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Illinois Rental Property Owners Association (IRPOA) Convention Report (last updated 11/16/01)
by: John Smith, owner of John Smith Property Management

Last month, I attended the Illinois Rental Property Owners Association (IRPOA) Convention in Glen Ellyn from Friday October 12, 2001 through Sunday October 14, 2001. During this time, I had the opportunity to visit with the vendors assembled in the trade show as well as to attend nine (9) one and one half hour seminars all the while meeting and speaking with representatives from other apartment associations from across the state.

Overall, I would describe the experience as very positive. I gained something from every speaker who gave a presentation; had good discussions with the vendors; met, talked with, and exchanged phone numbers and email addresses with many other real estate investors from across the state; and I even won two raffles! If next year, you are considering whether to attend IRPOA’s trade show, I would strongly suggest checking it out.

IRPOA’s hard work showed throughout their seamless convention and their professionalism was paramount. Their web address is at, and of some note, their meetings are right in our backyard in Bloomington/Normal. The next one is scheduled for November 10. I plan to attend, so anyone who would like to carpool, please get a hold of me at 384-6930, or, of course, email me at Their meetings are held at Amanda Brooke Apartments, 1420 E College Ave, Normal, IL in the party room. They have what they call their "War Stories" at 9:00 a.m. and the general business meeting begins at 10:00 a.m.

In my report whenever possible, I have included the web address, phone number, or both for any vendor about whom I was able to get such information. Jane Garvey kindly offered to assist in contact information on any vendor or speaker by contacting her by email at


During the trade show, I attended all but three of the presentations. I had to miss the presentation given by the lead paint panel due to a scheduling conflict. Federal, state, and landlord experts discussed rules and regulations regarding disclosure requirements as well as abatement. I heard that Armor Peterson with the Illinois Departement of Public Health comes highly recommended regarding education on the realities of lead in housing.

I also, regrettably, was unable to attend the presentation given by Verella Osbourne on evictions, and the drug panel presentation in which police and law enforcement experts discussed both how to recognize drug activity, as well as how to deal with it.

Friday night began with a presentation by Pat Callahan who represents The American Association of Small Property Owners (A.A.S.P.O.). Ms. Callahan is the founder and President of A.A.S.P.O. She is both a landlord and an attorney who served in the first Bush administration. Through personal landlord experience with rent control she became interested in the rights of property owners and landlords. She founded A.A.S.P.O. to help give property owners a voice. This organization is growing, and through grassroots action, especially utilizing the internet, they are starting to have an effect on legislation.

Ms. Callahan spoke of the need for affective advocacy as well as good timing in affecting public policy on issues. She cited her group's success in defeating rent control legislation in Massachusetts. She made reference to the book The Art of Political War and stated that her group provides updates on laws and court rulings across the U.S. that affect our industry. The web address for her organization is

Ms. Callahan was a very polished and knowledgeable speaker who was one of three presenters, which also included the lead panel and the drug panel, who were not selling a program.

After Ms. Callahan's presentation, we were invited to stay for another hour and half for coffee, ice cream, and to talk with others attending the convention.

Saturday morning started bright and early with registration and continental breakfast at 8:00 a.m. The first speaker was Don Beck who began at 8:30 a.m. Don Beck was the first of at least two former teachers turned investors to speak that weekend! In 1984, Mr. Beck left a tenured teaching position to manage eighty (80) rental units he purchased while still teaching. Mr. Beck was President of Philadelphia's Diversified Investors Group for nine (9) years and currently serves on the Board of National REIA. Apartment buildings are his specialty.

Don Beck began his presentation talking about his program entitled Down to Earth Landlording. For those of you fortunate enough to have been at the seminar when we had Mr. Landlord, Jeffrey Taylor, about two years ago, Mr. Beck's ideas and presentation were very similar to those taught by Mr. Taylor. They clearly also have some form of working relationship as purchasing Mr. Beck's program also got you a year's subscription to the Mr. Landlord Newsletter.

Mr. Beck spoke of the need to include clauses in your lease to define what happens in the rental agreement if there is a catastrophe such as fire. This clarification will help determine in advance how you, as landlord, are going to address and handle these crises before they ever occur.

Another of his ideas also addressed that in the lease, you could make an agreement whereby the tenant is responsible to pay for your time in the event that there is a court proceeding in which you decide to represent yourself. In this way, you can be compensated for your time spent in court instead of representing yourself pro bono.

My favorite idea discussed by Mr. Beck was that if a tenant writes you a bad check, you have the right to deposit into their account enough money to make that check clear! His favorite example was that at one time, a tenant of his wrote him a check that cleared after he deposited one dollar cash into the tenant's checking account.

Another suggestion that Mr. Beck brought up during his presentation was that of an "acceleration clause" in the lease. Those of us who have bought real estate with a mortgage may well already be familiar with "acceleration clauses". This is the vehicle by which a bank can demand the entire unpaid portion of a mortgage be due immediately when they file lawsuit for non-payment. In the absence of this, the bank would have to take someone to court every single month after they stopped making installment payments on a mortgage. Mr. Beck's application of this is in the form of rent.

With the addition of an "acceleration clause", when you have to take a tenant to court for non-payment of rent, you would be suing for the entire balance of the lease. While, typically, a judge would not award a judgment like this, if the tenant does not show up to court during the eviction trial, as is frequently the case, there will often be a judgment in the landlord's favor for the entire amount sought in the lawsuit. This larger sum can provide the landlord with leverage when seeking payment from the former tenant. Mr. Beck suggested that the landlord could now inform the tenant that if they do not make a reasonable installment toward the outstanding amount, then the landlord can tell the tenant that they will "forgive the debt". This would involve writing a letter to the IRS in which the amount of the forgiven debt would be reported, and that money would count as income to the tenant. Many tenants would wish to avoid this as they would now owe income tax on the amount of the forgiven debt, plus that additional income could alter government benefits that the former tenant is receiving or hoping to receive such as unemployment or other subsidy receipts.

One final tip that Mr. Beck discussed may be useful when trying to track down a tenant. This tip involves sending a letter to your tenant at their former address at your building. On the front of the envelope, by the tenant’s name and address, write clearly “Do NOT Forward, Return Service Requested, Return To Sender”. If the tenant has contacted the post office to forward their mail, you will receive your letter back with the new address clearly indicated on the front of it by the post office. This method will only work if the former tenant has forwarded their mail with the post office.

If you wish to order Mr. Beck’s program, his telephone number is 215.542.9804.

The next speaker was Wendy Patton delivering her talk on Unlocking the Secrets of Lease Option. Wendy Patton is a speaker on “Little or No Money Down” real estate investing. Ms. Patton has over fifteen (15) years and hundreds of transactions worth of experience as a real estate investor. Her specialization is in lease options. She is Past President and current Board Member of a group for advanced investors (D.O.L.L.A.R.S.) in Michigan.

During her presentation, Ms. Patton talked about the benefits of purchasing real estate on lease option with little or no money down, and she especially emphasized the benefit of little or no risk to the investor.

In her method, she only wants to do business with owners who ARE NOT in financial dire straits to make certain that they do not default on the mortgage payments while she still has the option to purchase their property. If they were to default on their mortgage, she could lose her investment.

In examining this investment type, consider that property sold on option has an added value attached to it. This added value is derived by the investor having to raise very little capital. Most investors are willing to pay more than fair market value for a building if they are granted terms under which they need to raise very little capital. Essentially, she approaches people who have not yet considered selling on option, and if her sales pitch is successful, optioning the property from them at wholesale cost, without the additional cost of the added value. After purchasing a building on lease option from the owner, she will then advertise the property for lease with option to buy and require that the tenants exercise that option in a relatively short period of time. Her mark up and profit is largely derived by purchasing with almost no money, and then "adding value" by making the property available for re-sale on lease option. If she does any improvements to the building, that will also be taken into account before making her offer, as well as considering how much that will affect her profit margins.

In pursuing a method like Ms. Patton’s, one would want to find someone who has not considered selling his or her house on lease option. In looking for a seller who is financially afloat, the target audience might be someone who has two house because of recently getting married where both spouses had a house, or perhaps finding someone who bought their next house before selling their first one. This seller may be open to getting out their equity later (when you exercise your option to buy) in exchange for being relieved of the current monthly payments. In essence you have bought a lease option for “wholesale” price.

Next, one would market to the population at large. By selling the house with the “added value” of selling on option, the price one would expect to receive would be higher than typical fair market value. At this point, it is being sold “retail”. Your profit is in the markup, and your security is that you can charge the buyers at least as much for the option as you have invested up to this point. Now, your risk is reduced.

When your buyers want to exercise their option, you schedule two closings at the same time. You buy from the initial seller, and you sell to your buyer all on the same day. And, if you’ve done things well, you walk away with profit.

An advertising campaign that she would endorse would read something like,” Company wants three to four homes in this area for long term lease or purchase.” She will also stay in contact with the local Realtors, asking them to call her if one of their sellers ever says anything like,” If I don’t sell this house soon, I may have to rent it out.”

After lunch, the next speaker was a man by the name of Jeff Desich. Mr. Desich is from Mid-Ohio Securities. He explained how to use IRA and 401(K) funds for real estate investing.

There is an investment vehicle called the self-directed IRA. Through the use of this medium, an investor can use their IRA to invest in real estate without using the traditional Wall Street method of using a Real Estate Investment Trust (REIT). With a self-directed IRA, an investor can use their same real estate investment strategies and philosophies that they normally use, only using those strategies with funds that are either tax-exempt or tax-deferred.

Jeff Desich talked about going to the Mid-Ohio Securities web address,, to begin the paperwork for opening the self-directed IRA. Remember that an IRA is nothing more than a designation. This money is set into its own account for retirement to grow or shrink as fortune plays upon it.

Most people think of using their IRA monies to invest in stocks, bonds, money market accounts, mutual funds, or certificates of deposit (CD’s). The self-directed IRA allows you to add real estate and real estate corollaries such as options and partnerships to that list. This would essentially allow the investor to become their own REIT while still enjoying the full control of determining for themselves which buildings to buy, sell, develop, rent, lease, lease option, flip, or hold while all of the proceeds and profits are tax-exempt or tax-deferred.

While this portion of Mr. Desich’s presentation contained a great deal of allure for many real estate investors, he added another facet to IRA contributions that would also attract real estate investors. Mr. Desich went on to discuss how much of our current real estate income can be siphoned into our IRA’s. Once an investor gets into the slightly awkward position of having profits exceed the tax sheltering benefits of depreciation, they now need to pay income taxes on profits. What many investors don’t realize is that whether they conceptualize their building(s) as being a business or not, the IRS treats it (them) as one. This means that as the owner of a business, you can divert as much as six thousand five hundred dollars ($6,500) of real estate profits into a simple IRA, which is a tax deduction. As a matter of fact, after you divert that money, your money, into the IRA, your company can match an additional three per cent (3%) or up to one hundred and ninety-five dollars ($195) more, for a total of six thousand six hundred and ninety-five dollars ($6,695), all of which is tax deductible, minimizing your tax position. In fact, as long as your spouse does work for the business, you can pay them up to six thousand five hundred dollars ($6,500) for the work they do, all of which they can put into a simple IRA as well, plus, again, the business can match up to three per cent (3%). You can also put your children to work. By using your infant children’s photographs as part of your advertising, you can pay them for modeling. How much? That’s right. Up to sixty five hundred plus the three per cent matching. Sound too good to be true? It does to me, too, which is why I’ll be consulting my tax attorney on all of this before implementing any of it into my business practices.

Some more tips pointed out by Mr. Desich during his presentation were that a self-directed IRA couldn’t be used to invest in collectibles like Persian rugs or rare coins. Apparently the IRS has no sense of humor about such things, so, again, only begin your work with the sound advice and consultation of your tax professional.

The last speaker on Saturday afternoon was a fellow by the name of Nick Sidoti. Mr. Sidoti has been active as a real estate investor and manager since 1979. He is both a Registered Apartment Manager and a licensed real estate agent. His main focus is on small apartment buildings and single-family homes. Mr. Sidoti’s presentation was focused on making landlording as painless as possible and working on Special Housing to generate significant cash flow.

The first point Mr. Sidoti mentioned that got my interest was talking about leaving the apartment unlocked to have prospective tenants show themselves around in the available unit. To ease our inherent fears about letting strangers have access to our units, he also suggested having a neighbor unlock the door before the prospect gets there, and then locking an hour after the scheduled appointment. The beauty behind this approach is self-evident: no more worries about no-call/no-shows. You can relax about the apartment and let it rent itself.

Nick Sidoti went on to talk about what he called the two biggest lies in real estate: deferred maintenance, and normal wear and tear. Mr. Sidoti suggested that both of these terms were euphemisms for neglect. His engaging style allowed him to rant on this point all the while holding the attention of the audience. “How often do you paint your living room at home,” he vexed the audience. If you have to paint it more often than that in your apartments, it’s because of tenant neglect. He certainly had my attention.

Mr. Sidoti went on in such a way as to help change the perspectives of the landlords in the audience. Get the neighbors of your apartment buildings on board by sending them letters explaining that you are the owner of the building down the street, and you’d like to be notified if anything goes on that is inappropriate or that bothers them. By getting your neighbors on board, they’ll be getting on your side. They may well call you, the concerned landlord who wants to maintain a quality property instead of complaining to the city departments when tenants are behaving badly.

Another way that Mr. Sidoti worked to change the perspective of landlords was to talk about what behaviors we find unacceptable in our tenants. If tenants are playing music too loudly and disturbing the neighbors, we need to have an intervention. Landlords did not get into this business to have such problems with tenants. Talk with them once or twice, and then offer to simply break the lease with them if the behavior hasn’t changed. They are not going to get considerate if they have been unwilling to change their behavior after the first two conversations. Get them out, and move on to a tenant who is not going to be a source of problems. If we, as landlords, can continue to eliminate the problem tenants, then we can have fewer and fewer problems to address. Mr. Sidoti was very clear on this point: we make money buying buildings, not by managing them. Make the management as painless and easy as possible by no longer working with tenants who are going to be a drain on your business and on your time.

The most inspiring part of Mr. Sidoti’s presentation was addressing what he called “special needs” housing. He has put together a complete program by which he offers, essentially, executive suites.

Through this program, apartments are fully furnished with furniture that has already been field tested by Mr. Sidoti in his own units. Examples he gave were chairs, but no sofas to discourage lying down in the living room. He has a maid service take care of these units, as one of the perks, and that service helps to keep it similar to quality hotel life: new toilet paper rolls placed on the hanger, soap dish refilled, Kleenex kept stocked, set of dishes placed in the apartment, iron, toaster, etc. His units are top shelf, and the tenants that he caters to are willing to pay for that luxury.

The focus group for these units is somewhat affluent student housing or perhaps retired or veteran populations. Largely the units address the needs of those who are less willing or less able to take care of such things on their own. And, because of the added value, rents can be substantially higher to generate significant cash flows.

Lending a personal endorsement, I purchased Mr. Sidoti’s program after his presentation was over. From the materials that I have reviewed so far, his programs seems very well thought out and very straight forward to apply to our businesses.

After this presentation, the show ended until early the next morning. I was so interested in seeing the first speaker the next day that I got up at 5:15 a.m. to be sure that I’d be on time. And, anyone who knows me knows that for me, 5:15 a.m. is more often a late night than an early morning!

The speaker whose methods I was so interested in was an investor by the name of Robyn Thompson. Ms. Thompson is known as the “Rehab Queen”. She got that title by rehabbing and selling fifty houses per year for the last four years. What is most impressive about her record is that she won’t touch a house unless she expects to pull out at least a twenty-five thousand dollar ($25,000) profit.

Ms. Thompson shared some of her tips with us at the ungodly hour of 8:30 a.m. on Sunday morning. It was definitely worth the lack of sleep.

The houses that Ms. Thompson buys are what we would know of as “distressed”. She buys these distressed houses, has her contractors do remodels, and then sells them. She owns some rentals, but turning over her properties is her main objective.

Ms. Thompson pointed out that when she is rehabbing, she would always try to make the kitchens and the bathrooms her highest priority. For example, every one of her houses gets a whirlpool bathtub when it gets remodeled. The whirlpool tub is surrounded by what she liked to call the “nice” tile complete with different colored tile spaced out across the wall for a beautiful bathroom. Her kitchens get new cabinets, and are made to look like the kitchen in which we’d all like to cook.

Ms. Thompson focuses her efforts on making affordable houses that are very attractive and have some of the bells and whistles of more expensive, new-construction homes. She then markets these houses herself by focusing her advertising on the down payment and monthly payments, not on price and location. She stressed that most of her buyers make an average of ten dollars ($10) per hour. This population may not even be aware that home ownership is an option. Her advertising technique is to catch the fancy of the readers of the Sunday paper. She works with the inexpensive and, for her, highly effective technique of using inserts in the newspaper.

Ms. Thompson’s record speaks loudly. The audience poured into her session regardless of the early hour, and paid rapt attention. A great many people also bought her program and signed up for her “boot camp” in which she trains students in person over a weekend in her hometown.

Her web page has more details as well as giving contact information to buy her program and instructions on how to participate in her boot camp. That web address is

After a brief break, we returned to the lecture hall to hear Louis Brown give his presentation on Street Smart Asset Protection and Estate Planning.

Louis Brown has been investing in real estate since he was a teenager, and has been a full time investor since 1984. He works with homes and apartments and also deals in loans and discounted mortgages. Added to his list of credentials are that he is a former president of the Georgia Real Estate Investors Association and of the National Real Estate Investors Association.

Mr. Brown’s presentation focuses on the use of the land trust as a tool for constructing a “foundation of protection”. He believes, like many investors that I know, that we need a base of income or of worth to free us up to pursue other opportunities. The effective use of a land trust, in Mr. Brown’s estimation, can protect that base and allow us to pursue opportunities as we wish, while the land trust can be a form of managing risk exposure.

Several benefits of holding your properties in a land trust were outlined, but of especially high value was privacy of ownership. When a prospective plaintiff contacts an attorney, according to Mr. Brown, that attorney might wish to run a search to find out whether that would-be defendant is collectible or not. Most lawsuits are structured in such a way as the attorney is only paid from the proceeds of the suit. If the attorney does not have reason to believe that the defendant is collectible, they may instead choose to file only on an hourly basis. Most prospective plaintiffs will not pursue a case on an hourly basis, and so the chances of that lawsuit ever being begun can drop significantly.

Another benefit that Mr. Brown outlined is transactional privacy. It was suggested that one could avoid the “due on sale” clause that frustrates many land contract offers. In most instances, when a bank loans money against a property, it does not allow anyone else to assume the mortgage. The full outstanding balance of the mortgage is “due on sale” to be certain that the bank is still first in line to collect in the event of a default. With a land trust, an owner no longer sells the property. Instead, the beneficial interest of the property is sold. This was presented as a way to not have to refinance in the event of a sale.

For example, any owner always has the right to place their property into a land trust. Once it is in that trust, they can sell the beneficial interest to anyone. The fact that the property is still owned by a trust is not important because all of the proceeds pass through the trust into the hands of the beneficiary. The bank, allegedly, does not know or is not concerned that the beneficial interest has changed hands.

This practice does not sound intuitive. Again, I would strongly recommend that you consult a professional before trying to place this into practice.

Mr. Brown essentially explained that land trusts could be a more attractive and efficient alternative to having a corporation, or multiple corporations to insulate your assets. He has even devised what he called a “paranoia scale” to assist an investor in determining what level of insulation they would be most comfortable holding.

If, like so many of the others at the conference you find this information interesting, then you can find the webpage for Mr. Brown at

After Mr. Brown’s seminar, we had a well-catered lunch, which gave a good opportunity to meet and talk with other investors. The next speaker I chose to attend was one of our neighbors from Danville, a Mr. Chris Albin whose topic was managing low to moderate-income rental property.

Mr. Albin is another teacher turned full time investor. He is a former president of the Danville Area Landlords Association, a current Vice President of IRPOA, a writer for the Danville Area Landlords Association, and a speaker who is clearly experienced in education.

Chris Albin used many overhead printouts to help illustrate his points. He emphasized that low income property could have a very desirable profit margin attached to it, and that there seemed to be a growing demand for those units.

He described the low-income tenant as one who typically lives from paycheck to paycheck focusing on survival instead of on getting ahead. These tenants will often feel victimized, and therefore focus on excuses and second chances.

Mr. Albin stressed that in this type of housing, it is not worth chasing money. File the judgment with a collection agency, and then forget about it.

Focus especially on providing affordable quality housing, and Mr. Albin stated that the tenants will seek you out for their housing needs. In many ways, he believes that you can work to provide the best units the tenants have seen and good service to develop a reputation among that population that will keep your units filled. This will translate into less marketing and advertising on the part of the owner, and fewer showings before getting a lease signed. Further capitalize on your growing reputation by letting your current tenants know when you have another unit opening.

Additional adaptations in your landlording philosophy may be advantageous when shifting to working with low-income housing. Mr. Albin recommends that you move to raising your rents between tenants instead of annually. Refund security deposits when your former tenants have made a good effort. Remember that your work is toward the development and maintenance of a reputation, not just to profit off of the individual tenant. It’s the difference between short-term and long-term goals.

If you don’t already use screening extensively with your current population, Mr. Albin reports that with this group, screening is the most important part of landlording. Check criminal records. As far as the credit report goes, flaws are not as important as negative patterns. Very important, also, is to avoid tenants with a recent eviction.

When working with the low to moderate-income housing market, it is much more likely that you are going to have an introduction to Section 8 subsidized housing, if you haven’t already experienced it. Mr. Albin discussed some points specifically related to Section 8 tenants and procedures to help landlords be prepared for working with that government entity.

Specifically on Section 8 housing, Mr. Albin stressed that, contrary to public perception, there is not a guaranteed payment. Landlords still need to do their own screening for Section 8 as approval by Section 8 does not in any way imply that the tenant has passed any kind of tenant screening process other than demonstrating hardship. Always look for paint problems prior to the Section 8 inspection to be certain that your property is not tested for lead paint against your wishes.

The presentation given by Mr. Albin was an excellent overview of the issues specific to working with the low to moderate-income housing market. Mr. Albin is offered up as a success story of Jim Banks, and so the program is available through

The final seminar of the convention began at 3:30 and was presented by Rex Maroney. The title of Mr. Maroney’s seminar was The Landective Process.

Mr. Maroney is a landlord who does a great deal of research on his tenants to minimize the chances of tenant fraud. He has designed a program to both help protect landlords from unsavory tenants as well as to profit from their dishonesty. He is currently a board member of the Philadelphia D.I.G.

Rex Maroney explained the process by which criminals commit identity fraud, and it was frightening to see the ease with which it could be completed. His program is designed to allow landlords to detect identity fraud by checking different sources than many of us typically consult. In this way, those who would attempt to defraud landlords can be foiled before they ever move into our units. Plus, once we have established fraud, we are entitled to keep, as compensation for loss, the application fee or holding deposit. In addition to outright identity fraud, he also demonstrates means by which other dishonest reporting can be detected on the application to lower the chances of having a bad tenant, and to meet the criteria by which a landlord can keep the holding fee.

Mr. Maroney was very clear on this point: the fee CANNOT be called a security deposit, escrow, or rent if we are to keep it when we determine there has been dishonesty on an application. It must be labeled an application fee, or a holding deposit. The application fee should be between fifteen dollars ($15) and fifty dollars ($50), and the holding deposit would be one third of a month’s rent. He would have a stipulation in his application that clearly stated that if a tenant was honest on their application and did not pass the background check, their holding deposit would be returned. If, however, they were dishonest on their application, their holding deposit would be forfeited.

Rex Maroney reported that a majority of applicants are dishonest in their applications. In fact, he added that he typically makes more money on units that are not filled than on units that are rented due to the holding deposits that are kept.

The technique demonstrated by Mr. Maroney is thorough, and he was able to show that the typical resources that landlords use through credit bureaus can be incomplete. He showed on an overhead projector the Equifax report of a tenant that I, personally, would have approved, and yet, on another of the sources he consults, he was able to show that this applicant had been evicted from their previous apartment. He has assembled a very impressive network of sources to consult before signing a lease with a tenant.

At five o’clock the trade show was over, and we all went back to our rental units with many ideas on how to more effectively run our businesses. I have tried to summarize, as much as possible, the main points made by the instructors so that the reader can benefit from those ideas as well as gain access to these instructors to more fully implement their programs.

Tips from every one of the speakers could be applied to many of our businesses whether we are house owners, apartment owners, rehabbers, flippers, or investors in any capacity in real estate in order to maximize our outcomes.

Good luck, and happy renting, rehabbing and flipping!

John Smith has a Master's Degree in Education, is a real estate investment and management consultant and trainer throughout the state of Illinois, and has been a real estate investor and manager for over seven years in Champaign-Urbana. To contact John Smith, email him at or call (518) 851-7820.