My provider has just freshly renovated the home after acquiring it at a significant discount in an off market transaction. The property was distressed and got a complete makeover as detailed in Hassle Free Rentals with a new roof, HVAC, plumbing, etc. This is all designed to minimize the likelihood of any major repairs for the first few years of ownership. Once a well screened tenant is placed, our group will have the option to purchase the home at a price where the turnkey provider makes a profit, but still provides good cashflow for us. That’s why it is so key to get the property at a deep discount.
So did we pick it up? Watch and see.
My review of one of the very best sites on the web for real estate investors, Bigger Pockets. There is not anything you can’t learn between their forum, podcasts, and books.
Kenyon Meadows MD interviews Jorge Newberry CEO and founder of American Homeowner Preservation (AHP). AHP raises money from investors and buys up distressed mortgages from banks at deep discounts often in low income neighborhoods. They then work with the borrower to come up with a financial solution to keep them in their home. This often includes writing off several thousand dollars of debt, lowering interest rates and extending the term of the loan. Because the mortgage are acquired at such deep discounts, American Homeowner Preservation has the ability to offer these substantial modifications while still paying attractive returns to investors in the 12% range. Additionally the investment minimum is just $100, making it an incredibly affordable way to participate in in this alternative real estate asset while stabilizing neighborhoods.
We talk about the lingering aftermath of the mortgage crisis, and delve into a case study of a borrower who was able to stay in their home after an AHP modification.
Kenyon Meadows MD reviews Stephen Gardner’s book Doctor Your Retirement: How the Smartest Doctors build Wealth with Real Estate. Gardner is a financial planner who avoids traditional paper assets like stocks and bonds in favor of real estate; specifically advocating for bridge loans. Bridge loans are an example of a type of private mortgage lending whereby a group of individual investors provide short term, high yield secured loans on commercial real estate projects. Returns are contractually obligated in the 6-12% with the underlying real estate acting as collateral. Gardner argues bridge loans represent an ideal combination of inflation beating returns, simple to understand, and appropriately passive for the busy high income professional.
I have been a private lender for years both off and online, and agree wholeheartedly with the authors approach and conclusions. For those interested in starting to participate in bridge loans Gardner offers a turnkey solution through his firm, but tactfully avoids turning the book into a prolonged sales pitch. I would strongly encourage you to pick it up and we also have 2 chapters devoted to private mortgage lending in Alternative Financial Medicine: High Yield Investing in a Low Yield World.