HOW TO DEAL WITH DAMAGES DONE TO YOUR PROPERTY

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By Glenn Mananeng

To some landlords, owning a rental property is not only an investment, but it can also be their sole source of income to feed their own family. There can be times where being a landlord can be too much especially when dealing with problematic tenants. A common problem that owners have to face is dealing with the damage left by tenants. Just because you have tenants it doesn’t mean you have nothing to worry about so you should just sit on your couch and wait for the rent money. Any major damage done to your property is your worst nightmare. Repairing it is one thing, dealing with evictions because of the damage done is another headache. Proway Property Management is here to help you out when it comes to dealing with such a problem.

Identify the type of damage done

Give the benefit of the doubt to your tenants. Reevaluate whether the damage done was intentionally or by accident. Knowing why and how the property was damaged in the first place is crucial before making any judgment as a landlord.

Accidental

– no house can last an eternity, your property will also undergo normal wear and tear. This is the usual case, especially when the property has been uninhabited for quite some time. The timing might be awful sometimes but these are not something that we can predict. If this is the case, then it might have been bound to happen anyway in the near future and as the landlord, you are responsible for fixing it. Under the Landlord-Tenant Law, the former is responsible for maintaining the property to keep it safe and habitable.

Intentional

– in cases of a bad tenant, they may leave the property in bad shape especially if they had a negative experience with their eviction. Bad tenants are more or less people who simply don’t want to take any part of maintaining the property. Even if they’re not the owner, they still need to partake in the maintenance of the house to some extent.

The damage has been done. What now?

In situations of involuntary damage, an agreement between you and your tenant should be cemented in order to agree on how to go about repairing the damage. In these cases, you’re most likely facing the brunt of the costs. It doesn’t have to be always but it pays off to be prepared for something unannounced. A sudden faulty heating insulator or problems with plumbing or electrical systems should be fixed right away before any major risks that may put the tenant and landlord harm develop.

If the damage was intentional, however, some serious actions need to be done. That’s why it’s important to take before and after pictures of the property as part of your agreement with the tenant. Although showing the house to them is necessary, taking photographic proof before your tenants settle in gives you the added assurance that the damage wasn’t there before. Generally speaking, the tenant is responsible for covering the cost of repair in those circumstances.

Proper use of the security deposit

Not every tenant agrees to pay for the damage even with hard proof. The security deposit can be used to cover the damages in this case. Under Michigan’s Landlord-Tenant Law, the deposit is limited to the amount equivalent to one and a half month’s rent. The deposit should not be used in cases of wear and tear and should be strictly limited to cover damages due to the negligence of your tenants.

If the tenant moves out or gets evicted, you should return their deposit together with a notice of damage. This itemizes the deductions to their deposit. The notice should be given to the tenant within 30 days after they’ve moved out. Tenants can file a dispute with the deductions about their security deposit within 7 days of receiving the notice.

We differentiated intentional and accidental damage done to the property. We also mentioned that the security deposit can be used for covering the costs of damage done by the tenant to the property if they refuse to pay up. However, it’s easy to mistake damages and routine maintenance wherein the deposit shouldn’t be used to cover up the latter.

For example, the deposit shouldn’t be used just because the property needs a new paint job which it really needs in the first place. If the tenant has been staying for years in the property, adding a new paint job is considered as routine maintenance. However, if the walls were newly painted and the tenant left the walls in a state of filth or even allowed their kids to draw on them, deducting from their security deposit would be justifiable. The verdict whether or not to use the deposit relies on the landlord’s standard practice and the appliance’s life expectancy. An example for a commonly damaged appliance are AC units. These have a life expectancy of 10 years. Replacing the unit doesn’t allow you to use the tenant’s deposit because it’s old and faulty. If the unit was newly bought and damage was done by the tenant, deducting from the deposit is plausible.

If the damage exceeds the amount of the security deposit

After calculating the costs of the damage and the security deposit isn’t enough to cover it, you can file a case in small claims court. Remember, under Michigan Law it is illegal for a landlord to take more than the limited amount of the security deposit. That’s why garnishments (money judgement against a previous tenant that owes you money) is a legal tool that you can use as a landlord in these cases.

It doesn’t matter if it was intentional or not though cause at the end of the day, damages to your property will still give you a headache either way. As much as possible, a landlord should provide a habitable living space for their tenants. Dealing with these problems is part of the long list of responsibilities along with being a landlord. If you don’t want to deal with the said hassles, Proway Property Management is the answer to what you’re looking for. We’ll take care of everything so you can literally sit back and just wait for your money to come. Contact us now by phone: (734)744-5080 or by email: [email protected]

What Is A Real Estate Syndication?

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By Fuquan Bilal

Real estate syndications are a term that is trending again. What are they?

Among the real estate investment opportunities on the landscape today are real estate syndications. How do they work? What are the advantages of syndicated real estate deals? How are they different from other investment strategies, and who are they for?

Real Estate Syndications 101

Syndications is basically another word for partnerships.

A syndication is an industry or technical term for when investors partner together to acquire, improve, manage and dispose of real estate assets together.

The one main difference between syndications and other types of partnerships is that there is generally one active partner to the deal. Also known as the ‘sponsor’. The sponsor is the one with the experience, connections, teams and systems to handle everything. The other partners bring their capital. Everyone shares in the rewards.

Syndications can be large or small, have few or many partners, and can partner on everything from pools of mortgage notes to value add multifamily apartment deals to ground up new construction projects.

Who Are Real Estate Syndications For?

Real estate syndications are typically reserved for accredited investors. Meaning those with higher levels of income or solid net worth.

This can include highly paid professionals like doctors, lawyers and tech workers. As well as celebrities, athletes, lottery winners and heirs to sizable inheritances. Entrepreneurs, family offices and real estate or private equity funds also often participate.

How Are Syndications Different?

The main differentiator of a syndication is that everything is done for you and you tend to get a split of all the profits, in contrast to investments where you may just receive a yield.

For example, a syndication for mortgage notes or apartment buildings may pay out cash flow dividends as income comes in, and then distribute a share of the gains on exit. So, you may get a percentage of the rents every quarter, and then a slice of the pie when resold. There are many combinations possible. For example a 90/10 split would mean the sponsor gets 10% of the profits and the other partners split the first 90%.

If you are an accredited investor, syndications can be highly attractive in providing a more direct investment and larger share of profits than simple investing in a fund or stock, and yet don’t require the time and headaches and risk of flipping houses or managing your own rentals or note workouts.
Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund

Fuquan Bilal

Fuquan Bilal founded NNG in 2012 with the principal mission of capitalizing on the growing supply of mortgage notes in the interbank marketplace. Mr .Bilal utilizes his 17 years of residential and commercial real estate success to identify real estate opportunities and capitalize on them. To date, he has successfully managed three private mortgage note funds that primarily invest in singlefamily performing and non­performing mortgage notes. His financial acumen and proprietary set of investment criteria enable him to purchase underperforming real estate assets at a deep discount of face and market values, thereby increasing the value of the assets. This, coupled with his ability to maximize the use of leverage, enables him to build strong, secured portfolios with solid passive income flows.

THE IMPORTANCE OF A TITLE SEARCH IN BUYING INVESTMENT PROPERTIES

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By Glenn Mananeng

It’s important that when buying a potential investment property, there are no legal issues that may arise after it is purchased. With that in mind, properties with a clear title is very important. Unique Wealth Education is here to let you know the ins and outs of a title search.

Who does a title search?

Title company – they conduct extensive research on the property using public records and legal documents to identify the owner, liens, and if there are any loans and property taxes due.

Lender – they conduct a title search to verify ownership of the property and any other judgements for or against it before approving a loan that uses the property as collateral.

A buyer can also do a title search on their own, although it’s not usually recommended. Not only is the process time-consuming, you’ll be prone to making some kind of mistake along the way if you don’t have the knowledge needed when it comes to legal matters. However, this should not hinder you from wanting to know the basics of a title search. After all, you want your purchase to have no strings attached as much as possible.

Understanding the basics of a title search

This will minimize the chance of you regretting the property after acquiring it. The process won’t be as complex and tedious as it usually is if you do it the right way.

STEP 1: Chain of Title

The “chain” refers to a sequence of transfers pertaining to the historical ownership of the property. This will show the list of owners from the current one back to the original owner when the property was first built. This can be obtained from your County Clerk’s public records.

Back then, this step took too much time cause you had to check records dating back to almost 100 years in order to complete the search.

The importance of this step will determine the credibility of the property title. If you happen to pass by a “cloud” or any missing part of the chain, this might indicate that an incorrect deed was done during somewhere along the way. This could also mean that the owner changed their name to reacquire the title. In this case, a quiet title suit is done as a security measure.

Quiet title suit – this is done in order to settle any dispute over the ownership of the property. Think of it as reinforcing the weakest part of the chain so it won’t break. The owner goes to court and describes all of the title defects with an attorney. The judge will “fix” these defects with a court order declaring that the claimant (in this case, the current owner) is now the true owner of the property.

STEP 2: Tax Search

The second step of the title search determines whether the property is up to date with its taxes. Any overdue or unpaid taxes can create a lien against the property. Let’s say that you finally purchased the property and you skipped this step, this can lead to the government placing it up for sale again just to cover the unpaid taxes.

Title insurance – this is done to prevent any overlooked late or unpaid taxes on the property and make it as clean as possible. Without this, the financial burden will be transferred to you as the buyer.

STEP 3: Site Inspection

Inspecting involves a lot more than just dropping by and checking if the property is ok. This should be done to make sure everything matches the records of the property such as the lot size or any signs of an easement. When you are granted an easement, this means you have the legal right to use or enter the property of the owner without possessing it. These are typically granted for utility companies and are usually not removable.

STEP 4: Name and Judgement Search

Any judgement or state and federal tax liens against the current or previous owners must be looked up. It’s up to the current owner to settle any of these judgements or state and federal tax liens found while owning the property. Judgement decrees, unpaid taxes, and liens can have claims over the property. In other words, these defects can complicate your ownership even after purchasing it. A title insurance policy is a good preventive measure against these judgements and insures these items are removed at the time the policy is issued typically at the closing of the sale.

STEP 5: Closing the Deal

The final step is the green light for the buyer to begin the process of purchasing the property with a clear conscience knowing that all legal hurdles have been cleared. Once the deal has been closed, the title company issues a title policy.

Title policy – is the title company’s guarantee that protects you as the new owner in the event that any unknown issue affecting the property comes up after it’s purchased.

Following all of these steps will ensure a smooth transaction between you and the seller. Although we mentioned that a third-party entity usually does this on your behalf, it doesn’t hurt to know the legal aspects of this very important process. Contact us by phone: (734) 224-5454 or email: [email protected]. We also invite you to our monthly meet-up every first Thursday of each month to share experiences and hopefully do business with fellow real estate investors.

Turmoil: The Storm Of Change & How To Thrive In It

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If you’re in real estate you’ve probably smelled the storm just over the horizon. The question is where it will hit, when it will hit, and just how bad it will be? More importantly, how can your business and portfolio not only survive in the eye of this storm, but thrive?

Meet Bruce Norris

You may already be very familiar with The Norris Group and their exciting hard money lending programs. Leading the company is President, Bruce Norris.

Bruce Norris has been investing in real estate for over 35 years. He’s been involved in thousands of property and financing transactions. We could fill this page with his accolades. Yet, what he is best known and most respected for in the industry is his reports.

There have been others who appear to have successfully called downturns. Others have created names for themselves in good times and betting on the market going up.

What’s unique about Bruce is that he has proven to be able to successful predict both market crashes and upturns. He has been called on by many organizations up to the highest levels to share his expertise and insights on market trends. That includes the California Builders Industry Association, California Association of Realtors and Mortgage Bankers Association.

In our exclusive interview Bruce told Realty 411 that he started out flipping houses in 1981. He admits that like many new investors he knew little about timing the market. He ended up with 7 brand new custom homes that weren’t selling. He learned some tough lessons.

Then in 1995, his son graduates college. He bought him a Honda Civic. Then a few days later found a house for sale in California that cost even less than the Honda. He saw incredible opportunity. Yet, really wanted to dig in and understand the markets, how to time them, how not to lose money, and how to invest his own money in the safest and most profitable way.

This led to his first report that he published in 1996. In 2006 he released a report calling the most recent major housing crash and foreclosure crisis. In 2012, he invested in line with his report and went all in on real estate. The market has gone up 100% since then.

Turmoil: The Coming Storm Of Changes

Now the real estate industry is once again feeling a lot of uncertainty. Perhaps with the exception of Bruce. There has been a lot of talk about a new recession and crash. While many investors keep engaging in the market. This year’s presidential election is no doubt to to bring many more attempts to send us all on an emotional roller coaster ride full of fake news.

Bruce says “There are no real estate I am afraid of.” He’s mastered looking at historical and current charts and overlaying the data, and remains bullish on the market.

What does concern him is a new era of legislation and policies which are wild cards with the potential to be extremely disruptive to investors in some of the most progressive states, like California.

He feels this is such a pressing issue that more investors need to be alert to that he has set up a panel and new event on February 1st, 2020 to equip investors with this critical information.

Major Factors That Could Impact The Market In 2020 & Beyond

State Politics

One of the big issues today is what things can be changed by popular vote versus by proclamation of state government, regardless of how its constituents feel. This puts residents at danger of rogue actors.

California has certainly become the poster child for aggressive new rules lately. Among them are sweeping rent controls, Prop 13, taxes, and the new ban on freelance workers which has the potential to create massive unemployment.

Then there is also city and state pension issues and the fact that many are not going to be guaranteed the money they were promised, or have already been counting on.

Fed Manipulation

Student debt, health insurance, guaranteed income programs, climate change laws and other major policies could all impact the markets on a large scale. We may see a lot more of this after the upcoming election.

Technology

5G is likely to be one of the biggest game changers of the next decade. Yet, the US continues to be behind in this critical technology and factor in global competitiveness.

Other technologies may become more essential for remaining competitive and profitable in this new landscape.

Surviving & Thriving

While these factors could throw some serious curve balls at California investors, and New York is rarely far behind, Bruce is still confident in the US property market.

Looking at the charts he says even California is more affordable than it used to be. He points out that at least for now we’ve been enjoying the lowest unemployment rates in the last 50 years, and interest rates remain low. Put in perspective, he believes the market justifies more sales, more building and higher prices. He says this is even truer of Florida. The Sunshine State which is enjoying great population growth, has no state income tax and isn’t as crazy at enacting these new sweeping rules.

So, what’s Bruce doing with his money?

A look at The Norris Group website shows they are still lending to investors. In addition to their traditional rehab loans and refinancing rentals, they are also now lending to build and flip investors in Florida, and on ADUs for rent in California.

Their investors are getting attractive 6% to 10.5% returns on capital invested in first trust deeds and mortgages without pooling their money. Far better than a lot of operators are promoting today.

Get Smart

Get all the details on these factors, what to watch out for and their potential impact at Bruce’s upcoming event. Then master restructuring your portfolio and making new moves in 2020 with confidence. Register for the event at TheNorrisGroup.com/Turmoil

Uber of Self Storage

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By Anita Cooper

“A house is just a place to keep your stuff while you go out and get more stuff.” – George Carlin

If you want to build wealth through investing it’s important not to become myopic when thinking about what you’ll invest in.

As a seasoned real estate investor, developer, and property investment educator, Scott Mednick has a keen sense of the marketplace and the foresight to keep ahead of changes in the market.

“I’m kind of new…I started about 30 years ago and I started in Commercial Real Estate with – back then it was Coldwell Banker, today it’s CBRE – selling apartment buildings. I did that for a few years and then sort of got the bug to work for myself, so I started building custom homes back in the 80s…

“My timing was not good.  I got right in before the market crashed, so my home building career didn’t last long.  I started working for banks as a general contractor, fixing up the REO properties for them. I remodeled about 2500 houses, here in Southern California, and in 1997, the market changed pretty quickly; at that point, I started buying and selling houses myself and have been flipping properties for over 20 years now.

“I’ve been investing here in Southern California as well as Florida, Texas and Las Vegas, but I primarily invest in  Southern California – as I like to stay close to home where I can keep an eye on my projects.

“I’m  a licensed real estate broker, so I often broker my own deals. However, even though I am a general contractor, I do hire a GC to run my projects.  It’s been a long road, but it’s been a lot of fun…”

Using knowledge and experience gained from years of investing, Scott helps other investors do what he’s done.

“I train investor’s how to buy and sell houses. Having done hundreds of flips – there’s not much I haven’t seen.  I have over 30 years of real estate experience and I manage a fund buying value-add self storage properties across the United States.”

Just as he helps investors learn how to buy and flip properties, he’s helping them build up their portfolios through investing in storage facilities.

In case you were wondering, the self-storage industry is no small market…

According to Self Storage Association – a not-for-profit advocacy and support organization for the self-storage industry, there are approximately 49,000 primary self-storage facilities.

The total amount of storage space among these facilities is estimated at 2.6 billion square feet, generating approximately $32 billion in revenue each year.

Other fast facts:

  • Facilities across the nation are about 90% occupied
  • There are, on average, about 540 units at each facility across the country
  • The percentage of households in the U.S. using these units is estimated to be about 9.3% (as of the first quarter of 2018)

Through his company Square Storage, Scott buys self storage properties located in diverse markets, buying only those facilities where there’s an opportunity to add value and the demand for storage, retail and housing are strong.

Some of the reasons why a self-storage facility may be doing poorly include:

  • Mis-management
  • Under-capitalization
  • Not enough storage space
  • Insufficient or ineffective management tools

Anyone who’s been investing for a while understands the need to diversify their portfolio. Self-storage facilities are the perfect accompaniment, either through ownership, as part of a REIT, or other investment vehicle.

Says Scott, “It’s also the perfect business model, because in a down market when homeowners loses their house, they put their stuff in storage and they move in with mom and dad.

“And then, the economy comes back, they get a new place, they get their stuff. But usually when the economy comes back they’re so happy to have money again they buy too much stuff, so the extra stuff they put back in storage…so it’s the perfect cycle.

We are seeking accredited investors to partner with us in the self storage business. If you want to be a part of the next commercial real estate boom, give us a call and we can explain why self storage is the next big thing. This is your chance to get into the Uber of real estate.”

 

Scott Mednick

Founder

SquareStorage.com

949 632 2600

 

BUILDING WEALTH IN REAL ESTATE: HOW LONG DOES IT TAKE?

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By Glenn Mananeng

This is a question on the mind of investors. There is no definite answer for this. This topic is always up to debate no matter how you look at it, as wealth is measured differently by every individual. Here are a few factors you need to know when building wealth – allow us here at Unique Wealth Education to teach you some important pointers to consider:

#1 Wholesaling

This is the easiest point of entry for the majority of the investors, as it requires the least amount of capital. You find a seller who wants to put their property for sale and find a buyer for that property on “as is” condition without the fixing part to try and get the market value higher. After the property has been sold, you’ll get a cut on the sale. Basically you are the intermediary that builds a buyers list to locate undervalued properties using a multi-pronged approach. This relies heavily on how good and how broad your real estate network is.

#2 Fix and flip

You don’t have to be an avid real estate investor to know what fix and flip is. Anyone who has cable and passed by HGTV has a basic idea of what it is. You buy a house below the average market value, renovate it, sell them for a profit! This is one of the most widely used real estate investment strategies used around the county.

Keys to fix and flip investing success:

· Preparing yourself by understanding how to locate undermarket valued properties in the right locations
· Understand values (make sure you are comparing apples to apples and going with the highest comp when doing our due diligence as a conservative approach)
· Aligning yourself with multiple capable and competitively priced renovation contractors to not only give you a bid prior to purchasing the home, but also to deliver as agreed on
· Understanding how far to go with finishes and layout changes to keep within the budget and comps in the area
· Stay away from potential losers such as foundation issues and bad layouts
· Having a sales strategy in place prior to the purchase that accounts for commissions, closing costs, holding costs, etc…
Contrary to “reality” real estate shows, getting rich doesn’t happen overnight. The longer it takes to flip the property, the more expenses you would incur for maintaining it while waiting for a buyer. Working with getting coached by or partnering with a seasoned investor is a huge advantage, as you learn best practices and pitfalls to avoid, which only years of experience can provide.

#3 Rentals

Mortgage Paydown

Let’s use a rental property as an example. In a normal scenario, you have a tenant who is essentially paying the rent in exchange for living privileges. If you bought the rental property with a mortgage, your loan will eventually cancel itself out over time. Why? The rent you receive from your tenant is basically used to pay the loan, which is increasing your equity in the property. The money left over is your cash flow divided by the amount you put down to come up with your CAP rate. This is a GREAT way to build long term wealth.

Cash Flow

We can all agree that this is very important. For those who are new in the game, cash flow is basically the income you get from your investment property (usually rental properties). This is a major factor in generating a high return for your investments and savings. Once you increase cash flow by accumulating properties, this allows you to plan your income and determine the course of future investments.

Taxes

If taken into account optimistically, you’ll see a lot of tax benefits when it comes to real estate investments. Consult your CPA to see how you can depreciate properties that you are holding onto for rental income and also discuss with them acceleration methods used to front load depreciation to give you more capital to buy more and keep building your portfolio.

The answer to how long it’s going to take, as you might’ve guessed already, is up to you. Your real estate skillset, determination, experience, and risk management are major players in this ballgame. it’s all about how smart you invest in the industry. If you make due diligence and play your cards right, you’ll one day realize that you’ve gained a considerable amount of wealth already. Unique Wealth Education can help you in your real estate career in helping you avoid common mistakes & pitfalls, is something that we take to heart very seriously. Contact us at(734) 224-5454 or email us at [email protected]to learn more.

Besides the Purchase Price, There Are Other Costs You Must Consider

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By Lloyd Segal

When flipping properties, you also need to consider repair costs, holding costs, real estate commissions, closing costs, estimated profit, and lost opportunity costs.   Let’s analyze each of these costs separately.

Repair costs.  The repair costs will likely be your largest cost, so you need to calculate them carefully.  If you’re able to inspect the interior, you’ll be able to estimate the repairs and renovations needed to make the house salable.  However, if you aren’t able to inspect the interior, use 10% of the purchase price as your estimate of repair costs.  In the alternative, multiply the square footage of the house by $7.00.  For example, if the property has 1,500 square feet, the estimated repair cost would be $10,500.

Holding costs.  It’s going to take you approximately 2-4 months to repair, market, and sell the property.  During those months, you’ll incur holding costs (i.e. mortgage payments, taxes, insurance, and utilities).  Neophyte flippers frequently forget to include these costs in their budgets.  If you’re worried about these costs, you can significantly reduce them by living in the house during this period, which is exactly what many flippers do when they are just starting out.  Instead of chalking up your monthly expenses as holding costs, simply consider it rent.  Another way to trim your holding costs is to price the house correctly the first time.  By offering the best home in its class at the best price, you’ll sell the home faster and lower your holding costs to more than cover the cost of selling the home for a little less.

Real estate commissions. You can assume you’ll pay a 6% commission to your real estate agent for selling the house when you flip it.  For that money, the agent will market your property for sale, list it in the Multiple Listing Service and related websites, advertise in local newspapers, receive and submit offers, negotiate with the buyer, and assist you with the timely close of escrow.

Closing costs.  You will incur closing costs when it comes time to sell the property.  These costs include escrow fees, title insurance, transfer tax, recording fees, and other miscellaneous charges.  For a rough estimate of closing costs, figure 2% of the anticipated selling price.

Estimated profit:  While we’re at it, let’s factor in profit.  You want to make at least a 20-25% profit on each of your flips.  In that way, if unexpected expenses do pop-up, you’ll have some margin before you lose money on the deal.  (And if you sell the house for more than you expected, or your expenses are lower, you’ll make an even better profit.)

Lost opportunity costs:  Opportunity cost is the cost of pursuing one investment choice instead of another.  Every investment you make has an opportunity cost.  With respect to flipping, lost opportunity cost boils down to making choices between various deals.  For example, if you are considering two potential deals and can only make one, which one is likely to generate the greatest return?  Which fits best into your workload, your skill set, and the time you have available?  If you can spend the same amount of time and money on a property that will generate a 20% return instead of another property that will yield only a 10% return, which would you choose?

Time:  Another cost that you may not have considered is your time.  Successful flipping takes time.  If you buy a property and plan to do some repairs yourself, you will save money on repair costs but you’ll also spending your time.  How much is your time worth?  If you’ll spend 300 hours repairing and renovating a property and will make $3,000 in profit, your time was worth $10 per hour.  If that sounds good to you, great!  If it doesn’t, you’ll need to adjust your cost estimates accordingly.  For example, if your time is worth $50 per hour, you should factor $15,000 into your budget for those same 300 hours.

Lloyd Segal

Chief Cook and Bottle Washer
Los Angeles Real Estate Investors Club, LLC
310-409-8310

www.LAREIC.com

 

 

What’s Triggering Non-Performing Mortgage Loans In 2020

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By Fuquan Bilal

Deals on non-performing mortgage loans are in high demand. So, with the economy and housing market reportedly so strong, what might trigger mortgage defaults, and give note investors more assets to buy?

Being alert to these causes of default can give you the edge to see where things are headed, be able to get ahead of the competition, and work out notes, obtain deeds in lieu of foreclosure, or grant profitable short sales.

Rent Controls

Rent controls have long proven to be counterproductive. New sweeping rent controls in California and New York are only likely to prove the same. Investors have been buying up record amounts of property in the anticipation of bumping up rents, or flipping them to institutional investors for yields. Now those profits have been cut off. Lenders don’t want to loan on such deals, and those with commercial loans that are maturing could find themselves in trouble.

Consumer Debt

When regulators cut off the appeal and safety of making mortgage loans to retail home buyers, those with the capital found new ways to deploy their money. Consumer debt has been one of the biggest buckets. They have few rules in this space, and can charge so much more interest and fees. Then as usual, when people begin using these credit lines, creditors cut them off, sending credit scores diving and these borrowers into a downward spiral. That can also cut many homeowners off from home equity lines and prevent them from refinancing and tapping equity, even though they may have recently invested a lot of this credit in improving their homes.

Taxes

Some areas have been experiencing a whole new spree in taxes over the past few years. Look at NY. Following the cap on state and local tax deductions, they’ve been hit with online sales taxes, mansion taxes, new real estate transfer tax hikes, and higher annual property taxes. That could be just the tip of the iceberg depending on which way the election goes in November. Many people haven’t been prepared for all these tax hits.

Destruction Of The New Remote Working Economy

A new California law may have just put an end to the new freelance and remote working economy. The new law has given businesses the choice between treating freelance talent as full time in house employees, with all the risk and cost that brings, or to conduct mass layoffs. Most seem to be choosing the latter. Thousands of truck drivers could be out of work. Media companies are laying off hundreds of workers. Much of the California economy and tech industry have been relying on this type of talent to operate and make profits. Should this roll out to other states the impact will be even worse. Freelancing platform Upwork alone has some 12 million freelancers. As many as 60% of all workers in places like Brooklyn are believed to be remote workers. These workers have made unemployment numbers look low for years. If that type of employment is gone, what’s going to happen with a 60% unemployment rate? How about even a 16% unemployment rate? How are all of these people going to be able to pay their mortgages?

Failed New Construction Projects

In the long term we may still be far under the level of housing we need. Yet, builders have been focused on high end luxury product and smaller and smaller units. Thousands and thousands of these units squeezed into small urban areas are going unsold. Some have remained on the market for four years already. They are too expensive or just don’t fit what buyers are looking for. Sooner or later more of these developers are going to be foreclosed on.

Failed Investors

It’s been great to see the thousands of investors who have been inspired to get into real estate and mortgage debt over the past decade. Yet, many have been purely speculating. They are trying wholesaling, are bankrupting themselves on house flips without knowing what they are doing, or have bought into the pitch that it is only about cash flow. Many are only weeks away from broke. A couple of stalled closings and they are going to be in trouble.

As a forward thinking note investor, these are all huge opportunities to help others and make some great profits in the process.

Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund

Fuquan Bilal

Fuquan Bilal founded NNG in 2012 with the principal mission of capitalizing on the growing supply of mortgage notes in the interbank marketplace. Mr .Bilal utilizes his 17 years of residential and commercial real estate success to identify real estate opportunities and capitalize on them. To date, he has successfully managed three private mortgage note funds that primarily invest in singlefamily performing and non­performing mortgage notes. His financial acumen and proprietary set of investment criteria enable him to purchase underperforming real estate assets at a deep discount of face and market values, thereby increasing the value of the assets. This, coupled with his ability to maximize the use of leverage, enables him to build strong, secured portfolios with solid passive income flows.

Virginia Land Trusts

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By Randy Hughes, Mr. Land Trust

Our modern world is fraught with dangers and potential liabilities for the real estate investor who just wants to work hard and build an estate for his/her family. Learning how to conceal assets and appear poor should be the goal of all hard-working entrepreneurs. America’s legal system has run amok and if you do not concern yourself with asset protection you are doomed to fall prey to the 21st century terrorist…the contingency fee lawyer (and his/her client).

An interesting and not well understood fact about Land Trusts is that they do not have to be formed in the same state where the property is located (or where the beneficiary resides). Like the founding fathers intended, Land Trusts have been left to each state to develop how to rule on the use of them. There is no Federal Land Trust law. Only a few states have a Land Trust Statute (most have only case law supporting the use of Land Trusts from other states), but all states recognize some form of title holding trust. In this article, I will discuss the Virginia Land Trust Statute and its unique benefits to the real estate investor.

The English Statute of Uses was repealed by the Virginia General Assembly in 1792, thereby eliminating one of the hurdles to land trust validity. But in 1819 the legislature enacted a limited Statute of Uses which applies to declarations of trust in which the trustee has no duties whatsoever. Since Land Trusts are usually drafted requiring the Trustee to do something, even if only accepting property and deeding it out, this is all it takes to get around the limited Statute of Uses.

Land Trusts in Virginia work exactly like those in Florida and Illinois. 55-17.1 of the Code of Virginia spells out the modern-day interpretations which incorporates all these attributes. 58-77 (2) of the Virginia Code confirms that a trust is not taxed as a corporation. And, 8.01-81 et seq. of the Virginia Partition Statute verifies that the remedy of partition cannot be used by one beneficiary against another. Furthermore, there is no transfer notification requirement nor a requirement to disclose the beneficiary (as some states have).

Note: Virginia Land Trust Law (Virginia Code 55-58.1) requires an in-state Trustee. Therefore, if you are forming a Virginia Land Trust to hold title to property in any other state, you need to have a Virginia Trustee. I do not like this requirement because although I prefer my trustees located in the same state as where I am forming my trust, it is nice to have the option to use someone from another state.

So, how do you form and out-of-state trust to hold title to the property in your state? And, where can you find a trustee from another state to serve as your trustee? These are good questions for the concerned real estate investor who wants to protect his/her hard-earned assets. You will find the answers to these and many more of your questions at: www.landtrustsmadesimple.com

I encourage you to learn more by going to my FREE online training at: www.landtrustwebinar.com/411  and text “reasons” to 206-203-2005 for my free booklet, “Reasons to Use a Land Trust.” You can also reach me the old fashion way by calling me at 866-696-7347 (I actually answer my own phone unlike most other businesses in America today).

Randy Hughes, Mr. Land Trust

If you want to learn more about the wonderful world of trusts, please go to: www.landtrustsmadesimple.com for more information. Or, if you would like to attend one of my FREE Land Trust Webinars, go to: www.landtrustwebinar.com/411 Also, feel free to call me with any questions. I actually answer my phone! 1-866-696-7347

How To Get Back Your Passion For Real Estate

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By Fuquan Bilal

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Want to feel that real passion for real estate investing again?

Whether you got stuck spinning your wheels before you really got started, have taken an extended break or are just going through the motions now that the money is coming in too easily, it’s important to keep your passion on high.

If you’re not passionate about what you are doing, people will notice, and it won’t be long before things start to slide. You can lose your passion from discouragement or just because you’ve automated everything and it’s become dull.

Whether you crave getting that mojo back or you just want to be sure you are maintaining it, try these strategies…

Remember Your Why

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Why were you investing in real estate or what excited you about it in the first place?

Maybe it was for your lifestyle or for your family, or to help other people. Chances are that you haven’t crossed the finish line yet. You may have run into challenges, or it may have become very transactional. Yet, the odds are that you haven’t made enough money to future proof your family wealth for the next few generations yet. You probably haven’t run out of people to help.

Remember your why. Realize there is still a lot to do. Get moving on that.

Set Bigger Goals

You can make a million dollars a month in real estate and get bored. There is only so much shopping and golf you can do. Set bigger goals.

You might be the biggest investor in your town, in your niche or even Manhattan. There is still more that can be achieved.

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It doesn’t have to be about the money. It’s more about knowing you’ve really pushed the limits as far as they can go.

Billion dollar companies are almost becoming common. If a billion is too small for you, then think globally. Can you build a portfolio of income properties in every state or country or major city? Can you diversify your brand from just flipping houses to new construction or something else?

You don’t have to do it all yourself. Ask who you can connect with, align with or hire to get you there.

Hang Out With Amazing People

It’s important to spend time with your peers and passing on your learnings to help others. Firstly though, be sure to spend a third of your time with inspiring and uplifting people who will challenge you to level up your game. Do that and everything else on this list should fall into place. And if you can’t do so in person for some reason, engage on social media, tune into a great podcast every week, and find ways to do it virtually.

Do Something New

Constantly doing new things is important. It has countless mental and physical benefits. It will also fuel your passion in a variety of ways.

Maybe you’ll travel and have your eyes opened to just how much real estate there is out there. Or you’ll realize how much you really love home.

Find new ways to look at real estate. Take the plunge into new asset classes and strategies. You may find something you are even more passionate about once you taste it.

Go take on new activities and meet new people. Treat yourself to new adventures. Otherwise what’s the point of it all?

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Ask Who You Can Help

We tend to lose our passion when we focus too much on ourselves. Instead, ask who you can help. Get out there and ask everyone how you can help them in regards to real estate.

Who can you help find a home? Sell a home? Generate more income from real estate? Diversify their portfolio? Raise money?

Challenge yourself to deliver. Push your limits. You may find it incredibly rewarding and a new fuel for your passion.

Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund

Fuquan Bilal

Fuquan Bilal founded NNG in 2012 with the principal mission of capitalizing on the growing supply of mortgage notes in the interbank marketplace. Mr .Bilal utilizes his 17 years of residential and commercial real estate success to identify real estate opportunities and capitalize on them. To date, he has successfully managed three private mortgage note funds that primarily invest in singlefamily performing and non­performing mortgage notes. His financial acumen and proprietary set of investment criteria enable him to purchase underperforming real estate assets at a deep discount of face and market values, thereby increasing the value of the assets. This, coupled with his ability to maximize the use of leverage, enables him to build strong, secured portfolios with solid passive income flows.