sdcia

San Diego Creative
Investors Association
Visit Us at: www.SDCIA.com
NEWSLETTER
News You Can Use!
In This Issue:
SDCIA Wishes
You a Happy
New Year!
About SDCIA:
Recipe For a Happy New Year
- Top 10 Mistakes People Make With Their Self-Direct IRA
- 10 Reasons Your Property Hasn’t
Sold - Part 2
- Real Estate Investment Funding Options
- What is Crowdfunding?
SDCIA is San Diego’s most established real
estate investor club. The association consists of
people with a wide range of real estate experience.
Our members include professional brokers, agents,
lenders, contractors, IRA specialists, title/escrow
agents, lawyers, and many more, plus a large
group of investors whose experience ranges
from zero to decades.
Whatever your level of knowledge and
understanding, we are confident you will benefit
from and connect with SDCIA members.
We are committed to networking, creativity,
and education in order to increase your
success in investing.
Visit www.SDCIA.com to join and learn
more about what we have to offer.
By Anonymous
Take twelve fine, full-grown
months; see that these are thoroughly free from old memories of
bitterness, rancor and hate, cleanse
them completely from every clinging spite; pick off all specks of pettiness and littleness; in short, see
that these months are freed from
all the past—have them fresh and
clean as when they first came from
the great storehouse of Time. Cut
these months into thirty or thirtyone equal parts. Do not attempt
to make up the whole batch at one
January 2016 Issue
time (so many persons spoil the
entire lot this way) but prepare one
day at a time.
Into each day put equal parts
of faith, patience, courage, work
(some people omit this ingredient
and so spoil the flavor of the rest),
hope, fidelity, liberality, kindness,
rest (leaving this out is like leaving
the oil out of the salad dressing—
don’t do it), prayer, meditation,
and one well-selected resolution.
Put in about one teaspoonful of
good spirits, a dash of fun, a pinch
of folly, a sprinkling of play, and a
heaping cupful of good humor.
SDCIA Sponsors
Accuplan - Brian Davis [email protected], 619-892-2438
DianesDeals.com - Diane Oliver, Realtor
[email protected], 858-876-7494
Financial Bodyguards - George Schmall
[email protected], 858-350-1253
Gap, Bridge, Early Funding - Tod Snodgrass
[email protected]
Phone: 310-408-7015
SDCIA makes no warranties regarding
products or services offered by Sponsors
KokomoInvest - Paul & Christine Kankowski
kokomoInvest.com, [email protected],
858-922-9224
MAXX Investments, Inc. - Max & Maurice Rizzuto
[email protected], [email protected]
858-717-5010 or 858-688-1646
Mortgage Banker/Home Loan Broker Thom MacFarlane
Trilion Capital - David Weiner
[email protected], 858-530-2251
uDirect IRA Services, LLC - Kaaren Hall
[email protected], 714-460-5505
Sequoian - Sasha Favelukis
[email protected], 858-205.2449
Windvest Corp - Andre Jimenez
[email protected], 858-485-0462
[email protected], 619-285-0777 x203
Oakwood Escrow - Angela Marx
[email protected], 619-430-0110
Molly O’Dell, [email protected]
858-240-2082
Talimar Financial - Brock Vandenberg
[email protected],
858-613-0111 x1
Top 10 Mistakes People Make With
Their Self-Directed IRA
Provided by AccuPlan, Brian Davis
1. Making a personal guarantee.
The IRA account owner is considered
a “disqualified person” and cannot
provide a personal guarantee of a loan
for the IRA. Therefore, when setting
up an IRA or IRA-LLC (ICO), you
cannot guarantee a loan to purchase
property, nor could you open a margin
account at a brokerage firm in which
you personally guarantee to cover any
margin calls. This could also apply in
cases where the LLC is attempting to
get a credit card from the bank, and
the bank requires a personal guarantee
on that card.
2. Making an IRA contribution by
depositing it directly into the ICO (IRALLC) checking account versus directly
with the IRA custodian.
The IRA owner makes their annual
contribution directly into the bank account of the LLC rather than with the
custodian of the IRA. In this case, you
are personally interacting with your
ICO (IRA-LLC). That is considered a
prohibited transaction. Additionally,
an IRA contribution is only considered valid when it has been received by
the custodian.
3. IRA owner individually signs an
agreement on property they want to
buy with their IRA.
IRA owner attempt to delay setting up
the self directed IRA or the LLC until
they are on the cusp of getting the
property. This usually results in a case
where the IRA account owner, personally enters into the buy-sell agreement
to acquire the property, and even puts
down personal money for the property.
The account owner then either sets up
the self directed IRA account and/or
the LLC that will hold the property.
This is a very flawed approach. For
one, the property must be owned and
titled in the name of the IRA account
or the LLC. Secondly, you cannot use
your personal funds in conjunction
with the IRA. The IRA must have the
ability to buy the property on its own
without you providing any indirect
benefit. You putting down monies
in advance could be construed as a
case where your IRA could not have
entered into the transaction on its own
because it was not setup.
4. Self directed IRA owner thinks a
passive investment in active
business is not subject to UBTI.
UBTI is the tax that levels the playing
field for tax exempt entities that invest
and compete against businesses that
pay taxes. Self directed IRA account
owners find unique business or investment opportunities in small businesses. Even though the opportunity
is compliant and reasonable, and the
IRA is passively invested, this does
not necessarily mean that the self
directed IRA is not engaged in an
active businesses.
Regardless of how involved the self
directed IRA account owner is in the
business, the business is active and it
is competing against other businesses
that are required to pay taxes. As such,
the IRA would be subject ti UBTI
tax regardless of the account owners
involvement in the business.
5. IRA owner uses personal assets or
“Sweat Equity” for the benefit of the IRA.
A self directed IRA owner is clearly
allowed to guide and manage the investments of the self directed IRA. The
management can be relatively involved
and substantial. As an example, the self
directed IRA owner (or even the self
directed IRA LLC manager – the ac-
count owner), could potentially expend
considerable effort in finding the right
real estate investment for the self directed IRA. This effort could likely be
in the form of visiting many properties,
speaking with many real estate advisors
and experts, crunching numbers, etc.
However, a prohibited transaction or
indirect benefit line could be crossed
if the self directed IRA owner (or as the
IRA LLC manager) were to use their
personal tools and equipment to improve the property (e.g. use your saws,
materials, truck, employees, to add a
new roof). Another potential mistake
is the self directed IRA owner provides
all of the labor for making
the improvements.
The general rule of thumb is that you
are allowed to provide the necessary
care and management of the self directed IRA’s assets, but you should draw
the line at providing “sweat equity” or
use and benefit of your personal assets.
6. No Rules Can Be Violated When
Dealing With A non-Disqualified Party.
One of the key tenets of IRAs is there
is a specific list of persons and entities
which are prohibited from interacting with your IRA. This leads people
to believe that if you are not on the
“list” (IRC 4975), then any transaction
would be allowed.
However, as the IRA owner you have
a fiduciary responsibility to act in the
IRAs best interest. Therefore, giving
a loan to a friend or brother or sister
below market rates, or with no interest
or terms could be deemed a prohibited
transaction.
Additionally, agreeing to enter into a
transaction due to coercion (e.g. sister
tells you that she is going to tell your
parents to change their Will if you do
not give her a loan) could be deemed
a prohibited transaction if your IRA
engaged in the transaction.
Agreeing to enter into a transaction
with an unrelated, non-disqualified
party, in exchange for some personal
benefit (e.g. agree to a loan or to fund
a business and agree to receive some
personal stake or interest for making
the loan), can be a indirect benefit
and could be deemed a prohibited
transaction.
Not acting in the best interest of the
plan could result in a prohibited
transaction regardless of who you are
dealing with.
7. Self directed IRA owner attempts
to receive fees and commissions from
IRA transactions.
There are cases where the self directed
IRA owner is a real estate agent and
they want to earn a commission from
selling property to their IRA or some
other disqualified party’s self directed
IRA. Such a transaction would be
viewed as conducting a transaction
with your IRA or receiving an indirect
benefit. Either way, it would be considered a prohibited transaction.
Another common scenario is that
someone is a good money manager or
investment guru type and they want
to bring in or combine several family
member’s IRA account and manage it
as a pool. In exchange, the money manager (a related and disqualified party)
wants to earn fees or commissions from
their activities. In this case the money
manager is a disqualified party, and
they receiving a direct benefit from the
IRA accounts of disqualified persons.
This clearly would not be allowed.
A disqualified person can be paid reasonable fees and expenses for providing
services to the IRA. Such an example
could be that your spouse is a CPA and
your self directed IRA LLC hires your
spouse to do tax work. There are not
any clear lines as to what constitutes
reasonable. So, our position on any
transactions with any disqualified party
is just don’t do it!
As tempting and harmless as some of
these transactions appear to be, we
feel its better to steer clear of having to
potentially defend your actions in the
event of an audit.
These scenarios and opinions expressed
above are for informational and educational purposes and are not intended
to be an exhaustive list of scenarios.
If you feel your situation may have an
exception or you require a more definitive opinion then you should contact
your personal tax advisor.
8. IRA owner loans money to a third party
with equity kicker in order to avoid UBTI.
Loaning money to an independent,
third party is acceptable and the
receipt of interest income is generally
considered to be passive and therefore
not subject to UBTI. However, adding
the equity kicker component to the
loan is likely to be viewed as nothing
more than a disguised equity interest
in the business. This would most likely
not avoid any UBTI on the IRA.
9. Two or more IRA owners agree to
“loan” each other money to avoid
prohibited transactions.
Interacting with your IRA is considered
a prohibited transaction. So, unrelated,
self directed IRA owners will attempt
to enter into a reciprocal agreement
to loan each others self directed IRA
money so that the IRA owners can indirectly tap their funds for personal use.
This is a flawed design and approach.
Even though the parties are not automatically on the disqualified list for
prohibited transactions, the indirect
benefit rule would come into play.
As a self directed IRA owner, you are
not allowed to receive any benefit directly or indirectly from your IRA. The
entering into a reciprocal arrangement
with a third party which results in monies into your own pocket (i.e. the other
person’s IRA funds) clearly conveys an
indirect personal benefit to you.
10. Self directed IRA owners
flipping real estate is Not UBTI.
The receipt of rental income is considered to be passive income and therefore
not subject to UBTI. However, some
self directed IRA owners fall into the
trap of thinking that this means that
they can buy and sell properties on a
routine basis (i.e. flipping), and that
this would not be active income or
running a business.
Even though there are not any bright
lines as to when buying and selling real
estate through your self directed IRA
would constitute UBTI, the general
guidelines will be based facts and circumstances. Some factors that would
be used to determine if the real estate
transactions would meet the requirement for UBTI are:
- The purpose for the property
- The frequency, continuity and size
of sales
- The extent of improvements
- The activities of the owner in
improving & disposing of the property
- The purposes for which the property was held
- The proximity of purchase and sale (i.e. how close together were the
transactions)
In general we advise clients that flipping or turning one property may or
may not meet the UBTI standard.
However, if you show a routine pattern
of buying and selling property and if
there appears to be the intent of turning properties for profit, then you will
most likely be subject to UBTI.
The information contained in this publication is intended for educational and
informational purposes only. If you
have a specific situation that requires
interpretation as relates to self directed
IRA and prohibited transactions you
should seek the advice of a tax advisor.
Contact Brian Davis for more info
Email: [email protected]
Phone: (619) 892-2438
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[email protected]
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Investment Property Specialist - SDCIA member since 2007
10 Reasons Why Your Property Hasn’t Sold
Part 2 of 2
Plus: Hot Tips from Lenska’s List
Written by Lenska Bracknell. Broker CA BRE 01507487
6
Your property won’t sell
because your house
won’t appraise.
Appraisers play an essential role
in the process of selling a home. It
is critical sellers and buyers work
together to ensure that an appraiser
provides an independent, impartial,
and objective opinion of value that
accurately reflects the marketplace.
The listing agent should actively communicate with the appraiser and supply any information that helps them
do their job. Materials such as: terms
of the sale (bank-owned, short sale
versus non-distressed homes, cash
versus financing), applicable comparable sales, typed list of improvements, contractor invoices, permits
for added sq footage and anything
else that may affect the homes value.
We’re having less trouble with appraisers these days but that doesn’t
mean that the problem has gone
away entirely. San Diego’s housing
market is on fire with multiple offer
situations, so sellers and especially
investors try to push the envelope.
Most of the time that just finished
rehabbed home is the “castle on the
street” and should appraise for the
highest price. If not, and you disagree
with the value the appraiser arrived
at, you can request additional detail
explaining how he/she arrived at the
value. You can rebuttal the appraisal
or switch to a different lender and
hope the other appraiser will share
your opinion of a higher value.
Note of caution, not to get wrapped
up in bidding wars, desperate buyers
are having trouble finding inventory,
some of them will foolishly overbid
in order to get the offer accepted.
Only later the seller has to agree to a
price reduction after the appraiser is
the voice of reason.
Lenska’s List Tip:
Have a detailed
list of your renovation and new
equipment typed
up and digital file
available, listing agent should
always meet the appraiser, don’t accept
offers with credit towards closing costs
which will inflate the price.
7
Your property won’t sell
because it’s unavailable
to show
It’s easy to show a vacant home
but some agents still don’t own a
Sentrilock box which any agent can
access with a chip card or via an app.
Vacant homes with a Sentrilock can
be shown spur of the moment rather
than phoning or texting for a code
to open a combo lock box. Showing
times and instructions are part of the
marketing strategy and depending on
if it is a sellers or buyers market. We
live in a “gotta have it now society”
where patience once a virtue not a
thing of the past. Sometimes sellers have to get the home ready. My
biggest pet peeve is pets. Pets are to
be appropriately contained, as not
to disturb buyers who want access to
all parts of your home. If possible,
removing pets from the premises
completely is preferred. If you have
an infant taking naps at different
times and you’ve told your Realtor in
no-uncertain-terms that you’ll only
allow showings during certain times.
Or no showings on Saturday or
Sundays which are prime days. Buyers will move on to the next property
and possibly buy that one instead.
Bottomline - they can’t buy it, if they
can’t see it.
As good as your online photos are,
they’re no substitute for an in-person
visit. Once you put your property
on the market it stops being your
“home”, and has become your “product”. And you want your product to
be seen by as large a buying audience
as possible.
Lenska’s List Tip:
8
Hold open houses
on occupied properties & don’t let
your listing agent
get lazy. Advertise
in the MLS 1 week
before so agents will
send their buyers by.
Your property won’t sell
because you have the heat
and power turned off
Maybe this is not such an important
point here in San Diego but still
coming through the front door it
could be love at first sight or flight
at first frost bite. I refused doing
open houses last summer unless the
seller turned on the air conditioning
– nearly all visitors stayed over 5 minutes talking to me plus eating chocolates without them melting in their
hands. Okay... maybe it’s an REO,
fixer or maybe you’re no longer
living in the home. You should not
need a flash light to view the home
either. Viewers need to be able to feel
comfortable when they’re viewing
your home for sale. Sometimes and
empty home can scream desperation.
The owner has left the building and
buyers feel that there is a lot of room
for negotiation when it comes to
the price of the house. Think about
it, one of the assumptions a buyer
makes is that the seller is in a hurry
to sell and would gladly accept lowerthan-the-market offers.
look crime-ridden, hurt home prices
and scare off potential buyers. If
home buyers have heard that crime is
an issue there, neighborhood watch
signs may give comfort that the neighborhood is doing something about it.
On the other hand, if it’s a neighborhood that is not facing major crime
issues, signs may be a confusing
signal. The signs may be viewed as
a red flag to would-be buyers.
Lenska’s List Tip:
Lenska’s List Tip:
9
Don’t forget to pull
up blinds, turn on
lights and may be
play some soft music.
Remove the stuffed
snarling bobcat.
Your property won’t
sell because of your
neighbors
You might have the Flintstones living
next door, or people who “Never
address their mess”, or you feel like
a daily visitor to an “autoshow”.
You know what I’m talking about,
the family who has a car without
an engine on the front lawn, or
doesn’t mow their lawn, or has never
trimmed a plant since they moved in
10 years ago, in-laws living in the motor home, the list goes on. Maybe you
can offer to pay to have their lawn
cleared of junk, or build a new fence,
or a huge wall?
Then there are the smaller nuisances such as loud music, non-stop
barking dogs, a home business next
door such as child care, drug rehab
rental or that “special” home other
neighbors would like to see sold
instead of yours.
The jury is still out on whether
neighborhood watch signs are good
or bad for property values. Some
argue that the signs can make an area
10
Bribe them, or put
a garage sale sign in
their front yard – just
kidding. Try to buy
your neighbor’s house
or tell all your realtor
friends they are interested in selling.
Your property won’t sell
because you are not
countering an offer
Value is in the beholder’s eyes.
While many sellers have emotional
attachment and financial investment in their home and we all
would love to get the most for our
homes. However, sellers need to stay
realistic. It is too easy to get hung up
on the starting number in an offer
when the focus should be on what
the end result is. The opening offer
is simply that –a starting point. It
gets a conversation going and results
in hopefully a happy medium that
is amenable to the buyer and seller.
Not countering an offer is like having a one way conversation. It won’t
work. How can you move to “sold”
if you can’t have a dialogue? It
doesn’t mean that the buyers aren’t
serious, they are simply being conservative in their first offer to get a
feel for how the negotiation is going
to go. It doesn’t mean that is the
most they are willing to pay unless
the offer was positioned that way.
Failure to counter sends a discour-
aging signal to the buyer that can
create an uncomfortable situation,
perceived or real. Buyers want to do
business with sellers who are eager
to do business with them. You don’t
have to give away the store to do so.
However responding with a number
in good faith is always a step in the
right direction.
Lenska’s last list
tips: Any home
sells for the right
price! If you have a
“challenged” home,
for example; a home
close to power lines
or freeway, your
days on market will
be 4 to 5 times longer and your price
should be adjusted downwards about
10%. Homes on busy or backing up to
busy streets, homes bordering on commercial zones and in rental neighborhoods
sit on the market longer and sell for less!
Having no garage is still a deal breaker
for most buyers! Pay the 2.5% or better
3% buyer’s commission to realtors so your
home makes it to the top of the list of
homes to be shown.
Want to Learn More?
Lenska’s Educational Classes:
Rehab Fieldtrips, every 3rd
Saturday of each month.
For more info:
www.InvestorToursSanDiego.com
Real Estate Profit Building 1.0
A 2-day educational event for
investors starting out how to
building wealth with real
estate. January 23 & 24th, 2016.
www.eventbrite.com/e/realestate-profit-building-tickets-18837271787
Financial BodyGuards Insurance Services, Inc.
Tod Snodgrass, Private Lender
Short Term Funding
Bridge Funding
Gap Funding
PROPERTY INSURANCE MADE EASY!
AFFORDABLE TOP QUALITY PROPERTY
INSURANCE FOR THE NEEDS OF EVERY INVESTOR
Products Offered:
- Contractors Liability / Vehicles / Workers Comp
- Fix and Flip: Liability and Property Package
- Course of Construction / Builders Risk
- Long Term Rentals /Home Owners
- Apartments and Condos
- Life and Health
Phone: 310-408-7015
email: [email protected]
Capital is Available for Your Projects and Deals!
Loan Parameters:
- $2,500-$50,000
Don’t be fool hearty! When you do any job make
sure you have the correct insurance. For instance if
you are doing a remodel or fix and flip, you need
a COC/Builder Risk policy. If you only obtain
a regular Home Owner’s policy your premium
will be lower; but your coverage will probably
be void.
You also need Workers Compensation for all
workers on the job; even if you pay them cash.
That is because if they get hurt on the job you can
be held personably liable. By law you must carry
Workers Comp. If you are breaking the law, Personal
Holding Corporations and LLCS provide only limited
protection.
Financial BodyGuards Insurance Services, Inc.
George Schmall, President
Phone: (858) 350-1253
Fax: (858) 350-1254
[email protected]
DOI License #0G13448
“The San Diego Creative Investors Association makes no warranties regarding vendor products or services offered”.
- Southern California preferred
- Must be fully collateralized
- 4-20 weeks normally
- Quick funding decisions
- Not a loan; no points, no interest, no monthly payments
- No up-front fees or costs
- Joint Venture:
- I bring the money, you bring the deal, we do a profit split
Have Questions? Want More Info?
My background:
Over the years, I have been an investor or principal in
several different type of deals, from fix & flip, rentals,
commercial, raw land, notes, condos, and many more. . . .
Contact Tod: 310 408-7015
8322 El Paseo Grande - La Jolla, CA 92037
[email protected]
Building Partners
Fix & Flip Loans | Construction Loans | Bridge Loans
Short-term
loans . . .
Long-term
relationshipsTM.
“We set ousleves apart from other hard money
lenders by creating lasting, mutually beneficial
relationships with our borrowers.”
David Weiner, President
Fast | Reliable | Competitive Rates
858-530-2251
www.TRILIONCAPITAL.com
CAL BRE #01894927
©2010 – 2015 Trilion Capital Corp. All rights reserved
Real Estate Investment Funding Options
Written by Tod Snodgrass (Short-term Funding Specialist)
T
ere is an old saying: If you
have the right deal, the
money will come. Well, if
you are an old experienced hand
with lots of contacts that is one
thing. But if you are new to this
field, the money may not be so easy
to find. Don’t let anyone fool you:
to be a successful real estate investor
takes money. The chances of getting
a no money down deal are limited,
or nonexistent to the vast majority
of REIers (Real Estate Investors).
It can be your money or someone
else’s money, but it has to come
from somewhere.
i. Personal (bank) loan, assuming you have a successful track record with your banker.
but that isn’t much comfort to the
other 75% of investors (and probably 99% of REI newbies) for whom
j. Construction (bank) loan, assuming 100% cash is not an option. Additionally, all cash deals mean you are
your profit projections hold up
sacrificing the leverage you could/
on paper.
would gain by using your funds in
k. Seller financing. Not every seller a way that spreads them around to
needs 100% cash out from the sale several deals, thereby potentially
of their home.
increasing your overall yields. The
alternative is to use your precious
l. Partnership with another investor;
cash resources to make multiple
you do the work, they bring the down payments, and borrow the
money; split profits.
rest. If you have penciled the costs
m. Specialty, short term funding for of the deal (purchase cost, rehab
EMD (Earnest Money Deposits), expenses, selling costs) out prop rehab, etc. See more below.
erly, you should be able to extract
a decent profit, despite having to
pay debt service on the borrowed
“A bank is a place that will lend you money if
money. Bottom line: Using OPM
(other people’s money), i.e. financyou can prove that you don’t need it.”
ing your investment property, can
– Bob Hope
produce significantly higher returns
than putting all your available cash
The good news is that there are a
Low or No Money Down vs. All Cash into one deal.
wide variety of different financing
So, is it imperative that you have
resources and tools available.
access to gobs of cash to speculate
FHA (Federal Housing AdministraStandard (and not so standard))
or invest in RE? Short answer: No.
tion) Loans: Potential Advantages
sources include:
The real (longer) answer, is much
1. Tax Free: These loans can be very
more complex and complicated.
attractive if you qualify, i.e. you are
a. Hard Money (asset based) loan.
First off, yes there are lots of REI
actually going to live in the house
strategies
used
to
invest
in
real
for at least two years. Some REIers
b. Equity in your own home via a estate without having a lot of cash.
use this funding source to buy a
HELOC loan or a refi.
And yes there even some deals that
run-down house, move in, fix it up,
c. Tap your retirement funds, such can be pulled off without using any
then flip it after living in it for two
as an IRA, 401k.
money at all. By way of background, years. The beauty of this method is
d. Friends and/or relatives.
as recently reported in a study
the profits you make on that type of
published
by
BiggerPockets,
and
flip are actually tax free (for up to
e. Conventional Mortgages; some co-authored
by
Memphis
Invest,
$500,000 for a couple).
even allow you some extra money about
one-quarter
(25%
or
so)
of
for rehab. See FHA loans.
US investors use 100% of their own 2. Multiple Units: FHA-financing
f. Equity investors.
cash to finance their real
can include up to four separate
estate investments.
g. Credit card advances, etc.
units. Put another way, assuming
you plan on living in one of the
h. Joint venture (you bring the deal, True 100% investor funds is by far
units, you can buy a four-plex, tri they bring the money, split the the easiest form of financing (it usu- plex or duplex with FHA money.
profits at the end).
ally has the fewest complications),
3. 3.5% down: Another big benefit
of an FHA loan is the very lowdown payment requirement: it is
currently 3.5% Yes you will be required to take out Private Mortgage
Insurance (PMI) to make up for the
low down payment, but it is still one
heck of a deal compared
to 20% down.
4. A 203K FHA loan can also be a
winner for REIers. If done right
(often not an easy task), it allows
a potential homeowner to buy a
house in need of (some) rehab
work, and provides extra funds
to accomplish the improvements,
repairs, etc. and roll that extra
amount into the loan itself. Like
the normal FHA loan, a 203K loan
allows for a 3.5% down payment.
Which financing option is best for
you? It depends on your needs, how
well the deal in front of you pencils
out, and how much experience you
have in this business.
Need more advice on this subject?
Need short term funding for
EMD, JV, etc.?
Contact: Tod Snodgrass
[email protected]
310 408-7015.
What is Crowdfunding?
According to Wikipedia, Crowdfunding is the practice of funding a project or venture by raising monetary
contributions from a large number
of people, today often performed via
internet-mediated registries, but the
concept can also be executed through
mail-order subscriptions, benefit
events, and other methods. Crowdfunding is a form of alternative
finance, which has emerged outside
of the traditional financial system.
The crowdfunding model is based
on three types of actors: the project
initiator who proposes the idea and/
or project to be funded; individuals or groups who support the idea;
and a moderating organization (the
“platform”) that brings the parties
together to launch the idea.
How did all of this web-based financing evolve? Due to the banking fraud
of 2008 that led financial institutions
to retreat into risk-averse decisionmaking, small and medium-sized
companies had real difficulty securing funding. Companies in different
stages of growth, from start-ups to
those expanding their businesses,
scrambled to find working capital
or project-related financing. Enter
crowdfunding, which can be a boon
to cash-strapped entrepreneurs
Crowdfunding for
Real Estate investing
Real estate crowdfunding is the
online pooling of capital from investors to fund mortgages secured by real
estate, such as “fix and flip” redevelopment of distressed or abandoned
properties, and equity for commercial
and residential projects, acquisition
of pools of distressed mortgages,
home buyer down payments and
similar real estate related outlets.
Investment, via specialised online
platforms, is generally completed
under Title II of the JOBS Act and is
limited to accredited investors. The
platforms offer low minimum investments, often $100 – $10,000. There
are over 75 real estate crowdfunding
platforms in the United States.
Is Crowdfunding right for you?
Do your due diligence! There are
well over 10 websites for Real Estate
Crowdfunding. To help you get
started on your research, check out
Real Estate Crowdfunding
Checklist for Investors:
www.crowdcrux.com/real-estatecrowdfunding-checklist-investors/.
SDCIA Disclaimer
SDCIA, its officers and directors,
individually or collectively assume
no liability or responsibility for the
outcome of any real estate transaction, decision, or other action that
any SDCIA member, guest, or
visitor, may enter into as the result
of attending any meeting of SDCIA,
listening to any guest speaker, or
talking to any SDCIA member,
guest, visitor, or persons listed on
SDCIA’s website, or of following
the educational content in any of
the resources in the library. SDCIA
in no way endorses any real estate
offering that may be made.
Members of SDCIA, guests, and
visitors are urged to perform their
own due diligence investigations
before entering into any real estate
transaction or other contractual
relationship.
SDCIA makes no warranties regarding
SDCIA board members, sponsor or
speaker products, information
or services offered.
SDCIA make no warranties regarding
sponsor products or services offered.
SDCIA reserves the right to terminate
memberships and sponsorships at any time
with credit back for unused months.
Direct Lender
Funding as fast as 72 hours
Flipper loans with only 2 points
Loans on Commercial, Residential
Multi-Family and Land
The Value of Real Estate and
Hard Money Loans
Sasha Favelukis
Partner
CA Brokers License # 01896048
NMLS License # 904764
858-205-2449
[email protected]
www.sequ.com
Hard money loans are asset-based
loans where a borrower receives
funds secured by the parcel of
real estate. Hard money loans are
typically issued by private investors
or companies like Sequoian Investments, Inc. Interest rates are typically higher than conventional loans
because the underwriting of the
loans is more liberal for out of the
box or “make sense” scenarios.
Typically most hard money loans
are used for projects that last anywhere from a few months to a few
years. Hard money loans are similar
to a bridge loan in that they are
a short term funding source.
The qualifying criteria for hard
money loans vary widely from loan
to loan due to the fact that every
property and borrower is different.
Credit scores, income and other
conventional lending criteria are
Loan amounts: $50,000 - $2,000,000
Borrowers can have multiple loans
No Prepayment Available
California Only
analyzed, however most of the time
we primarily qualify a loan amount
based on the value of the real estate
being collateralized and what the
property would rent for if the
investors ended up owning it.
The benefits of hard money loans
for borrowers are:
- Fast funding
- Equity based loans
- Make-sense underwriting
Benefits of hard money loans
for investors are:
- All loans are secured by
real estate, locally
- High returns
- Debt service underwriting
- There is equity securing
the investment
Membership Fees:
- Active duty military and spouses get
free annual membership and free
meeting entry.
- Children under 15 are free.
- Annual membership is $45:
get the first meeting free.
Save $85/year on membership!
Annual Guest Cost $240
Annual Member Cost $155
$45 to Sign up Today!
Get These Benefits:
- Reduced meeting fees, $10 vs $20
- Access to online recordings
- Access to education library
- Haves and Wants priority
- Member discounts:
- The Home Depot, 2% Cash Back
- ISC Tenant Screening
- RealProtect, Insurance for Investors
....and many more!
SDCIA’s Purpose:
To unite members in a common bond
to further their education and promote
their success in real estate investing. This
includes locating, buying, financing,
renting, managing, maintaining, selling,
and/or exchange real estate for
investment purposes.
Code of Ethics:
- To create the environment and processes
which encourages each member to help
other members to be successful in real
estate investing.
- To develop through education,
experience, sharing, and discussion an understanding of current real estate investment techniques.
- To encourage and uphold sound, honest practices which maintain real estate
activities on a professional and ethical level.
Contact Us:
Membership: [email protected]
Library: [email protected]
Web Support: [email protected]
Programs: [email protected]
General Questions: [email protected]
Benefits: [email protected]
Sponsorship: [email protected]
Newsletter: [email protected]
Volunteering: [email protected]
The #1 Benefit of Being
an SDCIA Volunteer.
FREE Annual Membership!
We are looking for dedicated
individuals to help at our meetings.
Are There Cracks in Your Insurance Policy?
An Insurance Program Designed Exclusively for National REIA Members:
- All risk coverage - theft and vandalism
- Replacement cost coverage with co-insurance waived
- Automatic coverage for new purchases for up to 30 Days
- No need for a separate builders risk policy for homes undergoing nonstructural renovations
- Vacancy restrictions eased or eliminated with certain conditions
- Multiple deductible options
- Optional coverage includes: earthquake, flood, sinkhole, mold, tier I windstorm
- Monthly payment plans available to minimize the effect on your cash-flow
- On-line reporting and accounting
- Comprehensive general liability Included
Additional member insurance products include property, health, liability, life insurance,
umbrella/excess liability, equipment and workers comp. Plus professional
liability E&O insurance for Property Managers and Real Estate Agents.
Please Contact Lee Rogers, President, Sales and Marketing at 770-718-5214
or visit: www.nortoninsurance.com/aggregation