10:00 PM PDT on Tuesday, August 30, 2011

BY LESLIE BERKMAN
STAFF WRITER
lberkman@pe.com

Three months after he retired from his Wisconsinpackaging business and moved to California, Don Passehl watched the bottom fall out of the stock market, seriously depleting his retirement savings. It was enough to prompt Passehl and his wife to look for a better, safer place to invest their money.

That was 2008. Passehl, now 61, of Laguna Niguel, is rebuilding his nest egg by lending to real estate investors so they can buy foreclosed homes in Inland Southern California. He is pleased to be getting a 9 percent annual return by lending on deals that banks would reject.

In Riversideand San Bernardinocounties, as across the nation, mortgage experts say they have seen a surge of interest in so-called “hard money” loans because they generate income that is far higher than what is available from the rock bottom interest rates of bank CDs and more dependable than a gyrating stock market.

Among the investors eager to do hard-money lending — charging interest rates of up to 12 percent — are retirees and pension funds.

NOT FOR EVERYBODY

“If (the lack of) that payment means they won’t be able to buy groceries, this kind of investing isn’t for them,” said Sosa. Although an investment gone bad often may be recouped through foreclosing, the process temporarily ties up an investor’s cash, she said.

Darren Rivera, an air conditioning contractor from Chino, said three years ago he started lending to a friend, Nick Manfredi, a Corona-based real estate investor who flips houses.

Rivera said so far he has been in four transactions with Manfredi. The largest loan he made was $280,000 that he raised from a home equity line on his house. Considering that he is paying only 3 percent interest on the bank loan, he said he still nets a 9 percent return on the hard-money loan for which he charges interest of 12 percent.

With the profits from lending, Rivera said he was able to take his family on a trip to New York and a Caribbean cruise.

Manfredi, 43, who heads a real estate investors club, said he is getting a lot of calls from prospective lenders.

“With Wall Street the way it is, there is more interest in being a hard-money lender than I have ever seen,” he said. “A lot of people are kicking tires. They want to know what it takes.”

Dos and don’ts

of hard-money lending

Don’t do it on your own; you need a broker in California. Without one you could be committing usury.

Don’t lend to owner occupants because of the high risk they will default and you will have to foreclose and evict them.

Don’t loan more than 65 percent of a property’s appraised value.

Do shop carefully for a broker.

Do loan only on first trust deeds, not seconds, to protect your financial interest in a default.

Do get an appraisal of the underlying property.

via Lending can lift investors’ returns | Business | PE.com | Southern California News | News for Inland Southern California.

By

PE Business

on May 12, 2011 11:35 AM

Home sales and prices dropped again in April at a time when the housing market typically gains steam, according to San Diego-based real estate tracking firm DataQuick.

The 18,344 homes sold in Southern California last month, was down 5.5 percent from March and 9.2 percent lower than a year ago. The median price paid was down a slight 1.8 percent from a year ago when homes were sold for $285,000.

In Riverside County 3,470 homes were sold last year, a 13.7 percent drop compared to the same month a year prior, for a median price of $190,000 – down $10,000 compared to a year ago.

The number of homes sold in San Bernardino County – 2,403 — dropped 12.4 percent. The median price dropped 1.7 percent to $147,500.

“The market’s in a rut at a time it would normally be building momentum,” said DataQuick president John Walsh in a statement. Job growth or price reductions could help it along, he added. “At the moment, the latter appears to be the more likely short-term catalyst,” he said.

– Kimberly Pierceall

kpierceall@PE.com

via PE.com – Business: Real Estate: Residential Archives.

by Ed Ferrara

An application for REALTORS®

Recently reported data regarding U.S. jobs is having a negative impact on global markets throughout the world. As stocks have suffered, the sluggish economy is keeping low mortgage rates in place as investors continue to choose safe assets.

Freerateupdate.com’s daily survey of wholesale and direct lenders show that mortgage rates have remained stable for the past week as a result of uneasiness that continues to flood the markets. Current 30 year fixed mortgage rates are at 3.875%, 15 year fixed mortgage rates are at 3.250% and 5/1 adjustable mortgage rates are at 2.625%. On the bright side, the majority of consumers are employed and, with good credit, can take advantage of these historical low mortgage rates. With housing prices down, this can be a win-win situation for many and an opportunity that may never happen again. These low conforming rates are available with 0.7 to 1% origination point to well qualified borrowers who can meet lender guidelines to receive approval.

FHA mortgage rates also continue to be low. Many consumers choose FHA mortgage loans because they are consumer friendly since it is goal of FHA to promote homeownership. FHA 30 year fixed mortgage rates are at 3.750%, FHA 15 year fixed mortgage rates are at 3.500% and FHA 5/1 adjustable mortgage rates are at 2.750%. Despite FHA’s higher closing costs (APR), which is due to the upfront mortgage insurance premium and other FHA fees, borrowers find FHA’s benefits assist in making the overall transaction affordable. A down payment of 3.5% is accepted with a credit score as low as 580, but FHA mortgage rates are not affected by low credit scores. FHA also allows borrowers to use gifts that meet the guidelines, as well as housing grants to reduce FHA mortgage loans.

The only change this week was with jumbo 30 year fixed mortgage rates which are at 4.625%, a decrease of .125%. Jumbo 15 year fixed mortgage rates are at 4.375% and jumbo 5/1 adjustable mortgage rates are at 3.250%. Since jumbo mortgage loans are not government insured, borrowers must have excellent credit in order to receive lender approval. These are the lowest jumbo mortgage rates available with 0.7 to 1% origination fee to well qualified borrowers.

With the end of the summer season here, August statistics have started to roll in. Consumer Confidence continues to drop below forecast which is never good news for the economy. According to S&P/Case-Shiller, home prices increased 3.6% during the second quarter of this year, but this is still a drop from last year. The Chicago PMI Manufacturing Index also fell. The big news is the job market which continues to struggle. With no new jobs added in August, U.S. investors as well as global markets started to react on Friday as they fled stocks and turned to safe investments. This will continue to be a news maker in the week ahead as the President prepares to address the job situation on Thursday.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard .07 to 1% point origination fee.

Published: September 7, 2011

via Realty Times – Sluggish Economy Keeping Low Mortgage Rates in Place.

Hi Nick,

Kudos on a fantastic meeting on Tuesday! You make it worth the 90 minute drive from Irvine (with traffic) with the quality of your meetings. We’re lucky to have you!

Cheers buddy,

Robert

_____

Hello Nick,
You organized a super Forum, and I enjoyed the Panel and their comments.
I am the guy who help you carry in some of the equipment from your car that evening.
Would please you add me to your Forum meeting announcement e-mai list.
Bruce