You’ll see this on the news occasionally.  Cat hoarder home raided.  20, 30, 40 or 100 felines removed in various stages of malnutrition and disease.  The home infested with fleas, that strong odor of ammonia from cat urine throughout.  And that little old lady taken away by ambulance to the funny farm.  It’s all very sad. 

​I guess I’m lucky after nearly 8 years in the business I have encountered only one cat hoarder.   There was a guy whose pitbull chewed up the doorways of his apartment, who at least had the decency to leave us a month’s rent in addition to his security when he moved out.  But the cat hoarder – that’s a new one on us!

It’s your own fault for allowing pets!  I hear this all the time.  Let me just say my piece here, and why we will remain pet friendly landlords.  

MOST pet owners make great tenants.  Their fur babies are family members.  It’s hard to find a rental that will let you keep pets, and understandably so.  Therefore, the majority of our pet-owning tenants have treated our rentals with the utmost respect.   

We screen out most of the not-so-responsible pet owners with our terms.  It’s expensive - $50 added rent per month for a dog, and that’s for each dog.  So if the rent is $600, with the dog it’s $650.  Two dogs it’s $700.  Cats we charge $30 extra per month for up to two.  Being a responsible pet owner is a financial commitment, we want to make sure our tenants know that going in.  We’ve had prospective tenants walk away when they hear we charge that much extra, and that’s fine with me.  If you’re not ready to commit what it takes financially to raise a fur baby, I’d prefer you live elsewhere.

Aside from the financial commitment, we require a veterinarian reference.  Don’t have a veterinarian?  Sorry, you’re not a serious pet owner.  We also need you to give us the policy number of your renters insurance policy that covers your dog before we give you keys to the unit.  Renters insurance is quite easy to get and it’s usually pretty cheap.  Everyone should have it – if the building burns down my insurance isn’t going to cover your stuff.  You’re going to pay a little more for it if you’re a dog owner, in some cases.  But if you love your dog, if he’s truly a member of your family, you’ll find a way to afford it.  If you don’t, you’re not a responsible pet owner.

Look I know it can be hard to make ends meet for a lot of renters.  You have your monthly rent, you pay your own utilities in a lot of cases, there’s food, gas for the car, car payments, your cell phone, your Dish Network, I get it!  And if you live and work in NEPA chances are you’re not bringing in a huge paycheck.  But pets are a huge financial commitment – almost as much as a child!  Maybe even more so – you can’t get on public assistance to help defray the costs of raising a pet.  If you can’t afford all the costs associated with a pet, from food to vet care to obedience training to renters insurance – then maybe you should put off pet ownership until you’re in a better financial situation.  Just sayin’.

For nearly eight years we’ve rented to (mostly) responsible pet owners.  I would say 75% of our units contain at least one companion animal.  We’ve been burned a few times – we no longer carpet our units if we can help it.  We use laminate flooring or tile – much harder to damage and much easier to clean.  We’ve added an entire page to our lease dedicated to our Pet Policy.  But in all honesty, whenever we’ve been burned by a bad tenant the damage was usually caused by humans.

Would a no-pets policy have prevented the cat hoarder situation?  Possibly.  At the first sign of any pet at all we would have been able to shut it down.  But this person had no regard for our pet policy that allowed her to keep 2 cats.  What makes me think she’d have any regard for a no-pets policy?  She snuck these additional animals in without notice.  We never had any reason to enter her apartment.  She paid her rent in full and on time.  She never called for maintenance.  There were only two units in that building, and her own son lived upstairs.  The son was eventually kicked out for bringing in a large, unruly dog that was not on his lease.  That’s when things started to unravel with the Cat Lady.  I’m just glad we caught it when we did.  Before it became newsworthy!

You have to hoard a minimum of 40 cats to get on the news.  She had somewhere between 12 and 25.  We were never able to get an exact eye-witness cat count.  But when her son upstairs was evicted, and the maintenance people had to come to clear out the belongings and garbage he left behind, they started reporting signs of feline overpopulation in the first floor unit.
A quick google news search for “cat hoarder” revealed that 40 cats seems to be the minimum to attract the media.  Even then you only get a little newspaper write-up:
http://altamontenterprise.com/10292015/dozens-cats-removed-elderly-womans-home-no-charges-pressed
“The air quality of the residence was questioned and concerning to my staff,” Sheriff Craig Apple said in a statement. “We were so concerned for the health and well-being of the homeowner…The residence, itself, is not fit for occupancy and is uninhabitable due to the number of cats, feces, cat urine, and garbage throughout the residence.”

Hoard up to 100 cats, and you might get TV coverage:
http://www.nbcchicago.com/news/local/Dozens-of-Cats-Found-Living-in-Abandoned-Chicago-Home-321267541.html
"The house that's immediately East of it, the children have been unable to come outside because of the smell, the flies, it's just a deplorable situation," he said.

Even the well-intentioned cat-rescuer can fall into hoarding:  http://www.desertsun.com/story/news/local/cathedral-city/2015/10/30/family-cc-man-78-cats-overwhelmed-rescuer/74896250/
According to the city of Cathedral City, Estler’s house was in such poor condition that condemnation is being considered.

Condemned.  Knocked down.  Razed.  I’m really glad we caught our cat hoarder in an earlier stage!

Recovering our rental from a Cat Hoarder.  The first thing we had to do was get her out.  She always paid her rent, so we had to file for a lease violation and we had to prove we’d given her written notice and time to correct the problem.  Our property manager wrote the letter, giving her 10 days to relocate the cats or face eviction.  The tenant claims she was able to place some of the cats, leaving her with 12 in our unit.  Her ankles were covered in flea bites, she said she had eczema.  She complained of an electrical problem in the unit – usually a stunt tenants will pull when they face eviction.  We dispatched an electrician, she refused him entry.  So we filed. 

We got our eviction.  10 days passed, she didn’t leave, so we filed for the Constable and that was another 10 day waiting period.  She stayed until the bitter end, when the Constable escorted her out and we changed the locks.  Miraculously she had made arrangements for the cats, so we didn’t have to involve the SPCA.  
Now we could begin the clean-up phase.

First, we had to remove all the furniture, clothes and garbage she left behind.  Everything was destined for the burn pile.  Fleas jumped on anyone who went in to do the job, including my husband.  They ended up in his car – which he had to flea bomb.  The only reason we didn’t have a flea infestation in our own house was we are vigilant pet owners who treat our cats with Revolution once a month.  Fleas get in the house, jump on the cats, bite them and die.

Investors tip:  if you choose to allow pets, insist in your lease that pets be treated with a flea treatment such as Revolution or Advantage.  Proof of such treatment will be required in the case of a flea infestation.  If proof cannot be provided, the cost of the flea extermination will be on the tenant.  Yes we are making medical decisions for their animals.  But if they don’t like it, they can find a different place to rent.  The average cost of a flea extermination is $300.

Getting rid of the trash and furniture alone did not remove that ammonia smell.  We figured we’d have to remove the laminate flooring in the living room and scrub the subfloor with bleach.  That didn’t do it. 
We removed the hard vinyl tile in the kitchen, found the subfloor had been rotted through from moisture – probably cat pee.  We scrubbed that with bleach.  And that didn’t do it.

We had to de-flea the basement.  While we were down there, we spread lye.  Then scrubbed the whole thing down, once again, with bleach.  And that didn’t do it.

Next to go – the flooring and subfloor in the laundry room.  We then used special encapsulating paint on all surfaces to lock in any lingering odor.  Then we repainted the whole apartment, and scrubbed with bleach again.  And that… didn’t do it.
We traced the smell to the kitchen cabinets of all places.  We removed all the shelves in the cabinets, replacing them with plywood after painting the outer cabinetry with encapsulating paint.  Then we removed all baseboard left behind from the ancient heating system we no longer used.  The areas around them were scrubbed down, painted with encapsulating paint and then painted over to match the rest of the walls.  And that did it.  We think.  It’s coming up on the first of December.  That apartment was vacated mid-September.

Right now we’re waiting for the paint smell to fade so we can give it a good sniff test.  If the ammonia is finally gone, like we think it is, it’ll be time to repaint the floors, throw down some new linoleum in the kitchen, and put in some nice new area rugs.  Then we can rent it again.  It won’t be hard to rent, there’s already a waiting list.  It’s a first floor two bedroom with off street parking in a good school district.  But we lost September, October, November, and possibly December rent income, plus the cost of remediation. 

These are the kind of things that happen to landlords.  It’s important to expect them, plan for them, and have the resources to deal with them.  This was a huge blow to our business, but it did not put us under.  We’re still here.  It wasn’t the first huge blow to our business, and it probably won’t be our last.  Rentals are the surest path to financial freedom.  But it’s a path strewn with obstacles.  My hope in writing this blog is to prepare would-be landlords for some real issues you are likely to face.  Every time something like this happens I learn something new, get a new tool for my toolbox.

​I wonder what I’ll add to the box in time for next week’s blog?

After nearly eight years running our little rental company I have accumulated a nice trove of war stories.  They make for lively barroom conversation.  I like to stand in a circle with other landlords at real estate seminars and REIA meetings, swapping stories and trying to one-up each other.  “Oh I can beat that, I had this one tenant that…”

If you’re reading this blog, chances are you’re either already a landlord or thinking of becoming one.  You may find yourself nodding in recognition as you read these horror stories.  You may even be thinking to yourself, “Oh I can beat that, I had this one tenant that…” in which case feel free to post it in the comments!  I love reading other landlords’ tenant horror stories because it makes me feel that I’m not alone, that this kind of bizarre shit doesn’t happen to just me because I’m doing something wrong.

If you haven’t started renting yet, these stories may horrify you right out of the business.  In my opinion, that would be a shame because even with all the tenants from Hell I’ve run into I still believe rentals are the surest way to financial freedom.  Tenants from Hell are part of the reality of renting.  Every time I’ve encountered one, I’ve learned something new about myself and my resolve.  I’ve learned a few more tricks that have made me a smarter landlord.  I’ve added new language to my lease.  I’ve learned new warning signs to watch for to nip problems in the bud.  The most important thing you can do in the face of a Tenant from Hell situation is to say, “what is the lesson here?  What can I take away from this experience to make me better?”  Tenants from Hell will cost you money.  Hopefully you gave yourself a nice cushion when you bought the rental property so you can absorb the cost without going broke.  Most real estate agents will tell you to set aside 10% of your gross rents to cover the cost of vacancies and repairs.  H. Roger Neal, my first landlord guru, says set aside 30%.  I go with Neal. That way, when I’m writing the checks to clean up the mess after a Tenant from Hell experience, I can just shake my head and think of the money as college tuition for The School of Hard Knocks.  And never, ever give up.

The first story I’ll tell you happened just a few weeks ago.  And it made me think about giving up. 

The great American Red Cross scam  

This one made me really question my faith in humanity as a whole.  I mean, who does this??? 

We began working with a very smart, streetwise property manager, a licensed real estate professional who is a landlord herself and has been for several years.  I think the world of her.  I still do, by the way.  This wasn’t her fault.  What happened here blew me away, too.

Our manager showed one of our half-doubles to a couple who had been burned out of their home and was being helped by the American Red Cross.  A few years ago, when we were self-managing I rented to another couple who were in this same situation and it worked out beautifully.  So I thought nothing of approving it – sure, just get their paperwork and run their background and employment screening.

Their picture IDs had burned up in the fire, but their names and social security numbers were on the paperwork, and the background came back clean.  The employment reference checked out.  Our manager received a letter signed by the Red Cross social worker that stated the first month’s rent and security would be paid in full, and would be mailed.  That’s the way it worked a few years ago with the other couple, so I green-lighted it.

They were moving in on the weekend the Peanuts movie came out.  I point this out because the ensuing drama interfered with our family’s Sunday Funday plans.  For this alone, I will never forgive these people. 

The neighbors on the other half of the double-block had been there from our self-managing days, so they had my husband’s cell phone number.  They started blowing it up that Sunday – these people are criminals, they can’t live here, this is not acceptable… ugh!  My first thought was – they’ve been there less than 24 hours and they’re already dealing drugs and having wild parties, really?  Or maybe you just like having the whole place to yourself, quiet without neighbors.  That’s more likely!  Boy am I sorry I ever thought that.

They told Steve they recognized the dog.  What dog?  The lease they signed was just the two of them, no pets, and no children either.  Apparently there were going to be four kids living in this two bedroom half double.  What the…?
It gets better.

Here’s why the neighbors recognized the dog.  The dog was famous.  A hero.  Back in January there was a fire in Carbondale – and the TV news ran a heartwarming story about how this dog saved the family by waking everybody up so they could get out of the house.  It’s the kind of story that sticks with you, especially if you’re and animal lover.  I remember it myself. 
The neighbors recognized the dog, then did a Google search for the news story.  They recognized the couple from the news feed, and the names on the news were different from the names they gave us.

I pulled up the American Red Cross paperwork that had been scanned and e-mailed to me earlier in the week.  I had only given it a passing glance on my smartphone when it came in.  But this time I pulled it up on my 17-inch laptop screen and really scrutinized it.  Could it have been faked?  Yes.  I called our manager – how did you get the paperwork, from the tenant, or was it faxed from Harrisburg directly to you?  She got it from the tenant.  But she called and spoke with the social worker.  The employment reference checked out.  We had been scammed.  Quite elaborately!

We tried calling the new tenants – no answer on their cell phones.  Steve called the Wilkes-Barre police, who told him to come in and fill out paperwork and they’d start an investigation Monday.  But we weren’t waiting for that.  Steve met the manager down at the rental – the tenants weren’t there – just the dog, barking away by himself in an empty house.  They called the tenants one more time and left a message on their voicemail, addressing them by their real names – you have two hours to vacate or the dog is going to the SPCA and we’re screwing the doors shut.  You don’t live here.

Self-Help Eviction – “You Can’t Do That!”  Actually, there is a debate in legal circles as to whether a self-service eviction is illegal in Pennsylvania.  Most say it is, you have to go through the magistrate and get an order of possession, and that is usually the way we do it.  I’ve heard some debate that there really is no specific law outlawing a self-help eviction.  But regardless of the law, we were doing one.  We weren’t letting these identity thieves sit in our property.  If they were willing to pull an elaborate scam like this who knows what else they were capable of? 

I really wanted to be there, but I hung back with Savannah because I couldn’t put our little girl in a potentially dangerous situation.  Our family Sunday was ruined.  I texted the mom of one of her friends and asked if they wanted to go to the Peanuts movie with us.  I had ground glass in my stomach, but there was nothing I could do.  Steve and our manager would have to handle this.  It was at this point I felt like giving it all up.
I called Steve when we got to the movie theater parking lot to get an update.  The tenants had shown up – and I could hear the shouting match.  “You can’t do this!  We’ll sue!” 

Here’s the thing – there was a lease signed.  But the lease had names on it that were not the names of the people who were screaming at us.  SO the identity theft victims may have had a case against us, but these criminals sure did not.  As far as I’m concerned they were breaking into the apartment.  Take the dog and leave now, or the dog goes to the pound.
They left with the dog.  They never came back.  I put the word out on Luzerne County Homes & Apartments Facebook page so other landlords would be on the lookout.  Our manager notified the police and the Red Cross, not sure what if anything they were able to do.  No one looks out for landlords, we have to look out for ourselves.    

Steve made it to the Peanuts movie about a half-hour in.  We were able to go out for pizza after.  Our apartment has since been rented to (hopefully) some law-abiding tenants who are not identity thieves or charity scammers.

The sad thing is, we can’t step in to quickly help out displaced tenants after a fire anymore.  Now we would need confirmation from an American Red Cross official in Harrisburg, and that could take days, maybe a week to work through the bureaucratic channels.  When I rented to that couple on Grove St years ago, the process was simple.  They showed me the paperwork, their backgrounds checked out and they moved right in.  Of course their drivers licenses hadn’t burned up in the fire.  What if they had?  Well, because of the experience we just had with these identity thieves, we wouldn’t have been able to help them.  At least not until they were issued new photo IDs, and that could take days, a week or more.  Sorry, guys.  Merry Christmas, too.

I think I’ll write a donation check to the American Red Cross at the end of the year.  They do good work, and now their work just got harder. 

​Next week:  Tenant Horror Stories:  The Crazy Cat Lady.  Every once in awhile you see a story on the news about a cat hoarder.  Next week will be the reality show version!

Good People Good Homes began as the name of our first rental property LLC.  Now, it’s our brand.  Our specialty is turning once-blighted properties into solid rentals filled with the kind of people who will bring a neighborhood up.  Our tenants are an asset to the community. 

That is the idealistic mission statement I started with in 2008, and I still have it today.  The naivity has been tempered with experience, but the optimism remains intact.  Despite all we’ve been through, I still believe owning rental property is the surest path to financial freedom.  And I intend to be a good corporate citizen while I’m building my fortune, regardless of how the community views landlords.

​There is nothing wrong with wanting to make money.  There is nothing inherently evil or greedy about someone who wants to build a company that will provide for their family’s needs and their own retirement, putting money right back into the community through taxes and charitable contributions.  Money can do so much good!    So why the negative image of landlords?

7The making of a Slumlord
I found out early on in the business why most landlords are such hard-asses.  You have to be, or the bad tenants will eat you for breakfast.  Unfortunately these bad apples have spoiled it for everybody else.  You give them an inch, they’ll take 50 yards.  I learned over the last 7 years that no, I can’t let the rent slide for a few weeks.  I can’t collect $100 this week and $200 next payday and believe you’ll catch up next month.  I have to file eviction papers on the 10th of the month (there are some landlords who file on the 2nd.  My husband wants to do it on the 5th, but as of now it’s the 10th.)  You’ll have until the date of your hearing to catch up.  I’m sorry, but it’s not personal, just business.  And yes you’ll have to pay the late fee and the filing fees too.  Because, I’ve learned, if you “work with” these tenants on the rent, your rent payment slips down their priority list until it’s somewhere below the cell phone minutes, beer money and new rims for the ride.  Meanwhile, your mortgage, property taxes and sewer bills all remain due on their due dates!  And if the water heater breaks, yep, you still have to fix it.

Some slumlords are created when there’s no money to fix the water heater, because no one paid their rent.  Still others are created when the city shuts down the building because the landlord couldn’t afford the water bill.  We actually acquired a great six unit apartment building that was left abandoned by a former owner who did just that!

These “slumlords” are just nice people who wanted to help out someone in financial distress.  And ended up in distress themselves.
 
This kind of problem snowballs – take the case of the “nice” landlord who now has no money to fix the water heater.  The good, rent-paying, law abiding tenants aren’t going to want to stick around.  The most common answer to the question “Why are you moving” on our rental application?  “Because the landlord never fixes anything.”
 
The landlord who never fixes anything
Don’t get me wrong, I know there are genuine slumlords out there.  I’ve met a few of them.  Buy the property cheap, do as little to it as possible, just enough to pass the rental inspection.  Stick a tenant in there – anybody with a pulse and a security deposit will do.  Collect as much rent as possible and spend as little money on the building as possible.  Voila – cash flow!

I do not subscribe to that philosophy.  Not only does it go against my morals, I believe it’s pennywise and pound foolish!  I’m not going to put a granite and tile kitchen in a tiny two bedroom in the low rent part of town, but I’m going to make sure that everything works.  And if the apartment is modest, it will still be pleasant.  Would I live there with my five-year-old daughter?  That’s my litmus test.  What I call “The Kelly Code.”  Unfortunately, a few of my units are not up to “Kelly Code” and here is why:    

Landlords are screwed repeatedly by hired maintenance help.  This has been an ongoing source of frustration for us since day one.  When we started out, both my husband and I had full-time jobs.  In the very beginning, we hired handyman help, and also paid contractors to help with major renovations on the six-unit we got from the landlord who couldn’t pay the water bill.  Those contractors ran off with nearly $10,000 of our money and disappeared into the ether without a trace.  That was after they got the work site shut down by the city for failing to pull permits.  (Read about that whole adventure in part 3 of my How It All Began series in the archives.  Link to it here:  http://thisgingerjustsnapped.weebly.com/blog/how-it-all-began-part-3-haunted )
As far as the handyman work – it was laughable!  If I wanted a crappy amateur job done, we would have done it ourselves!  So Steve started doing the maintenance himself, and actually got pretty good at it.  Heck, when he started he was already better than most of the people we were paying to do it! 

Investors’ tip:  if you’re doing maintenance yourself, this service is worth subscribing to.  www.JustAnswer.com  lets you post any question online and it will be answered by experts in the field.  My poor husband found himself having to replumb our 6-unit building with Pex after a 2 inch main burst, flooding a first floor apartment.  JustAnswer.com provided him the guidance he needed, and he had his work inspected by a licensed professional who gave him the thumbs up!  We’ve also used them to talk us through replacing a blower on a furnace.  For $65 a month you can write off your taxes against your business income – well worth it!  They helped me troubleshoot a computer problem once, as well.

If you’re handy, and you only have a few units, do the maintenance yourself.  It’ll save you money and aggravation, and you’ll learn a lot.  The most valuable thing you’ll learn is how to tell if someone you hire down the road is doing the job right or not.  Because eventually, you are going to have to hire somebody.  And that’s where most of us get screwed.
Professional Property Management companies in NEPA haven’t really figured out the maintenance thing either.  As we found out, they’re in the same boat we are – hiring people who seem like they can do the job right, only to have them do substandard work.  Or not show up at all.  This is creating slumlords.  Think about it – the typical out-of-state landlord follows the instructions for Real Estate Investing 101.  He buys a rental property in NEPA at a good price and hires a management company to run everything.  Hands them the keys and goes to his PO Box in New Jersey once a month to pick up his check.  He may never even see the property!  Meanwhile, unbeknownst to him, things are breaking and nothing’s getting fixed, at least not to my definition of “fixed.”  And before you know it, our clueless out-of-state investor is just another slumlord.  That Absentee Landlord local leaders are always blaming for our local problems.  If this investor ever takes the drive out 80 westbound to see his property, he may well be horrified.  “How could this happen???!!!” 

And this is why some of my units are not up to “Kelly Code” and it breaks my heart.  We ran into one of our long term tenants last weekend at the movies.  He’s had a long list of repairs – mostly minor but it’s a long list – and he’s been waiting months.  I squeezed his arm, “we’re trying.”  I was almost in tears.  But he understood – he ran a maintenance company himself once, and it failed, for all the same reasons.  He told me, “You had four guys come in to fix the same problem.  And each one fixed it wrong.  For the money you spent paying those guys, you could have hired Mike Holmes from Holmes on Homes to come in with his camera crew and ‘make it right!’”

We thought we hired a guy last spring to solve our problem.  He had a crew at his disposal, he told us.  He would do preventative monthly maintenance on all our units.  He could take on multiple capital expense projects, too.  We gave him several thousand dollars – and got a lot of unfinished, and in some cases never-started projects.  He got a nice Escalade with new rims.  I heard the rims got stolen – I guess Karma really is a bitch.  But not as much of a bitch as I am.  Lawsuit pending.
 
You are not a Slumlord.  Change your mindset.  See opportunities where others see only problems!  These are the words I tell myself every day.  And if you’re a landlord struggling with these same issues, I say them to you, too.  Never, ever give up.  Rentals are the sure-fire path to financial freedom.  All the gurus will tell you this.  We just have to figure this out.

My husband started www.InvestorsNetworkNEPA.com as a resource for our community – landlords, flippers, wholesalers, serious and casual investors.  One of the aims of this website is to provide a sort of Angie’s List for real estate investors to find trustworthy maintenance people, contractors and other professionals for the teams we need to build.  Right now it’s a very short list – but hopefully it will grow as we all pool our resources.  A handyman or contractor who ends up on our list will end up getting a lot of steady work!

We’ve also found a great local real estate professional to do the heavy lifting of managing our properties, even though we are still technically self-managed.  Maybe she’ll build a management company.  Maybe we’ll build one around her.  There’s a huge hole in the market for someone who gets the results she’s been getting for us!  My buildings will all be up to “Kelly Code” before long, I’m sure of it! 

There’s been talk of building a maintenance company – first to take care of our units, expanding out to contract with other landlords and professional property managers.  There’s a gaping hole in the market for that, too.  So gaping I actually don’t care if someone reads this blog and steals the idea – go for it!  And sign us up as clients!

NEXT WEEK:  TENANT HORROR STORIES.  Know what really makes a slumlord?  Scum tenants!  We’ve had our share of them over the past 7+ years, but the story I will tell you next week is a new one on me.  I mean, who does this???  This is why it’s essential to be on top of your game as a landlord, either watching your own properties with hawk-eyes or paying a competent, dedicated property manager to do it for you.  I’ll tell you that story... and what happens when the Crazy Cat Lady gets evicted!  

One of the things I love about real estate investing is the spirit of collaboration in the name of profit.  Sure we compete with each other at times – if I find a great potential flip in a desirable neighborhood and you find the same deal we’re both going to put offers in and may the best woman win!  But there’s probably another deal down the street – and if I win the bid on the first one I may want to partner with you to get the second one under contract as well.  Or I may just wholesale it to you.  Or if I’m too busy to do even that I may just tell you about it and let you go get it yourself.  And if you don’t know how to get it yourself?  Well then, come to our Investors Network NEPA meetings and we’ll teach you how!
​
Or rather, we’ll teach you what we know from our personal experience, and other investors in the Network will teach you from theirs.  And we’ll all learn together.  That’s what this Network is all about!
​
Get inspired!  Free real estate seminar next Saturday, November 14th, 9:30am to around 3pm at the Iron Skillet Restaurant, Petro Plaza, Highway 315 in Dupont, PA.  Pre-register by leaving a message at (570) 798-7051.  I wrote about our seminar in detail in last week’s blog post.  Check it out here:  http://thisgingerjustsnapped.weebly.com/blog/moving-forward-to-success-come-with-us

Investors Network NEPA has regular meetings every month.  The next one is this Wednesday, November 11th at 7pm at the Iron Skillet Restaurant, Petro Plaza, Highway 315 in Dupont, PA.  Iron Skillet gives us their back room for free as long as we spend $100 or more at the restaurant.  So if everyone who comes buys a burger, we’re good.  If not, we usually take up a collection at the end, and it ends up being about $5/person.  But we haven’t had to do that in awhile, people are coming hungry. 

My husband, Steve Franco, wanted to start a real estate investors association for entreprenuers, because there wasn’t one in this area.  Fellow local entrepreneurs Matt Whitney and Beau Cotes were instrumental in helping him getting Investors Network NEPA off the ground.  Matt specializes in flipping houses and reselling them as rent-to-own properties.  Beau is a finance guy.  Raphael Norat is an investor from New Jersey interested in buying and holding rental properties in NEPA, and also flipping houses for retail sale here and in Jersey. Sherri Silvestre is a Bird Dog and Wholesaler.  They've all contributed to the Network.  New people are joining every week.  There’s a diverse amount of experience in the room.  Some have no experience at all, and are just coming out of curiosity.  That’s fine.  Welcome!

You should come to an Investors Network NEPA meeting if:

*You want to flip houses like they do on all those A&E reality shows.  This is why most people come, and the main reason Steve wanted to start the network.  There was no meeting for people who wanted to flip houses in NEPA.  He had to travel to the Lehigh Valley or New Jersey to network with like-minded entrepreneurs.  Those meetings were worth the trip – you learn so much more from talking to real people who have successfully flipped a real house than from those highly edited TV shows.  You also meet people who can help you find the money to do the flip – private lenders, not banks, are the primary source of flipping funds.  You’ll get good referrals for contractors, real estate agents, title companies and everything else you need to build your team.  You’ll also learn about some alternative exit strategies if a property doesn’t sell like you thought it would.    

*You want to buy and hold rental properties, and manage those properties yourself.  In which case you should go back and read all the archives in this blog, because that is precisely what my husband and I started out doing.  We are only now beginning to move away from managing our own properties, because we have too many of them and the work of management is preventing us from doing other things in the real estate arena. It’s been a long hard road but I’d do it all again in a heartbeat.  I still believe rentals are the surest way to build long-term wealth as well as immediate monthly income, and that is the path to financial freedom.  I wrote a 9-part series on how we began our business as rental property owners.  Start with part 1 here:  http://thisgingerjustsnapped.weebly.com/blog/how-it-all-began-part-1

If your properties are in the Wilkes-Barre/Scranton area you should also attend Jim Yarwood’s monthly Wyoming Valley Real Estate Investors Association meeting.  They meet the last Tuesday of the month, 7:30pm at Wyoming Valley Church in the Dolphin Plaza on Highway 315 in Wilkes-Barre, just past the Woodlands on the way to Pittston.  You’ll meet several people in that meeting who are successfully managing a slew of their own properties, as well as the casual landlord who may have one or two places to rent out.   

*You want to own rental property, but don’t want to manage it.  In fact, you don’t want to even know it exists, except once a month when your property manager sends you (hopefully) a large check with your profits.  You’re going to need to put together a team of trusted people to make this happen for you.  The best way to do that is by networking.  We come together to find solutions.  And if you read this blog, you know my husband and I are still looking for this solution ourselves!  We’ll let you know what’s worked for us, and what hasn’t.

*You want to invest in real estate, but you have no desire to flip a house or be a landlord.  You just want to make money.  You can make 8 to 15% on your money by backing someone else’s investment with a private money loan.  You can make much more if you actually take title to the flip, although your risk increases.  Come to the seminar Saturday – Beau Cotes is the financial genius in our group and he’ll be talking about this first thing in the morning session at 9:30am.  “Lazy Money” is money that’s sitting in a low-yield savings account earning diddly over squat.  If you are lucky enough to have a problem like that, real estate investing may be a great solution!  And it gets you in the game without getting your hands dirty.

*You have no money, iffy credit, are in a bad financial situation and think real estate may be the answer you’re looking for.  The best thing about groups like Investors Network NEPA is they raise your mindset.  Suddenly you see possibilities when all you saw before was poverty, debt and a dead-end job.  You start thinking like an entrepreneur.  The gurus all say you are the sum of the 5 people you spend most of your time with.  If you’re spending all of your time with people who are in crappy financial straits, then… I’m not saying dump your friends!  There’s more to life and relationships than money, that’s for sure.  What I’m saying is if you don’t like where you are right now, start also hanging around with people who are living something closer to the life you want.  You can start off as a Bird Dog, sniffing out motivated sellers of properties that more experienced investors will pay you a couple hundred bucks for.  We’ll teach you how to do that.  You can try your hand at Wholesaling – being that investor who puts the deal together, matching up a motivated seller with an investment buyer.  That pays a couple thousand dollars, depending on the deal.  A lot of people start off this way when they have no money.  It’s a good way to get in the game and get some experience, make some connections.  Then when they’ve earned enough money to improve their financial situation, and there’s some left over, they move on to flipping houses and/or buying rentals.

Check out our cool new website to connect real estate entrepreneurs and investors in Northeastern Pennsylvania:  www.investorsnetworkNEPA.com   We’re also on Facebook:  https://www.facebook.com/investorsnetworknepa/
The website is so new, it’s not completely finished.  We’re looking for feedback on ways to make it better.  Its purpose is to create an online community for real estate entrepreneurs specific to NEPA.  You can post properties for sale or for rent.  You can connect with others on social media and message boards.  We want to build up a resource where our group can go if they need a good contractor, handyman, attorney, title agent, realtor – kind of an Angie’s List for our needs.     
The new website will be the main topic of our meeting Wednesday night, how we can all use this connection tool to make our lives and our deals easier.  Amazing things happen when real estate entrepreneurs band together in the name of profit.  There’s an unspoken rule – if I make money, everyone who helped me makes money, too.  There really is enough to go around.  It’s a culture of abundance!

*Investors Network NEPA regular meeting: Wednesday, November 11th at 7pm at the Iron Skillet Restaurant, Petro Plaza, Highway 315 in Dupont, PA. 

*Free real estate seminar next Saturday, November 14th, 9:30am to around 3pm, same location.  Pre-register by leaving a message at (570) 798-7051.  

www.investorsnetworkNEPA.com

On Saturday, November 14th my husband and some of our fellow real estate entrepreneurs are putting on a free seminar at the Petro Iron Skillet restaurant in Dupont.  This is what he’s been doing with his new-found time since we’ve farmed out management of our rentals. 

Why is it free?  Investors Network NEPA is a loose coalition these guys have put together in an effort to band together, sharing knowledge and resources.  It’s a Real Estate Investors Association (known in the industry by the acronym REIA, pronounced REE-ah) they formed for themselves because one did not exist in this area for people interested in flipping houses, wholesaling properties, private lending, and other such activities of real estate entrepreneurship.  There is a wonderful REIA for landlords – the Wyoming Valley Real Estate Investors Association.  But for anything other than buy-and-hold rentals, you’d have to go to the Lehigh Valley.  So they started Investors Network NEPA.  They’ve been having meetings on the second Wednesday of every month for about a year now, first at the Grotto by the mall, but they’ve since moved to the Petro Iron Skillet in Dupont.  They have a nice back room, and as long as our group buys at least $100 of food from the menu, they don’t charge us for it.  Pretty good food, too! 

Steve and his fellow entrepreneurs are holding this free seminar because real estate investing is a game of relationships.  I used to think, “Why would we teach someone how to flip houses and have them compete with us?” But real estate really isn’t like that!  Sure there will be competition for a really hot deal if there is one, but there’s a lot more collaboration than competition.  The smart real estate entrepreneur would ask the one who landed the hot deal to help him find one, too.  And she would, if she’s smart.  She’d find a great deal and use her skills and experience to get that house under contract, then assign it to the investor who asked for her help, taking a fee for herself.  That’s what wholesaling is.  The experienced investor makes some money and helps out a newbie.  The newbie gets a great deal even after paying the experienced investor her fee, flips the house and makes some money of his own.  We all help each other, and we all make money, too.  It’s capitalism at its purest – the way it would work in this country if the government hadn’t stepped in and screwed it all up!

Just a side note – one of the main things I love about our industry besides the pure capitalism is the lack of sexism I’ve experienced.  As a woman who spent 30 years working in broadcast media, this is a breath of fresh air!  I’m sure sexism exists, I just haven’t run into yet.  It’s all about the deal.  No one sees a man or a woman, they just see cap rates and cash flow!

So Steve and his fellow entrepreneurs of Investors Network NEPA are having this free educational seminar/networking opportunity to bring more entrepreneurs into the network – experienced deal makers and neophytes alike. 

Saturday, November 14th, starting at 9:30am (till about 2:30 or 3) – The Iron Skillet restaurant at the Petro truck stop, Highway 315 in Dupont.  Investors Network NEPA will cover the following topics:

Hands-Free Real Estate Investing – If you read this blog regularly, you know about the trials and tribulations of do-it-yourself real estate investing.  This is the path Steve and I have chosen to financial freedom – we believe it’s worth all the headaches.  But it’s not for everyone.  If you want to be a real estate investor, but you don’t want to deal with tenants or code enforcement or sleazy contractors, there is another way.  You could invest your money for great returns – 8 to 15 % - in backing those of us who don’t mind dealing with the aforementioned headaches.  We financed our first real flip this way – a guy named Guy  gave us a loan of $55,000 to purchase and renovate 1228 Main St. Avoca.  Check out our story here:  http://thisgingerjustsnapped.weebly.com/blog/how-it-all-began-part-7-flipping-avoca
After 9 months Guy earned 15% on his interest, plus an extra $1000 because we were late - we thought we’d have it done and sold in six months, and that’s the deal we signed.   

​The great thing about investing this way for Guy is, he was guaranteed to get paid no matter what happened with our flip.  If it didn’t sell, if we ran out of money and walked away, he would get the real property to dispose of as he wished.  He would have the same rights as a bank to foreclose.  If that place didn’t sell, it would have made an incredible high end rental property for Guy.  Even if we completely screwed up the flip – if the house he foreclosed on wasn’t worth $55,000 - he would have to right to chase us to recover his money.  He would have every recourse a bank would have.  Of course that’s the worst-case scenario.  We were in this flip to make money – we weren’t screwing around!  So Guy got paid, and we got paid, too.  When you invest in serious hands-on real estate entrepreneurs like the ones you’ll meet at Investors Network NEPA, you can expect similar results.

Of course there are risks in any kind of investing.  That’s why you don’t invest with your grocery money, your mortgage payment or your kids’ college fund.  If you back a real estate entrepreneur with a loan, you use “lazy money.”  That’s extra money you have, after the bills are paid and your obligations are met, that may be sitting in a savings account earning less than 1% interest.  Isn’t 8 to 15% a much better number?
​
Another way to invest in real estate this way is with retirement funds.  My husband has done this, I have not.  That decision is personal, and it goes to your risk tolerance.  Steve, by the way, did not put all his retirement money into a self-directed IRA to invest in real estate.  He pulled out about $80,000.  There are special rules to using retirement funds to invest in real estate.  Beau Cote is one of the entrepreneurs of Investors Network NEPA.   He has a Master’s Degree in Finance, and he will be explaining how it all works. 

Want higher returns than 8 to 15 %?  Be a little more hands-on with your real estate investing.  But just a little.  You’re still backing us experienced do-it-yourself entrepreneurs who will do all the work and put up with all the headaches, but you’re actually taking title to the property.  Sure you’re shouldering more risk this way, but as risk increases, so do returns.  Instead of getting a set percentage return on your money like you would with a straight-up private loan, you would get a set percentage of the entire profit from the sale of the flip.  Or the rent-to-own property.  Or the by-and-hold rental. 

What if you don’t have any money but still want to get into real estate investing?  OR you don’t mind the headaches and you want to be the hands-on entrepreneur and do what we do?  Then stick around for the afternoon session!  After lunch, we’ll be talking about active real estate investment strategies.  Don’t have a penny to your name?  Start out wholesaling.  Or bird-dogging, which is finding potential properties more experienced wholesalers can then match with other investors.  Bird Dogs make about $100 to $500 for each property they give a wholesaler when the wholesaler makes the deal.  That’s not a bad paycheck!  Wholesalers pocket $1,000 to $5,000 per transaction.  Steve has been averaging about $3,000 lately.  Save up enough of those fees and you can start flipping houses, buying rental property or entering the wonderful world of rent-to-own, all of which we’ll talk about in the afternoon session. 

We ARE successful real estate entrepreneurs!  I know my last blog was titled Moving Forward From Failure.  Read it here:  http://thisgingerjustsnapped.weebly.com/blog/moving-forward-from-failure 
But my husband and I are not failed real estate entreprenuers!  We are successful real estate entrepreneurs who have made quite a few mistakes and have learned from them.  I write this blog to pass on what I’ve learned – and because it’s quite effective therapy for me to write about our business.  Especially when I went back and detailed our history in 9 parts – it amazes me how far we’ve come!   If you’re curious, start with Part 1 here:  http://thisgingerjustsnapped.weebly.com/blog/how-it-all-began-part-1

We personally own 25 cash-flowing rental units.  We own another with an investment partner.  We own two rent-to-own properties with investment partners.  We successfully flipped a house, using a private money loan from a fellow investor.  We have three mobile homes set up in area parks we are offloading with installment sales, similar to our rent-to-own houses.  And Steve has been very successful at wholesaling, and has launched a few bird-dogging careers.  Yes, we’re still learning.  We’re not there yet – and we won’t be for awhile because we have set our business goals pretty high in the sky.  About as high as Trump Tower.

We bought the Real Estate Gurus’ 5-figure mentorship program.  (I blogged about that, too:  http://thisgingerjustsnapped.weebly.com/blog/how-it-all-began-part-6-when-we-bought-the-gurus-program)  A lot of the entrepreneurs in Investors Network NEPA bought similar programs.  We will be happy to pass on all we learned from them for free – because we see the value in building Investors Network NEPA.  The more investors who join our ranks, the more opportunities we’ll all have to reach our goals.  It’s kind of like getting together to trade baseball cards, except we’re trading deals.  Anyway, it’s free and we’re not selling a damn thing, so what do you have to lose?

The only thing we ask if you come is that you buy lunch.  If we spend at least $100 on the restaurant we get the room for free.  Details in the flyer below:

Well you could get off at the Avoca Exit 178, but then you'd have to deal with that nasty roundabout.  If you're brave and decide to do that, it's Rt 315 southbound - I believe there are signs for the Petro coming from that direction.

​I’ll give you an update if needed in next week’s blog.  And I’ll write more about how we’re moving forward with our business.  After all this is just the beginning of our story!