LC PR ONFE EVI EW RENC E
PRIVATE LENDER THE OFFICIAL EZINE OF AAPL September/October 2015
3 WAYS TO
PROFIT from Factoring
New tax form affects your IRA contributions
REAL DEAL TALK
THE MOST OVERLOOKED COMPLIANCE REQUIREMENT
HOW TO STOP SENDING THE WRONG MESSAGE PROTECT YOURSELF FROM YOUR BORROWER
FOR PRIVATE LENDERS Roc Lending is solely in the business of providing capital to Private Lenders. We have a dedicated team ready to handle your order flow, from origination to construction draws to payoffs. We’re not just a capital provider, we’re your dedicated back office. Less capital raising, more originating. Elevate your return on capital with Roc.
• Eligible Borrowers: Private Lenders and Investment Funds
• Eligible Collateral: 1-4 Family Non-Owner Occupied Residential Investment Properties • Maximum Account Size: $50 Million • No Up-Front Fees
• Advance Rates Up to 90% • No Personal Recourse
• No Cross-Collateralization
“Roc has been paramount in helping us grow. They table fund our loans with a higher advance rate than any bank. They have a dedicated team on call to process and approve construction draws and payoffs. With Roc, we can focus on making loans instead of raising money.”
—David Hansel, President, Alpha Funding Solutions
Contact us at email@example.com or call 212-607-8314 Learn more at www.roclending.com 40 West 57th Street New York, NY 10019 Roc Lending is a subsidiary of Roc Capital Holdings LLC.
Elevate your return on capital with Roc
Private Lender Contributors
Lender Limelight Kellen Jones
3 Ways to Profit from Factoring By: Mike Ponomarew
What’s Current News & Updates from AAPL Members and Partners
Nobody Wants to Suck at Their Job By: Chrissey Breault
New 5498 Reporting: What Does it Mean for my IRA’s Private Loans By: Bill Humphrey.
Abhi Golhar’s Real Deal Perspective By Abhi Golhar
29 Is Your Mortgage Fund or Private Equity Offering Compliant? By Kevin Kim
Your Borrower’s Contractor Should be Property Insured By BreeAnn Stephenson
2015 Annual Conference Preview • Conference Schedule • Speed Networking • Presenter Profiles
Matt Benson, Executive Director Welcome to the annual Private Lender Annual Conference Preview, featuring interviews with conference Keynote Speaker, Tim Rood. You will also find Kellen Jones, of FundDatabase. com, Cache Private Capital, and the American Association of Private Lenders’ Ethics Advisory Committee in the Lender Limelight. If you can count on learning one thing in our pages, it is advice and even some tough love from some of the most well-regarded private lending professionals in practice today. Many of who will be found presenting at Caesars Palace for the 2015 AAPL Annual Conference, we encourage you to visit the conference preview section of this edition as well as the conference, www.aaplconference.com, where you can view the presenters information, speaking schedule, and other networking and educational opportunities to help you make a the right decision to register for the event. We hope you enjoy this Conference Preview edition. Please stay tuned for the last edition of the year, this December, along with many other updates the American Association of Private Lenders is bringing to its members and friends!
PRIVATE LENDER September/October 2015 Production Manager/ Chrissey Breault CEO Michael Wrenn Art & Design Executive Director/ Matt Benson Advertising and Sales Linda Hyde Editor-in-Chief David Lang Private Lender is published semi-bi-monthly by the American Association of Private Lenders (AAPL). AAPL is not responsible for facts or opinions as presented by authors and advertisers. For Subscriptions: Visit www.facebook.com/aaplonline or email PrivateLender@aaplonline.com. For Back Issues: Visit www.issuu.com/aapl, email PrivateLender@aaplonline.com, or call 913-888-1250. For Article Reprints or Permission to use Private Lender content including text, photos, illustrations, logos, and video: E-mail
PrivateLender@aaplonline.com or call 913-888-1250. Use of Private Lender content without the express permission of the American Association of Private Lenders is expressly prohibited.
Copyright © 2015 American Association of Private Lenders. All rights reserved.
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2015 AAPL ANNUAL CONFERENCE & EXPO NOVEMBER 8-10, 2015 | CAESARS PALACE | LAS VEGAS, NEVADA
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PRIVATE LENDER CONTRIBUTORS •••••MEET A FEW OF THE TALENTED INDIVIDUALS WHO HELPED BRING THIS ISSUE TO LIFE.•••••
CHRISSEY BREAULT A Pittsburgh native and Hospitality major; Chrissey started a part-time photography and design business in 2009, while working full-time in local government communications. She is currently the Director of Marketing and Education Services with the American Association of Private Lenders. Follow Chrissey @CBExpressions or join her on LInkedIn. Beware: She takes too many pictures of her dog and does not have a filter! ABHI GOLHAR Abhi Golhar is Managing Partner at Summit & Crowne Partners, an Atlanta-based real estate investment firm. Since 2003, Abhi has utilized a “value-added” approach to capitalize on real estate renovation, new construction, and development opportunities in the Midwest and Southeast United States. He actively educates and works with seasoned debt and equity investors to employ market-driven investment strategies that yield success. Abhi holds a BS in Electrical Engineering from the University of Michigan. You may find him tweeting @AbhiGolhar, delivering massive value to investors at #RealEstateDealTalk, sending a market trends newsletter at firstname.lastname@example.org, or connecting on LinkedIn.
BILL HUMPHREY Bill oversees all facets of New Direction IRA including accounting operations, education, and client services. Bill is recognized in the industry as an expert in self-directed IRAs, HSAs and other tax-advantaged accounts, as well as the IRS codes pertaining to these investments. An experienced Certified Public Accountant, Bill has focused on income tax, auditing, tax-related real estate issues and forensic accounting for more than 20 years. Bill received his Bachelor of Science degree in Business from the University of North Carolina, Chapel Hill, and later rounded out his technical background with graduate study in Finance, Accounting, and Economics at the University of Colorado, Boulder.
KEVIN KIM Kevin Kim is an experienced corporate and securities law attorney with the Geraci Law Firm, a law firm dedicated to providing reliable and innovative legal solutions. Mr. Kim has an extensive background in complex corporate transactions, private placement, and cross border transactions. He has worked with major multi-national corporations, advising them on matters such as structuring strategic business acquisitions and private equity financing. Currently, Mr. Kim focuses his practice on real estate matters, specializing in private placements and other alternative investments for private lenders, real estate developers and other real estate entrepreneurs. His work includes ensuring clients are compliant with the applicable securities laws, structuring strategic partnerships and creating on innovative solutions.
PRIVATE LENDER CONTRIBUTORS RICK MELERO Rick Melero is Co-Founder and Principal of the HIS Capital Group, a collection of entrepreneurial real estate and lending entities. Operating from a core foundational belief of paying it forward and being of service, Rick has led HIS and various strategic alliances in the acquisition and creative restructuring of over $500 million in assets spanning 5 countries. From his humble beginnings as a wholesaler, he has established a reputation as a leading business strategist, negotiator, advisor, and educator within the industry.
MIKE PONOMAREW Michael Ponomarew joined the Factoring industry in 1999. He is the Founder and CEO of The Finance Institute. Managing Director of The InvoiceXchange. Factor member that managed $750+ million in Factoring transactions. Acclaimed industry educator that has taught over 5,000 business professionals, consultants and business owners how to profit in the lucrative Factoring industry. Contributing author industry publications and blogs, guest and key note speaker. Established and vended three successful businesses prior to joining the alternative finance and private lender industry.
BREANN STEPHENSON BreAnn Stephenson is the Assistant Vice President of Affinity Loss Prevention Services (ALPS), a licensed Property/Casualty insurance agent, and has been working with remodelers and real estate investors for over 10 years. For more advice about Loss Prevention, you can contact her at Breann@AffinityLPS.com.
THE OFFICIAL EZINE OF AAPL JULY/AUGUST 2014
IVAN OBERON On Moving Forward & Giving Back Back To Basics: Business Planning 101 How To Avoid Being Blacklisted by Google JOBS Act Crowdfunding and SBRE Funds
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I love to â&#x20AC;&#x153;envision
our companies and the way things look in the future. That imagery helps me go out and be part of that growth.
undingDatabase was founded to primarily keep our Fund’s (CPC Diversified Fund) pipeline full. They’ve become much more. More than 100 lenders actively depend on them for some level of deal flow. They’ve also developed incredible software and tools for borrowers, brokers and lenders to utilize. Kellen’s role is to expand our networks, harness initiatives, keep the pipeline full, and ensure FundingDatabase adds the highest degree of value possible to those who rely on them or use their products.
PL: Thanks for taking the time out for this special spotlight. We imagine we probably pulled you from a pretty big project; is there anythingy you can share with readers? KJ: We are emphasizing development of the lending SaaS products while increasing ways to screen and underwrite deals more quickly, present them more clearly, and fund or introduce funding sources in higher frequencies. I really think the things our companies do have attracted attention from peers and industry leaders to the point where folks yearn to be part of it. I’m lucky enough to be a product of that exciting environment. In return, I try to be as active as possible within the Association and larger industry, even as a volunteer. One way of giving back is through helping those around you learn from your experiences. PL: We definitely appreciate your willingness to help with the Ethics Advisory Committee and even the upcoming Annual Conference! You take on a lot; why did you choose this type of business for your career? KJ: I’m a creature of instinct. Every day presents different opportunities and challenges. Not only do you have to narrow your focus to pursue things that matter and make money, but you have to plan and react in real time. Those reactions can’t be void of emotion—because emotion is where our experiences interface with our decisions.
It seemed like when banks stopped lending as much, borrowers and businesses demanded new ways to get capital. They want technology to assist them. They want options. I wanted to be part of that solution. PL: What kinds of mistakes have you seen professionals make when it comes to their investments? KJ: Often times, underwriters completely whiff by focusing too much on traditional standards. In private money, for example, sometimes the credit score only matters if the borrower is going to depend on it as an exit strategy. Sure it also indicates whether the borrower makes his payments, but in most cases we see the impact of a bad credit score pale in comparison to the impacts of a reliable liquidation value and appropriate loan basis. I also see a lot of error in selecting an LOS. I would say a majority of the industry is either using the wrong technology for their particular strategy or rushes into developing an in-house system without understanding the expense and time it takes to do it right. PL: What do you think are some of the biggest mistakes you made and how did you overcome them? KJ: When we formalized FundingDatabase, as deal junkies, we would chase deals. I see brokers do it every day. I realized that although there IS a home for every deal, we needed focus. We have deliberately created ways to generate volume, so we’re seeing more deals, and developing tools to screen them faster. That way, we’re not even spending time on really bad loans, and we’re spending less time on good candidates. PL: With your hectic schedule, what types of things do you do to keep current? KJ: Beyond social media, conferences and membership in organizations, I stay current by applying the things we
•••LENDER LIMELIGHT••• learn in real scenarios. Then, we analyze our successes and failures and ensure we’re replicating the positives. By being self aware, understanding the markets, and honestly comparing our efforts and outcomes, I’m forced to keep tabs on what’s going on around me. PL: What influences or motivates you? KJ: Family is my biggest motivation. I try to let that motivation govern and influence the way I treat people and conduct myself. But beyond that, seeing innovation in this industry really excites me. I love to envision our companies and the way things will work in the future. That imagery encourages me to go out and be part of that growth. PL: If you could change one thing on your resume, what would it be and why? KJ: My life has provided some unique leadership and learning opportunities. But,if I could rewind, say, a decade or more, I would have learned how to code. I have gotten to the point where I can speak the lingo, but I wish I could write it. Ideas would be so much easier to bring to life with that skill. I’m even considering sending my kids to coding camp. PL: You are the first person that has ever mentioned wanting to have coding ability. Have you received formal recognitions? What where they? KJ: Our companies have been recognized on the Inc. 5000 list for two consecutive years now, received a UVEF Top 25 to 5 Award and induction into the Mountain West Capital Network Utah 100, to name a few. Personal awards and recognition have always provided an opportunity to reflect on and be grateful for the positive impact of the people you surround yourself with. PL: If you could sing one song on The Voice, what would it be? KJ: “Say It Ain’t So” by Weezer PL: What is the funniest thing that has happened to you recently? KJ: I was in New York and a man - probably “under the influence”) - approached me and asked if I was “Spencer Pratt.” He’s a former MTV reality show star that I might resemble a little, but hope I’m never be compared to. I decided to play along, though, by answering “Yes.” Let’s just say that some guy out there should probably check the authenticity of that autograph before selling the t-shirt I signed on eBay. “Follow your dreams. Spencer Pratt.” PL: (Laughing) Have you met “Stanley Tucci?!” A few months ago Jeff Levin was in the Lender Limelight and he mentioned how he is always mistaken for Stanley Tucci. We don’t even call him Jeff anymore! Don’t be too surprised if something similar happens
10 Private Lender
to you. It sounds like you take things in stride though; is there anything you complain about? KJ: Lines. Traffic if I’m late (which is another form of a line). Broken promises from borrowers. And until September of this year, the fact that McDonalds would end breakfast at 11 am. PL: What websites do you find yourself visiting the most? KJ: Our own. Although I frequent ESPN.com, HuffingtonPost.com, Business Insider and other news site, I’m proud of our web presence. PL: What do you think the biggest misconception about you is and why? KJ: That my age indicates something negative about me. In my very seldom-found spare time, I am writing about what it’s like being in your 30’s in the workforce. This comes from frustration with the idea that age is commensurate with ability. To me, everyone has something to contribute, and success has more to do with acumen and ethics than age. I think when I’m in a meeting with older folks, there is a misconception of my value related to my age, and there’s nothing I can do about it. I really respect those who have been in business for a long time or found success at an early age. There are also really impressive, bright young people (even younger than me) who cram so much into their lives and have a higher volume of quality experiences at an earlier age to draw from. I surround myself with people of all ages and experience levels that I can learn from. PL: Who do you consider your hero and why? KJ: I can’t pick one. I have always loved and looked up to John Stockton and Steve Prefontaine for their competitive drive. I love the breed of conscious capitalism championed by Robert Reich. I look up to each of my colleagues (Dale, Chris, Luke, Benson, Heather, Liz and David to name a few) and family members for different qualities. My heroes are social entrepreneurs like Blake Mycoskie and Hassina Syed. PL: What did you want to be when you grew up? KJ: A game show host. I still do. PL: What’s the best advice you’ve ever received? From whom? KJ: As a competitive runner in high school, every time I would recklessly bound down the stairs or jump off something, my dad would say, “Don’t break the nest egg.” When I was leaving home for college, and then entering the job force, he reiterated the phrase—but likened it to staying true to my core. I try to keep in mind what matters most and live as balanced life as possible to protect “the nest egg.”
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3 WAYS TO PROFIT FROM FACTORING BY MIKE PONOMAREW
he factoring industry is a multi-billion dollar industry offering an alternative business financing solution to companies throughout the world that need immediate and long-term, debt free working capital to thrive. While many industries have been floundering over the past few years, the factoring industry continues to experience tremendous growth across North America.
the economy and the many benefits behind the concept of factoring all contribute to the explosive growth of the industry.
There are many benefits associated with brokering factoring relationships including: • Start part time without sacrificing the security of your
Today represents the single best time in the history of Factoring to be taking part in this lucrative, recession present job. -proof industry because the recent credit crisis continues • Determine everything from the hours you work to to make it difficult for businesses to obtain traditional bank how your market your services. financing. Small to midsized businesses that • Residual Passive Income – work once need the money to thrive are turning to the get paid over and over again for up to 5 “Today represents concept of Factoring to quickly sell some or all years and longer. the single best time in of their accounts receivable at a discount and history of Factoring...” get the money they need fast. • Virtual Office – work from a home office setting.
Three main ways to take part in this dynamic industry are broker, buy or sell:
1. Sell – Business owners will sell some or all of
accounts receivable (factoring) to gain immediate debt free access to cash without waiting 30 days, 45 days, 60 days, 90 days or longer for payments from their customers.
2. Buy – Factors buy accounts receivable (current or
outstanding invoices) at a discount fee assumes all risk in funding the transaction.
3. Broker – Independent Consultants refer companies
that need money to a Factor and earn a residual commission each time a factoring transaction takes place.
Factoring brokers or independent consultants are professionally trained industry professionals that find companies in need of money to thrive. The broker network creates tremendous reach for the Factoring industry because the Factor does not have to hire or manage employees, pay benefits etc. (instead paying residual l commissions based on results) in exchange for lead generation. The broker network, bank lending restrictions, state of
12 Private Lender
• High Growth Recession Proof Industry – increasing demand for Factoring. • Low Start-Up Costs – No Employees to Manage – No Inventory – No Risk.
• Investment Potential – participate in funding your own factoring transactions and increase ROI.
Factoring provides “Predictable and Continuous Cash Flow” to:
• • • • • •
Increase Sales Fund Growth & Expansion Hire Additional Sales People Meet Payroll and Payroll Taxes Maintain a Good Credit Rating Early Payment – Supplier Discounts
Some of the many benefits of Factoring (if you’re a business owner) include:
• • • • •
Obtain cash without debt. Create continuous predictable cash flow. Credit limit increases with the value of sales. Fund future growth and expansion. Ideal for non-bankable businesses.
•••BUSINESS STRATEGY••• • No long term contracts to sign. • Unrestricted use of funds. Any business that provides a product or renders a service to another business or the government is a good factoring candidate. There is what we like to call “Hot Industries” that are inherently attracted to Factoring that could use the service right now including: Any New Start Up to 3 Years Old: Why? Because many of the banks have increased the minimum years a company needs to be in business and show a profit from two to three years to qualify for bank financing. Service Industry: Non-manufacturing companies that do not have hard assets to pledge as security to qualify for bank financing e.g. Temp Staffing, Security, Distributors, Wholesalers, Contract Cleaners, IT Consulting, Marketing Agencies, Importers, Exporters just to name a few. Medical Industry: Is the second largest industry in the country. The need for healthcare is about to explode due to the aging population (baby boomer). Any healthcare
provider (because the insurance companies usually pay claims over 100 days) or any durable medical equipment or service provider is a good Factoring candidate. Government Vendors: The government is biggest and best paying customer in this country but, usually pay their invoices really late. It is for this reason many government vendors struggle meeting the delivery terms of the government contract due to the lack of available working capital. Did you know if the government vendor can’t meet the delivery terms of the government contract the vendor stands to lose the contract to the next lowest bidder (competition)? Ask yourself this question: How many companies do you know or are in your area that fall into one of these categories? Now ask yourself how many of those companies do you think are getting paid in 30 days, 45 days, 60 days, 90 days and longer? If you missed last month’s Complimentary Online Business Workshop here is a replay link: Replay Workshop Now
WHAT’SCurrent NEWS & UPDATES HIS Capital Group, LLC: Loan Processor Wanted
HIS Capital Group’s Orlando Office is in need of an additional Loan Processor. If you have experience or know of anyone with experience looking to join a rapidly growing team, please share or apply for the position at http://jobview.monster.com/Mortgage-Loanprocessor-Job-ORLANDO-FL-US-154433838. aspx?mescoid=4300722001001&jobPosition=3
Southwest Airlines®—The American Association of Private Lenders Conference Airline. Beginning on August 1, 2015, American Association of Private Lenders’ conference attendees will receive a discount and bonus Rapid Reward points from Southwest Airlines through our SWABIZ® account. Southwest Airlines is offering an 8% discount off Anytime & Business Select® fares and a 2% discount off select Wanna Get Away® fares for travel to and from the conference. Book your travel between August 1, 2015 & October 25, 2015 to take advantage of the discounted rates. (Discounts are available for travel November 6, 2015 through November 12, 2015.) Click here to take advantage of the discounted rates and book now! By flying Southwest Airlines, as a American Association of Private Lenders traveler, you will also receive the following benefits:
• 50% bonus Rapid Reward points for your travel to & • • • •
from the convention No baggage fees (first two bags) No change or cancellation fees No peak travel or fuel surcharges Consistently ranked the “Best in Customer Service” by DOT
To take advantage of this offer, visit AAPLConference. com today! Submit your current news, updates, or job opportunities for possible inclusion in the next issue of Private Lender. Send details to PrivateLender@aaplonline.com
14 Private Lender
Applied Business Software Announces Major Software Update Applied Business Software Inc., developers of The Mortgage Office™ and The Loan Office™ software, is excited to announce a major update release to its signature software The Mortgage Office™.
The Long Beach based software company released this update that will allow its customers to enjoy enhanced features to the already industry leading loan servicing
Consistent with Applied Business Software’s development approach, some of the new features of Version 2.1.6 include:
• Lockbox processing support • Seamless Accounting System QuickBooksTM and PeopleSoftTM
• Ability for user customize certain labels in the Investor and Lender Statements
• User Defined Loan, Lender and Vendor imports from Excel spreadsheet
• New Partnership DRIP Shared Based Model Jerry Delgado, CEO & Co-Founder, commented: “We are extremely pleased with this release. Innovation, along with our customers’ needs and wants, are at the forefront of our software development. The new feature set is consistent with prior releases, where enhancements to compliance, reporting, efficiency, versatility and scalability are the ultimate objectives.”
Fairway America Names Chris Tassos Managing Director, Advisory Services Fairway America, LLC (“Fairway”) is pleased to announce the appointment of Chris Tassos as its new Managing Director of Advisory Services. Tassos comes to Fairway most recently from the Wilkinson Family of Companies where he served as Chief Administrative Officer and CFO of Funds. He was previously CFO at several well-known financial services and real estate firms including Harsch Investments, Fog Cutter Capital, and Long Beach Mortgage.
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•••MANAGE & LEAD•••
NOBODY WANTS TO SUCK AT THEIR JOB BY: CHRISSEY BREAULT
writer for Fast Company once said, “How you treat project deadlines can speak volumes about your organization’s commitment to the work.” It has inspired these tough love tips to get things moving like a well-oiled machine. A huge factor as to why so many organizations have so much trouble doing what they intend to do—on time— is because when they fail to meet a deadline, nothing happens. Businesses say they want to be more strategic and they want to execute better, but this simple failure to address missed deadlines keeps companies from making any real, strategic progress.
Here’s what it looks like: A project is committed. The dates come and go—and then no one even talks about it. The result is that people who were on the hook either assume that they have been granted more time, or it wasn’t that important to begin with. Then no new deadline is established—because no one is acknowledging the situation. So the strategic task takes an even lower priority over the more urgent tactical demands of the moment. You can’t let the date come and go, leave the failure totally unacknowledged and
unexamined, and expect to make progress. This sends all the wrong messages and sets a very low standard of execution. What you are communicating (by not communicating) is:
• • • • • • •
It wasn’t that important after all It doesn’t matter that it didn’t get done There are no consequences for missing a deadline We’re not serious about meeting our commitments “Late” is okay in our organizational values The project was poorly planned An agreement wasn’t important, or at least not priority enough
Missing deadlines means that others who depended on you or need your work to do their own will have less time to complete theirs There are four key reasons managers fail to follow up on missed deadlines. They are either:
1. Too busy to keep track 2. Not personally good at keeping track 3. Don’t like the conflict of keeping track 4. Don’t know what consequences to impose when something is off track
The first two are really easy to fix. If you are not getting this done well yourself (or hate doing it), get someone who’s naturally good at this to help you. This will be a breakthrough for you, your team, and your business. Have a director of staff or project manager who helps you with the hard work and detail of tracking obligations. Having that type of person helping in many executive roles is a huge factor in the ability to lead a group that unfailingly delivers. The next two; numbers 3 and 4, you can’t delegate. As an executive or manager, if these things make you uncomfortable you need to do them anyway. Here are some suggestions on how to deal with the necessary struggle of missed deadlines without it being
16 Private Lender
•••MANAGE & LEAD•••
emotional or personal, so it’s much easier.
1. PRACTICE SMART GOALS: Be really clear up front
about dates, owners, and measures, and create a dashboard to communicate the status of each key project at the beginning of the project when everything is still “green.” (No conflict yet.)
2. Use this dashboard to kick off the project. Also use it as your communication document to share status information on a regular schedule with all stakeholders before anything goes wrong. (Still, no conflict.)
3. The magic happens because everyone can see
their name and accountability on the dashboard. And they know this dashboard is the communication document that will go to everyone who matters. Shame them into keeping on track with peer visibility. (Result: More work is finished on time—so less need for conflict.)
4. Then when something is going wrong, going from
green to yellow or red, it is not a personal conflict to
18 Private Lender
bring it up with the person or the community. You can give them a chance to keep their line green on the dashboard. Then, if it still goes wrong, at least it is not a surprise. Everyone saw it coming. The person who failed to deliver had the chance to avoid it, and knew beforehand that it would be communicated and addressed. Even if a missed deadline was not intended as a sign of disrespect, it can be interpreted that way by the people who are affected by the delay. But sometimes extenuating circumstances make meeting deadlines impossible, despite our best intentions. Communicating the importance of both the task and the course or job can go a long way to minimize any sense of disrespect that might develop. By taking complete responsibility and accepting the consequence of their actions, they are demonstrating the importance of the interactions that emerge from deadlines.
Consequences for actions Managers get confused and think, “Okay, the person
•••MANAGE & LEAD••• Are you deadline challenged?
missed a key deadline, how do I address it? It seems like overkill to just star thinking, “Do I need to fire the person?” Especially, if you don’t really want to lose the person. Unfortunately, the tendency is to just do nothing at all.
If you hate procrastination yet frequently find yourself in its grasps, implement the following strategy to experience a new sense of control and freedom from work pressure: When you are handed an assignment, decide to complete
There are countless options between termination and nothing. You don’t need to fire someone every time a deadline is missed. If you don’t fire the person for missing a deadline, what do you do to enforce consequences? You don’t need to be a bully. You do need to have a discussion. Three simple questions will work:
1. “What happened?” 2. “How to do you intend to recover? 3. “How do you intend to prevent this next time?”
Just having this conversation sends the message that it is not okay to miss a deadline. The conversation itself is a consequence. Especially compared to doing nothing.
Relevant training and information in an ever-changing industry.
Maintaining motivation Many managers struggle with the motivation factor. They feel like if they have the conversation, they will be giving someone a hard time and the person may get demotivated, be less committed, or leave. In reality, when you address a missed deadline, the person actually feels a little good because this difficult conversation is reinforcing that their work really matters. You’ll also want to consider that stronger performers take a lot of ownership in those conversations and put even more pain on themselves then they feel like they are getting from you. Avoiding the conversation is equivalent to letting the person know that what they were working on wasn’t very important— which I think is always even more demotivating. It should be uncomfortable Sure it’s an uncomfortable conversation, but it should be! You missed a deadline. That should not be pleasant, comfortable news for anyone. It’s not about coming down hard on someone or being disrespectful or nasty. It’s about moving the business forward. Missed deadlines left unaddressed slow the business, and damage the trust, motivation, and commitment of the team.
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•••MANAGE & LEAD••• it within 75 percent of the allotted time. Decide your date and time for completion. Then, treat this earlier deadline as the real thing. Stoke your motivation by getting someone to whom you are accountable to inquire about your progress halfway through. This productivity strategy, ironically, will not generate the same type of anguish that you would otherwise experience with the real deadline. Relish the positive feelings of finishing early. Plan a reward—a golf game, a night out, or a mini celebration. Become more proactive and creative with deadlines and you’ll stay out of the grips of procrastination.
Are you dealing with the deadline challenged? You probably feel like a jerk because your colleague is a nice person and you like him/her, and you’re about to provide information that’s going cause some discomfort for them. And you’re probably a nice person yourself, and so that sucks. You still have to do it, you need to speak up and loop in your manager. If this had just happened once, you could try working it out with your colleague directly. But it’s a long-running pattern, it’s causing real and ongoing problems, and the very reasonable steps that you’ve taken to try to address it haven’t solved the problem. It is a problem that needs to be solved, so that means that you need to escalate it. At this point, I think you need to do two things:
1. Talk to your colleague about your concern.
You shouldn’t have to do this — your colleague should already understand that there’s a pattern of him missing these deadlines and should be acknowledging it and coming up with a plan to fixed it — but since that’s not happening, you need to raise it. Say something like this: “I want to talk to you about the deadlines for the project X. I depend on you to get me the data in time twice every year, and it’s causing me real problems that the data is often late and contains mistakes, or doesn’t come in time to QA it. It’s become enough of a problem that I think I need to pull the manager and possibly the manager’s boss in on this because I really need the next set of data to be on time and accurate, but I wanted to give you a heads-up that I’m going to do that.”
You could change that last part to say that you’re going to bring the bosses in on it only if there are problems in the future, rather than moving straight to talking with them now. But that means accepting that there’s a pretty good
20 Private Lender
chance that the next data set is going to be messed up too. Are you willing to accept that high likelihood in exchange for giving him one final chance to handle this on his own? Whether or not that makes sense to do depends on how much of an impact his mistakes will have if it happens again. Whether you decide to do it now or wait until the next time there’s a problem, at some point, yes, you’ll need to talk with your own manager about what’s going on. You said that you’re hesitant to bring her a problem without a solution, but — while in general, yes, it’s good to propose solutions where you can — this is a problem where the solution isn’t within your control. The solution here is that your coworker’s boss needs to step in and talk with him (and probably more closely manage him for a while), and you can’t make that happen without escalating things.
2. Say something like this: “I want to loop you in to a
problem I’ve been having with the data for X. I rely on him/her to supply me with the data for X, and it’s always late and often inaccurate. I’ve tried checking in with him weeks in advance and making it really clear what I’ll need by when, but each time it’s late and I’ve been left scrambling at the last minute, without a chance to QA it. At this point, I think I need to talk to his/her manager and get his help in resolving this. Does that sound right to you?”
In this example, you are bringing a solution — your proposed solution is talking with your colleague’s boss. But you might work somewhere where it would be more appropriate for your boss to be the one to do that, in which case you could change this wording to whatever’s appropriate in your organization, like “I wondered if you’d be willing to talk with the manager about how we can get what we need from his team” or whatever.) Does it suck to have to escalate something when it’s about a coworker? YES! But this is impacting your work, it’s happened repeatedly, and your boss and your coworker’s boss would almost certainly want to know this is happening and have the chance to step in and resolve it.
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NEW 5498 REPORTING: WHAT DOES IT MEAN FOR MY IRA’S PRIVATE LOANS? BY: BILL HUMPHREY
RA holders are facing a new change in asset reporting for rate, and 3. Length of term. the 2015 tax year. IRS form 5498, which IRA providers Theoretically, the value of a note fluctuates everyday use to report the value of your account, includes new due to inflation and the risk associated with the loan’s Boxes 15a and 15b, which require IRA administrators repayment. A private to categorize the values loan’s value is also of the assets within their dependent on the lender’s clients’ IRA accounts. This risk tolerance, as defined includes a category that within the loan’s agreed“The creation of Box 15 may mean delineates the value of upon interest rate and the chances of your IRA getting private loans extended with maturity date. audited by the IRS could increase.” IRA account funds (15b). The creation of Box 15 Prior to the 2014 tax year, may mean the chances Box 15 didn’t exist, and IRA of your IRA getting account holders only had audited by the IRS could to report the overall value increase. IRA account of their IRA or qualified holders will have to be retirement plan. Box 15 more meticulous than ever appeared on IRS form in their IRA transaction 5498 in 2014, but reporting proceedings. So what can within the box was optional. you do to make sure you For the 2015 tax year, the and your IRA account are IRS is actively taking steps ready for IRS scrutiny should they choose to audit your to enforce requirements for hard-to-value IRA assets. account? This means the IRS will have a more differentiated It requires a joint effort between the IRA account holder system for identifying which IRA accounts possess hardand the IRA administrator to keep account proceedings to-value assets; not to mention a heightened ability to within the bounds of IRS rules and regulations. IRA target certain investment structures in which prohibited administrators that provide educational services to their transactions can often occur, such as checkbook IRAs/ clients make it easier for account holders to exercise due Individual LLCs. diligence when making investment decisions. Choose Code B of Box 15b requires the reporting of “Short a credible IRA administrator with a reliable track record or long-term debt obligation that is not traded on an and an educational business model to confidently established securities market”. This is essentially asking make knowledgeable decisions about your IRA account for a valuation of all notes and private loans within your proceedings. IRA. Every asset in your IRA has a generally accepted process for valuation; original, purchased, and secondary market notes included. The value of a private loan is Interested in writing for Private Lender and getting in determined by more than just the amount of money lent front of thousands of real estate finance professionals? – there are three factors which contribute to the valuing a Contact us today! PrivateLender@aaplonline.com private loan in an IRA: 1. Original loan amount, 2. Interest
22 Private Lender
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PROPERTY ANALYSIS for Private Lenders
s a private lender, there are many moving parts related to a real estate deal, especially if you are new to property analysis. In this article, my objective is to offer a quick perspective on property analysis so you can make better decisions with your capital, time, and energy. Earlier this year, a wholesaler sent me a text with an address to a property and suggested that it may be of interest to me:
the market for $599,000. Tempted to lend on this deal? Let’s find out what the research says. A quick note: this process is exactly how my team and I determine to either complete the project ourselves, joint-venture with another real estate investor and lend capital for the project. Our definition for a high yield flip is for rehabs: net $50,000. For new construction, net $100,000+. These numbers will vary for everyone.
Step 1 of 3: Assess the neighborhood/ market conditions I asked my real estate agent to run a search on the MLS, and this is the initial data that I received (see Figure 1). The white bubble in the middle is the location of the subject property.
From this message, the wholesaler is telling me the purchase price is $220,000, comparables in the neighborhood are supporting a value of $550,000 or greater, and the home across the street is currently on
Here’s what you are looking at: the green bubbles represent homes on the market currently, the orange bubbles represent homes pending a sale, and the red bubbles represent homes that have sold. (The circle represents ½ mile around the subject property and targets are the market activity within the last 6 months.) What do you notice immediately? There are more homes that are pending a sale or that have sold than homes currently on the market. And for a real estate lender,
that is a powerful piece of information to question when speaking with the borrower regarding the deal. The wholesaler also mentions the home has 3 bedrooms, 1 bathroom, and is 1,050 square feet. My immediate thoughts are: “Alright, there are 2 options for this deal:
Case #3: 190 Locust Street NE, Atlanta, GA 30317 SOLD May 2015 for $454,000. It is a newly built 4 bedroom, 3 bathroom home with a footprint of 2,220 square feet.
1. the footprint of the home must be expanded to increase its size, or
2. tear down the existing structure and build a new home.”
The next logical step is to prove that either renovating/expanding the home, or building a new home is a winning opportunity: Case #1: 196 Warren Street NE, Atlanta, GA 30317 SOLD March 2015 for $350,000. This home has 3 bedrooms, 2 bathrooms and a footprint of 1,512 square feet.
Case #4: 120 Warren Street NE, Atlanta, GA 30317 SOLD for $354,900 in April 2015. The home has 4 bedrooms, 2 bathrooms with a footprint of 1,880 square feet.
Case #2: 229 Locust Street, Atlanta, GA 30317 SOLD December 2014 for $375,000. This home has 3 bedrooms, 2.5 bathrooms and a footprint of 1,732 square feet.
Case #5: 210 Warren Street NE, Atlanta, GA 30317 SOLD June 2015 for $590,000. The newly built home has 4 bedrooms, 3 bathrooms, and 2,950 square feet.
Comp 2 Comp 5
26 Private Lender
Step #2 of 3: Determine cost to renovate or build new Now that we have identified homes to use as a benchmark for our subject property, the next step is to identify the cost associated with each option: 1) renovate and expand, or 2) tear-down and build new. Your borrower will have this information handy, but here are my two cents: it’s important to view each property inperson. This will help you determine exactly what repairs must be completed and make sure to take your borrower and their contractor along to view the home. Remember that the price per square foot to renovate or build a new home will vary from neighborhood to neighborhood and can also vary from contractor to contractor.
Scenario 1: Debt Model for New Construction
Quick tip: Is this your borrower’s first real estate deal? If so, finding good contractors can be a hassle. I would suggest attending a community real estate networking event and ask around. I’m confident they will find a few to call on immediately.
Step #3 of 3: Determine the cost of capital for your borrower Let’s take the case of deciding to build a new home for this deal. I’ve outlined two scenarios for you to review in the perspective of your borrower. The first scenario (picture at right) is Scenario 2: Joint-Venture for New Construction a model that illustrates a 20% down the lender and borrower. Make sure you have a history of payment, 4% closing costs, and 14% interest, which are successful transactions with a borrower before entering into popular terms these days for most lenders. a joint-venture scenario where the there is high possibility of The second scenario (picture right) is a model that illustrates a 50/50 joint-venture partnership where net profits are split equally.
the borrower not having any skin in the game. In the event of foreclosure or a rogue borrower, you’ll be stuck if you don’t buy right and if you don’t have control of the project.
Keep in mind that in each scenario, I assumed the following: 1) a cost of $85.00 per square foot to build a home that is 2,400 square feet, 2) the project will take 12 months from purchase to sale, and 3) the home will sell for $600,000.
On the flip side, Scenario 1 is more conservative. The borrower is required to have skin in the game, is tied to the project financially, and has something to lose. This is a much better option if you are a new lender or a lender that prefers a conservative investment strategy.
CAUTION: Scenario 2 requires a lot of trust between
Choose your own adventure.
28 Private Lender
IS YOUR MORTGAGE FUND OR PRIVATE EQUITY OFFERING COMPLIANT? BY: KEVIN KIM
rivate lenders, real estate developers and other private investment vehicles utilize a variety of different methods to raise capital to fund their businesses (“Funds”). A majority of Funds will use an exemption from registration such as Regulation D of the Securities Act of 1933 or a state law exemption such as California Corporations Code 25102(f). Compliance with the rules and regulations set forth by these securities exemptions is growing more and more important. Since exempt securities offerings present with a greater likelihood of negligence, mishandling of funds and potential fraud, many regulators have become increasingly focused on exempt offerings to ensure they are compliant. This article will discuss some of the most common non-compliance issues and the associated penalties. The most commonly overlooked compliance requirement is making timely filings with the applicable regulatory agency such as the Securities and Exchange Commission (“SEC”) or the California Department of Business Oversight. Many Fund managers do not realize that many filings must be updated on an annual basis, such as Form D. Any Fund utilizing one of the many exemptions under Regulation D must file a Form D on
an annual basis as long as the Fund is raising capital. Also, the Fund must file the Form D in every state in which the Fund’s investors reside. At the federal level, the SEC has stated that accidental mistakes or late filing of the Form D will not affect the validity of the offering. However, many states have taken a more hard-lined approach to their state Form D filing requirements. For example, many states have imposed late fees, penalties and prohibition from sale when an issuer fails to comply with the respective state law requirements. Disregarding the Form D filing requirements can also lead to a loss of the Regulation D exemption. Loss of exemption is a serious issue. If a Fund loses its exemption, then it must register the offering as a public offering or find an alternative exemption in order to continue raising capital. For these reasons, it is exceedingly important to ensure regulatory filings for exempt offerings are made on a regular and consistent basis. Another frequently overlooked securities matter is broker-dealer regulations. Generally, a broker-dealer is someone who is in the business of buying and/or selling securities, for compensation. However, there are several factual scenarios that Fund managers often don’t think could trigger broker-dealer regulations. For example, paying finder’s fees, paying referral fees, operating multiple funds, or even allowing others to negotiate on behalf of a Fund with investors, are all potential situations in which state or federal securities regulators could require a broker-dealer license. State regulators and the SEC strictly prohibit unlicensed broker-dealer activity. Since the enactment of the JOBS Act, the SEC has increased its enforcement efforts against unlicensed broker-dealer activity in exempt securities offerings. Unfortunately, many Fund managers are unaware of broker-dealer regulations or often choose to ignore them. If a Fund manager pays compensation to an unlicensed individual for referring an investor, negotiating the terms of the investment, or the Fund manager is conducting business as a brokerdealer without obtaining the necessary licenses, the penalties can be severe. They can include SEC or
state enforcement action, monetary penalties, investor lawsuits, rescission and loss or return on invested capital. For these reasons, Fund managers should consult with a securities attorney before any form of commission, referral fee or finder’s fee is paid for referring investors. Although there are a handful of narrow exceptions to the broker-dealer regulations, only an experienced securities attorney can navigate those exceptions. Alternatively, a Fund manager itself can be viewed as an unlicensed broker-dealer in certain instances. For example, if a Fund manager operates multiple offerings simultaneously, the SEC or state regulator may view the Fund manager as being in the business of selling and dealing securities, for compensation, and thus require the Fund manager to obtain a broker/dealer license. For these reasons, Fund managers should always consult with securities counsel to determine whether particular proposed transactions, offerings or relationships could be construed as unlicensed broker dealer activity. The risk of operating multiple offerings simultaneously is that a regulator may integrate them into a single offering. Although this may seem innocuous, it can be especially problematic for Rule 506(B) offerings that have sold to a multitude of non-accredited investors. If multiple offerings under 506(B) are integrated into one offering, and the total number of non-accredited investors exceeds thirty five, the offerings will be ineligible under 506(B) and will be unlikely to find an alternative exemption. Alternatively, if a Fund manager conducts offerings that utilize different securities exemptions with varying investor suitability requirements; there will be no choice but to register the offerings as a public offering or dissolve the Funds. To ensure integration and broker-dealer penalties are avoided, it is recommended that Fund managers consult with securities counsel. Finally, Fund managers must make sure they provide full and complete disclosure to their investors. All securities offerings require some type of disclosures to investors. Any Fund, whether operating under a federal or state securities exemption is required to comply with the applicable anti-fraud statutes and disclosure requirements. This means a thoroughly detailed private placement memorandum or offering circular that includes comprehensive disclosure and discussion of the various risk factors, business plans, business history, and compensation structures of the Fund. These documents must be regularly updated to reflect any changes to the Fund, its business model and/or the law. Properly prepared offering documents will not only ensure that the Fund is protected from potential liability, but it will also ensure the investors fully understand the investment,
30 Private Lender
business model and risks associated with investing in the Fund. Failure to provide complete disclosures to investors may result in enforcement action by the SEC or a state regulator which could result in civil liability, penalties and loss of all investment capital. Furthermore, the SEC permits individuals to bring civil actions against Funds and their managers for inadequate, incorrect or improper disclosures, misleading statements and/or fraud. Finally, in some worst case scenarios, the U.S. Department of Justice (“US DOJ”) can take over SEC investigations and bring criminal charges against Fund managers, their principals, and even officers of the Fund for fraudulently misleading investors. For example, recently the SEC and US DOJ prosecutors shut down a $68 million dollar fund named Luca International. Luca International was a Regulation D offering. The SEC and the US DOJ froze the assets and are pursuing criminal charges against Luca International’s managers, and officers for misleading statements, fraudulent representations to investors and mishandling of funds in the form of a Ponzi scheme. Prosecutors not only froze the assets of the Fund, but also charged the Luca’s former business development officers and investor relations officers. The linchpin of this case is fraudulent and improper disclosures to investors. Luca International’s offering documents stated to investors that they would receive twenty to thirty percent returns on their investments which were intended to purchase oil rigs. Luca International’s officers never acquired the oil rigs and in turn siphoned off large fees and payments that were never disclosed in the offering documents. This case teaches the most basic of lessons in offering securities: Fund managers must disclose all material information to their investors. Material information continues to arise throughout the life of a Fund. For these reasons, it is strongly advised that Fund managers seek counsel from an experienced securities attorney to draft, update and revise offering documents to ensure that their Fund is protected from accusations of fraud, misleading statements or omission of material fact. Raising capital poses a substantial amount of legal issues, most notably securities compliance. Filing requirements, disclosure requirements, broker dealer penalties and integration are just a sample of the myriad of complex securities issues that Fund managers need to understand when raising capital. For these reasons, Fund managers should retain experienced securities counsel and take a proactive approach to securities compliance by regularly conferring with securities counsel and establishing an ongoing dialogue. This will ensure improved compliance with securities regulations, reduce potential liability and enforcement actions, and improve investor relations.
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YOUR BORROWER’S CONTRACTOR SHOULD BE PROPERLY INSURED BY: BREANN STEPHENSON
This exclusion exists to avoid an overlap of coverages. Any property damage, injuries to a contractor’s employees or negligence in their workmanship is covered under policies that the contractor procures for himself. (Subcontractors should get their own liability coverage, too.) Injuries don’t happen on every job, but when you work with saws, ladders and nail guns, the risk of injury and even death increases. For your borrower to pay a couple hundred or even a couple thousand dollars more to ensure his contractors are appropriately insured is a bargain compared to the tens or hundreds of thousands in costs they (and you!) could face after an accident.
What kinds of coverage are available? General Liability // Covers property damage the contractor is responsible for, as well as any negligence in workmanship once the job is completed.
very lender’s chief concern is getting their invested capital back. You depend on your borrower to have the systems in place to finish their rehab project according to schedule and pay off the loan according to the agreed terms. If a borrower hires an unreliable contractor, the whole project can be derailed, jeopardizing your ability to recoup your investment. If an injury occurs you may even find yourself in court. One way to protect yourself is to make sure that your borrower is hiring contractors that are properly licensed and insured. It is in your best interest, pun intended.
Where are you at risk? Some investors assume their property coverage and premises liability coverage will protect them if a contractor gets hurt while working on their project. Don’t be fooled— anyone your borrower hires to do work on the property is excluded from any standard ISO policy.
32 Private Lender
Worker’s Comp // Covers injuries to a general contractor’s or subcontractor’s employees if they are hurt while working on the job. The legal requirement to carry this coverage varies from state to state. In some states, it’s required with as few as one employee. Surety Bond // If the contractor cannot finish your borrower’s job—due to illness or bankruptcy, for example— this type of bond will cover some of the financial losses they incur in getting the job finished. As you can imagine, this bond could become very important for guaranteeing that your loan is paid as well. Professional Liability // Protects the contractor against liability incurred as a result of errors and omissions in the course of business. Inland Marine // Insures property in transit, such as materials and tools on their way to the property. Pollution Liability // Coverage for bodily injury or property damage arising from pollutants. Equipment Floater // Covers the contractor’s equipment,
such as bulldozers, excavators and tools. Commercial Auto // Covers the contractor’s vehicles while used in the course of business. (Hauling materials or traveling between jobsites, for example.) Contractual Liability/Hold Harmless Agreement // General contractors should sign this agreement with their subcontractors so they are not held liable for any damage or injuries for which the sub is responsible. Builder’s Risk // Covers the property during the course of construction. Can cover property at off-site storage locations and in transit as well, including building materials waiting to be installed. Premises Liability // Covers property damage and injuries caused to third parties (the mailman, for example) on the premises only. The owner procures this coverage, and it does not protect hired workers. Excess Liability // Increases (but does not broaden) the limit of liability coverage and will pay out only if the primary policy pays. What else does your borrower’s contractor need? Licensing // A license isn’t a 100 percent guarantee that all work is being done according to current building codes, but if your borrower’s contractors are fully licensed, it’s a good sign of their seriousness. Licensing exams last several hours, and a license can cost hundreds of dollars per year. If they are located near a state border, the contractor may need licenses for multiple states. Permits // Each city’s ordinances vary, but permits can cover exterior painting, roof repairs and much more. If a contractor doesn’t obtain the appropriate permits, any fines could come back on your borrower. If structural elements fail because they haven’t been reviewed by an engineer, there could be even worse consequences. Certificate(s) of Liability Coverage // Obtain a copy of all liability policies in force. At the bare minimum, this means a general liability policy and, if a contractor has employees, a worker’s comp policy, too. If you aren’t sure of the coverages being presented to you, consult your insurance agent. Require your borrower’s contractor(s) to name both you and your borrower as additional insureds/certificate holders during the project. This can give you and your borrower some protection if either of you are named in a lawsuit; it generally doesn’t cost extra. Being listed on the
policy should also ensure that both of you are notified if coverage lapses or is canceled. Non-Negotiable Coverages // Products and completed operations coverage should be included in the contractor’s liability policy. This covers damage that occurs after the work is completed. If an improperly soldered pipe fails three weeks after your borrower pays his contractor, this coverage can take care of the cost of the repairs. A good contractor will also guarantee his or her work for a reasonable period of time after the job is done—12 months is a good rule of thumb. Health Insurance // Your borrowers may want to ask their contractors for proof of health insurance, too. Most independent contractors have policies that cover their workmanship, damage to your properties and injuries they may cause to others—but not injuries they suffer. Contractors who have health insurance will have a safety net if they get hurt. They’ll be less likely to sue your borrower (or you) to pay their medical bills. Insurance is an area where no one should skimp. Due diligence for lending on a rehab project should go further than simply checking to make sure the borrower procures coverage on the property itself. The contractors they hire are performing high-risk activities and if not adequately insured, could not only harm your borrower, but the effects could make their way to you as well. Don’t be tempted to lend to a borrower who cuts corners in insurance to make a bigger profit. As we previously discussed, it’s in your best interest. Pun intended. Another version of this article can be read in Community Investor’s May/June 2015 edition,”Keep Your Contractor Out of the Danger Zone.”
Interested in writing for Private Lender and getting in front of thousands of real estate finance professionals? Contact Chrissey at PrivateLender@aaplonline.com to learn how! (It’s so easy!)
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American Association of Private Lenders’ Annual
PREVIEW TRIPLE YOUR EARNINGS
SPEED NETWORKING with A.J. Poulin
VIP RECEPTION NETWORKING MIXER PROFESSIONAL DESIGNATIONS Become a CPLA or a CFM!
Special Presentation by
TIM ROOD 35 Private Lender
Housing Outlook 2016: A Washington View
Annual Conference Preview | November 8-10, 2015
TRIPLE YOUR EARNINGS! REGISTER TODAY: AAPLCONFERENCE.COM
6TH ANNUAL CONFERENCE
SCHEDULE SUNDAY, NOVEMBER 8
TUESDAY, NOVEMBER 10
9:00 a.m. - 5:00 p.m. Certified Private Lender Associate Designation
8:00 a.m. - 9:00 a.m. Continental Breakfast
9:30 a.m. - 12:30 p.m. Certified Fund Manager Designation
9:00 a.m. - 10:00 a.m. Feature Speaker Jonathan Hornik
1:00 p.m. - 5:00 p.m. Exhibitors’ check-in & set-up
10:15 a.m. - 11:15 a.m. Breakout Sessions
6:00 p.m. - 8:00 p.m. VIP Reception at the LINQ High Roller Wheelhouse (Invitation Only. Tickets Required.)
11:15 a.m. - 1:00 p.m. Lunch (on your own) 1:00 p.m. - 4:30 p.m. Breakout Sessions 4:30 p.m. - 5:00 p.m. Conference Wrap-up
MONDAY, NOVEMBER 9 7:30 a.m. - 5:00 p.m. Attendee check-in 7:30 a.m. - 7:00 p.m. Exhibitors’ Hall Open 7:30 p.m. - 8:30 a.m. Continental Breakfast 8:45 a.m. - 9:00 a.m. Opening Remarks 9:00 a.m. - 10:00 a.m. Keynote Address Tim Rood
IMPORTANT INFORMATION To attend Sunday evening’s VIP Reception you must be a member or sponsor of AAPL, been invited, and have a ticket. Guests can attend for $125. To participate in Sunday’s professional designation courses you must register separately and be a current member of the American Association of Private Lenders.
10:15 a.m. - 12:30 p.m. Breakout Sessions 12:30 p.m. - 1:30 p.m. Lunch (on your own)
You know the drill! Topics, speakers, and/or schedule are all subject to change at AAPL’s discretion.
1:30 p.m. - 4:00 p.m. Breakout Sessions 4:00 p.m. - 5:00 p.m. Speed Networking 5:30 p.m. - 7:00 p.m. Networking Cocktail Reception
36 Private Lender
Find live updates with #AAPLAnnual
REGISTER TODAY! CALL 913-888-1250 OR VISIT AAPLCONFERENCE.COM
DON’T LOSE YOUR HEAD OVER ACCOMODATIONS: STAY AT THE HOST HOTEL CAESARS PALACE-EVERY OPPORTUNITY UNDER ONE ROOF. 37 Private Lender
AAPL Annual Conference www.AAPLConference.com
FOR LENDERS, INVESTORS & SERVICE PROVIDERS
With energy and enthusiasm, AJ Poulin, VP Sales for The Mortgage Office, will host this networking event to help you connect with everyone in the room! Bring your business cards, questions, smile and your elevator pitch. You will meet investors, brokers, lenders, and service providers. This session alone will be worth the trip – we promise!
Monday, November 9, 2015 4:00 p.m. - 5:00 p.m. Caesars Palace, Promenade Level All Conference Attendees Invited!
Expand Your Network - FAST
New Contacts Every Few Minutes
Maximize Your Time
Accelerate Your Networking
Meet Face-to-Face with Prospective Clients, Partners & Referrals aaplonline.com
Annual Conference Preview | November 8-10, 2015
PROFESSIONAL DESIGNATIONS Get your geek on. Prove you’re an industry expert. Whatever you want to call it, just don’t gamble with your success! AAPL is dedicated to educating its members and helping them achieve their professional career goals. Having relevant designations is one way to increase your credibility, knowledge, and ultimately success!
Private Lender Associate
Sunday, November 8, starting at 9:00 a.m.
The Certified Private Lender Associate designation provides a comprehensive overview of the principles of private lending. It also includes detailed information on the current federal laws and regulations surrounding the industry. Upon successful completion of the course, AAPL members in good standing will be entitled to use the CPLA designation and logo, demonstrating their commitment to education and their desire to achieve industry excellence. The CPLA requires annual continuing education.
Sunday, November 8, starting at 9:30 a.m.
The Certified Fund Manager designation bridges industry practice, investment theory, and ethical and professional standards to provide investment analysis and portfolio management skills. This intensive four-stage course, designed by industry veterans, will help you answer the question, “Is a mortgage fund my next growth opportunity?” Topics include: Mortgage Pool Fundamentals - Vision and Execution; How to Structure, Capitalize and Administer a Mortgage Pool Fund; Creation and Launching of the Fund; and on-going Fund Administration.
Register at AAPLConference.com
Topics, Speakers, Schedule all subject to change
Annual Conference Preview | November 8-10, 2015
TRIPLE YOUR BRAIN POWER Expand your capabilities, find your inspiration, and build on your success at the 2015 American Association of Private Lenders’ Annual Conference, this November. Only an event of this caliber can bring together the most distinguished speakers and offer the most strategic breakout sessions covering the latest topics and trends in private lending. Our goal is that you leave not only motivated, but up-to-date on effective strategies and tactics that will help you succeed.
Participating Industry Leaders Robert Buchanan Pride of Austin Capital Partners
Marc Heenan PeerStreet
Kellen Jones FundingDatabase
Jack Kiley MidAltanticIRA
Scott Lisman CapitalSource
Rick Melero HIS Capital Group
Susan Naftulin Rehab Financial
David Owen A-List Partners Management
A.J. Poulin Applied Business Software, Inc.
Belinda Savage IRA Trust Services
Jeffrey Tesch RCN Capital
Jonathan Hornik Larocca, Hornik, Rosen, Greenberg & Roca Plus many more!
Tailored Topics • Communication in a Tech Age • Raising and Deploying Capital Nationwide • Funding Commercial & Residential Hard Money Foreclosures • Future of Private Lending
• Starting and Creating your own Fund • Alternative Funding for Fix & Flip • Leveraging Strategies by using self-directed IRAs • Re-Thinking Mortgage with Techonology • Underwriting & Compliance
• Championing Ethics: Industry Viewpoint • Packaging and selling loans to investors • P2P Lending Market for Fix & Flip
Register at AAPLConference.com Topics, Speakers, Schedule all subject to change
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Annual Conference Preview | November 8-10, 2015
AAPL ANNUAL CONFERENCE
PRESENTER PROFILES All work and no play gets old fast. Never underestimate the power of a little fun mixed with some interesting people...it is Vegas, baby!
ROBERT BUCHANAN WHAT TRAITS DEFINE YOU? I’m an energetic leader who is truly passionate about what I do in my professional and personal life. I’m also loyal, persistent and honest. WHAT IS YOUR PERSONAL PHILOSOPHY? Live life to the fullest. In the words of Pope Paul VI, “Somebody should tell us right at the start of our lives that we are dying. Then we might live life to the limit, every minute of every day. Do it! Whatever you want to do; do it now! There are only so many tomorrows.” WHAT’S ONE THING YOU COULDN’T LIVE WITHOUT? Chocolate. WHAT IS THE ONE THING YOU CANNOT RESIST? Chocolate. WHAT IS YOUR GREATEST FEAR? That the world might one day run out of chocolate. WHAT IS THE BEST BOOK HAVE YOU EVER READ? Eric Clapton’s Autobiography – I’m a music fanatic and Clapton has a complex musical history with some of the greats. I also felt like I could relate to him as a fellow father so that aspect of his story was fascinating to me as well.
ABHI GOLHAR WHAT TRAITS DEFINE YOU? Patience. Courage. Resilience. Awareness. Adaptability. Decisiveness WHAT IS YOUR PERSONAL PHILOSOPHY? To be better, for more people, than yesterday WHAT’S ONE THING YOU COULDN’T LIVE WITHOUT? Technology WHAT IS THE ONE THING YOU CANNOT RESIST? Michigan football WHAT IS YOUR GREATEST FEAR? Mediocrity WHAT IS THE BEST BOOK HAVE YOU EVER READ? Intelligent Investor by Benjamin Graham WHICH ONE WOULD YOU WANT MOST – FLYING CARS, ROBOT HOUSEKEEPERS, OR MOON CITIES? Flying cars
MIKE HANNA WHAT TRAITS DEFINE YOU? Accessible, organized, trustworthy, reliable WHAT IS YOUR PERSONAL PHILOSOPHY? Always be sincere and genuine WHAT’S ONE THING YOU COULDN’T LIVE WITHOUT? Coffee WHAT IS THE ONE THING YOU CANNOT RESIST? Coffee WHAT IS YOUR GREATEST FEAR? Heights WHAT IS THE BEST BOOK HAVE YOU EVER READ? There are so many, but I would have to say Lone Survivor. WHICH ONE WOULD YOU WANT MOST – FLYING CARS, ROBOT HOUSEKEEPERS, OR MOON CITIES? Send the robot housekeeper, ASAP.
Register at AAPLConference.com Topics, Speakers, Schedule all subject to change
Annual Conference Preview | November 8-10, 2015
WHAT TRAITS DEFINE YOU? Honesty. Work Ethic. Leader. Entrepreneurial
WHAT TRAITS DEFINE YOU? Good attitude. Strong work ethic. Dedicated. Disciplined. Honest.
WHAT IS YOUR PERSONAL PHILOSOPHY? Say what you mean and do what you say, and never be afraid to challenge the status quo.
WHAT IS YOUR PERSONAL PHILOSOPHY? Why not me?
WHAT’S ONE THING YOU COULDN’T LIVE WITHOUT? Exercise WHAT IS THE ONE THING YOU CANNOT STAND? Homes that smell like cat urine!! WHAT IS YOUR GREATEST FEAR? Mushrooms WHAT IS THE BEST BOOK HAVE YOU EVER READ? The Underground Economist WHAT WOULD YOU DO (FOR A CAREER) IF YOU WEREN’T DOING WHAT YOU DO? Angel Investing or Venture Capital, investing in new or small companies WHICH ONE WOULD YOU WANT MOST – FLYING CARS, ROBOT HOUSEKEEPERS, OR MOON CITIES? Flying cars
WHAT’S ONE THING YOU COULDN’T LIVE WITHOUT? My wife (and my iPhone) WHAT IS THE ONE THING YOU CANNOT STAND? Watching people pose for selfies. WHAT IS YOUR GREATEST FEAR? Getting accused of a crime WHAT IS THE BEST BOOK HAVE YOU EVER READ? It’s a tie between A Prayer for Owen Meany, Outliers, and Walk to Moons WHAT WOULD YOU DO (FOR A CAREER) IF YOU WEREN’T DOING WHAT YOU DO? Game show host or High School XC coach WHICH ONE WOULD YOU WANT MOST – FLYING CARS, ROBOT HOUSEKEEPERS, OR MOON CITIES? Flying cars and robot housekeepers both kind of exist, so moon cities!
RICK MELERO WHAT TRAITS DEFINE YOU? I am your classic Type A personality. I am driven, passionate and relentless at achieving my objectives. But that drive comes from a purpose of being a blessing to those around me. WHAT IS YOUR PERSONAL PHILOSOPHY? I believe the key to success lies in thriving in balance with purpose. WHAT’S ONE THING YOU COULDN’T LIVE WITHOUT? A few years ago my answer would have been a bit different, now, my answer is God and my family. WHAT IS THE ONE THING YOU CANNOT RESIST? My daughter! WHAT IS YOUR GREATEST FEAR? Not growing WHAT IS THE BEST BOOK HAVE YOU EVER READ? The Bible. It teaches about family, love, business and living with purpose WHAT WOULD YOU DO (FOR A CAREER) IF YOU WEREN’T DOING WHAT YOU DO? Missionary work! WHICH ONE WOULD YOU WANT MOST – FLYING CARS, ROBOT HOUSEKEEPERS, OR MOON CITIES? Flying cars
Register at AAPLConference.com Topics, Speakers, Schedule all subject to change
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Annual Conference Preview | November 8-10, 2015
WHAT TRAITS DEFINE YOU? Mediocre looking, hard working, forgetful but pretty smart
WHAT TRAITS DEFINE YOU? Forthright, honest, loyal, smart, friendly, fair
WHAT IS YOUR PERSONAL PHILOSOPHY? Work hard, play hard
WHAT IS YOUR PERSONAL PHILOSOPHY? Be polite, follow through on your commitments, be honest with people, be fair, be prepared
WHAT’S ONE THING YOU COULDN’T LIVE WITHOUT? My family WHAT IS THE ONE THING YOU CANNOT RESIST? Multiple feet of fresh powder on a calm bluebird day, with my snowboard.
WHAT’S ONE THING YOU COULDN’T LIVE WITHOUT? My family WHAT IS THE ONE THING YOU CANNOT RESIST? Marshmallows
WHAT IS YOUR GREATEST FEAR? Losing a child
WHAT IS YOUR GREATEST FEAR? Snakes
WHAT IS THE BEST BOOK HAVE YOU EVER READ? Outside of religion, Atlas Shrugged
WHAT IS THE BEST BOOK HAVE YOU EVER READ? Devil in the White City by Erik Larson
WHAT WOULD YOU DO (FOR A CAREER) IF YOU WEREN’T DOING WHAT YOU DO? Oncologist. WHICH ONE WOULD YOU WANT MOST – FLYING CARS, ROBOT HOUSEKEEPERS, OR MOON CITIES? Robot housekeepers
DAVID OWEN WHAT TRAITS DEFINE YOU? Loyal, Affable, Helpful, Tenacious, Driven, Goal Oriented, Considerate, Intelligent WHAT IS YOUR PERSONAL PHILOSOPHY? Help others be successful and that lends to my personal success. Treat people with dignity and respect unless they prove that treatment is unwarranted WHAT’S ONE THING YOU COULDN’T LIVE WITHOUT? My Passport WHAT IS THE ONE THING YOU CANNOT RESIST? Chocolate Chip Cookies WHAT IS YOUR GREATEST FEAR? Dying alone WHAT IS THE BEST BOOK HAVE YOU EVER READ? Plato’s ‘The Republic’
WHAT WOULD YOU DO (FOR A CAREER) IF YOU WEREN’T DOING WHAT YOU DO? WHAT WOULD YOU DO (FOR A College Professor CAREER) IF YOU WEREN’T DOING WHAT YOU DO? WHICH ONE WOULD YOU WANT Teach in Higher Education MOST – FLYING CARS, ROBOT HOUSEKEEPERS, OR MOON WHICH ONE WOULD YOU WANT CITIES? MOST – FLYING CARS, ROBOT Robot Housekeepers (especially HOUSEKEEPERS, OR MOON ones that do laundry!) CITIES? Robot housekeepers – I hate cleaning although I keep a clean house, car and office
Register at AAPLConference.com Topics, Speakers, Schedule all subject to change
Annual Conference Preview | November 8-10, 2015
JJ PAWLOWSKI WHAT TRAITS DEFINE YOU? I am defined by my candidness, transparency, faithfulness, positivity and personal experience. WHAT IS YOUR PERSONAL PHILOSOPHY? Always begin with the end in mind. That, and “Everybody Wang Chung Tonight” (borrowed from the song by Jack Hues, Nick Feldman, and Peter Wolf). WHAT’S ONE THING YOU COULDN’T LIVE WITHOUT? A FREE America. WHAT IS THE ONE THING YOU CANNOT RESIST? Opportunities to be involved in a process that makes a difference in people’s lives, like lending people money to help them accomplish their own “WHY”. WHAT IS THE BEST BOOK HAVE YOU EVER READ? Psycho-Cybernetics by Dr. Maxwell Maltz really opened my eyes to a lot of things and changed the way I approach my investing business. It’s like The Secret before The Secret came out. WHAT WOULD YOU DO (FOR A CAREER) IF YOU WEREN’T DOING WHAT YOU DO? I was a nurse once, and that was pretty cool, but I’d rather be a shark on TV. WHICH ONE WOULD YOU WANT MOST – FLYING CARS, ROBOT HOUSEKEEPERS, OR MOON CITIES? Robot housekeeper-pilot hybrids to fly me from Moon City to Lunarville.
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AJ POULIN WHAT TRAITS DEFINE YOU? Persistent without being pushy, with a dose of comedy WHAT IS YOUR PERSONAL PHILOSOPHY? Be a straight shooter WHAT’S ONE THING YOU COULDN’T LIVE WITHOUT? My family WHAT IS THE ONE THING YOU CANNOT RESIST? The video of The Foo Fighters in concert at Hyde Park in London WHAT IS YOUR GREATEST FEAR? Boredom WHAT IS THE BEST BOOK HAVE YOU EVER READ? Killing Lincoln WHAT WOULD YOU DO (FOR A CAREER) IF YOU WEREN’T DOING WHAT YOU DO? My prior professions – either writing for TV shows, or stand up comedy WHICH ONE WOULD YOU WANT MOST – FLYING CARS, ROBOT HOUSEKEEPERS, OR MOON CITIES? That’s an easy one – flying cars
JEFF TESCH WHAT TRAITS DEFINE YOU? I am hard working, always smiling and constantly looking to see what is next. WHAT IS YOUR PERSONAL PHILOSOPHY? If you’re not moving forward, you’ll be left behind. WHAT’S ONE THING YOU COULDN’T LIVE WITHOUT? My family WHAT IS THE ONE THING YOU CANNOT RESIST? Believe it or not, I absolutely cannot resist ice cream. WHAT IS YOUR GREATEST FEAR? I’m afraid of standing on the edge of tall places. I wouldn’t really call it a fear of heights because I have no problem with heights, but I hate the feeling of standing near the edge of a building or cliff. WHAT IS THE BEST BOOK HAVE YOU EVER READ? The best book I have ever read is The Art of War by Sun Tzu. It’s amazing how many of the strategies in that book have business applications. WHAT WOULD YOU DO (FOR A CAREER) IF YOU WEREN’T DOING WHAT YOU DO? There are quite a few careers I can think of, but I would probably be a racecar driver. WHICH ONE WOULD YOU WANT MOST – FLYING CARS, ROBOT HOUSEKEEPERS, OR MOON CITIES? Definitely flying cars. My commute is very long so it would be great to be able to avoid traffic all together and get to work in less than an hour.
THE LINQ HIGH ROLLER 3545 LAS VEGAS BLVD SOUTH LAS VEGAS, NV 89109
VIP RECEPTION MEMBERS & SPONSORS ARE EXCLUSIVELY INVITED TO JOIN US FOR COCKTAILS AND HORS D’OEUVRE IN THE HIGH ROLLER’S WHEELHOUSE AT THE LINQ
NOVEMBER 8, 2015 6PM-8PM
BRING A GUEST! ADDITIONAL GUESTS ARE WELCOME TO JOIN US FOR $125
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