Dawn Rickabaugh - Note Queen

I really wasn't prepared for what a gift it would be to meet very Active Brad in person. When I dropped by Saturday morning, he was actively giving out bear hugs and 'Safe SEO' advice to anyone who could come up with a good bear story . . .

You see, when Brad was but a wee lad of 12, he was camping out under the stars when he was awakened in the deep of the night by a bear performing a lice check on his noggin. Fortunately, he's found a way to transcend the terror of that encounter by facilitating a support group he calls "Bearly Recovering" for folks, like me, who have been through a Major Ursa ordeal.

OK, obviously I'm having some fun here, but that's what it was spending almost 45 minutes there on the couch with Brad . . . fun.

I felt self-conscious of the fact that I was taking up so much of his time and attention, but he wasn't very good at projecting an awkward vibe, or darting his eyes about, or anything that would suggest he was ready for me to get lost. He was extremely present and generous with his time . . . I basically got Rain Camp 101 accelerated (if you miss him at NAR, you'll have to make it to Rain Camp at Inman Connect 2010 in NYC next January).

As a special bonus, he made me cry when he shared what it was like dropping off his son at college for the very first time. With 4 teens at home ranging from 16-19, his words shot straight through my heart. Empty nest syndrome is right around the corner for me, and I'm excited and dreading it at the same time.

Brad is passionate and real, and embodies what it takes to be an effective blogger and social networker.

"Write like you would talk to someone over a frothy cappuccino. Share, don't sell, use photos and videos, and put in 3-4 links to other sites for every 1 taking someone back to your outside blog... " [Quotation marks used recklessly]

I was touched and inspired by my visit with Brad and the vision of Active Rain that I really hadn't been able to get my head around before. And guess what? The point of Active Rain is not to get points (but all the same, you're going to use your God Console to grant me a few extras, right, Brad? ;-)

I'm grateful to Bill Exeter and the Deferred Sales Trust for getting me to the conference . . . making that personal connection has made all the difference.

P.S. I really did get a nice bear hug from Brad . . . anyone else score this year?

According to a poll released recently by LoopNet, an online commercial real estate marketplace, 46% of commercial real estate professionals say the commercial RE market will not rebound until 2011.

Fifty-three percent (53%) expect further price declines of 11% or more. “Lack of access to debt financing” was the No. 1 cited barrier to recovery. No one can get loans these days.

That’s why my whole conversation is about putting buyers and sellers together without the need for new bank financing. Intelligent, legal, ethical non-traditional ways of putting real estate transactions together is all I talk about.

We just need to choose the right strategy and engineer the transaction in such a way that it addresses the short and long term interests of both buyers and sellers.

Sometimes price is the most important thing to a seller, sometimes monthly income, sometimes capital gains. But one way or another, it’s about quality of life and creating desired outcomes.

What does the seller want to be doing with their time and energy?

• Do they have health problems?
• Are they tired of managing property?
• Are they moving out of town?
• Would they like the freedom to relax and travel and enjoy their retirement?
• Would a little more cash each month make all the difference?

A few days ago, I was talking to an agent that was trying to put a commercial real estate transaction together. His client owned a desirable 9,000 sqft property free and clear on historic El Camino Real in Northern CA.

A couple years ago, the property would have fetched close to $3 mil. Now it was listed at $1.6 mil, and there was one lone buyer who wanted it, only he couldn’t get traditional financing.

He would pay the $1.6 mil if the seller would take $400,000 down and carry the rest at 6.5% over 30 years.

Well, because the seller didn’t want to pay ANY capital gains, his agent was exploring the possibility of selling the note so all the proceeds could go towards a 1031 exchange.

Good idea, except for this…

The discount on a green 75% LTV (loan-to-value) commercial note, even with good down payment and credit, would be so high that it just wouldn’t make sense, especially with that low interest rate!

Here’s what I might say to the seller:

1. Just carry the dang note and be happy that you get to defer MOST of your capital gains through the installment sale . . . you’re getting your price, for heaven’s sake! And after some seasoning, you can sell the note for a smaller discount!
2. Drop the price 20% and hope for a cash buyer (or one that can actually get a loan) so you can do a 1031 Exchange or set up a Deferred Sales Trust.
3. Lease the property out and be prepared to wait AT LEAST 10-15 years before you find someone willing to offer $1.6 mil again.

I think this particular seller ended up leasing the property to the prospective buyer instead of selling it to him . . . which is fine, if he’s truly happy owning the property.

Just because the financial markets are in a mess doesn’t mean we can’t put savvy, potent real estate transactions together. And the economy needs us to do just that.

Be sure to sign up for: Seller Financing on Steroids: Pumping Paper for Power, Peace and Profits. Defer capital gains & sell fast for top dollar, regardless of market conditions (and have a note that's worth something!)

[Also included below as a random tangent and not related to business at all (except I did make it here to write this post): Bare to Bear - a True Tale of Grim Survival and Wobbly Knees] . . .

A title holding (land) trust is a great way to hold title to property, and personally, I will never again hold title to any piece of property in my own name, or even in an LLC or Corporation.

First, it'll go into a land trust, and my entity of choice (LLC vs. S Corp) will be the beneficiary.

When the trustee is deeded the property, the trustee is said to hold bare legal title.  The trustee holds legal and equitable title, but does NOT have the power of direction . . . that resides only with the beneficiaries.

The trustee does not have the ability to take any action with regards to the property or related paperwork without the express written consent of all beneficiaries.  This is why, in most states, there is unparalleled asset protection:

• not only do you have killer anonymity and privacy in ownership,
• but your ownership is consider personal property, not real property (which means it's usually protected from partition, judgments, probates, divorce proceedings, IRS tax liens, etc)

Judges, police officers, politicians . . . these people never want to show up on public record, right?  They don't want anyone to know what they own or where they live, and no one should in a society where lawyers are looking for a reason to snatch away your net worth.  Hey, wait a minute . . . are they working for the government???

Contrastingly, BEAR legal title refers to that right that a large mammal, known for its prodigious strength, has when it wants your property . . . or at least to get in for a snack . . .

It usually doesn't ask for written or even verbal permission . . .

Be sure to sign up for:  Seller Financing on Steroids:  Pumping Paper for Power, Peace and Profits.  Defer capital gains & sell fast for top dollar, regardless of market conditions (and have a note that's worth something!)

I had an especially exciting conversation with a Realtor recently . . . one of the few that totally gets how a little knowledge of the discounted note business helps put more real estate transactions together.

Instead of going broke with many of her colleagues, she's a real estate broker, turning note broker as well.

So here's what she's doing . . .

She's taking all these good buyers who can't qualify for bank financing, and hooking them up with FSBOs who are willing to carry paper (of course, she does a lot of educating in the process).

She collects a consultation fee from her buyers after she qualifies them, and knows they have a decent down payment.

Then, she goes out and finds FSBO sellers who are having a hard time competing with all the short sales and REOs. She shows these sellers how they can carry paper (offer owner financing) and still walk away with cash when they let their note season for 1-12 months, and then sell it.

And guess who will most likely be brokering that note?

So, she may not make a big commission selling the property, but she'll make a commission when she helps those sellers/note holders get cash for their note. And because she understands the note business, she knows how to help those sellers create a note that will sell for a decent price on the secondary market.

Fun, huh? She's a visionary and a leader, and she's passionate about helping the economy, and preserving the dream of home ownership for her clients.

Real estate brokers should be note brokers, as well. These markets dovetail nicely, and the specialized knowledge can make the difference between a broker going broke . . . or not.

Be sure to sign up for: Seller Financing on Steroids: Pumping Paper for Power, Peace and Profits. Defer capital gains & sell fast for top dollar, regardless of market conditions (and have a note that's worth something!)

I’ve never witnessed a tsunami first hand, but I’ve been told that before the devastating wall of water devours everything in it’s path, like a hungry sea beast coming in for a glorious feast, there are a few moments in time that seem quite magical to the innocent and unsuspecting.

The water line temporarily recedes, making it excruciatingly tempting to prance delightedly along the shoreline collecting shells, fish and other treasures that have suddenly become accessible.

And apparently, it can be such a fascinating and engaging activity that you might fail to notice the darkness forming on the horizon as you fill your goodie bag to overflowing. By the time you do . . . well, it’s usually too late.

I recently read the following from John Mulkey:

“If the economy is improving, do we really have millions more foreclosures coming? According to the U.S. Treasury, the answer is yes. In written testimony to Congress, Assistant Secretary for Financial Institutions, Michael Barr said that, regardless of the success of mortgage modification efforts, we should still expect millions more foreclosures.

Mr. Barr’s testimony is certainly not welcome news for those anticipating a significant recovery in the housing market. In fact, it is an indication that significant recovery is still years away.

And there are other factors that confirm the fragile state of both the economy and the housing market. Recent reports have indicated that there are almost 3 million active, interest-only loans with a total value of almost $1 trillion, with loans of about $500 billion set to reset within the next 30 months. Then we have a large group of Option Arm mortgages set to recast during the next 2 years. These loans have a combined value of more than $125 billion.

The rising number of bankruptcies, up 36% in the second quarter over last year, with wealthy families filing at double that rate, creates a ‘perfect storm’ of disastrous consequences for the housing market. With the likely prospect of millions more foreclosures coming, home prices and home sales will remain depressed until the market can achieve stabilization. And achieving stabilization will be a slow and painful process.”

Of course, certain areas of the country will be hit harder than others. Even here in California, (one of the hardest hit together with Florida and Arizona) there are pockets that are devastated, and pockets that seem almost immune.

And I don’t especially care for being a Prophetess of Doom . . . my brand is ‘Note Queen,’ which is rather harmless and mostly silly, really.

It’s just that I feel strongly about helping people triage (can you tell I used to be an RN?) their financial lives carefully. The real estate market may be fine where you are, and it may get even tougher. And if it does, how will your quality of life be affected?

If you’re holding on for ‘just a couple more years’ until the market ‘recovers,’ then stop it. Sell now, especially if you’ve got negative cash flow and your net worth is less than $5 million.

If you’re happy owning your property for the next 12-20 years no matter what happens, then fine. Hold out for your price and terms. But if your emotional and financial well-being depends upon the successful sale of a piece of property in the next 10 years, then quit dawdling.

And if deferring capital gains is important to you, download your free copy of a report I created entitled “How to Avoid Paying One Red Cent to Uncle Sam When You Sell Your Property” at www.AvoidCapitalGains.net.

There are a lot of investors out there picking up pre-foreclosures and REOs like sea shells before a tsunami. Prices seem good now, but they could get even better, despite all the government’s shenanigans in the ‘free’ market.

Be sure to sign up! (you’ll get the inside scoop)

When you opt in to ‘Seller Financing on Steroids,’ you get a Decision-Making Guide for FREE!