IC E-Lesson:7 Things Even I Learned at the OREIA Summit

If you attended the 2016 OREIA Summit last weekend, you already know that there was a head-crushing amount of information and advice. Several new investors came to me over the course of the event literally asking for advice about how to process and implement everything they’d heard.

And I get it; I was a new-ish investor at my first Summit way back in 1992. I walked away really inspired, but also somewhat discouraged by how much I DIDN’T understand and how many things I DIDN’T think I had time to implement.

But from the perspective of over 25 years in the real estate business (and with the handicap of not always getting to sit through all the presentations due to various responsibilities), it STILL surprises me how much I learn when I’m there.

I always spend the day after the event making notes on new things I learned and old things I’ve been reminded of and want to implement (and, to be honest, sleeping). Here’s my list from the 2016 Summit:

1. There’s a law working its way through the Senate that could kill your self-directed IRA. John Hyre talked about this at the advanced dealmaker mastermind on Thursday. A senator from Oregon has proposed a bill that would make it illegal for you to buy underpriced properties in your Roth IRA. You would be forced to pay Fair Market Value, and get an appraisal to prove you’d done so; if an audit determined that you’d “cheated” by putting an undervalued property there, your IRA would be disallowed and you’d pay the penalties and taxes, generally about 60% of the value of the IRA.

There’s an article here http://www.wsj.com/articles/sen-ron-wyden-to-propose-new-curbs-on-roth-iras-1473285186  that talks about the law, though more in regards to traditional investments than real estate. Equity Trust company confirmed to me that this would more or less destroy your ability to grow your Roth IRA rapidly using real estate, a huge blow to your prosperity.

2. We don’t study debt enough. When you think of real estate financing, what are your thoughts? That it’s a necessary evil? That you’d like to leverage MORE?

It seems to me that most people in our business think of mortgages in a sort of shallow way: that no money down is good, that banks are bad, that becoming debt-free as soon as possible is virtuous. But what we don’t do, as became clear to me watching both George Antone’s and Shaun McCloskey’s presentation, is think of debt as a tool that needs to be carefully studied and handled.

Both presenters discussed debt as a vehicle, and both talked about how there’s a time to get more and a time to start de-leveraging for various economic and emotional reasons. Having watched my father lose his entire real estate empire to a combination of debt and health problems, I have a natural allergy to the idea of taking on a lot of debt; I needed to hear the perspective that debt is like fire. It’s super-useful if you understand it, control it, and use it properly, and super-dangerous if it gets out of control. And guess which TWO seminars I’m going to in November and January? George’s and Shaun’s.

3. Some really successful investors ARE still getting deals through MLS. I’ve been largely avoiding the MLS as a way to get deals over the past few years; as you’ve heard me say, my perception has been that too many people are paying too much for houses there.

But Brad Sides convinced me to take another look; he uses a series of data points that include days on market, price per square foot, school system quality, and others to pick potential deals out of the MLS that others might miss. And I wouldn’t have even believed him, but a local investor I know, respect, and know is buying 50 deals a year confirmed to me that he’s doing just that. That’s one of the things I love about the Summit; for every presenter, there are literally 50 real-life investors in attendance to bounce ideas off of.

4. Using Facebook as a tool to get deals. I’ve known Jason Roberts for a few years, but I had never seen him or his partner Rachael Schneider speak until this last weekend. They talked mostly about how they find deals, and the most impactful thing I heard was that when they can’t find the owner of a property, they go to Facebook and friend everyone who looks like they MIGHT be the owner, then send them a message asking if it’s their house and they want to sell.

It’s not that I didn’t know that you can contact people on Facebook, it’s that when I tried to find people, I’d spend HOURS trying to figure out if I had the “right” Jim Johnson. I know it’s silly, but it was a big aha to me to hear that it’s faster and easier to just send a message to everyone who COULD be the right owner. Duh.

5. A LOT of people believe that senior group housing is the investment of the future. Just counting butts in the seats (and in the back of the room buying, which is my #1 measure of consumer confidence at this event) Gene Guarino was the most popular speaker at the event. His topic, senior group housing, resonated a LOT with people. Interestingly, a lot of those who joined his program were 50+, telling me that they see themselves potentially living in such a situation in the not-so-distant future, which in turn made ME more confident that Gene has the hottest investment of the 21^st century.
6. High fees and fines for code violations may violate the 8^th amendment. One of the things I love about the Summit is that it’s where I catch up on all the political and legal news from around the country. Toledo just passed a law that’s probably headed to your city requiring every single family rental property in the city built before 1978 to go through a lead test and be abated. Indiana is on the path to starting its own state lobbying organization. And according to Maurice Thompson of 1851 Center for Constitutional Law, Cincinnati’s ridiculous fines for high grass (up to $1,000) probably violation the “Cruel and Unusual Punishment” section of the Constitution.

Yeah, I know, I thought that Amendment was to stop waterboarding and the like, but here’s what it actually says: “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.”

If you live in Ohio and have a similar situation where you invest, contact me, ‘cause some stuff’s gonna go down over this.

7. There are more people worried about their business taking over their lives than I thought. I’ll just say it: I LOVE me some Lifeonaire. I first stumbled across it when I was in a very bad place in my business; though successful by most standards, it was definitely not leaving me room for a life. I was working too hard, not getting to any of my hobbies, ever, losing relationships over it…it was UGLY.

Lifeonaire taught me what the problem was: my business had grown up without much intention about where it was supposed to be taking me. It was all about the money, money, money (sorry, I’m a Pitch Perfect fan and can’t say the word without thinking about the song) and not about any life I might be trying to build.

So when I saw that literally 100 people signed up for Shaun’s Lifeonaire class here in Cincinnati in January, I was really happy for them—and also glad that many of them are going to get started on the RIGHT foot, instead of doing what I did and building a business without a vision underlying it.

I wish I’d heard that message years earlier than I did, and I’m glad so many of you get to.

Next year’s convention is November 9^th – 12^th, also here in Cincinnati. You can register RIGHT NOW at www.OREIAConvention.com and get it on your calendar for 2017 before it fills up with less valuable, less exciting stuff. I hope you’ll give yourself this gift next year. You’ll learn lots, I promise.