INVESTMENT NEWS

Real Estate Investor Meeting

On June 9th, 2015, at MAREIs Monthly Meeting, Real Estate Investor and Leader of the Minnesota REIA Mike Jacka will be teaching us
how to get our repair costs right!

MEETING

LOCATION
Holiday Inn & Suites
Overland Park West
8787 Reeder Road
Overland Park, KS

Find Out How to

Estimate Repairs in 15 Minutes!
Unless you know how to accurately estimate repair costs, you cant
make smart offers. And when you know how to do it FAST, youll
save valuable time, make more offers, and make more deals.
Mike Jacka is a long-time retailer and experienced wholesaler whos
developed a system for repair estimation for his own business thats
so easy that even his non-rehabber assistant can use it, and hell
share it with us at this meeting.
Mike will walk you step by step through his process of looking at an
making an initial repair estimate on a potential deal, and show you
how he does this in 15-20 minutes. Hell even share actual costs of
common repairs and upgrades.

Top Floor
Sunset Ballroom
5:35 pm to 9pm
Details at MAREI.org

FREE BONUS!

All in attendance to receive

a free copy of Mikes

Repair Estimate
Worksheet.

June 2015 issue

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And or Assigns
~ Mike Jacka
Recently I have had a lot of new investors ask me about using
"And or Assigns" after their name on the purchase agreement. While that does give you the ability to assign a contract, I
don't recommend using it. In fact, what I have been telling them
is:
"Get that term out of your vocabulary!"
All contracts by their nature are assignable, unless they state otherwise. If you are making an offer to a bank on a foreclosure
property, the banks contracts are NOT ASSIGNABLE. And if you
put in "And or Assigns" after your name, it would supersede the
written version of the non-assignment of contract. However, the
banks will more than likely reject your offer simply because you
included "And or Assigns" after your name on the Purchase
Agreement.
You see, the banks and financial institutions have been run
through the ringer by new investors who have no intentions of
closing on the deal. They know the investor is planning on selling the contract. And if the investor can not find a buyer, they will
simple walk away from the deal and lose their Earnest Deposit.
That causes the banks a lot of problems. First, they lose the time
that the property was in escrow. What's even worse is how the
other investors or prospective purchasers view the property.
Let's say that you put the property under contract and the MLS
shows the property as "Pending", meaning it is under contract
and waiting to close. Then you try and find a wholesale buyer
with cash, but are unsuccessful. At the last minute, you back
out. The bank has lost time and incurred additional holding costs
and liability. They then put the property back on the market.
What do you usually think when you see someone was going to
buy the property and then the house is back on the market about
a month later? Most peoples reaction is usually: I wonder what is
wrong with that property? Did the other person have an inspection and found something wrong with it? I wonder how the foundation is?
Do you see how this can devalue the property in your mind, as
well as in other peoples minds? When in reality, the whole problem was the person that put the property under contract was an
unseasoned investor and did not have the means to come up
with the cash because his/her attempts to find a wholesale buyer
"in time" failed.

Most peoples reaction to this situation, if they are even interested in the property after it is
back on the market is to make an even lower offer than they might have if the first investor had
not even been involved with the property in the first place.
This has happened all to often to the banks and they have stated in the Purchase Agreements
that the contract is not assignable. And if you submit a contract with "And or Assigns" after
your name on the purchase agreement, the banks will probably reject your offer, even if it is
full price, and you provide them with proof of funds.
Realtors hate "And or Assigns" as well. They know what that means, as well as the banks
do. And if they are representing an individual seller, they might have a tendency to suggest to
their seller to reject the offer for the same reasons as the banks would.
And what about FSBO's (For Sale Buy Owners)... How do you explain to the sellers that the
name of the purchaser is (John Doe, and or assigns)? How does a confused mind naturally
react? If you can not give the seller a convincible answer, they will probably back away from
the deal.
Ok Mike, you have convinced me not to use "And or Assigns" in my contract, but what if my
intentions are to wholesale the property? Then what do I do?
I am glad you asked:

First of all, if you are working with realtors and banks, there is not much you can do about
that. However, if you are working with FSBO's, you can have this statement printed or written
somewhere in your Purchase Agreement:
ASSIGNMENT: This Purchase Agreement is assignable.
When I wholesale a property, whether it is bank owned or individually owned, I use a simultaneous closing. I am not going to get into the details of a simultaneous closing right now, but I
will give you a quick overview.
A simultaneous closing is when you have a property under contract and you find a wholesale
buyer to quick-turn it and you close both transactions at the same time. The buyer brings the
cash to closing. You close in one room with the seller and 5 minutes later you close in another room with your buyer. The seller walks out of there with a check, the buyer with the deed,
and you with the difference between what you bought it for and what you sold it for.
The best thing about a simultaneous closing is that no one but you and the closing agent
needs to know how much you made on the deal. Where as, if you assigned the contract, the
buyer would know how much you made because they would be paying you your profit to buy
the contract.
After your first deal, you should start building a list of wholesale CASH buyers. That way,
when you have your next wholesale deal available, you will already have the buyers lined up
with cash to close.

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Due on Sale
~ Mike Jacka
The "due-on-sale" clause is probably the most, feared and
misunderstood topic in real estate. This article will break
down the due-on-sale clause and discuss why it is not the
feared animal most people make it out to be.
What is the Due-on-Sale Clause?
This is the exact clause taken from Form 3024 1/01 - MINNESOTA - Single Family - Fannie Mae/Freddie Mac Uniform Instrument:
***18. Transfer of the Property or a Beneficial interest in Borrower. As used in this Section 18, "Interest in the Property" means any legal
or beneficial interest in the property, including, but not limited to, those
beneficial interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the
transfer of title by Borrower at a future date to purchaser. If all or any part
of the Property or any Interest in the Property is sold or transferred (or if
Borrower is not a natural person and a beneficial interest in Borrower is
sold or transferred) without Lender's prior written consent, Lender may require immediate payment in full of all sums secured by this Security Instrument. However, this option shall not be exercised by Lender if
such exercise is prohibited by Applicable Law. If Lender exercises this
option, Lender shall give Borrower notice of acceleration. This notice shall
provide a period of not less than 30 days from the date the notice is given
in accordance with Section 15 within which Borrower must pay all sums
secured by this Security Instrument. If Borrower fails to pay these sums
prior to the expiration of this period, Lender may invoke any remedies permitted by its Security Instrument without further notice or demand on Borrower.***

The due-on-sale (a.k.a "acceleration clause") gives the lender

the right to call the loan due. It does not say that the loan
must be called due, only that the lender has the option, if they
so choose.
Where Did the Due-on-Sale Clause Come From?
Banks began inserting due-on-sale clauses in their mortgages in the 1970s when interest rates rose dramatically. Homebuyers were assuming existing loans rather than borrowing
new money from banks because the interest rates on existing
loans were lower. The banks realized that their old, lower interest loans were their own, toughest competitor. The banking
industry came up with the "Due-on-Sale" Clause. It is a contractual agreement only. It is not law.
This plan worked. The banks were able to force new home
purchasers to get a new loan (at the higher interest rates) and
pay off the lower interest rates when a property was sold or
transferred.
But... Today, interest rates keep dropping and the new loans
are at lower interest rates than the old ones. Could you see
the banks wanting to call these higher interest rate loans due,
just to make new ones at lower interest rate. I don't think so.
As long as the rates stay where they are, it doesn't make financial sense for the banks to call these loans due. Even if

(Continued from page 4)

the rates are the same or just a little higher. You see, the process to foreclose on a loan that is still in
good standing, just because the ownership transferred would be expensive. And, if you live in a
state with long redemption periods like Minnesota, which has a 6-month redemption period after the
sheriff's sale, the process to foreclose would be long and expensive for the banks. As long as the
loan is current, and in good standing with the bank, they would much rather keep taking your payments.
Is it Illegal to transfer ownership of property with the due-on-sale clause?
Many people are under the mistaken impression that transferring title to a property secured by a
"due-on-sale" mortgage is illegal. This is because most people have never read the Due-on-sale
clause. They just listen to what the Realtors tell them. I would venture to guess that most Realtors have never read the due-on-sale clause, or the Garn St. Germain Act. If the lender discovers
the transfer, it may at its option, call the loan due and payable. If it cannot be paid, the lender has
the option of foreclosing.
Garn St. Germain Act: (US Code / Title 12 - Banks and Banking / Chapter 13 - National Housing / 1701j-3 Preemption of
due-on-sale prohibitions. There are several exceptions in which the lender may not enforce the due-on-sale: The one
they are referring to is in section: Exemption of specified transfers or dispositions.. a transfer into an inter vivos trust in
which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the
property;

What is a Land Trust?

A land trust is a form of a revocable, living trust, which is exempted under the Garn St. Germain Act.
A land trust is a legal entity for taking title to real property.
The trustee holds title for the benefit of the grantor (in this case, the grantor is also the "beneficiary").
The act of placing your property into a land trust does not trigger the due-on-sale clause. However,
transfer of the beneficial interest does.
How do I buy a house Subject-To with the due-on-sale clause?
Let's say that you find a house in pre-foreclosure. The seller is willing to give you title to his property
if you stop the foreclosure and save his credit. The only "glitch" is that the loan is not assumable because the mortgage has a due-on-sale clause. So you pass, right? Wrong...
The first thing you need to find out is all the facts the seller has represented to you. Do your due diligence. Get a title company or Attorney to do a Title search. This will tell you the amount of the mortgage, if there is a second or a third mortgage, and if there are any liens or judgments against the
property.
If you are satisfied with the title search, then you may proceed with the transaction. Get the property
under contract. Along with the Purchase agreement, you will need to get an Authorization to release
information signed by the Sellers. This is the only document that will allow the Lender to release
any information about this loan to you. If the loan has already been turned over to the attorneys for
foreclosure, then you will also need this document for them.
You will need to request the loan balance, monthly payment, amount of arrearage (if any) and
amount to bring the loan current. If the lender is willing to work with you at this point, you have half
the battle won. Most Lenders (and attorneys) will work with you at this point. The most important
thing to them is bringing this loan current.
The banks get punished for having non-performing assets on their books. For every $1.00 in bad
dedt on their books, they are not allowed to lend back out $8.00. (Example: the bank has to fore(Continued on page 8)

CONSTRUCT & NEGOTIATE

p ro f i t a b l e o f f e rs
If you know anything at all about making offers, you already know that the right offer is
a made from a combination of the right evaluation and the right negotiation. In this allday workshop, youll learn both from a hyper-experienced real-life investor: Mike
Jacka. Youll be much better at making offer that will actually get accepted an that will
make money, too, when you find out:
How to set the right value, with free online resources for finding ARV
How to use a to use a seller net sheet to negotiate more effectivelymost investors have no idea how to use or present this powerful tool, but you will
How to use the multiple offer strategy to get more deals by giving your sellers
several options that will ALL work for you, and let him choose which best works
for him!
This workshop is designed to help you build the tools needed to get your offers
made quickly and easily and increase the likelihood of them getting accepted.
Regular Pricing: $49 for member, plus $20 for guest. Early Bird $29 plus $20**
$69 for non-member, plus $20 for guest. Early $49 plus $20**
Add $99 for Annual Membership for 1 or $149 for Annual Membership for two.
Total: _______________
Name: _____________________

Second Person Name: ________________________

Email: _____________________

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Phone: ____________________

Secondary Phone: ___________________________

Address: __________________________________________________________________
Paid by Check: #__________

Expire Date: __________ Security Code: ____________

Credit Card#_____________________________________________
Signature: _______________________________
Or register Online at MAREI.org or Phone at 913-815-0111. ** Early Bird till June 10th
Saturday June 13 8:15 to 4:30, Lunch Included, Career Education Systems, Ward Parkway
Shopping Center, 8600 Ward Parkway, Kansas City, Missouri

BUSINESS directory
Service

Company

Contact

Phone

Web

Contractor

Building Trades

Robert Massey

816-868-1817

Contractor

Discover Heating & Air

Curt Whitlock

816-500-2970

Discover HVAC.net

Contractor Supply

Home Depot

Sharon Beck

913-313-8912

HomeDepot.com

Contractor Supply

Sherwin Williams

Mike Steiner

816-589-8506

SherwinWilliams.com

Hard Money

Crossroads Investment Lending

Staff

913-766-2900

CrossroadsInvestmentLending.com

Hard Money

Great Plains Funding

George Hersch

913-735-6605

GreatPlainsFunding.com

Hard Money

Investor Choice Funding

Dave Williams

303-500-7088

InvestorsChoiceFunding.com

Hard Money

Kansas City Investor Funding

JJ Pawlowski

816-916-4593

KCInvestorFunding.com

Hard Money

Longhorn Investments

Chris Friedl

877-420-7346

LonghornInvestments.com

Home Buyer

kcmoHomeBuyer

Scott Tucker

816-200-2198

kcmoHomeBuyer.com

Insurance

Asset Protection Insurance

Lisa Goodner

877-752-2742

APIAProtects.com

Investor

Pride Properties

Marcus Bray

913-213-5370

PridePropertiesHomes.com

Lender

Merchants Mortgage LLC

Susan Aubin

720-554-9480

MerchantsMtg.com

Mortgage

Pulaski Bank

Beth Langston

816-234-8660

PulaskiBank.com

Realty

Realty Resource

Staff

816-406-0701

RealtyResourceKC.com

Realty & Management

Arrow Realty

Candace Davis

913-956-5003

ArrowRealtyKC.com

Realty & Management

Home Rental Services

Kandy Meehan

913-469-6633

Home4Rent.com

Realty & Management

Jamieson Home Team

Kevin Jamieson

913-384-8331

JaimesonHomeTeam.com

Security

COPR Security

Geoff Miles

816-398-4045

COPRSecurity.com

Title & Escrow

Accurate Title

David Green

913-338-0100

AccurateTitleCo.com

Title & Escrow

Alpha Title

Patsy Archer

913-498-8999

AlphaTitleLLC.net

Title & Escrow

Continental Title

Sharon Bower

913-744-7011

CTitle.com

Turn Key Rentals

KCInvest

Don Tucker

913-735-0118

KCInvest.com

See full details on all Business Associates at MAREI.org/Business-Directory/

Mid-America Association of Real Estate Investors does not render legal, tax, economic or investment advice. All programs, properties and services are provided with the understanding that Association is not engaged in rendering legal, tax,
or other professional services. If legal, tax or other expert assistance is required, the services of a competent professional
should be sought. Everyone should complete their own due diligence!

(Continued from page 5)

close and take back a property with a $100,000 mortgage, that means they are not allowed
to lend out $800,000, until that house is sold, and off their books.) That is why the banks are
usually willing to deal with us, even though they know the loan will be taken subject-to the
existing loan, which has a due-on-sale clause in the mortgage.
Next, GET THE DEED!!! Once you have the deed, then you have control of the property. Go
ahead and make the back payments and arrearages. You now own the property, and the
loan is current. If the bank is not going to take the payments from you, then you also know at
this point that they are calling the loan due (which is rare, but does happen). At least you
know, you have not spent any money on this property, except for a few dollars on a title
search, and some of your time. But most of the time, the lender will take your money. They
will re-instate the loan for you, and you own a property that
you bought subject-to, with an existing loan that you did not
originate, did not sign for, and has a Due-On-Sale clause in
it.

FREE BONUS!
All Members of
MAREI receive a
FREE Investor
Website.

As long as the interest rates stay low, the Due-on-sale

clause should not be feared, only understood.

A Trade Association for

Real Estate Professionals
For landlords, wholesalers, rehabbers, note sellers, multifamily investors,
exchangers or anyone else who use real estate as a way to build
wealth. We welcome full time investors as well as those just getting started or people who provide a product or service to the industry.
With something for everyone from beginner to pro!
The experienced real estate professional will find the support they need stay informed of the issues and tools to take action. The new investor will find the education they need to get started and the products, services and connections to build
profitable businesses. The product or service provider that caters to the real estate industry will find active professionals who need their services. And everyone
benefits from our community, from live meetings and events to our very vibrant
social media destinations. Please join us . . . .

Meeting Location
MAREI Meets every 2nd Tuesday at the Holiday Inn & Suites at 8787 Reeder
Road in Overland Park, KS. Conveniently located just off 69 & I35 Highways
at 87th Street.
Meeting Agenda
5:30 pm: Set Up & Early Birds
6:00 pm: Networking & Vendor Hall
6:30 pm: Member BenefitsLittle Board Room off Vendor Hall
7:00 pm: Announcements
7:15 pm: Estimating Repairs with Mike Jacka
9:30 pm: Late Night Networking in the Lounge 1st Floor
June Meeting on 8th Floor in Sunset Ballroom

Member
Discounts
Home Depot 2% Rebate
Sherwin Williams Discount Card
Office Depot Max Discount Card
Rentals.com 20% Off Reg Price
ISC Tenant Screening
More . . . .

Contact Us
Learn more about
Mid-America Association
of Real Estate Investors
Chapter of National REIA
Kansas City Office
8014 State Line Rd,
Suite 210
Leawood, KS 66208
(913) 815-0111
info@MAREI.org
Visit us on the web at
www.MAREI.org
www.MAREImember.com