Connect to our podcast, where our principals, Jan Brzeski and Greg Hebner, discuss our income-oriented, risk-controlled, capital preservation niche strategy across U.S. west coast real estate.
This podcast outlines a recent loan we originated, secured by a strip shopping center located in Ohio. This loan was compelling based on the income of the property. The attractive income outweighed the negative factor of the property being far from our office.
This podcast presents a list of "gotchas"--things that can make what appears to be a good investment actually turn out to be a bad investment, because the income stream ends up being less than what it appears to be. The podcast also presents a critical and at the same time enjoyable step in the process of researching an investment, namely, visiting the property and driving around the property in concentric circles to get a feel for the neighborhood.
This podcast introduces some of the issues involved when underwriting income property such as apartments or shopping centers, when considering making or investing in a loan secured by income property. The key is to understand the value of the property and value is driven by ability to generate cash flow, which in turn is driven by a variety of factors, depending on the property type.
This podcast addresses the issue of how to value income property, in the context of making a loan secured by an income property such as a shopping center or apartment building. The concept of the capitalization rate is introduced.
This podcast explains briefly how to look at income property investing, and specifically, how to think about the value of apartments, shopping centers and industrial buildings. Coming up with a good estimate of the property's projected cash flow is the the key to understanding the risk of investing in a trust deed secured by that property.
Those investors comfortable taking more risk may want to consider making a junior real estate loan, which can provide more equity-like returns (both on the upside and the downside) as opposed to the steadier returns on lower-risk first trust deeds. This podcast outlines a specific project in which we made a junior loan. This investment has now paid off and it was successful.
This podcast addresses problems that can come up when investing in real estate loans. The most common problem is a default, but other problems include natural hazards, fire and bankruptcy by the borrower, to name a few. All of these issues can be mitigated with property structuring, however many investors are afraid of having to deal with these types of issues, which helps explain why investors in real estate loans get paid well for the amount of risk they take.
This podcast examines an actual case study of a short term real estate loan where the interest rate was 13% and the origination fee paid to the lender by the borrower was 1% of the loan amount. The return was about 17%. The podcast shows the actual cash flows received by lender and how the total return was calculated. The point here is that including even a small origination fee increases the annualized returns to the lender substantially.
This podcast provides practical tips on what to look for when inspecting a property. The most important thing is to make sure that you don't skip this critical step altogether. A surprising number of investors make small trust deed investments without seeing the property, and then they wonder what happened if the investment gets into trouble. Seeing the property yourself cuts the risk of the investment dramatically. For this reason, we prefer to invest in Southern California when making small loans. Investing in other regions of the U.S. is fine if the loan amount is large enough to justify a trip to see the property and to understand the market. The top priority when seeing the property is to establish the real current market value. Do not rely on appraisals. It should be possible to establish your own opinion of value from looking at the property itself plus recently-sold properties near the subject property.
This podcast shows how we evaluate the margin of safety in a single family rehab loan, using actual comparable sales in the neighborhood of the subject property. We pay attention to the loan amount per square foot, as well as the total loan amount on the property. To ensure a margin of safety, we look for the loan amount per square foot to be substantially below the sales price per square foot of nearby properties. We also want to see the total loan amount well below the recent sale prices of comparable homes.
This podcast addresses some of the key steps involved in making a trust deed investment. The most important tasks need to be performed prior to making the investment, such as determining the sales price of comparable properties and seeing the subject property and the comparable homes to ensure that the property value is sufficient to provide a margin of safety. Other tasks relate to assembling a complete set of records documenting the investment after the time of funding.
This podcast explains why we do not make loans secured by owner-occupied homes but instead focus exclusively on lending to professional real estate investors. Lending to homeowners who have poor credit is a separate business and we have no interest in this business for a variety of reasons, some of which are explained in the podcast.
This podcast explains the pricing and terms private lenders can expect when lending to established, high volume single family residential rehabilitation specialists. It also explains the loan-to-cost and loan-to-value underwriting criteria that are typical in our market as of mid-2011. The current market is profitable for both lender and borrower, and provides an appealing opportunity for real estate investors looking for high current yields with a solid margin of safety.
This podcast explains the organic process through which we launched our residential bridge lending program. The founder of Standard Capital had cash available and was looking for something very safe with a fairly short maturity as an interim investment. The residential bridge loans went so well that Standard Capital launched a program allowing other investors to participate in these investments. The process was not planned out ahead of time, it evolved naturally as it became clear that the program really works.
This podcast examines three different sub-markets within the trust deed investing universe: (1) single family residential "fix and flip" six-month loans; (2) single family investor loans of up to 24 months; and (3) commercial real estate bridge loans of 12-24 months. The podcast compares and contrasts these three areas from the investor's perspective. Please watch our blog as we will be posting one new podcast roughly every week. There will be about 30 podcasts total in the series, and this is the seventh. If you are interested in learning more about what we do, please sign up for our newsletter at www.arixacpital.com or give us a call at 310-846-1754.
This podcast outlines selective positives and negatives of investing in trust deeds. The main focus is to highlight the limitations of trust deed investing so that investors go into this type of investing with realistic expectations‚ and steer clear if this type of investment does not match their objectives. Please watch our blog as we will be posting one new podcast roughly every week. There will be about 30 podcasts total in the series, and this is the sixth. If you are interested in learning more about what we do, give us a call at 310-905-3050.
In late 2010, Jan Brzeski of Arixa Capital Advisors, LLC, (formerly known as Standard Capital, LLC) was a featured speaker in Pensco Trust's webinar series for self-directed IRA investors. Using the links below, you can access the audio file of that webinar as well as the presentation that was distributed to the more than 250 participants in the webinar. As of the time of this posting, Standard Capital has invested successfully in dozens of new loans beyond those that were held at the time of the webinar. In addition, all of the loans we held at the time of the webinar have paid off profitably. To listen to the audio of the webinar, please click here. Please click here to download the webinar's power point and follow along.
This podcast gets to the heart of what outcomes the trust deed investor must be prepared for. There are two main outcomes: (1) get paid back, on time, with interest; and (2) borrower fails to perform, in which case there is a default and lender pursues a foreclosure to protect lender's interests. Within this second outcome, there are two sub-paths: (2a) foreclosure auction takes place, and the lender is outbid by another investor, in which case the lender gets paid back, with interest and reimbursement of attorney's fees; or (2b) lender is the highest bidder at the foreclosure sale in which case lender owns the property after the foreclosure sale. Lender can then hire a broker to sell the property. If the loan wasn't excessively large relative to the value of the property, lender should ultimately get his or her money back, with an attractive return, to compensate for the hassle and work involved in foreclosing and having to hire a broker and sell the property.
Please watch our blog as we will be posting one new podcast roughly every week. There will be about 30 podcasts total in this series. If you are interested in learning more about what we do, give us a call at 310-905-3050.
This podcast addresses the question "Why do borrowers need private lenders like Arixa Capital?" The answer is that banks will only make loans that fit into their current, restrictive criteria. Many of the loans we make are good quality loans but they don't fit banks' current lending criteria. Please watch our blog as we will be posting one new podcast roughly every week. There will be about 30 podcasts total in this series. If you are interested in learning more about what we do, please sign up for our newsletter or give us a call at 310-846-1754.