The National Real Estate Investors Association
Getting Involved for the Good of Investors
by Carole VanSickle Ellis
The National Real Estate Investors Association (National REIA or NREIA) was born in late 1985, when leaders from roughly a dozen real estate investor organizations met in New Orleans to exchange ideas and, before leaving the event, established a framework for a national association. The group’s first national event, held just a few months later, attracted more than five times the number of participants in the original summit. National REIA and its mission to educate members to become better real estate investors as well as empower leaders to execute this education and empowerment was born.
“Real estate investors are so important to the national economy, local communities, and the people that we serve,” said Rebecca McLean, executive director of National REIA. “I want investors to know that I am passionate about my job with National REIA because of how important real estate investors are to the American dream.”
McLean, who has been with the organization since 2001, describes the role of National REIA as one in which the organization promotes, protects, and educates the real estate investor population. As executive director, she said, her role revolves around “crafting a vision and carrying it out,” from “drilling down to the local member to provide value to them as an association” to providing programs and resources and guiding groups in implementation and use of those elements.
“We are always thinking in terms of the needs of the industry and the individual investor,” McLean explained. “The question is always, ‘How can we best serve them?’”
Charles Tassell, who has served as COO of National REIA since 2014, added, “One of the most important parts of being a real estate investor is making sure you are ready to adapt to the communities in which you are involved. As a real estate investor, you need to understand them. Being part of National REIA [at the local level] helps you keep your finger on the pulse of the community.”
Bringing Protection, Education & Advocacy Together
McLean cited the global COVID-19 pandemic as a recent example of how NREIA helped investors deal with unprecedented events in their local communities. “One of our biggest successes took place when local and national policymakers were extending eviction prevention during COVID,” she said. Starting in March 2020 with the initial CARES Act, moratoriums were placed on evictions with the intent to protect residents experiencing economic hardship and enable them to avoid environments in which social distancing and other protective measures might be difficult or impossible. At this time, many states were enacting their own shelter-in-place mandates and eviction-extension responses as well.
Every area of the country had overlapping and varied programs revolving around delaying evictions or prohibiting them entirely. Whether intentional or otherwise, these programs had the potential to inflict massive harm on rental asset owners who were, in many cases, placed in an impossible situation wherein they still owed money to lenders but were unable to enforce any type of rent collection strategies.
“We ran a huge campaign asking people to reach out to their legislators to stop some of the most onerous legislation from moving forward,” McLean recalled. “We were so proud that we could rally our people to protect themselves and the industry by influencing decisions legislators were making during that time period.”
McLean and Tassell both emphasized the importance not just of being aware of potential issues facing real estate investors, but also of knowing how to effectively communicate about these issues with other investors and policymakers who may not be familiar with the details of the industry. While real estate investors may be sympathetic to an issue intuitively because they understand the nature of property investing, those outside the industry may feel attacked if confronted with issues without the right context and background information.
“When your business feels attacked, as many investors’ businesses were during the pandemic, it is hard not to be angry and show your frustration,” McLean said. “That is not usually going to be helpful when communicating about the problem with politicians and lawmakers.” She continued, “We teach our members how to build relationships far ahead of the time when you have to have these conversations and how speak in a calm, informative manner that shows you understand both sides of the equation but believe the unintended fallout or consequences of a proposed policy or legislation is going to cause greater harm to the community overall.”
Part of National REIA’s educational efforts involve making training and timely news available to investors who want to start the process of becoming an effective advocate in the real estate space.
“We have resource pages, advocacy pages, and our news site, Real Estate Investing Today, to help anyone who is in the real estate industry pull everything together,” Tassell said. National REIA’s resource pages include instructional videos on how to effectively communicate with policymakers, how to prepare for a conversation about a piece of legislation, and how to meet productively with different stakeholders in the legislative process.
“The worst thing you can do is show up at the third reading of a bill and say, ‘We were not involved in this, and we want you to make changes,’” Tassell explained. “No elected official responds well to that, and communities do not like it either. You want to be in a position where you have been involved from the beginning, you can answer questions, and you are helping improve understanding of how the real estate investing process works.”
He continued, “If an investor is going to be in this industry for the long haul, they need to be involved in raising issues, raising questions, and participating in a solution-oriented process.”
Powerful Advocacy at a National Level
Nearly all real estate investors share a deeply ingrained creative drive to find solutions to problems — both their own and those of others. As a result, the real estate investing industry is filled with niche strategies, some of which ultimately burgeon into driving forces in the national market. One such strategy is seller financing, in which the owner of a property (the seller), carries the loan or debt on a property for the buyer (typically a real estate investor or moderately strategy-savvy retail buyer).
Investors have been leveraging seller financing for years in situations in which a seller might require a higher sales price than cash purchasing will permit or a buyer might not be able to demonstrate conventionally acceptable credit in order to buy a property using the traditional mortgage format. Seller financing also may be leveraged to enable buyers to access better interest rates or loan terms for their unique situations than they might if they transacted through a traditional lender.
Seller financing has been around since feudal times in various forms and fashions, but it emerged as a prominent strategy in U.S. real estate in the 1970s and 1980s, when interest rates hovered in the high teens. Because conventional financing was largely unaffordable, the tactic flourished.
It reemerged in the national consciousness in the mid-2000s and in the wake of that decade’s housing crash and subsequent financial meltdown. By 2014, Advanced Seller Data Services estimated there were more than 110,000 owner-financed notes being created each year, a huge leap upward from the roughly 60,000 reported in 2009. That year, the Consumer Financial Protection Bureau (CFPB), enacted the first of a series of regulations governing seller financing, including passing laws limiting the number of seller-financed transactions permitted per seller annually, licensing, and how terms of the loans could be set and buyer ability to pay should be assessed.
“The people who created and passed these laws did not understand the consequences of the legislation that restricted how many of these transactions you could do, in particular,” McLean said. “For many people, seller financing was the primary way they exited an investment. It was a terrific mechanism for individuals who could not get traditional financing to own a home. Limiting investors’ ability to seller finance also limited their ability to rehab properties, improve communities, and help others realize the American Dream.”
National REIA sprang into action, not only advocating on behalf of investors to raise the limit on the number of seller-financed transactions conducted annually, but also providing timely updates and education for investors who needed to be sure they were abiding by the new regulations.
“This is just one way we are helping communities,” McLean said. “That battle is still ongoing, but things are getting better.”
National REIA is also a leading voice in the national discussion revolving around wholesaling. The association’s outside general counsel for more than a decade, Jeff Watson, is leading the charge.
“An unfortunate combination of events has led more and more investors down the wrong path with wholesaling,” Watson said. “One: the recent, really long, sustained economic boom during which prices kept going up and up. Two: the trend of increasing social media influencing, which permits [social media users] to fake success [in real estate] without being held accountable, including when they are teaching strategies that they do
not really understand how to implement.”
He concluded, “What we are seeing in reaction to that combination are increasingly corrupt, bad, illegal practices being used by wholesalers all over the place.”
A fundamental area of confusion around the wholesaling process is the definition of the activity itself.
“The way wholesaling is often taught today, it is a specific type of real estate transaction that occurs when a person facilitates the transfer or sale of real property without ever becoming the owner of that property,” Watson explained. “This creates a situation where the average wholesaler is engaged in activities that require a real estate license and often involve deceptive marketing practices by sending out notices that claim, ‘I buy houses,’ ‘I pay cash,’ or ‘I close quickly,’ when, in reality, they never actually buy. To make it worse, they rarely close quickly when a sale does occur because the wholesaler is not in a financial position to actually close. Instead, they claim to be able to close, then look for a buyer who can close once the property is under contract.”
While the majority of real estate investors leveraging this wholesaling technique may not view it in Watson’s stark terms, retail buyers typically do. This is particularly true when wholesalers move into an area in the wake of a local disaster, such as wildfires, hurricanes and flooding, or a sharp economic downturn. The volume of promotional materials, promises to pay cash and close quickly when this may not be possible, contracts Watson describes as “one-sided” with little earnest money and extremely lenient exit clauses, and targeting of “motivated sellers” with sales materials combines to create a perception that the real estate investing population is composed of “vultures” out to take advantage of vulnerable homeowners and, to compound the issue, who are unable to deliver on their promises. Public outcry has led to targeted legislation in many states already.
“It has gotten so bad that states like Oklahoma, Pennsylvania, Illinois, and South Carolina have all enacted legislation preventing these undesirable activities,” Watson said, noting Tennessee, Kansas, Arkansas, and Colorado are also working on similar measures.
The solution, National REIA believes, has two primary facets: education for investors about the state-specific laws affecting current wholesaling practices and strategic adjustment of the wholesaling model so that the investor has the funding to make actual purchases.
“They need to line up financing, get an economic ally, or find other resources to fund their actual [wholesale] purchases,” Watson said. “They also have to understand, by way of education, what is going wrong with what they are doing now.”
“Sometimes, investors are taught incorrectly; they do not know any better, or they think the contract-assignment strategy is a good way to get involved in real estate cheap,” McLean said. “There are fine lines in real estate because different sellers are in different positions that make some creative strategies the right decision for them at the time. The real estate investor has to be able and willing to evaluate the situation and determine if the deal is good for all parties involved, and they have to be willing to navigate these situations inside the rules so they do not hurt the rest of the industry. At National REIA, we are working on this from both sides to ensure investors understand their legal responsibilities as well as the ethics involved.”
“The United States is a fantastic country for real estate,” Tassell concluded. “Our goal at National REIA is to get real estate investors plugged into the education and resources they need to move forward with their goals and dreams here.”
SIDEBAR
Shared Ethics & Partnerships
National REIA is arguably one of the highest-profile national groups offering real estate investor gatherings on the local and national levels, but the group is not alone in the investor-gathering space by any stretch. As early as the late 1800s, real estate professionals had begun gathering and creating formal groups and associations intended to support members and cultivate the real estate industry. Today, there are thousands of real estate investor groups and meetups, including many that leverage the “REIA” nomenclature for credibility and promotions.
However, Tassell emphasized, not all real estate investor associations (REIAs) are members of National REIA. “There are two distinguishing factors for National REIA,” he said. “One is ethics statements and standards, and the other is our national partnerships with a variety of businesses that support the industry designed to help investors save money long- and short-term whether your business is wholesaling, flipping, or something longer-term. Our members use these partnerships all throughout the investing process.”
“We also partner with other real estate associations for legislative purposes,” McLean said, “including the National Apartment Association (NAA), the National Multifamily Housing Council (NMHC), and the National Association of Realtors (NAR).”
Tassell noted that there are many types of real estate investor groups, an issue that some investors find confusing when they are looking for a National REIA organization in their local area. Only official NREIA-affiliated organizations can access National REIA’s member benefits, McLean emphasized.
“When you join a local, NREIA-affiliated organization, you are automatically a member of National REIA,” McLean said. You get all of our legislative information, updates, resources, and everything that comes with your local community group also.”
Learn more about National REIA and find your local chapter at NationalREIA.org.
