COMMERCIAL LENDING NEWSLETTER
You are receiving this letter because you are one of my Spartans - my top-producing brokers and investor clients - of whom I am allowed to have 300. Removal instructions are below. Today we'll talk about why hard money mortgage funds fail and why, frankly, you should give a (darn). We also have lots of cute, clean jokes, some funny pics, and a clever prank video.''
Joke Du Jour
My wife asked me to buy ORGANIC vegetables from the market. I went and looked around. I couldn't find any, so I grabbed a harassed and tired-looking employee and said, "These vegetables are for my wife. Have they been sprayed with any poisonous chemicals?" The produce guy looked at me and said, "No, sir, you'll have to do that yourself."
Annie Is Awfully Quiet
Private Money Commercial Permanent Loans Nationwide From $100,000 to $3.5MM
Do you need a commercial lender who will actually lend up to 75% LTV? Do you need a lender who will also look at the borrower's global income - income from salaries, other investments, etc.? Do you need a lender who will allow the seller to carry back a second mortgage? Does your client have a balloon payment coming due on his commercial property? Has your bank offered him a discounted pay-off? Does your borrower have less-than-stellar credit? Is your client's company losing money? Is your borrower a foreign national? Do you need a non-recourse loan? Do you need a commercial loan with no prepayment penalty? Is your client's commercial property partially vacant? Do all of your commercial leases run out in the next 18 months? Do you need a lender who will allow a negative cash flow? Do you need a loan against a portfolio of rental houses?
And don't forget, we will quickly and happily issue you a written Loan Approval Letter - at no charge - that you can use as a fallback and to lure cheaper lenders. After all, everyone wants to lend to you if you already have a commitment. Here is our latest rate sheet.
Blackburne & Sons is looking for commercial real estate loans that are not quite clean enough for a bank. Please click here to submit a hard money commercial loan or call me, Tom Blackburne, at (574) 210-6686.
"A man in Oregon walked away with minor injuries after he fell asleep in a dumpster and ended up in a trash compacter. This raises a lot of questions, and the answer to all of them is tequila." -- Jimmy Fallon
Why Hard Money Mortgage Funds Fail, and Why You Should You Care
Over two-hundred new hard money mortgage funds have arisen from the ashes of the Great Recession. After all, it's relatively easy to hire an attorney to create the legal documents to form a mortgage fund, and private investors are desperate for product these days. Unfortunately, 95% of these new mortgage funds will not survive the next real estate slump. Here's why:
Most hard money mortgage funds only make bridge loans - loans with terms of two years or less. The sponsor makes two to three points for originating each loan, plus maybe 75 bps. for servicing. The bottom line is that the sponsors of these mortgage funds make 70% of their dough from originating new loans, as new money comes in and as old loans pay off. Okay. There is nothing morally wrong with this, right?
Bad real estate slumps seem to hit every seven to twelve years. Virtually all mortgage funds start to lose money as more and more properties come back in foreclosure, and the properties only fetch 45% of their original appraisals. I will blog again on why foreclosed properties only fetch 45% of their original appraisals next week.
Once the investors start to smell these losses, they panic and demand their money back. Millions of dollars flow out of these mortgage funds, and hardly a penny flows back into the fund. Soon the sponsor has no new money to lend and stops receiving loan fee income, which used to constitute 70% of his income. The sponsor fails, and the government moves in to clean up the mess. Greedy attorneys, trustees, and accountants feast, the investors get fleeced. Bottom line, your relationship with this lender is gone.
"Frankly, my dear George, I don't give a hoot."
Yes you do! Success in the commercial mortgage business is all about developing relationships and friendships with commercial loan officers working for a lender.
You have a choice. You've got a slightly subprime commercial loan package on your desk right now. There are a dozen lenders you know who would do it in a flash. Do you really want to start building a relationship with a lender who will be out of business in five years? Fact: There were about 150 mortgage funds in business before the Great Recession. Fewer than five survived.
Or do you want to close the deal with a hard money commercial lender that has been in business for 37 years? Blackburne & Sons intentionally does NOT use a mortgage fund (we actually have one but we discourage our investors from investing much in it). We syndicate each loan (takes 48 hours) instead, and we charge our investors a whopping 200 basis points for servicing. If we have to, we can survive just off our loan servicing fees. This is why we have survived three commercial real estate crashes of 45%.
Ask yourself, "How many lenders close 70% of my deals?" That number will almost certainly be six or less. What if two of those six lenders failed in the next downturn? Develop your relationship with Alicia, George IV, or Tom! Blackburne & Sons was actively making commercial loans every single day of the Great Recession.
The most important lesson that I ever taught my sons.
Free Copy of The Blackburne List
The Blackburne List is a list of over 2,500 commercial lenders located nationwide. We just spent almost $30,000 and three months updating this list.
The Blackburne List is available for purchase for just $79.95. Is money tight? You can also buy one of our three Regional Lists (750+ lenders) for just $39.95. But why spend money at all?
We will trade you one of our three Regional Lists for the contact information of just one banker making commercial real estate loans. If you refer us three bankers, you will own the list for all three regions. Together you will own the entire Blackburne List.
There is another way that you can access The Blackburne List. Our newest portal, CommercialMortgage.com, is an online way to search the entire Blackburne List for the 30 lenders most suitable to make your loan. CommercialMortgage.com ("CMDC") is also 100% free!
Did you buy a copy of the full list last year? Please write to Tom Blackburne. For $39.95 more, we'll let you buy the brand new version of The Blackburne List.
"The Canadian food inspection agency announced that gin is being recalled. The recall was announced because bottles of Bombay Sapphire gin were found to contain 77 percent alcohol by volume rather than the typical 40 percent. Here's how you can tell--normally, gin tastes like juniper with hints of lemon and coriander. Seventy-seven percent alcohol gin tastes like regret, with hints of fighting a parking meter." -- Stephen Colbert
Learn Commercial Real Estate Finance - Nine Hour Video Training Course - Just $549
It would be a lot easier to close your commercial deals if you actually knew the subject matter. Finally learn this stuff.
It's the Loan Servicing Income, Folks
The loan servicing portfolio for Blackburne & Sons just broke $50 million this quarter. Since our average loan servicing fee is two percent annually, that means we earn $1 million per year for servicing just 250 loans. How would you like to walk in the door on the first of each month knowing that you will earn at least $83,000? Find your own private mortgage investors.
Not Married Joke
Sitting in the bar, George asked his 40-year-old friend John, "How come you aren't married?" John: "I haven't found the right woman yet." George: "So what are you looking for?" John: "Oh she's got to be real pretty, a good cook and house keeper, she's got to know how to handle finances, have a forgiving personality -- and money, she's got to have money, and if she has her own house it wouldn't hurt either." George: "A woman like that would be crazy to marry YOU!" John: "Oh, it's okay if she's crazy."
Buy Both Training Courses For Just $849
To order, please on contract Tom Blackburne at 574-210-6686 or firstname.lastname@example.org.
Star Wars Joke
"Today was Star Wars Day, because the day was May Fourth, as in 'May the fourth be with you.'' And now, it's technically May Fifth, Cinco de Mayo, as in 'May the fifth margarita be in you.'" -- James Corden
Need a Commercial Loan Right Now?
If you need a non-prime or subprime commercial mortgage loan right now, simply complete this super-easy mini-app to me here at Blackburne & Sons.
If you need a bank-quality commercial loan right now from a life company, a commercial bank, or a conduit, you should enter your deal into C-Loans.com or our latest commercial loan portal, Commercial Mortgage.com.
The 3,159 commercial lenders on CommercialMortgage.com are different from the 750 commercial lenders on C-Loans.com. The really hungry lenders join C-Loans.com.
Should I Work Out?
Sweet Apartment Loan Program for "A" Deals
Blackburne & Sons has a terrific apartment loan program for "A" quality deals. Our fixed rate is adjusted according to the desirability of the property and the area, but it starts at 3.87% and 1 point for a 30-year fully-amortized loan. For more details, please call Tom Blackburne at (574) 210-6686.
Counting Joke (PG-13)
There was a little boy who had just learned to count on his fingers. One day his uncle came to visit and the boy was anxious to show off his newly acquired skill. He told the uncle to ask him an addition question. So the uncle asked, "What is three plus four?" The little boy counts it out on his fingers and said, "Seven." The uncle said, "Listen kid, you can't count it out on your hands because someday when you are in school, a teacher will get mad at you for it. Now put your hands in your pockets." So the little boy put his hands in his pockets and his uncle asked, "What is five plus five?" After a few moments of intense concentration, the boy said, "Eleven."
Too Busy to Broker Commercial Loans to Us? Why Not Just Refer Them Instead? We Make It Easy!
We once paid a $21,250 referral fee. Here is our referral fee program.
It moves fast.
On a Personal Note
I am not much of a gardener, but I am learning to appreciate the amount of work a garden takes. I took the weekend to build a 20ft x 20ft garden in my backyard to surprise my girlfriend. Just the tilling alone took several hours. I built a 4.5ft tall fence around the garden and stapled chicken wire throughout to keep out any hungry deer that often meander into my yard. Time was of the essence. I had candles lit and a torch-light going while I worked through the dark of night. But the most frustrating thing that whole weekend wasn't the intense work. It was the fact that when I heard the cackle of a coyote not far off in the pitch black distance, my 5-month-old Golden Retriever pup, named Bernie, was nowhere to be found. When I bolted inside, I found him nestled quietly in his large, comfy doggy bed that my girlfriend made for him. A pampered pup already..
Don't Forget About C-Loans.com
We have a whole new crop of hungry commercial lenders on C-Loans, so if you have a commercial loan you're trying to place, it takes just four minutes to submit your deal to 750 commercial lenders. And remember, C-Loans.com is free!
[OMGoodness, I belly-laughed sooo hard.] For a computer programming class, I sat directly across from someone, and our computers were facing away from each other. A few minutes into the class, she got up to leave the room. I reached between our computers and switched the inputs for the keyboards.
She came back and started typing and immediately got a distressed look on her face. She called the teacher over and explained that no matter what she typed, nothing would happen. The teacher tried everything. By this time, I was hiding behind my monitor and quaking red-faced. I started to type, "Leave me alone!" They both jumped back, silenced. "Whaa??" the teacher blubbered.
Then I typed, "I said leave me alone!" The kid got really upset. "I didn't do anything to it, I swear!" It was all I could do to keep from laughing out loud. The conversation between them and HAL 2000 went on for an amazing five minutes. Me: "Don't touch me!" Her: "I'm sorry, I didn't mean to hit your keys that hard." Me: "Who do you think you are anyway?!" Etc.
Finally, I couldn't contain myself any longer and fell out of my chair laughing. After they had realized what I had done, they both turned beet red. Funny, I never got more than a C- in that class.
Get a Free E-Book on CREF
This free e-book contains seven of George's best blog articles on the subject of commercial real estate finance.
BRE# - 01919403
NMLS# - 1014118
BLACKBURNE & SONS REALTY CAPITAL CORPORATION
4811 Chippendale Drive, Suite 101
Sacramento, CA 95841
Phone: (574) 210-6686
Fax: (916) 338-2328