Think-Realty-Magazine-July-2018

FOR BUYING IN FLOOD-PRONE AREAS 4 SIMPLE RULES

3 RED FLAGS IN AIRBNB MARKETS

ARE "SMART BATHROOMS" A SMART MOVE FOR ROI? DESIGN POINT SOCAL MARKET RISK ANALYSIS FOR THE TURNKEY RENTAL BUYER MARKET BREAKDOWN

HIGH-TECH REAL ESTATE TRANSACTIONS ARE PERSONAL FOR AUCTION.COM CTO AMIT AGGARWAL PAGE 18 Refining the Real Estate Platform

CALIFORNIA DREAMIN': FROM "CRAMPED AND OUTDATED" TO A MODERN HOST'S DREAM VENUE RENOVATION ROCKSTAR TECHNOLOGY & RESOURCES IN REAL ESTATE SPECIAL FOCUS

$5.95U.S. ::$6.95CAN JULY2018

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TABLE OF CONTENTS

INSIDE THIS ISSUE

THINK REALTY 8 News & Events 10 Better Property Management

HOUSING NEWS REPORT 42 With Greater Data Access Comes Greater Responsibility "Splitting the Attom" article from ATTOM Data Solutions. by Nelda Green 46 Encore Performance "My Take" article from ATTOM Data Solutions. by Rick Sharga 49 Smartest Days to Sell a Home [ Infographic ] by ATTOM Data Solutions 50 The Terminology of Housing Market Progression An unofficial primer to real estate market terminology. by Daren Blomquist

Through Better Expense Management Think Realty Supplier Perks for Pros' dash TM card brings high-tech to your business wallet. by Tara Bonnell

DESIGN POINT 12 Renovation Rockstar: California Dreamin'

Turning "outdated and cramped" into a modern host's perfect venue. by Christy Edgar SPECIAL FOCUS: TECHNOLOGY 25 The Facts, Fictions, and Myths of Real Estate Investing Technology

IT holds incredible solutions, but only if you allow intuition a voice as well. by Tyler Van Winkle

MARKETING 62 5 Strategic Videos that Will Revolutionize Your Real Estate Marketing YouTube hasn’t just been home to the “crazy cat video” for quite some time. by Linda Liberatore

26 Exposing the Human Element in “Direct-Data” Real Estate Sites Algorithms alone will never be enough. by Rosario Terracciano

COVER FEATURE

High-tech real estate transactions are personal for Auction.com Chief Technology Officer AMIT AGGARWAL .

64 The 5-Minute Rule for Wildly Successful Search Engine Marketing Don’t let a simple oversight let your best leads get away. by Justin Schneider BYTHE NUMBERS 94 Top 20 Potential Places for a Landlord Paradise Huge increases in average rents could make these markets perfect for landlords . by Ingo Winzer

32 3 Things You Can Learn from Your Hard Money Lender The truth about that hard-money loan refusal. by Charlie Einsmann and Sam Jacknin

REFININGAPLATFORMFOR REAL ESTATE EMPOWERMENT

by Carole VanSickle Ellis :: photos by Jon Endow

34 Breaking Down the Tools of Tech A timeless truth: The right tools in your hands hold the keys to your success. by Douglas Skipworth

36 International Real Estate 2.0 Foreign-language AI will transform the industry. by Celeste Lindell

DESIGN POINT

MINDSET

THE BIG PICTURE

38 3 Ways to Use Technology to Improve Efficiency in Your Real Estate Business The way to greater profits lies with thoughtful, responsible automation. by Bill Griesmer

INVESTING INSMART BATHROOMUPGRADES

LIVETHELIFEYOUDREAM OFWITHTHERIGHTTECH Optimizing your business can lead to optimizing your life.

10HARDQUESTIONS YOUMUSTASK Identify strategic risks & rewards before you invest.

3REDFLAGSFOR AIRBNB INVESTORS

INVESTOR REVIEW: LENDERS EDITION 67 Exclusive offerings and insights from the sector's leading lenders.

IoT offers everything from hygienic flushing to leaky-pipe alerts.

Don’t invest blindly in Airbnb “danger zones.”

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FROM THE EDI TOR- IN-CHI EF

PUBLISHER R. Michael Wrenn

The Right Tools for the Job

PRESIDENT, AFFINITY WORLDWIDE Eddie Wilson | EWilson@AffinityWorldwide.com

EDITOR-IN-CHIEF Carole VanSickle Ellis CEllis@ThinkRealty.com

volutionary biologists and phi- losophers alike may dedicate

developments in real estate investing resources, including discussing: • The truth about how blockchain

VICE PRESIDENT OF MEDIA SALES Rodney Halford RHalford@ThinkRealty.com 816-398-4111 x86122 NATIONAL SALES MANAGER Teresa Stanton TStanton@ThinkRealty.com 816-398-4111 x86224 CONTENT DIRECTOR Abby Tillman ATillman@ThinkRealty.com DESIGN CONSULTANTS Rivet | www.WeAreRivet.com

their entire careers to isolating the human “spark” that makes us different from every other species on the planet. Real estate investors, on the other hand, instinctively know the difference and can tell you what it is in about five seconds: It’s the tools. Ted Chu, former chief economist at General Motors and the Abu Dhabi Investment Authority and current professor of economics at New York University in Abu Dhabi, identifies three “revolu- tionary” traits that make humans unique. It should give every real estate investor reading this a few “warm fuzzies” to know structure building is one of these three traits. It’s not surprising that Chu, as an economist, entrepreneur, and evolutionary biologist, would define structure building as much broader than simply building physical structures. He extends the definition to the process of sharing structures and models with others. It’s a perfect fit for real estate investing: You develop patterns and processes; you scale and grow, and you constantly expand your network of resources. And speaking of resources... In this issue of Think Realty Magazine , we’ve taken a deep dive into the exciting and murky wa- ters where traditional tools like phone lines, check books, pencils, paper, hammers, and nails meet groundbreaking technology and other innovations involving the latest investment strategies, the most creative transactional structures, and, of course, algorithms, code, blockchain, process platforms, and “the cloud.” Our contributors and featured experts peel back the curtain on some of the most exciting

could turn both the real estate and financial sectors completely upside down (hint: it probably has nothing do to with how most people you talk to use the term) • Why algorithms matter for turnkey investments, private loans, and even real estate robotics • Smart-home features and how to leverage their installation for maximum cash-flow and profit • The easiest ways to generate more leads for higher quality deals by combining the most traditional and most groundbreaking strate- gies in the industry Of course, we’ve also included the tools you expect from every issue, including a Califor- nia-dreamy Renovation Rock Star, insight into the best strategies for buying real estate in flood-prone areas, and an in-depth breakdown of market data on notable turnkey rental mar- kets around the United States. If all these resources in one place sound a bit overwhelming, don’t hesitate to “begin at the end” with our new back-page feature, “What You Saw.” This new feature highlights all sorts of exciting (and highly practical) resources mentioned in this specific issue of the magazine along with page numbers for reference! After all, as your compre- hensive real estate investing resource, it’s our job to make sure the information and education we provide readers is as easily accessible as possible. We're ready. Let’s get to work. •

DESIGNER Emily Bowers

CHECK!

CONTRIBUTING WRITERS Daniela Andreevska, Tara Bonnell, Salvatore Buscemi, Jennifer Jo Cobb,

Christy Edgar, Charlie Einsmann, Samuel K. Freshman, Troy Fullwood, Bill Griesmer, Sam Jacknin, George Koo, Linda Liberatore, Celeste Lindell, Katrina Rice, Justin Schneider, Douglas Skipworth,

Your Job Just Got Easier Think Realty has just made it easier for landlords and property managers to get the information they need from their tenants! Our newest resources include forms for property managers to use when accepting a new tenant, including:

Brian Spitz, Rosario Terracciano, Tyler VanWinkle, and Ingo Winzer.

COVER PHOTOGRAPHY Jon Endow

FOR ARTICLE REPRINTS :: Contact Jeremy Ellis at Reprint Pros, 949-702-5390. www.reprintpros.com. SUBSCRIPTIONS :: The annual subscription for Think Realty Magazine is $28.95 in the U.S. Order online at www.ThinkRealty.com or call 816-398-4085. Provide your full name, address and telephone number. DISCLAIMER :: Think Realty Magazine , its owners, contractors, distributors and their respective representatives do not provide tax, accounting, investment or legal advice and make no guarantee as to the effectiveness or success of any investment or tax strategies discussed herein. Please consult your own independent adviser as to any questions you have or decision you are contemplating. ABOUT THIS MAGAZINE :: ThinkRealtyMagazine isapublicationof AffinityRealEstateMediaLLC.Reproductionoruseofanyeditorial orgraphic,withoutpermission, isprohibited.Wearenotresponsible for thecontentofanypaidadvertisements.Forreprintrights; toob- tainadetailedstatementofourprivacypolicy;and forallsingle-copy requests,addresschangesandothersubscription inquiries:

Lease Application

Crime Free Lease Addendum

Landlord Reference Letter

Move-In Checklist

Random Inspection Form

The Insider’s Guide to Rent Estate

Become an Intro-level member to take advantage of these resources, and many more! Sign up today at ThinkRealty.com.

CAROLE J. VANSICKLE ELLIS, EDITOR-IN-CHIEF

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MARKET BREAKDOWN

THINK REALTY

NEWS & EVENTS

SOUTHERN CALIFORNIA

Southern California Market-Risk Analysis for the Turnkey Rental Buyer

Think Realty Parent Company Makes Equity Investment in OwnAmerica KANSAS CITY, MISSOURI On May 16, 2018, Think Realty parent company Affinity Worldwide announced it would make an equity investment in OwnAmerica, a leading platform that operates a national marketplace for single-family rental portfolios, deepening the partnership between OwnAmerica, Think Realty, and Affinity-owned National Real Estate Insurance Group (NREIG), which is now the preferred insurance program of OwnAmerica. For more information on this investment, OwnAmerica, and Affinity Worldwide entities, email Laura Chalk at Laura@wearerivet.com. SGF Contracting Services Inc. Becomes Radius Renovation Group

by Kathy Fettke

While there are still some opportunities for California rental owners to generate a little cash-flow inland, there are so many risks to being a landlord in California. You can still do pretty well with short-term rentals (vacation rentals and Airbnb options) near the coasts, but the laws can change at any time.

KANSAS CITY, MISSOURI On May 18, 2018, SGF Contracting Services Inc., a national provider of rehab and renovation services for real estate investors, asset managers, property management companies, and REITs, rebranded as Radius Renovation Group. The move underscores the company’s focus on providing clients with an all-encompassing, 360-degree solution for investor renovations from start to finish. Learn more about Radius Renovation Group at RadiusRenovationGroup.com.

renovation group FULL - SERVICE CONTRACTING

INstate REIA Hosts First Annual Statewide Real Estate Conference INDIANAPOLIS, INDIANA On May 19-20, 2018, INstateREIA (Indiana State REIA) hosted its first annual conference. INstateREIA is a statewide organization of real estate investing groups with the primary missions of changing public perception of real estate investors and assisting Indiana investors in following and contributing to legislative issues relevant to real estate investing. As a founding sponsor, Think Realty supported INstateREIA’s goal of bringing investors’ importance in the housing market to the forefront while helping investors better understand how they impact the market to ensure lasting real estate legacy for communities and families. Learn more about INstateREIA at IndianaStateREIA.org.

Proposition 13

Extreme Tenant “Rights”

Excessive Optimism

Proposition 13 was approved in 1978 and caps property taxes at one percent of the purchase price with a two percent limit annually for raising those rates even if property values rise exponentially. Rates can go up more than that only when the property changes hands and is reassessed based on the new price. The Threat: In November, two ballot measures will go to vote. One will eliminate these protections completely for commercial properties.

California’s “tenant rights” make it extremely difficult to evict non-paying tenants and may even enable a tenant to deliberately cease paying rent while being fully protected from eviction for non- payment for an extended period. The Threat: Even if a tenant cooperates fully, it can take 90 days or more to evict a non-paying tenant. During that time, you risk property damage, are unable to collect rents, and may face lawsuits if you fail to adhere to a number of complicated eviction laws and policies.

Californians forget their history and believe real estate values never drop. That is just not true! If you buy at the height of the market and are forced to sell at the bottom, you stand to lose a lot of equity and you probably will not cash-flow either.

Think Realty-Sponsored NASCAR Driver Speaks in Republic of Georgia to Support Inclusive Education, Female Empowerment TBILISI, REPUBLIC OF GEORGIA Jennifer Jo Cobb, Think Realty-sponsored American NASCAR Camping World Truck Series driver, spent May 26-June 2, 2018, speaking in multiple locations throughout the Republic of Georgia about empowerment, leadership, entrepreneurship, overcoming personal obstacles, and the benefits of inclusive education to the Georgian economy and led a female-only race at the Rustavi International Moorpark to honor Georgia’s female soldiers, veterans, and cadets. “Jen is an inspiring role model who shows off the best of what America has to offer. Her message will

The Threat: California real estate is very volatile.

reach thousands of young women and men in this emerging democracy,” said Damian Wampler, cultural attaché at the U.S. Embassy Tbilisi. For more information on Think Realty Racing and Jennifer Jo Cobb, contact Dell Hamilton at delltrracing@gmail.com.

THE SOLUTION: ADVANTAGE TO THE CALIFORNIA INVESTOR Don’t despair! California real estate investors have a huge advantage in that they tend to be rich in investment capital. Invest your money in rentals where it makes sense anywhere in the country using the best strategies for you. You may choose to make private loans, purchase turnkey rental properties, or get involved in syndications for huge projects, like commercial developments, for example, that yield huge returns in exchange for access to that valuable capital.

September 22-23, 2018 | The Westin Buckhead Atlanta THINK PURPOSE : Investing with Impact ATLANTA

July 14-15, 2018 | The Marriott Irvine Spectrum THINK RESOURCES : Tech & Innovation IRVINE

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THINKREALTY MEMBER BENEFITS

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practices like shared corporate cards or unauthorized employee purchases. Because transactions are pre-approved before the money is spent, there is an opportunity to ask questions about expenses before they become a liability. Account administrators receive real-time notifications every time an employee’s card is used to help keep a firm handle on business expenses. Furthermore, some of the barriers to obtaining traditional corporate cards, like poor employee credit history or a lack of business credit history, are not a factor with prepaid cards. •

hen was the last time you rifled through your wallet or the glove

compartment of your car looking for a re- ceipt you needed to complete an expense report? If you are a business owner, you may have not-so-fond memories of wait- ing for an employee to submit expenses, only to have months’ worth come in at once, and with a higher final tally than expected. And yet, every year, you spend umpteen otherwise-productive hours on the process of manually keeping track of business expenses, instead of getting a new listing or booking a showing that could lead to another sale. Surely, there must be a better way. With the help of modern payment and expense technology, you could save count- less hours on the administrative functions of reconciling receipts. For example, the Perks for Pros dash™ Prepaid Mastercard® powered by Karmic Labs, delivers a simpler, more efficient approach to expense manage- ment with built-in security controls. Let’s say you have a property that needs a little TLC to get ready for a showing. You’re already scheduled to your limit, so you need to delegate shopping for supplies to someone in the office. Even if it is just flowers and finishing touches, these don’t come cheap! If you ask a junior staffer to take care of the legwork, you may also be asking them to pay out of pocket and wait to be reimbursed. That might not be a realistic option for them. Alternatively,

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professionals in mind, and dash TM is a Think Realty Benefits supplier. Using dash TM can simplify your expenses and free up valuable time to help you focus your attention on your valued clients. The dash™ Prepaid Mastercard ® is issued by Sunrise Banks, N.A., Member FDIC, pursuant to a license by Mastercard International. Mastercard is a registered trademark of Mastercard International. This card may be used everywhere Debit Mastercard is accepted. Use of this card constitutes acceptance of the terms and conditions stated in the Cardholder Agreement.

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DESIGN POINT

AFTER

RENOVATION ROCKSTAR

KITCHEN AFTER

California Dreamin' TURNING "OUTDATED AND CRAMPED" INTO A MODERN HOST'S PERFECT VENUE.

OPEN FLOOR PLAN PROPERTY When you picture the perfect Southern California home, you probably have visions of mid-century modern Palm Springs: single-story, sun-drenched, and an open floor plan for plenty of flow. In this North Tustin home, however, the outdated furnishings and fixtures were hiding the home’s best features, making it look darker and more cramped than it should have (see image at left). “The transformation of this home was very fulfilling,” said Melero, “because of the great, and unrealized, potential of the home itself.”

by Christy Edgar Featured investor: Rick Melero, principal at HIS Capital Group

Located less than 20 minutes from Disneyland and less than 30 minutes from beautiful SoCal beaches, North Tustin is a desirable Orange County enclave offering the California lifestyle dreams are made of. For Rick Melero, principal of HIS Capital Group, this residential project was tailor-made for its market. “The location of this home was in a highly sought-after area, with [plenty of] space separating it from neighbors and heavy traffic. The 3,167-square-foot home sits on a half-acre with plenty of room to entertain,” said Melero. “We were drawn to this project because of the profit potential and the area itself.”

THE NUMBERS BREAKDOWN

Purchase Price: $850,000 Rehab Costs: $145,000 Timeline: 6 months Sale Price: $1,220,000 Estimated Profit: $225,000

KITCHEN BEFORE

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also included a new kitchen, new bathrooms, new windows, and new flooring. EXTERIOR CHANGES “We did not have many issues with the exterior,” said Melero. Landscaping, cleanup, and a fresh new paint job transformed the home. Melero chose a pale blue that would be a perfect echo of the endless blue skies above. The color, he said, gave the property a unique look while still being relatively neutral. In addition, winding pathways - many of which alternate paved and gravel elements - now lead to a gorgeous outdoor gazebo area (see image on p. 12), which offers a shady spot for relaxing outdoors under the swaying palms. A meticulously manicured lawn and minimalist plantings along the fencing and near the house echo the spare, contemporary look of the home itself.

FRONT EXTERIOR AFTER

LIVING ROOM AFTER

LIVING ROOM BEFORE

WIDE OPEN INTERIORS Many home descriptions talk about an “entertainer’s floorplan,” but the North Tustin home exemplifies this ideal. “This home is unique in its design and perfect for the entertaining family with lots of open space,” said Melero. But open space can still look dark and cramped without the right lighting and access to the outdoors (see before images

above), so the investor added modern lighting and chose paint colors, tiles, and other design elements to echo the colors of the outside setting, brighten the spaces, and bring natural materials into the interior. Many of the patterns and fixtures also hearken back to the mid-century modern design of the home itself, paying homage to its vintage style while looking fresh and contemporary. The renovation

OUTSIDE LIVING AREA DURING RENOVATION

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INDOOR/OUTDOOR LIVING AREA AFTER

STAGING WAS CRUCIAL Great design alone was not enough to tempt buyers, at least initially. “In this market we learned that in order to sell the property, we needed to stage the home,” said Melero. "We tried for 90 days without any staging and interestingly, after we spoke to a local market expert, we staged the home and sold it within 30 days from making that adjustment.” Finally, when you're staging, don't forget the outdoors! especially in a location like Southern California where outdoor entertaining is a "must," outdoor staging helps buyers envision the ways they will eventually use the space. BRINGING THE OUTDOORS IN During the renovation, Melero’s goal was effective integration of the sunny outdoor space with the now-brighter interior. “Our biggest design strategy was in making the kitchen and living space open to the backyard,” said Melero. “We brought in custom made, wooden sliding doors to create a feeling of a home without walls; the large floor to ceiling windows provide plenty of natural light to brighten the modern design throughout the house.” The result is a wall of doors that fold in, creating a seamless transition between the indoors and out. This allows guests to move from the kitchen to the great room to the backyard as if moving through one space - truly ideal for social gatherings of all sizes.

ADDITIONAL ROI

This home went from dusty and tired to bright, light, and oh-so-glamorous. It’s a great example of what can happen when a renovation focuses not just on the house itself, but on fully marrying the property to its setting. • As Melero found out with this home, staging can make a difference in both days on market and return on investment. According to the National Association of Realtors (NAR)’s latest home staging survey, over 97 percent of buyer’s agents say that staging has an effect on their client’s view of the home and more than half of seller’s agents estimate that staging increased the listing’s sale price, sometimes by as much as 20 percent.

WE’VE RENOVATED OUR NAME. SGF Contracting is now Radius Renovation Group. But no worries, our commitment to providing top-quality, renovation project management is still as strong as ever.

SGF Contracting has built a reputation as one of the nation’s premier full-circle investor renovation services. We deliver peace of mind to REIs across the country with our all-encompassing project management processes. We understand (and address) the pain points of renovating properties for flip or cash flow. You can rely on our years of experience and industry insight to renovate your properties at a fast pace, with high-quality, and within a budget to optimize your bottom line.

Christy Murdock Edgar is the Owner of Writing Real Estate. She is a freelance writer and content marketing developer for real estate professionals throughout North America. She may be reached at christy@writingrealestate.com or learn more at

writingrealestate.com.

JOIN OUR CIRCLE TODAY! Visit RadiusRenovationGroup.com, or give us a call at 417.730.9777.

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COVER STORY

AMIT AGGARWAL

REFINING A REAL ESTATE PLATFORM

MYTHEORY ISWHENYOU PROVIDE PLATFORMS TO BANKS, SELLERS, AND BUYERS THATENABLE THEMTO EFFICIENTLY SELL FORECLOSED ASSETS – ORANYASSETS FORTHATMATTER – THENYOUCONTRIBUTE TOTHENEEDS OFTHE COMMUNITYAND TO STABILIZINGTHE MARKET. THE EARLIER YOUCANDOTHAT, THE BETTER.”

High-Tech Real Estate Transactions are Personal for Auction.com Chief Technology Officer Amit Aggarwal

BY CAROLE VANSICKLE ELLIS PHOTOS BY JON ENDOW

AMITAGGARWAL CHIEF TECHNOLOGY OFFICER, AUCTION.COM

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believes, lies in providing the most information at the highest level of verification possible. “If you want to bid on assets with comfort, you need to be confident in the technology that handles that auction process and with the people behind that technology,” he explained. Aggarwal’s ongoing mission revolves around creating better and better systems to assist buyers (often investors) and educate sellers in the processes associated with a home sale at auction, including due diligence, pricing, and setting expectation. He accomplishes that, in part, by way of accessible, high-volume data. “We collect that data in multiple ways,” Aggarwal said. Auction.com’s systems deploy multiple sources of data, including assessor data, multiple listing source (MLS) data, public record, and real estate inspectors’ reports to assemble a “property detail page,” or PDP, that offers users access to a comprehensive view of the property up for auction. “We have copies of the title, property inspections, and other information that you could pull up on your own if you had a team of people working for you or were doing this on your own, on a small scale, full-time,” he said. “With the PDPs, however, new buyers are empowered to get all that data at a central location from a central platform.” That platform, Auction.com, is naturally well-served by its own goal of creating a larger population of active buyers, but so is the real estate investing community. According to a 2017 Harris/RealtyShares survey, 70 percent of Americans believe that investing in real estate is more difficult than investing in other asset classes and two- thirds believe the process is “just too hard.” The result: Only about three in 20 Americans are actively or passively investing in real estate despite three in four believing real estate investing is a good way to make money.

our content to provide better insight and education to every individual involved in the auction process and improve their interactions with each other, not just with us?” KEEPING TRUE, REAL DATAATTHE CORE Like most real estate investors, Aggarwal walks a fine line as he strives to bring the most information and access to all parties involved in real estate auctions. “We’re in the business of providing access to understanding,” he said. “We are constantly saying to ourselves, ‘How can we offer the best experience to the buyer and the seller?’” The answer to this question, Aggarwal

AMIT AGGARWAL JOINED Auction.com as its chief technology officer in late 2017, but the experienced senior information technology (IT) leader had his eye on the needs of the national housing market for more than a decade before the hire. As early as 2005, Aggarwal was watching the residential real estate industry, considering the early signs of what he refers to as “cracks” in the then-booming housing ecosystem and working on a solution. By the time the market melted down in 2007, Aggarwal had been instrumental in the design and implementation of the workflow processes and platforms that served as the underpinning for the foreclosure crisis, including working closely with Fannie Mae and several of the country’s biggest banks and mortgage lenders. “I started my career

5 “Insider” Tips for Investors Using Auction.com

to work and had a platform ready for all the banks and lenders to manage their foreclosure assets when the housing crisis came. That platform was the software used for the majority of those transactions in 2008 and 2009,” he said. Aggarwal took his passion for purifying and refining technology, processes, and real estate transactions with him when he joined Auction. com. “The platform here is already a great one for auctions,” he observed, “but we’re not stopping with that. Every day, my goal is for my team and myself to continue to innovate. How can I push the boundaries and create a better experience for buyers? What can I change to make my mobile platform more accessible? How can we expand

buy the property, you will almost certainly become responsible for these debts, and they can eat into your profits or even eliminate them entirely.”

“Real estate investing should not be difficult, and it should not be scary,” insists Amit Aggarwal. While his contribution to making the bidding aspect of the process easy lies mainly on the IT side of the process, he had five suggestions for real estate investors using Auction.com’s platform for buying real estate. 1. Knowwhat you’re buying “Virtually any type of property can be sold at auction, so be sure to conduct your due diligence on a property,” he said. “Anyone can attend an auction in person or online, but if you win the bid you will need to be prepared to make the purchase.” Aggarwal noted that Auction.com hosts an onsite presence for assisting with day-of needs and questions, although the scope of information available varies depending on state and county regulations. Most auctions require payment the same day the buyer wins the bid, although some states permit the buyer to make a deposit and then pay the following day. 3. Look for liens “You must research all the debt on a property before you bid!” Aggarwal emphasized. “When you 2. Prepare for success in advance

4. Remember you are buying “as-is”

Although Auction.com makes it possible to bid on properties from anywhere in the world, you are still committing to buy the property in as-is condition if you win the bid. This means you must pay regardless of the condition of the property. Enlist the help of a local agent or contact to help you confirm the property is standing and appears to be in the condition stated in the online description but remember you cannot disturb any residents. 5. Reconfirmeverything the day of auction. Remember lots of properties never make it to the auction block because the borrower manages to postpone the auction, pay off the debt, or modify their loan. Sometimes, lenders or owners simply fail to get their paperwork in on time. “Check on your target properties before the auction starts and remember that Auction.com’s mobile app can keep you abreast of these changes,” said Aggarwal.

providing the software for banks and lenders to manage foreclosures,” said Aggarwal. “My theory is when you provide platforms to them to efficiently sell foreclosed assets – or any assets for that matter – then you contribute [to meeting] the needs of the community and to stabilizing the market. The earlier you can do that, the better.” He recalled the realization that "the industry was going to shift" in early 2005 and the huge import of developing software to help lenders navigate that shift by, in many cases, selling off huge portfolios of distressed assets quickly. “We went banks, sellers, and buyers that enable

Aggarwal works with team members to make the investing process more accessible across the board. Only about three in 20 Americans are actively or passively investing in real estate despite three in four believing it is a good way to make money (Harris/Realty Shares).

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Build Wealth in Real Estate

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Think Realty Conference & Expo Mariott Irvine Spectrum • Irvine California

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Aggarwal officially spearheads the expansion of Auction.com's technological infrastructure and oversees the company's rapidly growing technology team.

If Aggarwal’s team at Auction.com can help make the real estate investing sector less intimidating for the many Americans who believe real estate could hold financial answers for their families but, simultaneously, believe the sector is out of their reach, Aggarwal believes this would be the most important thing he could accomplish at the company. “To that end, we’re continuously investing in new technology, taking that pure real estate transaction, the auction, and making it more mature and advanced, adding in an education factor for new and existing users looking to learn more and more about our space and their markets. The only way for us to thrive and for our users to thrive is making the platform one that provides the education necessary to achieve an easy, successful, replicable transaction,” he said. THE EVOLUTION OFTHE THIRD-PARTY SALE While Auction.com has long been described as “the eBay of real estate” by industry leaders (Aggarwal noted wryly the description is "somewhat limited" in comparison to the scope of the company's actual services and offerings), the company holds a firm presence at offline auctions as well

as online events. However, recent evolution of the auction process in Ohio could ensconce the company even more firmly in the digital auction space. In late May 2016, the Ohio legislature passed new provisions to its foreclosure laws to permit expedited foreclosures and sales on vacant and abandoned residential properties. At the same time, the state altered its policy on remote bidding and online auctions to allow all counties in Ohio to make their foreclosure auctions accessible online. “Our team works with local private selling officers (PSOs) who have permission through sheriffs and judges to use Auction.com for those online auctions. We were able to essentially digitize the assets for sale and make them available to users all around the world,” said Aggarwal proudly. “You do not have to have a person sitting in each of the 88 counties in Ohio holding an auction in order to bid on the properties for sale in those auctions anymore. You can be anywhere in the country or the world, place a bid, and win the auction,” he added, emphasizing, as always, “That helps sell the assets sooner and stabilize the market faster.” In fact, the first sale Auction.com transacted in Ohio was won by an investor out of the country at the time of

auction. “As long as an investor has access to internet and is able to pay, then that person is ready to bid,” said George Lane, Auction.com’s vice president of legal and business affairs. “If you can buy legally at auction in the United States, then you can buy legally at an online auction from anywhere in the world,” he said. Lane and Aggarwal are both hopeful that Ohio’s ongoing success with online auctions will spur other states toward digitizing their auction processes. “The overall limitation of the process of requiring people to come and be physically present in the state, physically stand in front of the court house and wait there, is limiting to the entire process,” said Lane. “The flexibility that comes to buyers and sellers with online auctions enables communities to stabilize,” added Aggarwal. “This stabilization means these assets are turned back into homes and are not causing blight for an extended period of time. It’s in everyone’s best interest to stabilize these assets, and it’s my mission to bring all buyers, including investors, the stabilizing factors in this scenario, together with those auction properties.” •

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Carole VanSickle Ellis is the editor of Think Realty Magazine. She can be reached at cellis@thinkrealty.com.

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TECHNOLOGY

REAL ESTATE TECH

Cognitive Collaboration TECHNOLOGY PLUS INTUITION BEATS TECHNOLOGY EVERY TIME.

by Tyler VanWinkle

echnology is a tool, and you need the right tool for the job. Fail in this, and you fail yourself, your company, your entrepreneurial dream, and, per- haps most devastatingly on a practical level, your bottom line. Across modern industries, business leaders have spent the last two decades overcompensating for breaking elec- tronic developments and permitting technology to lead innovation instead of innovating in order to lead technologi- cal evolution. You make the mistake of placing yourself in the unfair and highly limited position of believing technolo- gy will provide all the answers to your problems, if you compel your team to be led by the computer . In real estate, this may manifest in a variety of ways: • We may try to force our portfolios into management systems too large or too small to fit them; T

• We might attempt to redefine success- ful strategies or performances based solely on metrics-based computer solutions rather than evaluating the metrics themselves: • We sometimes congratulate our- selves on avoiding “shiny object syndrome” in our investment tactics all while creating unnecessary complications on the logistical side by constantly “upgrading” to new systems and software. The key to the successful use of tech- nology in real estate is the achievement of cognitive collaboration where data and intuition come together. Human strategic guidance combined with the tactical acuity of a computer will always beat any other combination. To this end, before working on a tech-solvable issue, ask yourself these questions:

• What are my goals? • What do I need to learn (and how will I best learn it)? • What is my hypothesis? • What data do I need? • Where/what is my ROI? • What path do I follow to reach my desired destination or solution? Sure, a lot of companies make da- ta-based decisions because these decisions generally are lower-risk than intuitive ones. However, the ability to combine intuition, creativity, and data brings with it the potential for exponential growth, groundbreaking strategy, and the creative problem-solving talents characteristic of every successful real estate investor. •

Tyler VanWinkle is the CMIO for Affinity Worldwide and a partner of Rivet, a full- service technology and creative agency in Kansas City, Missouri. Learn more at wearerivet.com.

24 | think realty magazine :: july 2018

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TECHNOLOGY

DIRECT DATA DEALS

Exposing the Human Element in “Direct-Data” Real Estate Sites ALGORITHMS ALONE WILL NEVER BE ENOUGH.

by Rosario Terracciano

out everything that looks like a diamond in the rough, but some of those “diamonds” will be congealed chunks of coal that never quite made it to gemstone status. No algorithm can filter out 100 percent of the imposters, so true automation for you means your service provider must include the human element. Think about it: There are direct data feeds out there that refresh every few seconds and are up- dated constantly in real time. At any given time just in my company’s geography alone, there are roughly 40,000 homes on the market. Even with a well-defined algo- rithm in place, hundreds of those 40,000 properties will get through the filter, and you know it is realistically impossible for every one of those properties to actually be a good deal. On the other hand, if the algorithmic filters are tightened, some good deals will be missed. Algorithms can only take you so far. You still need that human element evaluating and, ideally, managing the logistics of your deals.

f you are like most real estate investors, you spend quite a bit

The decision is yours: Will you be that human element, or will you select a team to perform those processes for you? •

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of your time searching for deals. You probably also spend quite a bit of your time fielding offers from various service providers who are more than willing to find those deals for you. Unfortunately, most investors find that even the most dedicated opportunity-seeking services leave them still running around, spend- ing time in the field vetting potential deals, evaluating those deals, writing and submitting offers, then babysitting those offers until finally, one deal gets done. Are these investors just control freaks who can’t quite let go? Absolutely not. But they do have a fatal flaw in their perspective: They think complete automation is the goal. Now, sure, automation has tremendous value, but it has limits. A truly full-service real estate company will not only boast the best algorithms and the most up-to- date data-scraping and -delivery services. That company will also boast a decidedly human factor, and here’s why:

ITEMS THAT REQUIRE MANUAL INVOLVEMENT FROM A HUMAN ELEMENT

• Detailed opportunity analysis, including inspections, renovation budgets and title searches • Offer submission and follow-up • Fact-checking • Negotiations • Closings

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Rosario Terracciano is the co-founder and CEO at Clickinvest, a real estate acquisition platform and Illinois-licensed real estate broker corporation for single- family investors. Learn more about direct-data real estate investing at Clickinvest.com.

Algorithms are essentially giant filters. A filter can pull

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26 | think realty magazine :: july 2018

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RESOURCES

DUE DILIGENCE

10HardQuestions toAsk Before Investing in a Commercial PartnershipDeal IDENTIFY STRATEGIC RISKS & REWARDS BEFORE YOU INVEST.

by Salvatore Buscemi

eal estate has always been regarded as an equal-opportunity wealth creator. However, caveat emptor: Real estate historically has been full of scams. Based on my experience managing dis- tressed real estate funds, that fear of being deceived and losing it all is the number one reason why smaller investors don’t invest in commercial partnerships. These 10 essential questions will teach you how to clearly identify the strategic risks and rewards associated with any partnership deal. QUESTION #1 HOW MUCH IS THE OPERATOR (THE PERSON MANAGING THE DEAL) INVESTING PERSONALLY? When somebody comes to you pro- moting an investment opportunity, you should ask them directly: How much is their stake in the deal? They should have a meaningful, personal stake in the deal. Although this is not a rule of law, espe- cially if this is your operator’s first deal they should put some meaningful skin in the game because the risks are quite high that they will make mistakes. Why it matters: If the operators don’t R

have a stake in the deal and things go wrong, they are likely to walk away from it.

commercial real estate deal: One is a refi- nance, and the other one is a sale. Why it matters: You should partner only with an investment group that is either capable of successfully closing a sale or qualified to get the property refinanced to get its investors taken out. QUESTION #4 HOW MANY SMALLER INVESTORS DO THEY HAVE? When managers or operators say, "Well, we were taking $50,000 as a min- imum, but I'll let you in for $10,000," that usually means that they are desper- ate. They may be raising a lot of money

QUESTION #2 IS THERE A HUGE UPFRONT FEE OR LOAD? Never take your eyes off the fees. Fees should be considered as imagined, meaning they are paid after the investment process has begun. If the fees come off your investment up front – for example, they take 10 percent off the top of a $1,000 investment – that is a bad deal for you. You will start out with a $900 investment instead of your original $1,000! Why it matters: Sophisticated, experi- enced operators know that fees structured as “a load” or taken up front are not good for investors or investments. QUESTION #3 WHAT IS THE EXIT STRATEGY? When you ask this question, you are asking, “How will I get out of this invest- ment?” It is not an unreasonable question. Do not invest in any real estate funds that present no clear-cut exit strategies for their investors. There are only two ways investors can get taken out of any

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Salvatore Buscemi is the co-founder of Dandrew Partners, LLC, a boutique real estate investment bank, founder and CEO of The Commercial Investor, and

co-founder of the Association of Capital Placement Agents for Real Estate (ACPARE), the industry’s leading accreditation agency for buy-side real estate professions. Learn more about raising money credibly and correctly without looking foolish the first time by downloading your own done-for-you private investor pitchbook by going to www.TheCommercialPitchbook.com.

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TECHNOLOGY

LEGAL DOCS

You invest. We protect. THERE IS AGUARD FOR YOU

The Online Paperwork Evolution, Simplified at Last TERABYTES OF DATA HAVE REPLACED PILES OF LEGAL DOCUMENTS IN REAL ESTATE.

by Linda Liberatore

egal document preparation, legal research, and document review grow more sophisticated daily due to the rising abundance of data. In the last two years, the amount of legal data available has tripled, and with it, the volume of search and translation tools has risen as well. That growth includes the arrival of artificial intelligence in many legal documents, an emergence that leaves many investors scrambling to understand the high-speed evolution of legal documentation and the internet. The power of AI with legal documents is not in replacing the human to structure the deal but instead empowering a legal representative or a real estate investor (or both) to be armed with more information faster. For example, a program skilled in identifying and illuminating the possibility of conflicting content of phrases to be sure the intent and purpose is agreed upon by all parties, can prevent closing-table disputes or the failure of a creative financing agreement like a lease-option deal. L 3 SPECIFIC EXAMPLES 1. DUE DILIGENCE AI is making strides in the due diligence phrase to research compre- hensive and extensive contract analysis. This enables firms to review faster and

USES OF AI IN THE LEGAL FIELD INCLUDE DUE DILIGENCE, INTELLECTUAL PROPERTY, PREDICTIVE TECHNOLOGY "Artificial Intelligence" is the term used to describe how computers can perform tasks normally viewed as requiring human intelligence, such as recognizing speech and objects, making decisions based on data, and translating languages. AI mimics certain operations of the human mind. "Machine learning" is an application of AI in which computers use algorithms (rules) embodied in software to learn from data and adapt with experience.

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A "neural network" is a system of hardware or software patterned after the operations of neurons in the human brain.

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track deal points from previous deals. It allows for managing the compliance and regulatory issues. Working with Humans: Together, humans and AI fill gaps that neither alone can fill and reduce risk of conflicts and omissions along with the number of reviewers necessary for each document. This reduces pa- perwork by improving efficiency when customizing template-based legal doc- uments, something that most law firms and real estate investors do regularly. 2. PERFORMANCE DATA EXTRACTION & ANALYSIS Imagine the incredible impact of taking seas of documents that legal associates are

drowning in and extracting key data points and performance indicators. Working with Humans: Use AI software tools with the legal team to identify compliance issues and extract current tenant rents, mainte- nance costs, expiration dates. Use AI tools set to your specific parameters to uncover hidden costs, maximize revenues, and optimize overall portfolio

Insure multiple LLCs, trusts and corporations under one schedule

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Linda Liberatore is the founder and CEO of Secure Pay One and a Think Realty Coach. She may be reached at lindal@securepayone.com, and her coaching materials may be viewed online at ThinkRealty.com/Linda.

National Real Estate Insurance Group is the nation’s leading agency offering coverage options for real estate investors across the country. Our lineup of products includes: REIGuard™, LandlordGuard, PMGuard, TurnkeyGuard, LenderGuard, and CommercialGuard.

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