REI Voice Magazine - January 2016 by San Jose Real Estate Investors Association

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REI VOICE MAGAZINE JANUARY | 2016 PUBLISHER LORI GREYMONT 408-782-9162 EDITOR GERALDINE BARRY GERALDINE@REIVOICE.COM DESIGNER IFRAEEM SULEMAN MARKETING & CONTENT MANAGER HANNAH ASH TECHNICAL PRODUCER CLAIRE BAERISWYL ADVERTISING SALES DAN NOBLE 408.269.9777 DAN@SJREI.ORG PRODUCTION MANAGER LORAINE CRUZ 408-782-9162 LORAINE@SJREI.ORG TO ADVERTISE WITH US INFO@REIVOICE.COM OFFICE ADDRESS FOR REI VOICE & SJREI ASSOCIATION 6840 VIA DEL ORO, STE.225 SAN JOSE, CA 95119

REI VOICE™ Magazine A Publication of SJREI Association™ Reproduction or use of any editorial or graphic is prohibited. To request reprints or reprint rights, contact info@REIVoice.com. REI Voice Magazine www.REIVoice.com 408.782.9162 SJREI Association and REI Voice Magazine make no representations or warranties regarding the content, accuracy, or validity of the advertisements or of the articles contained herein. All persons should exercise due diligence and consult with legal and tax professionals before making any investment decisions.

EDITOR’S

NOTE A new year is upon us, investors...I wonder if you are as excited for 2016 as we are here at SJREI and REI Voice? It is my hope that the new issue of REI Voice helps spark excitement for the world of opportunity that awaits in the coming months. We are delighted to bring you the information you need to get the ROI you want in this issue. Discover how to get results, read the statistics and data that are relevant right now, and hear real-life narratives from investors who’ve been there - and then succeeded. We are pleased to continue the tradition of bringing you the industry’s top masterminds and leaders into the new year. We are excited to have a woman grace our cover this issue, Kathy Fettke, shares some of the secrets behind her success- both as a CEO and investor. Market timing expert Bruce Norris delivers his sharp analysis on what we should take away from the past year - and what to anticipate for this year. Carole Rodoni, the Bay Area’s real estate hawk, helps to filter out the noise by giving us the run-down on what really matters right now in terms of interest rates and how fluctuations may or may not impact the market. In keeping up with all of those New Year’s resolutions, Dr. Christopher Thornberg shares his take on current data and what it means for the markets. Leslie Appleton Young serves a riveting piece on what to anticipate this coming year, and if you are a real estate professional who to target in your business, and what she sees on the horizon that will impact investors and professionals alike. This issue of REI Voice represents a culmination of all the wonderful programming SJREI brought you in the past year. SJREI is the Bay Area’s premier real estate investing organization and REI Voice magazine is a powerful arm of SJREI. A good real estate organization aims to connect investors with the education and networking they need to make solid decisions to enhance their wealth. The best ones, like SJREI, go several steps further. With SJREI and REI Voice, we bring you the speakers, topics and time-sensitive information you need to make excellent investments. We are your conduit to the industry’s most proven and accomplished voices. For those of you who hold the distinction of being SJREI members, you have personally met and mingled with many of the people included within these pages - do continue to visit us at SJREI Association (SJREI.org), and meet other like-minded people. We always welcome new attendees, and if you have not attended in the past, email Loraine@sjrei.org to secure your free pass so we can change that. As always: perhaps your own investing path is leading you to soon be published here too…. May these stories inspire you to find your own purpose and greatness: I hope to sit down for an interview with you soon…

Geraldine

Contents Welcome:

Features 3

By Geraldine Barry

Housing Market Has Recovered Welcome to the New Normal!

Advice:

By Geraldine Barry

Publisher’s Note

TRID (“Know Before You Owe”)

Leslie Appleton Young, Chief Economist with CA Assoc. of Realtors shares her Predictions for 2016

What is it & How Will if Affect You When Getting a Conventional Fannie Mae or Freddie Mac Loan?

By Jeffery Hare, Attorney at Law

Top Five Reasons to Consider Commercial Real Estate For Your Portfolio

What You Need to Know...

Silicon Valley’s Hardworking, High-Performing Super Bowl City: Santa Clara

Bay Area Heavy Hitters Weigh in on 2016 from Their Unique Perspectives

Whither Housing?

Avoid Costly Renovations: The Big Four

Basics:

Geraldine Barry interviews Santa Clara Mayor Jamie Matthews

By Geraldine Barry

By Christopher Thornberg, PhD

By Geraldine Barry

Pam Blanco

Putting the Turn Key Back in Turn Key

By Geraldine Barry

By Tom K. Wilson

The Real Estate World’s Due for a Baby Boom

Real Experience

What Power Real Wealth Network’s Kathy Fattke

By Graham Parham

Do Syndication Deserve a Bad Rap?

By Hannah Ash

By Geraldine Barry

How You Can Make Money With Bay Area Real Estate? By Lori Greymont

Analysis: Interest Rate Hikes:

An Interesting Reality Check

16 17

Emerging Trends for 2016

By Bruce Norris

SF Job Growth A Powerhouse

By Christopher Thornberg, PhD

Don’t Get Left Out on LinkedIn:

3 Commonly Under-Utilized Features

By Kimberly L. Yearry

Real Estate Market Cycle Expert, Bruce Norris, Weighs in on 2016

San Francisco Regional Outlook

By Dan Noble

By Carole Rodoni

By Kathy Fettke

Plan Your Turnkey Investing Like You’d Plan a Vacation

Invest the ‘House of Cards’ Way By Hannah Ash

Coach’s Corner Redefine Your Relationship With Money

39 40

By Lori Greymont

Calendar Investor Resources] I Survived Real Estate Rotaplast

42 43 45 46

REI Voice Magazine Continues the Mission of

SJREI

SJREI is the Bay Areaâ&#x20AC;&#x2122;s premier real estate investing organization. A good real estate organization aims to connect investors with the education and networking they need to make solid decisions to enhance their wealth. The best ones, like SJREI, go several steps further. With SJREI and REI Voice, we bring you the speakers, topics and time-sensitive information you need to make excellent investments. We connect with you the industryâ&#x20AC;&#x2122;s most proven and accomplished voices. We make things easy for you by highlighting proven experts and strategies - and membership includes the magazine as a resource to revisit when needed.

Join our community today www.SJREI.org

Advice

By Graham Parham

TRID

(“Know Before You Owe”) What is it & How Will It Affect You When Getting a Conventional Fannie Mae or Freddie Mac Loan? What is TRID? TRID, also referred to as “Know Before You Owe”, is a rule meant to assist borrowers in understanding the terms of their financing. TRID stands for TILA RESPA Integrated Disclosure: it is the culmination of several years of discussions between CFPB and members of the banking and title industries. TRID consolidates the existing disclosures required under TILA and RESPA for closed-end credit transactions secured by real property into two forms: A Loan Estimate that must be delivered or placed in the mail no later than the third business day after receiving the consumer’s application

the mortgage loan for which they are applying, and must be provided to consumers no later than the third business day after they submit a loan application. Second, the HUD-1 and final Truth-in-Lending (TIL) disclosure (final TIL together with the initial TIL forms) have been combined into another new form, the Closing Disclosure, which is designed to provide disclosures that will be helpful to consumers in understanding all of the costs involved with the transaction.

A Closing Disclosure that must be provided to the consumer at least three business days prior to consummation.

How will this affect the consumer? Since October 1st, 2015 these new forms have been a part our life in the conventional lending world. “TRID” gives borrowers three days to think about whether they want to proceed with the mortgage or not. How are the “Know Before You Owe”, TILA-RESPA reform changes impacting consumers?

So, what’s new? First, the Good Faith Estimate (GFE) and the initial Truth-in-Lending disclosure (initial TIL) have been combined into a new form, the Loan Estimate. Similar to those forms, the new Loan Estimate is designed to provide disclosures that will be helpful consumers in understanding the key features, costs, and risks of

Lenders must provide the Loan Estimate forms to consumers within three business days of loan application – which means three business days after the consumer provided the lender with their name, income, Social Security number, property address, property value estimate and mortgage loan amount sought.

Advice

The Closing Disclosure form must be provided at least three business days before loan consummation (the time the consumer becomes contractually obligated to the mortgage, which is usually at closing). Any significant changes to the loan terms (the annual percentage rate (APR) becomes inaccurate, the loan product changes or a prepayment penalty is added) will restart a new three-business-day waiting period. Both the Loan Estimate and Closing Disclosure forms can be delivered in person, by mail or electronic delivery. Additionally, this new process will NOT impact cash sales, private money, commercial loans or those financed using HELOCs, so the current processes will still exist as well. Before TRID, once the lender had “Clear-to-Close’, their closing department would send closing instructions to the title company so they could prepare the “HUD”. Once the HUD was approved, the borrowers could close on their loan that same day. Now with the three day waiting period, the consumers have to wait before they consummate the transaction. Needless to say this can cause many delays for buyer and sellers.

prepares and delivers the Closing Disclosure to the borrower themselves, even prior to the time the closing instructions are sent to the title companies. This helps avoid delays with the closing process versus waiting on the title company to prepare the CD and deliver it to the consumer. It also addresses any questions the consumer may have in advance of closing quickly and efficiently, helping avoiding further delays. The ultimate goal is always to get the consumer where they need to be as easily and effortlessly as possible. Our attitude at Highlands Residential Mortgage is continuing education, and focusing on providing consistent and timely communications to all parties to help ensure the client receives maximum value, and that the increasingly complex loan process is simplified for all concerned

Graham Parham Highlands Residential Mortgage 214-679-3396 NMLS# 195724

The smart lenders take advantage of the TRID guidelines,

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Sr. Loan Officer - Highlands Residential Mortgage

D: 855-326-6802 | O: 972-581-2998 | C: 214-679-3396 gparham@highlandsmortgage.com | www.grahamparham.com RMLO NMLS #195724

This information is provided to assist business associates and is not a consumer credit advertisement Licensed under Texas State law and is for informational purposes only. Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rates and program terms are subject to change without notice. 12001 N. Central Expressway-Suite 750, Dallas, TX 75243 HRM NMLS #134871 Highlands Residential Mortgage is an Equal Housing Lender.

Advice

By Jeffrey B. Hare Real Estate Attorney

Do Syndications Deserve a BAD RAP?

re syndications inherently evil? Is their sometimes sketchy reputation undeserved? Perhaps it’s the name. According to the Merriam-Webster dictionary, a “syndicate” consists of either a group of people or businesses that work together, or a group of people who are involved in organized crime. Gangster movie plots often portray mob bosses fighting for control of “The Syndicate.” Syndications – we’ll assume we’re talking about a group of people working together on a real estate investment project – appear to be gaining in popularity. Why? There are several possible reasons. Thanks to relaxed restrictions on advertising, people may be seeing more promotions on social media and the internet. Due to the hype, there is a (mis)perception among some that syndications are new and shiny. And there is no apparent limit to the sheer volume of private funding seeking better returns through real estate investments. There are two basic ways to invest in real estate: own the property directly or indirectly. When you own the property directly, your name is on the deed, the rent is paid to you, and when you sell, you realize a gain or a loss. You also are responsible for all of the headaches – toilets, tenants and trash – that go with owning the property. If this isn’t your cup of tea, you can invest indirectly, usually by purchasing a percentage interest 8

in the property. When you join a group of other investors and delegate the management of the project to a third party, you have a syndication. In many cases, this may also be known as a “private placement.” In almost all of these cases, you are investing in what is known as a “security.” As a result, these types of investment opportunities fall under the jurisdiction and regulations of the Securities and Exchange Commission, or SEC, and must be registered unless they qualify for an exemption. The rules and regulations of the SEC are intended to protect investors from being ripped off by scam artists, notably those who were selling nothing but “blue sky.” Both public and private offerings are required to register investment plans with the SEC, but some private placement offerings qualify for exemption under what is known as “Rule D” of the Securities and Exchange Act. Space here does not permit a thorough discussion of what qualifies for an exemption, but there is plenty of information for investors at http://www.sec.gov/ investor/alerts and www.investor.gov. As a general rule, promoters and organizers of syndications and private placements, also known as issuers, can raise unlimited amounts of funds pursuant to the exemptions if they limit their offerings to “accredited investors,” or up to 35 “financially sophisticated” non-accredited investors. The amount of information required to be

Advice

disclosed by the issuer will depend on whether or not non-accredited investors are included. Whether or not you are an accredited investor, and whether or not the investment opportunity is being promoted as a “syndication,” a “private placement,” or “the last chance on earth to get rich quick,” you need to take certain steps to protect yourself and your money. Typically, these investments are promoted as “unique” opportunities which are available “for a limited time,” and to a “select group” of individuals. Carefully review the disclosure materials, if they are provided, and be especially suspicious disclosure materials are not provided. Review the qualifications, background and experience of the key players and managers. If the private placement is promoted as a “blind pool” investment, find out what are the limitations on the type of real estate investment that the issuer can invest your money in. What happens if the target investment becomes unavailable? What are the deadlines that management must meet under the terms of the offering? How long will your money be tied up? How much are the manager(s) and issuers being paid, and what are the projections of net profit?

This is not to say you should avoid investing in syndications or private placement offerings. A number of perfectly legitimate and successful investments involve the use of pooled funds, and if managed with integrity by competent and experienced managers, they have the potential to produce a nice return over time for the patient investor. There is always risk in any type of real estate investment, and you are cautioned to always do your due diligence with respect to the project, the property, and the people you are working with. For more details and information about how to take steps to protect your investment, go to: http://www.sec.gov/oiea/investor-alerts-bulletins/ib_ privateplacements.html.

By Jeffrey B. Hare Real Estate Attorney

Advice

Top Five Reasons to Consider Commercial Real Estate For Your Portfolio. By Tom K. Wilson While many investors see single-family homes as their “bread-and-butter” investment, investing in commercial properties is an option that can also help you achieve your financial goals. “Commercial*” in its broadest lay vernacular includes multifamily apartments, however, the true industry definition separates multifamily properties (over five residential units) from true commercial, such as retail, office space, industrial, self-storage or medical centers. I’m often asked what kinds of properties I recommend. There is, of course, no one size that fits all investors or markets. While in a normal market multifamily properties are a natural progression from single family homes, this is anything but a normal market and currently there are too many multifamily buyers chasing too few deals, so it currently has lower CAP* rates or returns than pure commercial. Here are five reasons to consider commercial properties for your portfolio. #1 Higher ROI Commercial properties often have higher and more predictable return-oninvestment than single-family homes, in part due to the economies of scale from investing in a larger property not usually available to the small investor.

insurance, and maintenance making the owner’s expenses very predictable and consistent. #3 Stable Cash Flow Commercial leases are typically 5-10 years in length vs. annually for singlefamily homes. Additionally, commercial leases include annual bumps in rent and options-to-renew. As a result of all these factors, cash flows are more predictable. #4 No 10-Mortgage Fannie Mae Limit Any loans taken by the owner or syndicate do not count against your 10-mortgage limit because they are in the name of the owning entity and not on your personal credit. This enables you to put more of your capital to work. #5 Appreciation Multipliers Unlike single-family homes, which are strictly valued based on market demand, or ‘sales comps’, commercial properties are valued as a multiple of their Net Operating Income (NOI)* which can be driven up by a good property manager’s addition of value. At a Cap Rate* of 8.0, every one-dollar increase in annual NOI can result in $12.50 of appreciation! Steps you can take to actively improve NOI include: Upgrading the existing buildings Increasing TI (tenant improvement) Adding leasable square footage

For example, a current commercial retail center that we are acquiring has an 8.2 CAP rate and a 4-year internal rate of return* of 12.0%. When you can borrow money at 4.25% and invest it in something yielding 12.0%, that’s worth considering!

Raising rents

#2 Fewer Headaches

and many more

It’s generally easier to manage one large property through a professional property management firm than to manage scattered single-family homes. Also the business tenants you get in retail or office space are usually of higher quality than most residential tenants. Business tenants have higher credit/risk scores, have pride of ownership in their businesses and want to protect their livelihoods. As a result, they have an interest in taking care of the property. Many commercial properties are NNN* (triple net), so the tenant pays most of the expenses including taxes, 10

Reducing operating expenses Adding amenities Adding additional revenue generating resources (ATM kiosk) Rather than wait for market forces to raise real estate prices organically, you can create appreciation using levers like the ones listed above. Additional Benefits Of course, the five advantages of commercial real estate listed above are in addition to the usual benefits of any real estate investment: Tax Benefits Hedge against inflation A hard asset with intrinsic value

Caveats of Commercial Investing No discussion of commercial investing would be complete without noting a few issues that investors should be aware of. Financing can be more challenging Typically, the investor(s) must put down 25-30% of the sales price and finance the loan amount over a 5-10 year term with a balloon payment at the end of the term. Selling or refinancing options at that time will vary depending on market conditions. And there can be stiff prepayment penalties. Not as Liquid If you own 10% of a Commercial building and want to sell your interest, you can sell to your fellow investors (who usually get first right of refusal) but if none are interested, it may be difficult to get out of the investment. That is why longterm funds, like IRA money, are ideal for commercial properties. Sale of a Commercial Property can take longer While just about everyone wants a home, only a small percentage of the population is capable of purchasing a retail center or office building. The smaller market of potential buyers coupled with a detailed due diligence process means that the sale of the property can take longer than for a single-family home. Syndications Many of the challenges outlined above can be mitigated by investing with an experienced syndicator. Their knowledge, track record, and ability to qualify for the loan and manage the property, allows the small investor to participate in a high quality commercial property or to invest in multiple projects to distribute their risks. Summary The benefits, economies of scale, opportunities for forced appreciation and higher returns make commercial properties an attractive addition to most investors’ portfolio, and one worthy of serious consideration. For your free copy of Wilson Investment Properties article “Are Real Estate Syndications for You?” and a guide to “Commercial Real Estate Terms” please go to our website, www.TomWilsonProperties.com.

HIGHEST QUALITY INVESTMENT PROPERTIES INVEST WITH CONFIDENCE SINGLE FAMILY HOMES • ACHIEVE IMMEDIATE CASH FLOW Highest Quality Product Fully and expertly renovated with details to attract the highest quality tenants. Highest Genuine Cash Flow Unlike others we give actual current income and expenses on each property. Highest Quality Metro Area • Highest U.S. employment growth metro. • Broad based economy. • High occupancy.

Price: $139,000 Rent: $1,450 Year Built: 2007 5 bed/3.5 bath/3,131 sq. feet

All Properties Direct from the Source All properties with clear title. Principal has $100M and 2,000 units of experience in DFW.

COMMERCIAL PROPERTIES • GAIN ECONOMIES OF SCALE Invest with as little as $50K! Excellent cash ow and appreciation. Tax sheltered income. Long term leases. Annual rent increases and renewal options. Easier to deploy larger amounts of money. Easier to manage professionally. Excellent innation hedge.

INVESTOR PROPERTY TOUR Sunday, Nov 22nd in DFW Spend the whole day guided by experienced investors. See examples of retail & industrial properties, rentals, p neighborhoods & more. realty411guide.com/events for more info

Preferred rates of return. Triple net with reimbursement for expenses. FREE article “Sell Stocks, Buy Real Estate” visit www.TomWilsonProperties.com for your free copy

Tom K. Wilson, President (408) 867-1867 info@TomWilsonProperties.com www.TomWilsonProperties.com

Advice

The Real Estate Worlds Due for a Baby Boom WHAT YOU NEED TO KNOW By Geraldine Barry here’s much discussion about the ever-present millennial TWhat’s generation right now. When will they start buying real estate? holding them back? What do they even want? There’s another generation, however, that’s poised to make waves in the real estate world. Who is that you ask? The generation that championed personal freedom above all else, baby boomers born between 1946 and 1964, are overdue to downsize - and their choices in the next few years will impact many including real estate developers, investors, and their bottom line.

Here’s what’s happening: 32 million single-family homes are inhabited by baby boomers according to research by Fannie Mae1 - and that’s one big number. The baby boomers in singlefamily homes account for an entire one quarter of the nation’s occupied housing. The baby boomers, overwhelmingly, have stayed put so far - but as housing markets across the country continue to tick upwards, this freewheeling generation could be ready to trade in their big houses for less responsibility and lower maintenance. Census Bureau reports indicate that the Boomers’ owneroccupied single-family houses account for 42 percent of the value of owner-occupied stock. What these boomers end up doing with their sizeable stock of the owner-occupied market, and where they’ll go after, will, undoubtedly, make waves. While one reason boomers aren’t moving could be the recent economic slump, another could be an intrinsic part of who the boomers are as a generation. They rebuke tradition - and traditionally, empty nesters have downsized. Boomer empty nesters simply aren’t in a rush. When this trendsetting generation finally does move, it’s clear they’ll want to do it on their own terms. But how - and which housing inventories are due for a shake up when these boomers start packing?

PROXIMITY First and foremost, this is a generation that values livability. As they retire, they’re going to want to ditch commuting and will

likely flock to homes situated near lifestyle centers and vibrant downtowns - homes from which an organic latte or the dog park is just a stroll away.

AFFORDABILITY As baby boomers switch from their salaries to fixed incomes, affordable housing will be at the top of their list. Not a generation that turns its back on the finer things in life, boomers will be looking to cut costs of major expenses such as housing and cars.

INDEPENDANCE These free spirits don’t want to give up their independance. In fact, a Merrill Lynch survey 2shows that only 10 percent of boomers want to move to a retirement or age-restricted community.

SIMPLICITY The generation that made “This Old House” a household name is ready to say hello to new houses, condos and apartments. They’re done with fixer-uppers: they want their homes to be low-maintenance and new.

LESS BUT MORE A study commissioned by multibrand home builder Del Webb shows that baby boomers want two things out of their new homes: less space paired with high end finishes. The key takeaway here? The baby boomers are going to change national markets in big ways - it’s only a matter of time. From a flood of inventory to new demands for high-end, affordable, centrally located living spaces - agents, landlords, investors, and builders, consider yourselves forewarned... 1

http://www.fanniemae.com/resources/file/research/datanotes/pdf/housing-insights-082015.pdf

http://money.usnews.com/money/personal-finance/retirement/articles/2015/02/20/how-to-find-a-retirement-home-thatdoesnt-make-you-feel-old 2

Advice

Pam Blanco

Putting the Turn Key Back in Turn Key By Geraldine Barry he idea of purchasing turnkey property sounds great...but Twould if all turnkey property investing was a slam dunk, everyone be doing it. A bad experience in this endeavor can push

investors to get out at the wrong time in the real estate cycle, or spend costly funds on repairs for property that not been well managed. How can investors be successful in this process? The truth is: turnkey investing is only as lucrative as the company you work with. As with any successful enterprise, a successful system is key. For Pam Blanco, Principal at Professional Asset Management & Sales (PAMS), systems are the answer. “Systems work, if you work them”, she reflected. Back when she founded PAMS, Blanco wanted to apply her organizational skills and years of having been immersed in every facet of the real estate business - from acquisition to property management - to help investors find success with turnkey properties. Her experience gave her the insight to see what was missing in the world of turnkey investing. Through further research, Blanco found that out-of state-investors’ needs were largely underserved by turnkey providers. Blanco wanted to make the often complex process simple for investors, and so she set her sights on becoming a true one-stop shop. Noting her city’s many benefits for investors, Blanco focused on her area of expertise: the local Dallas Fort Worth area. The definition of a ‘Turnkey Business’ is a situation in which a firm’s high-level management plans and executes all business strategies to ensure that individuals can buy a franchise or business and only “turn the key” to begin operations. Pam endeavors to do just that. “There are many companies who stick out a sign, and declare themselves ‘turnkey providers’. They take on clients, but are not set up to handle many aspects of the business. Things slip through the cracks, unqualified tenants reek havoc on houses, maintenance is deferred, and investors suffer. They don’t realize what is going on until there is a big problem. Then it is too late - they are left holding the bag,” Blanco shared. As an investor myself, and as someone who speaks with investors regularly, being left to hold an empty bag is not an uncommon scenario. So, what can we do to protect ourselves? Here are Pam’s top five steps for approaching each facet of the business, and how she has built her business over the years.

STUDY THE MARKET Where do you want to invest? Why? What are the economic drivers in that market? Is business limited to one industry? What are the population trends? Employment rates? Does it make financial sense? What are the rent rates? Occupancy rates? How are the school districts? Blanco’s company launches serious research and data collection to find the best established and new neighborhoods and opportunities for investors.

sufficient reserves to fund a couple of months vacancy or an unexpected expense like an air conditioning unit. Finding an ally on the ground will increase your knowledge. Locate that person through referrals, interview them, pick their brains, ask for recommendations and input. What is their favorite area? Why?

RENOVATING THE PROPERTY What if renovations need to be completed? Do you have a trustworthy team to renovate the property? How skilled are they? Having the work done quickly and effectively is the goal. TIme is money, as are vacancies. Property managers often provide rehab services, but do your due diligence as finding a trustworthy team is often elusive.

MANAGING THE PROPERTY Property management will be with you for as long as you own the home so getting that locked down will be a significant step on the journey to success. You local real estate investment association can provide you with connections and a network of other landlords to learn from and share information with. National Association of Residential Property Managers (NARPM) is a great resource for property management in any metropolitan statistical area (MSA) across the U.S.

MARKETING AND LEASING THE PROPERTY

KNOW THE PROPERTY

This is an ongoing process and a really good property manager will be able to stay on top of trends, analyze their rates monthly to understand what is happening in the market.

Who is going to assist with deciphering where and what houses to buy. Does it cash flow? Will rents cover expenses? Are there

Turnkey investing is not something to shy away from but the ‘Cavet Emptor’ or buyer beware certainly applies here!

Advice

How You Can Make Money Lori Greymont With Bay Area Real Estate? Lori Greymont is the CEO of Summit Assets Group, SJREI Association, & publisher of REI Voice Magazine.

he Bay Area has enjoyed quite a run-up in housing prices in the past five years, but if you think you’ve missed the boat: you’re wrong! There are still lots of opportunities to make high returns on local real estate – when you use a forced appreciation strategy. Passive Appreciation vs. Forced Appreciation Passive appreciation is when you rely on the usual market forces of supply and demand to drive up the price of your property organically. For example, if you purchased a property in 2011, it has probably appreciated on its own by 30-40% - without any effort on your part. Forced Appreciation on the other hand, is what happens when you actively add value to a property to create appreciation regardless of local market conditions. Here’s an example: - You buy a 1,000 sq. ft., two-bedroom, one-bath cottage in Silicon Valley - You add another 1,000 sq. ft. to turn it into a 2,000 sq. ft., fourbedroom, two bath property - significantly adding value to the property. - Here’s the kicker: Residential real estate in the Bay Area sells for about $600 per square foot, but costs about $250 per square foot to build! The difference of $350,000 in this example ($350/sq. ft. x 1,000 sq. ft.) is forced appreciation. Depending on how long it takes to get permits for the construction, you can actually create $350K of equity in 6-12 months.This project took nine months, so the ROI comes to 52% on an annualized basis.

More Forced Appreciation Strategies Add a Second Story to Increase Square Footage Typically, a City Planning Department will allow you to make additions up to 40% of the lot size. For example, if you have a 1,000 square foot house on a 5,000 square foot lot, you could add another 1,000 square feet and still be within the 40% guideline (2,000 square feet / 5,000 square feet). If the lot size doesn’t support expanding the first floor, you can build a second story on an existing house, or build an in-law unit above a detached garage. Both will add square footage - and equity - without increasing the footprint of the property. Upgrade the Existing Property As-is Large bedrooms can be subdivided into two smaller bedrooms. A downstairs closet can be converted to a half-bath. Interior walls can be knocked down to create a more modern, open floor plan. Attics can be converted to kids’ bedrooms or home offices. Buy the Worst House in the Best Neighborhood If you can find a $700,000 house in a million dollar neighborhood, you can add $100,000 in improvements and bring the property to the level of the neighborhood – and pocket the $200,000 in

equity you created. The possibilities to create value are endless. So, Why Doesn’t Everyone Do This? To execute on this strategy, you need lots of resources: • • • •

You need to be well-connected to find the good deals before other investors do; You need about $1M+ in working capital to make all-cash offers; You need a reliable team of architects, contractors, attorneys and others; You need to know how to get your plans approved by the City Planning Commission quickly;

In addition to all the resources and connections you’d need, rehab/development projects carry huge risk! Unless you’ve done many of these before, projects will almost certainly go over budget or take much longer than planned to complete. Pitfalls are everywhere: Flaky contractors, long approval processes and vendors who rip you off. Despite what you see on late-night “Flipping Houses” TV shows, tackling a development project on your own can make you lose your shirt. The Solution? Syndications! You can partner with an experienced rehabber who has the connections to find the deals, has an experienced team on the ground with a record of success in in value-add projects, and has the deep pockets and connections needed to make the deal happen. With as little as $50K, you can pool your capital with that of other investors and participate in strategies like this that are not usually available to the small investor. This enables you to ‘play a bigger game’ while minimizing your risk and your time commitment. So, if you think it’s too late to create wealth through Bay Area real estate, think again! There are lots of creative ways to use forced appreciation to achieve your financial goals. Note: If you’d like a free consultation to see if this strategy is right for you, call Dan Noble at 408-268.9777.

Anatomy of a Recent Deal Acquisition Cost

$1.2M

Purchased through bulk wholesaler

Improvements

$0.6M

Includes adding square footage and the upgrading of the original property. Improvements cost $300-600K, depending on the extent of the rehab.

All-in Cost

$1.8M

Selling Price

$2.5M

Forced Equity Appreciation

$0.7M

ROI

39.0%

Return of $700K / Investment of $1.8M

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Analysis

Real Estate Market Cycle Expert Bruce Norris Weighs in on 2016 By Bruce Norris The best way to look forward to 2016? Look back at 2015. Let’s take a step back to get caught up with past year so that we may get a glimpse of what the new year may have in store for the markets. First, let’s begin with:

Affordability In January 2015, these important charts were flashing “price boom” signals. Foreclosures steadily declined, returning to a small percentage of all properties sold. In the past, this ratio of foreclosures to sales enabled sellers to establish their asking price and prices steadily rose. In most areas, affordability was still high. For the state of California, we hovered around 30% affordability for most of 2015. Historically, when you are at 30% affordability and it is headed lower, you face a strong likelihood of aggressive price gains. In the past, I haven’t become concerned about a price peak until we get below 20% affordability. More specifically, when affordability reaches 17% then I’m paying attention. At 17% annualized affordability for California – which we reached in 1980, 1989, and 2005 – I would rather have been a seller than to hold, and think prices would continue to rise. At 30% affordability, with declining foreclosures, 2015 had the possibility of aggressive price movement upwards.

Employment With the improvement of employment usually comes a building boom of single-family homes. In 2015, the unemployment chart improved gradually, with California getting closer and closer to the national unemployment number. As unemployment decreases, this usually bodes well for California real estate as we begin to get migration back to our state.

Sales

sales volume and discouraging existing owners from moving up and new buyers from trying to get approved.

2. Lackluster Momentum:

Household formation is lagging due to the Great Recession and the millennial generation having a pattern of staying single longer, staying in school longer, and not working full time.

3. Where’s the Construction?: One of the key engines

of the California employment picture is still in depression mode; the building of single-family homes. Yes, it’s improved from the depths of 2009, but we still haven’t seen this low level of new homes anytime in the last five decades. There’s a lingering lack of confidence that the creation of building lots will produce a profit.

4. Health Care Costs: As a company owner, I am tasked with selecting the health insurance plan for the company. There’s been a consistent cutting of benefits and continual increases in out-of-pocket costs. Deductibles and potential outof-pocket expenses now represent a much higher percentage of what a family makes. I think this is a game changer and could be detrimental to the level of debt someone wanting to own a home can take on. In summary, I don’t see any huge changes on the horizon for 2016. I see the new year playing out very similarly to 2015. I don’t see anything that leads me to believe we’ll have a crash, nor will we experience a boom... Renowned for his ability to forecast long-term real estate market trends and timing, Bruce Norris is an active investor, hard money lender, and real estate educator. Bruce has been immersed in the business for 30 years, and has been involved in more than 2,000 real estate transactions as a buyer, seller, builder, and money partner.

The last category that looked surely to be a positive was overall sales of homes. With declining foreclosures, high affordability, and low unemployment, it should be off to the races with sales volume becoming very strong.

2015: A ‘Blah’ Year Here’s a good question: how many times have you had low unemployment, declining and low foreclosure rates, and high affordability not producing significant price increases? The answer is NEVER! Until 2015, that is. In 2015, unless you were in the rarified air of an area like San Francisco, prices movement was pretty tame. Looking at the charts at the end of 2015, I see numbers more positive than they were in January this year. We have lower unemployment, lower foreclosure rates, and still great affordability, historically. Had I not experienced the blah year of 2015, I would say 2106 would be an explosive year in California for both price gains and sales volume. However, blah 2015 did happen, and the charts mean something is different this time around. The charts that I usually rely on are painting an incomplete picture. So, what is different this time? Here are four things that are having a detrimental impact on California real estate despite the great set of charts.

1. Reticent Lending: Lending policies are still restricting 17

Analysis

EMERGING TRENDS FOR 2016

By Kathy Fettke Expect the Economy to Contract For the past 50 years, Baby Boomers drove the economy with their spending habits. However, the largest population within this generation turned 54 this year, with most facing an empty nest for the first time. They can now focus on their nest egg. As they aggressively plan for retirement, they will begin to save more and spend less. The economy will feel it, which is partly why GDP has hovered around 2%, retail sales have slowed, and job growth is down from last year.

Rents Will Continue to Rise Even though the economy will likely slow down in 2016, there will still be a great demand for housing. The Millennials became the largest population in the United States in 2015, outnumbering the Baby Boomers for the first time. The largest group within this generation are ages 21-26. Itâ&#x20AC;&#x2122;s anticipated that these young adults could create 20 million new households over the coming decade. However, the majority are fresh out of college and saddled with unprecedented student loan debt. They will most likely be renters during the next 7-10 years. The U.S. is growing by 4.5 million new residents every year.

Most are immigrants, who will also likely be renters until they have credit, down payments and job history. Surprisingly, there has been an increase in the number of Baby Boomers entering the rental pool, perhaps because they seek a simpler lifestyle. All this competition for rental property will drive rents up over the coming years - especially in areas attracting Millennials. As San Francisco, Los Angeles and New York City become less affordable, expect to see more migration to â&#x20AC;&#x153;hipsterâ&#x20AC;? cities like Seattle, Portland, Denver, Chicago, Dallas, Houston, Kansas City and Cleveland.

The Effect of Rising Interest Rates on Home Prices Affordability does not seem to be a major factor today. In fact, according to RealtyTrac, only 3% of 582 counties were considered unaffordable by their own historic standards. That could change if interest rates increased to 5%, at which point 26% of those counties would enter the unaffordability zone. However, mortgage rates are not likely to increase by much, if at all. The Fed did finally raise rates in December, but this move has little to do with mortgage rates. Consumer interest rates are more dependent on the health of the economy,

Analysis

which is reflected in the 10 year Treasury yield. Since the yield hasn’t increased much, neither have rates. And that won’t likely change until we see the GDP increase, along with job growth and inflation. If affordability is high in 97% of counties, why is the homeownership rate at historic lows? According to a recent study by the Urban Institute, lenders are giving more loans to borrowers with credit scores of 720 or higher, and about 75% less to those with credit scores under 660. Lenders want to be able to sell off their loans, but the secondary market is practically non-existent. Therefore, they want to offer only the very best loans that mortgage backed security investors would be happy to purchase. However, investors worldwide are looking for yield and appear to have their sights set on lending once again. Institutional funds are starting to lend more to real estate investors, perhaps because investors have higher credit scores, and value property purchases based on income vs comps. Expect to see more institutional money enter the lending world in 2016, with hopefully some of those funds allocated to homeowners.

in history (Stockton, Fresno and the Inland Empire), while the major cities of San Francisco, San Jose, Los Angeles have surpassed their 2006 peaks. San Francisco home prices increased from $670,000 in 2012 to $1.1 million in 2015 - a 67% increase in just 3 years. Prices rose 15% this past year alone! Much of this growth came from the billions of dollars of venture capital hoping to launch the next big Initial Public Offering (IPO). Unfortunately, IPOs were unimpressive in 2015 and investors are backing off. The last time venture capital pulled out of the Silicon Valley at this rate was right before the dot com bomb. According to John Burns Real Estate Consulting, rents decreased by 30% at that time. Chinese buyers have also driven up values in the San Francisco Bay Area and in Southern California. Now that China’s economy is slowing, expect a slowdown in foreign investment in U.S property. In summary, expect rents in the San Francisco Bay Area to slow down or decline in 2016, along with home prices. This could be a very good time to sell high-priced California property and exchange it for high-cash flow property in markets attracting Millennials.

California Real Estate in a Bubble? California is a big state with lots of little real estate markets all operating at different parts of their market cycle. Some areas are still considered more affordable than they’ve been

Kathy Fettke The Co-Founder and Co-CEO of Real Wealth Network

Analysis

an Francisco continues to be one of California’s economic powerhouses, and a leader in the state’s economic expansion. San Francisco’s nonfarm employment base grew by 4.7% to 48,000 from September 2014 to September 2015, matching the San Jose MSA (4.7%) in terms of job growth over this period. San Francisco and San Jose are tied as the fastest growing metropolitan areas in the state over the past year. Perhaps more importantly, San Francisco was responsible for 10.8% of all new jobs added in the state while only accounting for 6.6% of its nonfarm positions. Steady gains in payrolls in San Francisco over the past year has also helped drive the region’s unemployment rate down to 3.1%, a decline of 1.0 percentage points. At the same time, the local labor force grew considerably, expanding by 3.1% and outpacing growth in the state’s overall labor force (0.8%). In other words, not only is the unemployment rate falling, but it is falling for the right reasons, with household employment growing by 4.1% over the past year. Overall, employment growth in San Francisco was led by the Professional, Scientific, and Technical Services sector, which increased payrolls by 15.1%, to just over 183,000 positions. With over 24,000 jobs added in the past year the sector was responsible for over half of the total nonfarm jobs added in the region. This follows significant flows of venture capital money that have come into the area. San Francisco received over $8.5 billion dollars in venture capital investment during the first half of 2015, a 53.4% increase over the first half of 2014. More importantly, despite concerns about another tech bubble in Silicon Valley, firms receiving venture capital are older and more stable than those in previous cycles.

www.reivoice.com

San Francisco Regional Outlook by Dr. Christopher Thornberg

Other sectors that have contributed to San Francisco’s surge in job creation over the past year are Construction (6.3%), Information (6.2%), and Other Services (5.7%). Like the Professional, Scientific, and Technical Services sector, the Information sector includes high-tech industries, such as data processing and software publishing. These industries have seen considerable gains in recent years as many companies try to cash in on the ‘app’ market and other media related technology. Construction is another sector that is experiencing strong growth, with multifamily permitting being particularly strong. During the first seven months of 2015 there were 3,034 multi-family permits issued in the region, a 43.7% increase over the first seven months of 2014. Jobs gains over the past year have been broad based with only a handful of sectors in San Francisco cutting their payrolls. Employment in the Art and Entertainment sector (-1.4%), the Management sector (-0.4%) and the Finance and Insurance sector (-0.4%) were the only major private sectors to see payrolls decline in the past year. Beacon Economics is forecasting total nonfarm employment in San Francisco to expand by roughly 3% during the first half of 2016, slightly faster than last quarter’s forecast. Thereafter, expect nonfarm employment to have an average annual growth rate of 1% to .6% through the end of 2020, a slight increase over last quarter’s forecast. We anticipate the region’s high housing costs to limit growth in future years. With the strength in the labor market, San Francisco’s unemployment rate is forecast to hold steady, in the 3% to 3.5% range, through the end of 2020.

San Francisco outlook (cont. from pg. 16)

Analysis

Consumer Spending Outlook Strong Although residents of San Francisco continue to shop at local establishments and make large purchases, consumer spending has slowed in recent months. San Francisco taxable sales reached $8.7 billion in the second quarter of 2015 on a seasonally adjusted basis, a 1.8% decrease from the same quarter one year prior. In comparison, over the same period, taxable sales grew by 3.8% in the state overall. According to data from the HdL Companies, consumer spending grew across the vast majority of categories over the past year in San Francisco. Leading the way was the Restaurants and Hotels category, which saw taxable receipts increase by 9.3% from the second quarter of 2014 to the second quarter of 2015. This is not surprising given the surge in tourism in the region over the past year. During the first seven months of 2015, the average daily rate for a hotel room in San Francisco increased 8.1% compared to the first seven months of 2014. These rising rooms rates have been met with rising hotel occupancy rates, which reached 86.2% during the first seven months of 2015. These two factors have led to a 9% increase in revenue per available room in the area. Moreover, more local residents are spending money on entertainment activities and dining at local restaurants. Not far behind Restaurants and Hotels, is the Autos and Transportation category. From the second quarter of 2014 to the second quarter of 2015 taxable receipts in Autos and Transportation grew by 7.9%. With rising employment levels and wage growth in the region, local residents are comfortable making large purchases. Similarly, taxable receipts in the General Consumer Goods category also saw steady gains over the year, increasing by 6.3% from the second quarter of 2014 to the second quarter of 2015. Construction continued to drive gains in taxable sales as well. Taxable receipts in the Building and Construction category grew by 5.7% over the past year. This follows gains in construction payrolls and in multi-family construction activity over the past year. The only major category to experience a decline in taxable receipts over the past year was Fuel and Service Stations. However, the rapid drop in gas prices at the end of 2014 was the driving force behind this decline, not a reduction in consumption. Helping to fuel gains in taxable sales in San Francisco has been increasing incomes and wages among local residents. Despite this, the high cost of housing in the region could impede growth in consumer spending in coming years. As more and more residents spend a larger portion of their income on housing, less money is left to purchase goods and services. Beacon Economics is forecasting taxable sales in San Francisco to surpass the $8.9 billion mark by the end of 2016. After that, expect a longer-term growth trend of between 3% and 3.5% per year from 2016 through 2020, reaching the $10 billion mark near the end of 2020.

Features

Housing Market Has Recovered Welcome to the New Normal! Leslie Appleton Young’s Market Predictions for 2016 By Geraldine Barry

eslie Appleton-Young is Vice President and Chief Economist for the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.), a statewide trade organization with more than 150,000 members dedicated to the advancement of professionalism in real estate. REI Voice is proud to extrapolate from her 2016 Economic and Market Forecast. The economy has been growing for 68 months and 2016 looks like it will be another banner year for the real estate markets: welcome to the new normal. According to Leslie AppletonYoung, the low mortgage rates we have been enjoying will continue for now, as job and income growth remain positive in the background. Despite the positive outlook, this is still a difficult market with few easy transactions for anyone to navigate in terms of financing, and lack of inventory. The supply of housing in California will be below the long-term averages with the share of first-time buyers continuing to decline. Affordability is, and will, continue to be an issue as prices rise.

Trade-up Buyers Facing Challenges There are several key challenges that the markets face right now. Demographically, the move-up buyer pool is smaller and there is a decline in the number of trade-up (or move-up) buyers due to population loss and a drop in homeownership rates. Trade-up buyers face numerous barriers to purchasing their next home. Right now, these would-be buyers have low interest rates on their current mortgages, which makes staying put enticing. Low existing property taxes coupled with a big jump when one purchases a new house is another obstacle for the market’s trade-up buyers. When considering listing their properties, buyers are faced with this dilemma, “Why sell when there is nowhere to go I can afford?” Additionally, there are concerns about not being able to qualify for a new mortgage today.

Investors are also Facing Challenges The foreclosure pipeline has dried up; investors are renting

instead of flipping houses. New construction is recovering, but remains low. Overall, investment properties are on the decline as the numbers no longer make sense. The share of investment properties dropped to the lowest level since 2009 - from a peak of 19% in 2013 to 13.1% in 2015. Cash, however, is still king. While the share of cash buyers fell to its lowest level since 2009, it’s still significant at 21%. In 2015, a total of almost one-fourth of buyers paid cash for properties.

Who is Buying? Sales are up for 2015 and prices will continue to increase steadily this year and next. CA housing prices increased by 13.6% in 2015, AppletonYoung predicts 9.6% in 2016. First time buyers are scarce. This can impact the cycle long-term as first time buyers become move-up buyers and the cycle continues. 29.5% of buyers in 2015 were first-timer buyers, down from the long term average of 38%. The share of international buyers is at its lowest rate in 18 years. 23% of CAR realtors worked with an international buyers in the past 12 months, 43% of which came from China. The share of long term buyers remains below the long run average. Currently, home ownership rates are at 54.9% in CA versus 64.8% nationwide. Houses are held for an average of 10 years before selling with net cash to seller the highest since 2007, which typically is $120,000.

Housing Affordability Crisis Brewing Housing affordability peaked in Q1 2012; factors influencing this peak were pricing and competition from investors and cash buyers. Market competition began to cool down after peaking in 2013. CA prices are more volatile and much higher than the rest of the nation. The difference between California’s prices and national home prices increased from $10,000 in 1970 to $255,000 today. The income required to buy a median priced house in CA major metros are less affordable than the other average U.S. metros.

Features

Income Required to Qualify for a Median Home in 3 CA Cities: San Francisco $267,783 Sacramento $57,581 Los Angeles $88,082

Possible Wild Cards on the Horizon Looking into 2016, there are some wild cards in the mix. Stock volatility, slower growth in China, further collapse in energy/ commodity prices, geopolitical tensions, terrorism, water shortages, and the 2016 Presidential Election are all factors that could influence the market next year.

Opportunities Millennials, 80 million in strength and potential, could make waves as they transition from renters to first time buyers. Most Millennials, however, are uncertain/doubtful that they can obtain a mortgage. This is a large potential market worth exploring. Further, the first time buyers who bought with tax credit back in 2009 could be ready to trade up. For industry professionals, understanding the differences in needs between Millennial first time buyers, and Millennial trade-up buyers will be key. The Baby Boomers are poised to downsize. Industry professionals will want to have an understanding of this generationâ&#x20AC;&#x2122;s priorities particularly investment and retirement. If we canâ&#x20AC;&#x2122;t keep them in California, industry professionals can help them find a place out of state by networking with other out-of-state realtors.

Market Opportunities Lower interest rates will be here a little longer, creating more opportunities for homeownership. Investor-buyers who purchased bargain properties a few years ago are now ready to sell as home prices start to level off. Minorities have grown in homebuyer share over time; this surge in the number of minority households will play a big role in the increase in housing demand over the next 10 years.

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Features

REAL EXPERIENCE What Powers Real Wealth Network’s Kathy Fettke By Geraldine Barry

athy Fettke is more than just an ace investor. She’s a visionary who sets the bar high for the industry. Fettke believes experience is the best teacher - and if you don’t have it, simply work with those who do. It’s time for a change in rhetoric when it comes to accountability for investors - and she works hard to set standards for both her own company and the industry. Real estate investing is populated with too many people who set up shop as “turnkey rental property providers” with little to no experience, staff or systems in place. Though Fettke may be one of the first to call for accountability, she’s no stranger to being a pioneer in the industry. Recently featured as one of the only woman on a panel of hedge fund investors at the IMN Conference in Phoenix, Fettke stood out among her male peers with practical, insightful comments from someone who has spent time in the trenches. “The turn-key industry is rife with risk for investors. If we don’t self-regulate to ensure the quality and consistency of turn-key providers, the Securities and Exchange Commission may step in and do it for us.” Fettke said recently. “This is exactly how things played out in the 24

mortgage and financial services sectors, and they have been seriously impacted with over-regulation.” Fettke’s goal in establishing protocols is to get ahead of the curve, create standards, and hold sellers accountable. If enough buyers complain about turn-key property provider products and services, it could draw the ire of government (regulation) on the industry. Her company, Real Wealth Network, has spent substantial time and resources developing the standards for their company, and hopefully the industry. She also believes that if buyers are better educated, they will make fewer mistakes. That’s why her company’s 2020 goal is to have 50,000 new investors enrolled in her Real Wealth Investor Academy, where they can access cutting-edge real estate investor tips in small, easy-to-learn video modules. To reach this goal, her team decided unanimously to donate 100% of the $10 monthly fee to the Real Wealth Foundation that gives to 6 charities and to Real Wealth members who are facing challenges.

Features See chart for details. Real Turn-key Property Model. REAL means that the rental property has been

Renovated (To REAL Turn-key Property Standards)

Examined (Independent Inspections)

Appraised (Below Market Value)

Licensed (Contractors, Inspectors, Agents, Property Managers)

An active real estate investor for almost 20 years, Kathy Fettke has survived and thrived throughout the ups and downs of many market cycles: she has seen firsthand the havoc that cycles can wreak upon unsuspecting investors who make erroneous assumptions. Studying cycles has become second nature to Fettke, who is about to release a book on this oftentimes misunderstood aspect of real estate investing. Why do people get blindsided by cycles when there is a long history demonstrating that they happen consistently? “The signs are there, but euphoria takes over, and logic flies out the window,” Fettke explains. This is what keeps Fettke focused, vigilant, and hungry for knowledge to protect her community. Fettke’s background is multi-faceted, reflecting the sharp business acumen that serves her well as an investor. She’s a licensed real estate agent, author, former mortgage broker, and broadcaster who worked in the newsrooms of CNN, Fox and ABC 7. Each of these roles have helped propel her to where she is today: sitting at the head of a multi-million dollar operation that specializes in helping people build real estate portfolios by acquiring single family homes, or participating in syndications that she creatively sources

and puts together. With a passion for research, Kathy enjoys assimilating information and sharing the insights gleamed on real estate and economics with her community members. Real Wealth Network (RWN), the company Fettke cofounded, is thriving today; there have been many obstacles to overcome, and the road has been rocky at times, but important lessons have been assimilated and shared so others could capitalize vicariously on the information, or not... Fettke defines real wealth as having “both the money and the freedom to live life on your own terms”. That is a compelling vision. Recently, Kathy Fettke and her husband, Rich, the cofounder of RWN, decided to make a unique shift in how they lead the company. For years, Rich has served as the broker and Chief Operations Officer of the company. As the Fettke’s saw an expanded vision and growth for the company, they realized how complementary their skills sets are and decided to both lead the company as Co-CEOs. This allows Kathy to focus more on what she enjoys: the Real Wealth Show podcast, writing, media appearances, educating Real Wealth Network members, creating those relationships that are critical to successful outcomes and finding great real estate deals. Rich’s role with RWN reflects the company’s emphasis on purpose, mission and goals. His background is in coaching, system implementation, and results: he utilizes those strengths to drive initiatives and lay the foundation for a cohesive and forward-thinking team. Annual goals are followed up every three months with staff retreats off-site, and the objectives for the following three months are set in place. Rich recommends any new ideas are shelved until those off-site retreats, so the objectives at hand can be the priority. Goals are broken down for each player, and weekly meetings serve as accountability sessions that review results and address issues in need of team input. The staff have enjoyed the hands-on coaching that spotlights not only business goals, but on personal

Both the money and the freedom to live life on your own terms... Kathy Fettke

Features

ones also. A staff member recently gave up smoking with Rich’s help; another made fitness a priority. For Real Wealth Network, a healthy team is a happy team. Along with focusing on buy & hold investing, Fettke offers syndication in land development, flipping, note investing and multi-family. Syndications are regulated by the SEC and require full transparency. Fettke shares, “Most of our members want to own rental property for the tax benefits, asset protection, leverage and cash flow. Our syndications (group investments) are totally passive for the busy investor, and can be very high yielding. The right project, with the right team, invested at the right time in the real estate cycle can be a huge winner financially.” Not one to sit back on their laurels, the Fettke’s recently acquired a house for their own portfolio in Malibu, CA, where the foundation needed to be replaced, and a major rehab completed on the property. The average person would not want to touch such a property. The Fettke’s, however, were delighted with the bargain price, dilapidated condition, and great location. The day after closing, crews were on site to start the renovation. They love doing what they recommend to

the RWN community - take calculated risks, complete the due diligence process, and secure your future one property at a time!

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Silicon Valley’s Hardworking: High-Performing Super Bowl City: Santa Clara By Geraldine Barry

an Francisco may get more attention than Silicon Valley’s cities - but don’t be fooled by our modesty. One local city, Santa Clara, has undergone a transformation under the leadership of its mayor - and the results are shining through. The epitome of a Silicon Valley community, Santa Clara has been hard at work creating business and maximizing opportunity. A quick look at what this city’s been up to underscores the incredible potential for all cities in the Bay Area while a chat with the city’s mayor showcases how some old-fashioned hometown commitment can make big waves for future generations to enjoy.

Hello Santa Clara... Santa Clara, a small city nestled in between the cities of San Jose and Sunnyvale, has attained bragging rights for its strategic negotiation and procurement of the San Francisco 49’er Stadium, now Levi Stadium, from the bigger, wealthier,

world renowned destination city of San Francisco. A frank conversation with this city’s Mayor, Jamie Matthews, reveals continued growth plans in the works (along with his thoughts on what constitutes a successful life). A consummate family man, loyal friend, stronghold in the community, excellent collaborator and negotiator… Matthews was born and raised in Santa Clara, attended school there, married his high school sweetheart “Princess Jules” (as he lovingly calls her), and still resides happily in Santa Clara today. He has fond memories of growing up in the city; he recalls his father saying, ”I make life possible, but your mom makes life beautiful.” His father’s legacy continues today: family is of paramount importance in Matthews’s life, and giving back. He has four children, all of whom play an instrument and love to sing: the Matthews home is a happy one filled with music. His parents, who came of age during the second world war, brought up their three sons to participate

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‘City Place’ By the Numbers

239 acres of land 5.7 M sq. of office space 1.1 M sq of retail space 700 hotel rooms 190,000 sq entertainment space 250,000 sq of food and beverage space 29,230 jobs created when completed in community life, love family, and be grateful for what they had. Matthews continues that legacy today. “I have always felt that I was born to serve, and that has been a driving force in my life…While politics can be difficult, and it’s hard to remain optimistic during the tough times, one has to hang in there until the job is done: therein lies the reward”.

How did Santa Clara secure the 50th Super Bowl? Collaboration. It was a regional effort that included San Francisco which held the financial clout, and the wherewithal, to be able to raise the funds to host a Super Bowl. Their full participation and joint efforts ensures this event benefits the whole region. The 50th Super Bowl will put the world spotlight on the Bay Area. When San Francisco Mayor Lee said, “let’s do this together”, Levi Stadium was under construction at the time the regional bid was submitted to host the Super Bowl. One of the requirements was that the Stadium be operational for one year prior to the game, which escalated construction, and pushed forward the date for completion (all of which happened on time and on budget). Staying on schedule was no small accomplishment when the huge scope of this project is considered.

community and attendees is first and foremost in this leader’s mind. Super Bowl 50 is no small endeavor: Homeland Security has been involved and participating at a high level since preparations began two years ago. “There are evil forces in the world looking to cause pain to the psyche along with physical damage; people with a blatant disregard for not only their own lives but the lives of others. This is the new normal that we are dealing with,” states Matthews. An event of this magnitude has not been seen in the Bay Area since the last Stanford-based Super Bowl in 1985. As Matthews muses, “the role of a leader, and there are many in this project, is to provide the vision, and have the humility to work with the team to ensure adjustments are made along the way as necessary to facilitate goal achievement.”

Changing the Face of Santa Clara with Repurposed Land What is happening today in Santa Clara? Currently in the works is a tremendous project that will change the face of Santa Clara (and the lives of its residents). Formerly a city landfill, and currently a municipal golf course located directly across from the magnificent Levi’s Stadium, this area is being developed into a live, work, play space called ‘City Place’. The 230-acre site is scheduled for development into a 9 million square foot project - including retail, office, restaurant, hotel, entertainment, and residential space. To put the scope of this project into perspective, this is larger in size than Union Square in San Francisco; alternately, Silicon Valley based Santana Row is 40 acres in size. City Place buildings will be of varying heights, include destination anchor stores, a jazz district, an

Super Bowl 50 In his second term as Mayor, Matthews enjoys all the challenges that brings - and with Super Bowl 50 on the horizon there is still much work to be done. The recent string of terrorist attacks across the world is driving security threats to new heights as the big event approaches. Protecting the

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art district, and 5.7 million square feet of office space, 1.1 million square feet of retail, 700 hotel rooms, a Joe Montana sports bar and entertainment center, 250,000 square feet of concessions, 190k square feet of entertainment, and 1,360 residential units. The project, to be completed over a 15-20 year period, is scheduled to break ground just after the Super Bowl in February of 2016. In order to develop this site, that was previously a landfill, $800 million of foundation is required to set the stage.

The Related Companies - a real estate development firm - are developing the project. They boast an extensive portfolio and strong track record both in the United States and globally: they are renowned for market-dominant mixed use destination real estate property. They will oversee Santa Clara’s project which will be developed in five phases over the next 15-20 years. RTKL is the global architectural firm, working with the Related Companies; RTKL’s award-winning portfolio spans seven continents.

Once completed, this project will bring 29,230 jobs to the area while serving to create a vibrant downtown with a pedestrianfocused entertainment destination. This development is set to accommodate the needs of the area’s growing high tech residents. Population trends estimate that Santa Clara population will eclipse that of neighboring Sunnyvale by 2040. The Millennial generation (which consists of over 80 million people) wants to live close to where they work, enjoy a suburban lifestyle and have the freedom to walk to shopping, entertainment and amenities. City Place is the wave of the future in terms of what people want - providing a seamless ability to leave one’s residence or office and be downtown to enjoy all the amenities that provides.

The concept was developed based on projects previously built over landfills in areas such as New York’s Hudson Yard; Singapore has also built effectively over landfills. Santa Clara entered into an exclusive negotiating agreement, starting with a confidentiality agreement – they worked with Joe Montana, who had secured the rights before this idea was conceived, to incorporate his development into theirs. Given how complicated it was, the deal was executed and finalized in record time. A trademark of Santa Clara is emerging – getting the job done quickly and effectively. The future is bright in this tech-centric city, and we look forward to sharing how things unfold in this massive undertaking in future editions.

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are the biggest obstacles facing quality of life and livability in the Bay Area and Southern California. The culture, weather and opportunities will continue to drive demand for housing in coastal markets. Extreme land valuations, construction costs and challenging entitlement processes will continue to that means a very healthy institutional multifamily market, but continued strain on higher market rental rates for tenants.” -- Andrew Baker, Senior Vice President, Anton DevCo

“For Silicon Valley, we are tracking job growth on a month by month basis due to the sheer volume being produced in the South Bay Area. Industrial vacancies are below 3% here, so we are seeing new speculative warehouse product being built. The supply of housing stock is still low compared to the demand - even with a bevy of apartments coming online in 2016, it is only making a dent, providing little relief to one of the most expensive housing markets in the country. We’re seeing a large pipeline of extended stay and select service hotels being developed in 2016 and mixed-use seems to be the catch all phrase in city planning departments, as cities work to push their general plans into higher density and transit oriented focuses. The larger tech tenants continue to assemble dozens of acres of land for campus expansions, and in the urban cores, like in downtown San Jose, be on the look-out for of millennials that look to ditch the car rather than commuting to the suburbs.” --Joshua Burroughs, Senior Development Manager, Barry Swenson Builders

“2015 has been a strong, high-growth year for us. Our revenues have increased by more than 40%, and it looks like we’ll experience the same type of growth in 2016. With rents moving to record or near-record levels, we’re seeing financing become available for just about every type of project on the private side. In the public sector, bond financing is becoming easier with the return of strong home values, so many school and college districts are able to sell bonds and invest in new and renovated facilities. At Blach Construction, we have a solid backlog of work for the next two, almost three years, which is highly desirable for a general contractor. Our sub-contractors are busy and more profitable too, but not overwhelmed, which is positive. We realize some contractors are struggling to find talented labor, but because we recruited heavily from universities through the last recession, we have the strongest bench we’ve ever had, and are able to tackle our growing volume without added outside hiring. The substantial investments we made in our people, innovation, and systems the past 10 years, including the Great Recession, are paying off handsomely. Our ability to design structures virtually in 3-D and then pre-fabricate them in our own shop has enabled us to generate significant time and cost savings for our clients.” -- Mike Blach, President & CEO, Blach Construction Company 31

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analysis

Whither

by Christopher Thornberg REI Columnist

.S. housing market data has been sending mixed messages over the past year. On the negative side, existing home sales had been growing steadily since the start of 2015, but slumped sharply in August. Data from the Flow of Funds shows outstanding mortgage debt has yet to rise in any meaningful way and, worse, median prices as reported by the National Association of Realtors appear to have fallen slightly in the last 4 months. Single-family building permits have been rising slowly but remain far below normal levels, even as home ownership rates (as measured by the U.S. Census) unexpectedly fell at the start of the year. Concerns surrounding Federal Reserve policy and its impact on interest rates is also worrying investors. The good news is that once context is provided, most of these issues look far more benign than they do at face value. Add it up and it looks like the nation’s housing market will continue on its modest recovery path for at least the next couple of years. Let’s start with the drop in ownership rates at the beginning of 2015, from 64.5% last year to 63.5% – the sharpest decrease since the peak of the housing crisis, according to the U.S. Census Housing Vacancy Survey (HVS). This appears to be an artifact rather than reality. This survey has been long criticized for its small sample and difficulty in finding appropriate benchmarks to create population estimates—problems that have led to large-scale historical revisions in the past. The Census again modified their statistical techniques at the start of 2015, but this time they didn’t bother to redo past estimates. As such, the numbers for 2014 and 2015 are not actually comparable. Recent numbers from another data source—the American Community Survey—suggest that the actual ownership rate in the U.S. last year was 63.1%, considerably lower than the initial estimate from the HVS. Importantly, this suggests that the 2015 ‘correct’ numbers from the HVS indicate that homeownership is again on the rise—albeit at a slow pace and from a historically low level. But a rise is a rise. The median price of an existing single-family home is up 4.7% over last year to $217,000, but seemingly peaked a few months ago, and has since dropped to levels below where they were in January. This is out of sync with other price measures—such as the Case-Shiller and Core Logic HPI Indexes, which have shown home price growth accelerating in recent months. The explanation is that the median price does not control for the sales mix. When the median price is flat compared to a quality-controlled HPI, it implies a shift to sales among lower end units. This suggests that the recovery is moving out of the high end of the market – a welcome broadening that indicates things are getting better rather than worse. And this is backed up by data from other sources. While it is clear that getting a mortgage is still relatively difficult, there are plenty of

signs of a slow thaw in the market. The New York Federal Reserve has been reporting data on new mortgage originations in recent years. In the second quarter of 2015 originations hit $465 billion, the best since the refinance boom of 2013. As for the flat reading in terms of outstanding mortgage debt, this is largely an accounting issue as banks continue to slowly write off mortgage debt on homes that may have gone into foreclosure years ago. As for who is lending, this too is beginning to expand. Fannie Mae and Freddie Mac are doing brisk work as can be seen in their profits. But banks are also starting to get back into the lending game. Small banks have increased their holding of home mortgages by 7% over the last year, and credit unions have expanded theirs by almost 10%. Only the large banks are holding back. It remains difficult for those with low credit scores to get new mortgages— but better employment numbers and rising incomes have allowed many people who were not there just a few years ago to begin accessing mortgage lending markets. Prices should also continue to rise. And although prices have just climbed back to the peak they were at prior to the meltdown, once we control for prices and interest rates it becomes clear that affordability is still better now than it has been at any time since 1996. With mortgage rates remaining in the 4% to 4.5% range, the market would have to experience up to a 15% to 20% increase in prices over current levels just to get back to historically normal levels of home affordability. There is no bubble in the market – at least not yet. This could change, however, if interest rates start to rise sharply. The markets have been expecting the Federal Reserve to begin the tightening process for the last few months. It was a surprise to many when the Fed’s September meeting came and went without an increase. An increase is still expected by the end of the year—a view echoed by some on the Fed’s voting committee. But it’s a mistake to think that Fed policy will have much of an impact on mortgage rates. Mortgage rates are typically tied to the 10-Year treasury. Beacon Economics’ analysis of the relationship between the Federal Funds Rate (FFR) and the 10-year note is quite weak—about a 1 in 10 relationship. In other words, if the Fed pushes up the FFR by a full percentage point then the 10-year would only go up by one-tenth of a point. And remember that the Fed does not have a lot of room to maneuver. If they raise the FFR by 200 PBS they would likely end up inverting the yield curve and causing massive market disruptions. Even if they begin this fall the increases will be small and far apart. Beacon Economics expects mortgage rates to remain under 5% for the foreseeable future. Add it all up and it is clear that the U.S. housing market expansion still has legs. Expect single family permits to continue their slow climb—up to 800,000 new units next year after a total this year of slightly over 700,000. Sales activity will also steadily increase as more households get back into the buying game.

Christopher Thornberg, PhD, is an economist and Founding Partner of Beacon Economics LLC. Learn more at www.BeaconEcon.com.

www.reivoice.com

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Hannah Ash

AVOID COSTLY RENOVATIONS THE BIG FOUR Alliance Wealth Builders Shares the Four Biggest (time-consuming and costly) Renovations

hose heart hasn’t sunk at the prospect of doing a home renovation? For those of us who venture into property investment, the renovation process is a huge, if not the biggest, undertaking. Investors face a litany of questions right off the bat from “does the roofing need to be replaced” to “is the current bathroom adequate or would renovations increase the value?” Inspections certainly help clarify these questions, but having someone to oversee the renovations is another challenge. If you’re thinking about working with a turnkey provider, you’ll find that not all turnkey properties come as ‘turnkey’ as advertised. Some providers, however, such as Alliance Wealth Builders (AWB), are willing to help investors manage the renovation issues. A good turnkey provider can make or break the investment from a financial perspective. AWB, for example, operates from the philosophy that investors are busy and don’t have the time, or inclination, to complete renovations on every house they purchase...after all, the ultimate goal for the investor is to build a portfolio, not renovate houses. When investors put too much time in the renovation process, they end up losing time and oftentimes money. AWB knows a thing or two about renovations: they professionally rehab every house they sell. They handle the smaller details, of course, but they also handle the big ones. The big four renovation areas, as AWB refers to them, may not be the most glamourous, but if you ignore them, you could end up with an investment that rapidly impacts

your bottom line. Here’s what the expert, AWB, says are the big four renovations investors need to always keep in mind when making investment decisions:

1. Plumbing: Leaky Pipes are a Real Drain Older homes and older pipes can create real trouble for investors. Before you rent the property, and preferably before you close on the house, you need to know that all pipes, drains, toilets and showers are in good working order. The goal here is to avoid surprises. Plan in advance to save yourself, and your tenants, the hassle of an annoying, late-night call to report a burst pipe. According to CEO Merv Plank, “Alliance Wealth Builders ensures that all plumbing meets the highest industry standards. We don’t want investors dealing with the headaches after the fact; our goal is to be proactive - it serves us all well, client, tenant, property owner and property manager.”

2. Wiring: Wire Yourself for Success Good wiring is critical to both modern convenience and safety. When you purchase older homes, especially those that have been left uninhabited for some time, mice can chew through the wiring, never mind that it deteriorates over time anyway. For a novice investor

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attempting to D.I.Y their renovations, chewed wiring can be all too easy (and dangerous) to miss. Alliance ensures all of electrical wiring meets state, federal and local codes. Wiring is professionally inspected and if found to be faulty, immediately replaced. Better to be safe than sorry.

3. Roofing: It’s Not Over Your Head If you have roof problems, you have big problems. Leaky roofs wreak havoc on flooring and walls. Improperly insulated or worn roofing can increase heating and cooling bills. Further, few things lessen the curb appeal of a home more than a faded, neglected roof. A good roof is essential for a successful rental property. AWB makes sure the roofing of their properties exceeds industry standards. If the roof isn’t in excellent condition, they replace it with one that is.

4. HVAC: Don’t Exhaust Your Resources Proper heating, ventilation and air-conditioning (HVAC) maintenance is crucial to ensure good air-quality and comfort. Toxic substances and pollutants such as pollen, dust, bacteria and carbon dioxide need to kept out of the air with a properly working HVAC unit. Alliance Wealth

Builders inspects, repairs or replaces the HVAC units in each of the rental properties it offers for sale - so their investors can rest assured that their tenants are living in energy-efficient properties with proper air quality and comfort. It’s easy to get caught up in the details of a renovation when considering which property to purchase. Before you focus on the details, however, take a step back and consider the above. Do you need a new roof? How is the plumbing? What about the wiring? Before you embark on a do-it-yourself renovation, or attempt to source contractors on your own, think twice. Do you have the time, energy and skill to invest in ensuring everything is done right?

Alliance Wealth Builders is dedicated to providing investors with the high quality renovations. Their work is marked by quality and efficiency: renovations usually begin the day after a property is purchased. AWB hires the best professional contractors and closely monitors the work to ensure guidelines and budget are met.

WHY INVEST IN ALABAMA? Now is a great time to add Alabama real estate to your investment portfolio. Alabama home prices are currently at historically low levels.

Alliance Wealth Builders of Birmingham specializes in helping real estate investors purchase high quality, undervalued, real estate investments and turn-key, cash flow, real estate in the greater Birmingham area, as well as other profitable markets within the State of Alabama; Huntsville, Montgomery/ Prattville.

1. Property Acquisitions 5. Property Management

The AWB Turn Key Process

4. Property Sales

2. Property Renovation

3. Tenant Placement

Our goal at Alliance Wealth Builders, Inc is to offer our valued clients a simple and hassle free experience when purchasing one or more of our Turn-Key income properties. By purchasing one of our high-quality, turn-key real estate income properties, youâ&#x20AC;&#x2122;ll benefit from our teams handling of every aspect of the investment process; starting with property acquisition and property renovation, and continuing throughout the process of tenant placement and ongoing property management.

(205) 552-7009

www.alliancewealthbuilders.com 100 Century Park S., Suite 105 Birmingham, AL 35226

Basics

Dan Noble Plan Your Turnkey Investing Like You’d Plan a Vacation 2. Learn Vicariously Through Others If you were planning a trip to Italy, you’d probably have an idea of the best way to get there. You’d learn from others how they did it. Did they take a plane? Did they take a boat? Did they go direct or with a regional or national carrier? They are many way to accomplish a specific goal. Turnkey investing is similar. Network and find out how other people do it successfully, pick their brains, and utilize their approach. There is no need to reinvent the wheel. Ask questions and pay attention to the answers you get. You have lots of different options when it comes to creating your wealth, but some of these options will be far more efficient and effective than others.

3. If It Sounds Too Good to be True...

Strategy. Whether you’re just beginning your career or you’re looking forward to retirement soon, a good strategy gets you from point a to point b. Not a general strategy either - though you do need a clear vision of what you want to achieve and the motivation to keep going for it. To actually get from point a to point b, you need to figure out the actual logistics of doing so. For example, if you wanted to travel to Italy from CA, it’s not enough to just think about Tuscany to get there. No - you need to figure out the details, the car, the plane, the boat and the train. You must be specific to arrive at your destination. In real estate investment, you need a specific strategy. It’s not enough to simply want to get the most ROI from your dollars. You need a clearly defined path - and you want to choose one that suits your needs. Look at turnkey investing, for example. Which turnkey provider will you invest with? To decide, think about it the way you would think about mapping out your trip. How would you decide which route to carry you to that destination? Let’s take a look.

1. Choose the Safest Path The world is full of options. Sure, there could be a million ways to get to Italy - but wouldn’t you want to take the one you know will get you there in one piece? Forgot the shaky footbridges. With turnkey investing, do your homework. Choose a provider with a reputation for delivering results to their investors. Protect yourself, and your assets, by choosing a path that comes with the least amount of risk. Preservation and growth of capital is the ultimate goal.

If something sounds too good to be true, well... it probably is. For example, if everyone tells you it takes X amount of money to get to Italy but one person tells you it only takes Y amount of money to get there if you buy a ticket with a company you’ve never heard of, you would probably think twice, wouldn’t you? Find out what you really need by sourcing your network. Call turnkey providers and industry associates: ask the hard questions. Get an idea of what resources you will need to accomplish your goals. Beware of those who tell you it’s possible to do what you want with less than what the majority recommends.

4. Be Willing to Fly… To get to Italy, you probably are going to need to travel by air. For some of us, the dizzying heights of air travel provokes fear. That fear, however, is groundless. Air travel is safer than travelling by car statistically speaking. Investing can be dizzying. However, when you have done your homework in planning your strategy, you can enjoy the journey. With a solid strategy in place, you can make the best possible choices for your money and future. Though it can come off as murky and opaque, the world of investing can be as transparent as choosing the right transportation - so go ahead and take full advantage of the knowledge and resources at your disposal. The work you put into formulating the right strategy will be worth it when you arrive at your financial destination! Dan Noble serves as Director of Investor Relations for Summit Assets Group. Contact Dan directly to discuss Summit’s turnkey investment opportunities at 408.268.9777.

Basics

Don’t Get Left Out on LinkedIn 3 Commonly Under-Utilized Features LinkedIn posts contribute to higher SEO rankings.

2. Repurpose Rich Content LinkedIn is much more than simply a virtual resume. Ensure that you are adding your own credible content in the many approved formats. Add PDF fliers, website links, videos and PowerPoint presentations to the ‘Summary’ and ‘Experience’ sections of your profile. Bonus Feature: Uploading a PowerPoint presentation creates an instant SlideShare link – think increased credibility and visibility. Use photos as powerful, visual testimonials. Pictures taken with clients or business partners can be added to various sections of your profile, including the cover image header.

Did you know that 2 new members join LinkedIn every second? With 400 million users across 200 countries, plus conversion rates that vastly outrank Facebook and Twitter, it’s guaranteed that your past, present and future business prospects are on LinkedIn. No longer a place for simply job seeking, this platform accelerates lead generation, original content publication and brand awareness. The question is no longer ‘why’ one should use LinkedIn, but ‘how’ to do so effectively. Here are 3 commonly under-utilized features that can advance your professional presence today.

1.Take Advantage of ‘Searchability’ When you enter your name in a search engine, have you noticed that your LinkedIn public profile appears on the first page, perhaps in the first 3-5 listings? It’s not always about who you are looking for - but who is looking for you. The following steps can maximize your digital discovery. Customize your LinkedIn public profile URL settings, and manage the view of what content appears to everyone vs. your connections. Maximize your skills to 50. Profile pages with skills are viewed 13x more than those without. You will appear more frequently in searches, as well as receive more endorsement opportunities within your network. Post regular updates. Google algorithms pull content based on not just relevancy, but timeliness. Recent

Turn that powerful profile into a PDF. If you have created a complete, meaningful and substantial profile, consider exporting it as a PDF for an instant resume.

3. Consider the Power of Company Pages While only 57% of businesses actually use this feature, company pages DO exist. Updates here can be shared on your individual page as well. Create your company page under the ‘Interests’ tab on the top black bar of your account. Follow the company page of your competition. Keep your friends close…and your competition closer. While a personal page showcases you as an individual, use your company page to display your brand’s logo, mission, company size, success stories and values. Hopefully the tips above have increased your perspective of the capacity and reach that LinkedIn delivers. Forbes recently reported that 94% of B2B marketers are embracing this social media avenue as part of their overall marketing strategy. Rather than getting left out on LinkedIn, consider leading by example; incorporate this platform with purpose for a powerful, amplified digital footprint. Kimberly L. Yearry Founder/Copywriter Crazy Cat Content Marketing kim@crazycatcontent.com

Basics

Invest the ‘House of Cards’ Way In some ways, one could say, the hot series “House of Cards” is like the opera: you either love it or you hate it. Whichever camp you fall into, there’s something to learn about strategic real estate investment from this Netflix show that has taken the nation by storm. Kevin Spacey’s star character Frank Underwood may not be the touchy-feely type, but one thing is certain: he gets what he wants. Maybe we could all use a bit more of that Frank Underwood grit, not condoning his lack of ethics mind you, to guide our business decisions. Let’s take a look at some of his best quotes and how you can apply them to up your investing game: “There are two kinds of pain. The sort of pain that makes you strong, or useless pain. The sort of pain that’s only suffering. I have no patience for useless things.”

Real Estate Translation: There are only two kinds of investments: investments that benefit your bottom line or ones that don’t. Investors, you don’t have time for ones that don’t. “For those of us climbing to the top of the food chain, there can be no mercy. There is but one rule: hunt or be hunted.”

Real Estate Translation: Investors, beware of sob stories. Whether they’re coming from vendors, property managers or tenants, they damage you when you pay them heed. Nobody wins when everybody loses: keep focused on your goals and purpose (and tune out the rest). “The nature of promises, Linda, is that they remain immune to changing circumstances.”

Real Estate Translation: A contract is a contract. Simple and sweet. Get things in writing. Cover yourself - and your investments. “From this moment on you are a rock. You absorb nothing, you say nothing, and nothing breaks you.”

Real Estate Translation: The road to success isn’t a straight-away; it’s anything but. To travel it, you need to be built to keep going when the going gets tough. “You have to respect your own mortality.”

Real Estate Translation: Remain cognizant that you don’t have all the time in the world. There’s no moment like the present. If there’s something you want to do, move on it now! “I will not be a placeholder president. I will win and I will leave a legacy.”

Real Estate Translation: If you’re going in, go all in. Maximize your assets, your abilities, your connections to get the job done. “There can be no false steps now. The higher up the mountain, the more treacherous the path.”

Real Estate Translation: Investments with bigger pay-offs come with bigger risks. Be aware and invest accordingly. “That’s how you devour a whale...one bite at a time”

Real Estate Translation: If you want to take the real estate world by storm, you simply can’t do it all at once. Start with one decision, one investment, and proceed slowly and carefully. “I never make such big decisions so long after sunset and so far from dawn.”

Real Estate Translation: Or, as Elvis famously sang, only fools rush in. If a deal gives you pause, then by all means, pause. The world won’t end if you wait - and if you lose out on a deal because you take too much time, there will always be another one. To sum up: while Frank Underwood goes overboard on plotting and scheming and of course his lack of ethics, the above quotes can certainly inspire us to be strategic. Look out for yourself first, investors. The real estate world can be very rewarding - but like anything, it’s also very risky - and can be fraught with trials that are hard to win without the right approaches in place. Hannah Ash

REI Voice Magazine Marketing & Content Manager

Basics

Coach’s Corner Redefine Your Relationship With Money hat influences our ability to build wealth? I’ve spent W a good deal of time looking at just this, and a key component that stands out again and again is their

relationship with money. How we view money is often passed down to us through osmosis from our families and then through reinforcement from life experiences. We may have grown up hearing rhetoric such as, “money is the root of all evil” or, even as some people will say, “the love of money is the root of all evil”. The truth is: when we hear and believe these things, we are sabotaging our ability to build wealth. Thinking this way is putting fear into the driver’s seat and letting it determine our outcome with wealth. You may read this and say, “yeah, I know better.” We all do - logically. Our subconscious, however, comes into play and...it really matters what you believe subconsciously. X percent of your actions, thoughts and beliefs come from the part of the brain you simply don’t control actively. Your subconscious is where all experiences and emotional feelings are stored: these experiences and emotions influence who you are and what you do. No matter how much you try to override your subconscious, nothing is going to change until you actively start to re-program it. I have an exercise that helps kick-start this important reprogramming sequence. This exercise helps you to recognize what is truly possible... I really hope that you will take this exercise to heart and not just read it, but also actually do it. And do it exactly as outlined here- your results will be amazing and transformative! I just guided my Summit Assets team through this powerful exercise and I can tell you that in the beginning there was resistance but by the end there was revelation and growth. Are you ready? This exercise is simple but powerful. Find a trusted partner or friend to help you. Have them to ask you the following 3 questions (you will need 3 pieces of paper with each piece of paper numbered 1-20).

Transform Your Relationship with Money, Question #3: What is money, really? Each time you are asked, write down your answer…if you get into a flow, go ahead and keep writing in advance of the question, and if you get stumped- don’t overthink it. Just let go and write down your gut response. For the first 7 or 8 answers, your response will come from your logical mind but as you keep going you will start to relax and let the flow from your subconscious come out. This is where the transformative work starts to happen.

Putting it All Together Once you’re finished answering all these questions, it’s time to take a peek at your subconscious and how it’s influencing your relationship with money. Don’t skip this important step of the process. Though it may be emotional reviewing these, let it flow and release it. It’s important not to jump to the next step prematurely. Go through your list and circle anything you wrote that was connected to a negative emotion, thought or experience. There are no right or wrong answers: these are simply observations that will help you - if you are honest with yourself. For example, someone might right down “control” as one of his or her answers and to him or her, that is a negative experience because they saw their parents fight over who controlled the checkbook. Again, this is not about judging: it’s simply about identifying negative emotions or thoughts that influence your relationship with money. Did you have any “ah ha” moments? This process is about reprogramming your subconscious, which is created through your emotions. If you stuff your emotions and don’t let release them, they will remain a block you have to needlessly stumble over again and again. Review your final list compared to your first list. Do you see a difference? I don’t want to give it away - so if you do this exercise and you want to know it worked, feel free to give me a call and I will happily review it with you. As a side note, this exercise works wonders in all areas of your life - so if you find yourself blocked in some other area, go ahead and copy the plan with that area. May you have a prosperous 2016 and enjoy your relationship with money more than ever!!

Have your partner ask you the following three questions out loud twenty times each question, pausing 3-5 seconds every time: Transform Your Relationship with Money, Question #1: What is money? Transform Your Relationship with Money, Question #2: What is NOT having money?

Lori Greymont Lori Greymont is the CEO of Summit Assets Group, SJREI Association, & publisher of REI Voice Magazine.

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CALENDAR OF EVENTS January 14th Market update from Sean O’Toole who is immersed in the information technology space for real estate investors. Sean O’Toole, CEO of Property Radar, will share his thoughts on the market. It may not be what you want to hear but always frank and perceptive you don’t want to miss this!

February 11th Silicon Valley’s Hardworking, High-Performing City, Santa Clara At this meeting Geraldine Barry will interview Jamie Matthews about the details on the new City Place development that will change the face of Santa Clara. It is a 239 acre development and is scheduled to be a live, work, play space that will include 5.7million square feet of office space, 700 hotel rooms, a jazz district and more, creating 29,000 jobs when completed. To get the size and scope of this project in perspective, Silicon Valley based Santana Row is 40 acres… Investors need to be aware of the changes that are on the horizon - this meeting will illuminate those for you with long-time SJREI friend Mayor Jamie Matthews.

March 3rd Turn Key Investing - The 911 from several based across the country SJREI is pleased to host a panel of turnkey providers from different states to share their perspectives as experts in that area. They will address what works, what you the investor needs to know to be successful. if you own rental property, locally or remotely, you will want to attend this event. Mark your calendars.

March 5th One Stop Shop For Investors Buying event with several turn key providers and auxiliary service providers including those featured at the meeting on March 3rd. Keep an eye on our website for registration details. http://sjrei.org/

INVESTOR RESOURCES Insurance personaly & investment David-Dyer-Max Insurance 972-864-0400 x247 Michelle Pepper www.garlandinsuranceagency.com

Private Money Cirius Capitol 800-951-9501 john@ciriuscapitol.com

Investments Wilson Investment Properties 408-867-1867 tomkwilson@earthlink.net www.tomwilsonproperties.com

IRA

Zinc FInancial 559-326-2509 tom.v@zinkfinancial.net www.zinkfinancial.net

IRA Services 650-593-2221 Michael McNair www.iraservices.com

Lending Home 650-218-0976 gabe@lendinghome.com www.lendinghome.com

The Entrust Group 800-392-9653 bneville@theentrustgroup.com www.theentrustgroup.com

Soctra Capitol 916-277-9304 chris@socotracapitol.com www.socotracapitol.com

Dustin Rose Cashflow Links 916.932.6865 www.cashflowlinks.com

Mortgage Brokers

FJM Private Mortgage Fund, LLC 415-248-1167 chlbardis@fjmpmf.com www.fjmpmf.com

Wilson Investment Properties Tom Wilson 408-867-1867 tomkwilson@earthlink.net www.tomwilsonproperties.com

Michael Ryan, Morgage Broker/Banker 408-986-1798 mike@michael-ryan.com Highlands Residential Morgage, LTD 214-679-3396 Graham@theparhamteam.com www.texasinvestorloans.com

Executive Coaching Geraldine Barry 408.396.7177 See website for detials www.geraldinebarry.com

Marketing/video serices/photography Tiago Media (408) 763-0083 Tmoules@gmail.com www.tiagomedia.com

Tax Preparations Sercies

Homevesters/We buy Ugly Houses Franchise 800-200-6475 mark.mckeller@homevestors.com www.homevestors.com

Turnkey provider

Summit Assets Group Dan Noble 408-782-9162 www.summitsassetsgroup.com Dave Payerchin 614.285.3600 Columbus Turnkey Houses www.columbusturnkeyhouses.com

Denise Wilson. Tax Preparer & CTRP 408-377-9703 denise@richardsmithtax.com www.richardsmithtax.com

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On October 16, the SJREI community attended the Norris Groupâ&#x20AC;&#x2122;s 8th Annual I Survived Real Estate took for the fourth year. This black tie gala took place at the beautiful Nixon Presidential Library in Yorba, Linda, CA. The event has raised over $600,000 for charities including Make-A-Wish and St. Jude over the last several years. Every year, I Survived Real Estate brings together thought leaders from around the country to discuss real estate trends, head scratching regulation, and forecasts for the year ahead. Real estate professionals from all over the country converged to enjoy an evening of great food, beautiful ambiance, and even better networking. SJREI was front and center for the evening. We always have a wonderful time there and itâ&#x20AC;&#x2122;s great to support such an important cause. We hope that next year you will join us at one of our tables! The entire video of the event can be found at www.isurvivedrealestate.com Image Credits:Resonant Lens

REI VOICE

Thank You SJREI Community For Your Generosity At SJREI, we enjoy being a part of a vibrant, caring and prosperous group of investors and community members. At our December meeting this past year, the SJREI community made a real difference in the lives of children who are less fortunate. Together, we raised over $5,000 at the December meeting to help disfigured children get their smiles back (other donations have been mailed directly to the Rotary Club of San Jose, Rotaplast committee). The target of our charity was a truly deserving group: the Rotaplast Committee (of the Rotary Club of San Jose). This committee supports Rotaplast International in its endeavor to provide surgical repair of congenital anomalies (such as cleft lip and palate) on poor infants and children in 3rd world countries. The committee typically sponsors 1-2 missions a year to a Latin American country; 2016â&#x20AC;&#x2122;s mission will head to Guatemala in February. Every year, Rotaplast sends highly qualified medical

teams on medical missions that provide free reconstructive surgeries and treatments for the care of these deserving children. Rotaplast is an organization committed to helping children and families across the world who have been impacted by the burden of cleft lips and palates, burn scarring and other deformities. The Rotaplast Committee is just one of the Rotary Club of San Joseâ&#x20AC;&#x2122;s many humanitarian projects. SJREI and REI Voice are proud to have joined forces with them to help make this important medical mission to Guatemala a reality. We challenged our entire community to come together and make change happen in the lives of children who so desperately need it - and we did it. Thank you and we look forward to another successful charitable drive next year! evate this industry to help make it the best it can possibly be.

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REI VOICE

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