April 2019
Be a Lender Not a Landlord
You are receiving this email because you have set up a Self Directed Retirement Plan and/or you are currently investing in our Managed Investment Program.
Most investors have, at some time in their lives, borrowed money to complete a real estate transaction. Generally speaking, they have not had the opportunity sit on the other side of the desk and be a lender. Safeguard is providing you with this opportunity!
Being a first trust deed lender allows you to have the "banking advantage" while generating the solid returns associated with real estate investing. Safeguard’s private lending option gives investors the ability to loan money secured by a real estate deed of trust, or mortgage, on a single-family rental property.
Be A Lender...Not A Landlord!
Our clients are lending on 5 year terms, at a 9% interest rate.
Our clients are lending on 5 year terms, at a 9% interest rate. Each individual loan is secured by a specific fully remodeled performing rental property of your choosing. These properties are being managed by one of Safeguards Certified Investment Partners. All of our clients receive post renovation photos, appraisals and loan overviews before we draft closing documents. Clients review these closing documents before committing to a loan.
We work closely Certified Investment Partners. They are cash flow investors that focus on price to rent ratios. This allows them to calculate break even points based on historical tenant occupancy rates, acquisition costs, rehab costs and monthly rental rates (cash flow). Allowances for vacancies, maintenance and property taxes are also accounted for.
Most real estate investors speculatively focus on appreciation and view cash flow as a means to justify an end. Our Certified Investment Partners purely focus on cash flows and if appreciation happens it's a bonus.
In the last real estate downturn, rental rates went up as housing prices went down based on the economic principal of supply and demand.
Why is now the right time to be a lender rather than a landlord?
- A couple weeks ago, the yield on 10-year Treasury notes has fallen below that on three-month bills for the first time since 2007. This is a top indicator that housing pricing are likely to stop appreciating. Source: www.wsj.com
- With baby boomers retiring at a rate of 10,000 a day, one would look to the millennial generation as the next wave of demand for homeownership. But many in this cohort are incapable of making such a financial commitment. They are burdened with a record $1.6 trillion in college debt. And “serious delinquencies” (those at least 90 days overdue or in default) of student debt topped a record $166 billion in the final quarter of 2018. Source: www.marketwatch.com
- The current tariffs on imports and the retaliatory actions by U.S. trading partners have significantly raised the cost of building a home. The price of steel mill products, softwood lumber, aluminum mill shapes, and plywood have jumped 20% to 30% in the past year. Source: Market Watch
- Home builders still face a plethora of regulations, which account for 25% of the cost of constructing a home. Source: Market Watch
