Issuu

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 10-21 October 2021 President’s Letter

Protect Your ASSets: Panel shows us how to keep our investments safe

Welcome, New Members!

Beginning Investors Workshop

Mike Butler: Yes or No – would you borrow $1MM at 3% fixed for 30 years?

Sharon Vornholt: Create 10 absentee owner letters that get a great response Jay Bowman: 10 things to know 16 about owning Airbnbs KREIA Photos

L.O.T.S. Recap: Jacob Michal 19 profits on a ‘paint-and-carpet’ fixer Nina Musgrave: Foreclosures increase as moratorium is lifted

National REIA News Briefs

Government Affairs Links

Calendar of Events

Dear KREIA Members and Friends, October is one of the greatest months of the year for sports fans. The baseball playoffs are in full swing, college and professional football have kicked off, and basketball games are set to tip. In The Infinite Game, author Simon Sinek reminds us that all of these are Finite Games. We know who the opponents are, we know the rules, and we know how winners and Erik Hitzelberger losers are determined at the end of the game. Amongst other things, real estate investing is not a finite game. It is an infinite game. An infinite game is one in which 1) the rules evolve over time, 2) opponents can be known and unknown, 3) there is no time limit or end, and 4) the object is not to win but rather to stay in the game. The only real way to lose an infinite game is to lose the will to play and drop out. Consider a relationship. No one suddenly wins Best Spouse, Ultimate Parent, Greatest Partner or Friend of the Year. We decide every day who matters in our life and work to maintain and grow those connections. Real estate investing works in the same manner. We set goals and spend each day working toward them. Our success is largely a function of our ability to take consistent actions and our resolve not to give up when things become difficult. We measure ourselves not against our competitors but against our own metrics. With that in mind, October is also a critical month for investors. The start of the fourth quarter should be a period where we strive to finish the year strong so that we can meet or exceed our goals. Being able to see those results at the end of the year and know you did your best is critical to maintaining the mindset required to continue in the game. October is also the time when we should start to set goals for 2022. January is too late. We need to start preparing now. As we begin to acquire investments and have wins, our new goals should not only be focused on growth, but also on protecting what we have already accomplished. This month, KREIA is very pleased to present a panel of experts who will show you how to do just that. Jenny Fields, Eric Shadowens and Greg Nalley will cover best practices for avoiding legal, tax and insurance setbacks. Each of these areas presents a risk to your business and to your will to compete. Show up, take notes and implement the Continued on Page 4

Copyright MMXXI 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 Erik Hitzelberger

Vice President Stacey Duvall

Advertise With KREIA

Secretary Jordan Pohn

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

Frank Miller

Greg Nalley

Hampton Scurlock

Rob Bergeron

Christopher Jaquith

Alexis Fentress

Ian Hooper

Mary Conrad

Eric Feller

John Mays

Michelle Rawn Parliamentarian

Chris McCarty Past President

Lauren Willoughby Media Manager

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 alongside active investors! Ask for someone to direct you at the checkin desk at the main 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!

How to Keep Your Investments Safe

Protect your portfolio using what you learn at KREIA’s October 28th main meeting You’ve worked hard to build your portfolio. How do you keep it safe? We’ve invited a panel to address this question at our October main meeting: attorney Jenny Fields, CPA Eric Shadowens and insurance broker Greg Nalley. Join us at Woodhaven or on the Zoom call. If you own rental property, it’s probably not a matter of if you’ll be sued but when. Don’t wait for it to happen — take steps now to protect your portfolio as much as is possible.

Meet Jennifer Fields Jennifer Fields graduated from the University of Kentucky College of Law in 1996 after completing her B.S. in biology from Milligan College. After working with Kentucky’s Fish and Wildlife Department in Frankfort, Jennifer joined the firm in 2001. She focuses her practice on real estate transactions, real estate investors, foreclosure purchases, business formations and IRS section 1031 tax-deferred exchanges. Jennifer is a member of the Kentucky, Indiana and Louisville bar associations. Jennifer grew up in Louisville and lives here with her husband, Mitch, and their two children. Wondering about the levels of protection you get from LLCs and trusts? Jenny knows, and she’ll tell us!

Meet Eric Shadowens Eric is a CPA who specializes in real estate tax accounting. He works with flippers, wholesalers, private lenders, landlords and realtors. He is always looking to gain more knowledge in real estate. His philosophy is to do more than just prepare a tax return for his clients and works to keep open communication throughout the year to provide advice, listen, and help his clients grow their business. Eric completed a flip back in 2019 but would consider himself a buy-and-hold guy as he invested in his first multifamily syndication this year. Eric is an accountant so you may have to approach him to get him talking, but once you do, he’ll talk all night about real estate, so be warned. Outside of tax season you can find Eric, his wife (Jan) and dog (Shithead) at their place at Nolin Lake on the weekends with a fishing pole and/or cold beverage in hand. Eric said he plans to address these points at the meeting: • Tax update of current legislation being discussed • Discussion of passive income and the real estate professional exemption • A few tax traps to avoid And he’s bringing us more digital goodies! Stay tuned…

Illustration by Nina Musgrave

Meet Greg Nalley George Gregory (Greg) Nalley is a Louisville native who joined the Air Force in 1983. He married his wife, Shawna Kennedy Nalley, and they’ve been married for 37 years. They have three adult children who are all paving their way in the world. While serving for 22 years, Master Sergeant Nalley problem-solved and ran offices for 6 Lieutenant generals and was lauded and highly decorated. Greg obtained his first degree in Information Resource Management through the Air Force and another Bachelor of Arts in Human Resource Management at Antioch University with 4.0 GPA. He retired in 2005 and moved back home from Hawaii and started his new career in the insurance business. He’s worked for many large agencies in Louisville and is now a partner at Nelson Insurance Agency. He enjoys helping folks with any insurance challenge. “I’ll be speaking about many policies to protect your assets,” Greg said of what he plans to cover at the meeting. “Adequate property coverage and umbrella, short- and longterm disability and several others that are important to our KREIA members.”

Agenda for KREIA’s Oct. 28th Main Meeting • 5:30 p.m. – Early Meeting with Tom Jenkins • 6 p.m. – Orientation with Jordan Pohn • 6:15 p.m. – Welcome, announcements, property pitches, and sponsor pitches. Buffet line opens! • 7 p.m. – Feature presentation on asset protectionge 34!

5:30 p.m. Early Meeting: Tom Jenkins Tom Jenkins, from Mold Solutions, will talk mold prevention and remediation. Tom says mold problems in Kentuckiana have been the worst he's seen in 18 years!

Welcome, New KREIA Members! Jasmin Ahmed Todd Armstrong Eddie Austin Shelley Beggs Colby Bentley Ellyn Dayton Marvin Greenfield Dexter Harris Matt Hoetker Melissa Lane

Brad Lehmann Chase Smith Jeff Lewis Mike Sostarich Don Lowe Miranda Woods DeCora Martin Eric May Marcus Merchant Terrance Oliver Octiana Phillips James Sidell Adam Smith

KREIA’s New Member Orientation Jordan Pohn will give a short presentation of the benefits of joining KREIA at every regular monthly main meeting. We offer many educational and cost-saving opportunities! Join him in the small conference room at 6 p.m. Online Presentation: You can view a recent session with Jordan and Stacey Duvall by visiting the Intro to KREIA page at kreia.com (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.

Workshop: Beginning Investors KREIA is teaming up with Master Builders Academy and NAREB (National Association of Real Estate Brokers) to deliver a workshop designed to teach beginning investors how to become landlords and house rehabbers. Attorney Harry Borders will be on hand to talk about wills and powers of attorney. Several bankers will also speak on how to get loans, and other investors will talk about their experiences in using real estate to actively create chunks of cash, through wholesaling and flipping, and in tapping the power of passive income – from rental properties, If you are interested in learning more about real estate investing, you are invited to attend this event, absorb this wealth of information, and ask questions. There is no charge to attend. ► When: Saturday, October 30th, 10 a.m. – 1 p.m. ► Where: Spirit of Love Church, 4107 W. Market St, Louisville, KY 40212 ► Cost: Free

President’s Letter Continued from Page 1

practices that will help keep you in the game during 2022 and beyond. We will continue to meet both in-person and via Zoom this month. Please join us whichever way you feel most comfortable by pre-registering at KREIA.com. This is the season of opportunity. It is sitting and waiting to be seized. You need to show up, get educated, and take action. KREIA is here to help. To your investing success! Erik Hitzelberger KREIA President

P.S. For those looking to add to their book list: Simon’s other books, Start with Why, Leaders Eat Last, and Find Your Why are excellent. Copyright MMXXI 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

Yes or No: Would You Borrow $1MM at 3% for 30 years? By Mike Butler Sounds too good to be true, doesn’t it? This article is intended to tickle your brain, make you think and jump into your Quadrant 2 zone (Important but Not Urgent). The Quadrant 2 zone takes good discipline and planning to force yourself to focus on your important but not urgent items in your life and business. First up, I don’t know any lenders offering these terms on real estate for the average mom and pop investor. If you find one, please send me an email asap. There’s some criteria to consider before making your decision and pulling the trigger. To keep it simple, there are 3 basic types of investors: 1. New Investors: brand new, just getting started 2. Varsity Investors: has a few investment properties and still growing 3. Veteran Old Pro Investors: could choose to “Stick a Fork in Me, I’m Done” If you are anywhere near my generation or age, you were probably raised and brainwashed with statements like these from your parents. • “Stay away from credit cards – they will cause you to lose everything!” • “ALWAYS Pay Cash for Everything. Avoid financing your purchases. This means stockpile and save up your cash if you want to make a large purchase or investment.” Our parents and grandparents lived by these beliefs because our grandparents lived through the Great Depression. Banks went belly-up. Customers stampeded to their banks to withdraw all of their money only to discover their banks were fresh out of cash. These bank customers lost their #@#$. So, my grandparents learned a huge lesson: Avoid banks. Stash and hide your cash anywhere except a bank. Okay, now let’s take a look at the New Investors. All New Investors should scream, “Heck, yeah!” to borrow this amount of money with these terms. Just imagine having $200,000 cash in five different banks. I want you to be honest here for a moment. When you read the title of this article, did you get the eebee-jeebee’s? Even if it was for a fleeting moment? Did this question terrify you because you knew you would have to make monthly payments on a $1,000,000 loan? Don’t worry, this is normal and it’s okay to have these kind of flashing thoughts between your ears. Your monthly principal and interest payment on this loan

will be $4,216.04; but, remember you have $1 million in cash stockpiled to invest wisely. Bottom line is this: As long as you can earn more than 3% profit, You WIN! Here’s another way to look at it. Imagine loaning this money to investors and securing it with a 1st position mortgage or lien on investment property. You charge 15% interest, but your cost is 3% -- allowing you to make 12% interest on money you have borrowed! This is 1% per month profit which equals $10,000 per month pure profit. On another note, you could go out and buy X number of rental properties, and you can figure the math on this one and don’t forget about your huge tax benefit of depreciation. Now let’s take a look at the Varsity Investor. You’ve been investing in real estate for a few years and have several rental properties. You are still growing your business and are very active doing deals every week or every month. No doubt, you can see how a huge infusion of cash like this with great terms could help you achieve your goals easier and faster. This one is almost a no-brainer once you conquer your fear(s) of borrowing this much money. Okay, now it’s time for the Veteran Old Pro Investor. You might say or be at the point in your investing career where you could choose to say “I’m done. I am going to kick back, relax and live off of my investment properties.” Now ask yourself, what could you really do with a million bucks, 3% fixed for 30 years? • Could you restructure your debt on the properties that still have loans? • Would this increase your cash flow now? • Could you replace all of your debt on your properties and still have a huge chunk of cash to stockpile? This would put you in a great position to take advantage of all of the new opportunities when our current market takes a dive or changes big time. Imagine all of the Jumping Loans opportunities that will surface. America is experiencing inflation like we haven’t seen in years. For the most part, we just wrapped up the CDC Eviction Moratorium. Running parallel to this is the Foreclosure Moratorium. Once this is over, you will see a boatload of pre-foreclosure and foreclosure properties hit the market. Our recent real estate market is nothing like we have seen before: Continued on Page 30

ATTORNEYS AT LAW Representing real estate investors, mortgage companies, banks, builders and buyers since the early 1970s with…

✓ Title Insurance Commercial Closings ✓ Contract Prep & Review ✓ Title Searches ✓ Powers of Attorney ✓ 1031 Exchanges ✓ Business Formation ✓ Investor Guidance ✓ Wills & Probate

✓ Residential &

Practicing in Kentucky

920 Dupont Road, Louisville, KY 40207 bordersandborders.com • (502) 894-9200 THIS IS AN ADVERTISEMENT

PRO-TECH FLOORING Floor Refinishing Specialist Hardwood Floors Installed Floor Repairs • Poly Recoating Dry Foam Carpet Cleaning Insured Member Office

Mobile

Fax

966-9300 500-8775 961-5730 David Williams, Contractor

FREE ESTIMATES

Do You Want Your Business Card to Appear in KREIA’s Newsletter? Become a Business Card Member for only $199/year and see your ad in a year’s worth of issues! You can upgrade to a business membership at any time.

Absentee Owner Letters That Get a Great Response By Sharon Vornholt Editor’s Note: This article was published originally on Sharon Vornholt’s website: LouisvilleGalsRealEstateBlog.com Sharon has allowed us to publish it here. Be sure to visit her site for more resources! I have talked about direct mail for a long time now. One thing that is so important to understand about direct mail is that you have to set up campaigns to be successful with this strategy. Creating absentee owner letters that get a great response all starts with consistency with your direct mail campaigns. Sending out a whole bunch of letters or postcards once or even a couple of times is just a waste of money. Direct mail is a long-term strategy. Before we move on to creating absentee owner letters that actually get a great response, I want to spend a little time going over the basics of direct mail.

123rf.com

What are the 7 steps that make up a direct mail campaign? 1. The mail piece: Decide on the type of mail piece (letter or postcard). 2. Your message: Create a compelling message for your mail piece. 3. The design: Choose the design of your actual mail What Exactly is a Direct Mail Campaign? piece. A direct mail campaign is an ongoing process of sending 4. Your list: Put together a list of prospects. Know who mail pieces to your target audience. It is not a one- or twoyour target audience is. time event where you send mail to your prospects. For most 5. Putting the mailing together: Do it In-house or groups of motivated sellers, my rule is that I mail everyone outsource it? every month so long as the house is still available. There are 6. The actual mailing: Drop it in the mailbox or have the some types of off-market deals like foreclosures that will direct mail company do that for you. (Recommended) have a different timeline. 7. Follow-up: Rinse and repeat every month. This is what I know for sure: folks who are successful with direct mail marketing follow some tried-and-true principles, Congratulations. You have just set up a direct mail and that’s what this article is about. campaign. This is the first step to creating absentee owner letters that get a great response. Surprising Statistics You Need to Know One more bit of advice to help you out. You can keep your lists organized in a spreadsheet. However, you need to Here are some statistics for you that you just might find get a database or contact management system to manage surprising. About 81% of your deals (not calls) will come at your leads right from the beginning. You won’t be able to or beyond your 5th mailing. However, around 90% of manage this process unless you automate it. people will stop mailing on or before the 3rd mailing. Stop and think about that for a minute. If you just mail consistently, you will be ahead of 90% of your competition. Should You Send Postcards or Letters? Just stay in the game. You want to be the last man standing My answer is, it depends. I generally use postcards for when it comes to follow-up. most of the niches except probates. (Find out more about You can find out more about direct mail statistics here: marketing to probates by visiting bit.ly/k2110probates) I’ve had good luck with postcards. However, you might ► Numbers and Statistics Aren’t Always Sexy, but Great need to do some split testing to find out what works best in Results Are (bit.ly/k2110numbers) your area. When I first started out, I used letters for everything with good results. Then when I moved to Here’s one more statistic for you. Something like 80% of postcards, I also had good luck. One main reason to choose all your deals will come from follow-up. So, what is followpostcards is they are so much more economical than letters, up? It’s your ongoing direct mail campaigns, a call after especially if you are outsourcing your mailing. Another someone has said no to your offer, or a second call just to reason is that the recipients have to see your message when follow up. It’s any continued contact you have with the they pick up the postcard. There is no envelope to open. seller. A thank-you note is a follow-up. Continued on Page 30 Copyright MMXXI 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.

5236 Dixie Hwy Copyright MMXXI 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.

10 Things to Know About Owning Airbnbs By Jay Bowman I purchase storage facilities across the United States with my partner Eric George with our company Beyond Storage, LLC, but outside of that I buy short-term rentals here in Louisville. I’ve been tackling STRs for three years now, and it’s been an interesting ride. Here’s a thread of what I’ve learned in my time owning Airbnbs... 1. Differentiating yourself is key. I was a house flipper. Gray paint, white cabs and Lowes lights are a no-go. People booking short-term rentals want to stay somewhere unique: Fun furniture, different colors, wild art, city-centric decor. 2. Outdoor spaces are a must. Fire pits, stainless grills, outdoor furniture and hot tubs definitely raise the game in my area. I went overboard and built a 30x50 deck on my first. Don’t do that. But do make it nice. 3. Know thy regulations. Cities are still changing rules around the country. Know what you can and can’t do. Louisville’s been through two changes and seems pretty settled now. If the floor drops out beneath you, have a backup plan for your house. 4. Know thy neighbors. When they find out what you’re doing in a residential area, you are an enemy. They think you’re going to run a brothel and sell drugs. Management of the outdoor space is a must. Quiet hours, rule signs, Ring doorbells and noise monitoring devices are helpful. 5. Don’t go cheap on the cleaning. In this game, pawns are the strongest pieces. The people who clean your Airbnbs are your eyes and ears. They’ll let you know if the hot tub is making weird noises, if there are holes in walls, if windows are broken and furniture is damaged. If you’re cheap they’ll be there just to clean – to get in and get out. Pay for quality and train them. 6. Management is a must. If your cleaner doesn’t show and you need to turn multiple units, you’re the one changing sheets and washing towels if you don’t have management. Paying management 20-25% of the gross is not uncommon. 7. Great location is a must. Great photos are the doorway to cash, but if the neighborhood is a dump they’re going to pull up and want their money back. I only tackle certain areas in the city. Everyone else can have the rest of the town.

8. Size matters. My 5BR/2BA does $120k gross a year. My 1BRs in the triplex bring $18k each. 9. Airbnb’s rate quotes are off by a mile. AirDNA’s are better. My manager uses an algorithm to find the top of the bell curve: location, competition, availability, price and condition all go into creating max returns. 10. People come to Louisville for the bourbon tours. We are drivable to most of the eastern half of the United States. We’ve got less than 1 million in population. You don’t need to be in a big city. Find your niche for the area and exploit it. Jay Bowman owns 60 Day Realty, a web-based real estate company that offers full-service listing programs with flat fee and discount realty commission options. “We save sellers $1,000s by providing exceptional real estate services at a fraction of the tradition cost!” Visit 60dayrealty.com

123rf.com

HELPFUL LINKS Louisville City Govt. Rules on STRs: bit.ly/louisvillestr Airbnb’s Louisville How-To page: bit.ly/airbnblouisville AirDNA: airdna.co

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.

Video Still KREIA Vice President Stacey Duvall moderated the panel during September’s Creative Financing meeting. Speakers were, left to right: Chris McCarty, Jay Long, Dennis Erhard and Darin O’Neil. Awesome strategies were revealed! This is a video replay you’ll especially want to watch.

Photo by Lauren Willoughby Ed Gibson, left, handed off the Lunch & Learn hosting reins to Duna Bolotte as he prepared to fly away South for his transition to Florida Snowbird. Thank you for hosting years of educational lunches, Ed! We learned a lot. Don’t be a stranger!

KREIA

Photos

Visit KREIA’s Private Facebook Group to see more of Bruce Hinson’s photos from last month’s meeting – in color!

photo by bruce w. hinson www.obedientcamera.com

Here we are learning at L.O.T.S. KREIA members had just polished off their free lunches when Jacob Michal took the mic to tell us about his rehab house at September’s Learning On The Site Event.

Photo by Rob Bergeron KREIA members Frank Miller, right, and Jordan Pohn, middle, networked with other investors near the bar at last month’s main meeting. Rob Bergeron and Andrea Dewey, at left, met up with another couple of investors at September’s main meeting: Brandee and Marcus Merchant.

Photo by Chris McCarty

PRP Rehab House: A Closer Look Jacob Michal parlays a light rehab into heavy profits By Lauren Willoughby Jacob Michal hasn’t been in real estate very long, but he’s working in turbo mode. It was July of 2019 when he got started – and he’s only 23 years old. “I stumbled across a few YouTube videos and thought, ‘Yeah, I can do this.’” He started out wholesaling and about a year later partnered on a flip. He took Frank Miller’s Believe Investment Group class and has completed three or four flips since then – and The 4BR/2BA house at 7104 St. Anthony Church Road is fairly new, built in 2003, and very spacious at 1,632 square feet. (Listing photo) said he has several more houses in progress now. and into their new house free of charge, and they wouldn’t This particular flip, the focus of KREIA’s September 28th have to lift a finger.” Jacob said all the couple had to do Learning On The Site event, he found off-market through a was point at where they wanted everything placed in the cold-calling campaign. And the rehab is one of those elusive new home. “paint-and-carpet” types every investor looks for. “That’s what we did for them. Hired a few people to “It was a fairly light rehab,” Jacob said. “We put $16k into come out here, got a U-Haul truck, and moved everything it.” His team redid the flooring, painted the whole house, for them. And that was like a big weight off them,” Jacob painted cabinets, installed granite countertops, did some said. “Also, being able to close on a quicker timeframe landscaping, and changed out all the light fixtures, door than if they were to list it with a realtor, and not have to handles, door knobs and sink fixtures. “So, it was a pretty easy deal, pretty quick,” he said. “I like do any repairs, that’s kind of the reason they went with us.” doing the lighter rehabs because you can do a lot more of Jacob said it took about 30 days to rehab the house and them, and they’re not get it listed. as stressful. We’ve Even though the house is in a flood plain, Jacob said done a few decentthey had many showings and many offers. It’s got a lot sized rehabs, but the going for it: a half-acre lot, a walk-in closet off the master lighter cosmetic bath (with washer/dryer hookups), covered front porch, rehabs are always the large back deck, garage, huge back yard – and a gorgeous best ones.” remodel that gives the house a like-new feel. The sellers, an At the time of the L.O.T.S. event, the house had been older couple, wanted under contract for about four weeks on a full-price offer. $150,000 for the The potential profit after commissions is around $50,000. house, but Jacob Sweet! negotiated them down to $140,000. “A lot of times the THE NUMBERS Find the highest price is not Purchase: $140,000 video from always the best offer this L.O.T.S. event Rehab Cost: $16,000 to that person,” Jacob on our Videos page. Sales Price: $220,000 photo by bruce w. hinson Find photos posted said. The sellers had a Closing, Commission, Etc.: $14,000 in our KREIA Facewww.obedientcamera.com problem – one he and book Group. Profit: $50,000 his team could solve. MM Lending’s Mike Fallot, left, intro“We offered to duced L.O.T.S. host Jacob Michal, who walked us through his rehab process. move everything out 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.

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 MMXXI 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.

Foreclosures Increase as Moratorium Is Lifted Latest numbers show expected increase, still well below normal market By Nina Musgrave ATTOM data shows that foreclosure filings – default notices, scheduled auctions, or bank repossessions – are up 34 percent from the previous quarter and 68 percent from a year ago. The latest report also shows that foreclosure filings from September 2021 were up 24 percent from August 2021. Lenders repossessed 7,574 U.S. properties through foreclosure (REO) in Q3 2021, up 22 percent from the previous quarter and up 46 percent from a year ago, the first quarterly increase since Q1 2016. Lenders completed the foreclosure process on 2,682 U.S. properties in September 2021, up 8 percent from the previous month and up 33 percent from a year ago. “Despite the increased level of foreclosure activity in September, we’re still far below historically normal numbers,” said Rick Sharga, executive vice president at RealtyTrac, an ATTOM company. “September foreclosure actions were almost 70 percent lower than they were prior to the COVID-19 pandemic in September of 2019, and Q3 foreclosure activity was 60 percent lower than

the same quarter that year. Even with similar increases in foreclosures over the next few months, we’ll end the year significantly below what we’d see in a normal housing market.” Foreclosure starts are up 32 percent from the previous quarter. California, Texas, Florida, New York, and Illinois (1,362 foreclosure starts) are the states that saw the highest number of foreclosure starts. For Q3 2021, ATTOM data shows Kentucky ranks #40 with 330 total properties with filings, 1 in every 6,012 (ATTOM: 1/every X HU (Foreclosure Rate). Indiana ranks #7 with 1,435 total properties with filings, 1 in every 2,012. Ohio ranks #6 with 2,598 total property filings, 1 in every 2,002. For more information on foreclosure activity in this article, visit attomdata.com Nina Musgrave is an investor and past KREIA board member. She is passionate about real estate, technology, and potato chips. Most platforms: @onlyonenina

National REIA News Roundup 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 Education & Outreach, has compiled. For more news, visit RealEstateInvestingToday.com

Builders Hunt for Alternatives to Materials That Are in Short Supply The Wall Street Journal reports that more than 90% of builders reported shortages of appliances, framing lumber and a type of engineered wood known as oriented strand board…. Another 90% said they faced shortages of plywood, and 87% cited shortages of windows and doors. Read the article at realtor.com: bit.ly/k2110builders

Who Pays the Most Property Taxes? Kentucky weighs in at the lower end of the property tax spectrum – but higher though higher population areas tend toward the median. Read the report: bit.ly/k2110propertytax

Fake Pay Stubs on the Rise Ohio investor and housing provider Jim Shapiro shares his story of having to spend more hours than ever screening prospective tenants lately. He is having to crosscheck owners and employers and even pay stubs. Read the report: bit.ly/k2110paystubs

Top Bed Bug Cities of 2021 With Fall finally here and Halloween just around the corner, Terminix has released its list of the top 50 bed bug cities in America for 2021. Uh-oh, Louisville is climbing the ranks of the most infested cities! Read the report: bit.ly/k2110bedbugs

S. Fla. Landlord Requiring Tenants to Get Vaccinated Against Covid-19 Current tenants, when it comes time to renew, either must get “the jab” or find another place to live. Read the article: bit.ly/k2110jab

Wall Street Seeks Out Fixer-Uppers The WSJ says a mountain of money has been made available to house flippers, but the challenge now is finding beat-up and out-of-date properties. We knew that! Read the article at realtor.com: bit.ly/k2110fixer

Mike Butler: Would You Borrow $1MM at 3% for 30 Yr.? Continued from Page 6 ✓ Interest rates are the lowest ever in history. Borrowers can afford higher prices. ✓ Not enough properties for sale causes increase in prices ✓ Too many buyers including investors all contribute to this crazy market. This canNOT continue. There will be another major correction in our real estate market. Think what would happen if the Feds raise the prime rate by 2 or 3 points? What would happen to the inventory of properties for sale? What would happen to the boatloads of buyers fighting over a few properties for sale? What if Lenders tighten up the criteria to borrow money, and many lenders after the last crash flat out refused to loan money to real estate investors. This wonderful real estate market happening now canNOT continue. No one can forecast exactly what will happen or exactly when it will happen. But all of my mentors all agree it will stop and probably with fast and drastic results. So, ask yourself now, are you ready and have you properly prepared for the next adjustment in our real estate market? If you spend a little time in your Quadrant 2 zone now, you can take action now to put you in the driver’s seat when these corrections start happening. Rue McFarland is definitely a Veteran Old Pro Investor by my standards. I’m not a betting person, but I would bet if you asked Rue McFarland if he could borrow $1,000,000 at 3% fixed for 30 years, Rue’s answer would be, “Heck, yeah! Let’s do all we can with these terms!” Now it’s Your Turn! Remember, LIFE does NOT have a Pause or Rewind Button! It’s up to you to make it happen To your continued $uccess,

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 best-selling real estate book “Landlording on Autopilot,” now available in its 2nd edition.

Sharon Vornholt: Absentee Owner Letters Continued from Page 10 Figure out what’s working in your area by testing. You can get a copy of the letter that worked well for me below. One last thing. Be sure your picture is on your postcards. Branding is an important part of direct mail. What are the Components of a Good Direct Mail Letter (or Postcard)? There are several key pieces to a good direct mail piece. 1. Your letter should be personalized. Wouldn’t you rather get a letter that says “Dear Dan” than one that says, “Hello homeowner or dear executor”? Your letter should also have the subject property address on it. 2. Headlines and sub-headlines are some of the most important aspects of the letter. You have to get the person’s attention right away, so it should be scannable. The person receiving the letter should be able to determine quickly what you are contacting them about. 3. When you are using postcards, getting your message across clearly is important because you have very limited space. Choose your words carefully and get to the point. 4. Use bullet points whenever possible to highlight your message. People have notoriously short attention spans. Using subtitles and bullet points makes it easy for the reader to scan your letter quickly. If they can easily identify with your message or your offer, they will be more likely to read the whole letter. 5. The letter isn’t about you, so don’t spend a lot of time talking about you or your company. You should say something like, “I will buy your house AS-IS, can pay cash, and close quickly.” 6. Those are things about you (or your company), but they are also benefits to the seller. List some problems the seller might be having such as: ● They tried to sell your property before you moved but didn’t get an offer.*Possibly they inherited an unwanted property. ● Or, they had tenants in the property and wanted to hold onto it for income. But, it turned out to be more trouble than you thought. 7. Offer some solutions or ways you can help them now. ● You won’t have to worry about making any of the needed repairs. ● You’ll stop sinking money into a property you don’t even want. ● We will take care of all of the paperwork for you. People are motivated by two things; pain and pleasure. Figure out how to make their pain go away. Continued on Page 34

Sharon Vornholt: Absentee Owner Letters Continued from Page 30 Want a Copy of My Absentee Owner Letter? Call up this article (bit.ly/k2110letter) on my website and scroll until you see the subhead asking if you want a copy of the absentee letter, then click where it says “Just Click Here.” And here are some previous posts on direct mail you might also enjoy: ► Tips for Consistently Boosting Your Direct Mail Rate (bit.ly/k2110boosting) ► Direct Mail Marketing 101 (bit.ly/k2110direct)

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

•

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

Sharon Vornholt is a local marketing expert with a national presence. Visit her website, LouisvilleGalsRealEstateBlog.com, to find years and years of articles with tips on wholesaling, marketing, branding, probate, and other real estate topics. On her podcast, Sharon interviews well-known investors from all over the country. Sharon is planning a new workshop soon on creating a marketing plan for off-market deals. Watch for a heads-up on her website and Facebook telling us when it’s ready.

Presorted First Class Mail U.S. Postage Paid Louisville, Ky Permit No.1402

PO Box 91225 Louisville, KY 40291 Return Service Requested

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

UPCOMING EVENTS

How to Keep Your Investments Safe You’ve worked hard to build your portfolio. How do you keep it safe? We’ve invited a panel to address this question at our October main meeting. You’ll hear from attorney Jenny Fields, CPA Eric Shadowens and insurance broker Greg Nalley. Oct. 28th, 5:30 p.m. - 9 p.m. ► 5:30 p.m. Early Meeting: Tom Jenkins talks mold ❖ Oct. 30th – 10 a.m. – 1 p.m. Beginning Investors Workshop. KREIA teams up with NAREB and Master Builders Academy. Speakers include attorney Harry Borders and local bankers.

❖ Nov. 10th — Noon-1:30 p.m. Lunch & Learn. Attorney Michelle Rawn catches us up on evictions, and Duna Bolotte hosts. Members only. Please note the move to Wednesdays for the time being. ❖ Nov. 16th — Noon-1 p.m. Tool Tip Tuesday. Tamara West hosts a Zoom call where she demonstrates software and resources helpful to investors. Members only.

Main Meeting Preview Here’s what’s coming in the months ahead: November 11th: KREIA’s Holiday Party January 27th 2022: Topic TBA

❖ Nov. 2nd — noon-1 p.m. L.O.T.S. event. We visit investor Regina Porter’s active rehab project in the Chickasaw neighborhood. Members only. Lunch provided!

We’re Back at Woodhaven, Baby! PRE-Register Now at KREIA.com