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MID-AMERICA ASSOCIATION OF
Investment News
P e ag 10
on c
Page 5 Staff Page 6 How I Did the Deal
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Page 8 Making Money Page 16 So Whats Your Script Page 18 Get Down to Business Page 20 Real Estate, Its Time Page 22 For Sale Investment Opportunities Page 25 Tax Tune Up Monthly Meeting Page 26 Use your LLC Properly Page 28 Calendar of Events Page 27 Quick Books Training Page 10 Benefits at a Glance Page 12 Disclosure Statement Page 14 Welcome New & Returning Members
Page 3 Business Members Build your team with our Service Providers & Industry Partners Page 4 MAREI Info
2011
2012
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BUSINESS MEMBERS
MAREI Business Members are here to serve you in your Real Estate Business. They specialize in Real Estate Professionals and have joined our association as a Business. You can find out more about each of our Business Members at www.MAREInet.com/Services . Dont see a service you need? Ask on the Forum!
Foundations Cornerstone Foundation Joe Williams 913-220-5253 CornerstoneFoundationRepair@yahoo.com Insurance www.NREInsurance.com Jim Jrolf 913-915-3232 1-888-741-8454 jj@nreinsurance.com Property Management
Your Company Here $499 annual Or $135 a Quarter
Investors www.kcmoHomeBuyer.com The Tuckers 816-200-2198 kcmoHomeBuyer.com Property Management Real Estate Brokerage www.RealtyResourceKC.com 816-523-4400 RealtyResourceKC@gmail.com
www.JamiesonHomeTeam.com www.MyPremierleasing.com Kevin Jamieson Jeff Wood 816-503-4671 816-841-9500 kevinjwoods@mypremierleasing.com jamieson@reeceandnichols.com Staging www.ShowHomesKC.com Michelle Davis 913-449-3593 mdavis@showhomes.com Suppliers: Building www.CabinetGiant.com Josh Burns 1-877-484-4268 info@CabinetGiant.com Title Company Suppliers: Building www.Sherwin-Williams.com Mike Steiner swrep4735@Sherwin.com www.AccurateTitleCo.com Jackie White / Mary Peterson 913-338-0100 jwhite@accuratetitleco.com
Investment News
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Contact Information
PO Box 8685, Prairie Village KS, 66208 Phone: 913-815-0111
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Legal Disclaimer
MAREI does not exist to render and does not give legal, tax, economic or investment advice and disclaims all liability for the action or inaction taken or not as a result of communications from or to its members, officers, directors, employees and contractors. Each individual should consult his/her own counsel, accountant and other advisors as to legal, tax, economic, investment and related matters concerning real estate and other investments.
Content Disclaimer
The views and opinions expressed by authors of articles contributed to this newsletter do not necessarily reflect those of the association, the board of directors or the staff.
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A 10% discount is given on ads pre-paid for 6-12 months. Any changes to a pre-paid ad will incur a minimum charge of $20. The deadline to submit ad copy is the 1st of each month. All ads must be prepaid. Contact to verify ad format can be accepted. PDF preferred. There is an additional charge of $25 to typeset a business card ad or 1/4 page ad layout, $60 for a 1/2 page or full page lay-out. Opportunities also exist for advertising on www.MAREInet.com. Call 913-815-0111 for more information. Email ad copy to info@MAREInet.com. Mail payment to MAREI, PO Box 8685, Prairie Village, KS 66208 or request an online payment for to use credit or debit card.
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Advisory Board Donald Tucker DonTuckerRE@gmail.com Investor Focus Group Leader: Blue Springs / Lees Suumit Debra Felderhoff superiorrental@gmail.com Landlord : Investor Focus Group Leader: Weekly Wednesdays Michelle Winberry mlwinberry@gmail.com Investor : Realtor Focus Group Leader: Weekly Wednesdays Brian Winberry
Advisory Board / Membership Desk Dan Goodwin DanGoodwin@kw.com Realtor : Short Sales Advisory Board / Membership Desk Shelda Goodwin SheldaGoodwin@kw.com Realtor : Short Sales Focus Group: Eddie Speed Mentoring Students L. Scott Ficinus Scott@Ficinus.com Realtor Advisory Board / Membership Desk John Welchert JWelchert@platinumrealtykc.com
Investor :
Investment News
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H
Kim Tucker
d the I di ow
Calling all MAREI members: Lets face it, there are three key tasks that all investors need to work on daily:
Prospecting or Marketing for Buyer Leads Prospecting or Marketing for Seller Leads Prospecting or Marketing for Private Money.
you can write out a short success story article and walk us through how you did the deal. You submit it to us here at the Investment News and we publish it here in this publication. Note that this publication is syndicated out to 4 different online publication sites as well as social media and emailed out to the MAREI list. So you get a lot of action through the newsletter. We know that you are probably like most investors who want to attract as many people as you can, so we need to take the next step and go online and seek out a few other real estate investor websites that will allow you to submit your success story and include your contact information. So for example, go out there to a site like REI Club or CREOnline and find their success story page. There should be a link for you to be able to submit your story. So after you send us the success story, submit it online to these sites and gain even more exposure across the country, for free! You can get into the big time real estate investor magazines, but note that most of the time, they will want you to either buy so much advertising from them or flat out pay to have your story included. This can get very expensive.
L! EA D
We often talk about the standard ways of prospecting as calling a list, emailing a list and posting ads on signs, in print media, or online. Now, you could spend more time and money on all those time consuming tasks or you could take a different approach. Become famous!
If you pick up any magazine targeted to an industry, you will note that the movers and shakers in that industry work to have a magazine article. A movie star has a new movie coming out, they get it in several magazines and make appearances on Talk Shows. Our business is no different. You want to attract buyers, sellers, and lenders so you need to do your own stint on the Daily Show and talk about what you do! Obviously, you probably cant get on TV (yet) but we do have a very valid alternative. To attract local investor buyers and at least potential private lenders, Page 6
We know that you still need to do the normal networking and marketing activities, but taking the time to share your success with others can direct a whole new group of people to you. Take some time to think about your past deals, pick out a few that really stand out, and write them down. Share your knowledge and your experience with others through this feature here and similar features online. Become famous, if only in the Real Estate Industry.
Do you have a deal, we would love to hear about it. Email it to us at info@MAREInet.com
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Investment News
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Making Money
MAKING MONEY WITH THE LAW WRITTEN
BY ON
AZREIA.ORG
Your ability to make money on business and real estate deals is directly related to your knowledge of the law. Whether it is structuring the deal or trimming the tax burdens, the law can turn a bad deal into a good deal and a good deal into a great deal. In fact, if you use the law to leverage what you do, you can make money faster than you ever thought possible. In your business, your professional practice, or real estate investing you dont need to work harder, use the law to leverage what you do to make more money. No more work no more time no more risk, just more money to spend! Not only can you get ahead financially a lot faster, using the law, when problems strike,
you can keep what you have worked your whole life for. In todays society, if you dont take the opportunity to protect yourself and your assets, somebody is going to take your assets away from you. It might be the government, the IRS, the lawyers, your tenants, your partners, your patients, your clients, or any one of a dozen other people or problems you face, but somebody is going to take your hard-earned money away from you, unless you protect it. You undoubtedly hope and pray that you wont have a lead paint problem, get sued by a tenant, or have the lawyers come after you for some insignificant reason. You do more than just hope and pray that you wont lose your household property to a common thief. You lock your doors, put security lights around your house, and set up alarm systems. Your financial investments and real estate investments are a lot more
Monthly Meeting
Details: Tuesday November 13 6:00 pm to 9:00 pm Career Education Systems Agenda 5:30 pm Pre Meeting / Setup 5:50 pm Orientation 6:00 pm Networking / Vendor Hall 7:00 pm Speed Networking 7:15 pm Presentation 8:30 pm Q & A / Networking 9:00 pm Adjourn
Guest Speaker: MAREI Member Joe Martin CPA with Citizen Tax Service
Ward Parkway Shopping Center8600 Ward Pkwy Kansas City Missouri Top Floor
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valuable than your household property. Have you done anything to protect those assets from the thieves that could take them away from you through a legal or financial attack? The legal system is the most powerful system we have in our nation today. When you get sued, you are going to spend every dime youve got just defending the lawsuit. Either that or you lose. That is the way the system is set up. The biggest mistake youre going to make in your financial careers is to say that you dont have enough to worry about yet. It doesnt matter how much or how little you have, in todays lawsuit happy society, you had better worry about how to protect your assets, or they will be taken away from you. If you are going to protect your assets, you need to be able to identify the financial threats you face. The sad part is, the general public doesnt even know what the threats look like, and they certainly dont have a clue how to protect themselves from those threats. The first thing you have to do is identify the threats, and then you have to systematically eliminate them. The IRS is one of the major threats you face. Your tax payments over your lifetime could dwarf your mortgage
payments, your medical expenses, the retirement money you stoke away, and the cost of sending your kids to college all combined. Taxes are by far the biggest constant drain on your financial resources. If you know the tax laws, can you make money? Certainly! You can cut 10 15 or even 25% off your tax bill every year. Think about it. How much would a 25% reduction in your taxes be worth to you just this year? You attend seminars, practice improvement fairs, scour the real estate market, and do everything else you can think of to find a way so that you can make more money. The irony of it all is, if you learn the rules of law and to use various legal structures, you can make more money in everything you do. You dont have to change what you are doing now. All you have to do is change your position in the law. Think about the rich people you know. It doesnt matter what they are doing, they use the tax laws and all the other laws to their advantage and they make money. You can do that, just like they do. But, you have to have a legal foundation to build on. You cant build a house from the roof down. What do you have to build first? The foundation! You cant build a financial fortune from the roof down either. Youve got to
have the foundation first. If you study the wealthy, you will find that every one of them has a legal foundation that they have built The reason you dont have a legal foundation and shields around your property is because of the cost, time and frustration. If you have a lawyer set up such a shield, it will cost many thousands of dollars, and you probably wont really get the protection you want. The process isnt hard, but the lawyers make it very complicated to protect their turf. Most successful people learn that they have to understand what the opportunities in the law are, and many of them actually end up doing a lot of the legal work for themselves. Every wealthy person makes use of certain legal tools and principles. If you want to be rich, you have to learn to use the legal tools that the rich use. Whatever you are doing today, if you understand the laws, you can make more money. Think about it. The rich make money at whatever they do. And, the rich just get richer. One of the major reasons they can do this is their use of legal techniques and structures. Their use of the laws puts them on the fast track to riches and lets them protect what they already have. Your use of the laws will do the same things for you. Page 9
Investment News
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MAREIs Government Affairs actively monitors national legislation and rule-making that impacts the real estate industry and harnessing the strength of MAREI members at the grassroots level. MAREI members also receive timely Calls to Action when there is a time for our members to take action on an important vote. Members also have access to the latest in Market Data.
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Investment News
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Disclosure Statement
Private Lending: The Disclosure Statement Written by Alan Cowgill, Colby Properties Reprinted from REIClub When I was getting my real estate education and started to learn about using private lenders, ALL of my instructors left out a HUGE piece of the equation. It was the part about being in compliance with the SEC and their regulations. I realized recently that there is a basic item that you need when borrowing money from Private Lenders that some of you might overlook. It is a DISCLOSURE DOCUMENT and every one of your lenders should get it. This is such an important item I thought I would dedicate this investing article to covering as much as can - so here we go... Private Borrowing & Lending Rules: 1. A promissory note is a security. 2. If you want to advertise, or pool money you had better have 'registered' with your states SEC. 3. Don't pay commissions to find private lenders unless it is to a licensed broker. 4. Don't use the word 'guarantee' in your advertising. Or anytime. 5. Every lender should get your disclosure document. What Is A Disclosure Document? Whether you have no private lenders yet or a bunch of them, you must have a disclosure document. This is a "no option item". When you are looking to get a new private lender, the first thing you hand them is a disclosure document. You see all investments are risky. Therefore you have to tell your private lenders that in your disclosure document. If you are ever asked by the SEC to show Page 12 them yours, you had better be able to produce it and prove that every lender got a copy of it. If you don't have one, then you need to start immediately on creating one. Then I'd run it by a SEC attorney to see if it is good enough. They are roughly 10 pages long for a basic one. When you are offering private lenders the opportunity to work with you, you must be sure to disclose to them the risks and rewards of the business. You should prepare a disclosure document. A disclosure document has legal consequences. If a private lender is not given sufficient, material information and suffers a loss, he may have a claim against you and your business. The information you give private lenders must be accurate and not misleading. The key test is if you have given private lenders all "material" (significant) information about your business at the time the investment was made. It is therefore important to follow the SEC's disclosure regulations in your document. What Are The Guidelines For Creating a Disclosure Statement? In general a disclosure statement should have at least the following included information:
The Business of the Company - This information generally includes a description of your private lending business, location of the company's facilities, trends in the industry, and the company's marketing strategies.
An example would be... "Integrity Home Buyers, Inc. is a real estate investment company. We work with private lenders and put their funds to use in residential property investments that are secured by mortgages. These transactions are done in compliance with relevant laws and regulations and in compliance with appropriate securities regisMAREInet.com
Public Accountant.
Risk Factors - These factors vary depending upon the company and the nature of its business. They may include cash flow difficulties, market competition, inexperience of management, and dependence upon an unproven product, absence of operating history or profitable operations. The real estate industry is particularly sensitive to economic downturns. The value of securities of issuers in the real estate industry can be affected by changes in real estate values and rental income, property taxes, interest rates, and tax and regulatory requirements. Use of Proceeds - The use of the funds to be received from the offering should be set forth with a high degree of specificity. Categories of expenditures may include such items as leases, rent, utilities, payroll, and purchase of equipment, payment of notes, advertising costs, insurance, supplies, and payments to be made immediately to officers. Key Personnel and Shareholders - Individuals who direct the company's operations or who make significant contributions to the business of the company as employees, independent contractors, consultants, or otherwise are identified and important background information such as education, age, and business experience of these persons is disclosed. Principal shareholders of the company are identified with a description of the number and percentage of shares beneficially owned. Financial Statements - Financial information, such as balance sheets and statements of income and cash flows that accurately describes the financial condition of the company, is typically provided. In some circumstances, these financial statements must either be audited or reviewed by a Certified Investment News
Other key points This is where you should give people access to information about your business. If you're new to this business, give people some projections of what you hope to do with the business that is reasonable and conservative. It's good business to under-promise and over-deliver.
You should distinguish between facts and beliefs in your disclosure. Restrained language should be used throughout the text. At the practical level, many investors are accustomed to reading carefully worded disclosures and they are suspicious of broad, unqualified claims. An understated, factual disclosure can deliver a powerful message to private lenders. Avoid arcane jargon and technical terms. Provide definitions for terms that might not be easily understood. Don't make private lenders learn a new language if they want to understand your disclosure document. Private Lending Lesson Conclusion - The All Important Disclosure Statement The bottom line... by giving your lender a disclosure document, it shows the lender exactly what is going on with their loan. You will have a meeting of the minds and everything is on the table. You will be a huge step forward by being professional and in avoiding potential problems in the future. Besides, it's required in every state. I now see it as my goal to make sure real estate investors are aware that when they borrow money from private individuals, it is not the Wild West. There are rules that come into play. The rules are there to protect the lender and the rules are good rules. The above guidelines were compiled through my SEC attorney. Page 13
Renewing
New Members
Jon & Stacy Bichelmeyer: Lenexa, KS (since 2010) Barbara Danuser: Pleasant Hill, MO (since 2010) Glenn Davis: Lexington, SC (since 2010) Alan Goke: Kansas City, MO (since 2011) James Jemmerson: Kansas City, MO (since 2011) Jacquie Lombard: Shawnee, KS (since 2011) Larry Myer: Kansas City, MO (since 2007) Mark Pantak: Houston, TX (since 2012) Michael & Lisa Rabbe: Kansas City, MO (since 2012) Bill Textor: Leawood, KS (since 2007)
Hank Arendt: Lees Summit, MO Terence Benson: Lees Summit, MO Caroline Boyd: Kansas City, MO Mike Cantrell: Kansas City, MO Ryan Day: Raymore, MO Bill Fowler: Leawood, KS Matt Graham: Kansas City, MO Dan Gregg: Tonganoxie, KS Gerry Hamment: Kingsville, MO Gregory Harris: Olathe, KS David Morgan: Lees Summit, MO Freud Musanu: Kansas City, MO Ralph Robles: Norwalk, CA Randy Rott: Overland Park, KS Carolyn Shaw: Shawnee, KS Dustin Shay: Perry, KS Joshua Smithson: Kansas City, MO Jose Suarez: Staten Island, NY Sherri Tabron: Kansas City, MO Kevin Tan: Kansas City, MO Randy Whitehead: Lenexa, KS MAREInet.com
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behind on payments, the bank will foreclose. Binds are used often in implied cause and effect. So if you do more of x then more of y will happen. So the more deals you bring me, the more money we will make. Or the more you procrastinate, the less time we will have. Double Bind is an implied cause and effect where both x and y are bad, forcing them to pick one over the other. You can sell your house to me today for $20,000 or you can wait a month or so and my offer may be less. Assumptive Tag Phrases are used to show that you assume the other person agrees with you. It makes sense to be a private lender rather than putting your money in the stock market, dont you agree. We wrote out scripts and practiced, practiced, and practiced. We also discussed body language, up swing and down swing and more. So figure out what it is you say in business every day. Take 5 typical scenarios in your daily business and write them out. Then write out some scripts one sentence to a whole paragraph. Use several or even all of these phrases. And practice. For more information you can Google NLP and study up. MAREI members will find Bills NLP Cheat Sheet in the member library. And if you want your scripts for real estate investing already written out, give us a call here at the office, we have a special price on Bills Sales Talk Training Program.
Embedded Commands that tell us to do something for example: Decide Tonight, to take my offer. Adverb Presuppositions that you put in front of the sentence to show that you assume it to be true. For example: Obviously, you need to take care of your situation. Temporal Presuppositions that allows you to presume or assume beforehand that something is true. An example: During the time we work on this transaction you will begin to understand. Direct Cause and Effect show that two things are related. For example: Making a decision creates a feeling of relief. Implied Cause and Effect that shows that if x happens, then y will follow. For example: Because you are
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Do the math.
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Discounts for MAREI Members: Jeff Woods Broker www.MyPremierLeasing.com 816-849500 Receive 20% off all Regular Priced Advertising. Log into Members Area, click on Member Discounts and look for MAREIs Discount code!
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Investment News
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offline as well as in email to accumulate all the stuff in so that when we need a document on this transaction we can find it in print and online and have a back up just in case. Prioritize. Look at your to do list and focus on the ones that must be done first. Also look at simple repeatable tasks that you might be able to outsource to a third party. Clear the decks: Only have out items that you are working on. Having a bunch of other papers on your desk or a bunch of other websites open online will distract and slow you down.
As entrepreneurs we may also find ourselves doing all the tasks in the business and as a one or two person business, this sometimes is impossible. So as you are clearing and organizing, look at the tasks you have and start writing out a process for the task. You may find that the tasks that you do each and every day are taking up way too much of your time and slowing you down. Yes, those tasks must be done, but should they be done by the CEO of your company - YOU. Or should someone be hired to complete them. Hiring someone does take some thought as to hiring a person who works for you in your small or non -existent office or who might work for themselves on your behalf. Virtual Staffing can be an excellent alternative to an employee as they work for themselves, maintain their own office space and equipment and deal with taxes, insurance, and payroll, thus saving you money. It may be that the virtual staff is in town, in another state, or even in another country. With a little work, you can be organized and get more done and make more money! So lets get down to business.
Throw out the trash. If you have no use for it be it empty take out or junk mail sitting on your desk, to spam emails or documents you no longer need on your computer. Get rid of them, they just clutter up your activities.
Put things where they belong. Have a filing system for everything in the desk, the back pack and online. In our real estate office we have a file per transaction both online and
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to have the cash yourself, but you need a ready source of private funding from those that do. Turn-Key Operators: Can purchase the low end ($20,000 to $80,000) stock from the wholesalers and the note buyers as well as bank owned REO to get rented out and cash flowing and then sell to the anxious money investors. Turn key operators need to have a system to fund the initial transaction, source the housing stock, and to manage the rentals. This can even be done with no money, if you are getting paid to act on behalf of the anxious money investor. Rehabbers: Can purchase the higher mid range stock ($80,000 to $150,000) to renovate and sell to the end buyer. Because the house inventory has shrunk, there are less good properties for those who can buy to choose from. So there is still a need for quality renovated homes. Hands Off: Those who want to invest, who have anxious money, but lack time and knowledge, well they can partner with any of the folks above for a decent, more reliable return than the stock market. So if you have the cash, you can fund any one of the investors above or partner with them. And right around the corner, according to industry experts, we see the commercial real estate market looking to fall into line right behind the residential market. All these factors work to create the perfect storm for real estate investing. The question becomes are you going to find your way into the industry or let it pass you by? Ready to get started? Then its time to take action! Step 1: Get involved in the industry. Make it a priority to meet with people in your area in the industry on a Investment News
regular basis. Step 2: Get educated. You can learn more about any of these types of investing at your local real estate investors association through live and online classes, blogs and libraries. There are many fly by night companies that see a whole new industry to sell you education. They come into town for a week, sell, sell, sell and then they are gone with your money. By going to the local real estate investor association, you can be assured that you are working with a known educator and because you are working through an association who talks to other associations, you are in a better position if the education turns out to not live up to be all that is promised. Step 3: Take Action. Get out of your comfort zone, look at deals, analyze them, get advice and put a deal together. So what are you waiting for? Its time to take action. You cant make any money setting on the sidelines.
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$148,500 Seller $140,000 Financed Noteon home in Blue Springs, MO 6040 E 14th ST Kansas City, MO $15,000
8% Int. 20 yr Am
Property Value $170,000, good equity position, over 8% Return Good 2/1/1 in North East
3 Bd 1 Bat
$18,000
3 Bd 1 Ba
$18,500
3 Bd 1 Ba
$15,500
2 Bd 1 Ba
$15,000
3 Bd 1 Ba
$10,000
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MAREInet.com/Properties
Raytown $167,000 7 Unit Raytown Cash Flow Terrance Benson Property RTBHomeBuyers.com Assignment 816-804-5287
Rogersville, MO
Negotiable
4 Units
$69,000
3 Bed 1 Bat
For Sale
$18,000
3 Bed 2 Bath
1910 S Lees Summit Rd, Independence, MO 2316 Blue Ridge Tr, Independence, MO
$35,000
3 Bed 2 Bath
Looking for a fixer Bemate upper in Independ- Sakal Investing ence 913-735-9997
$55,000
2 Bed 1 Bath
Seller Financed In- Nancy Hoover vestment Property Hoover Property in Independence Management 816-853-2110 Great JOCO Rental Chad Bartlett HomeRemedyKC.com 913-735-5598
$119,000
Investment News
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Cash Flow! Section 8 Turn-Key Rental, $900 a month. Rehabbed Great house in Raytown with excellent Tenant Great 3 Beds at 4333 Bellefontaine KCMO$12,500
Christoph Becker Blue Print Properties info@BluePrintProp.com 816-419-1165 Legacy Investment Properties. nick@KCLegacyGro up.com Bemate Sakal Investing 913-735-9997
Raytown House
$9,500
3 Bed 1 Bath
Awesome 3 Beds 2 Bemate Baths in KCMO Sakal Investing Only $10,000 913-735-9997
Olathe
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MAREIs
November Meeting
Location: Career Education Systems Ward Parkway Shopping Center Top Floor 8600 Ward Parkway Kansas City, MO Times: Tuesday November 13 6pm to 9pm
If youre looking to put more money in your pocket, knowing how to maximize deductions is essential. If youd like to make sure you are not leaving money on the table, you need to be at this meeting. We will be discussing:
Lets face it . . . as they debate in the Presidential Race, we all need to pay our fair share of taxes . . . but only our fair share and not a penny more! Thats why we are very excited to have MAREIs own Joe Martin CPA come and share his knowledge with us in November, so we can wrap up our tax year and start planning for 2013...
Agenda for Tuesday November 13th 5:30 pm Pre-Meeting & Set Up 5:50 pm Orientation 6:00 pm Networking & Vendor Hall (reserve vendor table) 7:00 pm Speed Networking 7:15 pm Presentation: Tax Tune Up with MAREIs own Joe Martin CPA from Citizen Tax Service 8:30 pm Wrap Up and One on One Q & A 9:00pm Meeting Ends Register for this meeting NOW!
Cost Investor MemberNo Charge Business MemberNo Charge Internet MemberGuest Fee Guest Fee $25 Per Person at the Door $15 Per Person on Web Go to MAREInet.com/September All Guest Fees Paid will Be credited toward membership when you join at the Meeting. Page 25
MAREInet.com/November
Investment News
Many investors know about the asset protection that they can obtain by setting up LLCs in which to hold their investment properties. There are differing positions on whether each property should have its own LLC or whether an investor should have one LLC which holds all of the persons properties. I believe that the answer lies somewhere between those two positions, and is based upon the amount of risk the investor can handle after weighing a number of factors. The purpose of this article is not to address that issue; the focus of this article is on making sure investors get the benefits of their LLCs once they are set up. First, a common mistake investors make is transferring title of a property to the LLC but then failing to name the LLC as the landlord on any lease they enter into with a tenant. For example, many investors put their own name on the top of the lease where the landlord is identified. However, that is wrong. The landlord is the owner of the property and the entity getting the benefit of having the lease. Therefore, the LLC should be named as the owner and landlord. On the other hand, the investor is an agent for the owner, getting tenants and managing the property. Under Arizona law, an agent does not have any liability for acts taken on behalf of a disclosed principal. Ferrarell v. Robinson, 11 Ariz.App. 473, 475, 465 P.2d 610, 612 (1970). On a lease, the LLC should be listed as the owner. If the investor wants to include himself on the lease, he should be identified solely as acting as an agent for the owner. Otherwise, if
the investor names himself personally as the landlord and fails to identify that there is a different owner of the property, the investor may personally be liable in the event of a lawsuit. In other words, the investor lost all of the protections he sought by forming the LLC in the first place. This same theory is important when you are managing properties for someone else. If you are a property management company, your company should not be listed as the landlord on a lease the owner is the landlord. The property manager should be identified as the person to handle all issues, but noting that he is only acting as an agent for an owner. If a lease is properly completed, and the tenant sues the property manager for a return of their security deposit, the property manager should summarily be dismissed from the complaint as he is only an agent and have no liability. Second, if the investor personally does work on the property they can personally be liable for to the tenant for any work done negligently. For example, even if the home is properly transferred into the LLC, and the LLC is named on the lease, the investor may be personally liable if he negligently repairs a water heater on the property and the tenant gets injured. Its important that the LLC hire independent contractors to undertake such repair work, so that the LLC is not liable. An LLC can serve as a great means of asset protection. Investors need to make sure that they properly use the LLC to gain that protection.
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1. You can track your income and expenses much more quickly
Location: Career Education Systems Ward Parkway Shopping Center 8600 Ward Parkway Kansas City, MO When: Saturday December 1st 9am to Noon Check in 8:30 to 8:50
Limited SEating
with a software system that is easy to use so that you or a staff member can input data. This input of data saves time and money spent at year-end paying your accounting person to compile everything, saving you money and time. 2. By tracking in a software system, you can find the information you need quickly rather than hunting through piles of paper. Know how much you spent on an advertising campaign or a rehab, so you can see where your money is going and where you could save money. Likewise see where your income is coming from so you can focus efforts on what is doing the best. One of the easiest software programs to use is Quick Books Pro. Join MAREI member Joe Martin CPA for an introductory workshop on how to use QuickBooks. With a few tips on how to set up your accounts, how to input credit card charges, checks, and deposits, and you will be ready to have a much more organized 2012.
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Other local and online training events added as we find out about them to the online Sun Mon calendar, check it weekly for new events.
November 2012
Tue Wed Thu Fri Sat 1 SG: Weekly Wed. Networking Newsletter Published 2 SG: Connected InvestorsNEW 3 SG: Blue Springs / Independence Inv. Wichita REIA
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