The Evolution of Home Loans and the Role of Brokers

The job of a home loan broker is to act as a “middleman” to broker mortgages on behalf of organizations and individuals. Typically, financing corporations and finance institutions sell their own solutions. But as the competition in the mortgage market place became more competitive, mortgage loan agents had no choice but to broaden their jobs. Generally speaking, home loans are the number one sellers of house loan products on behalf of lenders. Agents perform to assist individuals look for a lender or financial institution that will supply them with the specific loan amount that they want.

And as the internet age emerged, agents have to further enhance their functions. Classic home loan brokering has now moved forward into online brokering. Yes, mortgage brokers have found a new frontier to overcome. Online mortgage loan agents are recognized for the convenience and less complicated processing. Consumers may literally find almost everything they need to know about mortgage loans in a mortgage broker’s website. Now another popular feature of online mortgage loans is the refund home loans. Most web based home loans nowadays offer to share some of the commission they acquire in the form of a refund. A customer will get a certain amount of refund depending on the total amount of the mortgage. Refunds can prove to be helpful specially when meeting deposit requirements. Aside from that, it could be useful for other functions.

Australian mortgage brokers are normally up-to-date with the latest trends in the house loan market. They do this by checking different loan company across Australia and keeping watch of the established interest rates set by the Reserve Bank of Australia. Australian mortgage loan brokers are equipped with the expertise and experience to make first home purchase relatively easy. Exactly the same applies to other forms of properties like an investment property, holiday home, farm, etc. A potential customer can have less difficulty getting mortgages with the lowest interest in Australia through the support of a trusted Australian house loan broker.

Australian mortgage brokers are one of the best resources when it comes to financial guidance in Australia. They can also be of great help when you need to sell your property. And while potential homeowners can go by way of the whole experience alone, it’s still better to seek the assistance of a broker to be sure you’re making the best choice. Speak about your circumstance with your broker along with your requirements and he or she will know what products to provide you with.

Australian Mortgage Agents don’t only work with “regular” clients. As a matter of fact, agents have extended their services to individuals with bad credit histories. They can also work with individuals with unstable income. Agents may even help home owners looking for the First Home Buyer’s Grant. All Australian mortgage agents do is make the mortgage loan process easier for their clients.

How I Stopped Getting Private Money Loans and Got More Private Money

When I first started raising money from private investors for my real estate investments, I thought pretty much like everyone else did. Private Money ‘Lenders.’ My pitch to prospective investors was in essence: “will you loan me money secured by real estate?

You’re probably familiar with this pitch. Maybe you’ve used it. Perhaps you’ve had success, perhaps not (at least yet). One day I was reading a biography on Warren Buffett, billionaire investor and Chairman of Berkshire Hathaway. Buffett has generated returns in excess of 10% higher than the market for the past 45 years. When Buffett took control of Berkshire Hathaway in 1965, the share price was $20. Today the share price is $122,000.

Hmm…

Needless to say, I have always thought following and trying to copy Buffett as much as possible – to the greatest extent I could – would be helpful in making more money. Well, one day I was reading a bio on Buffett and I was really enlightened upon reading something not widely talked about, with regard to how Buffett got started in his investing business. You see, Buffett started his investing career by forming partnerships. He brought other people’s money into the partnership, invested it and then he got to keep a part of the profits made. Starting out with $100,000 in partnership funding, he soon had people all over his home town (Omaha) wanting to ‘get in’ with him. After a few years, he had plenty of capital and was on his way. Those first few investors were a catalyst for long term wealth.

The most interesting thing, though, was how Buffett structured his partnerships. Everybody that came in as a partner owned a proportional interest in the partnership. Buffett earned a piece of the profits the money generated (by his management). What Buffett did NOT do, was borrow money. He had equity investors.

A thought hit me when I read this: “I should do the same thing.” Instead of borrowing money, secured by mortgages and jumping through hoops each time a deal closed (buy side and sell side), I would raise an amount and each investor would own a proportionate interest in the company, and I would keep part of the profits generated.

BINGO.

This was really rocket fuel at the time. My business started growing much faster after I started raising equity capital versus only private money loans. Another big side benefit of this revolution in my business was that I was able to bring in more private money, because my offering had an appeal to higher net worth investors that could write bigger checks. These investors were less concerned about security and collateral and more concerned about returns and tax consequences of investment. Off and running I was. It doesn’t take much to give your business a boost and you never know where the next “lightening” moment is going to strike you.

I heard a long time ago that “luck is when preparation meets opportunity.” With real estate, the opportunity is there right now, so get prepared and then prepare to get lucky.

For Many, Investing in Real Estate Is Intimidating Because of the Size of Loan and the Personal Risk

Balancing risk with capacity is a critical component of your investing plan. For many, this can be too much to take on an investment. If you are serious about building a real estate portfolio, you shouldn’t let this stand in the way. The key is setting up an investment that will create the right balance of risks and rewards. If you can’t tolerate the potential loss of an investment, set up a set of conditions that will make this event virtually impossible.

First, take the time to ensure that the purchase you are making is insulated by positive characteristics that will assure the invested value and provide a strong promise of improving future values. This is a matter of ensuring the physical structure can support the trials of time, verifying that the underlying fundamentals of the neighborhood are strongly in favor of the property, planning reserves and capital support to protect the asset from vacancies and to provide the necessary repairs and improvements, and to provide the management to assure a well run highly occupied project. Whether we are dealing with one unit or 100 units, these principals are the place to start.

Second, ensure that the debt position of the project can’t place you in a position where you will temporarily or for the long term be unable to support it. This can be accomplished by brute force through an all cash or low leverage investment. Or, you can include partners who are committed to providing cash and or cash flow needed to support the project if a difficult time develops. You might even grant a partner who has plenty of cash an ownership position based on this commitment. This could be quite attractive as they would not have to put up their own capital. This enhancement may also make drawing debt capital for the project much easier. A formal way to accomplish this is to place a standby letter of credit in the project from the supporting investor.

In the end, investors recognizing that projects come with risk must balance their tolerance for that risk with the cash needs of the project. In far too many cases, investors over extend the debt seeking the cashless deal creating unnecessary risk for themselves and often for their partners.