Tag Archives: fund

Aggressive Retirement Investing in Real Estate Lending

Posted on by

InsuranceNewsNet.com quoted me in Investors ‘Flocking In’ to Real Estate Lending. It reads, in part,

The stock market is off to a roaring start in 2018, but there’s no shortage of investment gurus who warn that continued equities growth is far from guaranteed.

The dreaded market correction could be coming sooner, rather than later, some say.

That gives some money managers pause about what asset tools to steer in and out of a client’s retirement portfolio. But there’s an emerging school of thought that one specific alternative investment could be good protection against a stock market correction.

“We’re seeing financial experts weigh in with their 2018 investing recommendations, citing everything from mutual funds to value stocks,” said Bobby Montagne, chief executive officer at Walnut Street Finance, a private lender.

But one prime retirement savings vehicle often gets overlooked — real estate lending, Montagne said.

Real estate lending means investing in a private loan fund managed by a private lender. Walnut Street is one such lender in the $56 billion home-flipping market.

“Your money helps finance individuals who purchase distressed properties, renovate them, and then quickly resell at a profit,” Montagne explained. “Investments are first-lien position and secured by real assets.”

With real estate lending, investors can put small percentages of their 401(k)s or IRAs in a larger pool of funds, which lenders then match with budding entrepreneurs working on home flipping projects, he said.

“It allows investors to diversify their portfolios without having to collect rent or renovate homes, as they would in hands-on real estate investing,” Montagne added.

*     *     *

An Aggressive Investment

Some investment experts deem any investment associated with real estate flipping as a higher-risk play.

“Investing a percentage of a retirees funds in real estate flipping would be considered an aggressive investment,” said Sid Miramontes, founder and CEO of Irvine, Calif.-based Miramontes Capital, which has more than $250 million in assets under management.

Even though the investor would not directly manage the real estate project, he or she has to understand the risks involved in funding the project, material costs, project completion time, the current interest rate environment, where the properties are located geographically and the state of the economy, he said.

“I have had pre-retirees invest in these projects with significant returns, as well as clients that did not have experience and results were very poor,” he added. “The investor needs to realize the risks involved.”

A 1 percent to 5 percent allocation is appropriate, only if the investor met the aggressive investment criteria and understood the real estate market, Miramontes said.

Investment advisors and their clients should also be careful about grouping all real estate lending into one basket.

“You could invest in a mortgage REIT, which would be a more traditional vehicle to get exposure to real estate lending,” said David Reiss, professor of law at Brooklyn Law School in Brooklyn, N.Y. “If you’re doing something less traditional, research the fund’s track record, volatility, management, performance and expenses.

“You should be very careful about buying into a fund that does not check out on those fronts.”

Tennessee Court Rejected MERS’ Argument that Sale of Property Should be Invalidated

Posted on by

The court in deciding Mortgage Elec. Registration Sys. v. Ditto, 2014 Tenn. App. (Tenn. Ct. App., 2014) affirmed the judgment of the lower court.

This appeal involved the purchase of property at a tax sale. MERS filed suit against purchaser to invalidate his purchase of property because it had not received notice of the sale even though it was listed as a beneficiary or nominee on the deed of trust.

Purchaser claimed that MERS was not entitled to notice because MERS did not have an interest in the property. Purchaser also alleged that MERS failed to properly commence its lawsuit because it did not remit the proper funds pursuant to Tennessee Code Annotated section 67-5-2504(c).

The trial court refused to set aside the tax sale, holding that the applicable notice requirements were met and that the purchaser was the holder of legal title to the property. MERS appealed the lower court’s decision, however this court affirmed the decision of the lower court.

Since appellant was never given an independent interest in the property, and it did not suffer an injury by the sale of the property at issue, and the only injury suffered by appellant related to the future effect the case could have on its business model, which was not a distinct and palpable injury capable of being redressed by the court, the trial court’s grant of the purchaser’s motion for judgment on the pleadings was properly granted as appellant did not have standing to file suit to set aside the tax sale of the property for lack of notice under Tenn. Code Ann. § 67-5-2502(c) and the Due Process Clause of the Fourteenth Amendment.

The court found that the failure to tender the appropriate funds when filing the petition to set aside the sale under Tenn. Code Ann. § 67-5-2504(c) was not a prerequisite for relief.