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Last week saw the 10-year yield stay about flat.  The predominant factor causing uncertainty in both the stock and bond markets is the tariff trade war concern.  This is a bit of playing chicken, but this is where we are at the moment in our negotiation techniques.  Clearly, the uncertainty is keeping downward pressure on interest rates.

Using Virtual Partners to Create Solutions:

By now, most of you should know I am a strong believer in virtual teams and supporting each other.  I decided to share the following example as to how a particular interaction worked its way out.

One of my contacts (with whom I have great respect and rapport) connected me to an immigration attorney who was trying to help one of his own contacts.  My contact works in the Family Office sector and is an advocate of virtual teams to provide value to all.  The immigration attorney was very personable and really wanted to protect his contact.

Continuing with a long story even longer, the attorney’s connection needed to get his second loan on his house refinanced.  After some discussion, it was evident that this connection was in trouble.  They did not qualify for a new loan; and they had already had a notice of default filed against the property.  The chances of finding private money to take out this second loan seemed remote at best (and really was just moving the problem from one group to another).  Either way, this would jeopardize the $1,000,000 in equity in the home.

In our discussions, it seemed like the only real alternatives were to either sell the home quickly or find friends or family to take on the risk of the debt that needed to be cleared to avoid losing the home.  I bounced all of this off another one of my trusted partners; and she suggested that they may be able to keep their house and pay off the second by utilizing an equity share program.  I liked this solution as it would allow the client to keep the home, not move, and no longer have to have the burden of the second debt.

Note that the equity share program would pay off the second debt.  In exchange, they would then share in the upside appreciation of the property.  Now this solution is not for everyone, but it seemed to have a place in this situation.

Wrapping this up, using lots of virtual partners provided this client an option outside of selling his property outright.  At this time, I have no idea if the client plans on seeking that solution.  However, I felt this is an excellent example of utilizing our networks to find unique solutions to ultimately benefit our clients.  And that is only possible if you take the time to develop those networks with folks you can truly trust.

Investments Opportunities for Purchase with Strong Cash Flow:

Back on the January 15th update, I wrote about “Creating Residential Listings Using Commercial Opportunities.”  Each week,  I am presenting some of those investment opportunities to better educate all on what is actually available.  Note that these are all Single Tenant Net Leased properties that have listed in about the last 10 days.  In addition, I assumed a 5% loan with 50% down.  This is just a small sample of what is actually available.

If you assume investors in the Bay Area are getting a cash flow of 3.5%, then you can see the potential improvement with these properties above.  This approach is great for the investors desiring increased cash flow, an opportunity to get out of daily property management, and/or taking the challenges of rent control off the table.  Should you wish to discuss any of these or others, then give me a call.

That’s it for this week.  As always, feel free to give me a call with any of your strategic financing needs.

Articles of Interest:

Forbes reported “15 Booming Real Estate Markets That Are Trending In 2018.”

The SJ Mercury News reported “Bay Area trend – low earners move out, high earners move in.”

CNBC reported “China announces new tariffs on 106 US products, including soy, cars and chemicals.”

CNBC also reported “Here are all the store closures we know are coming in 2018.”

Bisnow reported “Rents In Bay Area Major Metros Increased By About 50% Since 2010.”

Bisnow also reported “Chinese Investment May Be Down In U.S. Real Estate, But Investors Still Love These Cities.”

CNBC reported “Warren Buffett and Ray Dalio agree on what to do when the stock market tanks.”  This is great advice for those getting nervous.

See the table below for approximate interest rates.
Type Rate Fixed Term
Apartments 4.335% – 4.870% 3 to 10 year (30 yr amortization)
Commercial 4.655% – 5.170% 3 to 10 year (25 yr amortization)
SBA Lending Call for Options Call for Options