October 2020 KREIA Newsletter by KREIA .com

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

Monthly Newsletter for KREIA Members

Vol 10-20 October 2020 President’s Letter

Paid Advertising Rates

Show Me the Money: Lenders 3 explain loans available to investors Welcome, New Members!

Preview: Real estate ownership workshop coming in December

Mike Butler: Your business card – 6 what is it really for? Michelle Rawn: Courts update

Help the Home of the Innocents: 10 Speak up at your next closing Government Affairs Links

Nina Musgrave: Landbank works 14 to establish new programs Videos Page: Missed any KREIA 16 meetings? Catch up online KREIA Photos

L.O.T.S. Recap: Couple teams up 19 with investor on Henryville house National REIA News Roundup

Greg Nalley: Program pays for ‘perils’ caused by tenants

Calendar of Events

Dear KREIA Members and Friends, At most levels in our city, at least from my perspective, other than the behavioral changes we are all dealing with, people are finding ways to navigate their lives successfully despite social distancing and other modifications to our pre-virus lives. We’re eight months in now on this life-altering pandemic. And Chris McCarty COVID or no COVID, if you are involved in buying, selling, supporting or holding residential real estate long-term in Louisville, you are likely doing well financially with your real estate activities. Record interest rates, low inventory and COVID-related behavioral changes have people, in general, investing, refinancing and improving their properties in record numbers. Realtor.com has reported an 11.1 percent appreciation of U.S. real estate in the past year and a 39% decrease overall in inventory. Throughout the country, we are experiencing a severe housing shortage due to the many years of underbuilding from the post-2008 recession. COVID has transformed the availability of key home building commodities, with lumber being the most critical to new construction. Add this shortage to all the other cost increases and shortages, and existing housing stock scarcity continues to drive prices up. Existing housing inventory was already in very short supply before the pandemic, and these new factors will continue to influence prices as people head to the house for safety, seclusion and work-from-home solutions for virus-free security. No person can say for sure what the final COVID resolution will be, but throughout it all and for the several years leading up, residential real estate has been a Continued on Page 4

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

Your KREIA Leaders

President Chris McCarty

Advertise With KREIA

Secretary Erik Hitzelberger

Vice President John Jones

Treasurer Mike Treasurer-Elect Grinnan CPA Wally Kallbreier

Board of Directors

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

Business Card Membership . . . . . . . . $199 Includes your business-card-sized ad. Admission at monthly meetings is $20. Premium Levels: These four advertising levels include your ½-page ad in each issue.

Rue McFarland

George Foree

Dennis Erhard

Frank Miller

Lauren Willoughby

Greg Nalley

Hampton Scurlock

Rob Bergeron

Christopher Jaquith

Jordan Pohn

Stacey Duvall

Alexis Fentress

ParliamenPast tarian Michelle President Rawn Eric George

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

KREIA's newsletter is published monthly and serves to educate you and to remind you of upcoming monthly meetings. About KREIA: The Kentuckiana Real Estate Investors Association is a nonprofit organization focused on education, networking and resources for today’s investor. Whether you are just starting out in real estate investing or are working on your hundredth deal, KREIA can help you learn more, earn more, and have more fun doing it. Group discounts are available. Contact us at support@KREIA.com if you: Want to advertise on KREIA.com • Need help • Have a question

Bronze Membership . . . . . . . . . . . . . $499 Includes free admission to monthly meetings for one person. Silver Membership . . . . . . . . . . . . . . $699 Includes free admission to monthly meetings for two people. Gold Membership . . . . . . . . . . . . . . . $999 Includes free admission to monthly meetings for two people and gives you a skirted table in the vendors area. Platinum Membership . . . . . . . . Reserved Includes extra promotion. There can be only one advertiser at this level. Our current Platinum Sponsor, MM Lending, holds exclusive renewal rights until 2021. Questions? Catch up with KREIA Sponsor/ Advertiser Chair Dennis Erhard at the meetings. Or email support@KREIA.com.

Join KREIA Joining KREIA is easy: Go to KREIA.com and click the "JOIN" option on the menu. Tell all your investing friends. The cost to join as an individual member is $125 per year, with a door fee of $20 at our monthly meetings (which covers the buffet meal and rent on the hall). Click JOIN at KREIA.com to find out about all the benefits of membership for both individuals and businesses. Too many to list here!

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

Need Funds to Flip or BRRRR That House? October 22 virtual main meeting brings 4 kinds of lenders front and center It would be nice to have a big enough bank balance to afford to not only buy a distressed bargain house outright but also to make all the repairs needed to turn it into an attractive rental or retail flip. Some of our members do have enough cash to selffund their deals. But many do not. And even those who could self-fund often prefer to borrow money anyway, because that way they can scale – they can tackle as many projects as they’re able because they’re not limited by how much cash sits in their bank account. Where can you borrow the money to fix and flip a house to sell? Or to fix it up so that a bank will refinance it into a cash-flowing rental, helping you be a landlord? We’re going to show you where to get money at this month’s meeting! We’ll show you four sources you can tap for funding, and we’ve invited four representatives to lay it all out.

Hard Money Lender Hard money refers to short-term loans that need to be paid back usually within a year’s time. Hard money lenders work much faster than a bank. If you’ve prequalified with a hard money lender, you can often get your deal funded in a week – or sooner. Hard money loans carry high interest compared to a bank. But if you’re working on a high-profit flip and you can turn projects around quickly, then shelling out a few thousand in interest is a small price to pay when your profit could be in the tens of thousands. Mike Fallot of MM Lending, KREIA’s Platinum Sponsor, will lead the presentation on hard money. Private Money Lender Private money is like a more relaxed version of hard money. That’s because you’re borrowing from an individual, not a company. Private money lenders may not charge you points or extra fees, and they may be less rigorous than a hard money lender in qualifying you. The lender could be someone who’s sitting on cash who’d rather be earning, say, 10% interest from you than let their money stagnate in a savings account. Or it could be a retiree who likes to loan from a self-directed IRA. Presenting on private money will be Joe Hampton.

Illustration by Nina Musgrave

Residential Banker Residential loans feature low interest rates with terms of up to 30 years. These are the loans homebuyers use. Buyand-hold investors can use them too – with a few key differences – and they’ll usually need at least 20% down. There’s a bit of red tape and hoop jumping in getting a residential loan, but it’s the cheapest money around. Besides using residential loans to buy rental properties outright, investors can also refinance into them out of hard or private money. For investors who BRRRR to build rental portfolios, residential bankers are their best friends. (BRRRR means to Buy, Rehab, Rent, Refinance and Repeat.) Bridgette Wingate, loan officer from Central Bank Mortgage, will lead the presentation on residential loans. Commercial Banker If you run up against the limits of residential loans, you’ll want to look into commercial loans. Or perhaps even start there. The interest rates are higher than for residential, but there’s less red tape involved. Investors face no limits in the number of properties they can hold in commercial loans, they can take loans in their LLC’s name, and they can BRRRR into them from hard money. Commercial bankers also make rehab loans on houses that don’t pass residential inspection. Presenting on commercial loans will be Marcy Mudd from Mid-Southern Savings Bank. Turn to Page 28 to meet our four presenters. 5:30 p.m. Early Meeting: CPA Eric Shadowens Are you and your tax adviser seeing eye to eye? Eric Shadowens will offer communications tips that can help avoid costly disconnects. He’s also going to cover recordkeeping and more.

Welcome, New KREIA Members!

President’s Letter Continued from Page 1

Milton Ali Joshua Batey Bill Bornstein Tyler Clements Gerald Ditsler DeShawn Dulan Tavares Ellis

stellar financial bet. Interest rates, monetary policy and government intervention, in my opinion, will be factors that all but guarantee this strong market continues. If you are on the sidelines, find a way to play. KREIA’s membership is holding steady without much fallout, despite not having in-person meetings. And our members are communicating virtually in many ways to keep transactions flowing and closing. In short, the KREIA community is still thriving as we all seek some kind of temporary normal. If you have the COVID blues and do not feel my lofty observations fit your life or scenario and want to break out, reach out, or get involved, give me or a fellow member a call. We would love to help.

Jarrett Ford Karl Roth Derek Guyer Gavin Shook Jason Hagan James Wiley Tirza Howard Tiffany Jackson Starla Mitchell Brandon Pefferle

KREIA’s New Member Orientation There will be a short presentation of the benefits of joining KREIA at every monthly main meeting. While we’re virtual, tune into our Zoom call at 5 p.m. to hear from Jordan Pohn and Stacey Duvall on why it’s good to be a KREIA member. See the presentation online: You can also review one of Jordan’s and Stacey’s video presentations by visiting the Intro to KREIA page (About/Intro to KREIA on the menu). On the Member Benefits page (Join/Member Benefits), you’ll learn how to secure your discounts and bonuses.

God Bless, Chris McCarty KREIA President

Preview: KREIA Real Estate Ownership Workshop On Thursday, December 10, KREIA is going to present the “Real Estate Ownership Workshop.” It will be both a virtual event, streamed on Facebook Live, and a live, in-person event held at the West Louisville YMCA. The event is open to KREIA members and non-members alike. Attendance at the YMCA will be first-come, first-serve, so plan accordingly. The plan is to present the workshop as an experts panel. George Foree, Donnie Adkins and Kisha Lindsay will be among the speakers, and questions from the audience are encouraged. We’ll have more information and details for you in next month’s newsletter.

The new West Louisville YMCA is now open to the public at 1720 West Broadway. (Google photo) Copyright MMXX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

Some of KREIA’s national sponsors via National REIA. For the full list, and info on discounts, visit nationalreia.org/benefits

Your Business Card – What Is It Really For? Here’s my priceless solution to make your business card the most effective marketing piece in your real estate business and perhaps your cheapest as well. When you hand your business card to someone, you have about 2.5 seconds for them to connect. All of us, including me and you, ask this when we look at a business card: “What’s in it for me?” If this person cannot see any benefit for them, you just wasted money on advertising. Now you know the purpose. Your business card is a “Lead Generator.” If you have only 2.5 seconds for the person to see “What’s in it for me?”, what should you have on your card? Consider that your card must be designed to target folks who want to sell their real estate. You MUST have these two things: 1. A “Business Slogan” that’s effective, simple, very short and MUST be easily readable on the card from 5 to 10 feet away. This is your 2.5-second challenge to conquer. 2. A “Call To Action” that’s driving them to your squeeze page, such as a free Investor Carrot website page with your fill-in-the-blank form. (Before the internet we used phones, faxes, and post cards – all things that are no longer needed for the most part.) Here’s a business card FRONT SIDE set up to target motivated sellers. And here we killed two birds with one rock – we inserted “We Rent Homes!” on the front of John’s card to help him find good quality tenants. Also, NEVER Leave the backside blank – that’s a lot of real estate to add more info about your process and how you can help this motivated seller. Your business How far away from cards like these can you be and still card should work easily read them? Or do you have to hold them in your hand in these scenarios: 18 inches from your eyes? 1. When you Can you easily identify what kind of business or service hand your card to each provides? someone and they Or are you saying, “Hey, I can’t read these – can you make ask “What’s In It For Me?” they will connect with you and them bigger?” That’s the point I am trying to drive home. your card in less than the 2.5 seconds. Next Question: What’s the purpose of your business card? 2. Make your card work for you when you are not presWhy do you give your business card to folks? Most investors ent. How? I set a goal for my buying machine to give out 50 say something like, “It’s all of my contact information.” business cards per day, and I would put 10, 15, or 20 cards Do NOT shoot yourself on this one. This is a big part of in these places: restaurant bulletin boards, car wash bulletin your growing pains in your real estate business. Continued on Page 32 By Mike Butler This is a powerful article for real estate investors who are growing their businesses. If you are looking for deals and are actively buying, this’ll help make your business card into one of the best marketing tools in your business. It certainly was in my business. Do you really know the purpose of your business card? It’s OK if you are not sure – I failed miserably for years on my first few business cards. Does this sound familiar? Ah-ha, you are going to be a real estate investor. Yes, you’re gonna do it, but first you need to get business cards. So you travel to Office Depot or Staples and go to the print shop to get a service person help you select, build and create your business card. (This is what I did back in the day.) You are presented with a huge three-ring binder with all kinds of templates of business cards separated into categories – real estate, medical, legal, retail, restaurants, etc. You flip to the real estate section and gander at all the examples. Take a look at the samples shown below. What is wrong with them?

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Update on the Courts By Michelle Rawn As most of you know, the CDC issued an eviction moratorium for evictions for nonpayment of rent through the end of the year. This moratorium is nationwide, but applies only to evictions for non-payment of rent. Evictions for non-rental lease violations (unauthorized occupants, disturbing the quiet use and enjoyment of the neighbors, etc.) and non-renewals/lease terminations were not affected and currently can move forward as usual. The moratorium did not cancel or suspend rental payments, but basically guarantees that a tenant cannot be evicted for non-payment of rent for the rest of 2020. In order for the moratorium to apply, the tenant has to sign a “Renters Certification” that was attached to the order creating the moratorium and forward the completed form either to the landlord or the landlord’s attorney. In Jefferson County, if the tenant completes the certifycation, then the case is dismissed. Other counties in Kentucky will continue the case until January of 2021. Most courts in Kentucky are not permitting the landlord or attorney to take any evidence to validate the information provided in the certification. In addition, in some counties, both Legal Aid and the courts are providing copies of the certification to the tenants at court for them to sign. Across the river in Indiana, things are better for landlords. The Indiana Supreme Court provided guidelines and direction to the eviction court judges and magistrates that permit the court to take evidence to prove each category of the certification. Currently there is a lawsuit filed challenging the validity of the CDC order and the authority with which it was put in place. That case is currently with a federal judge for review and decision. Until a ruling, though, the eviction moratorium will remain in place through December 31, 2020. During this time, if your tenants reach out to you to accept payment from a rental assistance program or want to try and work out a payment arrangement, you will want to think strongly about this before saying no. These rental assistance programs might be your only chance to receive payment for at least part of the rent owed while the moratorium is in place. As all of us know, things are still changing on a daily basis. Please feel free to reach out to me or John in my office to see if there have been any more developments or updates. I hope you and your families are staying safe and healthy. Michelle R. Rawn Rawn Law Firm, PLLC Tel: (502) 639-9396 Fax: (502) 276-0607 Email: Michelle@rawnlawfirm.com

There’s Still Time to Raise Money for Children in Need at Your Next Closing We wrote about this last month, but it’s worth repeating. If you’ve got a closing coming up, please keep the Home of the Innocents in mind. Another casualty of COVID-19 is our usual method of helping raise money for the Home of the Innocents, KREIA’s charity of choice: We haven’t been able to hold our 50/50 Raffle at main meetings. We haven’t had live, inperson main meetings since February! With the year ticking away, along with our ability to present a nice, fat year-end check to benefit the children of HOTI, KREIA board members Hampton Scurlock and Rob Bergeron had an inspiration: why not approach area attorneys and title companies to try something creative? So here’s the deal: If you’re holding a closing with one of these companies between now and December 31st, tell them you’re with KREIA to have $10 donated to the Home of the Innocents: ▪ Borders & Borders ▪ Rawn Law Firm ▪ Rounsavall Title Group ▪ The Law Office of Brad Lammi ▪ Millennial Title Win-win-win! A big thanks to all these companies. Let’s get closing and help those kids!

photo by bruce w. hinson www.obedientcamera.com

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

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

Landbank Works to Establish New Programs Community Land Trust, Loan Loss Guarantee Seek Input & Involvement By Nina Musgrave For more information on Metro Louisville Landbank, Office of Community Development and VAPStat, visit LouisvilleKY.gov/ government/community-development or call (502) 574-4016. The Louisville Landbank Authority was established in 1989 by Kentucky legislation. It aimed to help with foreclosure and disposition barriers that property owners faced at that time. (Remember: no email, no internet. Communication via fax if you were lucky. Loud dot matrix printers were heard in offices.) The Authority still acquires the majority of properties from foreclosures and donations. In 2005, a major MetroWide Comprehensive Housing Strategy was established. Landbank-owned properties went from “We can’t give them away, yikes!” to what it’s grown into today: a division of government that is genuinely seeking to put land and structures back into use through process, best practices, and pilot programs. In the wake of the 2009 foreclosure crisis, communities throughout the United States were left with expansive sections of vacant structures. At a peak high in 2011 in Louisville, 5,667 properties were foreclosed upon. This mass vacancy fueled the cycle of neighborhood blight: lower property values, increased crime and poverty, which led to even more vacant homes. Unfortunately, the issue of blight is still relevant. The Landbank even has a page on its website titled “Blight Buster Links” – it’s a robust list of resources for anyone who’s interested. To address blight, Louisville Metro has overseen more than 800 demolitions and 960 foreclosure initiations since June 2015. More than 400 properties have been sold by the Landbank. In 2019, the Landbank sold 100 properties, which means their inventory is changing hands. (They typically have an inventory of 500 parcels.) Another good thing: The Landbank can help achieve neighborhood plan goals. A Vision Russell update report shows that VAP and Landbank acquired 126 properties since January 2017— 36 of them will be returned to productive use. 43 parcels are available for reuse and they are working to initiate 141 foreclosures. Throughout the entire Metro area, as of July 31, 2020, there were 77 pending demolitions and 86 in-process demolitions. Because affordable housing is so vital, the Landbank is looking for organizations interested in building and

developing a Community Land Trust (CLT). A CLT is a nonprofit membership organization that owns and stewards land for the benefit of the community in order to preserve the affordability of housing on the land permanently. A CLT separates the ownership of buildings from the ownership of the land underneath those buildings. Cincinnati has a rich history with CLTs. In Kentucky, the Lexington Community Land Trust (www.lexingtonclt.org) is an example of a CLT in action. Across the country, successful CLTs utilize a variety of stakeholders to create a trust that benefits the neighborhood. “Community Land Trusts provide a unique opportunity to create permanently affordable housing in our city by offering homeownership opportunities for people who otherwise could not afford it,” according to Mayor Greg Fischer “Through this model, residents can build wealth and equity in a home in order to set them and their families on a path of success in the future.”

Louisville Forward (which works with the Landbank) has asked for comments on a Proposed Loan Loss Guarantee Program Supporting Home Rehabilitation. The goal of the program is to improve home rehabilitation and acquisition lending rates with historically marginalized neighborhoods by reducing perceived lending risks. As investors, we know getting loans on dilapidated homes can be hard, especially at a certain price point. When you add an unstable neighborhood, many lenders will no longer consider moving forward. This program could be an incentive for those notes. The Landbank needs public involvement to continue to move forward. If you’d like to help, please consider submitting input or developing one of their properties in inventory.

Missed Any Meetings? Catch Up on Our Videos Page We’re just about caught up with posting video from KREIA main meetings, L.O.T.S. events and Lunch & Learn gettogethers from the last few months. That’s more than 20 hours of local real estate instruction added onto what we’ve amassed already! Did you miss a main meeting this year? Or want to watch it again and take notes? Get up to speed with our video replays. These proprietary videos are for active KREIA members only, so to view them you must be an active member logged into your account at kreia.com with your email address and password. To reach the videos, click or tap the Members Only menu, then choose the Videos option from the list. If you forgot your password or for some reason are not able to log in to reach our members-only content, please send an email message to support@kreia.com and we’ll be happy to help you out. If you haven’t attended our live virtual meetings on Zoom and haven’t yet checked out the videos, we’ve got to say that you are truly missing out. The experts and presenters featured on the calls drop so much knowledge. Here are just a few nuggets:

Ing, then closing on a deal. He shared one of his favorite sources for finding bargain properties – where he has practically no competition. He says he finds 50% of his deals using this lead source, and almost no one else is doing it, even though everyone could! And Hannah led us through the nuts and bolts of planning a rehab. She showed us the scope of work documents she uses as a project manager with Freedom Property Group. ► In July’s “Financially Free, Thanks to Rentals” meeting, all three landlords gave great advice. George Foree told us who we need on our team if we want to succeed as investors. Greg Shell walked us through case studies of his rental properties, with spreadsheets illustrating that even modest investments can pay off handsomely in just a few years. And ► In our September “Buying at Auctions” meeting, Ian Christina George shared practical tips on creating timeHooper offered details on the process for getting a bond in saving systems. Want to know which property management order to bid at the Jefferson County Master Commissioner’s programs she likes? Watch the video! Sale. There are new rules in play now – did you know that? ► In her September 8 Lunch & Learn meeting, Michelle And those examples are just the tip of the iceberg. So be Rawn broke down exactly what the rules are for evictions to sure to check out what’s hiding underneath the Members go forward during the CDC moratorium. If you’re a landlord, Only menu. this is something you need to know – because if you do it We’d also like to point out a nifty page that’s hiding wrong you could be facing stiff fines and even jail time! underneath the Resources menu: News & Updates. We use You’ll definitely want to view that video. a blog there to tell everyone when new videos or site ► In June’s “Secrets Revealed: How to Make Money features are posted. Flipping Houses” meeting, Frank Miller and Hannah Gill put If you’ve been away from KREIA’s website for a while and on a master class in house rehabbing. Frank got us fired up wonder what you’ve missed – wonder no more. Just check and motivated, then walked us through the steps of findthe News & Updates blog. Copyright MMXX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

KREIA

Photos

Please help us with October’s issue! Email some photos to

kreiaphotos@gmail.com At Left: Some Happy Hour networking took place at Bearno’s earlier this month. (Photo by Alexis Fentress) Below Left: Ed Gibson hosted our Lunch & Learn event at Martin’s Bar-B-Que Joint. Below Right: Greg Nalley was the featured speaker at Lunch & Learn. He answered investors’ questions about insurance. At Bottom: Investors took notes while enjoying tasty barbecue.

photo by bruce w. hinson www.obedientcamera.com

Henryville L.O.T.S. Home: A Closer Look Jacqueline Smith and husband Mat team up with investor on a flip By Lauren Willoughby Jacqueline and Mat Smith are no strangers to house rehabbing. They’ve rehabbed two houses before – as live-in flips. This 3-bedroom ranch in Henryville is the first house the couple has rehabbed that they didn’t live in previously. They started on the house in April and have been fixing it up over the last five months – and Jacqueline said she expected they’d list it on September 30, the day after they invited KREIA members on a virtual tour. Jacqueline and Mat’s Realtor found this house at 316 A Vest Road in Henryville, Indiana, just It was Jacqueline who led before it was to go on the MLS. (Photos by Alexis Fentress) us through the house as KREIA board member Alexis Fentress followed with a smartphone, the windows. (She and her husband used to do that as a recording her on the Zoom call – and relaying questions business – build and paint cedar shutters.) from investors typing in their chat windows. (Alexis did an Jacqueline posts videos of her hands-on rehab work on awesome job, by the way!) social media: Check out her projects at jacquelinesmith.rei Jacqueline threw out tips as she moved from room to on Instagram. room. For example, if you have to clean out leftover grout Alexis asked her what her biggest The video from a tile job, don’t buy an expensive cleaning solution. lesson was working on this house. from this L.O.T.S. event is Instead, use vinegar and baking soda, with an assist from an “I wish we would have outsourced orbital sander. more things,” Jacqueline said of hiring posted on our Videos page. And even a thoroughly disgusting bathtub can be reout some of the labor. “I wasn’t turned to sparkling cleanliness by letting toilet bowl cleaner expecting to appreciate it so much.” She added that she’ll sit in it for a few hours, then scrubbing it using SOS pads. do more outsourcing in the future. This house is the couple’s first time partnering with Jacqueline is definitely another investor: He brought the cash for the purchase, and hands-on. She spray-painted the walls Sherwin-Williams she and her husband did the work and paid for supplies and miscellaneous labor out of their own pocket. They’ll split the Repose Gray. profits 50-50. “Spray-painted?” someGreat job, guys! Thank you for inviting us. one asked. “I spent a few days taping off the trim,” she confirmed. THE NUMBERS Purchase Price: $70,000 The walls do look sharp, with contrasting white trim. Renovations: $20,000 Estimated Sale Price: $152,000 Outside, she worked on Estimated Profit: $62,000 or thereabouts, which will be split the landscaping, pulling down shrubs that had over- (not including Realtor fees) grown the house, and building cedar shutters for L.O.T.S. host Jacqueline Smith Why do we call it “L.O.T.S.”? Because we Learn On The Site! Copyright MMXX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

National REIA Real Estate News Roundup Airbnb Takes Proactive Steps to Stop Parties & Large Gatherings

National REIA, of which KREIA is a chapter, reports on issues affecting real estate investors and also links to stories of interest from other organizations. Here is a sampling of recent news and resources that Brad Beckett, NREIA’s Director of Airbnb says that “trust is the real energy source” that Education & Outreach, has compiled. For more news, visit drives them and part of maintaining that trust has been realestateinvestingtoday.com through implementing smart community policies and new technologies to protect their hosts, guests, their homes and neighborhoods. With that in mind, Airbnb recently issued a new policy Black Knight is reporting that during the first week of prohibiting one-night reservations over the upcoming October, active mortgage forbearances fell 649k, representHalloween weekend for entire home listings in the United ing an 18% reduction from the prior week and the largest single-week decline since the start of the pandemic. In addi- States or Canada. In addition, they have also implemented high-risk detection systems that will flag potentially probletion, their McDash Flash Forbearance Tracker shows the national forbearance rate coming in at 5.6%, down 1.2% from matic reservations for a manual review. Airbnb says they have already identified and proactively the week before. cancelled nearly 9k high-risk reservations in North America. As of October 6th, there are 2.97 million homeowners in Read the full release: bit.ly/k2010airbnb COVID-19-related forbearance plans, representing $614 billion in unpaid principal. Read the full report: bit.ly/k2010forbearance

Forbearances Down 18% in October

CDC Issues FAQ on Its Eviction Moratorium

Local Market Monitor’s National Economic Outlook

Local Market Monitor, a National REIA preferred vendor, recently released their monthly National Economic Outlook, where they share their thoughts on developments The CDC recently issued a set of FAQs (frequently asked questions) offering “non-binding” guidance with respect to its taking place in the U.S. economy. In April, the number of jobs in the economy sank an recent “Temporary Halt in Residential Evictions to Prevent unheard-of 13 percent compared to last year. By July the the Further Spread of COVID-19″ moratorium. In response, loss was “only” 7.7 percent, and the possibility of a further the National Apartment Association (NAA) said in a release to quick recovery seemed possible as states re-opened their its members that this FAQ clarifies several things…. economy. But in August the loss was still 6.9 percent and in Read the FAQ and NAA’s response: bit.ly/k2010cdc September still 6.4 percent. Request the most recent outlook: bit.ly/k2010outlook

Lot Sizes Are Shrinking

According to research from the NAHB’s Eye on Housing, the median lot size for homes sold in 2019 dropped to 8,177 square feet, or 0.188 of an acre – which they say is the first time this has happened since the Census Bureau began collecting this data. The NAHB says the shrinking median lot size largely reflects the shift in speculatively built (or spec) home building towards smaller lots. Interestingly, they point out that sizes still vary by region. Read the full report: bit.ly/k2010

Collections a Solution for NonPaying Tenants Are you a landlord trying to come to terms with all the eviction moratoriums that are gripping the industry? On a recent episode of the Rent Perfect Podcast, David Pickron discusses how during a time of no evictions, collections could be your ultimate solution. Listen to the podcast: bit.ly/k2010collections

Landlords Are People Too (Surprise!) Apartment Conversions on the Rise A recent essay in NY’s Daily News asserts that “landlords are people too” and addresses some of the current misdirected rage against landlords – most of whom are mom & pop operations. Read the news story: bit.ly/k2010peopletoo

A recent report from RENTCafé says that thanks to an all-time high in conversions, yesterday’s factories are becoming today’s apartments. Read the full report: bit.ly/k2010conversions Continued on Page 24

Copyright MMXX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other Continued on Page 24 professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

National REIA Real Estate News Roundup Continued From Page 22

Flipping Is Down, but Profits Are Up According to ATTOM Dataâ€™s latest U.S. Home Flipping Report, there were 53,621 single-family homes and condominiums flipped in the second quarter, representing 6.7% of all home sales during Q2. The gross profit on the typical home flip nationwide increased in the second quarter to $67,902, up from $63,000 in the first quarter. Read the full report: bit.ly/k2010flipping

Homebuyers Flocking to Puerto Rico The Wall Street Journal says lower taxes are among the reasons why wealthy buyers from high-tax states like California and New York are buying homes in Puerto Rico, where luxury developers report that business is brisk. Read the full story: bit.ly/k2010puertorico

Millions Are House-Rich but CashPoor, and Investors Are Ready Americans with mortgages have accumulated nearly $10 trillion in home equity thanks to a decade of rising home prices. Yet millions of them have fallen behind on mortgage payments and risk losing their houses. It is a potential bonanza for rental-home investors. Read the article: bit.ly/k2010cashpoor

Existing Home Sales at Highest Level Since December 2006 The National Association of Realtors is reporting that existing home sales jumped 2.4% in August to a seasonallyadjusted annual rate of 6 million (10.5% higher than one year ago). Total housing inventory at the end of August was 1.49 million units, down 18.6% from one year ago. Read the full report: bit.ly/k2010homesales

Do You Have a Product or Service to Offer Kentuckiana Investors? Become a Business Card Member for only $199/year and see your ad in a year's worth of issues! You can upgrade to Business Card at any time.

Do You Want Your Business Card to Appear Here? Join KREIA as a Business Card Advertiser for only $199/year and see your ad in a year's worth of KREIA newsletter issues! Copyright MMXX Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509-2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

Insurance Program Pays for ‘Perils’ Caused by Tenants By Greg Nalley Did you know that you can legally make your tenants carry a minimum of $100,000 liability coverage for damages they cause to your property? I even have some clients who require tenants to carry $250,000 liability. Since 80% of claims are caused by tenant negligence, a Property Damage Loss Waiver program (“PDLW”) is a no-brainer for landlords & property managers. Another important statistic is that only 15% of tenants carry a renter’s policy. One of the biggest advantages with this PDLW program is that if you have a significant loss caused by the tenant, this policy would pick it up and the deductible would be only $250. And the claim would not go against your primary property policy. Normally, deductibles are anywhere from $1,000 to $10,000, and good luck trying to get that deductible back from your tenant if there is a claim that they cause. Another great benefit is that underwriters see this as a risk transfer in place. For landlords and property managers who have all their portfolio in this program, I’ve been able to save an extra 5% to 15% on the primary property policy. See a brief summary of this program below and let me know when you’re ready to implement it.

About the Program The Property Damage Loss Waiver program is a community-based property damage liability program. The property damage loss waiver option enables residents to receive $100,000 of property damage liability protection. PDLW is an innovative risk management tool option designed to fulfill residents’ contractual obligations specified in their lease agreement. The property damage loss waiver option is a way for the resident to meet the indemnification obligation under the lease. Residents agree to indemnify and hold the multi-family housing owner harmless for damages or losses negligently caused through their actions. The program addresses five “perils” for negligent resident-caused losses. They are: fire, smoke, explosion, water discharge, and sewer back-up. These five perils account for the majority of resident-generated losses. Protection for a single occurrence is up to $100,000. Under the program, damages are paid in priority – to the community owner/ manager for damage to the multi-family housing community and then to impacted residents up to $10,000 for their personal property damage/loss, subject to limit availability. Contact Greg Nalley, of Nelson Insurance, with your insurance questions. Call him at (502) 216-0642.

Show Me the Money Continued from Page 3 Got questions about how these four funding sources work – or the steps involved? Ask these experts on the call! Meet Mike Fallot: Mike cofounded MM Lending, is its CEO, and oversees all its lending activities. Mike enjoys working with new and experienced real estate investors to structure financing to achieve their goals. Mike has more than 14 years’ experience in the private lending business and has first-hand experience with the boom and bust cycles of real estate. Mike is a graduate of U of L and previously served as a partner with a regional CPA firm. He is an active member of the Rotary Club of Louisville, board member of The Cabbage Patch, past board member of KREIA and past president of the Louisville chapter of Financial Executives International. Meet Joe Hampton: Joe is a KREIA Past President (1989-91) and Ed Melton Award recipient (2004), and most of us know him as “the real estate guy.” He’s your go-to guy for doing 1031 exchanges (where you to trade up your buy-and-hold properties instead of selling, thereby deferring taxes) and is also a Realtor with RE/MAX Properties East. Joe brings a wealth of experience with him: a practitioner in real estate in Louisville since 1979; a sales professional from 1986; a real estate investor, owning in excess of 30 rental units; an approved instructor for the Kentucky Real Estate Commission; a national convention speaker and trainer; and a published author on business planning for the real estate professional. Meet Bridgette Wingate: Bridgette is a native of New Jersey and mother of two girls. She moved to Lexington, Kentucky, in 1996 and began her banking career there at First Federal Savings 24 years ago. Bridgette has been employed by Central Bank & Trust Co. for the last 13 years. In May of last year, she relocated to Central Bank & Trust Louisville to become their primary Residential Mortgage Loan Officer.

Meet Marcy Mudd: Marcy is Vice President of Commercial Lending at Mid-Southern Savings Bank. Though his office is in New Albany, he loans in Kentucky as well. Marcy has been in banking for 17 years and says he’s done everything in banking, including running a branch as a district manager. He moved over into commercial lending about seven years ago and says that he prides himself on building relationships with his customers. Mike Fallot CEO of MM Lending (502) 400-3011 mike@mmlending.com

To contact our presenters…

Joe Hampton “The Real Estate Guy” (502) 296-1031 joe@therealestateguy.com Bridgette Wingate Mortgage Loan Officer with Central Bank Mortgage (502) 456-3803 bwingate@centralbank.com Marcy Mudd V.P. of Commercial Lending, Mid-Southern Savings Bank (812) 883-2639 marcy.mudd@mid-southern.com Join our Zoom call on October 22 Log on by … ► 5 p.m. for the Member Orientation with Jordan Pohn and Stacey Duvall. Find out about the benefits you receive by being a KREIA member. ► 5:30 p.m. for the Early Meeting with CPA Eric Shadowens. He’s going to offer communications tips to help you and your tax adviser stay on the same page. Plus he said that, if he has time, he plans to talk about business startup considerations, recordkeeping, common expense and deduction issues, passive activity, and the Real Estate Professional exemption. ► 6 p.m. for announcements, a Legislative Update with attorney Michelle Rawn, and property and advertiser pitches. ► 7 p.m. for the “Show Me the Money” main presentation. ► 8:30 p.m. to 9 p.m. for open mic networking after the “Money” Q&A winds down. We’ll keep going until we’re too sleepy or hungry to carry on. This online main meeting is free for KREIA members and only $10 for non-members. Register now at kreia.com!

Mike Butler: Your Business Card – What Is It Really For? Continued from Page 6 boards, grocery store bulletin boards, and laundromat bulletin boards. And when you attach your business cards to bulletin boards, do not use push pins, which means that they’ll get buried amid all the ineffective cards. Instead, pinch them diagonally into the board’s frame at the bottom. You want your card to POP – to stand out and be the first card their eyes are drawn to. Like this:

like the neon yellow. I guess you could reverse the colors and have a solid black background. I have a very hard time reading the first 3 cards. Does John’s POP?

The line above is a true test of asking yourself if your card is effective. Special thanks to John Jones for allowing me to steal, paste, and edit his business card. Stay $afe, be careful, and make sure you keep a can of wasp and hornet spray in every vehicle! (Teach your kids how to use it.) To your continued success,

Motivated sellers can read John’s card from 10 feet away! And if they’re interested, they will grab one of the cards instead of trying to write down the info or take a photo of the card. Bottom line – this works! Here’s a creative idea you can try in banks. Most tellers have business card holders facing the customer. I removed their cards and put 10 of mine in the holders. 3. Wherever you leave your cards, you must target them in neighborhoods where you want to buy. Repeat: You MUST target them in neighborhoods you want to buy in. 4. When you turn on your buying machine, you want to get the biggest bang for your buck. Business cards set up properly will drive motivated sellers AND prospective tenants to your free Investor Carrot website. (You can get your free Carrot Website when you join MikeButler.com’s Gold Membership. FYI, John’s lead generation website is built on Investor Carrot.) 5. FATAL MISTAKES you can make with business cards: a. Focusing on yourself instead of focusing on how you can solve a motivated seller’s problem. Realtors like to put all of their designations, certifications and memberships on their cards – that’s stuff only other Realtors care about. Motivated sellers do not care about you. They want to make their problem go away. b. Making them too artsy-fartsy. Keep it simple with Big Bold Letters using a font that is easily readable from 10 feet away. Your background should be a solid LOUD COLOR

P.S. Sign Up for Your FREE Investor Training Every Tuesday at 12 noon: MikeButler.com/PowerLunch Mike Butler is a KREIA Past President, a recipient of the Ed Melton Award, a property manager, a high-volume landlord, a principal in Tenant Finder Service, a retired Louisville undercover police detective, and the author of the bestselling real estate book “Landlording on Autopilot,” now available in its 2nd edition.

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

UPCOMING EVENTS

Come Get Your Funding! Need some money to fix and flip a house – or to BRRRR your way into a rental property? We’ve invited four kinds of lenders to walk you through residential loans, commercial loans, hard money and private money. Member Orientation: At 5 p.m. on the Zoom call, tune in to hear about benefits you get as a KREIA member. Early Meeting: At 5:30 p.m., CPA Eric Shadowens is going to share tips on communicating with your tax adviser, and more! ❖ October 27th — Noon – 1 p.m. L.O.T.S. Event. Diamond Shirley will take us on a virtual tour of her rehab project. She’ll be showing how she’s fixed up the house, sharing her numbers, and answering your questions. Register now for the Zoom call!

❖ November 3rd — Noon-1:30 p.m. KREIA Lunch & Learn. Host Ed Gibson has invited Jordan Pohn of Surepoint Equity to speak. Check the website or your email for the location of the event. ❖ November 5th — 5-7 p.m. KREIA Happy Hour. Network and socialize with other real estate investors. Stay tuned for an email announcement, because we’re considering changing the venue. Also, as you’d expect, rules on gatherings during COVID19 may affect us.

Main Meeting Calendar Here’s what’s coming up next: • November 12th: Virtual Holiday Party on Zoom • January 28th: First main meeting of 2021

We look forward to seeing you at our next main meeting!