Barb Van Stensel

I've been working these past four weeks on materials, concepts, marketing to discuss with investors about investing in real estate. We have a strong registration for it but my topics are pretty out there in left field like:

• Don't get caught with your pants down when investing in real estate
• What's your ROI?
• How to buy real estate without slitting your throat
• Forum: How to Size up an Investment
• Do I Buy and Hold or Do I Buy and Sell?

So with that in mind and only a couple of hours away till the event - I'm finishing up on the production of the written material and thinking about some of the sayings that I included in the passout that I created. Let me share some of them.....

"Give me five minutes, and I can predict your financial future for the rest of your life." (this is on the front cover)

"Rich people believe that they can have their cake and eat it too; middle class people believe cake is too rich and only take a small piece. Poor people don't believe they deserve cake, buy a donut, stare at the hole and wonder why they have nothing."

"The secret to success it not to try to avoid or get rid of, or shrink form your problems; the secret is to grow yourself so that you are bigger than your problems."

"A seed, dropped into the ground, springs into activity, and in the act of living produces a hundred more seeds; life, by living, multiplies itself. It is forever becoming more. It must do so, if it continues to be at all."

"You are to become a creator, not a competitor. You are going to get what you want, but in such a way that when you get it every other person whom you affect will have more than he has now."

My challenge: "Thinking in that Certain Way: It is not enough that you should have a general desire for wealth "to do good with." Everybody has that desire.

It is not enough that you should have a wish to travel, see things, live more, etc. Everybody has those desires also. If you were going to send a wireless message to a friend, you would not send the letters of the alphabet in their order and let him construct the message for himself, nor would you take words at random from the dictionary. You would send a coherent sentence, one which meant something.

Go over your desires and have a clear mental picture of it as if you wish to look when you get it. That clear mental picture you must have continually in mind. As the sailor has in mind the port towards which he is sailing the ship, you must keep your face toward it all the time. You must no more lose sight of it than the helmsman loses sight of the compass.. - Mary Gersten"

So what's your goal?

I list and sell a good portion of investment properties but have realized that a lot of first time buyers are purchasing a 2-4 unit building instead of a condo or a home. This Forum is to help those understand how to manage, identify the right property, proper maintenance of an investment property.

Bridgeview Bank Group at 4553 N. Lincoln Avenue, Chicago, IL will have it's doors open this coming Wednesday at 6:30 p.m. for about one hour of questions and answers on how to manage, identify the right property, learn how to calculate your debt service ratio, and how to run the numbers as tight as you can when you invest in a 2-4 unit.

Barb Van Stensel, third generation in a family of real estate investors, will lend insight as to what to look for when you looking for that ideal property as well as handling tenant issues and maintenance problems.

Come join Rory Fanning, Asa Luke of Bridgeview Bank Group and Barb Van from Keller Williams Lincoln Square - for an event that will open your eyes and tune you in to investing. Refreshments and a light menu will also be served.

In my family, that request came once. Second time around - we were sitting in the dining room, in chairs, in the corners and could not move. Today's language - it was considered a "time out". That time out could be anywhere from 2 -4 hours. Move and I mean change a finger position and our time out started all over again!

What's this got to do about real estate? Plenty. I've been trying to get one of my clients to empty their house out for the last four weeks. They have moved but left the stuff that doesn't allow the imagination to flow and hence - I'm wasting my time, money and energies on trying to get an offer when the buyer's can't see beyond your "leftovers".

If I could, I would put you all in corners and make you realize what you are doing by delaying in your actions. Market time, lack of enthusiasm for the property because of your stuff just sitting in corners, holes in walls that need to be patched, pictures that draw attention away from the property. All this is costing you in price, money, market time. Granted this one particular property will have to be rented out - so at what point does an agent move on?

What this agent has learned is - do not take a listing again where the client isn't committed to getting the house sold. If you take a listing and they you find out that they aren't committed to selling ...... cancel the listing.

I just reviewed an appraisal from two years ago, at the request of the bank. What I found were inconsistencies, inadequate or non-confirmed information. The interesting part was that within the debt service ratio where the bank reviews the expenses, the appraiser stated "free from the city" for the water service! While it is a little "oops" that "oops" runs the owner $80/month and that figure wasn't calculated into the expense portion for the qualification of the property. At no time in this report, did the appraiser state that the rents for the building were under market rent due to the size, condition and/or location. Yet, while that might not play on something, the owners didn't know that they were getting below market rents for 1,900 square feet in prime Chicago neighborhood! In fact the rents were 50% of what they should have been.

So what does this have to do with anything? When you are the listing agent and the valuation may come in low , the buyer has the right to see the appraisal as they have paid for it. You have one chance to appeal that value. Carefully review the information as there may be "oops" and an underwriter in tim-buck-two in another state may not know this information.

In Chicago, people are thinking about investing in the short sales, fast track properties, estate properties for their future. It's not just about looking at the location of the building, but the style, the appeal, the numbers for the debt service ratio for the property, to the current leases, their terms and the anticipated rents in the future based upon the market and the location of the property.

Buy & Hold:

Market Value $
Discount/Profit %
Purchase Price $

Amount Financed (-)

Down Payment (=)
Cost of Purchase (COP) (+)
Cost of Repair (COR) (+)

Total Investment (=)

Net Operating Income (NOI) $
Principle & Interest (-)

Cash Flow Monthly/Annually

Buy & Sell:

After Repair Value (APV) $
Fast Sell Factor (-)


Fast After Repair Value (FARV) $
Discount/Profit (-)
Cost of Purchase (COP) (-)
Cost of Repair (COR) (-)
Carrying Costs (CC) (-)
Cost of Sale (COS) (-)

Purchase Price $
Amount Financed (-)

Total Investment $

Want to learn more? I'm teaching a class and holding a forum on this topic, August 19th here in Chicago at 6:30 at 4553 N. Lincoln Avenue at Bridgeview Bank Group.

Questions: BarbVan@kw.com

P.S. Paperwork is one thing ..... understanding what to look for in a building is another thing! Hope to see you there.

We just got the news that sales were down 29% for the second quarter. Now, one can say this is just awlful or start looking at the fact that homes are no longer selling before the sign gets put in the ground and that now and hopefully, we have learned our lessons that 100% financing just doesn't cut it anymore. With realistic and responsible financing for homes, and even though sales are down, the balance will come back into place.

On the other side of the coin, a lot of real estate agents and Realtors have dropped out of the industry because (a) they couldn't afford it; (b) it was too hard; (c) they liked the easy street where the consumer was held hostage and they had control; (d) they just didn't apply themselves. I have some good friends that did care, that were producers, that did apply themselves but they needed to feed their families and the hours are longer, the stress is unreal at times, and from what I have been told - real estate is one of the highest rates for divorce because of all the demands.

So is there another side to the coin? You betcha! This is the best time for those who have the ability to be disciplined to go knock on doors, to be local (neighborhood), to be consistent, to apply and be the problem solver for so many who need those skills that some of us have learned to obtain over the years.

I'm sitting here working on an analysis of a home whereby the seller has been in the home for over 25 years. The electrical won't pass for the amount of outlets that are required for today. The roof is worn out and showing signs of moisture. A couple of the lath and plaster walls are crumbling and one wall is bloated. The heating system is dated and has gas space wall units. Work was done on the house but not by someone professional or creditable. The curb appeal is average and could be heightened by some paint, flowers.

Most would say, price it for it's condition. Yup, just do it! But is this fair to the seller? Shouldn't the seller be told that they have lived their for so long that they have adjusted to the fact that their fuses don't hold and they know which outlets to use and when not to use others. Don't plug in the hair dryer with the bathroom light on or it will blow the fuse after 10 seconds. Don't run the vacuum when the small window air unit is running and make sure that the lights are out in the dining room!

The seller has adjusted to the inconveniences of today's demands and knows how to deal with the inadequacies of the home. So, shouldn't this be put down on a piece of paper so that the new buyer knows how to operate the house without the four fuses blowing? Should the house be priced accordingly to reflect these conditions? What about getting quotes for the seller(s) to show them what the costs will be from the buyer vs getting the home up to snuff? If they choose not to get the home up to snuff, then one would factor in the issue of longer marketing time. That being the case, then what is the seller's motivation and are they motivated to sell in today's marketplace?

So have you adjusted to the lifestyle of your house? Are you asking the next owner to adjust to the inadequacies that you've learned to adjust to? Are you willing to disclose or are you thinking about letting them find out on their own, if the home inspector doesn't catch them?

Let me put it to you another way: What if the seller of your next home had the same thoughts? Are you going to be just as excited about that next move?

This past Thursday, I met with a widow who lost her husband to a long-term illness five months ago. They refinanced their building in the same monetary increments and it was obvious that it was for his medical expenses. She sat slumped in the chair, her clothes were pressed, her hair was awesome, she had a smile that appeared amidst the tears that rolled down her cheeks. Her rents are low and the mortgage amount even before the medical expenses, was high but obviously the husband was working before the illness. My heart went out to her as it reminded me of the women my father would tell me that he would talk to when he was appraising and even selling real estate. Their husbands died. Their husbands handled the finances for the family. They didn't know where to look or who to reach out to. My father, the appraiser and Realtor, would place the call to Angie, his secretary, who then placed a call to my mother letting her know that my father had canceled all his appointments (again) for the rest of the day and would be late for dinner. When my father would come home, he'd gather us together and tell us what he spent doing for the day. At one point, my father sat my sister and I down and talked to us that he didn't want us to be like those women. He wanted us to understand, how to survive in today's world. So, my sister and I spent time with my father and learned alot about business, how to repair toilets, replace disposals, understand financing, what a mortgage is, what it is meant for and how it can be abused.

I am still awaiting to remeet with this widow who is behind in her mortgage payment. She has alot of papers that I need to look and sift through but I already have a survival plan for her. See, it's something my Dad taught my sister and I to do -step outside of the box, look at three alternative ways to handle the situation and be prepared to act on one of them, knowing the results of the actions that we had in mind.

Before you jump the gun and think this is about selling her house - it isn't. It's about teaching those who don't know how to handle their finances because of such a situation. This lady is hispanic and the deliquency letters came to her in english. It reminds me of the old days when people didn't know how to read or write. They didn't know how to sign their name but put an "X" by your name and that was as good as signing it! Those people way back when in the "good ol' days" trust whomever told them to put your "x" and it's yours. The same is not true for today. She was smart and went to her bank for help. Not the bank that holds the mortgage but her bank.

There are options like negotiating with the bank on her behalf to put the oustanding monies on the tail end of the loan because of the death of her husband, her provider. Then there's the issues of looking at the leases for the property, are they month to month (and they are) and rents need to be adjusted according to the market and the bank needs to see this as well. Her real estate taxes: she is a senior and hasn't claimed the senior freeze or exemption: why not? The escrow is twice the amount it should be. Wanna know why? She wasn't aware that she needed to renew the insurance for her building (right when he passed away) and so now her insurance premium is three times the amount it should be. So, can she get out of this mess and stay in the building that she and her husband have shared over the years? It's possible. If not, one could consider converting the building to condos and selling off so that she can remain in the building. Remember, it's about her. It's about highest and best use of the building. It's about her future and financial security. It's about you caring about them.

Yesterday, I received an "informational" fax from our attorney re the sale of my listing. This fax was from the buyer's attorney. Know this that that the subject property was sold as a "total gut rehab" and sold $100K below the lowest sale (even short sales). In included in the pricing the cost to carry the builidng for four months while work was being done, the loss of income, the cost of repairs, the building permits, their time, and they were rewarded with $120K - $150 in appreciation for having to put this kind of money out. The appreciation is a low conservative price. I work with alot of estates and this property is just that, an estate. The buyer has the loan approved with the loan number, all they require is the appraisal, the survey, title ... we can close.

This is how deals can get killed.

In his letter, this attorney states (a) "approval is subject to whatever repairs which buyers may request within 10 business days of the contract date."; mortgage contingency is modified to provide that if mortgage approval is not obtained by the approval date, if no request for extension (!) of said date has been made of Buyer, then the deal is dead!; (c) If the property is determiend to be located in a flood plain, buyer shall have the right to cancel this contract"

Now we've all read these letters and right away about 80% of us would say "Ah, who died and left him boss?" Recognize when you read such a letter that you should seek clarification from the Realtor as to "what's going on?" to your clients attorney.

Learn from this letter and don't panic. What made me laugh was "if the property to determinted to be in a flood plain ..." All of Chicago is in a flood plain! So the deal would be dead and most would be in a panic Me, I'm like - ah, somebody got a "C" in a class some where and here's why: if a comma is put in the wrong place, that could change the whole entire meaning of a sentence, a paragraph! That drove me crazy when I drafted opinions at Mayer, Brown & Platt here in Chicago. I would have my work reviewed and the attorney would hand me back 6 pages and would say "You miss a comma." I would ask him "Where". He would say - "you made the mistake, find it and change it because you've changed the entire meaning." What is interpretted is that this attorney should have said "should flood insurance be required for this property because of it's "Zone" in the flood plain, buyer has the option to terminate said contract.

So, I ask that while most of Chicago is in Flood Zone "C" in the Flood Plain here in Chicago, I would like to draw it to the attention of attorneys that you could have cost your client a deal because you sent out a form letter of introduction with your revised terms on it and where our attorney doesn't want to deal with you because you didn't even look at the file before you wrote your letter and they send it my way for questioning: "Do we move forward?"

What would you do? I laughed, called the other Realtor told her what was said in the letter, and she was the one that got upset because a "form letter" or being "average" as a Realtor can cost you because how you portray yourself.

I have a girlfriend who is in the lending industry and our friendship goes way back to when she met me 12 or 13 years ago when her boss messed up a file for one of my investors. This friend has taught me about financing, the options, alerts me when new programs are coming into place, what she thinks is an "awg" in financing and "hey, Barbie take a look at this new program!" I'm telling you about her and our relationship as friends and as one of my lenders because we've always made a pack to "agree to disagree". She is one of the top producing ladies in Illinois for financing and she got there by being honest. She has shown honesty to her clients, my clients, to Realtors and that's what makes her so outstanding and a strong solid friend of mine.

The reason why I'm telling you about her is because lately there's been alot of issues that I have seen with agents about not being honest with their clients. Here, let me ask you some questions:

1. When you go to a listing presentation, is your listing presentation about your company, what they can do for the seller, how great they are or do you give them the facts? Honestly.
2. When you look at their home, do you look at it through the eyes of an appraiser, the buyer, the home inspector or do you look at it through the eyes of the seller? Honestly.
3. When you see issues that could or would hurt the marketability of the property, do you bring them out to the seller's attention or hope that it goes away? Honestly.
4. When you look at their home from the street, do you compare it to the rest of the homes on the street to make sure that it has at least the top 10% of curb appeal of those homes on the block? Honestly.
5. Do you have a business plan? Honestly.
6. Is your marketing strategy the same for every listing that you take? Honestly.
7. Have you ever thought about getting the marketing material prepared, ready to go, fliers done, before the property hits the market? Honestly.
8. You do an open house and you put the signs out 30 minutes before the open house. Do you really think 30 minutes notice is fair to the seller when they are paying you to market their home? Honestly.
9. Have you prepared a Seller's Net Sheet at the time of the listing presentation that represents about every nickel and dime that you can estimate for the seller so they have an idea or ballpark of what they would net at three selling prices? Honestly.
10. Do you care? Honestly.

One of the campaigns I am on is working on spreading the concept/actions of Realtors to understand that they need to be honest with themselves and with their clients. This is a pledge my friend and I have made to each other, to support one another and to make a difference for the consumers. Honestly.