Warning - Risks of Loan Called Due When Investing in Real Estate

04/12/24 • 30 min

Santa Clarita Real Estate Investing & Real Estate Financial Planning™ Podcast

Investing in real estate adds some risk to an already risk-filled life.

However, certain activities and strategies when investing in real estate create additional risks that other strategies and activities do not have.

For example, choosing to utilize strategies where the lender has the right to call a loan due—like many types of creative financing, using home equity lines of credit, and many commercial loans—adds the additional risk of possibly having loans on your properties called due and payable in full.

Add in the fact that these often coincide with the most extreme market conditions, and it can be a recipe for disaster for you as a real estate investor... a perfect storm of sorts... extreme market conditions where refinancing or selling can be near impossible or at least impractical, and the lender forcing you to do just that very thing at the same time.

In this mini-class, James will discuss the risk of loans being called due, what we can do about it, and how to mitigate or eliminate that risk completely.

In this class, James discusses:

A George S Patton quote about fear, risks and making decisions.
When are loans called due?
Balloons on mortgages
Breach of agreement on mortgages
Buying properties subject-to the existing financing, lease-options, and lease-purchases
Lender's option to terminate loan agreement
The perfect storm: extreme market conditions and lenders calling loans due
How to avoid having a loan called due
Options when a loan is called due
Plus much more...

Free Real Estate Deal Analysis Spreadsheet: Download a copy of the newest version of The World's Greatest Real Estate Deal Analysis SpreadsheetTM by going to:

https://RealEstateFinancialPlanner.com/spreadsheet

Improve Cash Flow: Book a consultation to improve cash flow using our proprietary 88 cash flow improving strategies.

Real Estate Agent & Lender Collaborators: Interested in collaborating with us on the Santa Clarita real estate investor podcast? Book a free consultation to discuss.

Warning - Risks of Loan Called Due When Investing in Real Estate

Investing in real estate adds some risk to an already risk-filled life.

However, certain activities and strategies when investing in real estate create additional risks that other strategies and activities do not have.

In this mini-class, James will discuss the risk of loans being called due, what we can do about it, and how to mitigate or eliminate that risk completely.

In this class, James discusses:

A George S Patton quote about fear, risks and making decisions.
When are loans called due?
Balloons on mortgages
Breach of agreement on mortgages
Buying properties subject-to the existing financing, lease-options, and lease-purchases
Lender's option to terminate loan agreement
The perfect storm: extreme market conditions and lenders calling loans due
How to avoid having a loan called due
Options when a loan is called due
Plus much more...

Free Real Estate Deal Analysis Spreadsheet: Download a copy of the newest version of The World's Greatest Real Estate Deal Analysis SpreadsheetTM by going to:

https://RealEstateFinancialPlanner.com/spreadsheet

Improve Cash Flow: Book a consultation to improve cash flow using our proprietary 88 cash flow improving strategies.

Real Estate Agent & Lender Collaborators: Interested in collaborating with us on the Santa Clarita real estate investor podcast? Book a free consultation to discuss.

Previous Episode

How to Analyze Buying a Rental Property at a Discount

How to Analyze Buying a Rental Property at a Discount in Santa Clarita

Some real estate investors insist on only buying properties where they can purchase them at a significant discount. While not mutually exclusive, other investors insist on buying quality properties at a fair price as long as it gets them their desired returns and will stand the test of time.

Buffett began as a deep value investor and eventually shifted his focus towards investing in high-quality companies. “It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price,” Buffett confidently stated that his investing has evolved significantly.

But, in today's mini-class, let's look at how to analyze buying a fair property at a wonderful price... in other words... analyzing a property using The World's Greatest Real Estate Deal Analysis SpreadsheetTM that you bought at a deep discount and required some money to capture some sweat-equity, but that you're planning to keep as a long-term rental.

Or, check out the deal analysis example for Santa Clarita, California:

Deal Analysis for Santa Clarita Buying at a Discount

Free Real Estate Deal Analysis Spreadsheet: Download a copy of the newest version of The World's Greatest Real Estate Deal Analysis SpreadsheetTM by going to:

https://RealEstateFinancialPlanner.com/spreadsheet

Improve Cash Flow: Book a consultation to improve cash flow using our proprietary 88 cash flow improving strategies.

Real Estate Agent & Lender Collaborators: Interested in collaborating with us on the Santa Clarita real estate investor podcast? Book a free consultation to discuss.

Next Episode

Deal Alchemy™ - Residential vs Commercial Property

Deal AlchemyTM - Residential vs Commercial Property

Deal AlchemyTM is all about manipulating the returns you're earning on your investments. Often, this is done through the choices we make when selecting the investment property and the strategies we choose to implement.

For example, you could choose to invest in residential properties where your tenants would live in the property. Alternatively, you could choose to invest in commercial properties where your tenants do not live in the property.

Often, these investments would have different numbers and characteristics, such as who pays taxes, insurance, and maintenance on the property. However, for the sake of today's mini-class, we will look at just the difference in the tax benefits of depreciation in two identical investments, except one is residential and the other is commercial, to see how that impacts your overall returns.

In this class, James discusses:

The definition of alchemy
What is Deal AlchemyTM
How to manipulate returns and move them between quadrants
An example by purchasing a commercial property with 39-year depreciation schedule instead of a residential property with a 27.5-year depreciation schedule
Plus much more...

Free Real Estate Deal Analysis Spreadsheet: Download a copy of the newest version of The World's Greatest Real Estate Deal Analysis SpreadsheetTM by going to:

https://RealEstateFinancialPlanner.com/spreadsheet

Improve Cash Flow: Book a consultation to improve cash flow using our proprietary 88 cash flow improving strategies.

Real Estate Agent & Lender Collaborators: Interested in collaborating with us on the Santa Clarita real estate investor podcast? Book a free consultation to discuss.