INVEST R SPONSORED CONTENT A Think Real ty Publ icat ion
LEE ROGERS realprotect
LINDA HYDE AAPL
Hot Market: Tampa Jason DeBono and NuViewTrust give investors more choices and more control
MARCO SANTARELLI Norada RE Investments
NATHAN TRUNFIO Direct Lending Partners
Self-Directed Investing The Journey
by Jason DeBono, NuView Trust L ooking back to 2005, it’s hard to believe that a college intern- ship expo would be one of the most pivotal moments in my career. Like every other young and eager college student at the event, I stood in long lines at all the “brand” name firms just to hand over a resume, while ignoring the scores of small busi- nesses scattered throughout the room. I don’t know if it was curiosity or empathy that caused me to walk up to the lineless booth with a simple, pull up banner that read “Buy Real Estate in Your IRA,” but I’m glad I did. I was fortunate to have a handful of interviews after the expo, but it was the company with the simple pull up banner that stood out from the rest. I interviewed for the internship
directly with the CEO, Glen Mather, who started the company in 2003. The company had only three employ- ees – a far cry from my Fortune 500 ambitions. Its purpose was to help people use their retirement funds to buy real estate and other non-public investments, which was an area I knew absolutely nothing about. In fact, prior to the interview, I called my dad, who has always been my go-to for advice in my life, for some insight into the company. I vividly remember him saying, “I asked my broker about buying real estate in my IRA and he said it wasn’t allowed.” I didn’t realize just how important my father’s words were at the time until I repeated them to Glen during my interview. He didn’t bat an eye, as he
said, “I hear that all the time.” Glen passionately shared his personal story of trying to buy real estate with- in his own IRA and why he started the company to help others, like my father, who wanted more than just stocks and bonds. I knew this was the perfect opportunity for me. That opportunity as an intern has turned into an amazing career. A career that has given me the ability to spread the message of self-directed investing to people, like my father, who simply do not know that a re- tirement plan can invest beyond Wall Street. A career where I could learn vicariously through clients, about all the creative investment strategies and opportunities that exist. For those that may not be familiar
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This is why self-directed IRA custodians like NuView exist - to give investors more investment choices and control.
with what a self-directed IRA is (a moniker the industry uses to refer to investing your IRA beyond the stock market), I will provide some context. A self-directed IRA works just like any other IRA with two major cave- ats. First, all investment discretion is given to the account owner, and second, the investments held within the account are typically non-public investments, such as real estate, private loans, or private equity. What makes self-directed IRAs even more attractive is the fact that the IRA maintains its tax-deferred or tax-free status even when invested beyond stocks and bonds. One thing to keep in mind though with a self-directed IRA, is that all investments must be made at an arms-length, meaning the IRA must transact with unrelated parties (See IRC Section 4975) and the account is prohibited from invest- ing in collectibles or life insurance (See IRC Section 408). Traditional banks and brokerages don’t offer truly self-directed accounts, similar to the way that McDonalds doesn’t serve tacos. It’s not because they can’t, it’s simply because it’s not part
of their business model. This is why self-directed IRA custodians like NuView exist – to give investors more investment choices and control. To provide insight into the evolution of self-directed investing from where it was when I started to where it is now, I think it will be most helpful to break it down into four periods I call The Boom (2005 – 2008), The Bust (2008-2010), The Opportunities (2011- 2019) and The Unknown (2020). THE BOOM (2005-2008) As a newbie to the investing world, I remember being fascinated by all the different ways there are to make money, especially in real estate. My only personal experience at the time was helping my dad clean out properties after tenants moved out – which as a kid, was a very unpleasant experience, to say the least. As an intern, I was like a sponge trying to soak up as much as I could to help me better understand self-directed IRAs through the lens of our clients, but also personally as I was eager to start making my own money invest-
ing in real estate. I attended all the local real estate investor association meetings and met some incredible people – all who had a tremendous amount of experience in real estate investing. During this time, the message of self-direction was growing, and what seemed unknown in 2005 was be- coming something that more people were at least starting to hear about. This was largely in part to the reach of the internet age, coupled with many of the real estate gurus helping their students understand the part self-directed IRAs should play in their wealth-building strategies. This increased exposure coupled with a mainstream interest in real estate propelled the self-directed industry forward as investors continued to seek new capital to gain exposure to the real estate market. One of the individuals that was a large promoter of self-directed IRAs and someone I learned a lot of my own personal investment strategies from was Augie Byllott. Augie was a banker turned real estate mentor and coach who approached investments
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like a true business and encouraged those he educated to do the same. Augie was one of the first clients I met when I joined NuView and he helped me understand some of the creative investments that he and his clients were doing through their self-directed accounts. He was a big promoter of transactional engineer- ing – a way to move the parts of the deal around until they work for all parties. This has served me very well in many of my personal investments. Augie and his wife, Audrey, estab- lished their accounts with NuView and have seen their old 401k plans grow to well over $1 million! THE BUST (2008-2010) As the saying goes, all bubbles eventually burst and this one was no different. While the great recession officially started in December 2007, the real shock and awe factor was felt in 2008. The credit crunch elim- inated companies like Lehman Broth- ers, Bear Stearns, and Washington Mutual, and in September of 2009, the stock market saw its worst point drop in history (at that time) of 750+ points. Real estate inventory was rising, and prices were dropping– in some cases up to 50% or more. Despite the quick drop in real estate prices – many of our clients holding rental real estate were not affected nearly as badly as their counterparts in the stock market. Many owned the real estate in their IRA free and clear, so they were not dependent on rent to pay their mort- gage. Furthermore, the increase in foreclosures only served to increase the rental demand. Some clients sought a safe haven in precious metals during this uncertain time. Unlike stocks, which are typically held for their appreciable value, private loans and real estate tend to be income-producing, which can fare much better through correctional periods.
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Despite the doom and gloom over the investment markets in 2008- 2010, NuView continued to grow rapidly in both net accounts and total assets under custody, proving that self-directed investors were much more flexible and able to pivot to asset classes that could weather the storm. As with any economic downturn, investment opportunities began to present themselves, and shortly after the 2008 crash, our clients began finding opportunities. Some invest - ments became attractive because of depressed pricing while new asset class opportunities began to take shape, and as a result, self-directed investing really accelerated. We saw real estate begin to generate cash flow, tax liens pay premium interest, distressed mortgage funds clearing assets off banks’ balance sheets, and REO properties and short sales be- coming common types of purchases. THE OPPORTUNITY (2010 – 2019) It was also during this time that I met another impactful client, Greg Bond, who had an amazing story of real estate. He invested passively in real estate outside his IRA while running a map store (for those under 30, you actually had to use a real map before smartphones were invented!) in the 90s and early 2000s. I found it interesting that he stopped buying real estate in 2003 because the basic fundamental investment principles were no longer applicable during the boom. Once he closed his map busi- ness, he decided to get back into real estate, this time full-time – now that he felt the basic investment funda- mentals were implementable. Greg started his self-directed account in 2009 with $58k and has grown it to over $1.5 million. His wife, Jane, has seen her $27k account in 2009 grow to over $1 million today. They did this through a disciplined approach of
finding discounted assets and either cash flowing them or flipping them to maximize return. Just as our clients were taking advantage of market opportunities, so was NuView. In 2012, we launched our institutional platform to provide financial advisors and investment issuers and syndicators a custodial platform for more Wall Street-like packaged product that was created for retail investors. The Institutional division has seen exponential growth in the last eight years as more and more passive investors look to gain exposure to the private equity mar- kets through larger group invest- ments. THE UNKNOWN (2020) As the world currently fights off the Covid-19 pandemic, many investors are wondering where to go from here. It’s a difficult question to answer as we have never experienced a pan- demic related economic shut-down that landed over 20 million people on unemployment in just 30 days. Financial markets and real estate markets alike are all trying to digest the information to see what the ulti- mate economic impact may be. We are seeing many of our clients stay the course as they did in 2008. They have investments that they believe can withstand a potential correction. We have other clients that are ac- cumulating cash and even selling in preparation of buying opportunities in the future. Regardless of where you stand – self-directing your retirement accounts is the only way to stay nim- ble during economic uncertainty. Stay safe, get educated, and re- member, opportunities are available in good and bad economic times – you just need to know where to look! Happy Investing!
Jason DeBono is the VP and COO of NuView Trust Company, a Self-Directed Custodian with $1.5 billion in assets under custody.
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A s the real estate insurance program of Norton Insurance, realprotect is not only comprised of insurance professionals, but is also a real estate firm that has over 200 licensed agents and property managers. realprotect is the expert in insuring real estate investors and understanding the real estate business and what you look for and need in a comprehensive insurance program. You have built a business out of owning and investing in real estate, and realprotect wants to help you protect it. realprotect starts this process by gaining an understanding of your properties, business structure, and operations. Then, realprotect will de- sign an insurance program that helps you meet your coverage and pricing objectives. realprotect promises to work diligently to find the best cover - age at the best price for you – based on your actual needs. realprotect takes risk manage- ment and loss control seriously for every single client. realprotect has
risk management resources to offer you the tools you need to under- stand the risks that you face and has partnered with industry-leading companies to provide you risk con- trol products at discounted rates. At the helm of realprotect is Lee Rogers, President. As an insurance professional that has worked and consulted with different Sin- gle-Family Aggregators, Rogers brings unique value and perspec- tive for investors, fund managers and operations professionals. He and the Aggregation Risk Man- agement Team at realprotect have helped design and implement insurance and risk management strategy that is above and beyond what is being set as an industry standard for insurance structure in Aggregation Portfolios, while keeping costs contained and risk properly manage and transferred. Based in Atlanta, Rogers has unique insight and knowledge of many insurance markets, with direct access to many of the world’s lead-
ing insurance carriers. Rogers has helped develop analytical tools and insurance philosophies that are in line with the true risk exposures that Single-Family Aggregators are fac- ing. He understands that the Aggre- gation Market is unique, and that the insurance industry must be able to adapt to this emerging asset class. Rogers uses his vast experience and innovativeness to focus on building business relationships with prospective clients, marketing products and advising investors on coverage options for their real estate assets – while making sure that his entire team at realprotect provides the same quality experi- ence for each client. Lee Rogers and his team at realprotect work with industry leaders such as lenders, market- places, and property managers and wholesalers to provide them with the protection and service that their hard work deserves. To learn more about realprotect, please visit www.realprotect.com. •
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To find private money you can trust, start here. Our members are the most-trusted private lenders in the business. They’ve pledged to follow the industry’s only Code of Ethics , enforced by the oldest and largest association for private lenders. Find your next financial partner today at aaplonline.com/directory.
Where Can You Find Funding You Can Trust?
by Linda Hyde, AAPL
W e at the American Association of Private Lenders field hundreds of emails and phone calls monthly asking for referrals to lenders that real estate investors can trust. We’ve heard the bait-and-switch stories, the haphazard and stressful closings, the exhausting search of shopping a deal around. Real estate investors are looking for experience, partnership, and above all: trust. Every day at AAPL, we work to bring that trust to our industry. We set the standard for professional conduct and are the only organization that enforces a Code of Ethics. We pledge to our members to provide structure and legitimacy to the private lending industry, and in turn, they promise us – and you – that they will uphold the trust you place in them.
• Adhere to all laws with respect to the services in which they engage. • Not discriminate against borrowers based on sex, age, race, sexual orientation, or religion. • Be honest and forthright in all their dealings. • Only change their loan terms with just cause and perform in accordance with the agreed-upon terms. • Not originate loans intending to see the borrower fail in order to obtain title to the property. • Adhere to all advertising laws as defined in the Truth-in-Advertising Act • Respect the intellectual property rights of others and comply with regulation related to copyrights, trademarks, patents, and trade secrets.
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Latest Housing Market Predictions 2020
by Marco Santarelli, Norada Real Estate Investments
U npredictable and uncertain, are words that linger in our minds nowadays. Many of us are wondering what will happen a week or a month from now. A lot had put a hold on many things but the wise ones make good use of this time to plan and prepare. Before the pandemic came into the scene, the housing market saw modest increases across the board in the past year, though there were hot spots in the market in terms of both geography and price ranges. House prices had risen for 33 consecutive quarters across the United States. The housing market predictions were clearly pointing out that all the housing indices would trend upward for the nation as a whole as well as in every state, including the top 100 metro areas. After the coronavirus pandemic came into being, the housing market forecast runs the gamut from optimistic to pessimistic. The updated data for housing market predictions from various sources shows that sales of homes will decline by 15 percent in 2020. The home prices would flatten out. That’s mainly due to vigorous social distancing norms and economic uncertainty has compounded this temporary restraint on real estate transactions.
Housing market predictions that take Covid-19 into account have already come out. Capital Economics is estimating four million homes will be sold in 2020. This would be the lowest rate since 1991. For comparison, roughly 5.3 million homes sold in 2019. US housing market predictions for the longer term will depend on the lingering impact of the coronavirus. How long will it take for the economy to return to normal? How quickly will the service economy re-open and get people back to work? Before the Covid-19 pandemic literally went viral, US housing market predictions for 2020 showed appreciation of roughly 1 percent. Existing home sales were predicted to fall about two percent, while single-family starts were predicted to increase six percent. For the rest of 2020, in hot job markets and communities that fit the youngest generation’s ideals, price increases of 8-15 percent are possible year-over-year. For most everyone else, real estate is appreciating at or just above the rate of inflation. What will 2020 be like for buyers? If you qualify for a mortgage, you have a more limited selection and prices are close to what they were before the coronavirus pandemic started, but
you have relatively little competition. In response to the COVID-19 national emergency, borrowers with financial hardship due to the pandemic have been able to request forbearance, which is a pause or reduction in their monthly mortgage payment. And borrowers can request an additional six months if needed. What will 2020 be like for sellers? Expect homes to be slower to sell, and you may have to reduce the price to move it. Or you may need to wait a few months to see things shift from a buyer’s market to a more balanced market. The only exception would be the “affordable” homes that are in short supply. In that case, you’ll benefit from a seller’s market as soon as people start shopping again as quarantine rules relax. What will 2020 be like for investors? Many US housing markets are ripe for investment in 2020, making it a great time to buy investment properties. Of course, working with a team of experts with years of investing experience will be important for your success. • Marco Santarelli is an investor, author, Inc. 5000 entrepreneur, and the founder of Norada Real Estate Investments – a nationwide provider of turnkey cash-flow investment property. His mission is to help 1 million people create wealth and passive income and put them on the path to financial freedomwith real estate. He’s also the host of the top-rated pod- cast – Passive Real Estate Investing.
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Resilience of the Tampa Market
by Nathan Trunfio, Direct Lending Partners
P rior to the coronavirus bringing the nation to a standstill, Tampa ranked amongst the best real estate investment markets in 2020. This trend was visible in many of the markets that DLP Real Estate Capital operates: fast-growing mid-tier markets, like Tampa, are attracting new companies, young professionals, and working-class families seeking a higher quality of life at a lower cost of living. For years, DLP had placed an emphasis on investing in Florida and the Southern region for multi-family financing and acquisitions, but recently began investing with greater frequency and success. With Florida and most of the nation now open, many wonder if Tampa will continue its trend as a great investment market, or if this impending recession has effectively brought an end to growth in the region? From our perspective, all indicators point toward continued growth in Tampa. Unlike the 2008 recession when the real estate market was dealing with an abundant supply of housing and subprime lending, Tampa is experiencing the exact opposite. With a major housing shortage and unprecedented demand, the need for new home construction, fix and flips, and rental properties are greater than ever. DLP Real Estate Capital is committed to meeting this need and easing the imbalance. Our new construction arm is building affordable, energy-efficient homes across many of Florida’s fastest growing markets. We are very bullish on both build-to-sell and build-to-rent new construction investment strategies, and as a lender have already seen an uptick in demand for new construction loans. While the residential housing market in Tampa saw one of its largest drops in home sales in April, it wasn’t as dramatic as expected. Once the stay-at-home orders were lifted, the real estate market quickly bounced back. By the following month, May’s new home listings in Florida saw
a 37 percent rebound compared to April, which nationally proved to be the economic bottom of the COVID impacts. So, should investors consider moving their money into the Tampa region? It’s important to understand the factors driving the current market to determine its sustainability. The low inventory coupled with rising home prices and a strong overall economy is creating a highly competitive investment landscape. Unemployment is significantly lower than the national average, which is a contributing factor to why Tampa has been listed as one of the most COVID- resilient markets. As long as job opportunities remain and companies rebound, housing demands will continue to increase. With a strong pipeline of new home starts, we should see a healthier relationship between inventory and demand emerge. We’ve already seen an uptick in demand for new construction loans and feel investing in Tampa’s new construction market is a strong strategy. Throughout the pandemic, DLP’s debt financing arm, Direct Lending Partners, continued to meet this demand by funding loans for new construction, fix and flips, and multi- family properties when many lenders closed their doors or significantly reduced their offering. A considerable amount of this demand originated from borrowers investing in properties in the southern U.S. They’re seeing great returns on investments. Rentals are scooped up quickly in markets just like Tampa, and properties rarely spend extended periods of time on the market. As a result, DLP has more borrowers than ever who are thriving and scaling up their businesses. For more information on acquiring investment financing in Tampa or other national markets, contact DLP Direct Lending Partners by visiting directlendingpartners.com to speak with a Funding Specialist. Also, visit TalkingLoudly. com to subscribe to our podcast and get cutting edge news on real estate investing from the industry experts. •
INVESTOR REV I EW : : 15
Stay up to date while on the go with our twice-weekly podcast. Available in both audio and visual formats, the Think Realty Podcast is your source for the latest industry trends, hard-hitting insights and news. Vist thinkrealty.com/podcast to get your listen on now, or find it on your favorite podcast platform.
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