Newsletter
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Today is a fabulous day. Why? Well, your newsletter is here. It’s just jammed with great information.
If you’re actually reading this you should be super happy, because you are a member of the Alamo REIA. Hey,
you have access to some of the latest thinking in the real estate investment field. Second a whole bunch of the
stuff can be implemented immediately. And lastly, you’re getting something useful in the mail. It has to make for a
better day.
News – 1. The oil price has collapsed. Our tenants and buyers have more disposable income.
2. March is around the corner and it’s the very best month to move property. Yep, it’s when people can move their
children to new schools.
Event venue is the Double Tree Hotel (37 NE Loop 410, located at the corner of Loop 410 and McCullough Rd.).
Time 6:30 p.m. on February 12th 2015
The venue provides an outstanding pre-event dinner from 6 to 6:30 and Cash bar till close.
Contents: - Event speaker – Michael Plaks –
Immigrant and extraordinary investor. If he can make it so
can you – learn the simple lessons from Michael.
President Message
Cap rate
Musings from the Office
Gas price and what it means to property
What “one house can mean for your future – a must read
In this edition of the Newsletter
How to find rental properties – in last
month’s edition
How to find properties to rehab – in this
month’s edition
How to fix em up.
Huge Inconsequential Notice
1. We are working to get the MailChimp program
working and resume direct emailing to our
members and other interested investors.
Micheal Plaks
“What works and
what does not
work in RE
investing: the
hidden truths”
There are so many different ways to make money in
real estate. All of them work great – IF you believe
the gurus, the promoters and your fellow investors.
But should you believe them? Are they telling you
the truth? Who can tell? Michael Plaks can! Why? Because, as a real estate accountant, he sees what nobody else can see: the real numbers. You can lie on stage or to your friends, but you cannot lie to your accountant. After looking at the successes and failures of hundreds of his clients – all real estate investors – Michael acquired
The only San Antonio chapter of NATIONAL REIA
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This Newsletter is produced by the Alamo Real Estate Investors Association The Association does not purport to offer legal advice and you are encouraged to consult with an attorney about legal matters related to
property transactions.
Ideas only from Alamo REIA
unique insights into what does and what does not work in real estate. Some of the top 10 things that work well: narrow focus, buying subject-to, selling rentals with owner financing Some of the top 10 things that do not: “handyman specials”, out-of-state investments, 50/50 partnerships. Don’t you want to learn the rest of them and discuss the reasons? Of course you do! Do not miss this informative and controversial presentation.
“10 business habits that will save you thousands of
dollars in 2015” By now, most of our New Year resolutions are discarded. We will return to dieting, exercising and meditation next year. Right now, we are focused on making money. Michael Plaks will help us keep more of this money in our pockets and save time and trouble while running our real estate businesses. It takes some simple to adopt habits, such us utilizing phone apps for bookkeeping chores and verifying interest calculations. Let’s tighten our business practices and run our operations professionally and efficiently. Michael will show us how, so make sure to attend and take notes
President’s Message, February 2015
Happy February!
We have many events happening this month to help grow and achieve your business goals, plenty of opportunities for you to take advantage of. Michael Plaks, a Federally licensed Enrolled Agent (EA) with extensive experience helping investors with IRS audits and other stressful matters, is bringing his expert knowledge and his quirky sense of humor to our main meeting February 12, and showing us what “really” works in real estate and makes you money and what really does not work and why. You can lie to everyone else but you cannot lie to your accountant, they see your true numbers. After looking at the successes and failures of hundreds of
his clients – all real estate investors – Michael acquired unique insights into what does and what does not work in real estate. He will share with us on what works well: buying subject to, selling rentals with owner financing, and what does not work out: handyman specials, out-of-state investments, and 50/50 partnerships. He will also tell us 10 business habits that will save you thousands of dollars in 2015! If that’s not enough he’s graciously agreed to travel back to San Antonio and do a 2 day boot camp, February 28 & March 1, on Real Life Accounting for Real Estate Investors, You need this unique course if you are:
1. New investor ready to set up good bookkeeping practices
2. Experienced investor tired of lousy accounting and wasted money
3. Bookkeeper working with real estate investors
We’re not done yet, remember we have all of our Focus Groups happening this month: Ladies Focus Group, Landlord Focus Group and our newly formed Flip Focus Group! Make sure you join us on Meetup.com to get the latest
information on locations, dates, and times.
And one of our biggest events we will be hosting this year is Ron LeGrand! Yes, we are honored to have the national real estate mentor of many successful real estate investors himself coming to Alamo REIA and hosting and all day event, if you are going to be real estate investing then you definitely need to know who this godfather of real estate investing is. We will have more information on this at the main meeting.
Lots of things to do this month, mark your calendars now, register, do whatever you need to remind yourself of all the great things to go to at Alamo REIA this month!
Happy Investing!
The only San Antonio chapter of NATIONAL REIA
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This Newsletter is produced by the Alamo Real Estate Investors Association The Association does not purport to offer legal advice and you are encouraged to consult with an attorney about legal matters related to
property transactions.
Ideas only from Alamo REIA
“All people are self-made. Only the successful people admit it”. ~Ron LeGrand. Sharon Fernandez, President.
Cap rate
By Tim Herriage, Managing Director, B2R Finance The capitalization rate, or cap rate, is the rate of return on a real estate investment property based on the income the property is expected to generate. It is an important consideration for investors looking to
buy rental homes.
Let’s look at an example.
A three-bedroom/two-bath
single-family home is listed
for sale for $200,000. You’ve
done your research on the
neighborhood and have
determined that the home
can command a monthly rent
of $1,900. You’ve also viewed the home in its current
condition and you have estimated that your annual
expenses will be about $9,100.
In considering your annual expenses, you should take into
account these items: annual real estate taxes for the
property, property and liability insurance, any utilities that
you will be paying, repair and maintenance costs; HOA
dues, management fees and projected vacancy expenses.
In this example, we estimated annual real estate taxes at
$4,500, insurance at $1,000, vacancy costs at $1,100 and
maintenance expenses at $2,500 for a grand total in
annual expenses of $9,100.
To figure out the cap rate, we are going to take the income
that we expect the property to generate ($1,900 x 12 =
$22,800) and subtract our annual expenses ($9,100) to get
an expected annual net operating income of $13,700.
We then divide $13,700/$200,000 to get a cap rate of
6.9%.
Using the cap rate is a good way for a SFR investor to
compare multiple properties in a given market against one
another to see which one might offer the best rate of
return.
The higher the cap rate, the better the annual rate of
return. Based on the investor’s objectives, a home with a
10% cap rate might be a better investment opportunity
than a home with a 3% cap rate. Keep in mind that higher
cap rates can indicate increased risk as well. Investors will
have to decide for themselves the minimum cap rate they
are willing to accept. Is a 5% return sufficient or will a 7%
or 8% cap rate be your floor?
In our example above, let’s say you’ve decided that the
minimum cap rate that you are willing to accept is 7%.
Take your annual net operating income/cap rate or
$13,700/7% to get the amount you should pay for the
property you are considering.
In this example, you would need to offer $195,715 on the
listing to reach a 7% cap rate.
To review, the cap rate equation is yearly
income/purchase price. Remember to factor in expenses.
It’s also important for investors to realize that this isn’t a
fail-proof equation, as unforeseen expenses can occur or
your estimates can be off. Make sure you have a cushion
of funds after the mortgage is paid for unexpected
expenses that could cause your cap rate to be lower than
what you calculated.
Say, for example, the property sits vacant for longer than
you anticipated or that a tenant causes expensive damage.
It’s important that you consider your rate of return against
worst-case scenarios to make sure that you don’t end up
with a negative rate of return.
Cap rate isn’t the only thing real estate investors should
consider when investing in single-family rental properties,
but it is certainly an important one to recognize.
Musings from the office – 1
JARGON BUSTER
Gross rental yield = Annual rental income (weekly
rental income x 52) / property value* x 100
* Can be purchase or market value
In the below example the rental yield is 13.6%
Property purchase price = $75,000
Monthly rent = $850.00
(850 x 12) / 75,000 x 100 = 13.6%
The only San Antonio chapter of NATIONAL REIA
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This Newsletter is produced by the Alamo Real Estate Investors Association The Association does not purport to offer legal advice and you are encouraged to consult with an attorney about legal matters related to
property transactions.
Ideas only from Alamo REIA
Whilst the gross rental yield is a simple calculation to
use it’s important to note that it doesn’t take expenses
into account. A property may have a high rental yield but
may also have high expenses making the rental return low
when taken into consideration.
If you do want to want a more precise calculation you
will need to know (or estimate) the total expenses of
property including both purchasing and transaction costs
(property purchase price, closing costs, legal fees, pest and
building inspections, any loan fees, let up expenses etc.)
and annual costs such as vacancy costs (lost rent and
advertising), repairs and maintenance, managing real
estate agent fees, home insurance, rates and charges etc.
Net rental yield = (Annual rental income – Annual
expenses) / (Total property costs) x 100
HOT TIP: Increasing the yield of your property (by
increasing rent) will not only increase your cash flow but
also potentially increase the value of your investment.
Musings from the office- 2
On being late
This could be quite close to the bone for many. It may
be a little old-fashioned because it is nothing to do with
“fashion” or “generation”, it’s got everything to do with
basic manners and respect for other people.
How is it okay for people to be late for everything?
It seems to me that if the meeting is set to start at 9
AM, for some people it’s in the general vicinity of that time
and it’s more like 9:30 for example.
People drifting anything between 9:10 and 9:20. They
smile warmly at the waiting group as they unwrap their
breakfast sandwich and are apparently totally
unconcerned that others have been here since 5 to 9
preparing for the start. The fact that they’ve happily kept
10 or more people waiting for 20 minutes while they
selfishly detoured via coffee shop wasting 20 or more
minutes.
Let’s extrapolate. 10 people are being kept waiting
for 20 minutes. That’s a total waste of 200 minutes. Oh
how I wish I could send a bill to those late comers.
But it extends even further than this, people invited
to a dinner party let’s say at 7:30 and think it is fashionable
to arrive at 8 or 8:15. No consideration is given to the host
and hostess who have prepared the meal to make it the
very best and now it is ruined by being kept in the oven for
these late stragglers.
This is just rude and totally inconsiderate behavior.
Which brings me lastly to the doctors. If you were to
keep your doctor/dentist waiting for 50 minutes as they
have done for years it makes want to just walk out and
literally say to the receptionist that when the doctors
ready for him to call you.
The usual excuses that the doctor is “busy”. What?
You mean I’m not busy? How would it be if I were to send
you a bill for my time?
End of rant.
The Gas price and what it means for property in
South Texas.
The price of gasoline dropping is going to have a
major impact on the property market in South Texas.
A new oil wells takes about two years from concept
to production. With the price of gas dropping so radically
it’s highly unlikely that additional exploration will occur.
Because no exploration occurs employment in the industry
is going to drop off precipitously. The businesses that cater
to the exploration industry are going to go bust. The
applies to not only to the exploration companies but also
to the corner grocery store, gas station, hotels and of
course the landlords renting out leverage property.
It seems probable that much of the rental in the entry
will be coming back to market as repossessed stock. With
The only San Antonio chapter of NATIONAL REIA
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This Newsletter is produced by the Alamo Real Estate Investors Association The Association does not purport to offer legal advice and you are encouraged to consult with an attorney about legal matters related to
property transactions.
Ideas only from Alamo REIA
the decimation of the transient population one can expect
a huge number of vacancies and without doubt a
depressed real estate market.
The question to ask is, how will this affect me as an
investor?
We will see vacancies occurring very rapidly in the oil
profit dependent cities, Houston being the prime example.
San Antonio will not be spared.
With this large number of properties becoming
available and the lack of the population’s ability to make
the monthly rental payments downward pressure is going
to be evident.
How to rehab a house.
If you have never rehabilitated a house, then it is
imperative to hook up with a mentor.
A rehab starts with imagining in your mind’s eye what you
would like home to look like after it has been completed.
To build the “Taj Mahal” in a 50,000 thousand dollars
neighborhood is not a good idea. Temper your imagination
to the neighborhood.
Outside the house the first thing to do is look at look curb
appeal. Often it’s easy. Clean up the yard, cut back the
overgrowth and paint the house.
Let’s look at the inside the first thing to do is to walk
around and look at everything below knee level. Make a
note of what needs to be repaired and replaced or
upgraded. Now walk around the home again and look at
anything above knee level and do exactly the same thing.
We now have some idea of what is required and you
can start to make a list of the necessary bits and pieces to
put it together.
The areas to concentrate one’s efforts are 1. The
kitchen. 2. Bathrooms. 3. The rest of the house, in that
order.
Where do you get ideas? Talk to people within the club
and go and visit some of the rehabs in progress. Ask,
many of us have projects going all the time. It’s quite easy
and a huge amount of fun. Do it.
WE ARE ON FACEBOOK AND MEETUP.COM!
Looking for a place to post deals, find deals, ask about contractor referrals, ask real estate investing advice, etc.? You now have a place to communicate with your fellow members online! Join the group now, it’s FREE and part of being a member!
www.facebook.com/alamoreia www,meetup.com/alamoreia
The Focus Groups are up and running. We have a Woman’s Meeting once a month – talk to Sharon Fernandez. The Landlords
Focus Group is run by Harold. Don’t mess about get involved.
“Subject to” Focus Group is looking for a night to meet as is the “Note buying and trading Focus Group”. Please contact
The only San Antonio chapter of NATIONAL REIA
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This Newsletter is produced by the Alamo Real Estate Investors Association The Association does not purport to offer legal advice and you are encouraged to consult with an attorney about legal matters related to
property transactions.
Ideas only from Alamo REIA
WHAT "ONE" HOUSE CAN DO FOR YOUR FUTURE Editor’s note: - Please make a copy and give this to your children A landlord recently made the following comment in response to a new landlord getting started with just one rental home,
"Bothering with one house 90 miles away from your home...Why bother?"
The only San Antonio chapter of NATIONAL REIA
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This Newsletter is produced by the Alamo Real Estate Investors Association The Association does not purport to offer legal advice and you are encouraged to consult with an attorney about legal matters related to
property transactions.
Ideas only from Alamo REIA
A long time landlord who has lived to see the value of "one" house responded. Thanks Robert J(CA) for sharing! Do you know what one rental house will do for your future? When I turned 16, instead of buying a new car for myself, I saved my money and on my 18th birthday purchased my first rental home. Here's what that one home did for me: 1) During the first 10 years I was able to get enough rent money to pay all expenses and save a little towards emergency repairs or vacancies. I was also able to take several tax deductions, as an investor-landlord, which saved me $3,000 a year on taxes on top of the positive rental cash flow. 2) During the next 10 years I was able to slowly raise the rent and double the income, making me $1,000 a month positive cash flow and paying down the mortgage. 3) During the last 10 years I paid off the property, received triple the original rent, and now pocket $2,000 a month in positive cash flow and have an asset worth half a million dollars. So one rental property gives me $2,000 a month income, makes my net assets rise by 1/2 million dollars and provides a nice supplement to my retirement. In 30 years, think of how the property will be paid off and make you a great income.
Thanks – MrLandlord.com.
Support our vendor members.
ISB Capital, LLC. – Private Money
Lydia Herrera
141 Danube Suite 102
San Antonio , TX 78213
210-447-9129
www.isbcapital.com
R.E. Capital, LLC – Hard Money Loans Mitch Stephen 11207 Perrin Beitel, Suite 303 San Antonio, TX 78217 210 669 4020 [email protected] www.Loans2Go.net.
Longhorn III Investments – Hard Money Loans 13750 San Pedro Ave, Suite 810
San Antonio, TX 78232
T: 877.420.7346 - : - M: 713.409.6386
Contact: Scott Fleming & Chris Jameson www.longhorninvestments.com
Value Funding, Inc
Fix and Flip Lender
210 649 8807
www.valuefunding.net
Property Maintenance
Birdy Maintenance Web : WWW.birdymaintenance.com Office # (210)314-5110
Alamo Area Virtual Tours LLC 210 325 2675 www.alamoareavirtualtours.com.
Elite Star Inspections 210 719 1282 www.elitestarinspections.com
Alamo Lawn & Landscape Recovery “Has your lawn gotten away from you? Let us RECOVER it!” Call 210 689 6289 Cell 210 605 3280 [email protected]
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This Newsletter is produced by the Alamo Real Estate Investors Association The Association does not purport to offer legal advice and you are encouraged to consult with an attorney about legal matters related to
property transactions.
Ideas only from Alamo REIA
Your advertisement here next month
Angela Marrero, Escrow Officer Providence Title, 700 E. Sonterra Blvd., Suite 1215,San Antonio, TX 78258 Off: 210-495-0396, Fax: 210-495-8018 [email protected] www.protitletx.com
Got a House to Wholesale? Experienced investor looking for inexpensive properties on the South, East and West sides of town. Call Alma at 858-9862
Need to advertise our business? Members are entitled to a free two line classified ad in our future issues of our Newsletter – cutoff date for
all submissions – 15th of each month –
publishing date 20th of the month.
As a member we are entitled to
discounts and/or cash rewards at Home
Depot, Office Max and Sherwin
Williams. Do not forget to register. This
is our association working for us.
Real Estate Investing for Dummies – Ralph R Roberts – from Barns and Noble
Your practical guide to scoring cash to fuel your real estate investments
Want to be a smart, successful real estate investor? This no-nonsense guide contains everything you must know to make the right choices about financing your investments — from the various options available and the impact on cash flow to the tax implications and risk factors involved. You also get tried-and-true tips for surviving a down market and using current investments to finance future ones.
A crash course in real estate financing — understand standard terms and concepts, learn the various sources of investment capital, and gather all essential facts and figures
Weigh your options — decide which type of financing is best for your circumstances and incorporate it into your real estate investing plan
Finance residential properties — evaluate residential loan programs, navigate the loan application and processing, and handle the closing
Invest in commercial properties — know the different property types, choose the one that meets your
investment goals, and discover unique sources for financing
Tap into unconventional sources — discover the pros and cons of "hard money," capitalize on seller financing, partner to share risk and equity, and invest on the cheap with no-money-down deals
Open the book and find:
Real-world advice on financing without tying up all your capital
How to get prequalified or preapproved for a loan
Questions to ask your lender upfront
Ways to avoid common beginner blunders
How to protect your personal assets from investment risks
Bargain-hunting hints for low-cost loans
Strategies for surviving a credit crunch
Ten pre-closing steps you must take
Please read it. Editor – Peter Michael ––
Classified ad section.
Pablo Uresti, Attorney - Licenciado 2302 N. Zarzamora Street,SA, TX 78201
210-736-6800//C 210-262-6945
AmaKhaya
Peter is looking to buy
financially up-side down
houses:
Call 210 523 9990 right now
Your ad here next month
The only San Antonio chapter of NATIONAL REIA
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This Newsletter is produced by the Alamo Real Estate Investors Association The Association does not purport to offer legal advice and you are encouraged to consult with an attorney about legal matters related to
property transactions.
Ideas only from Alamo REIA
Four ways Alamo Real Estate Investors Association pays for itself
1. Home Depot 2% rebate. Shop at the Home Depot? Get a minimum of $50 a year off your Home Depot
purchases with your Alamo membership. You don't have to apply for a credit card either! Just register the
card/s you already use and Home Depot will send you a check twice a year.
2. Free shopping savings. Save as much as 30% off paint and paint sundries at Sherman Williams, 20% off
your Rentals.com listings, 20% off your Constant Contact membership and up to $100 off a year with Roto
Rooter. There's always a discount available to you at OfficeMax.
3. The National REIA business builder provides.... All the tools you need to run and market your real estate
business including website, hosting, property management automation, lead generation, foreclosure
tracking, squeeze pages, all deeply discounted for membership... All of which is needed and a
requirement to start your real estate business.
4. It will soon possible to by Notes (First Mortgages) directly at a huge discount.
This is a package that is now included as part of your membership.
Joining Alamo REIA is a no-brainer
Other benefits:-
Local contact with the very best and successful real estate professionals. Structured networking. Regular market reports. Meet the finest real estate trainers in the country Find partners to one or more deals while learning. Easy to find sources for your real estate funding.
Your best resource for real estate investing success is a group of other investors in your area who are already
successful. In his book, "Think and Grow Rich," Napoleon Hill spoke of the "Mastermind Group" necessary to achieve your success.
AlamoREIA is your mastermind group. Whether you need a partner, funding for a deal or just the security of knowing that "this stuff works," the Alamo Real Estate Investors Association is a vital part of your success plan, but please consult with your often neglected partners, you attorney and accountant, before you set off on any investment path.
The only San Antonio chapter of NATIONAL REIA
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This Newsletter is produced by the Alamo Real Estate Investors Association The Association does not purport to offer legal advice and you are encouraged to consult with an attorney about legal matters related to
property transactions.
Ideas only from Alamo REIA
Back Page Tip # 1 Save yourself time and worry when flipping at a retail level. The buyer agent is going to ask for 1. A
survey and you are going to pay for it. Get it done before listing. 2. This is really where the worry part get banished. Have the inspection done by your tame inspector. He will tell you what needs fixing. When the buyer’s agent comes to ask for the property to be inspected, Voilà! you have it to hand. If the buyer’s agent dose proceed with a second inspection, yon hand the report to the new inspector and guess what? He/she is not going to find too much wrong. He/she is not going to argue with a fellow tradesman. Oy, peaceful sleep.
Back Page Tip # 2 Want to rent a property fast? We all do. List it on the MLS and offer half the first month’s rent to the
agent. Seems expensive, but try a vacancy in comparison. You will in all probability be offering more than anyone else and that means your house gets shown. Further you do have to talk to the prospective tenants, going through all the same old story so many times a day. Then the agent does the showings. They go out and wait for the prospects. You do not have to worry about being there at any time and the no show prospect is NOT YOUR PROBLEM. Lastly you control the application process through the agent and it insulates you from the hassle factors and sob stories. Oh, yes the MLS auto lists your rental on Zillow, Truili and Realty.com. This is just the very best advice EVER.
Back page Tip 3 The amount of money required to build a viable rental portfolio can be daunting. The jump from
relatively easy credit for up to 4 rentals to the next level, $500,000 asset value, will stress most. The solution is to learn about Equity Holding Trusts and use this vehicle to buy ‘subject-to’ without all the agro (Americanizes – aggravation) such as credit, violation of any acceleration clause in a regular loan/mortgage document and reduce the maintenance issues involved. .
Wow, this is not normal junk mail. HAPPINESS. It’s not an account, a window envelope, a demand for money, a heartfelt charity letter or a
solicitation. It’s just solid information that can be used immediately. This is your very own copy of the monthly newsletter.
That’s why today is a brilliant day.