Creative R E A L E S TAT E
St. Paul Duplex Read Khrystyna Kneefe's Success Story PAGE 2
Deal of the Month PAGE 2 Success Story PAGE 2 April Meeting Recap PAGE 4 Saturday Workshop: Wholesaling with the Real Estate Goddess Vena Jones-Cox PAGE 5 Market Update PAGE 6 MnREIA Trivia PAGE 7 Stupid Wholesaler Stories PAGE 8
New Members PAGE 10 Message from Mike PAGE 11 May Meeting PAGE 12
Minnesota Real Estate Investors Association | www.MnREIA.com
May 2019 | 1
DEAL of the
MONTH Submit you’re before and after pictures and a description of the project. All valid entries will receive $50 REIA Bucks and one lucky winner every month will win a $50 Home Depot Gift Card. Entries can be of current deals or past projects. Submit your entries to amckinnon@ therealestatehouse.net.
Duplex in St. Paul Khrystyna Kneefe, KK Leadership LLC Our story is not a very successful one but might be helpful. The initial issue was finding a financing institution. Having no credit history. No financial institution would give us a loan to buy the property. I had to start building my credit history from zero and start arranging relationships with different lenders. Six months later, a mortgage company from another state approved me for the right amount and the search began. Apparently, it’s a tough task to find a duplex in the Twin Cities under $200K in a good area. When one would appear, it would be gone in just days, presumably for a cash offer. As luck would have it we found a duplex in St Paul that happened to be on the market for over 6 months, because the first buyer backed out (financing problem) while others thought there must be something wrong with it. After a little bargaining, our offer was accepted for $202,000 and splitting closing costs. The underwriting took over three months and the lender that first seemed so easy going and understanding now became very difficult to work with. We had to cancel the application with them and start over with Kim Burke. She was able to help me now that some time had passed and I
2 | May 2019
Minnesota Real Estate Investors Association | www.MnREIA.com
BEFORE
AFTER BEFORE
BEFORE
AFTER
AFTER
BEFORE
acquired my first credit score. After so many months of waiting (the seller lost two rental payments in one unit) we finally closed and moved in. Living in one unit, renting out the other certainly helped us pay the
AFTER
mortgage. My husband and I started executing the many projects for interior and exterior renovations, one step at a time. We stuck yellow post-it notes on a task board and would take them down as the projects were completed.
Minnesota Real Estate Investors Association | www.MnREIA.com
We are fortunate in that my husband works for a commercial construction company and has access to complimentary materials. These get put toward updates of our duplex. With minimum expenses, we both raise the value of the property and build equity little by little. Once we complete remodeling, we will be able to raise the monthly rent amount by several hundred dollars.
May 2019 | 3
Vendor and meeting speaker Hendrie Grant with member Tom Filzen!
New Vendor Ryan Alvarez & Kimberly with Star Lift!
APRIL MEETING RECAP Thank you to everyone who came to our last Main Monthly Meeting with our most experienced members talking about “How I’d make $1 Million in 5 years if I had to start over!” We had over 300 attendees at this MnREIA meeting and we absolutely love seeing so many people chase their dreams for financial freedom! See all of you next time!
New Vendor Sue Marty with Zerorez!
Check out the Haves & Wants!
Darryl rocking registration per usual!
Vendor Kristen Christie with Sterling Title!
Volunteer Julia Earle & Executive Director of MnREIA – Anna McKinnon holding down the fort at registration!
New Vendors Joe Vesey with First American Exchange & Jake Johnson with Lake Area Bank!
Another view of the jam packed room at our April meeting!
4 | May 2019
Minnesota Real Estate Investors Association | www.MnREIA.com
SATURDAY WORKSHOP WHOLESALING REAL ESTATE GODDESS with the
VENA JONES-COX
How to Build a 6-Figure Wholesale Business & Find More Great Deals than You Can Handle with Vena Jones-Cox 9 a.m. to 5 p.m. Saturday, May 18, 2019 Best Western Plus - North Metro Event Center • 1000 Gramsie Rd., Shoreview, MN 55126
AM
PM
To truly get out of the “rat race”, you need a plan that goes beyond the basics of “find a deal, sell a deal” and allows you to expand and systemize your business so that you can work with more buyers and sellers, and delegate some of your work to others.
The days of “too many deals, not enough buyers” are over for the moment, which means that whether you’re a wholesaler, a retailer, or looking for some good income properties, you’d better understand how to find off-market deals.
IN THIS MORNING WORKSHOP, YOU’LL DISCOVER:
JOIN US IN THE AFTERNOON AND FIND OUT:
• Why wholesalers who systemize make 10 times the money of those who don’t • Why working with more kinds of sellers makes you more money, and how to wholesale properties from banks and other sellers who want to make your contract “non-assignable” • Which tasks you can probably delegate right now, cheaply, to virtual assistants • How to create a plan to grow from no deals or a few deals to a deal every week within 12-24 months • How to Find Great Deals in a Seller’s Market
• Exactly what makes marketing “work” and gets you the highest profit for the lowest outlay of money • How to develop strong marketing messages that make sellers want to call you (when you see how Vena creates her messages, you’ll understand why yours aren’t working as well as they should) • Why a lot of what you “know” about marketing in the real estate business is wrong • How to get 5-10% response rates for your letters, postcards, and other direct mail
EARLY BIRD SPECIAL PRICING Up To 5/7/2019 Members: $39, Non-Members: $59 5/8/2018 to 5/13/2018 Members: $49, Non-Members: $69 5/14/2018 to 5/17/2018 Members: $59, Non-Members: $79 Regular Price Members: $79, Non-Members: $99
VISIT WWW.MnREIA.COM TO REGISTER. Minnesota Real Estate Investors Association | www.MnREIA.com
May 2019 | 5
Market Update
Market Update
Median Sales Price
MARKET UPDATE
Median Sales Price
Median Sales Price
JANUARY
Median Sales Price: ▲
Pending Sale Increased to Increased to $258,900 in January from $258,000 in December Closed Sales: Decreased to New Listings: ▲ Increased to 4,359 in January from 2,406 in December Median Sales Price: Pending Sales ▲ Increased to $258,900 in January from $258,000 in Increased to 3 Median Sales Price: ▲ Pending Sales: ▲ Month’s Supply of Inventory: ▼ December Increased to $258,900 in January from $258,000 in Increased to 3,248 in January from 2,945 in December Decreased to 1.6 months in January from 1.7 months in December Closed Sales: December New Listings: Decreased to ▲ Closed Sales: ▼ Increased to 4,359 in January from 2,406 in December New Listings: ▲ Decreased to 2,681 in January from 3,740 in December Increased to 4,359 in January from 2,406 in December Month’s Supply of Inventory: ▼ Decreased to 1.6 months in January from 1.7 months in December Month’s Supply of Inventory: ▼ Decreased to 1.6 months in January from 1.7 months in December
MEME OF THE MONTH
uary from $258,000 in
y from 2,406 in December
Pending Sales: ▲ Increased to 3,248 in January from 2,945 in December Closed Sales: ▼ All Aspects of Home Remodeling and Repairs Call your local Experienced Handyman Decreased to 2,681 in January from 3,740 in December Jim McKinnon (612) 590-0830
Jim.McKinnon@hotmail.com
y: ▼ anuary from 1.7 months in December
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6 | May 2019
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Minnesota Real Estate Investors Association | www.MnREIA.com
April
Trivia
Answers on page 11
1. What is PITI? A)Feeling sorry for someone B) Property Insurance To Individuals C) Principal, Interest, Taxes, Insurance D) None of the Above 2. What is Fee Simple? A) Absolute ownership of real property B) The opposite of Fee Difficult C) The lowest fee that can be charged D) Easy math problems 3. What is Chattel Real? A) A new Apple Chat app
B) Facebook’s new messaging service C) Personal property that is closely associated with real property D) Personal property that is not associated with real property 4. What is an example of Conveyance? A) Transfer of title from one person to another B) Transporting someone or something from one place to another C) Transfer of information from one person to another D) All of the Above
5. Which of the following would be an example of Encumbrance? A)Unpaid Taxes B) Mortgage loans C) Deed Restrictions D) All of the Above 6. What is Cubage? A) Former third baseman of the Minnesota Twins in the 1970s B) Height X Width X Depth C) Square footage X 3 D) None the above
Congrats to this month's WINNER Hope Goddard
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1998 – 2018 C E L E B R AT I N G
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1998 – 2018 C E L E B R AT I N G
20 YEARS IN BUSINESS
YEARS IN BUSINESS
Minnesota Real Estate Investors Association | www.MnREIA.com
May 2019 | 7
STUPID WHOLESALER STORIES By Vena Jones-Cox
Vena is a long-time wholesaler and past president of the National Real Estate Investors Association. She’s on a mission to professionalize the wholesaling business and create wholesalers who make lots of money while also treating buyers and seller right and not making idiots of themselves. Come learn from her at our May 7th meeting! Is it wrong of me to get ticked when people who call themselves wholesalers show a complete lack of understanding of what wholesaling is, or why wholesalers get paid? I mean, it IS my businesses — and I imagine that, say, a pediatrician might get mad of some guy who’d never gone to medical school hung up a shingle and started treating kids’ broken arms. Not that I’m trying to compare what wholesalers do to what doctors do — people’s lives are rarely saved or lost because of what happens in a real estate deal. But I do sometimes wish that wholesalers had to prove some basic level of competence before they could call themselves wholesalers. But that’s not the case: anyone who thinks they can “buy low, sell not so low” is allowed to print business cards that say “Don Dufus, Wholesaler” and run around wreaking whatever havoc they can manage. My favorite type of stupid wholesaler is the one who’s fallen for one of those, “You don’t really have to know anything, it’s all done for you” sales pitches, bought himself a website, and tries to sell me properties about which he knows NOTHING, from the actual value of the property to the amount and cost of the work needed.
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8 | May 2019
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In case you haven’t had the pleasure of buying one of these courses/eBooks/seminars, the basic pitch seems to be this: don’t worry about knowing the market—the tax folks have the value of the property right up there on the auditor’s website. Don’t worry about repair costs—you never need to see the house. Just offer owners half of whatever they’re asking or whatever the property tax folks think it’s worth, and you’ll be fine. Buyers will line up to buy that house at 55% of value. If you don’t understand what’s wrong with that theory, please don’t call yourself a wholesaler. Wholesalers get paid for providing profitable deals to serious buyers, not for getting deal under contract. REAL wholesalers know what they’re offering, know that it’s a good deal, and can stand behind their numbers. The folks I’m talking about seem to think that they can and should get checks for throwing numbers at a wall and seeing what sticks. Here is, as closely as I can remember, an actual word-forword conversation I had last year with one of these “fake” wholesalers: Him: “Hi, my name’s Don Dufus, and I saw on craigslist that you buy junker properties in Cincinnati. I have one that I think you’d be interested in.” Me: “OK, do you own it, or are you wholesaling it?” Him: [long pause] Me: “It’s fine if you’re wholesaling it, I just want to know if I’m dealing with an owner or a wholesaler.” Him: “I have it under contract.” Me: “OK, tell me about it” Him: “It’s at 1234 Main Street in a neighborhood called Delhi. It’s a 2 bedroom, it’s worth about $70,000 fixed up, needs about $7,000 in work, and I’m asking $22,000” Me: “OK, Dufus, let me tell you a few things about that property. “First of all, it’s not in Delhi, which is a bread and butter area with a great school system — it’s in Fairmount, a near-warzone in the city schools. It doesn’t even adjoin Delhi. “Secondly, I could literally buy that house and every house for 2 blocks around it for a TOTAL of $70,000, because 9 out of every 10 houses on that street are boarded up. Using a rental evaluation, this house is worth $35,000, max, and that’s really an imaginary number because there are no sales of fixed-up properties in that area for the last 5 years. “Thirdly, it doesn’t need $7,000 in work, it needs $17,000 in work, and the reason I know this is that I sold that property 12 months ago for $1,500.
Minnesota Real Estate Investors Association | www.MnREIA.com
“So, Dufus, I’m curious: where did you get your numbers?” Him: [long silence]. Me: “Have you even seen it?” Him: “No, I’m in Portland. This was a lead I got from my website. I got my repair numbers from the seller, who said he had a bid from a contractor to fix it for $7,000, and he told me it was in Delhi. The County website says it’s worth $70,000. I have it under contract for $19,900, what should I do?” Me: “I guess you’ll have to go to some other Dufus from the West Coast’s website and post it there, ‘cause you’re never going to sell it to anyone who actually bothers to go and see it.” You may think that this kind of wide-eyed naiveté — “It’s done for me! I can make thousands, and don’t have to do a thing!” is rare. If only. I have some version of this conversation an average of once a month with people who honestly think they don’t have to know, or do, anything in order to make money wholesaling. And, let me add, the ‘gurus’ who are willing to sell courses using this pitch are making money hand over fist. Of course, their making it selling courses, not wholesaling houses. But what’s almost worse is people who decide to get “creative” with their wholesaling techniques, and because they don’t really understand WHY it is that real wholesalers do what they do in the ways that they do it, end up doing things that make absolutely no sense. Don’t get me wrong: there are creative things you can do with wholesale deals—but they kind of have to fall within the parameters of what’s possible, given the nature of the deals we do. For instance: I was recently approached by a local wholesaler who told me about a deal that sounded pretty interesting. After evaluating it and deciding that the numbers were right, I asked what part of the total price the was the wholesaler’s fee. He informed me that it was $7,000, and that he trusted me so much that he’d take a personal check for that amount on the spot. I, of course, have no problem with paying any fee to a wholesaler, as long as the overall price works for me. But before I wrote the check, I asked to see the purchase contract. Why?
Because when a wholesaler assigns a contract, the buyer—me, in this case—is agreeing to ALL of the terms of the contract. Before I pay an assignment fee, I want to know what it is I’m agreeing to. The “wholesaler” then informed me that he didn’t have a contract—he was co-wholesaling the deal for the ACTUAL wholesaler, who was in contract with the seller. The cowholesaler then asked me to pay HIM the ENTIRE wholesale fee (only $2,000 of it was his, the rest was what the actual wholesaler was asking), so that he could get into contract with the real wholesaler, so that he could have a contract to assign me. HUH?? So, this guy was asking me to pay him for something that he didn’t have: the right to buy a property. And, apparently, this is tactic that has worked for him in the past. Unfortunately for him, I actually understand that paying someone for something they don’t have and have no guarantee of getting (who’s to say that the actual wholesaler hadn’t already found a buyer? Or that she was actually in contract, for that matter, since neither he nor I had seen such a contract?) is a really, really bad idea. So, I told him I would do this: pay his wholesaler $7,000 for her contract, and let her pay him, the co-wholesaler, his $2,000. He refused on the grounds that he was afraid she’d want to keep the entire $7,000…and he did not at all see the irony when I mentioned that I was sort of afraid the same thing was going to happen if I gave the $7,000 to him. Was it pretty creative of him to bypass the whole dealfinding process and specialize in marketing other people’s deals to buyers? Sure. Was it pretty stupid of him to be out trying to sell a deal that he had no actual interest in, no idea what the contract he was trying to sell looked like, and no concept that what wholesalers get paid for is a piece of paper he’d never seen and didn’t even know for sure existed? Yep. PLEASE, if you’re going to wholesale, know your craft and understand your product. If you don’t, the best thing that’s likely to happen to you is that you’ll spin your wheels a lot and not make the money you should. The worst thing could be that you unwittingly break the law or ruin your own reputation. Get trained, take advice, and don’t try to reinvent the wheel.
Wholesalers get paid for providing profitable deals to serious buyers, not for getting deal under contract. REAL wholesalers know what they’re offering, know that it’s a good deal, and can stand behind their numbers. Minnesota Real Estate Investors Association | www.MnREIA.com
May 2019 | 9
ANOTHER PERK FOR OUR MNREIA MEMBERS
CONGRATULATIONS the
to
NEWEST MnREIA MEMBERS! MARCH 2019 Darryl Adams Alex Speed
Ed Clinton Jared Fox
Brian Bean
Ty Meusburger Barbara Moen
Franklin Grant Brian Kreitz
Travis Zerwas
CONTRACT OF THE MONTH Free for MEMBERS ONLY at our main
monthly meetings
Daniel Richter Aleta White
Rustam Muharamov Marshawn Williams Molly Ruegemer Gary Lachance
Christy Sturlaugson
Home Improvement Outlet
Connie LaChance Elbert Greene Jr Ashley Zerwas Trisha Becker Connie Fox
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Danny O'Brien Jay Theriault Joe Vesey
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Abdirahman Suleman Todd Hendries
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Two Locations 510 County Road D West, New Brighton 2700 Minnehaha Avenue, Minneapolis
10 | May 2019
Store Hours Tue to Fri: 10 – 6 p.m., Sat: 10 – 4 p.m. Donations until one hour before close
Heather Hanoski Jenna Xu
John Cox
Minnesota Real Estate Investors Association | www.MnREIA.com
MESSAGE from
MIKE JACKA Is There a Bubble Coming? The simple answer is yes. We are always in a housing bubble. The bubble is either inflating or deflating. We have been in an inflating bubble for 8 years now so history tells us that the bubble is getting ready to start deflating. The real question everyone has is, will the bubble burst like it did in 2008. I can’t answer that, but my guess is no it won’t. However, no matter whether the bubble bursts or deflates slowly, you need to be prepared for the changing economy. We just had a panel of experts that have been through a bubble or two and they all said the same thing. Now is the time to start building up a cash reserve and increasing your available credit lines so that when the next market turn happens, that you are financially able to take advantage of the great opportunities that always appear after a market crash/down turn.
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TRIVIA ANSWERS
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3﹒ C 4﹒ D
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Minnesota Real Estate Investors Association | www.MnREIA.com
(651) 800-1501 KimBurke@Leader1.com mymortgagewithKim.com
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May 2019 | 11
Minnesota Real Estate Investors Association, Inc. 7040 Lakeland Ave. N #200 Brooklyn Park MN 55428 (763) 432 2809
N E T WO R K I N G ~ T R A I N I N G ~ E D U CAT I O N
Wholesaling with Vena Jones-Cox Everyone knows that wholesaling is the quickest and easiest way to put cash in your pocket in the real estate business. The problem is, most people don’t actually understand how wholesale deals are supposed to work. Vena Jones-Cox does, because she wholesales a property about every 9 days, and she’s been doing it for nearly 2 decades. She’ll share her in-the-trenches experience with us at our May 7 meeting.
6-9 p.m. Tuesday, May 7 Banquets of Minnesota 6310 Highway 65 NE Fridley, MN 55432
CALENDAR OF EVENTS: MAY