Joel Barth

Option #1 - Referral

You refer your client
NWCA collects the short sales package and authorization
NWCA negotiates with the lender(s)
NWCA markets the property providing sign, lock boxes, and full marketing services
NWCA negotiates with the buyers
You get PAID 35% Referral Fee

Option #2 - Negotiate

You keep your listing
NWCA help you collect the short sale package and authorizations
NWCA negotiate with the lender(s)
You market the property-provide signs, lock boxes, and marketing
You negotiate with the agents
You negotiate with the buyers
NWCA receives a 30% Referral Fee From You

Option #3-We Buy Property

You can use your negotiator or our sister company WCR LLC
NWCA have no agency role and simply make offer to purchase
You list property and handle all real estate agent functions (Up to 9%)
You gather and submit short sale documentation
You find buyer we can re-sell to after purchase of property.

For more details please visit us at http://www.shortsaleinvestmentgroup.com

Mortgage and real estate brokers are increasingly looking to private investors for financing as the credit crunch continues

By Joel Barth:

With interest rates at 40-year lows the interest of the public in refinancing has been rising steadily in recent weeks. There seems to be a new enthusiasm on the streets as people line up to lower their mortgage payments. Unfortunately, what many are finding out is that they do not qualify for financing. Lenders have raised the bar considerably as the tightening of credit continues unabated. This has left many borrowers and prospective borrowers as well as their mortgage brokers and realtors with nowhere to turn as the availability of capital and access to programs have all but disappeared.

Fortunately, it has been said there is a silver lining in every cloud. In this regard, mortgage and real estate brokers can turn to private investors when the bank says no in order to fund their deals. This type of investment generally takes the form of a trust deed investment. A trust deed investment is a promissory note secured with a deed of trust against a piece of real estate.

Trust deeds are typically in the form of hard money and used by corporations and developers to securely finance real estate projects. Investors can capitalize on the credit crunch and tightened credit standards of most banks by trying to fill in this liquidity gap. The credit crunch has not eliminated the need for capital to complete necessary projects and borrowers are actively seeking out alternative sources of financing for their projects. These loans are popular among borrowers because they represent short-term loans, which can close much more quickly than traditional forms of financing. Time is often of the essence in closing on a lucrative real estate investment opportunity.

With the stock market producing negative returns, trust deed investments can also make sense for investors looking for the security and fixed rate of return a trust deed investment can provide. Hard money trust deed investments are typically short-term in nature and are placed at a very low loan-to-value ratio (typically a maximum 65% LTV) providing for security even in a declining real estate market. Interest rates can be in the neighborhood of 12%. For investors, trust deeds can be popular because their investment does not fluctuate like the stock market and in the event of default they can usually recoup the majority of their investment by selling the underlying property. This is because trust deeds can offer greater security than stock market investments in that a trust deed is secured by actual property (i.e., homes, buildings, and land). In addition to the security of real property, with a trust deed investment the investor can receive a higher than average rate of return. This is due to the fact that borrowers are often willing to pay a higher interest rate in exchange for the flexibility and speed such loans provide. Private trust deed investors are not limited by the traditional rules and restrictions of bank loans. This means greater flexibility to the borrower. To the mortgage broker this means a closing a deal without all of the red tape of traditional lending.

Another benefit of a trust deed investment is that the deed of trust can typically be held inside of a retirement account, which can provide significant advantages. There are a number of retirement plans such as 401(k), 403(b), SEP and other plans where people can accumulate assets for retirement in a tax advantaged way. One of these is an individual retirement account, which is more commonly referred to as an IRA. Depending upon the type of IRA, the income and capital gain taxes can be deferred or tax-free. It is possible to use an IRA to invest in real estate, and potentially, in the case of a Roth IRA, the capital gains are also tax-free. Using a retirement account to invest in real estate trust deed investments can help to increase the investor's equivalent yield.

The first step in using an IRA for real estate investing is to create a new IRA or rollover an existing IRA to a company that provides the option for a self-directed account and where there us an option to invest in real estate. Generally, the investor will want to make sure the self-directed IRA is set up where the company holding the funds functions more as an administrator (as opposed to a custodian) and where they have the accounting systems set up to handle real estate investments. Such companies include Equity Trust Pensco, and Lincoln Trust among others.

Mortgage and real estate brokers can therefore serve as valuable liaisons in facilitating the flow of capital between clients with available funds and clients in need of funding. They can also serve as a valuable resource by educating themselves and their client's as well as their financial advisors with respect to available real estate opportunities. As with any investment there is a certain degree of risk, which must be disclosed. There are also regulations, which must be followed, in order to help mitigate that risk and ensure the success of all parties involved with the transaction. It is also important to note that the loans may be subject to and should be treated with the same care and diligence as any traditional loan. In the case of a residential transaction this can include such things as the Truth-in-Lending Act and RESPA. It is advisable to work with a competent real estate attorney to develop the loan documents. It is also advisable to close with a reputable title and escrow company to close the transaction. This provides the investor and borrower with the protections necessary to ensure a smooth and profitable transaction.

Once this relationship has been established with your clients you are no longer at the mercy of your banks and institutional lenders. And having the ability to continue to close the transactions that do not fit the mold will help you stand out from among your peers.

Joel Barth is an officer of Northwest Capital Advisors, Ltd.; a real estate investment fund focused on distressed foreclosure and short sale properties. He is also a licensed real estate broker and notary public in Washington State. Previously, he has served as a mortgage broker, investment adviser, and investment banker. Mr. Barth holds a Bachelor of Science in Business Administration. He can be reached at 866-928-4003 Ext. 106 or can be visited online at http://www.northwestcapitaladvisors.com or http://www.trustdeedinvestmentfund.com

Credit Crunch Killed the Banks and They are Not Lending. But You Can! Learn How Private Trust Deed Investors are Using Their IRAs to Make Home Loans

By Joel Barth;

In the midst of this nasty housing slump/credit crunch/recession/depression some investors are actually quite excited about the increasing foreclosure rate! These are private trust deed investors who are using their Self-Directed IRAs to make trust deed investments or mortgage loans to homeowners. The fact that the banks are no longer lending has helped these investors fill a valuable niche while the once flowing credit spigot has turned off the need for money still remains.

By using a self-directed individual retirement account, investors can pursue a wide variety of investments including such things as real estate, trust deeds, commercial paper, annuities, tax certificates, receivables, stocks, bonds, mutual funds, options, currency, futures, etc. The first step is to roll over an existing account or open a new retirement account at a trust administration company that specializes in this type of account. Such companies include firms like Pensco Trust (http://www.penscotrust.com ) and Equity Trust (http://www.trustetc.com ) among others.

Generally, trust deed IRA investors don't make the traditional 30-year fixed loan but instead make loans ranging in term from a few months to a couple of years. The loans are usually structured like a hard money loan with points paid upfront and interest-only payments in the range of 12%. Typically, the average loan to value is 50% or less. Investors generally find borrowers through an informal network of real-estate agents, mortgage brokers and other investors. The liens are usually made in first-lien position; which means it is first in line to get the money back from the borrower. Foreclosure is generally rare even in this environment, even though some trust deed investors do not worry about default. What is the worst that can happen? You get a property at 70% of market value or less?

Investors must tread carefully however. It is recommended that investors work closely with a real estate attorney and other competent real estate professionals as there are numerous rules, regulations, and laws that must be carefully considered and observed or an investor can quite quickly and innocently find him or herself on the wrong side of the law.

There are also a number of taxation and financing issues to take into consideration when using your self-directed individual retirement account. For instance, your real estate investments must generally be funded by the liquidity in your IRA and not with a mortgage. Trust Deed Investors generally don't have this problem since they are acting as a lender but if you are using your IRA to purchase real estate yourself pay close attention. Using debt financing can trigger taxes such as UBI and UDTI. Pursuant to IRS regulations your retirement account cannot guarantee the mortgage debt nor can you personally. This makes obtaining a mortgage from a lender very difficult.

However, there are a handful of lenders that do provide non-recourse loans to IRAs but it is a niche market. These loans very often require at least 30% down payment on average.

IRS publication 598 states the income from debt-financed property within an IRA is considered unrelated business income ("UBI"). UBI is defined as "the income from a trade or business that is regularly carried on by an exempt organization and that is not substantially related to the performance by the organization of its exempt purpose or function, except that the organization used the profits derived from this activity."

If the IRA receives more than $1,000 of UBI during a tax year, it is subject to taxation and an additional tax form must be filed (If there is less than $1,000 of UBI, no filing is required). Some advisors recommend using the excess UBI to make principal reductions on the mortgage each year since once the debt is paid off, the income is no longer considered UBI.

In this regard, it is best to consult with a real estate professional, tax advisor, attorney, and trust administrator prior to making any investment decision. However, there are "riches in niches", and using a sophisticated trust deed investment strategy might be just what you need to make attractive stable low-risk returns at a time when most other investments are crumbling.

Disclaimer: Information is provided for educational purposes only. Please consult with you legal, tax, financial, real estate, and other advisors prior to acting upon any information contained herein.

In Deeds, We Trust

Funding turned down? Try private investors and trust-deed investments

By Joel Barth, officer, Northwest Capital Advisors Ltd.

Many commercial mort-gage brokers and their borrowers are left with nowhere to turn for funding as lenders have raised their underwrit­ing standards considerably - or have left the business altogether - and as the credit crunch continues.

As the saying goes, though, there is a silver lining in every cloud. Mortgage brokers looking for that silver lining in today's market may find it by turning to private investors to fund their clients' deals when banks or other traditional lenders refuse.

One way private investors can help is via a trust-deed investment, which is a promissory note secured with a deed of trust against a piece of real estate. Corporations and developers often use these trust-deed investments, which typi­cally are hard-money loans.

These loans also are popular among borrowers because as short-term loans, they often can close more quickly than traditional forms of financing. Indeed, time is often of the essence in closing on a lucrative real estate investment opportunity.

Further, the traditional rules and restrictions of bank loans often do not limit private trust-deed investors. This means greater flexibility for commercial borrowers. To mortgage brokers, this means closing a deal without all the red tape of traditional lending.

From the investors' perspective, trust-deed investments can make sense for those looking for security and a fixed rate of return. This is because hard-money trust-deed investments are typically short-term and are placed at a low loan-to-value (LTV) ratio; typically, they're at a maximum 65-percent LTV. Plus, interest rates can be around 12 percent.

In case of default, investors also usually can recoup most of their investment by selling the underlying property. In addition, with a trust-deed investment, investors often can receive a greater-than-average rate of return because borrowers can be willing to pay a greater inter­est rate in exchange for these loans' flexibility and speed.

As with any investment, there is some risk of which borrowers and investors must be aware. There also are regulations, which brokers must follow to help mitigate that risk and to ensure the success of all parties involved with the transac­tion. It is also important to note that these loans may be subject to and should be treated with the same care and diligence as traditional loans.

Brokers would benefit from working with a competent real estate attorney to develop the loan documents and with a reputable title and escrow company to close the transaction. These moves can provide investors and borrowers with the necessary protection to ensure a smooth, profitable transaction.

In sum, mortgage brokers can serve as valu­able liaisons in facilitating the flow of capital between private investors and clients who need funding. They also can serve as a valuable resource by educating themselves, as well as their clients and financial advisers, about avail­able real estate and lending opportunities.

Once you establish these relationships with your clients, you are no longer at the mercy of banks and other institutional lenders. Being able to close transactions that do not fit the mold will help you stand out from your peers and earn repeat and referral business. "Mortgage brokers can serve as valuable liaisons in facilitating the flow of capital between private investors and clients who need funding."

By Joel Barth,

We sure have found ourselves in an economic pickle so to speak. The current recession has been likened to The Great Depression and has recently been referred to by the press as the "perfect storm". A certain four-letter word combined with "storm" also comes to mind. Certainly, there has been a precipitous chain of events over the past few years to include the housing slump, the sub-prime mortgage crisis, the credit crunch, the stock market collapse, and the ensuing corporate and regulatory fallout. And now we are faced with this nasty recession or possibly depression that may take us years to recover from. But why did this happen?

Could it be that we are at a current point in a longer-term economic and sociological cycle that may converge every 60 to 70 years or so? Could it also be that this is a perfectly normal and an unavoidable reflection of free market capitalism entwined with human nature? The last point of comparison to the current crisis would be The Great Depression. The timeline seems to fit. Or, is there something more to all of this? If we follow the money, it would seem that the capital spigot turned up with intensity shortly following the Dot Com implosion and then even more so following the instability caused by the events of September 11, 2001. Low interest rates, loose monetary policy, and large inflows of foreign funds helped fuel a housing market boom and consumer debt-financed consumption. Government and industry alike loved this consumer-financed economy because the piggybank also known as a home allowed consumers to support a global economy awash with excess goods and supplies. Home prices began to appreciate wildly and consumers began borrowing more and saving less. The real estate market soon replaced the stock market as investors began to demand higher and higher returns. Wall Street created ever more exotic securitization strategies to appease investors insatiable appetite and this fueled greater demand for the lenders to create ever more creative loans to entice borrowers and prospective homeowners to purchase taking the homeownership rate to nearly 70% by 2004 with home prices appreciating more than 124% from 1997 to 2006 according to various government data sources. This increase in the homeownership rate appeased politicians. Rapid home price appreciation in turned added fuel to the speculative fire and caused a building boom. Builders rapidly and excessively increased the supply of housing inventory, outpacing demand. Investors began buying and selling homes without ever living in them and by 2006 nearly 40% of all home purchases were non-owner occupied according to Wikipedia. The bubble became unsustainable. Yet, the money kept flowing in from Wall Street and the bankers kept putting it to work. The economy soon began overheating causing a rise in interest rates. With the brakes put on the economy, defaults began to occur and numerous failures in risk management were exposed. The credit rating agencies now had some explaining to do as investors became spooked and the credit crunch ensued. With funds no longer flowing to banks they began to hoard available capital, the consumer driven economy began to collapse, housing prices crumbled, consumer spending declined, corporate and over-levered banks and mortgage companies failed in succession, fraud increased as demand waned, consumer and investor confidence was destroyed, and the regulators were ridiculed and blamed for their laissez-faire handling of the crisis. And now here we are. Who is really to blame? It would seem to some extent that we all are. Are we merely reaping what we have sown? Is this our karmic punishment? Is the bubble the result of our unethical behavior or is it merely the culmination of an economic cycle and geopolitical events? Can bubbles be prevented by imposing regulations to modify human behavior? Perhaps, yes. Perhaps, no. This brings to the forefront the concept of ethics. But what is ethics? Unfortunately, ethics is not a topic that is easily defined and varies to some extent between cultures. Ethics is a philosophy with numerous branches and beliefs which according to Wikipedia, "seeks to address questions about morality, such as what the fundamental semantic, ontological, and epistemic nature of ethics or morality is, how moral values should be determined, how a moral outcome can be achieved in specific situations, how moral capacity or moral agency develops and what its nature is, and what moral values people actually abide by." Obviously, ethics is a very broad topic and to address the various branches is beyond the scope of this paper so I will only attempt to correlate our current crisis with a handful. The first branch of ethics that comes to mind is Hedonism. Hedonism is a principle of maximizing pleasure and minimizing pain. See any correlation here? I sure do. The next branch to point out is Epicureanism. Epicureans believe that some pleasures and indulgences are detrimental to human beings. Certainly, the bubble was the result of excess. Stoicism also comes to mind. The Stoic philosopher Epictetus believed that the greatest good was contentment and serenity. Peace of mind was of the highest value. I am sure that is something we could all use right now! However, all humor asides, the most relevant branches, which pertain to business ethics is perhaps applied ethics and normative ethics. Applied ethics is an attempt to apply ethical theories to real-life situations. Normative ethics also known as moral theory is the study of what makes right and wrong behavior. Business ethics is a form of applied ethics with a normative discipline. Wikipedia describes it "as the study of moral or ethical problems that arise in a business environment." The beginning of this articles addressed many of the problems that preceded this crisis. How can we begin to work through this crisis? By a return to our core values. In essence, I call this sustainable economics. From a lending perspective this means making loans that have a means to be paid back and are affordable for consumers. From a regulatory perspective this means removing bad apples and streamlining existing regulations so that uniformity on a national level results in greater efficiencies. This does not mean runaway bureaucracy or tilting the competitive advantage towards larger institutions. Size does not imply strength. From an investment standpoint this means creating investment opportunities that have real intrinsic value and can further foster innovation. From a treasury standpoint this means an end to runaway spending once we are out of this crisis and a return to more sensible balanced monetary policies that do not debase our currency and subjugate the wealth of this nation to benefit the few at the expense of the many. We must return to prosperity. Sustainable policies and investment in innovation will lead the way out of this storm and into a brighter tomorrow.