RE N E W S

INVESTMENT

NEWSLETTER FOR
MID-AMERICA ASSOCIATION OF
REAL ESTATE INVESTORS

4 REASONS TO INVEST IN
REAL ESTATE
from Home Rental Services

TOP 10 THINGS FOR

For Self Directing
from Jeff Watson

OCTOBER 2016

PLUS
Legislative Update
Calendar of Events
Market Update
Business Directory

LEGISLATIVE UPDATE

"Rental Ready"
Passed in
Independence
Please help
collect
signatures on
repeal Petition

OCTOBER 2016

As you may be aware the City Council of

Independence Missouri voted and passed a
new Rental Ready Ordinance #18637
(Article 15 Chapter 4 of the city code
read here) that will require landlords to have
a Business License for every rental unit and
as a condition to obtaining and keeping that
Business License will be required to hire a
qualified inspector to inspect the rental unit,
occupied or not), every two years. Multi
Family of 4 or more units shall have 10% of
units inspected very two years. . Inspectors
to inspect for some basic safety issues and
for many tenant issues such as not using too
many extension cords, debris around furnace
and hot water heaters our around egress
windows and doors, insect and rodent
infestation, animal or human waste on walls
or floors.

This ordinance would require an inspector to

enter the private homes of renters,
continually, every other year, without
permission, without due cause, and without a
warrant. If the renter refuses the inspector
entry to their home, then a judge can issue a
warrant and then force entry. We as a group
of Concerned Missouri Property Owners feel
that this is a violation of the home renters
4th Amendment Constitutional Right.
Our Group has collected 100 signatures of
registered Independence Voters and won the
right to collect signatures from other
registered Independence Voters so that they
can petition to have this Ordinance put to
the vote. We now have until October 7th to
collect enough signatures and we need your
help.
We have assembled a petition package to
provide every other concerned citizen of
Independence to be used to collect as many
signatures as possible and turn them in by
October 6th.

CALL TO

ACTION
We need help collecting signatures.
Please go online to get all the
details and a Petition Package at
www.MAREI.org/Indep-RentalReady

RE INVESTMENT NEWS

Part II

Self Directed IRA

INVESTING
In the previous article, I discussed five of my
top ten recommendations for retirement
account holders who are doing self-directed
investing. Lets continue with that list.
6. Do small-dollar deal until you get really
comfortable with doing all the due diligence,
underwriting and documentation that goes
along with self-directed investing.
If you do a small-dollar deal (remembers, all
accounts started out small) and something
goes wrong, you only lose small dollars. If you
do a large-dollar deal, particularly at the
beginning if your investing career, and
something goes wrong, if could be fatal. As
your confidence and experience grows, you
can do large-dollar deals.
4

MAREI.ORG

Article from Jeff Watson

& National REIA's RE Journal
(https://issuu.com/nreia/docs)

that in order to have a truly self-directed

retirement account, I must have
checkbook control. Checkbook controls
comes when the IRA owns an entity, such
as an LLC or trust that is funded with IRA
Many people will tell you that UBIT can be your
dollars, and the checkbook is in the
friend, and I would agree that in certain
circumstances, UBIT or UDFI are potential allies control of the account holder. My
response to that is that IRA-owned
to your retirement account; but acting like a
entities can either be awesome or awful.
dealer or owning a business inside your selfdirected retirement account is not wise. Not only You had better know when, which and
does it create a higher risk of liability and lawsuits, why.
but there is a greater likelihood that it will attract
the attention of the IRS. You will also have to file a Its a rule of practice in my office that I will
not assist a self-directed retirement
more complex tax return because the debt or
business Activity Income inside your self-directed account holder in setting up a singlemember LLC to be owned by an IRA
retirement account is not tax-free.
wherein the account holder insists on
Ive had people say to me, But, Jeff. Ive been told being the manager (person in charge of
7. Dealing and acting like a business owner inside
a self-directed retirement account is not a good
idea.

SELF DIRECT

the funds), I insist that they have an independent,

non-disqualified third party as the manager of
that LLC or the trustee of that trust.
8. Open a Roth account
Many investors who are getting up in years have
lamented that they only have traditional
accounts, and they dont think there is any way
they can get a Roth account. My response to that
is that anyone with a pulse and a way to earn and
report active, earned income can have a Roth
account, and they need to get one NOW! There
are simply no excuses. Once you have learned
the definition of what constitutes active,
ordinary, earned income (income that is subject
to income tax or self-employment tax such as
W-2, paycheck, 1099 or Schedule C income),
you will understand the importance of getting
some of that money into a Roth IRA or Solo
401(k) with Roth component. The magic of the
Roth is absolutely crucial. Not only does the
money get to grow tax free, but under the right
circumstances, it can be withdrawn from the
account in the form of a qualified distribution tax
free.

9. Make sure you double check the

beneficiary designations for the accounts you
have established.
This rule actually applies to every type of
retirement account, investment account, or
bank account you have. You need to double
check your beneficiaries. Is that money going
to go to the person you want it to go to in the
event of your death? Is the beneficiary
designation consistent with your overall
estate plan?
Jeffery S. Watson serves as general Counsel
for National REIA and practices law at the
Jeffrey S. Watson Law Firm, LTD located in
Conneaut, Ohio.
10. Become creative and learn how to play
nicely with financial friends.
Self-directed retirement account investing is a
team sport. It is not a solo activity, Anyone
who understands the prohibited transaction
and disqualified investment rules

understands that you cannot take money

from your self-directed retirement account
and use it for you own investments or put
some of you current assets into those
accounts, so you must learn how to work with
other individuals in a cooperative manner, You
need to find individuals by networking with
them at your local REIAs to determine if
their business standards are the same as
yours, if their objectives are similar to yours,
and if they seem like the right kind of person to
put on your investing team.
When you play nicely with financial friends all
of you prosper and benefit. Avoid doing a deal
with someone who believes they alone need
to be the one who profits and benefits from
the transaction. If the investment is not
mutually beneficial, it shouldnt be done by a
group of financial friends. One of the benefits
of developing a group of financial friends is that
you can do repeated deals with them as
various situations and opportunities arise.
This was originally published in the RE Journal
from National REIA Winter 2016.

LEARNTOBUILDWEALTHATMAREI'S

SELF-DIRECTED IRA

ACADEMY
OCTOBER228:30TO5HOLIDAYINN
8787REEDERROAD,OVERLANDPARK,KS
JEFFWATSON:TIMKUHMAN:QUINCYLONG
LIMITEDSEATING
EARLYPRICINGTHRUTHE18TH
MEMBER'S$49(REG$69)
NON-MEMBER$69(REG$99)
SPOUSEORBUSINESSPARTNER$20(REGNA)

RE INVESTMENT NEWS

Renters Insurance
Protects Your
Tenants & Gives
You Peace of Mind
By requiring your tenant to carry
renters insurance, you ensure that
your property has the extra layer
of protection that you already
require. For as little as $5 a
month, your tenants can purchase
basic renter's insurance and for an
additional premium, they can add
coverage for their belongings and
valuables.
Renter's Insurance
Protects tenant's belongings
Provides tenants with
personal liability coverage
In the case of tenant caused
loss, the renter's insurance
may become primary, thus
avoiding a claim on your
policy.
Avoids you
otentially becoming liable

GetaQuote!

www.realprotect.com
phone: 800-579-0652 (#3)
jjohnson@realprotect.com

for tenants pets and guests.

THE MOST COMMON

SDIRA
MISTAKES
By Jeff Watson
Asyouprobablyknow,Imvery
passionateaboutindividuals
learninghowtotakecontrolofand
managetheirselfdirected
retirementaccounts,whetherthey
areRothortraditionalIRAs,
401(k)s,orHSAs.Throughthe
years,Ihavebeenaskedallsorts
ofinterestingandsometimes
complexquestions,andoverthe
lastyearorso,IamseeingwhatI
believeisthemostcommon
mistakebeingmadebymostself
directedaccountholders.
Theyhavefailedtodiscipline
themselvestomakeregular
contributionstotheseaccountsin
ordertohavemorecapitalto
investingooddealsand
opportunitiesthatcometheirway.
Idontthinkitsbecausemost
peoplearebadwithmoney
managementanddonthavea
monthlyplanforwhatisgoingto
happentotheirmoney.Instead,I
thinkitstemsmorefromthebelief
heldbythetypicalaccountholder
thattheycanmakeupforthelack
ofcontributionswithastuteand
aggressiveinvesting.
Thestepstocorrectthisare
relativelysimple.

1.Outlineawrittenplanforwhat
youaregoingtodowithyour
consistentmonthlyincome.
2.Designateaportionofthat
money,whetheritiswagesyou
deferfora401(k)orothertake
homepay,tobedepositedintothe
retirementaccountyouhave
selectedwiththecustodianofyour
choice.
Forthoseofyouwhowanttodoa
quickmathexercise,takea
consistentcontributionof$100a
monthwitharateofreturnof12%
andseewhatthatwouldbecome
after40years.Canyousaythe
wordmillionaire?Ifyoudont
thinkyouhave40years,trythese
numbers:$300amonthat12%for
just20years.Thatsnearly
$300,000.
Allowmetosharewithyoua
quoteIpickedupfrommyfriend
PeteFortunato:Itisaterrible
thingtobephysicallyaliveand
financiallydead.Inorderto
avoidthatterriblething,self
directedaccountinvestorsneedto
makesuretheyareconsistently
puttingmoneyintotheirretirement
accountsonaregularbasis.

RE INVESTMENT NEWS

MAREI.ORG/CALENDAR

THE CALENDAR
FROM OTHER GROUPS >

MEETING

SELF DIRECTED IRAS &

REAL ESTATE

WinVestor's
Hosted by Brian & Michelle Winberry
Wednesday Mornings at 9 am
Lucky Brewgrill
5401 Johnson Drive, Mission
On Facebook

Jeff Watson is an Attorney & Real Estate investor who has

conducted & assisted others in structuring Real Estate
Transactions in Self Directed IRA's and other Self Directed
Accounts . !Be sure to RSVP Online and join us at the Holiday Inn
at 8787 Reeder Road from 6pm to 9pm on Tuesday October 11th
FREE for Members and 1st Time Guests. All others pay $25 at the
door or $15 when they pre-regsiter at MAREI.org.

1st Saturdays
Hosted by Jim & Beth Kasper
1st Saturday of the Month 9 am
Networking Coffee / Denny's
9001 Shawnee Mission Pkwy, Mission
On Meetup
Landlords of Johnson County
First Wednesday of the Month
Matt Ross Community Center
8101 Marty, Overland Park, KS
jocolandlords.org/Meetings.cfm
Cass County Landlords
3rd Tuesday of the Month
Carnegie Village
103 Bernard Drive, Belton
Landlord Inc of KCK
3rd Tuesday of the Month
Loan Star Steak House
1501 Village West, KCK
On Facebook
Landlords Inc.
4th Tuesday of the Month
Central United Methodist Church
5144 Oak Street, KCMO
sites.google.com/site/kclandlordsinc/
Landlords of EJC
4th Thursday of the Month
Allen's Banquet Hall
11330 E Truman Rd
Independence, MO
landlords-of-ejc.com/
Jackson County Real Estate Investors
Last Wednesday of the Month
4 West Monroe Street
Buckner, Missouri
On Meetup

WORKSHOP

SDIRA ACADEMY
This is a one day hands on workshop designed to show investors the
nuts and bolts of profitable real estate transactions with small dollar self
directed accounts. Jeff Watson will be sharing deals he and his clients
have done and showing how you can do them too. He will be joined in
training by Tim Kuhman from Kingdom Trust and Quincy Long from
Quest IRA. Early Bird Price is $49 for Members, $79 for Non-Member and
Bring a Guest for $20. Register by Oct 18 at MAREI.org for early pricing.

See full day

workshop
page 5

NOVEMBER

LEGISLATIVE PROCESS

Election
Night
2016

November 8th is not only Election Day but also our

November Meeting. So go vote and then join us at
the meeting at 6:00 for networking and at 7:00 for
our meeting. This month we will be talking about
legislation. Most specifically how to create or
change law in KS and MO to protect our industry.
We will be talking about Seller Financing, Rental
Licesning & Inspections, and City Owned Utilities.
Please mark your clanedar for Tuesday November
8th.. We may add a few more webinar events, so
watch the calendar of events.

We are beginning to be successful in buying and holding rentals, and a component of that has been
your MAREI organization and the people youve had as guests. We thank you for good REIA
and all the influential real estate and investing people youve brought in these last few years!"

"

MARKET UPDTATE

august 2016

3,580 $17k 3,393

homes sold

6.4% Increase over 2015

58

average days on
market

pending sales

17,141 average
sale price
increase from
same time last
year (5.5%)

average: $222,192
median: $186,900

5.0% Increase over 2015

8,047
houses for sale
30.5% decrease
2.6 month supply

14.7 % Decrease from 2015

96.6

of asking price

1.2% Increase over 2015

Closed sales began to cool for much of the country last month, and conventional wisdom
indicates that year-over-year declines are going to be present for the remainder of the year,
given the low inventory situation in most markets. Demand is certainly present and has created
competitive situations that have kept prices up. Rental prices are also up, which may lure more
toward homeownership.
vAs inventory continues to drop, the contradictions of today's market are evident. Sellers should
feel confident enough to list homes at fair prices and receive meaningful offers in a healthy
residential real estate and overall economic environment. However, there may be lingering
worry over the availability of move-in ready homes to replace what was sold. On a brighter
note, building permits are trending upward. That news should be weighed against the fact that
the highest level of activity is in multifamily rentals.
For further detail see http://www.kcrar.com/statistics

4REASONSTO
4REASONSTO
INVESTIN
INVESTIN
REALESTATE
REALESTATE

#1 Cash Flow is the profit you have

each month after youve paid for all
of the expenses on your investment
property.
Lets say that you get $2,500 per
month in rent. Lets also assume that
your mortgage and property
management fees are $1,800 per
month, leaving you $700. During the
month, you had a garbage disposal
that needed to be replaced for $300,
leaving you $400 in cash flow.
You might be thinking to yourself
that $400 is not going to make you
rich. And it probably wouldnt unless
you had multiple properties yielding
$400 per month in cash flow but
this is just one of the four reasons
investing in real estate is a
great investment.

10

MAREI.ORG

Many of our investment clients own

multiple properties that we manage
for them.
Lets say that you were able to buy
five properties over the course of 510 years. If they were all cash flowing
$400 per month, you would have
$2,000 per month of passive income.
Thats starting to become a number
that matters. Its a number that could
allow you to buy the boat youve
always dreamed about or retire a bit
earlier.
#2 Appreciation is the historical
trendthat properties rise in value
over time. Sure, there are corrections
in price when the economy
is suffering like in 2007, but over the
years, property values usually
increase.

By
Home Rental Services
If you currently live in a home that
you own, youve probably seen this
happen first hand. You get a tax
assessment every year and its rare
that the assessed amount goes down.
Lets say that you bought your home
for $250,000. Ten years later, that
home might be worth $270,000$300,000 based on how well real
estate performs related to the
economy. If you sold your home, you
would realize $20,000-$50,000 of
gain (minus closing costs, etc.)
And thats an example for just one
home.
In the cash flow section, we talked

RENTAL PROPERTY

about buying multiple investment properties

and assumed that you were able to purchase 5
homes over a period of years. When you start
multiplying appreciation gains across multiple
investment properties, the numbers really start
to add up. You could be looking at $100,000$250,000 of potential gain after 10 years. (We
say potential, because you wont realize a gain
until you sell the properties, and many investors
choose to hold them for the long term.)
#3 Paying Down Your Loan When you
purchase a rental property with a mortgage,
you make a monthly payment to the lender.
That payment includes two parts: principal and
interest. Interest is the profit for the lender, but
the principal is money you are paying down the
loan with.
For example, if you purchased a house five
years ago for $100,000 and got an $80,000
mortgage. Well say it was a 30-year mortgage
with a 5 percent fixed rate.
Today, you would owe only $74,000 because
$6,000 of your monthly mortgage payments
went towards the principal of the loan amount.
Ten years from now, you would owe only
$65,000. This means that every year your
equity increases, you would gain value in the
property as long as the market value didnt go
down. Equity is the difference between what a
property is worth and what you owe on the
mortgage.

#4 Tax Benefits Many landlords are not

aware of all the great tax deductions you can
get when you own investment
property which means that many landlords
are overpaying on their taxes who wants
to do that? Rental properties allow more tax
advantages than pretty much any other
investment vehicle. That is good news!
1. When you think of the rental income you
are going to get, its great to know that
expenses such as repairs, maintenance,
leasing commissions, property management
fees, interest on the mortgage, utilities, make
ready costs, HOA dues and more are usually
tax deductible.
2. Real estate taxes on your investment
property are tax deductible.
3. The IRS allows you to not only depreciate
the house (not the land) but also capital
expenses such as roofs, replacement
windows, etc. All of these things work to
reduce your taxable income.
4. If you have one of those not-so-fun years
and you lost money; your losses can
also help offset other income which is a
bright spot. (There are some annual limits to
thischeck with your tax advisor.)

5. If you decide you want to sell your

investment property at some point
and you are looking at a sizeable
profit, the IRS has a great program
called a 1031 Exchange. This program
has some specific date limitations but
essentially allows a perfectly legal
way to defer capital gains taxes
(always a good thing).
Be sure to consult a tax advisor who
knows all the deductions you can take
when you own rental property. You
want to be sure to take advantage of
all of them!
We recommend that you work with
your attorney or CPA before making
legal or financial decisions.
Conclusion: When you consider cash
flow, appreciation, paying down your
loan, and tax benefits, owning an
investment property can be an
excellent way for you to generate
passive income.
To learn more, please give us a call at
(913) 469-6633 or email
info@home4rent.com.

If you are in a financial position where you can

buy the property outright, you have 100%
equity. But youve also tied up a sizeable
amount of your liquid assets (cash) in that
property.
The decision to take out a mortgage or
purchase a property outright is influenced by
many factors including interest rates, tax law
and more. We recommend that you talk with
your accountant about the best way to
financially acquire a property.
RE INVESTMENT NEWS

11

Build Your Team

With MAREI Business Members

Save time and money by starting with service

providers who already know your business. Who can
solve problems as they arise to help you get the deal
completed on time and for maximum profit.

CLICKON

business
associates

AZURE WATERFRONT

A Full Service Title Company

David Green
www.AccurateTitleCo.com
913-338-0100

Luxury Waterfront Property Investment

Brad Reddick
www.AzureWaterfront.com
800-240-3606

Full Service Title Company

Patsy Archer
www.AlphaTitleLLC.net
913-498-8999

MAREI.org

ACCURATE TITLE

ALPHA TITLE

12

VISIT

BRIDGE MANAGEMENT
A Turn Key Real Estate Experience
Nathan Brooks
www.BridgeTurnkey.com
913-695-8213

ANDERSON & ASSOCIATES

CONTINENTAL TITLE

Law Firm
Julie Anderson
www.MOKCLawcom
816-931-2207 / 913-262-2207

A Full Service TitleCompany

Sharon Bower
www.CTitle.com
913-338-3232

MAREI.ORG

DIRECTORY

CROSSROADS INVESTMENT
LENDING

INVESTORS CHOICE
FUNDING

Investor Lending
Britton Asbell and BarakTschirhart
www.KCLend.com
913-766-2900

The Flexible Funding Solution

L. Scott Ficinus
www.InvestorsChoiceFunding.com
816-668-7223

DISCOVER HVAC

JAMIESON HOME TEAM

Heating & Airconditioning

Complete System for $2785
www.DiscoverHVAC.net
816-500-2900

GUARANTEED RATE
First Digital Mortgage
Beth Langston
www.GuaranteedRate/com
913-225-9323

Realtor & Property Management

Kevin Jamieson
www.KevinJamieson.YourKWAgent.com
913-384-8331

KC CABINET
COLLECTION
Cabinet Source
Mark Yanda
www.CarriageHouseCabiinet.com
913-980-4260

HEARTH MASTERS

KC INVEST

Chimney & Fireplace Restoration

Mage & Gene Padgitt
www.ChimKC.com
816-461-3665

Investment Property Seller

Kim Tucker
www.KCInvest.com
913-735-0018

HOME DEPOT
2% Rebate on all Purchases
Christine Putman PRO Account Rep
816-377-9534
Sharon BeckPPO Account Rep
913-313-8912

KCMO HOME BUYER

Property Buyer
Don Tucker
www.kcmoHomeBuyer.com
816-200-2198

HOME RENTAL SERVICES

MERCHANTS MORTGAGE

Kansas City Property Management

Sandy Fisher or Paul Branton
www.Home4Rent.com
913-469-6633

Real Estate Finance Company

Susan Aubin
www.MerchantsMtg.com
720-554-9480

RE INVESTMENT NEWS

13

DIRECTORY

NATIONAL REIA U

REAL PROTECT

Online Training
Professional Housing Provider Credits
www.NationalREIAU.com

Insurance for Investors

Brought to you by National REIA
www.RealProtect.com
1-800-579-0652

OFFICE MAX / DEPOT

REALTY RESOURCE

A further sign of health is that we don't

become undone by fear and trembling, but
we take it as a message that it's time to stop
struggling and look directly at what's
threatening us, said Pema Chdrn.

Real Estate Brokerage

Scott Tucker
www.RealtyResourceKC.com
816-406-0701

PAT LIVE

RENT PERFECT

Professionally Answered Telephones

Free Trial & Discounts
www.MAREI.org/PatLive

Tenant Screening, Leases & Insurance

www.ISCScreening.com

PRIDE PROPERTIES

RENTALS.COM

Real Estate Professionals

Marcus and Matt Bray
www.PrideProperties.com
913-213-5370

Advertise Your Rental Properties

Discounts for Members
www.Rentals.com

REALEFLOW
Real Estate Investor Platform
Marketing, Management, Deal Flow
www.MAREI.org/Realeflow

REAL ESTATE INVESTING

TODAY
Real Estate News from National REIA.
www.RealEstateInvestingToday.com

14

MAREI.ORG

YOUR COMPANY HERE

Become a Business Member Today
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Take the Hassle Out of

Leases and Rent Perfect

Investigative Screening & Consultings ISC Connect

is the solution rental property owners & managers
have been crying out for. Theyve combined the
hands-on human element of
investigative techniques with the speed,
convenience, and cost-cutting power of the digital
age to provide you with an all-in-one, mobile webenabled screening process. The ISC Connect
Online Lease Agreement allows you to send your
tenant(s) a customized lease agreement,
electronically and securely!
No more having to create or search for a lease; just
generate it, and theyll securely hold on to it for you!
They have included all the legal greatness of a
normal lease, and made it easy to customize to
your specific property by adding terms such
as: Lease Start and End Dates, Monthly Rent,
Additional Lessees and Authorized Occupants, and
of course Security Deposits and Concessions. Your
tenant (and you) will then electronically sign the
lease, which is then conveniently stored and
available in your account, viewable at anytime!
National REIA members receive a discounted
$0.95 set up fee for this program.
In addition to their Online Lease, ISC now features
a way to make renters insurance required for your
rental property addresses. Tenants are notified via
the ISC portal and, through a partnership with
realprotect, given access to special discounts on a
new policy starting as low as $5 per month.
Sign up today and see why ISC Connect has
become the one tools hundreds of property owners
and managers cannot live without. ISC allows you
to rent perfect!

EXPAND YOUR

BWUI TSHI N
E
S
S
MAREI

PROFESSIONAL
housing provider

Key Investing Areas

CERTIFICATION

for members to share knowledge

Rental : Rehab : Wholesale : Notes : Creative

40,000
professionals

750

Average Member

National REIA 514 MAREI Members

4 member benefits
designed to promote

SAVINGS

500 Average Home Depot Rebate

100 Average Saving Office Depot
$100 Saving on 5 Training Events
$50 Savings on Other Benefits
People / Networking Priceless
Deal Connections Priceless

community
NETWORKING : EDUCATION
A D V O C A C Y : C H A R I T Y

30+
local and national
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many with discounts

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