Are You High Income or are You Wealthy?

Category : Blogs


One You Work for, The Other Works For You

        Wealth is nothing more than the accumulation of assets that work for you.  High income to a large extent, leads to the acquisition of assets that you work to keep.  In other words, you work for the bricks and mortar of your nice home. 

        Acquiring assets that work for you overtime gives you a sense of security within yourself.  Knowing that your assets wake up each morning; ready to go to work, with the only expectation of making your life more plentiful is a great feeling. So how do we acquire the assets that work for us? 

        Acquire assets that generate more than their cost.  Real estate if purchased and developed properly will not only pay for itself, but it will pay for you as well.  Properly leveraging this asset can not only create immediate income, but it can provide future income as well.  And the good news is that it will always be in the same location, ready to go to work.

In a Nutshell

The success of an economy built on real estate, over time will take on an existence by itself.  It will grow in perpetuity, and not only give you a great future, but also provide a future for generations to come.

My feelings on the subject,

Nathaniel S. Fulford V

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When to Use Short Term Bridge Financing

Category : Blogs

Short Term Bridge Financing


Time is of The Essence

        First off, let’s define our terms. Short term bridge financing has a one to three year term followed by a balloon payment.  You can’t afford to be indecisive. In acquiring bridge financing, you’ve traded equity for liquidity on a short-term basis.  You want to use the funds to quickly increase the value of the asset more than the cost of liquidity.

Watch out!

        A common misconception of inexperienced investors is the assumption that an acquisition of 30% less than estimated market value generates an immediate net gain.  However, in actuality the cost to arrive at this estimated market value can easily exceed 30%, if you fail to properly assess the cost of the rehab.   That is why I can’t impress upon you enough, how important it is to do your due diligence(i.e. rehab cost, sale or rental income, carrying cost, probability of refinance on additional short or long term basis,  etc.) Trading equity for short term investment funding can greatly increase your net worth.  Use the money soundly.

My feelings on the subject,

-Nathaniel S. Fulford V

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Hard Money vs Stock Market


Of Assurance and Speculation

1. The Macro: Stock Market

        Speculation to me is nothing more than glorified gambling. For example, people buy stocks because they believe they will see a healthy rate of return due to a perceived inevitable increase in value. The question is, by what mechanism is said value being being ascribed? How does one value a partially intangible asset properly? The stock market operates on a macro-economic scale. It requires you to fully understand the nuances of millions of moving parts and guess which variables will be the most consequential.

        What you typically find with people discussing stock is a couple of talking heads giving opinions on which of the many causes they believe the main cause of a major dip or a rise to be. Just like in a casino and for similar reasons you are very unlikely to be a winner.

2. The Micro: Hard Money Lending

        The business I do in hard money lending is quite a bit different. I assess individual tangible assets. I then use reliable market data to ascertain a price point at which it makes little sense for the borrower to default. These evaluations are what I would classify as a micro-economy. A micro-economy has few moving parts and nuance to understand after the initial groundwork is done.

        For example, I use real estate to securitize my loans because it’s something I am able to accurately evaluate the value of (via personal real estate experience, location, income stream, size, amenities, tax records, etc). From there I simply adjust my price point before a deal is struck. The degree of uncertainty in this hard money lending strategy is astronomically low. To this day I have not had to foreclose on a single client. This is because I qualify the value of assets with enough leeway for my evaluation to be off by a bit. After all, what if I over speculate?

The Point

I don’t want to be in the speculation business. I want to be in the business of assurance for the sake of the customer and myself. Riding waves or building businesses in  bubbles are an open invitation to a stress aneurysm. When it comes to the feasibility of reliably calculating the outcomes of each business interaction, micro-economies have a clear advantage.

My feelings on the subject,

Nathaniel S. Fulford VI

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Bypass Bureaucracy

Category : Blogs


Mass Impedes Movement

Lets Clear Things Up

      There seems to be this widespread misconception out there that private lenders exist only to service a market of credit poor or unbankable clients. This could not be further from the truth. The name of the game is speed. When borrower has the asset in their sights the timer has already started.

      This brings me to my point, larger things tend to be less agile. Prominent banks are massive bureaucracies that are burdened by books of regulation, massive splintering chains of command, and loyalties to the interests of government institutions as opposed to the customer. For example, you may not qualify for an SBA loan if you are considered an “excluded business type”. For the businesses they will lend on, they need an excessive amount of time to make sure the deal passes through the checks and approvals of many hands before the deal goes anywhere. This may work well for a certain type of shareholder. For the small balance real estate investor, to whom timing is everything, such regulations are undesirable.

So what?

     In all facets of business, more decision making entities translates to slower movement. This is why it is in the best interest of small private equity lending businesses to take on as few funding investors as necessary to maintain nimble decisive action and adequate liquidity for the creation new loans at a moments notice. This allows them to service the aforementioned borrowing commercial investors in an amicable way. To sum it up, it’s not bypassing credit that creates the market for private lending, it’s bypassing the albatross of bureaucracy.

My feelings on the subject,

Nathaniel S. Fulford VI

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Asset Based Hard Money Loans: Two Fold Advantage

Category : Blogs

Fast and Less Restrictive

More Speed

        Asset based hard money loans are lightning quick from request to funding. Unlike conventional lending that pre-approves quickly only to have you provide never ending documentation, a hard money lender can have you approved and funded within days rather than months. This allows you to move forward with your business venture and take advantage of timing in the market. There is just no time to wait on a deal or a dormant asset.

Less Hassle

        It’s far less of a headache to deal with a hard money lender who lends his own money. They are able to be looser on restrictions and operate on a more personal basis given that you are dealing with a singular decision maker. As a result of having less moving parts and channels for documents to pass through, less requirements need to be met by the borrower.  Hence the lender only requires three things: a sufficient collateral property (not owner occupied),  a business/investment purpose to warrant the loan, and a reasonable exit strategy. Private hard money lenders have the freedom to structure repayment and collateral release terms in ways that are mutually beneficial to both borrower and lender.

Asset based hard money loans are simply a better deal for small businesses to acquire liquidity when waiting is not an option.

My feelings on the subject,

Nathaniel S. Fulford

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