1

Inside this Issue

Welcome to the Summer 2003 issue of the S.E.C. Real Estate Observer. As summer fades, we turn our attention from thoughts of vacations and outdoor activities to the challenge and the fun of making money in our chosen profession, creative real estate. This issue of the S.E.C. Observer will assist you in meeting your goals. It presents new ideas, formulas, and a little history of those who have paved the way for our current endeavors. The objective of The Observer is to provide information and ideas that will assist the reader in becoming a more effective real estate professional and/or real estate investor. In addition to the articles, there is timely information on educational opportunities you will find nowhere else in the country. We hope that you will enjoy The Observer and that it serves you well in your endeavors. Virgil Opfer, S.E.C. Editor The S.E.C. Real Estate Observer

2

I. Table of Contents Volume 2 - Issue 3 – Summer 2003

S.E.C. President’s Message

"Summertime and the livin' is..." Mark A. Johnson, S.E.C., CCIM

Feature Articles

"The G5 Partnership Concept" Virgil Opfer, S.E.C.

"Risk versus Profit…How much is enough?" Mark Johnson, S.E.C.

"Getting From "Here to There" Jim Brondino, S.E.C.

Society Columns

"Environmental Insurance - Will It Help You Make Money?" Vicki Yeomans-Klien, S.E.C.

"Investment Fundamentals" Chester W. Allen, S.E.C.

"My Mentor Told Me" Bill Stonaker, S.E.C., CCIM

Ideas and Formulas

"Trust Deed Split Provision" Virgil Opfer, S.E.C.

"You Are Own Best Client" Phil Corso, S.E.C.

"What Do I Tell Him?" Virgil Opfer, S.E.C.

In the Spotlight

Margaret Sedenquist, S.E.C. A Biography

Roy R. Moore, S.E.C. A Biography

The S.E.C. History Files

"The KISS Formula" R. Royce Ringsdorf

"A Slow Death" Clifford P. Weaver, S.E.C., CCIM

The S.E.C. Education Foundation

"You Only Live Once" Phil Corso, S.E.C. President The S.E.C. Education Foundation

Society News Briefs

Education Program Success

Broker Estate Building

Creative Real Estate Formulas

3

I. S.E.C. President’s Message A. Summertime And The Livin’ Is ...

“Summertime And The Livin’ Is …”

By

Mark A. Johnson, S.E.C.

President The Society of Exchange Counselors

Wow, it has been 95 degrees in the shade, the sun is hot and the humidity is 80% plus. Does that sound like summer? Is summer a time of the year when things change in the business world? Does your family have expectations for the summer? Do your clients have expectations for summer? Is it hard to keep focused and meet the demands of a family and clients? As the song goes, “summertime and the livin’ is easy.” In the real estate business, summer is a period of opportunity when your time management skills must be perfect. The demands on your time can and often times are unmanageable. Your children are in sports, scouts, camp, or visiting relatives, your spouse has trouble getting each family to the respective activities and your office staff is going on vacation at the worst possible time. Ever hear of Murphy and his little law of unintended consequences? What am I supposed to do? The first thing you do is go to the nearest mirror, look at yourself and say “This is going to be a great summer and I will be prepared and ready for everyone and every opportunity.” Every morning you must set aside a specific amount of quiet time to plan your day and review the week and month. You must be flexible! I would suggest buying a yearly calendar that could be placed on a wall in your office. This calendar should show all twelve months at a glance. You can visualize the year and planning becomes very easy and you become very effective. You can see the vacation times of your employees and sales staff and you can structure your appointments accordingly. By using a different color marker, you can also visualize the needs of your family and identify the known time requirements. This tool is one of many ways to make your life easier. This allows you to enjoy the family while being productive at work. Flexibility is important as sometimes things do change. However, never allow your family to become less than the most important part of your life. Since you are scheduling and setting appointments, I would suggest that you look at attending the next SEC Marketing Meeting in Indianapolis in September. For information on the SEC Marketing Meetings logon to www.secounselors.com; you will find a request for meeting invitation, a schedule of the 2003 SEC meetings, find a member and locate the property to complete your next transaction.

4

While you are visiting the Society’s web site, click on the link to the SEC Real Estate Observer (www.secobserver.com) and review the list of education programs that being offered by The S.E.C. Education Foundation. Remember the seven “P’s:” Prior Proper Planning Prevents Pitiful Poor Performance. Enjoy your families and make the summer of 2003 your best ever. Mark Johnson, S.E.C, CCIM is the 2003 President of the Society of Exchange Counselors. He is president of Border Properties, Inc based in Brownsville, Texas; active in industrial development specializing in NAFTA based warehousing on the Mexican Border. He is an active nationwide investor and provides property management services for retail, commercial and industrial property. Mark serves as a director of the S.E. C. Education Foundation.

5

II. Feature Articles A. The G5 Partnership Concept

The G5 Partnership Concept

By

Virgil Opfer, S.E.C.

There are many ways to form a partnership, but over time, most profit sharing methods in partnerships don’t work. Here’s a way that does work. The traditional share-and-share-alike agreement seems like a fair arrangement at the beginning of every partnership. Does this sound familiar, “We will both share the effort and split the profits 50/50.” Even with the best of intensions, somehow, over time, the equal sharing of effort, time, and risk seems to fade away and the partners are no longer participating on an equal basis. Inevitably, one partner ends up pulling more than half of the weight. However, under their partnership agreement, both partners continue to share equally in the profits. In our opinion, this is a sure-fire formula for a partnership to fail. The G5 Concept A few years ago, five brokers, who knew each other for many years from their monthly local exchange meetings, got together to see if they could make some money and have some fun doing it. The five brokers, Chet Allen, S.E.C., Dan Harrison, Greg La Marca, Virgil Opfer, S.E.C., and Bob Stewart decided to join together to seek exceptional real estate opportunities. This decision led to a series of organizational meetings. At the early meetings, we decided to define in writing our goals and objectives. The impetus for that important decision was the direct result of the Business Symposiums sponsored by S.E.C. and, in particular, the Denver symposium at which Harry Kennerk, S.E.C., clearly defined the importance of setting specific goals, and to define the obstacles in achieving those objectives. At one of the early meetings, Chet Allen brought a unique idea to the group that really set our team into high gear. Chet’s concept (a genius inspiration, in my opinion) was that we dissect a typical transaction into some very basic functions, then, as a group, agree on a value for each of those functions, or roles, in order to provide a financial incentive for each of us to seek out those functions and receive the associated reward for doing so. Chet went on to suggest that after the persons have been rewarded for their specific roles, that the remaining profits (if any) would then be divided based the traditional share-and-share-alike arrangement. That way, those who performed the most important functions in any given project would be paid first and in greater measure than those who contributed in a more minor role to the success of the project.

6

The idea led to several lengthy meetings with round after round of lively discussion. The basic thought behind the reward system was simply, “Let’s make the reward for each role first based on logic, but also make the reward so attractive that each of us will want to play each role.” Each project would stand on it own, with a separate written agreement for each new project. Once the sharing arrangement was set, it would remain unchanged for the duration of that particular project, even if subsequent events led to changes in future financial structures. It was at this time we also decided to incorporate and the company, G5 Enterprises, Inc. (G5), was created. We also agreed that each project would be structured as a newly created limited liability company (LLC), with G5 Enterprises, Inc. serving as the Manager of each new LLC. Since we anticipated that the bulk of the investment capital would come from a cadre of investors, we agreed that each LLC would be based on the classic “safety first” formula, where the cash investors would receive all of their capital and all of their profit before G5, as Manager, would receive any compensation. For our purposes, we defined the following basic roles, or functions, for a real estate investment:

1) Finder, the person who locates the property and presents the opportunity to the group and then oversees the acquisition through the close of the purchase escrow.

2) Funder, the person who contributes capital to the project, or who brings in other

investor’s cash to fund the required capital.

3) Coordinator, the person who manages the day-to-day details of the investment and sees the idea through to completion and serves as the primary contact person for all activity once the project is underway.

4) Administrator, the behind-the-scene person who is responsible for the ongoing

administrative work, written reports to investors and the bank, bookkeeping, and tax preparation functions.

5) Loan Guarantor, the person with sufficient financial strength who puts his financial

statement at risk to guaranty any loans that require a personal guaranty.

In any given project, one person may play more than one role. Likewise, one role may involve more than one partner. There may be occasions where not all roles are required for a project. For example, a Loan Guarantor would not be required if a project involves a non-recourse loan, or in a cash transaction where there is no loan.

7

G5 Profit Distribution: Based on our discussions, we came up with the following formulas for rewarding the five major role players. Each of the following references to “profit” is based on the profit remaining after the investors have been paid 100% of their capital as well as their entire return on capital. We refer to the profit remaining after paying the cash investors in full as the “G5 Profit.” Those fees listed below based on other than the G5 Profit are also paid only after the cash investors are paid in full.

1) Finder, an amount equal to 3% of the acquisition price, or 6% of G5 Profits, whichever amount is greater.

2) Funder, an amount equal to 10% of the capital raised from third party investors or

contributed by the partner.

3) Coordinator, fee will vary from 5% of G5 Profits for a simple purchase and resale, to 10% of G5 Profits for a construction project or condo conversion.

4) Administrator, an amount equal to 5% of G5 Profits.

5) Loan Guarantor, an amount equal to 7% of the original principal amount of any loan

guaranteed.

Shared Profit Distribution: Once the investors are paid in full and each of the above special fees has been paid, then the remaining profit (the “Shared Profit”) is distributed equally to all partners. We have just completed our first project and the results are very satisfactory. The rewards for the partners in the special roles were very significant and the pro rata share of the Shared Profit was in the six figures, with all six figures to the left of the decimal point. The G5 distribution method based on first rewarding a person’s contribution to a specific project works exceedingly well. This is evidenced by the fact that all five partners are fully engaged in concerted efforts to be role players in each of the five new projects now on line.

Virgil Opfer, S.E.C., is President of G5 Enterprises, Inc., a San Diego based investment company that specializes in the syndication of real estate projects. He is a co-author of "100 Equity Marketing Formulas," a compilation of creative approaches to real estate transactions. Virgil currently serves as Vice President of the Society of Exchange Counselors and is a director of the SEC Education Foundation.

8

II. Feature Article B. Risk Versus Profit…How Much Is Enough?

Risk Versus Profit…How Much Is Enough?

A CASE STUDY

By Mark Johnson, S.E.C., CCIM I was approached by a broker (“Broker Bob”) who had a client/owner of 12.65 acres of land who needed a land loan to pay off a first lien that had come due weeks earlier, with foreclosure procedures to commence within the next 10 days. Broker Bob was seeking a $300,000 loan for his client at 10% interest for 15 years, paid monthly. A balloon payment would be negotiable. Now, most investors want the highest yield possible, correct? To me, a 10% yield was not very appealing. On the other hand, usury limits must be a consideration for every hard moneylender in the market. If I could legally earn a higher rate, I would be interested, so we proceeded to explore the proposal. First, we reviewed the real estate and found that the property was well located across the street from a major mall, had level topography, and located as a key parcel in the center of several parcels that were being promoted as a 50-acre power center site. The owner claimed that he had received and had rejected (unfortunately) prior offers of over $1,000,000. He was very confident that in the next year or so, he could sell the property for more than $1,000,000. He needed $225,000 to payoff the loan that was now overdue. The questions: Do we make the loan? How should we structure the loan? Or, do we just offer to buy this property? These are typical considerations that every investor faces. We told Broker Bob that we would provide the $300,000, but not as a loan. We elected to make the deal a purchase at below market with an option for the seller to repurchase. We would provide the $300,000, but the Owner would deed us the property free and clear. After paying the $225,000 to the lender, the owner would net $75,000. As the new owners, we would pay the property taxes and any other costs that might be associated with the property during the 5-year contract period. In return for selling us the property at below market value, we would create an option contract that would allow the former owner to buy back the property for a period of four years. The option price would be based on a price schedule that would increase each year. We would also grant the owner the right of first refusal to purchase the property during the fifth year. If the property were not repurchased by the end of the fifth year, the seller would have no further claim on the property. If the owner was correct about his evaluation of the property’s value and it’s marketability, then he could easily sell the property during the option period, pay us the scheduled option price and pocket the difference between the sales price and the option price.

9

The option price would repay our $300,000 plus a return on our $300,000 that would be significantly higher than a typical land loan. Structure: While I was structuring the transaction, I planned to use the sale proceeds of a property that a partner and I had just sold. In addition, a previous partner came to me and had $150,000 to invest. My partner and I each placed $75,000 into the deal and the previous partner was included with his $150,000. The total of $300,000 was achieved, we closed on the purchase, and I then owned a 25% interest in the 12.65 Acres. The three of us formed a partnership with each of our interests being controlled by separate corporations. During the 5-year contract period with the former owner, there were several offers made to the previous owner. Even though the price was acceptable to the option holder, none of the proposed transactions ever closed. I had promised Broker Bob that, if he could get the property sold during the option period, I would not participate in the commission. That of course made him happy. At the end of five years, the property was still unsold. The option holder’s failure to close on a sale meant that at the end of the 5th year the property was ours with no further obligation to the former owner/option-holder. As a courtesy, we allowed Broker Bob to keep his sign on the property and we began to deal with potential purchasers. During that 5-year period, the mall across the freeway doubled in size, the retail market in the area went crazy, and the land values for property adjacent to ours soared to $15.00 per square foot, a ten-fold increase in land value in those five years. A Second Transaction with Broker Bob Early on, when the deal with the landowner started, I learned that Broker Bob was in another partnership with some other friends of mine. That partnership owned income-producing property. His partners were unhappy because of the demands being made by Broker Bob for commissions. During the first year of the option period, the partners approached me to buy Broker Bob out of their partnership. I said I would look into that possibility if they would provide me with the partnership information. After some negotiations, I purchased Broker Bob’s 25% of the income producing partnership for $380,000.00. I did so by paying off a $100,000 note owed by Broker Bob to his bank and, for the remaining balance, Broker Bob agreed to take a personal unsecured note for $180,000.00. The note would have no payments. The interest would accrue and be due in 5 years. Since my buyout of Broker Bob, I have kept the property associated with the income producing partnership leased and I have received a minimum of $60,000 per year in pre-tax dollars.

10

Who’s in charge? Near the end of the sixth year, Broker Bob came back to me and asked if we would sell the property for a price lower than option price. I said no, and he reminded me that I had partners and threatened to go talk to the partners. I was naturally offended by the threat, but I said he was welcome to talk to the partners, but until he wore my shoes, they would not listen to him. As predicted, he did, they didn’t. Use the Land to Your benefit! As the end of the sixth year approached, the entire principal of the $180,000 note plus five years of accrued interest was coming due. Thinking that I would be under heavy pressure to pay off his note, Broker Bob’s next strategy was to approach me and state that he had an interest in buying the 12.65 acres, but, again, at a significantly reduced value. He said he was even willing to purchase my interest in the land by forgiving a portion of the note and accrued interest that I owed him. I later learned that Broker Bob’s keen interest in our land was because he was working with a developer who had spent close to $100,000 in fees for inspections and they believed that they could develop a major retail development by assembling the 50 acres mentioned above. Broker Bob was attempting to obtain control of the multiple parcels that comprised the proposed shopping center site. Our parcel was in the middle of the site and absolutely essential to any meaningful development. Broker Bob wanted to own or be under contract to control the various parcels so that he could be the sponsor for the overall transaction. Even though he was looking at a potentially huge pay day if he could assemble the key parcels, he was still trying to use the upcoming due date on my note as a tactic to pressure me on the price. He told me that the owners of the remaining parcels that were required for the assemblage were determined to sell their properties and would sell for less than market value and wanted me to do the same. I really don’t like someone trying to bully me, and I especially didn’t like Broker Bob’s heavy-handed approach. We negotiated for the next full month and Broker Bob finally agreed to surrender 100% of principal of my note and waive 100% of the accrued interest in exchange for my 25% interest in the 12.65 acres. That was a great deal for me and had the effect of providing a fantastic return on my investment. In addition, I had enjoyed $60,000 per year during those five years, (and still continue to receive each year) from the partnership interest purchased with the $180,000 note and the $100,000 in cash. Of course, prior to agreeing to the sale of my 25% ownership share in the land, my other partners were informed of my thoughts and they fully approved the deal. They realized that nothing would change for them with the acceptance of a new partner. Under the terms of the partnership agreement, the two of them still held full control of the partnership with their 75% ownership. The two of them would be able to out vote Broker Bob. Oops, I guess Broker Bob forgot to look at the big picture.

11

Summary My reluctance to accept a 10% yield led me to a more creative way to structure the transaction. The result of that structure was that the former owner avoided eminent foreclosure, pocketed $75,000, and had five years to repurchase the property and make a nice profit. When he failed to do so, we owned the property without the burden of having to foreclose on a loan. Early on, Broker Bob’s inability to work closely with his partners in an income producing partnership led to a second transaction with him. Then going full circle, Broker Bob became a minority owner in the land partnership by acquiring my interest with the note that I owed to Broker Bob. Based on my cash investments in the two transactions, my yield has been in excess of 35% per annum, a far cry from the 10% that was offered. As I fully expected, Broker Bob’s plan for the mega-retail transaction has fallen by the wayside and the big pay for him has not materialized. I can’t help but wonder if he tried his bully tactics on the other owners too. The 12.65 acres is now for sale. Guess who is the listing broker? Yes, That right. With their 75% ownership, despite Broker Bob’s objection, the former partners have voted to have my firm market the property. Editors Note: Mark Johnson, S.E.C. and Phil Corso, S.E.C. together teach a two-day education program entitled “Broker Estate Building.” The program is based upon the original class created and taught by Colby Sandlian, S.E.C. and Cliff Weaver, S.E.C. in the 1970’s and ‘80’s. Totally rewritten to reflect the realities of the real estate business today, the program is offered nationwide. For additional information, contact either Phil or Mark or visit the S.E.C. Education Foundation web site: www.secedfoundation.com. Mark Johnson, S.E.C, CCIM is the 2003 President of the Society of Exchange Counselors. He is president of Border Properties, Inc based in Brownsville, Texas; active in industrial development specializing in NAFTA based warehousing on the Mexican Border. He is an active nationwide investor and provides property management services for retail, commercial and industrial property. Mark serves as a director of the S.E. C. Education Foundation.

12

II. Feature Article C. Getting From “Here to There”

Getting From “Here to There”

By Jim Brondino, S.E.C.

How do the presenter and moderator get from “here to there?” In moderating, as in designing a trip, it takes organization and planning. Moderators are responsible for efficiently, expeditiously, and skillfully guiding the presenter and the presentation in an orderly manner to maximize potential “takers.” Moderators are also duty-bound to produce a powerful presentation. What are the elements that allow moderators to fulfill those responsibilities and to meet the expectations that others have of them? Primarily, moderators need a road map that provides direction for them, the presenter and the participants. That road map is guided by the following sequential format: 1) Property/Asset; 2) People/Ownership; 3) Situation/Issue; and 4) Solutions/Ideas. This sequence has been developed through research, experimentation, and provable justification. Questioning of the presenter by the moderator related to each of these four segments must be rather evenly allocated within the given time limit. The Property/Asset segment involves a detailed revelation about the property/asset being presented. The People/Ownership segment reveals relevant information concerning information about the current ownership including, but not limited to previous ownership experience(s), capabilities, skills, talents, and expertise, and what ownership is willing to do to accomplished the desired result. The Situation/Issue segment is a brief and concise statement as to what why ownership has chosen the moment in time to convey ownership, and the reason(s) why current ownership no longer wishes to retain the asset. And, the last segment, Solutions/Ideas, engages the participants to offer ideas, solutions and recommendations that integrate all of the information that has been revealed to the benefit of the presenter. Given this presentation road map, it the mission of the moderator to gracefully negotiate the presenter around the curves, traffic, hills and obstacles of the presentation highway to arrive at the point that the ultimate number of available “takers” are achieved at the end of the presentation. To attain this result, moving the presentation from here to there, involves a moderator to be: 1) Skilled at listening 2) Skilled at eliciting information and questioning 3) Skilled at process and structure 4) Skilled at managed communications

13

The procedure that best allows the moderator to get from “here to there” is the integration of pre-moderating in the presentation process. Those moments that precede a formal presentation, fifteen to twenty minutes, establish rapport between the moderator and presenter, separates information that must be presented from the unnecessary/superfluous, and paves the way for a powerful presentation. The pre-moderating time, when properly managed, builds trust and confidence between the moderator and presenter, opens lines of communication that ultimately serves to engage the participants and produces the desired result of generating “takers.” Trust and rapport arise from the moderator being concerned and friendly to both the presenter and the participants without comprising the integrity of the presenter and the participant. This approach leads to a comfortable, unconstrained relationship, which comes to exist between the moderator, presenter, and the participants. Inside this win/win relationship, the moderator can guide the presenter to convey all of the data and information that peaks the interest of the participants. This process leads the presenter and participants from “here to there.” The force that propels the presentation to the desired result, aside from the prescribed format, is the quality, content, and information presented in each of the format segments described above, i.e. Property/Asset, People/Ownership, Situation/Issue, and Solutions/Ideas. Moderators should strive to reveal to the participants facts, features, amenities, opportunities, and/or potential for profit that the participants can or may interpret as benefits to them or their clients. The presenter is well served to be coached by the moderator into revealing to the participants what their respective client¹s are willing and/or capable, or prepared to do in order to achieve their desired result. When the presenter is comfortable with the driver, the moderator, and when the presentation highway is paved with quality information, getting from “here to there” is not an arduous task, but a pleasurable, enjoyable, and presumably profitable experience. This results in a gratifying excursion for the presenter, moderator, and participants.

Jim Brondino, S.E.C., CCIM is president of Brondino & Associates based in Ontario, California. He is a nationally known real estate educator whose class "Counseling for Action" is recognized as the premier education program for real estate counselors and brokers. His firm specializes in asset management, consulting and exchanging. Jim is a Vice President of the Society of Exchange Counselors and serves as a director of the S.E.C. Education Foundation. He was the 1996 SEC Counselor of the Year.

14

III. Society Columns A. Environmental Insurance

Environmental Insurance – Will It Help You Make Money?

By

Vicki Yeomans-Klien, S.E.C. The commercial lenders’ newest hot button is environmental insurance. The product they are talking about usually costs less than a Phase I Site Assessment and can be written in a few days. Is this a way to save time and money? Who is actually protected against loss? What is the coverage and who is the beneficiary? Environmental Insurance is a tool developed for banks to manage the loan risk on commercial properties. The bank is the beneficiary. The bank can only make a claim, if the bank as a result of foreclosing on a non-performing loan holds the property and if there is an enforcement action from the state or federal government to clean up an environmental problem. Coverage does not include building components abatement, for example lead and asbestos. What environmental risk does a bank face on commercial loans? The Asset Conservation, Lender Liability, and Deposit Insurance Protection Act of 1996, amended the Comprehensive Environmental Response Compensation and Liability Act (CERCLA or Superfund). The 1996 amendment spelled out the procedure for a lender to foreclose on an environmentally contaminated piece of property and said that a lender is exempt from clean up expenses, if that lender did not “participate in management” of the property or business prior to foreclosure. Traditionally the borrower had a Phase I Environmental Site Assessment done as a loan requirement. If a loan was non performing and foreclosure was a consideration, the lender had a second Phase I performed. If the property was clean, the lender foreclosed. If the property had significant environmental problems, the loan was generally written off and the bank took a loss. Although the 1996 amendment protected lenders from the potential liability of huge remediation expenses, lenders still faced the risk of loosing the loan amount and any associated expenses.

15

How does the environmental insurance protect the bank? For the insurance to pay:

1. The bank must hold title to the property as a result of loan default, 2. The cost of remediation must be greater than the bank’s equity in the property after

foreclosure, 3. And the property needs to be under an enforcement action.

The insurance company either pays for the cost of remediation above the cost of the equity or pays off the loan balance. Procedures vary by company, but the bank does not have to write off the loan and incur a loss. The insurance covers this loss. Is the borrower protected? The insurance coverage is not designed to protect the borrower. In the event the bank has a claim on the policy, through the right of subrogation, the insurance company can take action against the borrower to recover damages. Is there any other down side for the borrower? Unless a Phase I Site Assessment is performed the “purchasing borrower” may be assuming “hidden” environmental liabilities. CERCLA, the Superfund Act, defined an “innocent purchaser” as a person or entity that complied with certain due diligence requirements prior to acquisition and as a result should not be responsible for the “clean-up” liability of a property. The Phase I Site Assessment is designed to meet part of the environmental due diligence requirements as outlined in CERCLA. If a Phase I is not performed prior to taking title, a property owner may not be able to show that any environmental due diligence was performed, and therefore may not be able to seek the “innocent purchaser” defense under CERCLA. The potential clean up liability extends to “decision makers” as well as the actual purchase entity, so a corporation, Limited Partnership or Limited Liability Company is not a shield to personal liability.

16

What are the differences between a Phase I and environmental insurance? Generally a Phase I is an inspection of the property, a review of the past uses of the property and a review of the general area for known environmental issues and incidents. A good Phase I will also identify potential areas of concern and can recommend preventative actions to avert an environmental event from happening. Environmental insurance is a transfer of potential environmental risks, post foreclosure, from the lender to an insurance company. What is the cost of environmental insurance and who writes it? Policies usually run from $600 to $2,000. AIG, Zurich-America, Reliance/ECS, United Capitol and Kemper Environmental write coverage for commercial properties. The policy for a $2,000,000 loan amount may run about $700 and can be written in as little as 2 days. What is good about this type of insurance? The product was designed to reduce lender risk. Like PMI (Private Mortgage Insurance for residential loans) environmental insurance is an inducement to the lender, paid for by the borrower. Environmental insurance is a cost of financing. Having environmental insurance available should encourage lenders to be more accepting of industrial properties and some high-risk retail properties. A borrower’s knowledge of this insurance may help in loan negotiations with a reluctant lender. Theoretically providing environmental coverage to a lender on some property types should change the risk structure of a loan and reduce the interest rate or at least make it more attractive. Are there other types of environmental coverage that protect the property owner? The E&O insurance of the Phase I provider is your first level of environmental insurance. There are many types of environmental insurance products that provide protection for both the property owner and tenants. Most environmental coverage is not a “stand alone” policy; the coverage is written as an amendment to a general commercial policy. This type of coverage tends to be incident specific, providing clean up if an event occurs that affects your property. The insurer may require a base line Phase I Site Assessment as well as a thorough understanding of the property, the tenants, and the products used on the property, and the processes performed. In some cases, it is easier for a tenant to get environmental coverage than a property owner, since the tenant/operator has direct control over the operations performed on the property.

17

Conclusion: Knowledge is power. Read any insurance policy carefully. Determine the beneficiary and the risks covered. Recognize that some insurance coverage is a cost of financing not protection for the landowner. A good Phase I Site Assessment creates a record that the purchaser has performed his environmental due diligence. Establishing the groundwork for the “innocent purchaser defense” may be the best insurance you can get. Vicki Yeomans - Klein, S.E.C. is the owner of Yeomans Realty in Houston, Texas. Ms. Klein specializes in property management, leasing and development of various real estate projects.

18

III. Society Columns B. Investment Fundamentals

Investment Fundamentals

By

Chester W. Allen, S.E.C. Once upon a time, a very successful developer hired me to assist marketing his one unsuccessful project. Handsomely designed, located on a prime site in one of the world’s most beautiful locations, built and furnished by skilled craftsmen using the finest materials, the project hadn’t sold and it was presently costing the developer in excess of $3,000,000 annually. I, too, had been a principal in a very unsuccessful development project that had created a severe “net-worth-ectomy.” A lodge in the Rocky Mountains had cost me most of my cash, two years of productivity and a very valuable parcel of California land that I had pledged. One day, while having lunch with my developer client and his wife, I was asked, “As smart as you are, Chet, how did you possibly invest in that lodge project?” My reply was “I got so caught up in the creativity of making the transaction that I forgot about the economics.” Whereupon, the wife turned to her husband and with a rueful smile, she said, “It sounds like somebody else I know.” If we are to amass and retain wealth through real estate investing, we must understand real estate investment fundamentals, and then discipline ourselves to insure that all of the properties and projects we seriously consider are sound economically. Players in the real estate game are exposed to hundreds of properties, many of which are pretty, some in superb locations, and most of which make no financial sense. To be successful we must look beyond physical appearances and refrain from emotional decisions. Overview The real estate game, properly played, can be the most fun and profitable game in town. There are more moves than in chess, more unknowns than in poker, with the odds weighing heavily on the side of the intelligent player. And, unlike most money games, the real estate investor has a great deal of control over his or her investment. Players in the stock and bond markets are dependent on the management skills of unknown third parties whose motives and loyalties are often suspect. The real estate investor can choose when and where to acquire, when and if to upgrade, when and if to raise rents or subdivide or complete a condominium conversion. He can change management. But, most importantly, the real estate investor has only his own best interests at heart.

19

Historically, real estate has been the most profitable of investments. The reasons are simple. There is a limited supply and ever increasing demand. Inflation drives up the costs of new construction and replacement of existing structures. And, finally, the attitude of real estate owners is one of positive expectancy. Except during brief periods of severe recession, few, who own real estate, expect to sell for less than the purchase price. We all expect to make a profit. Therefore, most of us won’t sell at a loss. If the market gets soft, the majority of real estate owners wait until it firms up. After all, historically it has always firmed up. We know we live in a cyclical economic world. Yes, real estate prices do go down temporarily. This occurs when a critical number of property owners lose confidence or must sell at the same time. This will happen if and when there is extensive overbuilding with resultant vacancies, and in times of economic downturns. This is not to say that real estate investments don’t have shortcomings, they do. The two most glaring shortcomings are the lack of instant liquidity and required level of management. But, even these can be mitigated or in some cases eliminated by choosing certain types of investments. Real estate ownership advantages far outweigh its disadvantages. Besides the appreciation that most long-time investors have come to expect, many real estate investments offer outstanding yields and others offer tax sheltered income. Equally important, real estate offers a unique vehicle for building and preserving one’s estate—the tax deferred exchange. Risk vs. Return Good financial planning requires goal setting. While creating goals, the real estate investor selects a financial target and a timetable. Aggressive goals and short timetables dictate the need for high annual returns. It is an axiom (or should be) of all investments, “the higher the return, the higher the risk.” It is not realistic to expect a very secure investment, such as a leased telephone building; to offer the same high yield as an over-financed locally owned fast food franchise. Post offices may not pencil out as potentially profitable as hillside condominium developments, but they are a whole lot safer! Chet Allen, S.E.C., is a builder, developer, and real estate problem solver. He is a CCIM and former winner of both the Snyder Award for Best Exchange in the USA and Campbell Award for the country's Best Commercial-Investment Transaction. He authored and teaches a seminar entitled Developing & Syndicating: Big Money Real Estate, and his book, "The Guide to Becoming Real Estate Rich" is available at iuniverse.com. He is a past president of the S.E.C. and the 1982 S.E.C. Counselor of the Year.

20

III. Society Columns C. My Mentor Told Me

MY MENTOR TOLD ME

By

Bill Stonaker, S.E.C., CCIM

Bringing Value to the Transaction As real estate professionals, if we do not bring value to a transaction, we will not be in this business very long. The days of order takers are over! Now buyers, sellers, potential tenants and landlords can access so much information on the different web sites that they can actually cut us out of the deal without ever even asking us for our opinions or comps. So how do we bring value to the transaction? Anyone with a high school education can fill out a lease form with a little help. What a potential tenant or buyer might not know CAN hurt them. Let’s brainstorm about some of the latest pitfalls in our business. First, we will review some of the obvious:

1. In most states, a commercial real estate professional (sales person or broker) is liable if they are selling a tract of land and do not recognize potential environmental problems. I was representing a client that was buying an office warehouse in Dallas many years ago and was amazed that the seller had never mowed the end of his lot. At the far end of the tract, covered in high grass, was a piece of 4” pipe sticking out of the ground about 5 feet high. Sure enough, the property had been used by a car rental firm years before and they had an under ground fuel storage tank for gasoline. I immediately contacted our state office for that type of storage and found that the tanks had been removed but the vent stack was still there. No problems, but if I had not insisted that the seller mow the high grass, no one would have ever been the wiser. My buyer was impressed and I breathed a sigh of relief. I will never forget that one! Close call. Could have cost me my license.

2. Another environmental issue – you probably know that you must inform all your buyers

and tenants that they should have the subject property inspected for asbestos. But many think that because the ACM is not friable there is no need to worry. Floor tile covered in carpet is ok. Right? Maybe for the first time. But what happens when you need to replace the carpet and must pull up the old carpet that you glued direct to the floor tile? The guys in space suits must remove it. Now add the cost of disposal in clay-lined pits of yards and yards of carpet in addition to the original floor tile. Do you get my point? Potential liability here or not? Help your owner think through these mine fields. And with the city building inspection departments under intense federal government scrutiny to keep our air clean, just know that they are maintaining much better records. Don’t go

21

trying to tell the city inspectors in our area “I don’t know what happened to that tile.” Big time fine. Maybe jail time. And people over 6 feet tall should not wear stripes!

3. How about one that you might not know yet. The 2002 National Electric Code (which

most cities and counties use), went into effect January 1. The code requires the removal of abandoned cables in commercial buildings whenever changes to the systems are made. If the cables are not terminated at both ends to a connector or other equipment, or if they are not tagged for future use, they are considered abandoned and they have to come out! This applies to both horizontal (above ceiling) and vertical (in the walls). The National Fire Protection Agency drafted the rules under the NEC code 800.52B. The reason for the mandate is that the wrapping around the old wiring and cables are materials that include toxins and in a fire can be very dangerous. The code applies to ALL WIRES AND CABLEING, including copper and fiber. Who is responsible for removing the wiring? If your client is buying the 1980’s vintage building that has been re-tenanted several times, do you think there might be a potential liability associated with his ownership? What about your tenant that you are moving from one building to another? Do you have any exposure at either end of that transaction?

The list goes on and on; ADA, radon gas, chemical spills, etc. And these are just some of the physical issues. Do you have any that you would add to the list? Maybe we can brainstorm a list of potential pitfalls later this year at one of our meetings. What if we begin to produce a list of ways we can add value?

Bill Stonaker, S.E.C., CCIM is a Dallas based real estate broker, exchangor and developer specializing in land development, retail and commercial projects and syndication. Bill is the managing member of Wilson & Stonaker; L.L.C. and also serves as a Governor of the Society of Exchange Counselors.

22

IV. Ideas and Formulas A. Trust Deed Split Provision

Trust Deed Split Provision

By

Virgil Opfer, S.E.C.

When purchasing land that can be subdivided, ask the Seller to carry back a Note and Trust Deed, each of which contains a provision that will require the Note holder to create multiple substitute Notes and Trust Deeds after the land has been subdivided. This will permit landowner to sell off parcels and allow each buyer to assume a portion of the original financing.

One of the most advantageous provisions available to buyers of unimproved land is the Trust Deed Split provision. It is sometimes called a Substitute Note and Trust Deed provision and allows the new owner to create multiple new Notes and Deeds of Trust (or mortgages) for the individual lots he creates upon the completion of certain agreed upon conditions. The provision is more advantageous to the developer than the more traditional partial release clause. For example, a developer buys a twenty-acre parcel of land that can be subdivided into ten two-acre lots. The price of the parcel is $300,000. The developer makes a down payment of $60,000 and asks the seller to carry back a Note for the balance of $240,000. The Note is to be secured by a First Trust Deed on the twenty acres. The developer negotiates the purchase so that the Note will not contain a Due On Sale clause. Developer and Seller agree that after a final subdivision map has been recorded, Note holder will allow the $240,000 Note to be reconveyed and, in its place, Note holder will accept ten (10) substitute Notes of $24,000 each. The ten Notes of $24,000 each will be secured by ten separate First Trust Deeds, one Note and one Trust Deed on each of the ten (10) lots created by the map. Developer agrees to provide Title insurance to insure that Note holder is still in first position on each of the new Notes. After the paperwork is complete, each lot will have its own independent financing in place with no due on sale provision. In the aggregate, the total monthly payments and the due date will remain unchanged. Note holder’s security will not be impaired because Note holder will still be in a fully insured first position and, more importantly, the ten lots are now worth considerably more than the twenty-acre parcel before the new Developer completed the subdivision process. EXAMPLES OF THE BENEFITS:

1) Developer sells one of the lots for $50,000 and accepts cash down payment of $10,000

and agrees to a $16,000 carry-back Second Note behind the original seller’s $24,000 First Note. In the above scenario, the $24,000 in financing is already provided by the original seller.

23

Compare this result with a more traditional partial release clause, which would have required Developer pay off at least $24,000 in order to release that lot from the blanket debt of $240,000. In most cases, a partial release clause requires more than a simple pro rata share of the total debt. Using a partial release provision, with only a $10,000 down payment and with at least a $24,000 cash payment due the Note holder, the Developer would have had to go into pocket at least $14,000 to sell the lot.

2) Another lot buyer wants to pay $50,000 all cash and have Developer deliver the lot free and clear. Developer can use $24,000 of the cash purchase price to pay off the Note on that lot. The $24,000 Note is paid in full and the lien is reconveyed permitting the property to be delivered to the lot buyer free and clear. No release provision is required because the only debt on the property is the $24,000 Note. Obviously, therefore, no premium, such as 115% to 125% of par would be required.

The above example assumes that all ten lots of equal value. Other arrangements can be drafted in the Trust Deed Split Provision to account for lots with a range of values.

The exact terms and conditions of the Trust Deed split must be clearly defined in both the Note and the Deed of Trust. Be sure to negotiate the terms of the Trust Deed Split during the offer process, as it is too late to bargain for these benefits after the sale has closed.

SAMPLE ONLY

ALWAYS SEEK COMPETENT LEGAL ADVICE FOR ANY CONTRACT PROVISION TRUST DEED SPLIT PROVISION This Deed of Trust (“Original Deed of Trust”) and the Promissory Note secured thereby (“Original Note”) have been entered into with the understanding by all parties that the Land encumbered by the Original Deed of Trust (“Subject Property”) may be subdivided by Trustors, and/or their heirs, successors, and assigns. It is hereby agreed that the time, money, and effort spent in subdividing Subject Property shall improve its value and, thereby, increase the security for the Original Note. In consideration thereof, it is the intent of the parties that this Trust Deed Split provision be incorporated to accommodate the future sale of subdivided lots by providing for the creation of smaller Substitute Notes that shall be individually secured by Substitute Deeds of Trust on each of the to-be-created lots. Now therefore, it is agreed that upon the acceptance of a Final Subdivision Map or Final Parcel Map by the governmental body having the authority to approve subdivisions on subject property, the Beneficiaries hereby agree for themselves, their heirs, successors, and assigns that, provided no default exists under the terms of this Deed of Trust or of the Note secured thereby, at Trustor’s request and at Trustor’s expense, Beneficiary shall split this Original Deed Of Trust into smaller Substitute Notes with each smaller Substitute Note to be secured by a separate Substitute Deed of Trust on one of the lots created by the subdivision.

24

In the aggregate, the total principal balance of all such Substitute Notes and Substitute Deeds of Trust shall be equal to the total remaining principal balance at the time of the split of the Original Note into smaller Substitute Notes. The total of all payments shall be equal to the single monthly payment in effect at the time of the split into Substitute Notes. There shall be no change in the due date on the obligation, nor shall there be any change in the interest rate.

Within ten (10) calendar days of Beneficiary’s receipt of a written request from Trustor accompanied by a copy of the Final Subdivision Map or Final Parcel Map, Beneficiary shall, at Beneficiary’s sole discretion, allocate portions of the total remaining principal balance to each of the lots designated on the Final Map. Each of the lots may be assigned any portion of the total principal balance, provided that, in the aggregate, the total value of all Substitute Notes shall be equal to the then remaining balance of the Original Note. The periodic payment allocated to each Substitute Note shall be in the same proportion that the principal balance on each new Substitute Note bears to the total remaining principal balance at the time of said split.

Beneficiaries shall execute any and all documents as may be required to fully cancel the Original Note and to fully reconvey the Original Deed of Trust, and, in exchange, Trustor shall execute each Substitute Note and its corresponding Substitute Deed of Trust. Trustor shall bear the expense of recording the reconveyance of the Original Deed of Trust and each of the new Substitute Deeds of Trust. Trustor shall provide, at Trustor’s expense, a title insurance policy on each of the Substitute Deeds of Trust to insure that each Substitute Deed of Trust holds the same seniority position as did the Original Deed of Trust.

It is further agreed that, within ten (10) calendar days from receipt of Trustor’s written request and at Trustor’s sole expense, the Beneficiaries, their heirs, successors, and assigns shall execute any and all documents which may be required by the governmental body having the authority to approve subdivisions on subject property granting approval by the Beneficiaries for a legal division of land, as well as any other documents that may be required to fully comply with the intent of this Trust Deed Split provision Virgil Opfer, S.E.C., is President of G5 Enterprises, Inc., a San Diego based investment company that specializes in the syndication of real estate projects. He is a co-author of "100 Equity Marketing Formulas," a compilation of creative approaches to real estate transactions. Virgil currently serves as Vice President of the Society of Exchange Counselors and is a director of the SEC Education Foundation.

25

IV. Ideas and Formulas B. You Are Your Own Best client

“You Are Your Own Best client”

By

Phil Corso, S.E.C.

How many of us throughout our real estate careers spend enormous amounts of time searching for new clients? Our hunt for transaction income (aka commissions) takes us to all four corners of the planet earth. We spend time cold calling owners, seeking referrals from satisfied clients, networking in our communities, and generally working every angle known to man in our quest for new product to bring to market and for new clients to assist in creating wealth or solving their problems and, ultimately, to make them money in real estate while we earn our commissions. Ever wonder if there is a better way? Have you ever thought about creating wealth for yourself? Well, there is another way. However, getting there requires a change in latitude. Most importantly, you’ll also need a change in attitude. To find this new life course, all you have to do is conclude one day that: “I am my own best client.” So, how does one become “my own best client,” you ask? Well, it’s really pretty simple. First you start with a plan…a written plan for your life and your business. What do you want to achieve and when? What are your long-term and short-term objectives? What expertise do you have? What are your weaknesses? What are your strengths? What level of risk are you psychologically ready to take on? How strong are your banking relationships? What about your education plan…do you know it all or are there some things left in life for you to learn? Do you have a stable of investors clamoring for the opportunity to invest in your projects? Or are you just starting out and searching for investors who will trust you with their money? What assets do you have today that you can put to work to grow your net worth? How do you spend your time every day? Are there aspects of your life that need to change if you set forth on this adventure? Only you can answer these questions and the answers need to be realistic, in writing and part of a plan to achieve your objectives.

26

Now I know that you are probably chuckling just about now…everyone has told you about the power of writing down your goals but you just never seem to see the value in that exercise or just can’t seem to find the time to get it done. There is always tomorrow…. except one day you will wake up and tomorrow will be here. There is an old saying that I like that seems to say it all: “If you don’t know where you are going, you will probably end up somewhere else.” So, to start on your journey to becoming “your own best client”, write your life plan and share it with those in your life who will help it become reality. Then, work the plan. Oh, and begin today because tomorrow is just around the corner. Editors Note: Phil Corso, S.E.C. and Mark Johnson, S.E.C. together teach a two-day education program entitled “Broker Estate Building.” The program is based upon the original class created and taught by Colby Sandlian, S.E.C. and Cliff Weaver, S.E.C. in the 1970’s and ‘80’s. Totally rewritten to reflect the realities of the real estate business today, the program is offered nationwide. For additional information, contact either Phil or Mark or visit the S.E.C. Education Foundation web site: www.secedfoundation.com. Phil Corso, S.E.C. is President of P.C.I Associates, Ltd. and a real estate developer, investor and educator based in Scottsdale, Arizona. He is currently engaged in self-storage ownership and development and is an active Walgreens Developer. He is a past president of the Society of Exchange Counselors and presently serves as president of the SEC Education Foundation. He teaches several real estate related courses and was the 2002 SEC Counselor of the Year.

27

IV. Ideas and Formulas C. What Do I Tell Him?

What Do I Tell Him?

By

Virgil Opfer, S.E.C. Here’s a challenge for all of you in the S.E.C. brain trust. Read the question below and send me your answers. A summary of your responses will be published in the next issue. I recently received the following inquiry from a broker friend of mine. He was concerned about two things. First, was the transaction described below going to meet tax code requirements for a tax-deferred exchange? He was also concerned about losing a large commission because of a recommendation from the client’s CPA. Here’s the question. “My client has just told me that I should stop looking for a $2,000,000 replacement property for him because his CPA is now recommending that he purchase a tenant-in-common interest in an offering for a large apartment complex. The CPA says that it is a way for my client to eliminate management responsibilities and it’s an easy solution to the timing problem of finding the replacement property. If he does not exchange, he will report about $500,000 in gain. I’m close to finding an acceptable property and we still have 35 days remaining in the identification period. Is a tenant-in-common project right for him, and if not, what do I tell him to convince him that he should continue to look for his replacement property?” I found out that the client is in his mid-50’s and has owned a number of income properties and has had great success with all of them. He hires professional property management and has been satisfied with their services. The client plans to continue to build his estate though real estate investments. The client knows nothing about tenant-in-common projects. What do you tell him? I look forward to your answers. Virgil Opfer, S.E.C., is President of G5 Enterprises, Inc., a San Diego based investment company that specializes in the syndication of real estate projects. He is a co-author of "100 Equity Marketing Formulas," a compilation of creative approaches to real estate transactions. Virgil currently serves as Vice President of the Society of Exchange Counselors and is a director of the SEC Education Foundation.

28

V. In The Spotlight A. Margaret H. Sedenquist, S.E.C.

BIOGRAPHY

MARGARET H. SEDENQUIST, S.E.C.

By

Vicki Yeomans-Klein, S.E.C. Margaret H. Sedenquist, S.E.C., is a long time member of the Society and served as its President in 1995 and 1996. Her biography is a story of adventure, intellect, and courage. Childhood and school: Margaret has deep roots in the state of Wyoming and in its history. She told me, "The history of Wyoming is filled with the history of my family." James C. Shaw, her maternal grandfather drove herds of 4,000 to 5,000 cattle and led 100 cowboys up the Texas trail to Wyoming and Nebraska. Biographies have been written about Jim Shaw, detailing his cowboy exploits and the cattle drives he led. In 1930, Jim wrote Pioneering in Texas and Wyoming, telling of his journey from South Texas to Wyoming in the 1870's and his part in building the State from a wilderness. Jim purchased his South Dakota ranch from Teddy Roosevelt. While James was writing history, his wife, Margaret's grandmother, was helping run the family cattle operations, which spread over Nebraska, New Mexico, Wyoming and South Dakota. In 1913, Mrs. Shaw decided to build a house. She hired an architect from Ohio, who lived with the family for three years during the construction of their eight-bedroom home. The Shaw house was a model for its time with indoor plumbing and electricity, and is still considered a landmark of the area. Margaret was the first of Ruth Shaw and Fred A. Hageman's six children. She was raised on a cattle ranch northeast of Douglas, Wyoming. Fred Hageman had a lumberyard, a grain elevator and a general store in Shawnee. The depression and a great drought forced the family to move to Fred's homestead. Fred worked in Douglas as a carpenter and a surveyor while building the ranch into a cattle operation. Margaret describes her father as a man of great ability and intelligence. To pay for music lessons and shoes, the family raised chickens and sold eggs, cream, and butter. Money was not needed for clothes, since her mother sewed those for the family.

29

Despite the depression and tight family finances, Margaret speaks of her childhood with great fondness. She talks of visiting aunts, uncles, and cousins on the Platte River and of having good times with a house full of children playing cards, riding horses, and enjoying the rural life. Margaret attended a country school in Shawnee until the 12th grade. After graduation she attended the University of Wyoming in Laramie, where she studied journalism and graduated with a degree in psychology. Early Career: "People perform best when they are given the information they need and want." Upon graduating from college, Margaret worked as a Research Psychologist in Employee and Community Relations at the General Electric plant in Schenectady, New York. GE was concerned about possible employee strikes and work interruption, so the company focused on improving employee relations and hired Margaret for this purpose. With an attitude that has served her well throughout her life, Margaret saw her lack of prior experience as an opportunity to see the situation from a fresh point-of-view. She insisted on talking directly to the workers and spent more time on the factory floor than in her office. Soon workers began coming to Margaret with their concerns and needs. Margaret determined that the employees wanted feedback. The terms and concept of "empowerment" and "employee buy-in" had not only not come into vogue, but they were unheard of at that time. She trained the foremen how to bring the employees into the chain of information and how to draw ideas from them. She established a process of providing information and a system of evaluation with feedback. The basic research and ideas that Margaret had at age 23 and used at General Electric have been employed at Harvard Business School and in most industrial psychology studies for the past 25 years. Marriage and Motherhood: "Having healthy children who have been educated and are productive members of society is an important achievement." Because of family demands, Margaret returned to Wyoming and school. She began teaching high school literature and English in Cody, Wyoming. Her interest in drama surfaced, and she was given the job of directing the High School drama “Lost Horizon.” It was during this time that she met Charles Sedenquist, a chemical engineer at Husky Oil. They married in August, and for the next eleven years she worked at home raising their family. When her son, Mark became very ill, Margaret began studying the effects of vitamins and eating habits on health and wellness.

30

Real Estate: "Real estate seemed like a good way to have the time for my family and to make money; I had no idea it would be so much fun." When Diana her youngest child was two years old, Margaret decided she needed a job where she could spend time with her children and make money. Real estate seemed perfect. She saw exchanging as a wonderful vehicle for her clients to improve their holdings and allow their estates to build in a tax deferred position. Many clients have worked with Margaret for years. She has moved several clients who came to her with non-producing properties, and through counseling and exchanging helped them become multi-millionaires. Through a series of exchanges, and over a period of several years, Margaret counseled one client from an 8-unit apartment project in Pasadena that needed repairs into a 48-unit project and a shopping center. Margaret spent years working in organized real estate, culminating in being Vice President, Treasurer and President of the Pasadena Board of Realtors. She also served as President of the Los Angeles Boards of Realtors. Volunteer Spirit: "People are blessed when they give. Giving should be a joy because it produces prosperity for both the person receiving and the person giving." Giving back to the community and the less fortunate has always been a high priority for Margaret. As a Senior Warden and Stewardship Chairperson of All Saints Episcopal Church, Margaret was put in charge of the annual gifting program which had an historically annual collection of $140,000. Margaret increased this figure to over $2,000,000 annually. She saw giving as a joyous expression of a person's own life and blessings. With this philosophy she began training members of the congregation how to raise funds. There could be no talk of the needs of the church; guilt was not to be used as a motivation. Each and every expression of giving had to be a joyous experience, and all sorts of fun needed to be added to the process. All Saints has financially benefited from this program, but the members have benefited more by discovering the blessing of giving. Women in the Vestry: “It still gives me such a thrill to see women put on the vestments." Margaret's involvement in the Episcopal Church went far beyond changing an attitude toward giving. She started the process of getting women ordained because she witnessed a shift in her daughter's attitude towards the role of a woman. Margaret realized that her child was being affected because the church was sending its messages in a single gender.

31

Margaret began talking to George Regas, the rector at All Saints, about God's grace and noting that it extended to women and was not a male domain. She started keeping track of gender-oriented words in the sermons and liturgy. During her first recording period, 100 gender-oriented words were used; 97 were male oriented. The 3 female terms used were mother, daughter and wife. She began sending these tallies to George and having meetings with him to discuss them. Margaret's next focus was to get women into the priesthood. She initiated an ad hoc committee for this purpose. This pilgrimage ultimately led to the Diocesan Convention, where she made the motion to change the language in the Diocesan and canons, by-laws, to include women. Bill Rodiger, the Attorney for the Diocese, surprised by this unscheduled motion, tried to floor it by formally asking, "If we address this matter next year, would Mrs. Sedenquist be satisfied?" In response, Margaret delivered one of her show-stopping one-liners, "From you Mr. Rodiger, I am not seeking satisfaction, only justice." This memorable response insured that the idea was not dismissed. The next year the National Convention began adopting gender changes in the diocesan and canons, which ultimately led to the inclusion of women in the priesthood. Margaret Sedenquist’ s current business activities include:

Owner of Real Estate Brokerage Company, M. H. Sedenquist & Co., that specializes in investment properties including apartments, houses and commercial office buildings.

Owner of Mohawk Management Corp., a property management company. 50% owner and Chair of the Board of Sedenquist-Fraser Enterprise, Inc., which is the

owner of S. F Technology and Leisure Components, a plastics factory. Founder of and member of the Board of Directors of Commercial Pacific Bank and

former Chair of the Board of Commercial Pacific Bank. Margaret's community activities include:

Chairperson of Five Acres, a home for abused children. President of the Pasadena Playhouse State Theatre of California • President of Pasadena

Chamber Orchestra. Past president of the Society of Exchange Counselors and member of the Board of

Governors. Senior Warden and Stewardship Chairperson, All Saints Church. Member of the Board of Directors of the YWCA. Founder of Foothill Apartment Association.

32

V. In The Spotlight B. Roy R. Moore, S.E.C.

BIOGRAPHY

ROY R. MOORE, JR., S.E.C.

By Debbie Sullivan

The life of Roy Rex Moore, Jr. reflects a full range of the qualities that built modern North American society: hardworking, determined, brave, tenacious, honest, innovative, adventurous, independent, and successful.

Roy's father, Roy Rex Moore, was born in 1889 in Van Wyck, Idaho, and the oldest of eight children whose parents had emigrated west by covered wagon. Young Roy grew up herding sheep and helping his parents keep the family going. After completing eighth grade, he went to work to help support the family. His son recalls his stories of those pioneer days, when a man could ride clear across the state of Idaho without running into a fence. Eventually Roy Moore migrated to Wyoming, where he met Ida Patrick. They were married in 1932.

Ida was born in 1901 in Lorton, Ontario, Canada, to a comfortable, aristocratic, livestock-oriented family. Her father imported the Suffolk breed of sheep from Europe, and he was the first to export the breed to the U.S. and Japan - a pattern that his grandson, Roy Moore, Jr., was to follow many years later. Ida grew up to be a well-educated eastern lady with perfect manners, but she must have had an independent spirit to head out for the wilds of Wyoming and give her hand to a poor sheepherder. In 1934, they homesteaded a ranch in the southwestern corner of Wyoming, near Evanston, with no close neighbors and no public water, electricity, or telephone. Ida was a full partner with her husband, and a careful housekeeper; she scraped the logs of their first one-room cabin with glass to make them beautiful, and did the same with the two-story log house they built later.

Their only child, Roy Moore, Jr., was born in Salt Lake City in 1935. He was raised on his parents' sheep and cattle ranches in Wyoming and went to school from first grade through college in nearby Colorado. At Colorado State University in Fort Collins, he was a member of Lambda Chi Alpha fraternity and the National Agriculture Honor Society. After graduating from CSU in 1958 with a Bachelor's of Animal Science degree in animal production, he returned to the family ranch. His father sold the ranch and retired in 1961, investing in property and moving to Phoenix, where he became a horse trader. Roy followed his parents to Phoenix the following year and began trading property to help his father out of some bad land investments in Phoenix his father had made after he retired. He worked for Ed Post Realty, Arizona's largest real estate firm, for five years. He headed up the exchange division, which was created at his request, during the last three years. He earned his broker's license, went into business on his own in Phoenix, starting National Realty Exchange, which was the fore-runner of the RE/MAX format. All seven members were top exchangers. He was soon setting state and national real estate sales

33

records. He married Roberta Olney in 1963, and by 1971, he and Bobbi were the parents of four boys.

In 1967, Roy received the Snyder Trophy for Best Exchange of the Year from the National Association of Realtors (NAR) - one of his most satisfying lifetime achievements. He also served as president of the Arizona Real Estate Exchangers. He received extended education through special courses in real estate and taxation, and in the early 1970s, he began presenting marketing sessions around the country.

During this period Roy exchanged and syndicated into a hotel in Pawhuska, Oklahoma, about 35 miles northwest of Tulsa. Proceeds from Roy's share of that hotel sale provided the down payment in 1972 for what was to become the Rocking M Ranch in Weiser, Idaho, where Roy got back into raising cattle. In the late 1970's he became the first in the U.S. to import the Salers breed of cattle from Europe, another treasured lifetime accomplishment. With the Salers breed, he began working toward developing the best possible quality of beef. The family moved to the ranch in 1979, after Roy and Ida Moore had passed away.

Roy continued to build the ranch and resort operations through the 1980's and 1990's. As his sons grew up and earned university degrees on the proceeds from their prize-winning 4-H cattle projects, they joined their parents in the family business. In the 20 years since Roy introduced the Salers breed, it has become the eighth largest in the U.S. Its exceptional carcass qualities led Roy to establish Maverick Ranch, the recognized leader in developing branded fresh meat programs and improved nutritional beef products. These programs are currently leading to rapid expansion in sales and production, including some of the first new products of their kind to carry the American Heart Association Heart Check seal of approval. Sales are now in the $800,000. per week average. They have increased 40% in the first five months of 1997 and Maverick Ranch Beef now appears in 5% of supermarkets nationwide.

From 1986 to 1995, annual sales of the Maverick Ranch Association (DBA, Maverick Ranch Lite Beef) increased from $1 million to over $17 million, serving hundreds of supermarkets with Lite and Natural Beef and continuing to add new stores. In 1994 the company opened its own processing facility, expanding from 12 to 65 employees. That year the family formed Moore Holdings as the holding company for nine separate integrated family operations.

In 1995, Maverick Ranch introduced a mail order program, and the business established its own laboratories to perform high-quality food testing for Maverick and other producers. Total operations now have 103 employees.

The resort business at the ranch has also been expanding. After the family converted the ranch headquarters to a hunting and fishing lodge in 1988, annual revenues for this business grew from $14,000 to over $250,000 in 1994. This trend continues, with a new marina (the only one on the 57-mile-long Brownlee Reservoir), an exclusive Honda marine dealership, three boat dealerships, and leasing of houseboats, speedboats, and fishing and sailing boats. The RV business at the ranch has doubled in recent years. In 1997 he closed this operation to the public due to government interference.

34

In 1991 and 1992 the Moore family also moved into timber marketing, substantially increasing net worth through tax sheltered timber sales. In 1993 Roy purchased a 20,000-acre ranch in Oregon by pre-selling part of the timber for 90 percent of the ranch out of sheltered timber profits at closing. He considers this the best real estate deal he ever made as a principal. Through timber sales from the Rocking M Ranch and the Oregon ranch, he was able to fully retire the debt on both properties.

Throughout his career of over 30 years in real estate exchanging, Roy has handled 400 to 500 exchanges in 34 states and Canada and has never been in court on a real estate transaction. He currently oversees the nine Moore Holdings companies, serving as President and General Partner of each one and passing his experience on to his sons - Rex in the day-to-day beef business operations, Lance in the real estate division, Charlie in the resort and marketing side, and Monte in marketing and advertising with Bobbi. Future plans include moving more than half of the family's real estate net worth into Maverick Ranch to further the company's growth in the next few years.

Roy was named U.S. Livestock Man of the Year in 1987. Every day since August of that year, Maverick Ranch has donated the beef for all three U.S. Olympic Training Centers, serving 1,100 athletes a year with over $2 million worth of beef so far – the only family-owned corporation to support the U.S. Olympics to this degree, and the first to carry the Olympic logo on its products, which it has also done since 1987. During the 1992 Olympic Quadrennial, through an historic agreement between the U.S. and Japanese Olympic Committees and Maverick Ranch Lite Beef, Maverick Ranch became the first American company to market in Japan with the U.S. Olympic logo. Roy considers the company's donation to the Olympics "probably our main contribution to society," and regards the Olympics as "the strongest social movement worldwide, because they foster peaceful competition and human achievement for the entire world to see."

In recent years, Roy has continued to win outstanding recognition for his achievements. He received the Cliff Weaver Award for Most Creative Exchange from the Society of Exchange Counselors (SEC) in 1993. The next year he became the first member of the American Salers Association Hall of Fame. He has served as director of the National Cattlemen's Association, and is one of the few people to have served as president of two national cattle breed associations.

Roy is a member of the Presbyterian Church. He and Bobbi currently live in Colorado, where Moore Holdings and several of its companies are based, but his business dealings often take him elsewhere. At present he is traveling all over the country presenting a series of seminars on beef. His family shows horses and cattle and competes in beef carcass contests, holding the top record in the nation. Bobbi Moore, who majored in interior decorating in college, pursues her interests in art, decoration, and photography. Her husband is a longtime polo player and past president of the Camelback Polo Club in Phoenix, and enjoys riding on the family ranches and elk hunting.

35

Roy's business goals are to continue working with his family in the fields of real estate, agriculture, and food production, to develop each of the Moore companies on its own, and to quadruple the beef company's annual sales to over $100 million in the next 12 or 15 years. He has a vision of Maverick Ranch as a model company of the U.S. Olympic Committee, one they can point to and show the evolution of a very small family-owned business into a corporation having a major impact on the food and cattle industry.

Knowing Roy's background and vision for the future, it is not surprising that his life goal is "to continue doing what I'm doing for another forty years." Part of his life's philosophy is to enjoy his work and his life, looking forward to the excitement and challenges of each new day. To be successful, he believes, you must believe in yourself, have a positive attitude, and be ready to turn failure into an ingredient for success. Roy believes that "only a handful of great opportunities present themselves in a lifetime. The difference between success and failure is to recognize opportunities when they arise and be able to act on them immediately and with confidence."

Looking back, Roy acknowledges his father as his greatest influence. Both of his parents were strong role models and had a major effect on his life choices. The epitaph he placed on his father's grave expresses how he himself would most like to be remembered:

"Roy R. Moore - an honest man."

36

VI. The S.E.C. History Files A. The KISS Formula

The KISS Formula

By

R. Royce Ringsdorf, S.E.C.

KISS. Not just a romantic or affectionate action. The K.I.S.S. Formula is one thing that we, in the real estate and especially the exchange business, should never forget. It means - Keep It Simple, Stupid!! The Keep It Simple speaks for itself and the Stupid is there to get your attention.

It is amazing how much knowledge that we acquire in our own particular business. When I first started in the real estate field, I had absolutely no idea of what took place. People talked about trust deeds, mortgages, legal description, meets and bounds, etc. I had no idea of just exactly what these things were.

When I received my license to sell real estate 20 years ago, these words gradually started to make sense to me. Through the years, with their continued use with the people I affiliate with, they became so common that I expected others to know their meaning.

This fact really hit home when, one day during a counseling session, my wife happened to be in the outer office. I was doing a fine job (so I thought) in learning all about the potential clients and what it was they wanted to accomplish. When they left, my wife looked at me and said, "Do you realize they didn't even know what a trust deed was?" I stopped to think! Here, I had gone through a whole counseling session and I had been using words that meant nothing to these people! Trust deeds happened to be one of the simpler terms I had used. There were others that I know had worked into my conversation such as created paper, eat, third leg, and many others.

I stopped and thought, because unlike so many others, our spouses can cut through our “smoke screen” very quickly. She had been completely right!

We must all endeavor to do our best, especially when counseling, to keep the words so simple that our customers and clients will know exactly what we are talking about. Many, many transactions are never consummated, not because they are not good for the clients, but because they did not understand what it was we were attempting to do for them. Keep it simple!

Not only must we keep it simple in our dealing with customers and clients, but we must also learn to keep it simple when dealing with our fellow licensees. I have received countless offers at marketing sessions where the terms and conditions were written in such a complicated way that if I were unable to get together with the offering party, the offer meant absolutely nothing to me. I strongly suggest that when you write an exchange offer or a preliminary exchange proposal to another party, that you write the terms and conditions on a blank sheet of paper. Study them over

37

and then see if they can't be simplified.

For instance: “The party of the first part is to assume the existing loans on second party's property and the second party is to assume all existing loans on the first party's property. Second party will give the first party a $10,000.00 note and deed of trust back on the first party's property payable at $100.00 or more per month including 9% interest, all due and payable 10 years from close of escrow. Each party to take title to the other party's property.”

How much simpler it would be if the terms and conditions were written: "Second party to give first party a $10,000.00 note and carry back deed of trust payable $100.00 or more per month including 9% interest, all due in 10 years to equalize equities." Let's not get carried away with a lot of words. The simpler it is stated — the more easily it is understood!

Another way to keep it simple (and we see examples at every marketing session) is to keep the solution to a problem as simple as possible. We all like to brainstorm and I have noticed in the brainstorming session that the number of solutions can be absolutely astounding. Usually the more we brainstorm; the more complicated the solutions become. If a sale will solve the problem and the property is saleable, by all means, sell it! If the property won't sell, we can perhaps get into some of the other solutions. Why complicate a transaction? One reason why I like a two-way exchange is that it is so simple. Many times when I have exchanges with several legs, or parties involved, I may make one two-way exchange after another as we progress rather than try to tie them all together in the same escrow. The more parties to a transaction, the more problems you will have, and the greater the possibility the transaction will fall through.

Keep it simple, STUPID! R. Royce Ringsdorf was born and raised in the Midwest, received his secondary education at the Missouri School of Mines, and Bakersfield College where he majored in Business Administration. Receiving his real estate license in 1956, Ringsdorf worked principally in the sales area until 1966 when he began his specialization in the real estate exchange field. He is a past member of the Society of Exchange Counselors.

38

VI. The S.E.C. History Files B. A Slow Death

A Slow Death By

Clifford P. Weaver, S.E.C., C.C.I.M. Editor’s Note: This article was written nearly 30 years ago, but it sounds like it could have been written today. Some truths just don’t change!

From A Bang to a Fizzle Many exchange, marketing and problem solving groups appear to go through cycles. A lot of groups start out with a bang, appear to be doing well, and then slowly die down.

Same Old Thing See if this sounds like your group. The group does well at first and then you start to notice the same properties being presented over and over again. You also notice the attendance starts to dwindle. A quick check shows the same regulars in attendance, but no new blood.

The Real Problem The real problem is the group does not have an active program to attract others into this specialty field. Without a program, this group might as well die or merge with a group that is active, alive, and meets the "Life blood" challenge.

The Multi-Level Group An experienced visitor to a marketing (exchange and problem solving) meeting can quickly notice if the group is "multilevel." Multi-level means the group has three or more levels of expertise in its members. For example: Level one - the beginners; Level two - those with a year or so experience and have taken one or two seminars and have been working modestly within the group; Level three - those with two to four years experience, have taken several seminars, work aggressively within the group, and make a large amount of income from their participation within the group; and Level Four - the experienced exchangors who have taken many seminars, aggressively work in their own groups, and other groups, and are recognized as "Area Leaders."

The Area Leader The main problem with those individuals who become Area Leaders is they often get too busy to spend time helping the other levels to rise, thus, the levels remain constant and the group does not progress.

The Life Blood-Level One Often as members of groups’ progress through level one into level two, three and four, they forget or neglect to develop a new cast for level one. Thus, the group becomes top heavy and

39

you start to see the same old regulars, the same old property, and hear the same old discussions. Attendance, profits, and spirits drop and the group is in trouble.

Place the Blame It's easy and natural to place the blame on the group leadership. However, to be more truthful, the blame should be placed on the entire membership, as the leadership is as only good as the membership directs.

Rule No. 1 — Objective Every group must develop a primary rule and it should be a well-defined objective. The objective must produce benefits to its membership. The Real Estate Practitioners are tired of being ripped off by those groups (clubs, societies, institutes, chapters) who feel success is measured on the amount of members obtained (give old Joe a wall plaque because he brought 12 new members into the fold). If the group does not produce benefits to its members, the group is misdirected (soon the 12 members brought in by Joe will be given an award for hanging old Joe).

Some of the Solutions If the group is primarily an educational group, then the group should aggressively develop educational programs to benefit its members.

If the group is a marketing group, it has a two-fold problem.

(1) The marketing must be developed to produce the maximum in production. This can best be accomplished by:

o Securing top production moderators. o Working from a planned agenda. o Working on exclusive listings. o Presenting properties on written packages. o Have homework kits on both the property and client.

(2) The group must develop or secure education for those aspiring to level one in a multi-level group. This is the lifeblood. Clifford P. Weaver, S.E.C., CCIM of San Jose, California, was a member of the Society of Exchange Counselors. Mr. Weaver personally administered the real estate interests of multiple partnerships, corporations, and joint ventures throughout his career. His articles appeared in the leading national real estate journals. He was named S.E.C. "Counselor of the Year" in 1968, and was the 1975 President of the Society. He authored articles and books on Broker Estate Building and was a founder of the original S.E.C Real Estate News Observer. . He created a real estate education program on Broker Estate Building and taught throughout the nation in the 1970's. Known for his creativity, good nature and fun loving spirit, today, the SEC honors his name with the Cliff Weaver Award for Most Creative Transaction of the Year.

40

VII. The SEC Education Foundation A. You Only Live Once--Live Life’s Challenges

“You Only Live Once — Live Life’s Challenges”

By

Phil Corso, S.E.C.

President The S.E.C. Education Foundation

It’s been said “Life is not a rehearsal, we only get to do this once.” Ain’t that the truth!!! So, what are you doing each and everyday to “live life’s challenges”? How are you spending your time? Are you dedicating a portion of each and every day to creative thinking? Are you approaching each challenge you face with an “outside the box” mindset? Are you searching for “diamonds in your own backyard”? Are you thinking like a real estate investor or are you stuck in your broker mode relying on clients to say yes? The S.E.C. Education Foundation is dedicated to helping you step out into the world of creative real estate . . . to follow the path less traveled. Our course offerings are designed to get you to think…to act…and to achieve success. Whether you want to learn about time-tested creative formulas to implement in your daily business life, or how to enhance your people skills with counseling techniques that will allow you to better serve your clients, S.E.C. Education Foundation programs will change your life. Maybe you want to learn the fundamentals of Real Estate development…. or sharpen your investment/development knowledge portfolio. The S.E.C. Education Foundation offers programs that will give you the tools you will need to find success. Perhaps you need to better understand “Equity Marketing” as a business practice that will give you an edge on your competition. Better yet, you might need to combine equity marketing with product knowledge and learn to function at the highest level at real estate marketing meetings. S.E.C. Education Foundation programs are the source to recharge your batteries and give you the intellectual firepower to stay one step ahead of the curve… Ultimately, utilizing real estate as an estate-building tool for brokers is the final challenge. The transition from commission income to investment income should, in our opinion, be the objective of every real estate broker who reads these words. To get to where you need to be, you must make the conscious decision to increase your knowledge portfolio. S.E.C. Education Foundation programs are the paths to achieving your objective.

41

The objective of the S.E.C. Education Foundation is to spread the good word of creative real estate. We are dedicated to your success. Our instructors are “doers”…folks who live what they teach everyday. Our programs are designed to give you the tools you need to take your real estate practice to the next level. How can we help? We will assist your organization by providing instructors and programs that will enhance the lives and business practices of your members. We will help underwrite the financial risks of producing an education program for your organization. We will guarantee your success. We invite you to visit our web site, www.secedfoundation.com for a complete listing of our programs and to contact us for assistance in producing an education program that will help your members “live life’s challenges.” Remember, “Life is not a rehearsal, we only get to do this once.” Contact the S.E.C. Education Foundation today and let us take you on a journey on the path less traveled. Phil Corso, S.E.C. is President of P.C.I Associates, Ltd. and a real estate developer, investor and educator based in Scottsdale, Arizona. He is currently engaged in self-storage ownership and development and is an active Walgreens Developer. He is a past president of the Society of Exchange Counselors and presently serves as president of the SEC Education Foundation. He teaches several real estate related courses and was the 2002 SEC Counselor of the Year.

42

I. Society News Briefs A. Education Program Success

Education Program Success Since the last issue of the S.E.C. Observer, the S.E.C. Education Foundation has sponsored several successful education programs throughout the nation. SEC Instructors Ted Blank, Chuck Sutherland, Bob Giniecki, Mark Johnson and Phil Corso taught various programs to sell out audiences in Ohio, Atlanta, New England and Portland, Oregon. Featured programs included Equity Marketing, Counseling, Formulas and Broker Estate Building. Sponsoring Organizations included commercial real estate and exchange organizations dedicated to providing top quality education programs to their members. The S.E.C. Education Foundation’s mission is to sponsor and support creative real estate programs for local, regional and national real estate organizations. Program offerings can be found on the Foundations web site, www.secedfoundation.com. Should you or your organization desire additional information about SEC Education programs for your membership, contact the Society of Exchange Counselors for additional information.

43

I. Society News Briefs B. Broker Estate Building

Broker Estate Building

Wichita, Kansas

October 9th and 10th, 2003

The S.E.C. Education Foundation is proud to present, in association with the Kansas CCIM chapter, “Broker Estate Building,” one of the S.E.C.’s signature course offering on October 9th and 10th in Wichita, Kansas. Registration for the program is ongoing with information available by contacting Rod Stewart, S.E.C., CCIM, at 316-651-0041. The Broker Estate Building program is comprised of historical creative estate building formulas for Real Estate Practitioners. The formulas and ideas for this course were originally created, researched and taught in a seminar conducted by Colby B. Sandlian, S.E.C., and Clifford P. Weaver, S.E.C. This course and its materials was revised and rewritten in 2003 by Phil Corso, S.E.C. with the valuable assistance of Mark Johnson, S.E.C. and the ongoing guidance and encouragement of Colby Sandian, S.E.C. and Bob Steele, S.E.C. Presented by Phil Corso, S.E.C. and Mark Johnson, S.E.C., CCIM, the primary focus of the Broker Estate Building program remains centered upon using real estate as an estate-building tool for the real estate broker and investor, creating long-term cash flow and maximizing profits. Phil and Mark take a no-nonsense approach to teaching that fills the room with excitement and enthusiasm. They teach beyond techniques and add their personal experiences to every segment of their programs. As active investors and developers, Phil and Mark not only “talk the talk, they walk the walk” in their daily lives. Broker Estate Building graduates discover how to become more effective in their real estate practice and, ultimately, make more money. Graduates head back home better armed with new knowledge that will enhance their potential for prosperity.

44

Broker Estate Building is a comprehensive two-day program with strategies and tactics to help you become an “Estate Builder:”

Building your estate thru Creative Real Estate How to become “Your Own Best Client” The Transition: From Broker to Principal Creation of Wealth Formulas Acquisition and Negotiation tactics “Capital Formation Plans” for your projects Expanding Expertise – Managing Time Establishing Banking and Investor Relationships Understanding your Goals and Objectives The “Golden Rules” of OPM Group Ownership Strategies & Structures Control Property thru Options Mortgages, Notes and Seller Financing Counseling the Client and the Broker Buying, Selling and Exchanging Strategies Leasehold Interests and their impact Case studies of closed transactions

For additional information on sponsoring the Broker Estate Building program with your organization, contact the SEC or either instructor.

45

I. Society News Briefs C. Creative Real Estate Formulas

Creative Real Estate Formulas

Oklahoma City, Oklahoma

October 9th, 2003

The S.E.C. Education Foundation is proud to present, in association with the Oklahoma Association of Realtors, Creative Real Estate Formulas, one of the S.E.C.’s signature course offering on October 9th in Oklahoma City, Oklahoma. The Course will be included in the Oklahoma Association of Realtors 2003 Education Conference & Trade Show titled "Unlock Your Potential" which runs from October 8-10, 2003 at the Cox Business Services Convention Center in Oklahoma City. Registration is now open! Visit http://www.oarconference.com/ for more information. Creative Real Estate Formulas covers proven formulas for solving difficult real estate problems and maximizing returns in everyday real estate investments. Presented by Charles Sutherland, S.E.C., Creative Real Estate Formulas has proven to be a “must take” course for real estate professionals, investors, and developers.

Creative Real Estate Formulas is a comprehensive one-day program with formulas and techniques to solve almost any tough real estate problem. Areas being covered include:

Creative Transaction Structures Cash Sales And Exchanges Exchange Transactions That Work Joint Ventures Sale-Leasebacks Creative Financing Development Problem Solving Syndication Subdivision

For additional information on sponsoring the Creative Real Estate Formulas program with your organization, contact the S.E.C. Office, or Chuck Sutherland directly.