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July 2003
Member of the National Real Estate Investors Association (NaREIA)
Upcoming Meetings July Program & Hot Seat Speaker
and Seminars Legal Update & Mobile Home
• July 3 & 17 – Public Policy Com-
mittee Meeting, 8:30 a.m. at
Primer On Tap
Denny’s on Patton Avenue. Con-
On Monday, July 14, CRE-
tact Langdon Ammen, 285-0123
IA’s Hot Seat Speaker will be
or lammen@worldnet.att.net for
an attorney from the law firm
more information.
of Cogburn, Goosmann, Bra-
• July 8 – New & Beginning Inves-
zil and Rose. The firm will be
tor Meeting, 6:30 p.m., Denny’s
updating CREIA members
on Patton Avenue. Group Leader,
and guests on the most recent
Judy Clodfelter, 683-4799 or
NC real estate contract forms
silversrosebud@aol.com.
available and some things to be
• July 12 - 17 – NAREIA Summer
aware of when making offers
Cruise, with Pat Tarr and Nick
and counteroffers. After a
Sidoti. A real estate investor’s net-
short break and networking
working dream. See enclosed flyer
time, CREIA’s July program will be lead
or email creianews@hotmail.com
by longtime member Roy Chapman.
to request a flyer.
Roy currently serves on the CREIA
• July 17 – Upstate CREIA Monthly
Public Policy Committee and has be-
Meeting. Upstate CREIA meets the CREIA’s monthly meeting is held at 6:00 p.m.
come known as the “Mobile Home
third Thursday of every month at at the A-B Tech Enka Campus off I-40 at exit
Maestro” in the organization. Increasing 44, .5 miles west on 19/23 towards Candler.
6:30 p.m. at the Marriott on I-85 &
interest for affordable rental housing in If you are coming from I-40 toward Candler
Pelham Road at exit 54 in
Western North Carolina that actually on 19/23, turn LEFT at Sandhill Road and the
Greenville, SC. Contact Deb Sisson new campus (old BASF plant) will be on your
– Continued Page 4 – Continued Page 2 left.
Special Deal for CREIA
and Upstate CREIA members CREIA Receives Top National Award
by John Maltry
Save $60 on the Southeastern Con-
vention and Trade Show in Atlanta, July As you may know, the National Real Estate In-
18-20! Don’t miss these 17 National vestors Association Convention was held in
Speakers! Normally $129 at the door, Asheville this past weekend. This is the first time
$69 if you pay at the next CREIA meet- they have come to such a small town as
ing or Check, Cash, M/C or VISA on July Asheville. Next year’s convention will be in Las
14 or send your check by July 14 pay-
Vegas.
able to CREIA, PO Box 615, Asheville,
NC 28802 for the group discount. NOTE: It was an excellent meeting and a great oppor-
YOU MUST PAY CREIA TO GET A DIS- tunity to learn new techniques on how to produc-
COUNT! – Continued Page 3
2
Program Take Care Not To Overextend Ability
– From Page 1
To Acquire, Manage Properties
gives investors monthly cash flow
has lead many down the path of mo- Current market conditions are pre-
bile home investing. Roy will discuss senting a significant opportunity for
his techniques and experiences on
President’s
shrewd and educated investors. Yet, you
rehabbing mobile homes from floor need to be careful not to overextend Message
to ceiling. If the floor is warped and your ability to acquire, renovate, rent,
the roof leaks, Roy has a solution for and manage your properties. With va- area, they contribute the majority of
your repairs. cancy rates on the rise and money freely their problems to overbuilding and un-
Another subject Roy intends to accessible, we have all the makings for employment. It is not uncommon for
cover is the area of investing by pur- investors to overextend themselves and tenants to be offered concessions, such as
chasing a mobile set-up in another end up in a financial pit. You need to be one month free rent, reduction in secu-
person’s park and the advantages careful and invest wisely. Remember the rity deposit or other special promotional
and disadvantages you may encoun- objective is not too see how many prop- packages to sign a lease. Officially, the
ter versus buying a mobile with land. erties you can get control of, but how vacancy factor as reported by the NC
Be prepared for an open discussion good of a return you get from each indi- Apartment Association is 12.7%. For the
of anything and everything to do vidual property. Southeastern US, it is 12.4%.
with mobiles and don’t be afraid to I know investors who have hundreds For many years now, the typical
ask because Roy is willing to answer. of properties but are unable to meet Asheville CREIA investor has been
For those who still have questions af- their basic financial needs and are cur- blessed with a near 0% vacancy factor.
ter the meeting adjourns, they are rently forced to sell property to pay bills. As soon as one tenant moved out, you
cordially invited to join Roy and Other shrewder investors purchased would find another one ready to move
other CREIA members at the Crack- right and did not overextend themselves. in. The longest downtime was for clean-
er Barrel for more discussion on mo- They are living comfortably with a solid ing up the unit prior to a new tenant
bile home investing. Hope to see you cash flow and are looking forward to a moving in. This has been changing over
there at 6 p.m. on July 14 at A-B good retirement. the past several months and now local
Tech Enka Campus. During a recent trip to Raleigh, the – Continued Page 6
members of the local investment associ-
WANTED: ation (TREIA) were complaining about CREIA Report
the high vacancy rates in the 15% to
Communications CREIA Report is published
25% range. TREIA members attribute
monthly. Newsletter editor is Jean-
Director for their high vacancy rate to four key fac-
nie Acevedo.
tors:
CREIA Report • Overbuilding of apartment
Articles submitted are the ex-
If you’ve always wanted to be the press opinions and comments from
units
editor of a popular publication, various independent CREIA mem-
• Poor economic conditions re-
now is your chance! bers and outside sources.
The CREIA Report is looking for a sulting in a significant reduction in high
CREIA members are urged to
newsletter editor to write articles paying technical jobs
submit articles for publication.
and edit information before being • Federal budget constraints re-
submitted to the newsletter Deadline for articles to be pub-
sulting in reevaluation of Federal subsi-
designer. If you are energetic and lished is the third Monday of each
dized housing prices
good at bringing information month.
• Lower interest rates encourage
together in a relatively organized Send your article to Jeannie Ace-
format, WE WANT YOU! tenants to become homeowners
vedo, 82 Greenridge Rd., Weaver-
Contact Jeannie Dunn Acevedo at Similar discussions with individual
ville, NC 28787, or e-mail,
301-3010 or investors in Charlotte indicate extreme-
creianews@hotmail.com creianews@hotmail.com
ly high vacancy rates. Like the Raleigh
3
Award The entries were turned over to non-industry professionals
for evaluation. Available resources, including annual budget,
– From Page 1 number of association members and
tively run an investment group. The NaREIA volunteers and
available staff, were factors in the “We are
evaluation process.
conference committee from CREIA did an outstanding job. It is with great pleasure and hon- the best
The comments were excellent about our hospitality and how
much they enjoyed visiting our city.
or to announce that CREIA won the of the
top Award of Excellence for our ac-
As many of your may or may not know, this year the Na- complishment this past year. This is best ...”
REIA hosted its award contest and ceremony, the Awards of the first time we have ever won an
Excellence, inspired by the models of the best in the real es- award and we cane out on top. We are the best of the best. It
tate investing across the United States. There was one major has been a very difficult year and many many, many volun-
award for the Association with the overall best program and teers have worked extra hard to move this organization for-
seven secondary awards including Governmental Affairs, ward, especially the Board of Directors.
Community Service, Membership Development, Communi- Although painful at times, we accomplished a considerable
cation, Education, Convention and Trade Shows and Fi- amount and have helped many individual investors. And that
nance. is our primary goal, helping others invest in real estate and find
Each entry was evaluated on: financial freedom – the “American Dream.” The Upstate
1. Accomplishments; CREIA team is also to be congratulated. For half of this past
2. Innovation and creativity; fiscal year, Upstate was part of CREIA. Their hard work and
3. Quality of the programs; growth was an instrumental section of our entry. Thanks for
4. Organization. all the hard work.
4
Meetings & Seminars Good Things Happening
– From Page 1
at debsisson@charter.net or (864)313-2101 or go to
At Upstate CREIA
www.UpstateCREIA.com. By Glen Woodfin
• July 21 – Experienced Investor Focus Group meeting, 6:30 The final count for the last Upstate CREIA meeting on
p.m., Skyland Fire Department (upstairs), Group Leader, June 19 was 242 people in attendance! Thanks to the Board
Judy Clodfelter, 683-4799 or silversrosebud@aol.com. and several volunteers who made June 19 the biggest evening
• July 23 – Landlording Focus Group meeting, 6:30 p.m., in Upstate CREIA history.
Realty World Marketplace, Chestnut St., Asheville. Group The atmosphere was electrifying. For me as former presi-
Leader, Judy Clodfelter, 683-4799 or silversrosebud@aol.com. dent of Upstate CREIA, it was a dream come true. As a mat-
• July 28 – Finance Focus Group meeting, 6:30 PM, Skyland ter of fact, everything that I imagined we’d accomplish during
Fire Department (upstairs), Group Leader, Judy Clodfelter, this past year has come true. Every-
683-4799 or silversrosebud@aol.com. thing.
• July 29 – Hendersonville Focus Group meeting 6:30 p.m., On Saturday, June 21, Upstate
Bay Breeze Restaurant Hendersonville Group Leader, Tom CREIA had the chance to sit down
Boyd, 697-6716 or tandcboyd@mchsi.com. with Bill Twyford and Dwan Bent
• August 5 – New & Beginning Investor Meeting, 6:30 p.m., Bill Dwan
and let them let their hair down and
Denny’s on Patton Avenue. Group Leader, Judy Clodfelter, really explain to us how to make money in Short Sales at the
683-4799 or silversrosebud@aol.com. Greenville Tech Campus. I went to the all-day seminar in
• A Haywood County Focus Group is in the formative stage. Asheville last year and I’ve been dreaming of the Twyfords
If you live/invest in Haywood County and you wish to help coming to Upstate CREIA because they were just so good.
organize this Focus Group, please contact Judy Clodfeter at They truly know how to train and motivate real estate inves-
828-683-4799. tors. They don’t just teach it, they do deals all the time.
They’ve done close to 1,000 deals with over 50 million dollars
in transactions.
In Memoriam As we watch the Greenville/Spartanburg real estate inves-
tors group climb to new heights, don’t forget that as a non-
CREIA member, Paul Rice, passed away in the Oteen VA profit organization with volunteer leadership we must remem-
hospital after a short bout with cancer. Paul is survived by his ber one thing. Upstate CREIA is what you the members of
wife Mary Parker. The funeral was held at 10 AM on Friday, the organization make of it. If you’d like to volunteer at the next
June 13 at the Veterans Cemetery chapel off Old US 70 (near big event or at our regular monthly meetings, ask Deb Sisson what
Highland Farms) in Black Mountain. Please keep Mary in you can do to help. Deb can be reached at debsisson@charter.net
your thoughts and prayers. or (864)313-2101 or go to www.UpstateCREIA.com. See you at
the next meeting on July 17 at 6:30 p.m. at the Marriott on I-85
& Pelham Road at exit 54 in Greenville, SC.
5
Want To Move Ahead Real Fast In Real Estate?
Attend National REIA’s Summer Cruise July 12 - 17, 2003
By Don Beck
If you have been investing for any and asset protection specialist Pat Tarr. We
length of time, you know there is no crys- will again feature the ever popular evening
tal ball to rub or magic formula to pop in Q & A sessions where you get the real
the computer to teach all there is to know scoop of how to do a deal in a small group
about being a real estate investor. What is setting.
known, though, is that being around peo- This five-day cruise has been designed
ple who enjoy doing the same things you as a tax-deductible vacation with an edu-
do will move you faster to your goal of fi- cation, and the goal to make it affordable
nancial independence. so more can attend. Strongly consider
Over the past five winters and last sum- bringing the whole family and let Carni-
mer, investors from all over the country val’s camp counselors entertain the kids for
gathered on a National REIA cruise to free while you attend the seminars.
take a “vacation with education” – and There is also a $300 per person price re-
written it off to boot. This year’s summer cruise is being held duction for a third or fourth person in a cabin. More infor-
from July 12-17, 2003. Carnival’s two-year old ship “Victo- mation about the cruise, the itinerary, what the price includes,
ry” will be our home for the trip. We leave from New York and the topics offered can be found on our website at
City and cruise to the towns of Halifax, Nova Scotia and St. www.nationalreia.com or see enclosed flyer. You can also con-
Johns, New Brunswick, Canada. On our two days at sea, our tact Cruise Chairman Don Beck toll free at 877-542-9804 or
national speakers will be “Dr. Cash Flow” – Nick Sidoti – email him at mgmtexpert@aol.com.
6
Overextend Mistake #2: Investing Blind
Investors are blindly buying real estate
embarking on such a project and wants
a large enough profit to justify the risk.
– From Page 2 based on bogus advice or complete lack For example, if a house needs
investors are reporting 2% to 6% vacan- of education. Real estate is one of the $10,000 in repairs, the rehabber inves-
cy rates. – a blessing when compared to few investments in which risk is directly tor wants to make at least a $20,000
Raleigh or Charlotte, yet unacceptably proportional to knowledge. profit. If you find a deal with $20,000
high for the Asheville market. I read a comment on a real estate dis- in profit potential, how could you expect
According to recently released state cussion group on the Internet. In re- to get $10,000 for flipping the property
figures from the North Carolina Em- sponse to an inquiry as to whether a par- if the rehab investor you flip it to is only
ployment Commission, the Asheville ticular seminar or training program was going to make $10,000? You should be
metropolitan area, which includes Bun- worth the money, someone answered, happy making $2,500 and moving on to
combe and Madison counties, has the “Why waste the next deal. If you want to
lowest unemployment rate among all your money make more than $2,500 on such
metro areas in the state at 3.9%. The on that stuff? a deal, then you must find and
state average unemployment rate is Just use your negotiate a better bargain that
6.1%. The mountainous terrain tends to money as a has more profit potential.
limit building and thus overbuilding is down pay- Mistake #5: Treating Real
not as a significant issue. In short, ment and Estate as Anything OTHER
Asheville has not seen the same massive learn as you than a Business.
growth as Raleigh or Charlotte and, like- go.” This is probably the worst advice People are lured to real estate because
wise, I don’t think we will see the same you could ever give a beginner. of the quick buck that it promises. Don’t
massive downswing, as other areas will. Mistake #3: No Cash Reserves hold your breath, you won’t get rich
I recently came across an article at Ask anyone in real estate long term quick. An “overnight sensation” usually
www.legalwiz.com by William Bron- (or any other business, for that matter) takes about five years. More than 90 per-
chick entitled “The Wrong Way to In- and they will tell you the two most im- cent of the people who take a real estate
vest in Real Estate.” Given our current portant words for survival are: “cash seminar quit after three months.
market conditions, I thought it would be flow.” Why the high fallout rates? Lack of
helpful to review the highlights from In order to stay in real estate long action and unrealistic expectations. Give
Bronchick’s article that covers 5 mistakes term, you need cash reserves. Buying real yourself at least six months to see if real
real estate investors make. estate nothing down is easy; handling estate works for you. It may even take a
Mistake #1: Stock Market Mentality negative cash flow, repairs and other ex- year before you buy your first property.
You’d think after losing $7 trillion in penses in the meantime is the trick. Maybe in the second year, you will buy
the stock market people would have In other words, you can buy real es- three or four properties.
learned! Nope, they are making the same tate without money; you just can’t sur- In short, if you buy and hold for the
mistake, which is assuming what hap- vive in business without cash reserves. long term (15 + years), you aren’t likely
pened yesterday will happen tomorrow. Thus, consider accumulating cash re- to lose. Real estate values generally go up
Nine of ten new investors I meet say serves before investing in rental proper- in the long run, with few exceptions.
they are interested in real estate because ties. On the other hand, if you are buying
they saw someone else make money Mistake #4: Being Greedy properties with negative cash flow with
from the rapid appreciation of the mar- Many investors get started flipping the expectation of the values increasing
ket over the last few years. But, buying properties to other investors, which is a over 2-3 years, shame on you! What if
real estate solely for short-term apprecia- good idea to generate cash reserves. the values decrease? What’s your backup
tion is often a big gamble! However, you must be realistic about plan? Can you rent it for break-even cash
So, should you refrain from investing how much profit is in a deal. If there is a flow? Can you sustain negative cash flow
if you think the market has peaked? Ab- potential for a $20,000 profit in a rehab until the market rebounds?
solutely not! You can find bargain-priced project, you can’t expect to make Don’t bank on appreciation; buy
properties in every real estate market, $10,000 flipping that property to a re- properties below market and have a
even the hottest. habber. A rehabber has a huge risk in “plan B” if it doesn’t work out.
7
Check Out The New Library Material
By Jack Nesbitt wealth building and secure your finan-
CREIA Reading Room (New Mate- Library cial future! This is a complete training
rials from your CREIA Library) manual and audio-cassette package.
• How To Protect Yourself and Reduce News • Maintaining A Lead Safe Home by
Your Taxes Using Trusts by Shawn Ca- Dennis Livingston. This is a do-it-your-
sey, Esquire. The complete system in- • Four Training Video Package from self manual for homeowners, property
cludes easy-to-understand explanations CP&L on framing, insulation, ductwork managers and contractors. This is a re-
of land trusts, living trusts and wills, in- and HVAC equipment with companion vised edition that re-
cluding six cassettes that answer all your handbooks included. This course is flects new HUD
questions and explain how to use the available in both English and Spanish rules.
forms. Latest updates including a 200- formats. • Developing The
page workbook and forms. • Accelerated Wealth Building-Beyond Leader Within You
• The Super Start Package – Four spe- The Basics by Richard Desich. Discover by John Maxwell.
cial audiotapes to get you started in the the best strategies for quickly amassing How to develop
right direction! Think BIG with John millions of dollars tax-free. Discover the vision, value,
and Greg Rice, including Making Your how to start saving, investing and com- influence, and
Money Work for You by Robert Kiyosaki pounding the same dollars you’re need- motivation of
and Ron LeGrand, Success Is A Mission lessly “donating” to the IRS right now! successful leaders
by Ron LeGrand and Marshall Sylver Learn the secrets of using mortgages, • 10 Rules To Break & 10 Rules To
and Five Superstars Tell How They Built liens, real estate and other “unconven- Make by Bill Quain, Ph.D. The Do’s
A $1,000,000 Business. tional” investments to accelerate your and Don’ts for Designing Your Destiny.
Library Policy And Agreement
Library Policy and above require a credit card im- member of CREIA, in good standing,
For your review, here is the Library print. and I do not owe any late fees to the li-
Policy and Agreement as adopted by 8. Now, go make some money. brary. I understand and agree the mate-
your board of directors. Library Agreement rial I am checking out on the above not-
1. You must be an active CREIA mem- By signing my name to this form, I ed date will be returned to the library at
ber in good standing. attest and agree to the terms and condi- the next CREIA meeting held on the
2. You must not owe any late fees to the tions of checking out material from the 2nd Monday of the following month. If
library. CREIA library. I attest that I am a – Continued Page 8
3. Your membership dues must be cur-
rent as determined by our monthly
CREIA membership list. Overdue Library Materials
4. You may check out only one (1) item
per member per meeting. Here is a list of all those CREIA members who need to return books and tapes
5. You have read and understood the Name Code Title Date Out
Library Policy and CREIA Library
Bill Banas 241 Fast Cash 11/11/02
Agreement.
6. If you’ve had late fees or any library Don Markum 315 Lease Option BC 3/10/03
material 90 days past due, you will David Wall 3 Tax Free Exchanging 4/14/03
forfeit your library privileges. Karen Hawkins 226 The Millionaire Next Door 4/14/03
7. Library materials with a value of $200 John Kelly 312 Power Negotiating 5/12/03
8
Q&A Forum Yahoo! Groups Forum
Here are some of the questions and answers posted this past ing. Both deals were much better than any other offered. One
month at the CREIA Yahoo! Groups Forum. Don’t forget that company wanted $300 to pump the oil and dispose of it, and
you must be signed up before you can send an email to $250 each to remove the tanks.
creia@yahoogroups.com and you must be a member of CREIA
to sign up. If you would like to join Yahoo! Groups today, please Q: I am working on getting my
send your request to George Lycan at glycan@charter.net. first project rented (four units) and
Q: I am about to lease out my first property in city limits. was planning on including dish-
How much does a C.O. cost and whom do I contact to ar- washers and refrigerators in two of
range it to take place? the units. The lease will contain a clause saying appliance re-
A: You must have your CO in place before your tenant pair is the responsibility of the renter since they are provided
moves in or it will be very costly! And they will not turn the as a convenience to the occupant. Today someone told me that
water on in the new tenant’s name until the process is com- that might not be allowable in NC. Any thoughts?
plete. Call the Asheville Housing Department. Speak to Jeff A: NCGS Chapter 42-42 states that the landlord is required
Baker at 259-5656. to “maintain in good and safe working order and promptly
repair all ... appliances supplied or required to be supplied by
Q: I have two 250 gallon above-ground oil tanks, one with the landlord provided that notification of needed repairs is
about 2.5" of oil in it, the other half full. I need them removed made to the landlord in writing by the tenant.” In short, if the
from our property. Any suggestions? appliance is on the property and it does not belong to the ten-
A: Grace Fuel Oil Company was very helpful to me in find- ant, then the landlord is responsible to maintain it. Any agree-
ing a repair company for my oil tank when the tenants let it ment contrary to this is illegal in NC.
go dry. They can be reached at 828-252-6401.
A: Thanks for all of the replies. As usual ,this group is very
active and very informative. I found an oil company, Western
Agreement
Carolina Oil in Arden NC – 828-684-3110 – that pumped – From Page 8
the tank out (about 130 gals) for $75. The driver gets $25 of I fail to return the library material I will be obligated to pay a
that, and the oil is given to those who can’t afford to fill their late charge of $10.00 per piece of material, per month. If I
tanks due to their financial situation. He said just call that do not return the material within 90 days, I will be billed at
number and leave your name and number if you have a need. the retail value for the material I have checked out. If I have
I also did find someone to take the tanks. The suggestions here late fees or any library material 90 days past due I will for-
were great, including putting them in the Iwanna and the feit my library privileges. I also agree to reimburse CREIA
local paper. The company is Smoky Mountain Ptroleum on for all collections expenses associated with the attempt and
Swannanoa River Rd in Asheville - 828-298-5131. They had process of collecting my late fees and/or retail value of the
a boom truck that lifted each from its base. That cost us noth- material past due.
9
Fixer-Uppers Need To Be In Marketable Condition
by Henry Savage conditions may not be the best, but at told him I needed the property to be ap-
Realty Times.com the end of the journey, you will very praised “as is.” This means the value is
Question: My wife and I have been likely have a nice asset on your hands. not subject to any repairs or improve-
looking for the right house to buy for the Now, let’s get to your question. ments. Second, I asked him what specif-
last year or so. Property values have sky- You’re in a bit of a Catch-22 situation. ic items he would be obligated to list as
rocketed, so we have been searching for The lender won’t lend you the money “adversely affecting marketability” of the
well-priced “handyman specials,” figur- unless certain repairs are made. You plan property. It turned out that the apprais-
ing we could buy at a on making these re- er was concerned with holes in the din-
good price and make pairs but can’t make ing room ceiling and broken gutters.
improvements ourselves, them until you obtain Third, I instructed the buyer to plas-
over time. your mortgage and ter the holes and re-attach the gutters
We found the perfect settle on the house. with the minimal cost and effort. It
house in a great neigh- The lender has one is- turns out the repairs were made at a cost
borhood for $230,000. sue–marketability. of less than $100. The appraiser then re-
Similar houses in the The job of the ap- inspected the property and was able to
area are going for nearly praiser is to not only complete the report in “as is” condition
$300,000. The only dif- valuate the property and with no adverse notations.
ference is that this house but also inform the Basically, the buyer had to spend
needs major cosmetic lender of the market- $100 and a little bit of time to ensure
improvements. There ability of the proper- that the appraisal report is not a red flag
are holes in the plaster, ty. The lender is look- to the lender. Remember that all ap-
the kitchen is outdated, and the siding is ing at a worst-case scenario. You default praisers are different. If your appraiser is
falling apart. Need I say more? on the mortgage and the bank ends up unwilling to work with you on these is-
At any rate, we figured we could im- with the property through foreclosure. sues, you should find a different apprais-
prove the house over time at very little The appraiser notes on his report that er. In my experience, most appraisers
cost with our own “sweat equity.” We the property is not in “marketable con- will be flexible in what they will note in
applied for a mortgage of $184,000 with dition,” meaning that the home will not the report.
a 20 percent down payment. The ap- easily be sold until certain repairs are Article reprinted with permission from
praisal came in at $250,000–$20,000 made. Realty Times.com.
over our purchase price. But the lender Hello? Isn’t that why you’re buying
is saying that the appraiser noted a list
of items recommended for repair. Now
the house? The price is great for a reason
–the house is in lousy condition so no-
Free E-Seminar
they say that they won’t make the loan body (except you) wants to buy it. But if By William Bronchick
unless we patch the holes in the walls the bank ends up with the house For a limited time, LegalWiz.com is
and repair the clapboard siding. through foreclosure, it can’t easily sell offering a free E-seminar ... a seminar
This seems ridiculous considering the house without repairs being made. by email! “Real Estate Finance in Six
we’re putting 20 percent down and the Herein lies the problem. The bank is Easy Lessons” will be sent to you elec-
property appraised $20,000 more than in the money-lending business, not the tronically.
the purchase price. We really want the home improvement business. The lend- Individuals get two bonuses for reg-
house but can’t afford to make these re- er is scared to death that it will end up istering.
pairs in the next 30 days. Any advice? with a piece of junk property that they • Access to 20 downloadable real estate
Answer: First of all, congratulations on can’t get rid of without spending a & business legal forms
finding an undervalued “fixer-upper.” bunch of time and money on it. They • FREE subscription to William
One of the best ways to build wealth is don’t want to be in that business. Bronchick’s “Real Estate Entrepre-
to do what you’re doing—buying an un- I acted as a mortgage broker in a very neur” Newsletter
dervalued home in need of some work similar situation. Let me tell you what I For more information or to register, go
and adding a little TLC. Your living did. First, I phoned my appraiser and to www.legalwiz.com/e-seminar.htm.
10
All Three FICO Scores At Once
For the first time, consumers can see Isaac, says, “Having all three FICO $12.95 for each FICO-scored profile
all three FICO scores used by lenders scores is like getting a three-dimension- ($38.85 for all three), the same price
to make credit decisions exclusively at al view of your credit road ahead. For that Fair Isaac has charged since it first
www.myFICO.com. Fair Isaac Corpo- the first time, you can compare your offered FICO scores directly to con-
ration (NYSE:FIC) announced at its three scores just as lenders do. By add- sumers more than two years ago.
InterACT 2003 client conference the ing the Experian-based FICO score to Fair Isaac is encouraging consumers
launch of its newest consumer product, FICO scores from Equifax and Tran- to check all three of their FICO scores
FICO-Scored Experian Credit Profile, sUnion, www.myFICO.com has be- since widely different scores are a good
becoming the first company in the na- come an essential stopping point for sign that the underlying credit reports
tion to offer consumers all three of anyone wanting to get the best deal on contain significantly different informa-
their FICO(R) credit risk scores - the a credit card or new loan.” tion.
industry-standard scores used by lend- Consumers can buy their FICO The company also advises consumers
ers when deciding who gets credit and scores calculated from the credit reports to regularly verify the accuracy of their
at what rates. Available exclusively on of each of the national credit reporting credit reports, both to protect their
www.myFICO.com, the Experian- agencies. Each score is individually FICO scores and to detect early signs of
based FICO score joins FICO scores packaged and delivered online with the possible identity theft. The myFICO
from Equifax and TransUnion in the underlying credit report and Fair Isaac’s Web site offers informative, actionable
first complete view for consumers of personalized analysis of that score, in- credit information services that help
the way lenders really see them. cluding suggestions for improving it people improve and protect their over-
Tom Grudnowski, CEO of Fair over time. The cost to consumers is all financial health.
Creative Cash Flow Solutions
Serving NC Real Estate
Investors
Your Note Buying Partner
We Love Paper
(336) 643-1115 or
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11
Some Observations On Flipping
By Jack Hall 1.) resale of a prop-
Most of us, as investors, refer to “flipping” as buying a erty occurs within 90
property at one price and selling it for a profit, including the days of the previous set-
instances where a property is tied up with a contract for pur- tlement date; or
chase and the contract is assigned for a fee. However, some 2.) the property is
fraudulent activities involving the purchase and quick sale not purchased from the
have, for several years, received attention from the press, regu- owner of record ; or
lators and legislators and been labeled “flipping” with nega- 3.) the transaction
tive implications. involves the sale or an as-
The first of these is the practice of buying a property and signment of the sales
reselling at an artificially inflated price, often with collusion contract.
between the seller, lenders and appraisers. To eliminate these Generally, resales oc-
kinds of scams, which often victimize those with low incomes curring between 91 and
and poor credit, HUD has promulgated new rules. 180 days of acquisition
At the Federal level, HUD, on May 1, 2003, released its are eligible, except that
Final Ruling on “Prohibition of Property Flipping in Single HUD will require additional documentation (must include an
Family Mortgage Insurance Programs (24 CFR Part 203; Fed- additional appraisal) if the sales price is greater than 100%
eral Register, Vol.68, No.84, p. 23370).” over the purchase price. The regulation also gives HUD the
This rule establishes certain new requirements for eligibili- authority, at their discretion, to require additional documen-
ty for financing single-family property acquisition with FHA tation from the lender if the resale price is 5% greater than
mortgage insurance. To summarize: a property is not eligible the lowest sale price in the preceding 12 months and specifies
for FHA-insured mortgage-financing if: – Continued Page 12
Housing Task Force Issues Reports
By Jack Hall and show up at the work session (no spectors and COs (Certificate of Occu-
The Task Force on the Minimum public comments are usually allowed) and pancy).
Housing Code has issued two reports, council meetings, where public comment The majority included three CREIA
and city staff has made its recommenda- is solicited, to support their view. members, Bill Goacher, David Maggard
tions to city council for amending the Every member is also urged to call, and Colin Robertson.
Code and council has just released a no- write or e-mail the Mayor and council The minority, mainly non-profit rep-
tice changing discussion of this issue to members with their views on the subject resentatives, still insists on mandatory
the July 15 work session. (for a list of contact addresses go to inspections of all residential properties.
Because the reports are so divergent www.ci.asheville.nc.us). Contact them for further information. A
and the issue will greatly affect every The task force majority report rec- third report came from city staff that
property owner in Asheville, members of ommends adoption of a complaint- wishes to retain the current, mandatory
CREIA are urged to inform themselves based system, eliminating third party in- system of inspection and COs.
12
which allow homeowners to take out additional equity.
Flipping North Carolina was the first state to comprehensively address
the problem of predatory lending, unfortunately labeling cer-
– From Page 11 tain practices of some unscrupulous investors (and lenders)
the use of those appraisals to calculate the maximum mort- as “flipping” with a narrow definition. However, the only ref-
gage amount. erence in the law is directed to lenders who fraudulently
Note that none of these events are illegal, unless, of course, “flip” loans, that is, refinance loans so that the original bor-
they involve fraud: only that they preclude FHA mortgage rowers can take out additional equity while paying further
insurance. financing charges, consequently getting further into debt
In Ron Le Grand’s e-book, he says in the chapter entitled each time they do, many times ultimately resulting in default
“Flipping is Illegal:” and foreclosure.
“Any time you buy and sell a house, you are flipping, in Since the definition in North Carolina’s Predatory Lend-
the broadest sense of the term and the way most real estate ing Law does not include the “normal” practice of buying
investors use it. But because of some very shady deals that and selling houses for a profit, we should not be particularly
have come to light in which there was some fraud commit- concerned, other than for fraudulent acts.
ted, a lot of attention has been focused on a small number of The new HUD rule appears to place impediments only
transactions, and legislators and administrators at various gov- on sellers and rehabbers who are selling houses to retail buy-
ernmental levels, including the Feds, have attempted to re- ers who want to finance their purchase with a loan requiring
strict certain activities ... Flipping is not illegal. Fraud is (em- FHA mortgage insurance. It should have no effect on inves-
phasis added).” tors who flip a property to a rehabber for cash (including in-
The second area involves lenders who refinance loans, dividuals who wish to invest sweat equity for a place to live).
CLASSIFIEDS
(All area codes 828 unless otherwise noted.) credible location! E-mail or call for CREIA dis- cabinets. Full basement sits on .49 acres, concrete
FOR SALE: 361 and 363 Rockwood Road to count rates and web site address. Tex Teixeira, back patio as well as a concrete driveway. Cov-
be moved. 3 BR, 1 Ba for $30,000 and 4 BR, 1 Tex.teixeira@ncmail.net or 689-5740. ered front and rear porches, $118,000. Valencia
BA for $30,000. Robert Johnson, 275-3344. FOR SALE: 3BR, 1.5BA in Swannanoa. Live & Archie McNair at 316-5653, 646-9404 or
FOR SALE: Lot 190 Sandpiper Lane, Lake upstairs and possibly rent out the 1BR, 1BA with valcoop@juno.com.
Lure. 1000 sq. ft. 2BR, 1BA, unfinished base- bonus room and kitchen, living area and washer FOR SALE: 180 John Tate Drive, Fairview.
ment that could be made into another 2BRs, 1BA dryer connection in basement. 320 sq. ft. storage Newly remodeled 3 BR, 2 BA on 1.5 acres.
area. Deck wraps around the house. Enjoy the area under carport. Low-maintenance brick and $73,500, Robert Johnson, 275-3344.
mountains and beautiful Lake Lure. $135,000, frame in Grovemont area, $169,900. Jeannie FOR SALE: 610 Wade Hampton Blvd.,
owner financing available, Gary Kuhnel, 704- Dunn Acevedo, Realtor, Cabins and Castles, Greenville, SC. $30,000 to be moved to your lot,
483-3413. 301-3010. Robert Johnson, 275-3344.
FOR SALE: Lot 110 Rabbit Place, Lake Lure. FOR SALE: 3000 sq. ft commercial office FOR SALE: 1500 sq. ft. manufactured home
1000 sq. ft. 2BR, 1BA, unfinished basements that building in Black Mountain with additional on permanent foundation in small, landscaped
could be made into another 2BRs, 1BA area. 1200 sq. ft. storage building on Montreat Rd. development. Garden tub, double-seat shower,
Deck wraps around the house. Enjoy the moun- $299,000. Will consider lease purchase. Eliza- heat pump, fireplace off Jackson Road in Fletch-
tains and beautiful Lake Lure. $125,000, owner beth or Richard Garzarelli, 628-0910. er. Under $85,000 with seller financing, Round-
financing available, Gary Kuhnel, 704-483-3413. FOR SALE: 3 BR 2 BA, six years old, to be table Financial Services, 285-0123.
FOR SALE: No Money Down. 312 and 316 moved. Very good condition, $25,000 delivered. FOR SALE: No Money Down. 1011 5th Ave
Old County Home Road. Duplex and one single Lane Godsey, 684-7564. West, Hendersonville. Duplex plus cottage,
family home brings in $1550 per month. FOR SALE: A Rare Find! Level, wooded 1.3 brings in $1300 monthly, asking $160,000 will
$169,900 will owner finance $40,000 at 6%, acre lot on Stony Fork Creek in Candler. Family owner finance $40,000 at 6% with balloon in
Robert Johnson, 275-3344. land for over 100 years, $42,000, West Commer- five years, Robert Johnson, 275-3344.
FOR SALE: Authentic Log Home in Histor- cial Properties, 665-0305 or 215-8523. FOR SALE: Two townhouses located one
ic Homeland Park, Asheville. 1BR, 1BA with FOR SALE: Nothing Down, 2 BR, 1 BA, mile from downtown Hendersonville. 5200 sq.
rocking chair front porch, eat-in kitchen, reno- renter in place for three years. $430 per month ft. total. City water, no city taxes. Chandelier,
vated bath and kitchen, stone fireplace, hard- rent and trailer is set up in a park at $195 per ceramic tile, marble flooring, hardwood floors,
wood floors, and off street parking. $67,900, month lot rent. Trailer in excellent shape, financ- 6-jet spa tub, high vaulted ceilings, recessed
would rent for $700 per month. Stephanie ing at $200 per month for 26 months, Roy lighting, handmade cabinetry. Two levels on
Johnson or Robert Bowles, 274-5059 or Chapman, 255-8191. each townhouse. Must see! Sell both or sepa-
joyah@aol.com FOR SALE: 27 Howard St., Asheville. 2 BR, rate. $340,000 for both at $60,000 under ap-
FOR RENT: Oceanfront beach house for 1 BA with bonus room upstairs. All new plumb- praisal! Leon or Karen Corbeil, 696-5003 or
weekly rental on Oak Island, NC. 3BR, 2BA, in- ing, heating and AC, new carpet, tile, kitchen 693-3968.
13
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Advertising Rates Note: If your membership has lapsed for three months or more, you will be considered a NEW member at the new rate.
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Each month the CREIA newsletter reaches a
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select group of active real estate investors. If
you have a trade, service or business, or
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Address
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All advertisements must be prepaid and
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Mail check (payable to CREIA) to PO Box 615,
Asheville, NC 28802. Mail or email ad (camera Signature:
ready or roughed out) to The Word Shoppe,
For membership information, call Neva Steffens at 232-5808. • www.CarolinasREIA.org
P.O. Box 5504, Asheville, NC 28813. Email:
dave@wordshoppe.com. The Association is an educational organization only and does not offer investment, legal, or accounting advice of any
kind and is not liable for any action or inaction taken or not taken as a result of its communications.
Editing and Right of Refusal
CREIA reserves the right to edit ads or to
refuse ads.
Corporate Sponsorship
Corporate Sponsors may display their
Guest Policy
promotional materials and business cards at Guests can waive the $15.00 monthly meeting fee ($20.00/couple) for their
the monthly meeting on the sponsors’ table. first visit with a referral from a member. Simply fill out the ticket below and have
Each sponsor has an opportunity to talk about
his/her business at a scheduled monthly the guest turn it in at the sign-in desk. Should you have any questions about this,
meeting and/or write an article for the please call Neva Steffens at 828-232-5808.
newsletter.
(New Members: $150 • Membership Renewal:
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Option A – Six business card ads and six
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Members Cost - $240
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Extended Corporate Member Package
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JULY MEETING CREIA OFFICERS
• Monday, July 14 – A-B Tech Enka President Communications Focus Groups
Campus (.5 miles from I-40, exit 44) John Maltry Jeannie Acevedo Judy Clodfelter
Work: (828) 252-6858 (828) 301-3010 (828) 683-4799
• 6:00: Announcements, Show and Sell johnmaltry@cs.com creianews@hotmail.com silversrosebud@aol.com
& Tips and Hints Vice-President/Director Librarian Web Communications
• 6:30: Hot Seat Speaker – Real Estate Of Professional Standards Jack Nesbitt Bob Wieselman
Debbie Bucklaew (828) 891-8339 (828) 254-5416
Contracts with Cogburn, Goosmann, avenahomes@lycos.com bob@brighteye.com
h:(828) 454-0235
Brazil & Rose Cell: 328-507-7247 Education Director Assistant Treasurer
• 7:00: Short Break beaumontrentals@aol.com Rich Walton Pat Williams
• 7:15: Roy Chapman on Mobile Secretary Office: (828) 255-9390 Home: (828) 684-6311
Beverly B. Robinson RIwalton2@aol.com cole-williams@charter.net
Home Rehabbing, Renting and Man- Home: (828) 667-8911 Treasurer
agement BevRob03@aol.com Langdon Ammen Upstate CREIA
• 8:00 Meeting Adjourns, Network- National Speakers Work/Fax 285-0123
Bill Choate Home: 258-0262 President - Upstate CREIA
ing Time at Cracker Barrell lammen@worldnett.att.net Deb Sisson
Home: (828) 299-0767
choatedev@aol.com (864) 313-2101
Director Marketing
SHOW & SELL Programs
Rick Roberts
Debsisson@WeBuyHousesSC.com
Home: 456-7749
If you have a property for sale or some- Sami Forrest Director of Communications
Rickroberts271@hotmail.com
Home (828) 281-1125 Mercedes Curry
thing you are interested in, single family, Office (828) 771-2665 Public Policy Committee (864) 270-0003
duplex, mobile home, land, etc., that you s.c.forrest@att.net Colin Robertson currym13@yahoo.com
298-3933
would like to offer/ask for during Show Membership
Neva Steffens
& Sell at the CREIA meeting, please fax CREIA is an educational organization and investors should consult an
Home/Fax 232-5808 attorney or accountant before making an investment. All members and
your info to John Maltry at 252-6858 or Neva888@aol.com guests assume the risk of making their own investment decisions.
e-mail him at johnmaltry@cs.com by Fri-
day before the Monday meeting.
CREIA Info Line — (828) 255-2727 — creia@bellsouth.net
Fax: 828-255-8042
828-255-2727
Asheville, NC 28802
PO Box 615
Permit 413
Asheville, NC
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