N E W S

New HUD Rules on Tenant Screening

from MAREI Staff

N E W S L E T T E R F O RM I D - A M E R I C A A S S O C I A T I O N O FR E A L E S T A T E I N V E S T O R S

MAY 2016

Finding Deals,the Calendar,the Directory,and All StarNetworking

from Vena Jones-Cox

M I S T A K E SF O R R E H A B F L I P S

9PLUS

RE INVESTMENT

THE PROFITABLEREHAB FLIP

Average HouseYou want to buy theaverage house in thebest neighborhood. The bestneighborhoods aregoing to have good

schools and amenities and will be easierto sell. By being the average house,rather than the biggest, the smallest orthe weirdest it is also going to be easierto sell and in the eye's of the Realtorswho control the buyers - easier tofinance.

Poor Curb Appeal

Finding a housewith an overgrownlandscape and anoverall lack of curbappeal can often bea cheap and easy

Not Every House is a Good Deal: Every house has a number andyou have to find it. But while very house has a number to be bought,not every house is going to make a good flip.

Some Things You Can't Fix: You can't change the location of thehouse, unless it's a mobile home, and that becomes a different articleentirely. So if it is located in a bad neighborhood with bad schools, noplace to buy groceries and not many jobs it will be tougher to sell. Likewise if it is located on a busy street or the neighboring property isless than desirable, like a run down house with a yard full of junk, or agas station right next door or a strip club down the street are allthings you can't fix and will affect your ability to sell the house.

Some things are an Easy Fix – Sometimes you get lucky and find ahouse that is not selling, primarily because the yard is overgrown andno one can see past the clutter. Clean it out and clean it up and it'sgood to go. Other times the clutter is just on the inside.

Contractor's & their Issues – The mechanics and logistics of hiring agood contractor, paying them correctly and documenting properlycan be the difference between making a profit and breaking even oreven worse, loosing money because you have to redo it, get fined, orcan't document the repairs were ever made.

These tips will help you make a profitable rehab flip.

MAREI Staff

fix. Just do some trimming, somemulching, some power washing andyou have it all cleaned up. A littlepaint on the shutters, mail box, lightfixtures and front door and it's allbrightened up.

Do Your HomeworkWork your numbersand make sure theyare correct. Nevertake the seller's orthe wholesaler'srepair estimate.

The average "perfect" house youmight buy, typically needs $10,000to $20,000 in repairs and updates.

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Don't Pay RetailRight now themarket is hot andfixer uppers are at apremium. Don't fallinto the trap ofpaying more, just

to get the deal. If the numbers don'twork for you to buy, rehab andretail, either go on to the next houseor explore a different strategy.

REHAB FLIP

Check out theNeighbor's House

Avoid Busy StreetsA house on a busystreet is going to sitno matter if it is forsale or rent,because no onewants to have to

get in and out of the driveway, listenito the road noise, or worry aboutthe kids or the pets getting run over. You can rent and sell these, but besure to adjust your priceexpectations downward.

Paying DrawsBe sure to payinvoices in trackablechecks and be sureto get a W-9 forreporting to the IRS. This way you have

all your bases covered in case of anaudit, but also if you have to proverepairs to a lender. Be sure to paycontractors based on a drawschedule and make sure scheduledwork is complete before they get ascheduled draw.

Get Permits

permits were obtained. Plus, shouldan inspector just show up on yourjob site to see permits and you don'thave them, you could be a thorn inyour side going forward, where ifyou had been proactive andobtained the permits, the inspectormight help you solve a few costlyproblems in the future.

Once you buy thehouse and fix it up,you have to sell itand if the housenext door is a junkyard or in poor

repair it is going to be tough gettingbuyers to overlook the mess nextdoor. Unless you can fix theneighbor's house, lower yourexpectations or go on to the nextone.

Yes, permits costtime and money. However when yougo to sell the projectyou are often askedif all the necessary

R E I N V E S TM EN T N EWS | 3

CONTRACTORSBe sure to checkout yourcontractors. Makesure they have allthe necessarylicenses and

insurance. Also ask for referencesfrom past clients and check themout. Go see their work and ifpossible visit them on a current jobsite, just to see what everythinglooks like while they are working.

Earn UpTo 7%Rebate OnPurchases

5% Rebate Varies based on total spend in a year.  2% Rebate has a minimum purchase of $3000 in 6 month period.

Home Depot offers up to 5%Rebate Quarterly to ThoseRegistered with Home DepotPro Rewards.MAREI Members can registerfor an additional 2%Rebate  Bi­Annually

LEGISLATION

"SO NOW I HAVE TO RENT TO FELONS?"What the New HUDGuidelines ActuallySay About Applicantswith Criminal Records

By Vena Jones-Cox

On April 4th, HUD released a statemententitled “Guidance on Application of FairHousing Standards to the Use of CriminalRecords by Providers of Housing and RealEstate Related Transactions” that set socialmedia sites afire with a lot of angryspeculation and half-truths regarding whatthe statement actually “means”..

But what does HUD’s move mean, and whatdoes it actually require you to do?

First, this is NOT a “new law”. There has been noaction by congress or the courts; felons have notbeen added to the list of “protected classes”. It’sa statement by the Federal-level policing agencyfor fair housing law clarifying its intention to

4 | MAR E I .ORG

interpret and enforce the existing lawin a new way. So while no act ofCongress created this, you can assumethat HUD WILL prosecute cases basedon it.

Second, in order to understand whyHUD thinks that whether or not yourent to felons is a discrimination issueAT ALL, it’s important to understandthe “Doctrine of Disparate Impact”.

The original Fair Housing laws of thelate 60’s more or less defined illegaldiscrimination as an intentional, if not

criminals are bad tenants”. For instance, youmight have criteria like this:

• No violent or drug-related felonies• No crimes against children• No felonies committed within the last 10years, and no imprisonment for felonieswithin the last 5 years• No crimes against landlords or rentalproperties• No convictions or pleas to any crimeinvolving metal theft, vandalizing properties,or otherwise damaging properties.• No arson convictions or pleas

And, as always, you’ll need to have thesepolicies in writing, update them as theychange, keep written records of how anyapplication rejections violated your policies,and above all, they must be applied equally toall applicants of all races, religions, disabilities,familial statuses, and so on.

In other words, don’t be what the folks who’dlike to further impinge on your propertyrights think you are. Don’t use your crime-related applicant policies to discriminateagainst applicants because of theirmembership in a protected class.

On the one hand, your rental houses are yourprivate property, and you should be able todecide that, as a blanket policy, you don’t wantcriminals living there for your safety, thesafety of your property, and the safety of yourother tenants and neighbors.

On the other hand, it’s unforgivably naïve torefuse to admit that America has systemicproblems that are nobody’s fault andeverybody’s fault—but which lead to a systemthat’s stacked against the poor and minorities.And when this stacked system becomes animpediment to finding a place to live, itbecomes HUD’s concern.

These new guidelines are an attempt to useHUD’s policing powers to remedy a perceivedsocial injustice—the blanket denial of housingto ALL people with a felony criminal record,regardless of the details of that record—thatimpacts some categories of Americans morethan it does others.

And yes, the way in which the powers that beare attempting to “remedy” this situationfurther restricts your rights to control yourprivate property.

So while it’s not “fair” that you should,personally, be burdened with having to rightthe wrongs that other people perceive withthe world, you ARE the one with the ability todeny housing, so of course the responsibilityto “fix” it falls upon you.

But the good news is, the new guidelines don’tsay that you MUST rent to felons, nor do theysay that you can’t take criminal history intoaccount.

. What they say is that a policy that bars ALLfelons, no matter what the nature of theircrime or when it was committed, might beconsidered to be discriminatory.

You CAN have policies regarding renting tofelons that protect your property, your safety,or the safety of you other tenants andneighbors. What you can’t do is have a no-felons policy based on generalizations like “all

R E I N V E S TM EN T N EWS | 5

overt, act. But as time passed, fair housing“thinking” began to evolve to include the ideathat even completely unintentional acts, if theeffects of those acts served to limit the housingchoices of protected classes, could bediscriminatory, illegal, and punishable by law.

For instance, landlords who created policiesthat limited the number of people allowed in aunit—for instance, “I won’t rent my 2 bedroomapartment to more than 3 people”—wereaccused of discriminating against families withchildren under the Doctrine of DisparateImpact.

See the logic? This policy would in no wayimpact a couple with no children, but woulddeny a couple with 2 children, or a single parentwith 3 or more children, access to an apartmentthat could, theoretically, suit their needs forspace. Thus, it “disparately impacted” aprotected class—families with children.

The fact that the reason behind these policieshas to do with the economics of owning rentals(more occupants use more utilities and do moredamage) does not stop them, under theDoctrine of Disparate Impact, from being illegal.

While the idea that you can be prosecuted forunknowingly and unintentionally discriminatingmight seem dangerous and unfair, the SupremeCourt did uphold it in a 2015 decision, sayingthat the Civil Rights Act does govern any and allpolicies that create “artificial, arbitrary, andunnecessary barriers” to housing based on“statistical disparities”.

And it’s those “statistical disparities” thatconnect policies against renting to felons todiscrimination. HUD’s argument is that,because people of color make up a much higherpercentage of the prison population than theydo of the general population, they are provablymore likely to be kept out of housing by suchpolicies than are whites.

So what we have here is one of those deeplycomplex, messy, divisive issues that pits thenatural and constitutional rights of one group ofpeople against those of another.

Vena Jones-Cox is a full-time realestate entrepreneur, real estatebroker, and past president of the OhioReal Estate Investors Association andNational Real Estate InvestorsAssociation. She publishes weeklyarticles about real estate investing,wholesaling, and the legalenvironment at www.REGoddess.com

Hosted by Brian & Michelle Winberry

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FROM OTHER GROUPS >

Join us Tuesday May 10th at 6 pm for networking

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very best rehab investors. Our special guests

include Jim Kasper, J.D. Asbell and Donald Tucker.

We are takign questions through the MAREI

calendar until 2pm on Tuesday. So go to

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there submit your questions..

REHAB FLIPS WHAT THE TVGURUS DON'T TELL YOU!

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"WHERE ARE ALL THE DEALS AT?"Some of the best placesto find deals andthings to make thedeal find you!

By Kim Tucker

#1 – Listed Properties: if you are going to startwith listed properties, you are going to want towork through a Realtor or I contend get yourown license and become your own Realtor.

For these listed properties you can find severaltools that will allow you to enter your

search criteria and then have it email you every

property that comes on the market. This is a

great place to start if you are a brand new

investor, primarily because it gets a lot of houses

in front of you so you can learn your area, go

look at houses and learn what is a deal.

However to get the best deal, you will want to

8 | MAR E I .ORG

narrow your search to properties that

fit your criteria. For example only in

your area, with 3 or more bedrooms,

with at least 1 or 2 garages and with a

basement. You may want to limit to

under a specific price, although

personally if it’s in my area, I want to see

them all and if they seem like a good

prospect I go look and make an offer.

The listing price is irrelevant.

What are you looking for in these

properties that get emailed to you?

Items that indicate a motivated seller.

First I look at pictures, is the yard a

That fairly well covers the list we started with,but by no means has it found us more thanmaybe 10% to 20% of the deals. So what then,how do we find the other 80% to 90%? Wellyou don’t find them . . . you make them find you. . . and you do it the good old fashioned way . . .you market to them.

Top 5 Marketing Tools:

#1 Business Card: By far one of the cheapestand best tools is your business card. Carrythem everywhere and find a reason to give oneto every person you meet:

#2 Web Site: The website does several things. First it is a perfect first impression for buyers.Second it lets you share your knowledge andexpertise. Third is is a place to captureinformation . Last is is a place for sellers tocommunicate with you.

#3 Direct Mail: This is one of the top ways tomarket to specifically the type of motivatedseller that you want to target. You can buy orbuild list of property owners that have soe sortof immediate motivation to sell. Then send aseries of direct mail pieces to these sellers.

#4 Internet: This is going to be a broad rangeof things to reach out to people from yourwebsite, to social media campaigns to emailcampaigns.

#5 Signs: You may have heard the song Signs,Signs everywhere are Signs . . and that is justwhat you need. These can range frombranding on clothing, to little bandit signs onthe side of the road, to banners in yards andbillboards. It's all in your budget and your plan.

Hopefully this has given you a few ideas to useto go out and find deals.

See you at the next meeting, be sure toconnect with the other folks there, someonejust might have a deal for you.

You could also check other classified sites, thenewspaper or the penny saver publications.

#3 Driving for Dollars is what they call it whenyou drive around a neighborhood looking forsigns of houses for sale. However, it’s also a greatway to build a list of not only the houses listed forsale or the houses with For Sale By Owner or ForRent By Owner signs, but also of homes that arevacant and / or in disrepair. Then depending onyour motivation to buy houses, you could goknock on the doors and talk to people or look upthe owner’s name and address up and send thema letter or postcard or in this day and age, see ifyou can find them on Facebook or LinkedIn andsend them some messages. There is even an app,where you could snap a photo of the house andsend a postcard to the owner, all from yoursmart phone.

#4 Referrals from People You Know: This couldbe one of your best resources because peoplewho the seller knows, tells them to call you oryou to call them, so they are a warm lead givingyou built in credibility. Be sure to cultivateeveryone you know to send you leads. Let themknow that you buy houses and how you work,then when they come across a person whoneeds to sell their home and do it quickly thatthey should call you. This could be people youknow like friends and family, but don’t forgetpeople you run into at the grocery store, or whomake your coffee at Starbucks, or clean yourteeth at the Dentist. Or you could also work tocreate a group of people to refer to you like pastsellers, probate attorneys, Realtors and otherpeople who might be working with motivatedsellers.

#5 Other Investors: There is a whole categoryof investor that is not buying to rehab and flip orbuying to hold, they are buying to sell to you. They are called wholesalers and you want to besure to get your name on every wholesaler’semail list so you can find out about their houses. You will find these people as you startnetworking at your local REIA and you will startto see their marketing as you work on your ownmarketing, and you might run into them athouses. Be sure to get their card, go to theirwebsite and get on their list.

R E I N V E S TM EN T N EWS | 9

mess? Does the roof look in bad shape? Is thesiding falling off or the paint peeling? Are thereboarded up or broken or ancient windows? When we look at interior photos, is it cluttered? Is every flat surface covered with stuff? Doesthe kitchen need updating? Is there a lot of pinkor aqua blue green in the bathrooms? Is there alot of 80’s brass? If the pictures say it needsupdated or remodeled or repaired it haspotential.

Is it obviously vacant? Then the seller alreadymoved out. Very big flashing indicator that thiscould be a deal.

Is it beautiful, like the after photos on the homerenovation shows? Then this is probably aninvestor fixed up house and will be yourcompetition once you remodel and list it for sale.

Second look at what the text says about theproperty. Does it say anything like “motivatedseller”, “bank owned property”, “handy manspecial”, “fixer upper”, “estate house”, etc? Theseterms are all indications of motivation. Sometimes the system you are using might allowyou to search for key word terms. By far the bestsystem to work with is the Realtors systemthrough the Multiple Listing Service, you can setup searches for each of these key words.

But remember, if you are getting a property sentto you via email, a whole bunch of other potentialbuyers are getting the same email. So if it is adeal, you have to act fast and bring your bestoffer.

#2 Craigslist: Craigslist and other similar siteswhere you can search for houses advertised forsale by owner can be a great resource. However,you might want to set up a system to deal withthe advertisements where you make a list of allthe houses available for sale AND for rent, andsend an email to them with some sort of briefmessage that you buy houses and close quicklyand ask them to call you, email you back ormaybe submit on your website. Or you couldmake a list of all the houses for sale and theassociated phone number and send a voice blastor text blast for them to call you. The motivatedsellers will get in touch with you and you can thengo look at, build rapport, make an offer.

DIRECTORY

BUSINESSASSOCIATES

A C C U R A T E T I T L EA Full Service Title CompanyDavid Greenwww.AccurateTitleCo.com913-338-0100

A L P H A T I T L E Full Service Title CompanyPatsy Archerwww.AlphaTitleLLC.net913-498-8999

A P I AAsset Protection Insurance AgencyLindsay Griffinwww.APIAProtects.com877-752-2742

A Z U R E W A T E R F R O N TLuxury Waterfront Property InvestmentBrad Reddickwww.AzureWaterfront.com800-240-3606

Find out more about each of these associates by visitingtheir website.

Or go to MAREI.org and click on Business Directory.

CROSSROADS INVESTMENT LENDING

C O N T I N E N T A L T I T L E

Investor LendingBritton Asbell and BarakTschirhartwww.KCLend.com913-766-2900

A Full Service TitleCompanySharon Bowerwww.CTitle.com913-338-3232

1 0 | MAR E I .ORG

B R I D G E M A N A G E M E N TA Turn Key Real Estate ExperienceNathan Brookswww.BridgeEquity.com913-695-8213

A Z U R E C A R P E T C L E A N I N GCarpet, Hardwoods & MoreJerry Myers & Tiffany Kroutwww.AzureCarpetCleaning.com816-668-0258

D I S C O V E R H V A C Heating & AirconditioningComplete System for $2785www.DiscoverHVAC.net816-500-2900

DIRECTORY

I N V E S T O R S C H O I C E F U N D I N GThe Flexible Funding SolutionL. Scott Ficinuswww.InvestorsChoiceFunding.com816-668-7223

J A M I E S O N H O M E T E A MRealtor & Property ManagementKevin Jamiesonwww.KevinJamieson.ReeceNichols.com913-384-8331

K C I N V E S TInvestment Property SellerKim Tuckerwww.KCInvest.com913-735-0018

K C M O H O M E B U Y E RProperty BuyerDon Tuckerwww.kcmoHomeBuyer.com816-200-2198

REAL PROTECTInsurance for Investors Brought to you by National REIAwww.RealProtect.com1-800-579-0652

P R I D E P R O P E R T I E S

M E R C H A N T S M O R T G A G E

Real Estate ProfessionalsMarcus and Matt Braywww.PrideProperties.com913-213-5370

Real Estate Finance CompanySusan Aubinwww.MerchantsMtg.com720-554-9480

H O M E R E N T A L S E R V I C E SKansas City Property ManagementSandy Fisher or Paul Brantonwww.Home4Rent.com913-469-6633

L O N G H O R N I I I I N V E S T M E N T S

Private Lending PartnerLawrence Hopkinswww.LonghornInvestments.com214-420-7329

R E I N V E S TM EN T N EWS | 1 1

REALTY RESOURCEReal Estate BrokerageScott Tuckerwww.RealtyResourceKC.com816-406-0701

G U A R A N T E E D R A T EFirst Digital MortgageBeth Langstonwww.GuaranteedRate/com/BethLangston913-225-9323

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