Private Lending 103: Funding the Deal

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Private Lending 103 Webinar with Download

 

 

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This survey is about our Private Lender Educational series. Private Lending 103 coming soon. Take the survey and we can add your suggestions for future webinars or PDF’s http://www.surveymonkey.com/s/HSH3HQ8

News from Inman News: Consumer Protection Bureau Updates

Mortgage Loan Fraud Assessment based upon Suspicious Activity Report Analysis (Photo credit: Wikipedia)

Integrated RESPA, TILA disclosures coming this fall

Seal of the U.S. Securities and Exchange Commission. (Photo credit: Wikipedia)

Inman News

The Consumer Financial Protection Bureau expects to complete a rule integrating and streamlining federal mortgage disclosures. Borrowers currently get separate disclosures under the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA).
“Pending the results of additional testing, we expect to issue the final rule this fall, although we would not expect any implementation work to begin until” after January 2014, the bureau said this week in a semiannual update of its rule-making agenda.
Also on the bureau’s agenda: clarifications and amendments to several mortgage-related rules mandated by the Dodd-Frank Act, most of which are slated to take effect in January 2014. Source: consumerfinance.gov.
Copyright 2013 Inman News

 

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Commercial Real Estate Lapse, Rebound, Relapse Part II: Sunday Morning Thought 09 June 2013

After a lapse, there is almost always a rebound, which is the current state of the commercial real estate market.  The rebound even includes areas of cities which were once abandoned many years ago, and are now going through a city revitalization project.

During the lapse many investors created a buying market for many new investors of commercial real estate.  The lapse being caused by lenders either not refinancing properties, which became deals with lending already in place for an investor who has access to cash to pay off a note which balloon has come due.  Or from an investor who entered the commercial real estate market trying to wear multiple hats, like managing the property, doing the maintenance and up keep for the property, and acting as the handyman as well; the proverbial jack of all trades, but master of none.

A formula for an unsuccessful leap into the commercial real estate market, driving an investor into a frenzy of disappointments, ending in a loss of the investment and resentment of land lording.

Real estate investing is mostly the K-I-S-S method, simplicity in all things.

So with the current rebound, history will repeat itself with the new commercial investors, as the commercial real estate market is now poising itself for another relapse.

The rebound is being driven by higher purchase prices which are substantially impacting the capitalization rate of properties which are the “bread and butter” types of commercial real estate. So what may have been a multifamily property which sold with a cap rate of 8.5%, goes up for sale in this rebound market, and after a bidding war, sells with a current cap rate of 4.5%, a recipe for higher rents to try and bring the cap rate back towards 8.5%.

But, the shadow market of house rentals may prove to cause another relapse in the commercial multifamily sector.  With renters having a choice of either renting a house for the same price as renting an apartment in a 100 plus unit complex, the house with a front yard and backyard may become a better option for many.

Watch the Private Lending 102 Webinar on our FaceBook page.  At the end of the Webinar download the information loaded PDF Private Lending FAQ’s.

 

 

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• Commercial Real Estate Lapse, Rebound, Relapse: Sunday Morning Thoughts 02 June 2013 (backedbyrealestate.com)
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Commercial Real Estate Lapse, Rebound, Relapse: Sunday Morning Thoughts 02 June 2013

What caused the lapse in the commercial real estate market?   

Many would think sub-prime lending, but that is not the cause.  Commercial lending is based on the income of the property.  The lapse has been caused by easy lending.  Similar to sub-prime lending in that it was easier to get a loan and purchase a commercial property, without regard for knowing how to manage a commercial property.

Many people had never learned about managing commercial real estate but entered into the arena believing they could handle the demands of commercial property.  Many of the properties were multifamily apartments.  Although many of the investors sold off items from the apartments, such as , microwaves, refrigerators, washing machines, dyers, etc. and then skipped out on their loans, and leaving in their wake the rubble of what was once a viable housing community.

Many of these properties were left in a horrible state, but was it really that horrible?

Not necessarily so.

It had been noticed that many once viable properties, in thriving rental areas, had fallen into low occupancy, disrepair, and higher than normal expenses due to mismanagement; with many units in a community becoming uninhabitable from some type of damage such as fire, or property destruction such as knocking holes in the walls.

The lapse was a time of finding a plethora of value-add properties, which are still present at this time and many more like type properties entering the commercial market weekly, if not daily for lucrative rental areas.

Next Sunday’s post the Rebound part II.

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The Webinar and the PDF

 

The webinar of private lending 102 is now active and on our Facebook page.  We did have a few minor technical difficulties with the beginning of the webinar, but we are currently working to improve the issues.  They only last for about 3 minutes.

 

Gauging from private lending 101, we hope the information is not overwhelming.  Pen and paper is recommended so you can write down your questions as you have them.  Use two types of paper, one for questions and one for the information you are learning and find relevant.

 

We appreciate questions.

 

Download the PDF, and if you have more questions just shoot us an email.  The PDF is a 25 page booklet, with a more in depth look at a deal, even the burning question regarding the commercial market and the real estate recovery.

 

 

 

Private Lending 102: Analyzing the Numbers

The educational webinar Private Lending 102 is going live on the 25th of May.  At the end of the webinar there will be a free pdf .   The webinar is totally free, there will be NO selling of any kind.  This will be an all content driven webinar, so bring a pen and paper to take notes.

If you have ever thought about:

• your retirement
• wanted to earn more interest on your investment
• want to have passive money going into your IRA
• Or realized 1 in 3 Americans cannot retire comfortably
• or wanted to have passive income, then this webinar series is for you.

Learn a new way to increase your investments strength, which will be Backed By Real Estate.  Go to our Facebook page and learn from Private Lending 101, and come back on the 25th of May for Private Lending 102 and download the information loaded PDF Private Lending FAQ.

Share the knowledge with others, re-post to your social media friends.

We also have a mailing list,  which we do not sell or exchange with others, so sign up to receive information from our company.

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Arbitrage, Profiting from the Spread: Sunday Morning Thoughts 19 May 2013

Arbitrage The simultaneous purchase and sale of an asset in order to profit from a difference in the price. It is a trade that profits by exploiting price differences of identical or similar financial instruments, on different markets or in different forms. Arbitrage exists as a result of market inefficiencies; it provides a mechanism to ensure prices do not deviate substantially from fair value for long periods of time.  http://www.investopedia.com/video/play/arbitrage/

 

Understand when you look up the word arbitrage, you will find many varied references to the stock market, for this post the term will be applied to real estate investing.

In real estate as a private lender arbitrage will be the spread between the costs of monies.  If you borrow $100,000 at 3% interest then loan the same money at 6% interest then you would have 3% interest as a gain.  Many private lenders and real estate investors have taken advantage of arbitrage.

Flipping houses is also a form of arbitrage.  The method is slightly different today but it is still the buy low/ borrow low and loan/sell at a high rate and the difference will be the profit.

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• Hedge Funds Rush to Debt Trading Where Wall Street Tread – Bloomberg (bloomberg.com)
• Arbitrage and Real Estate: Sunday Morning Thoughts 14 November 2010
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• YOUR MONEY: How to see the world and ‘arbitrage’ your retirement (uk.reuters.com)
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How to Keep the Goose Alive, FOREVER: Sunday Morning Thoughts 31 March 2013

Let’s recap last week’s post about a steady income flow during retirement.  To keep the goose alive and producing golden eggs, you must have at least one stream of steady income into the goose, also known as your retirement account, or life savings.  Please understand retirement does not mean you quit your lifestyle, but that you no longer go to a job/work/run your business.

But all play and less business/work can lead to poverty.

We all live on a fixed income, regardless of retirement status.  We make a budget of fudget, encounter surprise expenditures, and maximize the money we have.  So working on your retirement before you retire is the ideal, but everyone always puts it off until later.  Set up your retirement account, also known as your golden goose, to continue to have an income when you have gone into retirement.

How do you keep an income, when you are no longer working?

Have your non-earned streams of income continue to work for you, such as private lending.  With a private lending contract the work is minimal.  The deals literally come to you.

You examine each deal to ensure it will give you the return you are looking for, and for the period of time you wish to be involved.  Remember; never place all of your eggs (investment money) into one basket.  Diversify your types of lending investments.  You can invest in a few SFR’s, a few small and/or large multifamily units, offices, and businesses either start-ups or businesses which are already generating a steady income.

The only way the goose will remain alive is to feed it a steady income.  If you live off of the money you put away without adding to it, it will eventually run out, become depleted, and the end result is  a dead goose, and no more golden eggs.

But, the goose can live forever, if you plan for it.

So how do you make your goose live forever?

Private lending is one way.  But, before you dive in, get an education on private lending first.  We have an on demand webinar and will be adding two more educational webinars soon.

Ask questions, we will answer your questions.  So take a moment, bookmark our Facebook webinar page and watch Private Lending 101 at your leisure.  Private Lending 102 and 103 coming soon.  May your goose live long and give you prosperity.

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