All Forum Posts by: Kathy Fettke

Land is tricky. It can take years to get entitlements. And sometimes it never gets approved. Most banks and lenders won't touch land for that reason. If you're not experienced with land, partner with someone who is. Don't just take advice from the seller- they obviously have ulterior motives.

Hi Jerry,

Great question. I think what Mike H was saying is that he could find deals in the same neighborhoods for 4-8% better returns than we are getting. If that's the case, that's fantastic for him. I do know that the two companies we were recommending do a very thorough renovation, so that needs to be calculated into the equation. Our investors want their rental homes to be in like-new condition upon purchase. They don't want issues.

Obviously we are not looking for properties that net 4-8% or we'd stick with California. When going out of state, returns need to be a minimum of 9% and often they are much higher than that (like the OH property I just bought for $65K that rents for $1100).

So, to be clear here.... I am not actually a big fan of Chicago properties and we haven't actually promoted the area for some time. The taxes and landlord laws are not in the favor of investors.

However, several years ago we did promote a turn-key operation South of Chicago for a short period of time because we liked the quality of their work. Mike H contacted me at that time with concern that we were in rough areas. I went to check it out myself, wondering if my staff had made a mistake. I saw no signs of graffiti, overgrown grass, bars on windows, punks on the street, or anything that would indicate a rough area. On the contrary, I saw nice cars, high-end shopping centers and businesses. I'm not saying Mike H is wrong. I just am wondering if maybe the area is like Oakland, CA where one street is great and 5 minutes away you need police protection. You have to know an area down to street level.

This is one of the properties Mike H warned me about. It's in South Holland, and certainly doesn't look "rough." An investor paid $135,000 for it and is getting $1500/mo in rent. It was like a new home after renovation. Every member who bought through this group has raved about their investment.

The only complaint we've had is that our members wanted to buy more but the company decided to only work with several NY hedge funds who wanted all their inventory. That is a scenario many turn-key rental property providers found themselves in these past years.

So... if these deals are as awful as Mike H says, why did these hedge funds want all the inventory? (Sure, you could say not all hedge funds know what they're doing...)

Anyway, to try to make up for the demand we had within our network for Chicago properties, we interviewed other companies and found one that also had excellent renovations but they operate South of Chicago in rougher neighborhoods. I had my concerns about this, but decided that as long as we disclose that the neighborhood is C class, then the investor can decide if they want it.

Here's a picture of one the duplexes this second group offers:

An investor paid $162K after a very complete renovation with everything updated to "like-new" condition, and is getting $2000/mo in rent.

Like I said, our director of market operations is from Chicago and actually invests in these neighborhoods, but he admits it's not for everyone. I agree! It's actually not for me. I like A neighborhoods.

Hi Mike,

You're right. The Chicago properties are in C neighborhoods. This is disclosed, and is only recommended to investors looking for that. Ron Manabat is our Director of Operations. He's from Chicago, and those are the very neighborhoods he invests in - successfully. People who buy there are not new to the game, but rather VERY sophisticated and know what they're doing. We have not received a single complaint from those who bought - but rather have had RAVE reviews from people waiting in line for more. Don't you think we'd have a lot of hate mail if people were getting screwed, rather than an A+ rating on BBB?

I understand you are trying to protect people by these posts. I just wish you looked a little further into what we're doing before judging us. I personally buy from the very vendors we recommend. I just bought a property in Ohio in an A neighborhood for $65,000 after all rehab, and it rents for $900 per month. What's not to like about that? Not one vacancy yet. One of our newest members just bought a duplex in the same A neighborhood for $85,000 that rents for $1200/month. That's not bad for having to pay a company to do the work for you.

I hope you join us on a tour sometime to really see what we're doing. And I didn't even mention the commercial properties that we are getting our investors for as low as 10 cents on the dollar... Those deals are so good that I dare not say more on this forum or I might get accused of something else. :-)

Hi everyone,

This is Kathy Fettke, CEO of Real Wealth Network. Thanks for sharing your thoughts - it's always interesting to hear what people think of me. :-)

I just want to reply with a few questions:

What if you live in a high price coastal market and want to buy cash flow property? How do you go about it? Would it be helpful to get advice from someone who's successfully done what you're trying to do? Would you get value from being a member of a group who has the "inside scoop" on who you can trust in this business and who you should avoid?

I'm from California, so I had to learn how to invest out of state if I wanted to build a cash flowing real estate portfolio. These are the questions I had when I got started. And believe me, I learned the hard way - this industry is filled with people who like to take advantage of Californians!

So since 2003, I made it my goal to find the people we could trust to help us reach our investing goals. I created a real estate investment club, Real Wealth Network, a group of like-minded people who want to learn from each other and get support in the process. We have a lot more power when there's 14,000 of us instead of trying to go it alone!

Mike H, I appreciate your feedback and I agree that if I lived where you lived, it would be easier for me to find deals myself and be able to cut out the "middle man." But since I live far away, I have to have lots of "middle men" to help me find deals, renovate them, and manage them. Do I have to pay more for those services than if I were doing it myself? Of course, but that's the price I pay for living in a non-cash flowing marketplace.

If I tried to do it myself, I'd be paying for lots of flights and hotel rooms, and of course the time spent trying to find the deals, find the crews, find the tenants, etc... all that costs money so it really wouldn't be cheaper for me to do it myself when investing out of state. I'd rather pay more for a local expert to do the work for me - and do it better than I could.

This is also how our busy Silicon Valley and Hollywood members feel. They don't have the time to do it themselves and will happily pay an expert to help them. In fact, our podcast, The Real Wealth Show, is now broadcast in 27 countries, so it's not just Californians we are helping now.

Our system is not for everyone. But for our 14,000 members, we are the solution they've been looking for. Consider this - we send our members to a wholesaler or property manager we've vetted in Indianapolis or Houston or any city we see has potential. If that wholesaler or property manager does not offer the service they promised, we will hear about it. And we will share that information with our database - and we will no longer work with that team. So you see, over time, we have a list of people we really trust who we know take care of our members.

This is the value of a network. Again, not for everyone, but truly valuable to those who need it. And as for the comment that I'm not "on the hook" for anything - are you kidding me? Imagine the pressure of so many investors coming to me for advice. If I screw up, they lose money, and my name is mud. Obviously we wouldn't be doubling our membership every year if we weren't do something right. :-)

Looking forward to more feedback on how we're doing - we're always looking to improve. Thanks for listening!