We Are GaREIA Georgia Real Estate Investors Association - Issue 5, jan/feb 2016
President's Corner:
Seeking Freedom
Many people today are in precarious shape financially because they are bound by their own poor choices and lack of knowledge regarding money. The have formed bad habits and continue these habits that bind them financially. Like borrowing for most of what they have. A new car payment of $500 per month for seven years, a TV just in time for the Super Bowl with no-interest payments, new furniture with no payments until next year, charge everything because there is not enough cash, etc. And then there’s the bigger house to hold all of the extra stuff.
Some people believe the government will provide what they need and owes them a minimum standard of living. But is the government really here to help? Many government leaders are more interested in creating dependency on government and getting votes than promoting financial freedom. That is one reason why these elected officials provide for welfare, unemployment and cell phones, but do not include any financial education within our government-funded curriculum. If the government is concerned for anyone‘s financial well-being, then where is any emphasis on financial literacy to be found in No Child Left Behind and the new Common Core? If a majority of voters were financially literate then they might not continue to elect politicians who keep growing the national debt, putting our nation’s economy at risk.
The first step to financial freedom is to recognize that you are the one who is in control of your financial status. That means investing in your financial education and paying yourself first. One of the first books that I read on this topic, and still one of my favorites, is “The Richest Man in Babylon” by George C. Clason. It holds timeless lessons on how to go from a being a financial slave to achieving financial freedom. When my wife and I were first married I wrote down the key lessons from each chapter and posted them on the fridge. Each time we faced a major financial decision or considered an investment we reviewed the lessons to see what applied. Although we made some mistakes, the lessons gave us a framework of principles to establish a solid financial foundation. By implementing the first lesson, “A part of all I earn is mine to keep,” when we started working we are now close to achieving financial freedom.
Financial freedom is attained when your passive income from all sources exceeds your expenses. This may be a combination of rental properties, mortgage interest income, 401(k) and self-directed IRA distributions, pension and social security. Where are you in your quest for financial freedom? Do you know how much income is needed to achieve your financial goals? What steps are you taking this year to increase your passive income? What actions are you taking to increase your financial literacy and ability to create value and profits?
Whatever your financial freedom goal amount may be, GaREIA is here to help you achieve your real estate goals by providing the education and networking opportunities that you need.
News Notes: January 2016
** Atlanta Tops List of Most-Likely Places for Millennials to Buy in 2016**
Realtor.com ranked Atlanta, Georgia, number one for places millennials are most likely to buy homes in 2016. With a population share of “older millennials” (24 to 35 years old) of 13.6 percent at present, that population is likely to grow exponentially in the coming years thanks to high affordability, great job opportunities for young professionals (ranked best city for new college grads and young professionals by MarketWatch), and high median starting salaries. A booming music scene, great walkability, and vibrant nightlife make the area perfect for young homebuyers, and that’s great news for all buyers, sellers, and investors in the area.
** Popular Nightspots and Eateries Fall Prey to High-End Mixed-Use Construction**
Investors love mixed-use development, but several long-lived, popular Atlanta nightspots and eateries will be biting the dust in the name of progress this year. “Out with the old and in with the unique,” said myAJC reporter Bill Torpy of the new developments, noting that live/work/play developments are heading into Cheshire Bridge, Roswell Road, and elsewhere. Among the fallen are Manuel’s Tavern (which is actually going to reopen after extensive renovations to fit in with the new atmosphere of its area), Alfredo’s on Cheshire Bridge, and Roswell Road’s The Brickery, a popular bar and grill. These and other restaurants and smaller clubs and pubs stand to struggle if they want to reopen elsewhere because new developments will take local rents and leases much higher than they can afford. However, the “new look” will likely be very good for real estate values in the area.
** Huge Tyler Perry Mansion Still on the Market Along with Other Ultra-High End Properties**
He’s definitely done a lot for Atlanta, but selling off his $25-million mansion has not yet made it to Tyler Perry’s list of accomplishments. While Perry’s mansion is not the most expensive on the market in the Atlanta area (that title goes to an “undisclosed” site on the Chattahoochee River that is listed at $48 million), Perry’s abode is no laughing matter with its own private screening room, tennis courts, and parking deck along with 17 acres, a massive pool, seven bedrooms, 11.5 bathrooms, and more than 34,000 square feet. Rumor has it that Perry is planning to build a new home on 1,000 acres in Douglas County near Sweetwater Creek State Park.
** The Golden State is Moving East to…Duluth**
A huge California real estate firm recently made an investment back east, in Duluth to be exact. San Diego-based Versant Commercial Brokerage Inc. sank $9.1 million into two flex office buildings in Duluth, Georgia, to help diversify tenant base for a group of investors who already owned real estate in the area. A Versant spokesperson described the move as a way to minimize risk to investors by expanding the number of tenants in their holdings in the area. By purchasing additional property, the investors were able to diversify the leases on their properties and also stagger those lease renewals so that if one tenant leaves, the entire investment structure remains firm.
Got Georgia real estate news to share? Send your tips and insights to carolejellis@gmail.com
Motivational Minute: For New Year’s Change Your Habits, Not Your Mindset
It’s the New Year, and that means that you are about to be inundated with promotions and products designed to help you set up the perfect mindset for success in 2016. Here’s the thing, though: it’s not your mindset that needs changing; it’s your habits. This year, make the decision to change the daily grind that keeps you stuck in a rut instead of moving forward. Laugh off those mindset models and change your habits instead.
New Year’s is one of my favorite times of year. It feels like there is so much possibility in the air as we all arbitrarily decide to make life-changing decisions that will improve everything around us. Unfortunately, those decisions often last a day, a week, a month, or, at best, maybe 90 days. Then they fall by the wayside and we fall back into our daily routines, whether those routines are hitting up Starbucks for a scone and a latte – that scone just makes the whole diet thing kind of moot, doesn’t it? – or hitting the snooze button and deciding to start exercising tomorrow. Ultimately, we let our habits hold us in place and blame our mindset, even though habits are far, far stronger than optimism any day of the week.
To beat this problem, start small, and don’t be embarrassed to say that your resolution is something simple, like opting out of desserts for six days out of every seven or following a 30-day/30-step de-cluttering exercise that requires only about five minutes of work a day. It’s making and sticking to the small changes that will enable you to make the big changes and you’ll find, just like an athlete, that the longer you train consistently, the bigger changes you will be able to make and the greater goals you will be able to achieve.
Here’s a great “small change” for the New Year: Commit to joining a single GaREIA subgroup. They meet, for the most part, once a month. Spend one night a month learning valuable, practical information that will enable you to take real, meaningful action that will affect your financial stability and future in a significant way.
GaREIA Featured Subgroup January 2016: The Women’s Empowerment Subgroup
This Subgroup meets on the second Wednesday of each month at 7pm at GaREIA headquarters.
From Jacquelyn:
We are a diverse group of women who have an interest or a passion in real estate investing. We are here to help support one another in our conquest to be the best real estate investor and woman that we can be. Whether you are a pro or are just getting started, we want to share skill sets with you, which will enable you to grow professionally, mentally, financially, and spiritually. We welcome you to come and spend an empowering evening with us. We look forward to seeing you at our next meeting!
The purpose of the Women's Empowerment Group is to empower women to be the best that they can be in their real estate business and in life. We will discuss the status of the current real estate market, learn how to be a better negotiator, learn various marketing strategies, and other techniques that will enable us to reach our goals in our personal and professional lives.
Our aim is to help each other break away from the shackles that bind us from being the best that we can be. We will gather input from a wide range of women investors and stay abreast with what is working in today's market. We will discuss how our mindset affects us as business women and as real estate investors. We intend to hold one another accountable with doing what we say we are going to do. It is vitally important that everyone who attend contribute ideas and information because that's how we will grow and become more empowered. After all, we all have greatness within us.
We welcome you and any expertise you have to contribute to the group. We hope you will join us at our next meeting!
GaREIA Featured Speaker January 2016: Bryan Ellis
“All the Green You Need in 2016: 3 Easy Steps to Fund Your First Deal of the New Year”
Bryan Ellis is the manager of SDI Private Equity LLC, a Las Vegas-based private equity firm focusing on residential real estate flipping in strategic markets throughout the United States. He is also host of the highly regarded Self Directed Investor Podcast, America's top show for affluent self-directed investors and is publisher of the Bryan Ellis Investing Letter, a newsletter for real estate investors with over 700,000 subscribers worldwide. Bryan lives in Kennesaw, Georgia with his wife Carole and 4 children.
In his presentation at the General Meeting on January 9, 2016, Bryan will explain:
- How ANYBODY can raise capital
- Why it's all about the DEAL and NOT about your experience or your credit
- How to find GREAT DEALS that investors will LOVE to finance
- Where there are MILLIONS of dollars sitting totally idle... and ready for investment; and
- Give a DEMONSTRATION of how to convince investors to invest with you
Don’t let another month – much less another year – go by without doing the real estate deals that could change your life meaningfully, quickly, and PERMANENTLY.
GaREIA Success Story: January 2016
Alicia Nicholson joined GaREIA last year and shortly thereafter found herself seeking a new place to live. Using creative financing strategies that she learned in the GaREIA Creative Financing subgroup, she found and purchased a home in just two months. The property, which is a three-bedroom, 2.5-bath, was being rebuilt at the time and Alicia was able to have some say in the customization of the home in addition to securing financing until at least 2017 (the owner may agree to extend again at that time).
Alicia purchased the home for $105,000 (it listed for $110,000) after finding the deal on Craigslist. She noted that she believes in retrospect that she could have gotten it for less, but this was her first deal and she simply offered slightly below asking rather than reviewing comps in the area. Alicia also recommends that buyers and investors at least consider requiring the sellers to report payments to credit agencies, since that can build up credit scores. She opted not to do this, and says she wishes she had. Alicia added that she met her fiancé during the purchase process; he did the renovations on her home.
GaREIA Legislative Update: Bid Rigging Cases Get Worse for Investors
If you are active in real estate foreclosure auctions in Georgia – or anywhere in the country, for that matter – you have probably felt at times like you were on the outside looking in. However, with perseverance, most investors report that they are able to eventually succeed in these auctions and obtain properties in this manner, but many do not realize that some of the practices that they tolerate at first and later may be invited to participate in may be illegal. The plethora of bid-rigging cases in state and federal courts today indicates just how pervasive this issue truly is.
Take, for example, the case of two Georgia real estate investors who recently pled guilty to rigging bids at Georgia foreclosure auctions. Paul Chen and Ira Eisenberg essentially made a private agreement between the two of them not to bid against each other and, later, others. Once properties were obtained at low prices (getting properties at “a buck over” or “a penny over” is a great coup when the properties represent serious value), Chen, Eisenberg, and others got together and held private auctions. On the surface, it probably sounded great to everyone involved, since money was still being spent but it was going to other members of “the club” instead of into government or bank coffers.
Sadly for this group and others like it, this type of agreement is, without question, bid rigging because it keeps the sale price at auction artificially low. Furthermore, it’s not just the banks, lien holders, and municipal governments that lose. In some cases, even the homeowners would have seen some payoff from the auctions. “Money should [go] to mortgage holders and homeowners,” said assistant attorney general Bill Baer regarding these cases. An FBI spokesperson added, “Incidents of bid rigging at public real estate auctions continue to be an issue in Georgia…and the FBI would like to remind the public that such matters are violations of federal law.”
Have you ever been approached to participate in bid rigging? Here are a few signs that what you are considering might be considered such and be illegal:
- Your actions will somehow keep auction prices low
- You are invited to participate in a separate, later auction after the public auction
- Winning a property does not mean you get to keep it
SIGN UP NOW FOR THE NEXT GaREIA BOOTCAMP
Coming March 3 - 6, 2016
