March 2019 KREIA Newsletter

Providing Education, Resources & Networking Since 1978 Kentucky’s premier investment club for landlords, rehabbers and wholesalers Meeting the 4th Thursday of every month (except November & December) KREIA.COM • facebook.com/groups/kreiaky • twitter.com/reiaky

Monthly Newsletter for KREIA Members

Vol 03-19 March 2019 President’s Letter

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KREIA Members!

Paid Advertising Rates

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Lease Options: Joe Earls teaches us about how to have control without ownership

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Now that Mike Grinnan has got you ready to file taxes and Jason Wojo from Lifeonaire helped you craft your vision and set big goals for this year, we’re ready for local expert investor Joe Earls to show you how to find more deals using lease options this month at KREIA!

Welcome, New Members!

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Brad Lammi: Quick Q&A on purchasing tax bills

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Mike Butler: DealMachine is a must-have tool for real estate investors

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Eric George

Using lease options is a great way to make quick chunks of cash and residual income in real estate without actually purchasing properties, and it is a growing niche with lots of potential that the majority of today’s investors aren’t taking advantage of! Joe Earls has quietly been doing tons of these deals around Kentuckiana for years, and now he’s going to teach you how to do them too!

Make sure you sign up for Joe’s Saturday workshop too and get the in-depth knowledge you need to start making money now using lease options!

Sharon Vornholt: Why you 10 should choose probate investing KREIA Photos

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L.O.T.S. Recap: Beau Hollis rehabs former East-End rental

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Press Release: AAPL appoints Mike Fallot to government relations committee

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Government Affairs Report

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Also, elections are coming up in a few months for KREIA’s board and leadership positions, so if you are interested in running for the board please contact Michelle Rawn to get added to the ballot. We’re always looking for new volunteers to help run our events as well, so if you’re interested in giving back to KREIA in any way, contact John Jones at support@KREIA.com!

See you at the meeting!

Eric George KREIA President

Nina Musgrave: A brief 24 explanation of Opportunity Zones

Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

Your KREIA Leaders

President Eric George

Vice President Tamara West

Advertise With KREIA

Secretary Erik Hitzelberger

Treasurer Mike Treasurer-Elect Grinnan CPA Wally Kallbreier

Board of Directors

Put your message in front of the most active rehabbers, landlords and wholesalers in the state! KREIA offers five membership levels for businesses. Go to KREIA.com and join at one of these annual advertising levels to get your ad in every issue of KREIA's newsletter and be invited to make ad pitches at meetings:

Business Card Membership . . . . . . . . $199 Includes your business-card-sized ad. Admission at monthly meetings remains $20.

Premium Levels: These four advertising levels include your ½-page ad in each issue!

Rue McFarland

George Foree

Dennis Erhard

John Jones

Lauren Willoughby

Darin O'Neil

Mike Fallot

Hampton Scurlock

Mike Butler

Chris McCarty

Greg Nalley

Clay Smith

Parliamen- Past Pres. tarian Michelle Frank Rawn Miller

Get involved with KREIA. You can help with the monthly meetings, L.O.T.S. program, this newsletter, Saturday workshops, Government Affairs roundups, marketing, the KREIA website & more. Work shoulderto-shoulder with active investors! Ask for someone to direct you as you check in at the front desk at monthly meetings.

KREIA's newsletter is published monthly and serves to educate you and to remind you of upcoming monthly meetings.

About KREIA: The Kentuckiana Real Estate Investors Association is a nonprofit organization focused on education, networking and resources for today's investor. Whether you are just starting out in real estate investing or are working on your hundredth deal, KREIA can help you learn more, earn more, and have more fun doing it.

Group discounts are available.

Contact us at News@KREIA.com if you want to: Advertise on KREIA.com • Sponsor a monthly meeting Sponsor a L.O.T.S. program • Sponsor Saturday Workshops

Bronze Membership . . . . . . . . . . . . . $499 Includes free admission to monthly meetings for one person.

Silver Membership . . . . . . . . . . . . . . $699 Includes free admission to monthly meetings for two people.

Gold Membership . . . . . . . . . . . . . . . $999 Includes free admission to monthly meetings for two people and gives you a skirted table in the vendors area.

Platinum Membership . . . . . . . . . . $3,500 Includes everything the Gold level offers, plus extra promotion from KREIA. You'll be our designated events sponsor, and we will promote you accordingly!

New ½-page advertising levels and pricing are in effect for new member signups and upon renewal for current advertisers.

Questions? Catch up with KREIA Sponsor/ Advertiser Chair Dennis Erhard at the meetings. Or email support@KREIA.com.

Join KREIA Joining KREIA is easy: Go to KREIA.com and click the "JOIN" option on the menu.

The cost to join as an individual member remains at $125 per year, with a charge of $20 at the door for monthly meetings.

Click JOIN at KREIA.com to find out about all the benefits of membership for both individuals and businesses. Too many to list here!

Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Lease Options: Tips and Case Studies Joe Earls will show us how to earn profit without having to invest lots of capital

Learn from area investor Joe Earls about the many profit points of lease options: how to get paid up front, at the back end, and enjoy cash flow in the middle. Without having to own the property! Be sure to be in your seat at KREIA by 7 p.m. to hear his presentation. Check out the Q&A below for a preview and to learn more about Joe. How did you get started in investing?

I got started in Investing by paying cash for properties. After we ran out of cash, we started using traditional funding. After we ran out of cash and credit, we were stuck! We then started implementing creative financing and lease options to acquire properties.

When did you get started in investing?

Bought my first investment property in 2007.

What is a lease option deal?

Simply control without ownership.

With an option, you have right to buy the property but not the obligation to buy.

However, the seller is obliged to sell.

Who are your mentors?

Wow, I couldn’t list all my mentors as I have them in every area of my life. I got Joe Earls my education from Rich Dad Education and Ron LeGrand and have invested over six figures to learn.

What does a typical lease option deal look like?

1. Nice houses in nice neighborhoods 2. No rehab needed 3. Motivated seller What does your favorite kind of deal look like?

Little money into the deal with a house that’s in a great location and where no rehab is needed.

Please describe a recent lease option deal you’ve made.

Acquired a 5-acre horse farm on a 30-year lease option, then rehabbed the property (paint and flooring) and leased it to a tenant buyer, receiving $554 monthly in cash flow plus the non-refundable option consideration, debt paydown and back end profit. We are now working on a lease option deal on a commercial property and storage facility.

Has not having the deed ever presented a problem?

It could if you don’t do everything you need to do. Here is an example from my experience and one from a partner.

1. We didn’t record a document after signing and lost or didn’t make $25,000.

2. One of our partners had a seller who, when they went to close with the end buyer, refused to sign off on the deed.

(The seller only did this because she saw how much money the investor was going to make.) The investor did what he was supposed to do: He took the seller to court, and the judge told the seller that either she signed off on the deed or the judge would. There are several ways you can avoid this kind of situation, and I’ll talk about that at the Saturday class.

Besides presenting case studies and giving an overview, Joe plans to cover these topics at Thursday’s meeting: • Circle of real estate wealth: where each strategy fits • Mindset and where new investors should start • Where to find money for deals

SATURDAY WORKSHOP! On March 30, from 9 a.m. to noon, go more in-depth with Joe on lease options! Location: Home of the Innocents. Cost to attend: to be announced.

Background: “Married with four kids. Decorated Combat Veteran who left combat diagnosed with Post Traumatic Stress Disorder and Traumatic Brain Injury to include Major Depressive Disorder. I was told by both professionals and others close to me that the best course of action for me was to sit at home and collect a check from the government.

While I was stuck for almost six years believing this, I choose not to listen and to go against the grain.”

5:30 p.m. Early Meeting: Tax Liens Special Door Prize for Pre-Paid Registrations!

Active Members: $20 • Guests: $30 • Former Members: $30 Register now at kreia.com. Receipt emailed for your records.

PRE-PAY NOW!

Attorney Brad Lammi heads up the early meeting to tell us what we need to know about purchasing tax bills. Turn the page to find out more!

Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Welcome, New KREIA Members!

Lindsay Addison Vanika Armstrong Tanya Barnett Santosh Bhatt Marcus Britton Ellsworth Collins John Davis Christopher Dye Adam Engle

Adam Greene Jack May Benton Middleton Danny Nail Desmond Pickett Kim Pinkston David Plotner Garrett Rednour Jane Renn

Kyle Schlosser Nishea Sipley Rochelle Sivils Mike Vanover

Quick Q&A on Tax Bills

By Brad Lammi Want to diversify your investment portfolio? Looking for stable 3- to 7-year investments? Trying to find a creative way to get a property on the market? These are some of the benefits investing in tax bills can provide.

What is a tax bill?

When a real property owner fails to pay the taxes on his or her property, then the city/county in which the property is located has the authority to sell the outstanding bill as a certificate of delinquency to third-party purchasers. A lien is a legal claim against the property for the unpaid amount owed. Property that has a lien attached to it cannot be sold in an arm’s-length transaction or refinanced until the taxes are paid and the lien is removed. In the event that the lien does not get paid, the property itself can become the matter of a foreclosure action to enforce the payment of the tax bill.

What do I stand to gain from investing in tax bills?

For the most part investors will be looking at a passive investment that requires little to no management. In Kentucky this investment will produce simple interest at the rate of 12% on the invested amount, along with receipt of a nominal one-time administrative fee in the amount of $115.

How do I invest in tax bills?

Delinquent tax bills correlating to any particular property can be purchased from the county clerk of the county in which the property is located. Once a year, each county clerk will hold an auction for that current year’s tax bills. Bills sold in this manner are part of a lottery system. If you are planning on investing in more than three tax bills in any one county or more than five tax bills in the entire state of Kentucky or more than $10,000 worth of tax bills, you must register with the Kentucky Department of Revenue.

During the pre-meeting seminar I will be going over the benefits and risks associated with investing in tax bills and some useful methods in determining which bills are viable investments and which should be passed over.

Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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DealMachine: #1 Must-Have Tool for Investors

By Mike Butler Hey, fellow KREIA members! Very seldom do I write an article pitching a product or service. However, this one is an exception because it is so powerful and I use it all of the time. It’s a proven winner!

If you are serious about your real estate business, you MUST have this cell phone app called DealMachine.com.

Here’s why. How many times have you driven by a property that caught your eye for some reason and fumbled around to write down the address with a note or two hoping you will remember to look up owner info and more when you get home? I did this too when I got started and it is a piss-poor way to track your leads efficiently.

Back in the day, I solved this problem by using good old fashion blank index cards. Old-timers always dreamed of the day when this cell phone app called “DealMachine.com” would be created.

It’s one brain-dead simple system to efficiently organize ALL of your leads and is a great tool for landlords and property managers too!

Now, imagine yourself driving down a street and you see a property that looks like a good prospect or lead. Here’s how it works: 1. Open your DealMachine App on your smart phone 2. Take a Picture using your smart phone 3. Within 3 to 5 SECONDS… Owner Info will appear, Property History, and a boatload of more info you would have spent 15 or 30 minutes looking up when you got back home.

You can do as many of these searches as you want every month for one low monthly fee ($49).

This app is so powerful, you get to try it free for 14 days without any credit card info!

DealMachine.com has extra powerful features for your business. You can set up your own customized postcard(s)

allowing you to push a button and send the owner your custom postcard with a photo of their property on the card!

This costs only 99¢ per postcard.

You can also create a “campaign” where you get to set up how often you want to send this owner your customized postcards. For example: send this owner your customized postcard every 14 days for three times. Once you create your campaign, it can be used on any lead you enter in your app.

I cannot tell you how many investors in my Gold membership have captured great killer deals using this cell phone app.

David Lecko is the genius creator of this app for your business. David has been featured on my Power Lunch series and lives in Indianapolis. At the time of the Forbes article listing his app as Number 1, his app was barely one year old!

This is a no-brainer for your business and I’m going to help you maximize and use all of the features in this app. Simply go to DealMachine.com and enter promo code mbutler and I will give you 3 big bonuses and cash too. (Yes, I do get some coins, but it does not change my attitude one bit about this incredible cell phone app.)

1. Sign Up for Your FREE 14-Day Trial (no credit card) and enter this promo code: mbutler 2. BONUS – I’ll put $10 in your account so you can send some postcards and more.

3. BONUS – I’ll ship you my brand new book, “Landlording on AutoPilot,” for Free ($23.95) 4. BONUS – You get my “29 Ways to Buy Real Estate Without Banks” PDF. This is a kick-butt follow-up system. Each property you enter has its own folder. You can enter more photos, notes, and more! Your ultimate follow-up system!

Not only is this DealMachine.com great as your number one tool for buying, it is also a very powerful tool to assist you when processing rental applications. Most rental applications ask for current and previous addresses, along with owner of each. Simply enter those addresses to verify ownership and you get your answer in three to five seconds! Wow! DealMachine is what old-timers have been dreaming about for decades. David Lecko has made it happen and it exists today.

Continued on Page 22

Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Do You Want Your Business Card to Appear Here? Join as a Business Card Member for only $199/year, and see your ad in a year's worth of KREIA newsletter issues!

Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Why Choose Probate Investing?

By Sharon Vornholt Probates have been my #1 source of leads for more than a decade. I love working with probates; however, that’s not true for all investors. The reason this niche is so good is because you will never run out of leads, and the heirs almost always need to sell the property. It’s usually just a question of whether it’s a “pretty house” that will be listed (listen up, Realtors), or it’s an ugly house needing repairs and updates that will be sold to an investor. It’s a pretty straightforward choice in most cases. Whether it’s a pretty house or an ugly house, there is so much opportunity here.

Why Do Investors Shy Away from Probates?

I think there are two main reasons investors are reluctant to work in the niche of probates.

1. First of all, they just don’t understand how the probate process works.

Investors think that they have to know a lot of legal stuff, which just isn’t true. Because probate is a legal process, you do need to have a basic understanding of the probate process and the steps involved. Specifically, you need to know when the house can be sold. One other thing that will help you tremendously is being familiar with the terminology used in probate. Knowing these two things will allow you to show up as the “expert” to help them with their problem, which is an unwanted house.

2. The second reason is that their mindset holds them back.

Probate investing isn’t that much different from other niches in real estate, particularly when it comes to off-market deals. There will be things you need to learn that are unique to that particular niche.

Because the property is part of an estate, it makes a difference in the way people feel about it. Investors often feel like it’s creepy working with probates. Or they feel like they are taking advantage of someone at what is undeniably one of the worst times of their life when they make a low-ball offer. They feel guilty even when it’s a fixer-upper that needs a lot of work.

It’s important to understand that it couldn’t be further from the truth. In almost every case, the property must be sold before the estate can be closed. That means that the heirs have to take care of the business of settling the estate, before they can collect what they have inherited.

Here is the main thing to remember about probate: this is a great niche for investors because the heirs almost never want the house. They just want the cash sitting in that property.

Probates are also a very profitable and untapped source of leads for Realtors. In a seller’s market like we’re in now, a large percentage of those properties will likely be listed on the MLS. I’ve been doing this a long time, but I don’t know of a single Realtor in my area who specializes in probate property. As I said before, there is so much opportunity for both real estate investors and agents.

Showing Up as the Expert Remember that marketing is how you get leads, and branding is why they choose YOU. When you are able to show up as the expert to talk to a motivated seller, they will choose you over the other investors every single time because of your knowledge about probate. The seller will be able to identify with you. They will also be confident they’ve made the right decision because they view you a trusted expert.

Armed with your knowledge about probate, all your marketing will get better results because you will have built a rock-solid brand around your expert status. You begin this whole process by changing your mindset. That’s the first step. Then once you have learned the terminology, you know the steps in the probate process, and you understand how to market to these folks, I can promise that you will be light years ahead of your competition.

To find learn how you can become the probate expert in your area, check out my course, Probate Investing Simplified: https://probateinvestingsimplified.com Sharon Vornholt is a local wholesaler & marketing/branding expert with a national presence. She blogs and hosts podcast interviews with other real-estate experts at her website, LouisvilleGalsRealEstateBlog.com. Visiting her site is like taking a master class in real estate.

Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Do You Want Your Business Card to Appear Here? Join as a Business Card Member for only $199/year, and see your ad in a year's worth of KREIA newsletter issues!

Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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CPA Mike Grinnan drew a packed house to the February meeting on tax tips. (Photos by Lauren Willoughby)

KREIA

Photos

See more photos in KREIA's private Facebook group.

Greg Shell, left, and Mike Grinnan shared a laugh after the meeting.

In the early meeting, Mike Butler spoke about how to automate with QuickBooks.

Heidi Fore, a Keller Williams Realtor who has developed a video course teaching busy people how to make the most of free Google tools, spent an hour giving tips and answering questions at the March 13 Indiana Subgroup Luncheon.

Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Bancroft L.O.T.S. Home: A Closer Look Beau Hollis rehabs former East-End rental house

KREIA member Beau Hollis is known for wholesaling. His company name says it all – Louisville Wholesale Houses. Try Googling his company and you’ll see he also knows a thing or two about SEO! But when he acquired this house on Keisler Way near Ballard High School, he decided to take it down himself for a flip.

The house, which came to him as a referral, had been a rental house, Realtor-owned. Beau said he bought the owner’s entire portfolio. The other properties he wholesaled.

This four-bedroom/two-bath Beau Hollis rehabbed this house at 7307 Keisler Way, which is located in the Bancroft neighhouse was move-in-ready, but he borhood off Herr Lane between Westport Road and 22. (Photos by Lauren Willoughby) rehabbed it to give it some high-end moving into a house that costs $278,000, you may want a touches for a higher price point. master suite.”

“I was not in here swinging hammers,” he said. So he “We could have sold it for $300,000,” Greg added. brought along the general contractor who worked on the Still, at the time of the L.O.T.S. event, Beau already had a house, Greg Kelley of R&G Homes, to the March 5 L.O.T.S. event. Greg stepped up to address the nitty-gritty construc- contract on the house and was within two weeks of closing. tion details KREIA investors are known to ask about at these The guys did a beautiful job – the house looks amazing!

If you want to catch up with Beau, look for him at KREIA meetings. meetings. He also hosts his own monthly meetup, first Beau and Greg redid the floors, the bathrooms and the kitchen. There had been a wall separating the kitchen from Monday of the month, at the Blind Squirrel in Middletown. the living area, and they removed it to open up the space, adding a coffered ceiling in the dining area.

They also had to deal with random problems such as sump pump issues (during the rains that wouldn’t quit in January and February) and a collapsed sewer pipe.

Beau took a look at the pumpkin-colored exterior and decided to make the house stand out by painting the bricks white.

Then he made a discovery: “These are the kinds of bricks that suck up The KREIA crowd gathered in the open living area to network and tons of paint.”

The biggest challenge munch on their free lunches, courtesy of MM Lending. to selling the house was THE NUMBERS that it lacks a master Sale Price: $278,500 suite, he said. “Hindsight Purchase Price: $175,000 Potential Profit: $45,500 Rehab & Holding: $58,000 is 20/20, right? We would’ve put in a master Why do we call it “L.O.T.S.”? Because we Learn On The Site! suite… When you’re Beau Hollis Copyright MMXVIII Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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AAPL Appoints Mike Fallot to Govt. Relations Committee Newly formed committee to focus on federal and state legislation American Association of Private Lenders Press Release Mike Fallot from MM Lending has been appointed to the newly formed Government Relations Committee of the American Association of Private Lenders (AAPL).

AAPL is the national organization representing the private real estate and peer-to-peer lending industry. Its three core principles – Excellence, Ethics & Education – provide a foundation for the new generations of real estate capital: private lending. AAPL serves as a catalyst for industry growth by fostering awareness, promoting best practices and encouraging a standardized code of ethics for its membership.

Several states and federal agencies have ramped up efforts to regulate the private lending business, which could have negative impacts on the availability and affordability of funding for real estate investors. In 2019 the committee will focus on limiting licensing requirements for the private lending industry, and exempting business-purpose loans collateralized by real estate from various government regulations.

“Now is the time to enter the legislative advocacy arena,” said Linda Hyde, AAPL managing director. “Our industry has grown to a point that we can no longer count on our niche status to keep us out of regulatory crosshairs. We’ve helped our industry self-regulate via our Code of Ethics for a

decade. It’s time to leverage that longevity now that the window of opportunity is at its widest.”

Mike Fallot, CEO, cofounded MM Lending and oversees all lending activities. Mike enjoys working with new and experienced real estate investors to structure financing to achieve their goals. He has over 14 years’ experience in the private lending business and has firsthand experience with the boom and bust cycles of real estate. Mike is a graduate of the University of Louisville and previously served as a partner with a regional CPA firm. He is an active member of the Rotary Club of Louisville, board member of The Cabbage Patch, board member of the Kentuckiana Real Estate Investors Association, and past president of the Louisville chapter of Financial Executives International. mike@mmlending.com, (502) 400-3011

Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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GOVERNMENT AFFAIRS REPORT From Kentucky Realtors & the Louisville Board of Realtors KREIA Report Coordinated by Rue McFarland Heads Up, fellow KREIA Members. There are many laws, rules, and regulations already passed and pending affecting real estate owners and landlords.

Mayor Fischer has proposed a new 15% tax on insurance premiums. A fellow KREIA member had a multi-acre tract of land already under contract for a large out-of-town developer and his buyer backed out of the deal because of this new proposed tax by the mayor.

Please contact all of the council people who represent the area where you own real estate and let them know to cut their budget just like you and I have to do when our income changes. Let them know to not touch public services like police, fire, EMS and first responders. Tell them to whack all of the extra departments the Mayor has added to Metro Louisville.

Take a look at Metro Louisville Budget ending in summer of 2018. Call your Council Person and cut the highlighted areas below and keep all public services. This is an excerpt from a 185-page budget. Go to bit.ly/k1903_GA. (Highlighted areas: Louisville Zoo, Codes and Regulations, Office of Management & Budget, Office of Resilience and Community Services, Office of Performance Improvement, Department of Information of Technology, Related Agencies.)

On the State Level, there are too many items to list and cover in this short article. Such things as meth-contaminated properties, new notary laws, assistance animals, new continuing education for brokers and real estate agents, damage to rental property law update, fair housing discrimination regarding sexual orientation and gender identity, property taxes, property taxes for veterans, and

more. To see all of the details, please log in to KREIA.com and hover on “Resources” and click on Articles and look for the article called “March 2019 Government Affairs Report on STATE Laws affecting Real Estate.” There you will find the PDF with Yellow Highlights on items affecting real estate.

More From State Government Kentucky Realtors Legislative Updates. Read weekly updates on bills in play in Frankfort at the Kentucky Realtors’ site: bit.ly/KYR_LEGU

More From Local Government Louisville Metro Government: Get a summary of local affairs (and state) by the Greater Louisville Association of Realtors (GLAR): bit.ly/LRGAU

Mike Butler: DealMachine App Continued from Page 6 Oh, one more thing. You can add up to 3 “bird dogs” (deal finders) for FREE! You set them up with their own user name and password, and they get to take photos of properties you want them to find for you. Make sure you structure some kind of compensation for them, whether it is a flat fee for each or a fee for each property you buy.

Your bird dogs can only add property photos and are not allowed to send post cards.

Your bird dogs could be the mailman in your target area, pizza delivery driver, Uber drivers, UPS drivers and more!

If you are still reading this article, just do it now. Go to DealMachine.com and sign up for the 14-day free trial and enter promo code mbutler to claim all of your bonuses and $10 cash in your account!

I’m so looking forward to hearing about the deals you have captured using DealMachine. After being elected to your KREIA board, I’ve heard your Vice President Tamara West talking about trying to get David Lecko to come and speak at one of our monthly meetings. Thank you, Tamara, and KREIA Program Committee.

To Your Continued $uccess! – Grab Your Deal Machine App Now for FREE 14-Day Trial

Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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A Brief Explanation of Opportunity Zones

Defy capital gains taxes with new tax-advantaged investment vehicle

By Nina Musgrave I admit to having FOMO (fear of missing out) on anything so blatantly named “Opportunity Zone.”

I know that an Opportunity Zone (OZ) is an area that is distressed and needs a boost – and there are tax benefits for investing in an OZ. But how do you do that?

I will attempt to pass on what I’ve uncovered, in simple terms. Please contact your tax and legal professionals for further advice, if Opportunity Zones are something you’re interested in! Here we go.

First, the big winners are those with unrealized capital gains. Fancy words for profit that exists on paper because it hasn’t been cashed in. (Even if that’s not you, keep reading.

Chances are, if you stay in KREIA, you’ll get there.) You can find a map and a downloadable spreadsheet of Opportunity Zones at cdfifund.gov/Pages/Opportunity-Zones.aspx Kentucky has 144 OZs. Investing in an OZ starts with forming a Qualified Opportunity Fund (QOF). This is the entity that will invest and hold assets/property. You self-certify the fund by filing Form 8996 with federal returns. There is no approval needed from the IRS. The fund must be taxed as a partnership or corporation. LLCs can qualify, provided they file as such. The fund must hold 90% of assets in OZ property: stocks, partnership interests or business property.

I will concentrate on business property, which consists of tangible assets. Basically, business property must have been purchased after December 31, 2017, have a current business or be improved by the fund. Improvements must be during the 30-month period after the date of purchase and exceed the adjusted base of the property at the beginning of the period.

The Opportunity Zone business qualifies if it receives at least 50% of gross income from business in the OZ, has most tangible assets in the OZ, holds a limited amount of investment property, and does not own or operate a variety of industries, including gambling facilities, alcohol stores, golf courses or tanning salons.

Setting up the fund allows you to prepare for the future and save on taxes. If you have unclaimed short- or longterm capital gains, you can defer the income tax by reinvesting it, within 180 days, into the fund.

From here, if the investment stays in the fund for five years, you will receive a step-up in tax basis equal to 10% of the original gain. If held in the fund for seven years, you will receive an additional 5 percent step-up in tax basis. Importantly, investments maintained for 10 years and through

Dec. 31, 2026, will allow for an exclusion of all capital gains from post-acquisition gains on the investments in a QOF. Truly, an Opportunity!

More information continues to be released on Opportunity Zones. For reference, see The Tax Cuts and Jobs Act, Pub. L. 115-97, signed into law on December 22, 2017. (Internal Revenue Code §1400Z-1 and §1400Z-2).

Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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First Class Mail U.S. Postage Paid Louisville, Ky Permit No.1498

PO Box 91225 Louisville, KY 40291 Return Service Requested

THE Local Resource for Landlords, Rehabbers & Wholesalers Meeting the 4th Thursday of every month (except November & December) at Woodhaven Country Club, 7200 Woodhaven Road, Louisville, KY 40291 KREIA.COM • twitter.com/reiaky • instagram.com/reiaky • youtube.com/KreiaDotCom facebook.com/reiaky (public) • facebook.com/groups/kreiaky (private)

UPCOMING EVENTS

Lease Options with Joe Earls Can you control a property without owning it? Yes, you can!

Get tips, best practices and case studies from local investor Joe Earls. Thursday, March 28, 5:30 p.m.  Saturday Workshop on Lease Options. March 30, 9 a.m.  April 2 — noon-1 p.m. L.O.T.S. event. We tour Chiquita Lindsay’s rehab in the Chickasaw neighborhood of West Louisville. Check your email for the address. Members only.

Lunch is provided by Platinum Sponsor MM Lending.  April 4 — 5 p.m.-7 p.m. KREIA Happy Hour. Networking at a local restaurant. Check your email. Jeff OBryan hosts.  April 9 — Noon-1:30 p.m. Lunch & Learn. MM Lending’s Mike Fallot will talk about how house rehabbers can get shortterm fix-and-flip loans. Check your email for the location.

Members only. You buy your own lunch. Ed Gibson chairs.

 April 10 — 11:45 a.m.-1:30 p.m. KREIA Indiana Sub-Group Luncheon Meeting. Area vendors will address the group. Want to be included and get the word out about your business? Talk with event organizer Brian Haeseley first. At Tucker’s Restaurant in New Albany (State Street and I-265). You must buy your own lunch.  April 18 — 6 p.m.-7:30 p.m. KREIA Game Night: CashFlow.

Want to get out of the Rat Race? Play CashFlow with other investors pursuing financial freedom. Hampton Scurlock hosts.

Main Meeting Calendar Here’s our tentative lineup of topics for the next few months: • April 25: ‘7 Houses in 5 Years’ with Andrew Holmes • May 23: Landlord Tenant Act with attorney Michelle Rawn • June 27: Wholesaling with Frank Miller (workshop planned)

PRE-Pay Now at KREIA.com to Qualify for a Big Door Prize Drawing!