CARING FOR TENANTS WITH DISABILITIES

By Glenn Mananeng

All tenants have rights to housing and those with disabilities are no exception, additionally, those with disabilities have unique rights under state and federal law. We often hear about people being evicted from the rental property and many of these people are people with disabilities who cannot afford rent or fall behind due to medical bills or low pay from Social Security benefits.

Millions of Americans are affected by disabilities struggle to find a place to rent. In fact, 1 out of 5 people in the U.S. have a high chance of acquiring some type of disability according to the Census Bureau. It is of utmost importance to understand their rights in order to provide a proper place for them to live comfortably.

QUALIFYING DISABILITIES

The Federal Housing Act (FHA) has set a very broad description as to what qualifies as a disability. Under federal law, these disabilities have certain qualities such as:

Must limit one’s major life activities
This covers anything as simple as walking, talking, breathing, manually performing tasks, or caring for oneself. If it significantly affects at least one or more of these activities or something similar, the disability should be considered.

It doesn’t have to be obvious
The disability does not have to be noticeable to other people regardless of how much time they see or spend time with you. For example, a person suffering from asthma may seem normal to anyone unless there is an obvious breathing issue due to an emergent attack. A landlord is not legally permitted to ask a resident or prospective applicant about a disability.

Doesn’t require the use of an assistive device
People with mobility disabilities can still qualify under FHA rules even without the need of assistive devices such as wheelchairs, canes, or walkers. The same also applies for those with hearing impairments where there wouldn’t be a need for a hearing aid.

Physical disabilities aren’t the only ones included
Mental illness, chronic fatigue, and learning disabilities are included as part of the FHA’s definition.

Addictions are included as well
Individuals suffering from drug or alcohol addiction can qualify as long as they are currently part of a rehabilitation program.

EMOTIONAL SUPPORT ANIMALS (ESA)

As the name implies, they provide support and comfort especially for those suffering from mental health issues. They help their owners cope with daily life and alleviates their condition a little bit better. There is a clear difference between a service animal and an emotional support animal.

The former is well-trained to perform specific tasks to support a physically disabled person. One of the most common service animals are guide dogs for the visually impaired. ESAs on the other hand provides support and companionship to people with mental health problems.

If you’re in need of such a companion, you need to request an ESA letter from a licensed mental health professional (therapist, psychologist, or psychiatrist). The letter should confirm your mental condition, explain how limiting the disability is when it comes to day-today activities, elaborate how an ESA helps improve your well-being, and should be signed by the medical professional.

As long as one has an ESA letter, the landlord can’t deny housing to that individual. This means that the landlord cannot charge a pet fee even if the rental property follows a NO PET POLICY.

WHAT IS REASONABLE ACCOMMODATION?

This refers to modifications in the rental property which will enable the tenant with a disability to fully use amenities and features of the home as easy as possible. Some of these may include adding a ramp for wheelchair use, widening of doorways, adding grab bars in the bathroom, and even lowering kitchen countertops.

In the event that the landlord receives government funding to maintain housing, there is a chance that they have to cover the renovation costs. However, if a landlord accepts Section 8 tenants, they would not have to pay for the modification.

If a tenant needs the modification to the property but can’t afford the cost, there are a few resources to help fund it. Local fair housing centers are available in almost every community. In Michigan, most of them are divided into different areas throughout the state from Metropolitan Detroit, Southeast and Mid, Southwest, and West Michigan.

A landlord cannot deny or refuse reasonable accommodation to their rental property not unless it would somehow change the layout of the whole building, be unreasonably expensive or impossible to do so, or would pose a physical hazard to other tenants.

Regardless of one’s situation, no one shouldn’t be denied housing. Landlords should always treat tenants equally despite disabilities. There’s nothing more important than working with professionals who have a deep understanding of Fair Housing Laws, especially people with disabilities.

For additional information about Michigan Fair Housing Laws, you can check out our Tenant Section here. To learn more about property management services that we provide, you can call us at (734) 744-5080 or send us an email at [email protected].

Can You Micro Flip Mortgage Notes?

By Fuquan Bilal

There’s a lot of talk about micro-flipping real estate out there. But can you micro-flip mortgage notes?

The Micro-Flipping Craze

If you’ve Googled anything to do with real estate lately, you’ve probably been inundated with ads for micro-flipping. Almost every podcast, email and social post out there is talking about the same micro-flipping stories.

It’s a great twist of phrase on a very old strategy. Some people have been doing extremely well at it for years. So, what is it? What are the pros and cons? Can you apply it to notes instead? If so, why should you?

What Is Micro-Flipping?

Micro-flipping is the new term for wholesaling real estate. Wholesaling means buying or contracting to buy a property, and then assigning your contract or flipping it as-is, without doing any rehab work. If you have a good buyers list and connections, or can do this effectively online, you can be in, out and paid fast. It’s a high volume sport.

This has been made a lot easier thanks to all the access to data and software and online platforms we have today.

This form of real estate investing is made to sound super easy. That may be luring in a lot of people who think it is a lot easier than it really is. Not everyone is going to get the results they were sold on. Some will find it the easiest and fastest money they’ve ever made.

The real con of this strategy is that everyone is being sold on trying it. At least tens of thousands of people are sold on using the same software, data and marketing to do this. So, what you get is a lot of people bidding on the same deals, trying to sell them to the same buyers, and engaging in long broker chains. You don’t make money when you are running with the herd.

How To Flip Mortgage Notes

So, what if you could apply the same benefits of micro-flipping houses to the less crowded mortgage note space?

There are at least four ways to try this:

  1. Acquire individual mortgage notes and flip them as-is for a reasonable markup
  2. Buy pools of mortgage notes at deeper discounts than others can, and sell the individuals notes for more
  3. Acquire non-performing loan notes, work them out, resell them as more valuable reperforming notes
  4. Use non-performing notes as an avenue to acquire the collateral property and wholesale that to all of these new micro-flippers

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.

Allowing a Lender to Cross Collateralize Against Additional Property

By Edward Brown

There are times when a lender is going to ask for additional [real estate] collateral in order to make a borrower a loan. The most likely scenario for this is when there is not enough equity in the target property. Other scenarios include a borrower with less than stellar credit, or the type or quality of the target property may not be enough to satisfy the lender to make the loan, as most lenders are more interested in making loans that will pay them back instead of facing foreclosures. For this reason, the lender may ask the borrower to put up additional collateral satisfactory to the lender so as to give the borrower an incentive to avoid defaulting on the loan.

In many cases, this cross collateralization may not be something the borrower worries about, as the borrower intends to pay the lender in full. The general plan is for the borrower to refinance the target property at a point where a new lender does not require cross collateralization, pay off the existing lender, and the existing lender releases both properties; however, what happens when the borrower sells the crossed property, or has the opportunity to refinance the target property, and there is not enough to pay off the current lender who crossed?

The danger here is that the lender may hold up the sale because it does not want to release their lien until they are paid in full. For example, let’s say the borrower owns a rental house that is worth $500,000 and there is a first mortgage in place for $200,000. The borrower wants to buy another rental for $800,000 and has $250,000 to put as a down payment. The borrower asks a lender to loan the remaining needed $550,000, but the lender is not comfortable with the LTV [68.75%], so the lender asks what other real estate the borrower owns, so it can cross collateralize its $550,000 loan. The borrower mentions the other rental, and the lender decides to ask for crossing on the first rental. Thus, the lender has lowered its risk because of the equity in the first rental.

Now, let’s say that the borrower receives an unsolicited offer for the first rental of $525,000, and he wishes to accept it. If there was no cross collateral against this property, the borrower could accept the offer, pay off the existing first of $200,000, and pocket the $325,000 remainder. However, because the rental has been crossed, the lender has $550,000 against the property in second position. That means that there is technically $750,000 of liens showing up against the property. The borrower cannot accept the $525,000 offer without having the second [the crossed loan] release its lien.

For this reason, it is imperative for there to be an agreed upon release price in which the lender agrees ahead of time to release its interest in either properties for a specific sum. It does not necessarily have to be just the remaining equity in the first sale [$325,000 in our example]. The release price could be a smaller amount. It could also be a larger amount [up to what the lender is owed]. If the lender desires more than the $325,000, the borrower would have to come up with additional cash in order to transact the sale. This may not be all bad, as the crossed lender’s loan has then been reduced.

For example, if the crossed rental was sold at a 5 CAP rate, and the crossed lender’s interest rate was 7%, the borrower may choose to sell the rental and come up with money to satisfy the lender should the lender want more than the $325,000 net proceeds from the sale. In other words, there are times when it makes economic sense to come up with money in order to sell property. Another similar scenario like this occurs when there is a blanket loan covering multiple properties, as is the case when an apartment building has been converted to condos and the owner of the building desires to sell off one condo at a time. A typical lender on the building will usually have release prices [agreed ahead of time] under which the lender will allow each unit to be sold and the lender takes a specific amount [or percentage of each sale] as a pay-down of its loan.

The release price can be negotiated between borrower and lender. Because the lender did not take the new property alone due to the high LTV, many times the lender will reduce its pay-down to where it feels comfortable with a specific amount of its loan on the remaining property. To make this point clear, let’s say that the lender usually makes loans for rental properties at an LTV of no more than 55%. Since the new rental was purchased for $800,000, the lender would be fine with a loan balance of $440,000. Thus, in order for the lender’s exposure to be reduced from its original loan of $550,000, it may be willing to accept $110,000 from the sale of the first rental in order for the lender to release its crossed lien. In this case, the borrower would sell the first rental for $525,000, pay off the first mortgage of $200,000, and pay the lender in second position $110,000 [to release its crossed lien of $550,000], and pocket the rest of the proceeds from the sale [$215,000]. The borrower would keep $215,000 from the sale, and the only debt on the second rental would be the lender [who crossed] of $440,000.

Borrowers who overlook release prices [a specific clause in the loan documents] risk having to ask the crossed lender after the fact under what circumstances the lender would be willing to release the first property. If there is no agreement ahead of time, the borrower runs the risk of being at the mercy of the lender, as the lender does not have an obligation to release its lien for less than what it is owed.

Many lenders may be willing to work out a reasonable amount for releasing either property, as it is in the lenders best interest to reduce the borrower’s default risk. Having more than one property as collateral sounds good in principle, but the added exposure of having a loan spread out amongst more than one property may not be worth the risk. Each situation will be different, but, as a general rule, it is more conservative from the lender’s viewpoint to have a low LTV on one property compared to having crossed on one or more additional properties that have a higher LTV. Additional costs of foreclosure, if needed on more than one property, as well as having to deal with an existing first mortgage [keeping them current, so that lender does not foreclose] may not be a desirable solution to protecting the lender’s interest.

This is the primary reason why typical banks do not usually cross collateralize their loans. Most banks do not like a lot of moving parts. They want to focus on one property and the risk associated with it.

Borrowers should make sure that the lender does not hold any of the borrower’s properties hostage and that release prices are set at a point where the borrower feel comfortable.

Edward Brown

Edward Brown currently hosts two radio shows, The Best of Investing and Sports Econ 101. He is also in the Investor Relations department for Pacific Private Money, a private real estate lending company. Edward has published many articles in various financial magazines as well as been an expert on CNN, in addition to appearing as an expert witness and consultant in cases involving investments and analysis of financial statements and tax returns.

5 Ways of Getting $10M to Invest in Real Estate

By Fuquan Bilal

Need more money to invest in real estate? Where can you get another $10M in capital from?

The ironic thing about money for real estate is that you rarely have too much of it. You can for a little while, especially if you’ve raised a lot and have your latest deal oversubscribed to. It’s happened to many funds recently. Though sooner or later, the reason for not doing more always comes back to “If only I had a little more money I could…”

Maybe you want to take down a big commercial building, or need to have millions to earn a seat at the table and ability to bid on the note pools and bulk REO deals with the most profit. Or perhaps $10M is just the next milestone you’ve set for yourself. Where do you get it?

Commercial Real Estate Loans

$10M is a very small number in commercial real estate. In fact, there are many, many lenders who don’t want to touch small balance deals for less than that. It’s their minimum loan amount.

You may have to find a great deal with lots of equity, or raise $1M for down payment, but this kind of money is out there to borrow.

Real Estate Crowdfunding

This can be done publicly or privately, and for debt or equity or even donations. If a prototype for an off brand smart watch (not even Apple) can raise $10M in a few hours on a crowdfunding platform like Kickstarter, shouldn’t you be able to raise a lot more than that for some prime real estate with great yield or value add potential?

Here’s the thing. Most crowdfunding campaigns fail. Either because there was no strategic roll out, or the organizers didn’t have the marketing budget designated to invest in it. It might cost you $100k or $1M to raise $10M, but that may still be worth it.

Partnerships & Syndicates

Partnerships are probably the most obvious way to raise capital to invest in real estate. At least after loans. Depending on who your contacts are, that may come in $50k or $1M or $5M increments.

If just being involved in a deal of this size is what you want, then maybe you don’t even need the $10M. Maybe you can put your $1M into an existing syndication with the right connections, management and systems in place – and benefit from big deals like this, without having to raise money at all. You might even be the one getting the preferred return, without any of the work.

Launch a Startup

As crazy as it may seem, there are still billions of dollars being plowed into startups. It may make little sense given the risk of volatility and how poor and low value you think the ideas that are being funded are. So, why not do better than them? If you can make contacts that want to invest in startups instead of just real estate, give them a startup to put their money into. You can call it a tech company in the real estate space, or a real estate or finance or fintech startup. Put a nice appealing twist on it, get help with a great pitch deck and float the opportunity.

Make $100M for Someone Else

If you make $100M for someone else, they shouldn’t have a problem cutting you a check for 10% of that, right?

Maybe you don’t want to do all the work involved in acquiring, managing and disposing of $100M worth of real estate. Yet, it may be far easier to help someone else raise that kind of money, sell that much real estate or buy that much property. Then get some reasonable compensation for that. Or you can leverage arbitrage and invest that money into another fund and keep your slice. Then you can invest your $10M in whatever you like.

It’s not that much when you really start looking at the numbers. That much property can change hands in a day in Manhattan alone. These days $1B seems to be the new minimum property price tag for Google and Apple. $100M is loose change for them.

How will you raise your next $10M?

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.

Mortgage Free Real Estate

Matthew Pillmore

Disclaimer: I am not a lawyer or an accountant. Nothing here should be construed as professional advice. I suggest that you always retain the services of a competent professional to provide advice on your transactions.

If you have a loan on your primary residence and/or rentals, you may have considered whether it would be worthwhile to pay it off ahead of schedule. And if so, you’re not alone.

The debate over whether to prepay your mortgage is perpetual in the personal finance world.

Pay Off Your Mortgage or Invest? The Math Says…

On one side, some experts argue you should NOT prepay your mortgage if you are locked in at a low interest rate. Their reasoning: You would be better off INVESTING your money where a reasonably diversified stock portfolio can expect to earn at a higher rate of return on average over the long run.

Add in the home mortgage interest deduction you can take on your federal taxes and, they say, you would be silly to prepay your mortgage and miss out on those perks.

To this group, the question is just about math. After all, why would you prepay a loan at 3% or 4% and lose out on part of a valuable tax deduction when you could invest that money instead and earn considerably more?

But There’s a VERY Important Side to Prepaying Your Mortgage, Too

Still, there are plenty of experts who forge ahead with their mortgage prepayment plans. My parents (including a CPA father) fell squarely in that category. Instead of taking the standard 30 years to pay off their mortgage, they paid it off in well under 10 years.

Ask him if he cares about the tax deduction they missed out on, and he’ll probably look at you like a crazy person. Why? Because the decision to prepay was never JUST about the math to them; it was about their financial freedom. And math aside, they have never regretted their decision to pay off their home and become entirely debt-free.

Most people agree with that sentiment, eventually. Most, just don’t like debt. It’s as simple as that.

But others prefer a deeper analysis.

Analyzing the Pros and Cons

For starters, let’s take a look at what the home mortgage interest deduction really means.

The easiest way to figure out your home mortgage interest deduction is to look at your effective tax rate. Say your overall tax rate is 22%, for example. On average, the home mortgage interest deduction reduces your taxes by $22 for every $100 you pay in mortgage interest.

That’s a nice perk, but there’s a caveat. Your home mortgage interest deduction is only valid for the amount you deduct over and above the standard deduction, which is available to taxpayers who don’t itemize their returns. The standard deduction for married spouses filing jointly was $12,400 in 2014.

So what does that mean? Simply put, if you don’t itemize your taxes, your home mortgage interest deduction is worth nothing. And even if you do, it’s only worth what it helps you save over the standard deduction that anyone can take. In many cases, this drastically reduces the value of the home mortgage interest deduction to the point where it’s barely worth considering.

But what about those lost investing returns? When you ask people whether or not they prepay their mortgage and why, you’ll find plenty of skeptics who balk at the idea of carrying long-term debt in favor of investing their extra dollars in the stock market. And when it comes to who is “wrong” or “right,” there are several ways to look at it.

The interest you save by prepaying your mortgage is a “sure thing.” Many people are happy prepaying and banking the extra money they save on interest, even if it’s less than they may have earned by investing their extra dollars instead.

A Balanced Approach

As someone who loves leverage but despises (ALL) debt, I see both sides of the issue. And that’s why I personally take (and teach) others to consider a balanced approach.

My only debt includes what is used to advance the assets and income growth of my plan, but is paid back strategically to $0 as quickly and safely as possible. I don’t see the reason to choose between investing extra money OR prepaying my mortgages, so I rely on Debt Weapons™ to do both faster.

What About Debt Weapons™??

Debt Weapons™ are tools that allow any consumer to achieve 1 or more of 7 highly financially beneficial purposes.

1) Maximize Cash Flow
2) Compress Amortization Schedules
3) Replace Inadequate Bank Accounts
4) Invest More Quickly & Safely
5) Minimize Total Interest Costs
6) Enhance & Protect FICO® Credit Scores
7) Quickly Increase Financial Safety and Emergency Reserves

To be clear, VIP Financial Education does not provide or offer Debt Weapons™.

We do the research for our Coaching Members in order to help them decide where to go to get the right Debt Weapons™, at the right time, to accelerate their unique goals.

Just like exercise equipment can injure you when used incorrectly, Debt Weapons™ can also be quite harmful if you access the wrong one or use the right one the wrong way.

Applying for any Debt Weapon™ without knowing the proper questions to ask, can lead to several negative consequences. For example, credit scores can rapidly decline, you could access the wrong Debt Weapon™ for your intended purpose leading to unforeseeable costs and terms, possibly delaying your goals even further.

That seems like a good compromise to me. Still, there is nothing wrong with taking sides on this issue.

When you hate debt, you want to put it behind you once and for all, and that’s understandable. But it’s also understandable for someone to make their decision based solely on the numbers. After all, it’s hard to argue with math. At the end of the day, we all have to do what is best for our families – and what helps us sleep best at night.

So, should you pay off your mortgage quickly? It is, and always has been, up to you, yet by joining us at the upcoming event with Realty 411 you will learn how YOU too can rely on Debt Weapons™ to take a more advanced approach and achieve BOTH simultaneously, far more quickly.   

 

Matthew Pillmore
President
VIP Financial Education

Assign or Double Close: The $9,000 Question

By Jeffery S. Watson

In a conversation I had with a real estate investor regarding the differences between assignments and double closings, we talked about the cost associated with double closing a transaction. When you close two separate real estate transactions involving the same property within a short period of time, say 30-45 days apart, there are certain inescapable costs incurred twice. The title and escrow company or closing attorney is doing almost twice the amount of work.

The general rule of thumb I have given investors has been that if the assignment fee is $9,000 or less, then go ahead and assign the contract so there is only one closing and the assignee (the new buyer stepping into the shoes of the first buyer) completes the transaction with the title company or closing attorney. If, however, the assignment fee is greater than $9,000, then it’s time to examine if a double closing should occur.

In certain jurisdictions, that $9,000 number would change. For example, in Cook County, Illinois, I would recommend it be $15,000 or higher because of the extraordinarily high cost of closing a real estate transaction in that jurisdiction. In some states, many of my clients wisely choose to double close on all transactions due to the large spread between what they are buying it for and what they are ultimately able to resell it for.

In your market, the best thing to do to determine whether to assign or double close is to have conversations with various title and escrow companies or closing attorneys. Do some cost comparison as to the usual and customary fees and whether those fees can be negotiated down. Find out the basic, unavoidable costs of closing a real estate transaction.

Until you have that information readily known to you, you cannot make an intelligent decision as to whether you should assign or double close on a particular transaction. With that extra information, you become more effective in managing your real estate business.

Jeffery S. Watson

Attorney

Jeffery S. Watson is an attorney who has had an active trial and hearing practice for more than 27 years. As a trial lawyer, he has a unique perspective on real estate investing, wealth building and asset protection. He has tried over 20 civil jury trials and has handled thousands of contested hearings. Jeff has changed the law in Ohio 5 times via litigation or legislation:

Smith v. Rudler – 70 Ohio St.3d 397
In re Hugley – 629 N.E.2d 1136
Bahr v. Progressive Insurance – 2009-Ohio-6641
Snyder v. Snyder – 865 N.E.2d 944
H.B. 463 amending the Ohio Civil Rights Act

Jeff has also been a real estate investor since 1994, investing in both residential and commercial properties. He currently represents established real estate investors in commercial and residential matters when the transactions involve self-directed retirement accounts. As a frequent and popular guest speaker and teacher on stages and webinars, he is a recognized thought leader and innovator in the field of real estate investing, wealth building and self-directed retirement account transactions.

He is a nationally-recognized authority regarding regulatory concerns with wholesaling. He was the co-creator of the Option Contract method that revolutionized the short-sale flipping process. Thousands of investors have used documents created by Jeff to flip properties.

Jeff is general counsel to the National Real Estate Investors Association. Jeff is general counsel to and a cofounder of Realeflow, LLC, which made the Inc 500 list in 2011. He currently advises six different national organizations with a combined membership of over 250,000 investors.

From 2010 to present, Jeff has led lobbying efforts in Washington, DC on behalf of real estate investors which has brought about several changes in both government regulation and policy on distressed property purchases and resales. In 2014 and 2015, his efforts on Capitol Hill helped bring about change in the U.S. tax code and helped reinstate the Mortgage Debt Forgiveness Act. Since 2015, Jeff has worked to secure passage of the Seller Finance Enhancement Act.

Jeff’s efforts to secure reform in the real estate arena aren’t just on Capitol Hill. In his home state of Ohio, he has worked with the Ohio Division of Real Estate teaching on the legality of wholesaling.

He is a part owner of Venture Land Title II, LLC, and his law firm prepares deeds and other documents for two title companies. He is also legal counsel to a number of other organizations including Eagleville Bible Church, Inc.

Jeff is the author or co-author of 6 digital books:

  • “Understanding Self-directed Individual Retirement Accounts”
  • “A Guide to Private Lending”
  • “Short Sales Done Right – How to Profitably and Legally Navigate the Short Sale Jungle”
  • “Death of the Land Trust … in Short Sales”
  • “How to Hire Your ‘Dream Team’ ”
  • “Understanding the Foreclosure Process”

In addition to his digital books, Jeff authors an email newsletter twice a week and maintains a blog at WatsonInvested.com on investing, business and entrepreneurship which are read by thousands of successful investors.

Why Invest In Costa Rica Real Estate?

By Jimmy V. Reed

Why all the Fuss about Costa Rica Real Estate Investments?

Have you heard all the buzz in the last few years about investing in Costa Rica? If not, you may be missing some of the best opportunities to make money in real estate right NOW!

Why Costa Rica?

Costa Rica affords a stable, growing economy in an outstanding environment. Only a few hours from the U.S., the “secret” of Costa Rica’s allure is becoming common knowledge, which is increasing tourism and development. Property values, once renowned for their incredibly low prices, are now rising with the increased housing demand. In short, the window of opportunity for major profit is right now!

About Costa Rica:

Costa Rica is flanked by the Pacific Ocean and Caribbean Sea. With a distance of approximately 155 miles between coasts, Costa Rica is well known for the premium it places on peace, education and democracy. In 1949 the government abolished the Army, allocating all would be military expenses to education and health care. As a direct result the literacy rate rose to 95% and continues to be one of the highest rates in the Americas. International ports on coasts, air and freight transportation services, and a well developed infrastructure and a strategic location at the crossroads of two continents make Costa Rica a contender in world markets. The government’s receptiveness toward new business ventures and excellent incentive plans have lured a growing number of multinational corporations to the country.

Spectacular natural beauty and peaceful atmosphere attract residents and tourists year after year. Nine active volcanoes, diverse forest environments, hot springs, wetlands, lakes, island reserves and 600 miles of beaches on two coasts account for the dramatic increase of tourism and residency in the last decade. Costa Rica’s varied terrain provides endless possibilities for activities ranging from hiking and white water rafting through national parks to snorkeling, scuba diving, and surfing off of the Pacific and Caribbean shores. Whether your interest is business or pleasure you will find Costa Rica a country of unequalled beauty.

Last year some statistics showed that there were 89,000 ex patriots living in Costa Rica. They find that the price points and cost of living put them way ahead in living standards and allow for the purchase of houses priced way below that of the United States. These properties are in gated communities with ocean, mountain, and rain forest views. This coupled with very favorable tax situations make it the idea place to invest. I see this first-hand as a developer there myself, because we are able to put our investors around the world into projects that will earn them double and triple returns of  those they may find in the States.

Why You Should Invest in Costa Rica:

There are several projects currently in process in Costa Rica and due to the recent US economy; there is an influx of investors now wanting to participate. As Investors, you should always keep in mind that your goal is to make the safest investment possible with the greatest return to you, in the shortest time period. You should analyze the investment, use your intelligence and make a calculated estimate based on the information you have available. That’s Investing 101! Costa Rica is now one of those investments that make a lot of sense for both the novice and seasoned investor.

Investors I know that have been involved in several development projects in Costa Rica from as small as 100 acres to as large as 1,650 acres. All said they needed expertise help when closing on these projects; they needed a team to help them with everything from writing contracts to title companies. Now there are two to three different American companies in Costa Rica that provide title guarantees. Those corporations provide foreigners with a title land guarantee.  Therefore, if there is a problem with fraud or problems in the title, they can be identified and the buyer can be paid back.

We also want to stress a crucial point to overseas investing and that is taking a little trip to the property you intend to buy or invest in. Now many investors we know have invested in Costa Rica and did not visit the properties firsthand. However some have visited since their purchases and found that they really enjoyed going to Costa Rica and seeing first hand where they have invested their money. One of our goals this last year was to inform investors of the opportunities in Costa Rica by encouraging them to take a FAM trip. A FAM trip is known in the travel industry as Familiarization and Marketing: it’s a trip you take to learn about the area and have a vacation at the same time. I would encourage investors who invest in these countries to hook up with a group that can show you the area, understand the investment, and at the same time give you a little cultural immersion while having fun at the same time.

In the future these types of trips will help the investor who never thought they would invest in another market become more comfortable and familiar with the market they have an interest in.  It’s true that with the help of the internet you can gather plenty of information on markets like Costa Rica fairly easy. Fact is for the first few years of International investing I did all my research on different markets via the internet.  But we also know the value of seeing an investment with our own eyes. Some Investors I know finally took a little trip down to Costa Rica to learn more about the projects. At the same time they had a blast riding around the projects on ATV’s and later on boat trips through the rivers and ocean of one of the most beautiful countries they had ever been to. Now that’s Cultural Immersion!

In closing, the returns are looking incredible. The market and demand are there. All you need to do is fill the demand just as many other investors are doing. Keep this in mind; investing should be, and can be fun. If you find yourself not comfortable with the investment then walk away. But don’t be like some investors who find something wrong with every investment and so end up never investing in anything. A true investor analyzes the project for what it is and then with all the facts he has moves forward or backs away. Moving forward though may sometimes require a little Leap of Faith.

 

Jimmy V. Reed         

Jimmy V. Reed of Fort Worth, Texas has been investing in real estate since 1987.  In 1991, he started conducting full-day training sessions on Wholesaling.  He then began teaching and mentoring others throughout the country. He is currently the founder of the Fort Worth R.E. club www.1REclub.com and has his own real estate training company that includes Wholesale, Probate, Mentoring & a Biblically based Debt Free training course and more!

More info available at www.JimmyReed.net

 

Is Credit Card Stacking Really Going to Help You Fund Your Real Estate Deals?

By Jessica Guisinger and Merrill Chandler

If you are a new or seasoned real estate investor and you have been looking for capital to fund your real estate deals, there is a good chance you have heard of credit card stacking.

Credit card stacking is the practice that credit brokers use to help individuals acquire credit by applying for multiple personal credit cards at the same time. The idea is that once you are approved for multiple credit cards, you can use the newly extended credit to fund your real estate deals. While getting multiple credit cards at the same time may initially sound like a great idea, doing so can create serious problems—especially if you attempt this strategy without fully understanding the consequences.

“I think just about the worst mistake I’ve ever seen an investor make is funding a deal by employing a credit card stacking strategy,” said Jessica Guisinger, the referral partner liaison with CreditSense, a firm that specializes in improving both personal and business fundability for real estate investors and small businesses. A cursory review of their website reveals they are nothing like a credit repair agency, but rather a Fundability Optimization firm, that gives its real estate investor students and clients a great deal of specialized insight into the inner workings of credit underwriting in general, and credit approvals in particular.

“We see a lot of offer there that offer investors “funding” to do deals, but in reality they are just managing credit card stacking [for the investor],” Jessica explained. “These companies do not disclose—and investors rarely know until it’s too late— that getting the funding they need by maxing out these new credit cards will absolutely ruin the investor’s chance of obtaining future funding, and it inevitably tanks that person’s personal credit profile and score as well. And to add insult to injury, the 0% offer that was so attractive almost always disappears when they try to liquidate their credit card limit for cash.”

What credit card stacking participants don’t know is that even if they pay on-time for the next 24 months, they will be flagged as high risk borrowers because lenders view this practice as an extremely high risk behavior. The investor will also be flagged as high risk because of the sudden spike in utilization (balance to limit ratio), and a demonstration of poor credit management.

“A far better solution is to use true business lines of credit as your funding source. When you have the right credit profile these lines of credit offer the lowest rates available and you can get these business lines of credit with full check-writing capability at 3% to 6% to fund your deals,” recommended Jessica. “This type of funding is not only check-accessible, but it is unsecured as well. This feature offers a huge advantage for real estate investors because it helps make them MORE fundable while improving their personal credit rather than destroying it.”

Many real estate investors assume they cannot qualify for unsecured business lines of credit, or that they will need to pay high interest rates in order to obtain them without ever discovering the truth. Jessica noted that with the right borrowing strategies, this is patently untrue. “A lot of real estate investors need help becoming fundable because they have been playing the funding game without knowing the rules. And, not knowing the rules is made even worse because real estate investing is considered a high risk business by lenders—they don’t want to even talk to you much less give you money,” she said.

Jessica continued, “Thankfully there is hope. There’s a way for real estate investors to get inexpensive money from top tier lenders. They simply need to learn the rules of the funding game and then play that game at a professional level. In fact, if you know what you are doing, you can obtain these unsecured business lines of credit and then strategically grow them to $1 million or more in real estate funding,” she said.

“Experts who help others acquire this type of funding do not just jump in without exploring the current fundability of an interested investor,” Jessica concluded. “If someone does not do a little bit of fact-finding and a comprehensive fundability analysis before they lay out a plan for you, be on alert,” she said.

 

Stop Dissin’ the Housing Market—Set it Free!

By Christopher Thornberg, PhD

Editors Note: This posting was originally published on the Opinion Page of the Los Angeles Daily News.

High housing costs continue to be at the center of policy debates in Los Angeles—and across much of the state. This intensifying focus is warranted now more than ever given how the crisis has moved from simply eating up the disposable income of residents to slowing overall employment growth in coastal economies – something driven by a lack of available workers, which in turn is driven by the housing shortage.

Sadly, the many proffered solutions to the problem remain wildly off base and are not likely to accomplish much of anything.

Take the City of Los Angeles’s proposed linkage fee, a fee to be paid by developers of market-rate properties to fund more affordable housing – and something that has been endorsed by many prominent voices in the community in recent weeks. That support has been motivated in part by the results of a recent homeless count done in Los Angeles County, which suggested that there was a 20% increase in the County’s homeless population over the last year. This is a total red herring when it comes to addressing the lack of new housing supply.

The recent homeless census count indicates that the total number of homeless in Los Angeles County is 53,000—a minuscule fraction of the 10 million plus people who call the County home. Moreover, a clear majority of these folks are homeless not because of the high cost of housing but because of mental and/or substance abuse problems, serious issues that would leave them homeless regardless of the current market price of housing. These people desperately need help—but a different kind of help than the linkage fee would provide.

And the few who are helped represent the proverbial tip of the iceberg—for every family that receives support there are another thousand that continue to struggle as rising rents eat into their incomes. Conservatively, the County would need close to one-quarter of a million new units to catch up with current need.

The linkage fee and similar policy proposals being rolled out at the city and county level reveal a deeper problem: Many localities and policymakers simply believe that the free market is not willing or able to create an adequate supply of housing in the region so they pursue punitive measures to make up for these perceived inadequacies.

Such a claim is akin to chaining a mighty eagle to the ground and then accusing it of not being able to fly. The lack of housing in Los Angeles is not due to the market’s failure but rather to the actions and choices of the City’s citizenry and its policymakers who have systematically intervened over many years to slow new development.

Research conducted at UCLA (UCLA Dissertation, The Homeowner Revolution: Democracy, Land Use and the Los Angeles Slow-Growth Movement, 1965-1992, Morrow, Gregory D.) shows how the City has energetically downzoned over the years, shrinking housing capacity from 10 million people to just slightly over 4 million—roughly the same as the current population. Add to that sky high permitting costs imposed by the City, non-stop California Environmental Quality Act (CEQA) lawsuits, as documented by the lawyers at Holland and Knight (In the Name of the Environment: Litigation Abuse Under CEQA, Jennifer Hernandez, David Friedman, and Stephanie DeHerrera, August 2015), and other rules and taxes including inclusionary housing and prevailing wage requirements, and it becomes obvious why the market is responding so slowly to current price signals.

It is true that what does get built in this town tends to be for higher income households. But this is a natural outcome of the barriers to entry that afflict the system. When supply is artificially limited, what does get produced is going to be concentrated in the highest margin portions of the market. If supply were less restricted and fixed costs reduced, there would be a natural movement towards lower income families. Would costs ever go so low as to entice developers to build ‘affordable housing’ using the public regulatory world definition? Probably not. But in Los Angeles the overall lack of supply keeps middle income families in housing that would otherwise be available for lower income families.

The market should not be blamed for problems created by public policies that have constrained them. Addressing these critical policy issues is the place to start. A few small changes have occurred at the state level, but so far, Sacramento has looked more towards punishing local jurisdictions for not allowing housing, rather than attempting to deal with the true root causes. Everyone is treating the symptoms, not the disease.

Take for example inclusionary housing, the new buzz word in many communities. Past studies conducted by neutral researchers have shown that these policies have very little overall impact on housing affordability in a community. This is because the gains enjoyed by the lucky few families who receive inclusionary housing subsidies are offset by the higher cost of housing for the rest of the population. And ultimately such efforts are tiny compared to the scale of the problem. The $90 million raised per year would support less than 1000 new units. This is less than the annual increase in the housing shortage.

A few places with similar problems are starting to look at more realistic options. Oregon has started to move in the right direction with Oregon HB 2007, a proposal that goes to the next level—it seeks to prohibit local efforts and activities that restricted housing development in the first place. As the old ditty goes when you’re in deep the first thing to do is stop digging. But Oregon’s proposal is controversial, there are many loopholes, and even if it passes it will only prevent new restrictions from being put into place. Until California, Oregon and other development-unfriendly places roll back current market restrictions and fill in the hole, the housing crisis will only get worse.

Christopher Thornberg

Christopher Thornberg founded Beacon Economics LLC in 2006. Under his leadership the firm has become one of the most respected research organizations in California serving public and private sector clients across the United States. In 2015, Dr. Thornberg also became Director of the UC Riverside School of Business Center for Economic Forecasting and Development and an Adjunct Professor at the School.

Are You Destined for Greatness?

By Sam Sadat

The most common nemesis of both new and seasoned real estate investors is inaction! Many use the excuse of no money as their number one reason for procrastination. In fact, the number one reason for failure in life is the FEAR OF ACTION. Many people are simply too afraid to try. Think of this, anyone who has never made a mistake has never tried anything new. STEP UP! Unless you try, you won’t make mistakes, and until make mistakes, you will never grow and prosper. Nothing great has ever been accomplished with contemplation alone.

The greatest source of unhappiness in life is unproductivity. Playing it safe in your comfort zone will bring you nothing but mediocrity. I know it’s scary to step into the unknown, but that’s where all your opportunities are. Make a commitment to explore and embrace the unknown is 2020 and I can guarantee that you will be more successful and a lot happier by 2021.

The mistake most people make is thinking that they can solve their problems with the same mind that created them. The only way to overcome your challenges in life is by changing your mind. You must learn new things and look at your problems from a different perspective. In other words, you need to tackle your difficulties with a new level of consciousness, which is the only way to produce sensible solutions.

To maintain your sanity and joy in life, accept life as it is and not as what you think it should be. Insisting that the world owes you a favor or people must change to accommodate your needs is a hallmark of folly, immaturity, and ignorance. Until you are happy with who you are and what you have, you will not soar to great heights. By acknowledging and taking responsibility for your conditions in life, you will remove a massive burden off your shoulders and pave the way for a bright future.

Learning to accept things as they are requires your trust in the process of life. Let events unfold as they may while you observe them with a sense of awe. Your job is to say yes to whatever life gives you, to celebrate happy times, and to learn from adversity. So, never regret yesterday, live for today, and hope for tomorrow. Here’s a good tip: never stop questioning, exploring, and growing. That’s all you need to enhance the quality of your life. Like a river, life flows……..so stay in the middle of the current to gain proper balance and perspective. All the action is in middle of the stream, not the riverbanks.

Knowledge may be power, but its application will bring you joy and prosperity. If you want to know whether you know a subject well, try to explain it to a child. If you can’t do that, then you don’t understand it well enough. Until you learn and assimilate a subject well, you’ll never be able to apply it successfully and until you can apply your knowledge, you will not achieve greatness.

Never fear to act, as life rewards the brave.

Best regards,
Sam Sadat

Sam Sadat

Over the past 28 years, Sam Sadat has been involved in more than 2,000 real estate transactions as a principal, partner, lender or broker. During this time, he’s helped thousands of aspiring investors learn the real estate business the right way and apply their knowledge confidently to prosper greatly. He started his own company, Aim Financial, which in a few short years, became a top producing brokerage firm in Los Angeles. He also started Global Financial Network, LLC which is an NMLS licensed private lending firm specializing in financing of “fix and flip” or “buy and hold” investment properties in Southern California. Also, he hosts his own radio show, The Free and Clear Hour, on KHOW in Denver, CO and created the VIP Mentorship Programs that are affordable, practical and powerful.