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Credit Scores: The Five Metrics That Determine Whether Capital Moves Toward You—or Away

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Many borrowers think credit scores measure income.  They do not.

Others assume they measure wealth.  They do not.

Credit scores measure what lenders care about most: whether you are likely to repay obligations exactly as agreed.

A credit score is not a judgment of character.  It is a risk model.

Higher scores signal lower perceived default risk.  Lower scores create friction: higher pricing, more documentation, stricter conditions, and more denials.

“Credit scores do not measure success.  They measure repayment behavior.”

A FICO score generally ranges from 300 to 850 and reflects five major categories of credit behavior.  Payment History and debt utilization carry the most weight, together representing roughly 65% of the score.  [FICO Scores | Word], [myfico.com]

Credit Scores Determine the Cost of Capital

The gap between a 580 score and an 800 score can mean tens of thousands of dollars in extra borrowing costs.

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Stronger scores commonly produce:

·       Lower mortgage rates

·       Better credit card terms

·       Quicker loan approvals

·       Higher credit limits

·       Lower required deposits

·       Stronger rental qualification odds

Low scores usually lead to the opposite outcome.

Borrowers with stronger scores typically secure capital faster, at lower cost, and with fewer restrictions.

“Poor credit shows its real price when capital is needed most.”

Credit Score Ranges in Practical Terms

Score RangeRisk AssessmentCommon Lending Result
800–850ExceptionalBest pricing and terms
740–799Very GoodHigh likelihood of approval
670–739GoodUsually financeable
580–669FairHigher pricing and tighter underwriting
300–579PoorHigher denial risk and discounted terms

These ranges are guides, not guarantees.

Final pricing still depends on the lender, loan type, collateral quality, and full credit profile.

“Approval is binary.  Pricing is where credit scores extract the real cost.”

The Five Metrics Driving Your Credit Score

1.  Payment History (35% of FICO): The Trust Record

Payment History is the largest factor in a FICO score.  It shows whether obligations were paid as agreed.  [myfico.com], [FICO Scores | Word]

Lenders start with one question:

Did you pay others on time?

Scoring models examine:

Core Payment-History Metrics

·       Count of late payments

·       Depth of each delinquency

·       How recently delinquencies occurred

·       Pattern of missed payments

·       Collection activity

·       Charged-off accounts

  • Foreclosures
  • Bankruptcies

A recent 90-day delinquency hurts far more than an old, isolated late payment.

Scoring models do more than count errors.

They detect patterns.

“Credit scores preserve the record of promises kept—and promises broken.”

What Borrowers Often Overlook

Many borrowers assume that paying eventually is sufficient.

Credit scoring does not work that way.

The gap between 29 and 30 days late can matter because many creditors report delinquencies only after the 30-day threshold.

Payment timing matters.

2.  Amounts Owed and Credit Utilization (30% of FICO): The Leverage Test

Payment History shows whether you pay on time.

Utilization shows how heavily you rely on available credit.

This category measures the debt burden relative to available credit.  [experian.com], [myfico.com]

Key Utilization Metrics

  • Overall credit utilization
  • Individual card utilization

·       Accounts with active balances

·       Total balances owed

  • Installment loan balances

Formula

Credit Utilization = Current Balance ÷ Credit Limit

Example

·       Total credit limits = $100,000

·       Total balances = $15,000

Utilization = 15%

Utilization Benchmarks

UtilizationInterpretation
Under 10%Excellent
10–30%Acceptable
30–50%Increasing risk
Above 50%Significant scoring pressure
Above 75%Severe risk signal

A Borrower can pay every bill on time and still see their score decline due to excessive utilization.

“High utilization warns of financial pressure before default appears.”

The Hidden Risk

Scoring models also review each card individually.

One maxed-out card can hurt a score even when total utilization looks acceptable.

3.  Length of Credit History (15% of FICO): The Track Record Factor

Lenders Trust proven patterns more than recent optimism.

A Borrower with fifteen years of disciplined credit behavior usually creates less uncertainty than one with only six months of History.

Scoring models evaluate: [myfico.com], [FICO Scores | Word]

Core Age Metrics

·       Oldest account age

·       Newest account age

·       Average account age

·       Time since recent account activity

Longer histories give lenders more predictive evidence.

Short histories offer less proof.

That is why closing old accounts can damage scores.

It removes useful historical evidence.

“Credit age is not just time.  It is evidence.”

Professional Insight

Opening several new credit lines at once can lower a score, even with zero balances, because the average account age drops immediately.

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4.  Credit Mix (10% of FICO): Can You Manage Different Debt Types?

Not all debt works the same way.

Credit cards, mortgages, auto loans, and installment debts require different management habits.

Credit mix measures a Borrower’s ability to manage multiple debt categories.  [myfico.com], [FICO Scores | Word]

Categories Evaluated

Revolving Accounts

  • Credit cards
  • Retail cards
  • Lines of credit

Installment Accounts

  • Mortgages
  • Auto loans
  • Student loans
  • Personal loans

Open Accounts

  • Certain charge card structures

The goal is not more accounts.

The goal is proven competence.

“A diversified credit profile signals broader financial competence.”

The benefit is real but limited.

No professional should take on unnecessary debt to improve their credit mix.

5.  New Credit and Inquiries (10% of FICO): Measuring Borrowing Velocity

A sudden surge in borrowing activity can signal financial stress.

Scoring models, therefore, evaluate how quickly a Borrower seeks new credit.  [myfico.com], [experian.com]

Core Inquiry Metrics

  • Hard inquiries
  • Recently opened accounts
  • Account opening velocity
  • Months since last inquiry

·       Credit rebuilding behavior after prior problems

One inquiry rarely causes serious harm.

Ten inquiries within sixty days can.

Scoring models treat rapid borrowing activity as a possible distress signal.

“Healthy borrowers seek capital strategically.  Distressed borrowers seek it urgently.”

Important Exception

Mortgage and auto rate-shopping inquiries are often grouped by scoring models when submitted within a limited window, which can reduce their Impact.

Behind the Curtain: How Algorithms Score Borrowers

Most consumers assume every Borrower is compared against every other Borrower.

Modern scoring does not work that way.

The system first places the Borrower into a risk category, often referred to as a scorecard or scoring bucket.  [FICO Scores | Word]

Examples include:

  • Thin credit file
  • Mature credit file
  • Recent bankruptcy filing

·       Derogatory History file

·       Established prime Borrower file

The algorithm then compares performance against peers in that same category.

A 10% utilization ratio may score differently inside a distressed scorecard than inside a mature prime scorecard.

The system measures relative risk among comparable borrowers.

“You are not competing against everyone.  You are competing against your peer group.”

Takeaway

Credit scoring uses complex models to answer one simple question:

How likely is this Borrower to repay as agreed?

Every part of the algorithm supports that judgment.

The five categories do not carry equal weight.

Payment History and utilization matter most.

Start there.

Preserve older accounts.

Limit unnecessary inquiries.

Use credit deliberately, not emotionally.

“Credit scores are not built by borrowing money.  They are built by managing obligations predictably.”

“Capital flows toward consistency.”

“A Borrower’s pattern usually appears before the lender’s first loss.”

“A credit score measures less about wealth than financial discipline under pressure.”

Enterprise references are located in FICO Scores, How Are FICO Scores Calculated and Why Are They Important 2026, and related Dan Harkey materials.  [FICO Scores | Word], [How Are FI…rtant 2026 | Word], [Do FICO Sc…ding Loans | Word]

Dan Harkey
Educator & Private Money Real Estate Lending Consultant
[email protected] 949 533 8315
www.danharkey.com

Locating Private Money Loans: Building a Network for Referrals and Identifying Opportunities

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By Dan Harkey

Master Educator | Business & Finance Consultant

The private money lending industry offers significant growth and potential to succeed. Real property borrowers often seek financing alternatives outside of banks and institutional lenders. One such alternative is private money lending, a niche designed for non-bankable or non-traditional loan transactions —loans that do not meet the strict criteria of traditional banks, such as those with lower credit scores or unique property types.

To review the article on my website, click here: https://danharkey.com/post/locating-private-money-loans

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Who Are Private Money Lenders?

Private money lenders are typically individuals or private entities, including companies or investment funds, that invest directly in loans. These lenders are not subject to the same regulatory constraints as banks, allowing for more flexible underwriting —such as considering the property’s value rather than the Borrower’s credit score —and faster funding—ideal for borrowers who don’t meet conventional lending criteria and need quick access to capital.

How Do Loan Agents and Lenders Find Private Money Opportunities?

Identifying potential borrowers who may need private money loans requires a combination of research, observation, and networking. Traditional methods include:

  • Reviewing public records from title companies to identify properties with low loan balances.
  • Monitoring building permits for additions or renovations, which may indicate a need for financing.
  • Tracking delinquent property taxes, which can signal financial distress.
  • Targeting first-time homebuyers, who may not qualify for conventional loans.

In the past, title companies provided databases listing loans with private beneficiaries—an indicator that a Borrower had previously used private money. However, due to privacy regulations, access to these lists has become limited.

Property and Borrower Profiles Likely to Need Private Money

Certain property types and Borrower situations are more likely to require private money financing:

  • Properties on loan default lists
  • Properties with delinquent property taxes
  • Properties that show visible signs of deferred maintenance
  • Properties owned by heirs or beneficiaries of deceased owners
  • Properties already encumbered by existing private money loans

While these indicators are useful, building a statistical model to predict private money loan needs remains challenging due to the variability of borrowers’ motivations and circumstances. It’s important to remember that this is a common challenge in the industry, and not a reflection of your abilities.

My Motto: “You Locate a Buyer; You Do Not Create a Buyer.”

The most effective way to find private money lenders is to cultivate a broad, diverse professional network. Focus on professionals who regularly interact with potential borrowers or investors:

  • Mortgage brokers (both private money specialists and conventional)
  • Residential and commercial real estate agents
  • Accountants, enrolled agents, and CPA firms
  • Estate planning, divorce, and probate attorneys
  • Financial planners and wealth advisors
  • Real estate and business litigation attorneys
  • Contractors, builders, and developers
  • Income property owners and speculative investors

Building and Leveraging Your Network

There are many ways to build a list of these professionals. Consider this: if you have 500 contacts in your network, and each of them has 500 contacts, your potential reach is 250,000 people.

To stay top of mind, consistently provide value to your network. Avoid generic newsletters or mass marketing. Instead, send personalized, authentic communications that demonstrate your expertise and help your contacts grow their own businesses.

The Power of Referrals

Referrals and repeat clients are the lifeblood of successful loan agents and business professionals. Those who master the art of networking and relationship-building often find themselves in the top 20% of producers, earning 80% of the income. The rest? They struggle to gain traction. By recognizing the value of referrals, you can appreciate the role your network plays in your success.

Approaching professionals for referrals is both an art and a strategy. Here’s a practical, relationship-driven approach tailored to your work in private money lending:

1. Start with Value, not a pitch

Before asking for anything, offer something of value. This could be:

  • A market insight or trend relevant to their industry
  • A helpful article or white paper you’ve written
  • An introduction to someone on your network who could help them

Example:

“Hi , I came across a recent update on property tax delinquencies in [County] and thought it might be useful for your clients. Let me know if you’d like a copy.”

2. Identify the Right Professionals

Focus on those who are already in touch with your target borrowers:

  • Mortgage brokers
  • Real estate agents
  • CPAs and enrolled agents
  • Estate planning and probate attorneys
  • Contractors and developers
  • Financial advisors

3. Use a Warm Introduction

If possible, get introduced through mutual contact. If not, reference a shared connection, event, or interest.

Example:

“I noticed we’re both connected to [Mutual Contact] and work with similar clients. I’d love to learn more about your business and explore ways we might help each other.”

4. Be Clear About What You Do

Professionals are more likely to refer clients if they understand your niche and how you can help.

Example:

“I specialize in private money loans for clients who don’t qualify for traditional financing—often due to credit issues, property condition, or timing constraints. I work quickly and transparently, and I’m always happy to be a resource for your clients.”

5. Ask for the Referral—Tactfully

Once rapport is established, make a straightforward but low-pressure ask.

Example:

“If you ever come across a client who needs fast, flexible financing and doesn’t fit the bank’s box, I’d appreciate the opportunity to help. I’m happy to jump on a call or meet in person to discuss how I work.”

6. Follow Up and Stay Top of Mind

  • Send occasional updates or success stories.
  • Celebrate their wins (e.g., “Congrats on the recent closing!”).
  • Always thank them for any referral, even if it doesn’t convert.

7. Be a Credible Expert

  • Demonstrate knowledge: Share insights on market trends, regulatory changes, or case studies that show your expertise.
  • Be transparent: Clearly explain your process, fees, and expectations. Professionals need to trust that you’ll treat their clients with integrity.
  • Show results: Share success stories or testimonials (with permission) that highlight how you’ve helped clients in challenging situations.

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8. Be Reliable and Responsive

  • Follow through: Do what you say you’ll do—on time, every time.
  • Communicate proactively: Keep your referral partners in the loop. Let them know when you’ve contacted their referral and how things are progressing.
  • Be available: Prompt responses build confidence. Even a quick “Got your message—will follow up shortly” goes a long way.

9. Make Them Look Good

  • Treat their referrals with respect and professionalism.
  • Avoid hard selling. Focus on solving problems, not pushing products.
  • If a referral isn’t a fit, refer them back or to someone else who can help. This shows integrity.

10. Educate and Empower

  • Offer to host a short lunch-and-learn or webinar for their team on private money lending.
  • Provide referral guides or FAQs they can share with clients.
  • Help them understand when a private money loan is appropriate—so they refer the right clients at the right time.

11. Give Before You Ask

  • Refer clients to them when appropriate.
  • Promote their services in your newsletter or social media.
  • Invite them to network events or industry mixers.

12. Stay in Touch—Genuinely

  • Send personalized updates, not mass emails.
  • Celebrate their wins (e.g., “Congrats on your new office!”).
  • Check in periodically without an agenda—to say hello or share something useful.

13. Be Patient and Consistent

Trust takes time. Some professionals may not refer right away, but if you stay visible and valuable, they’ll think of you when the right opportunity arises.

Thank you,

Dan Harkey

Master Educator | Business & Finance Consultant

949 533 8315 [email protected]

Website www.danharkey.com

Building Personal Power: From Inner Agency to Outward Influence

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You shape the outcome, but others decide on your credibility and trust. They are the ones who determine if you have power.

By Dan J. Harkey

Summary

Personal power isn’t a title, a job description, or a corner office. It’s the capacity to shape outcomes—starting with yourself and extending to teams, organizations, and broader networks. Some of it is intrinsic (self-awareness, competence, emotional regulation). Some of it is socially conferred (credibility, reputation, trust). The two reinforce each other: inner agency builds consistent behavior; consistent behavior earns external confidence; external confidence increases your scope for action, which, in turn, strengthens your inner agency.

Below is a practical, field-tested playbook for building personal power that holds up in demanding environments—such as boardrooms, negotiations, investor pitches, and high-stakes projects.

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1) Embrace Self-Awareness: The Cornerstone of Personal Agency

Power without self-knowledge becomes volatile. Power with self-knowledge becomes reliable.

Do this:

  • Values Audit (30 minutes): Write down your top five values (e.g., truth, stewardship, independence, excellence, service). For each, identify one behavior that demonstrates it weekly. If you can’t name the behavior, it’s not yet a value; it’s a wish.
  • Strengths & Gaps Map: Identify 3 “edge strengths” (these are the skills or traits that you excel at, better than 80% of your peers) and 2 “rate limiters” (these are the skills or traits that are holding you back, capping your impact).  Design one experiment per limiter over the next 30 days (e.g., “Run one high-stakes meeting with a written agenda and time boxes to counteract rambling.”).
  • Trigger Journal: For two weeks, note moments when you were annoyed, defensive, or overly eager.  Ask: What was threatened—status, certainty, autonomy, relatedness, or fairness?  Labeling triggers reduces their power.

Why it works: Self-awareness converts reactivity into choice.  People feel safer following those who are consistent under pressure.

2) Build Irrefutable Competence: That Compels Respect

Personal power grows fastest when you can consistently solve complex problems.  Confidence might get you into the room; competence keeps you there.

Do this:

  • Deliberate Practice: Pick one “needle-moving” capability (e.g., complex deal structuring, regulatory navigation, risk assessment, persuasive writing).  Block 5 hours weekly for deep practice: case reps, scenario drills, post-mortems.
  • Skill Stacking: Combine adjacent skills that multiply influence—e.g., financial modeling + narrative writing + negotiation.  Power often emerges at the intersection of disciplines.
  • Portfolio of Evidence: Document wins: before/after metrics, testimonials, decision memos, decks, and artifacts.  Quiet competence is good; visible competence is power.

Why it works: Decision-makers tend to gravitate towards those who reduce uncertainty.  Expertise shortens arguments and tilts the table in your favor.

3) Use Emotional Intelligence as a Force Multiplier

Influence is emotional before it’s logical.  Emotional intelligence (EQ) amplifies your technical value.

Do this:

  • Name → Normalize → Neutralize: When tension rises, name the emotion (“There’s frustration in the room”), normalize it (“It makes sense given the deadlines”), then neutralize it (“Let’s break the decision into two steps.”).
  • Active Listening Protocol: Ask one clarifying question, paraphrase the other party’s core concern, and only then propose options.  People support what they feel heard in.
  • After-Action Reviews: After negotiations or meetings, debrief: What did I notice (signals)?  How did I behave (impact)?  What will I change next time?  EQ compounds through feedback loops.

Why it works: Trust doesn’t just flow to the most intelligent person; it flows to the person who makes others feel understood while steering toward results.

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4) Command Presence and Communicate with Precision

Presence is not theatrics; it’s the discipline of being clear, calm, and consequential.

Do this:

  • BLUF Your Messages (Bottom Line Up Front): Start with the conclusion, then support.  Busy people reward clarity with their attention—and attention is a valuable currency.
  • The 3×3 Rule: For essential communications, aim for three key points, each supported by three facts/examples.  It’s memorable without being simplistic.
  • Nonverbal Hygiene: Open posture, measured pace, strategic pausing, and direct eye contact (more while listening than while speaking).  Presence is often felt before it is understood.

Why it works: In high-stakes contexts, people equate brevity and structure with mastery.  You signal reliability when you never waste a moment.

5) Grow Your Social Capital: Power Flows Through Networks

You don’t “have” power in isolation; you access power through relationships.  Networks provide information, resources, and reputational transfer.

Do this:

  • Map Strong & Weak Ties – Strong ties mobilize quickly; weak ties expand opportunities.  Maintain both.  A quarterly check-in with weak ties (share an insight, a relevant article, or a congratulatory note) pays outsized returns.
  • 5-Minute Favors: Make intros, annotate an article with insights, or review a draft.  For instance, you could introduce a colleague to someone in your network, share your thoughts on an industry article, or provide feedback on a project draft.  Compounding generosity builds a bankable reputation.
  • Mentor Matrix: Identify one mentor for strategy (someone who can guide you in your career path), one for craft (someone who can help you improve your skills), and one for character (someone who can advise you on personal and professional development).  Different mentors cover different blind spots.

Why it works: Social capital is an option—the right call to the right person at the right time.  People lend you their credibility when you’ve invested in them first.

6) Control Your Narrative: Reputation by Design, Not Default

You will be known for something; decide what it will be.  Narrative is how others summarize you when you’re not in the room.

Do this:

  • Positioning Statement (25 words): “I help [who] achieve [outcome] by [method], especially when [constraint/pressure].” Use it across intros, bios, and profiles.
  • Proof-of-Work Cadence: Publish brief, high-signal insights (monthly), share case lessons (quarterly), and give talks or guest sessions (semi-annually).  Consistency beats volume.
  • Crisis Playbook: When things go sideways, respond within 24 hours, state what you know and what you’re doing, and set a specific update checkpoint.  Silence invites speculation; clarity builds trust.

Why it works: Humans think in stories.  A coherent, consistent narrative makes you legible—and legibility is power.

7) Practice Decisiveness and Own the Outcomes

Decisiveness isn’t impulsive; it’s disciplined choice under uncertainty.

Do this:

  • The 70% Rule: Make most decisions when you have ~70% of the information.  Waiting for perfect information is often more costly than making a decision and iterating on it.
  • Pre-Mortems & Post-Mortems: Before starting, list potential ways the plan might fail and consider mitigating them in advance.  After execution, analyze what actually happened.  This habit boosts hit rate and credibility.
  • Single-Threaded Ownership: For every decision, identify a single accountable owner (possibly yourself).  Distributed accountability is disguised non-accountability.

Why it works: People follow leaders who make decisions and then learn from them—accountability compounds into trust and authority.

8) Manage Energy and Boundaries: Power Requires Fuel

Sustained influence demands stamina.  If you’re depleted, your judgment and presence degrade.

Do this:

  • Calendar as Strategy: Color-code deep work, meetings, and recovery.  Protect two 90-minute blocks of deep work per day for high-cognition tasks.
  • Keystone Habits: Sleep regularity, strength training twice weekly, walking meetings for ideation, and no-phone first 30 minutes of the day.
  • Boundaries Script: “I can’t do X by Friday, but I can do Y by Tuesday with the same quality.” Boundaries increase respect when paired with alternatives.

Why it works: Energy is the rate limiter of power.  The best strategy dies in a tired body.

9) Lead With Ethics: Trust Is the Ultimate Power Multiplier

Power built on fear is brittle; power built on trust is anti-fragile.

Do this:

  • Fairness First: In negotiations and team decisions, explain your reasoning and acknowledge tradeoffs.  Even “no” can build trust if it’s transparent.
  • No-Surprise Rule: Stakeholders should never be shocked by bad news.  Early warnings and frequent updates convert risk into manageable work.
  • Credit Assignment: Publicly attribute wins to contributors; absorb blame as the leader.  Your reputation will precede you.

Why it works: Ethical consistency lowers perceived risk in working with you.  People share information and opportunities when they feel safe and trust is established.

10) Make It Measurable: Metrics That Matter for Power

What gets measured compounds.

Leading Indicators:

  • Opportunity Flow: Number of unsolicited asks for advice, intros, or collaboration per month.
  • Influence Radius: Count of cross-functional projects or rooms where your input is sought.
  • Response Latency: Average time you take to respond to critical stakeholders (signals reliability).

Lagging Indicators:

  • Outcome Hit-Rate: Percentage of projects that meet or beat their defined success criteria.
  • Network Depth: Number of relationships where you can ask for (and receive) meaningful help within 48 hours.
  • Reputation Poll: Twice a year, ask 5–7 colleagues: “What three words describe me professionally?” Track drift toward your desired narrative.

A 30/60/90-Day Power-Building Plan

Days 1–30: Foundation & Focus

  • Complete your Values Audit, Strengths & Gaps Map, and Positioning Statement.
  • Select one craft capability to deepen (e.g., negotiation, expert writing, domain analysis).  Block 5 hours/week for deliberate practice.
  • Start Trigger Journal and run two Active Listening reps in real meetings.
  • Publish one proof-of-work post or memo and reconnect with five weak ties using 5-minute favors.

Days 31–60: Credibility & Communication

  • Lead two meetings using BLUF and the 3×3 Rule; solicit feedback on clarity and pace.
  • Run one pre-mortem for a key initiative; define single-threaded ownership and decision thresholds.
  • Host a learning roundtable (60 minutes) to share a case study and invite debate—teaches, positions you as a resource, and expands network density.
  • Update profiles and bios with your positioning statement and recent artifacts.

Days 61–90: Scale & Solidify

  • Seek a cross-functional project where your skills intersect with a new group; aim to become the go-to for one specific problem type.
  • Publish a quarterly case lesson (what went right/wrong, numbers, and takeaways).
  • Conduct a mini reputation poll with five trusted peers or clients; compare the three words they use to your target narrative; adjust behaviors accordingly.
  • Identify and formalize your Mentor Matrix: one strategy mentor, one craft mentor, one character mentor.  Set a monthly cadence with each.

Field Tactics for High-Stakes Moments

  • When the room is tense, slow your speech by 10–15% and lower your volume slightly, then ask a clarifying question.  Calm is contagious.
  • When you’re challenged: Thank the challenger, reflect their point accurately, and add a “Yes, and…” bridge: “Yes, and here’s the constraint we’re operating under…”
  • When time is short: State the decision, the single riskiest assumption, and the next check-in time.  This triage preserves momentum and credibility.
  • When you made a mistake: Own it in one sentence, state the remedy in two, and name the safeguard in one.  Then move forward.

Common Pitfalls (and Fixes)

  • Performative Confidence: Swagger without substance erodes power fast.  Fix: Anchor confidence in artifacts—results, models, memos, and measurable wins.
  • Overreliance on Title: Formal authority is a loan; personal power is equity.  Fix: Behave in ways you want attributed to you—especially when no one is watching.
  • Networking Without Value: Collecting Contacts Is Not Capital.  Fix: Lead with valuable insights, introductions, and thoughtful questions.
  • Decision Paralysis: Waiting for certainty is often a hidden “no.” Fix: Decide at 70%, set a review checkpoint, and be explicit about what would change your mind.
  • Inconsistent Narrative: Mixed Signals Confuse Stakeholders.  Fix: Choose a positioning statement and reinforce it in how you show up, what you share, and what you decline.

The Compounding Effect of Personal Power

Think of personal power as a flywheel:

·         Self-awareness produces calm and integrity.

·         Competence produces results that others rely on.

·         EQ and presence attract trust and attention.

·         Networks and narratives expand your reach.

·         Decisiveness and accountability cement your reputation.

Each turn of the flywheel reduces friction for the next turn.  Over months, this has become a visible influence.  Over the years, it becomes gravitational pull—opportunities find you, decisions tilt your way, and your voice shapes the agenda.

The most reliable way to build personal power is to start inside, prove it outside, and keep the loop spinning with consistency, generosity, and courage.

Here’s a one-page checklist summary of the article for quick reference:

✅ Personal Power Builder: One-Page Checklist

1.  Self-Awareness

  • Complete Values Audit (Top 5 values + behaviors)
  • Map Strengths & Gaps (3 edge strengths, two limiters)
  • Keep a Trigger Journal for 2 weeks

2.  Competence

  • Block 5 hrs/week for deliberate practice
  • Stack adjacent skills for leverage
  • Build a Portfolio of Evidence (wins, metrics, artifacts)

3.  Emotional Intelligence

  • Use Name → Normalize → Neutralize in tense moments
  • Apply Active Listening Protocol (clarify → paraphrase → propose)
  • Run After-Action Reviews after key interactions

Dan Harkey
Educator & Private Money Real Estate Lending Consultant
[email protected] 949 533 8315
www.danharkey.com

AB-130: The New California Law that States That a Homeowner Association Fee Violation Cannot be More than $100?

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By Dan Harkey

Abusive HOA practices: Some homeowner associations harass their property owners with continuous fee assessments for every little thing. The propensity is irritating and makes property owners feel like another big brother is watching and harassing them. The practice is abusive and creates a bureaucratic infrastructure that supports itself on the backs of homeowners.

Summary

Abusive HOA practices: Some homeowner associations harass their property owners with continuous fee assessments for every little thing. The propensity is irritating and makes property owners feel like another big brother is watching and harassing them. The practice is abusive and creates a bureaucratic infrastructure that supports itself on the backs of homeowners.

It may now be a better strategy to merely pay a $100 fine to keep them off your back.  And smile all the way to the refrigerator for a cold beer or glass of wine.

The new California Law, which caps most homeowner association (HOA) fines at $100, is Assembly Bill 130 (AB 130), effective 1 July 2025.

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Language of the new Law:

SEC. 3.

 Section 5850 of the Civil Code is amended to read:

5850.

 (a) If an association adopts or has adopted a policy imposing any monetary penalty, including any fee, on any association Member for a violation of the governing documents, including any monetary penalty relating to the activities of a guest or tenant of the Member, the board shall adopt and distribute to each Member, in the annual policy statement prepared pursuant to Section 5310, a schedule of the monetary penalties that may be assessed for those violations, which shall be in accordance with authorization for Member discipline contained in the governing documents.  Monetary penalties shall be reasonable.

(b) Any new or revised monetary penalty that is adopted after complying with subdivision (a) may be included in a supplement that is delivered to the members individually, pursuant to Section 4040.

(c) A monetary penalty for a violation of the governing documents shall not exceed the lesser of the following:

(1) The monetary penalty stated in the schedule of financial penalties or supplement that is in effect at the time of the violation.

(2) One hundred dollars ($100) per violation.

(d) (1) Notwithstanding subdivision (c), the board may impose a penalty stated in the schedule of monetary penalties or supplement that is in effect at the time of the violation that is greater than one hundred dollars ($100) per violation, if the violation may result in an adverse health or safety Impact on the common area or another association Member’s property.

(2) Before imposing a penalty on a violation pursuant to this subdivision, the board shall make a written finding specifying the adverse health or safety Impact in a board meeting open to the members.

(e) A late charge or interest shall not be charged to a Member for a monetary penalty.

(f) An association shall provide a copy of the most recently distributed schedule of monetary penalties, along with any applicable supplements to that schedule, to any Member upon request.

SEC. 4.

 Section 5855 of the Civil Code is amended to read:

5855.

 (a) When the board is to meet to consider or impose discipline upon a Member, or to impose a monetary charge as a means of reimbursing the association for costs incurred by the association in the repair of damage to the common area and facilities caused by a Member or the Member’s guest or tenant, the board shall notify the Member in writing, by either personal delivery or individual delivery pursuant to Section 4040, at least 10 days before the meeting.

(b) The notification shall contain, at a minimum, the date, time, and place of the meeting, the nature of the alleged violation for which a Member may be disciplined or the nature of the damage to the common area and facilities for which a monetary charge may be imposed, and a statement that the Member has a right to attend and may address the board at the meeting.  The board shall meet in executive session upon the request of a Member.

(c) A Member shall have the opportunity to cure the violation before the meeting.  The board shall not impose discipline in either of the following circumstances:

(1) The Member cures the violation before the meeting.

(2) If curing the violation would take longer than the time between the notice provided pursuant to subdivision (a) and the meeting, the Member provides a financial commitment to remedy the violation.

(d) If the board and the Member are not in agreement after the meeting, a Member shall have the opportunity to request internal dispute resolution pursuant to Section 5910.

(e) If the board and the Member are in agreement after the meeting, the board shall draft a written resolution.  The written resolution, signed by the board and the Member of the dispute pursuant to procedures not in conflict with the Law or governing documents, binds the association and is judicially enforceable.

(f) If the board imposes discipline on a Member or imposes a monetary charge on the Member for damage to the common area and facilities, the board shall provide the Member with a written notification of the decision, by either personal delivery or individual delivery pursuant to Section 4040, within 14 days following the action.

(g) A disciplinary action or the imposition of a monetary charge for damage to the common area shall not be effective against a Member unless the board fulfills the requirements of this section.

 Key provisions of AB-130:

$100 fine cap: For most violations of the HOA’s rules, the association cannot fine a homeowner more than $100 per violation.  This is a significant reduction from previous practices, where daily fines could quickly escalate into thousands of dollars.

  • No interest or late fees: The Law explicitly prohibits HOAs from charging late fees or interest in monetary penalties, which in the past could cause a financial hardship for residents.
  • Health and safety exception: HOAs can still issue fines above the $100 cap if the violation poses an adverse public health or safety risk.  However, the board must first make a written finding detailing the specific health or safety Impact at a public meeting.
  • Right to cure: Before a fine can be imposed, the homeowner must be given the opportunity to correct the violation.  If the issue is fixed within the specified timeframe, the HOA cannot impose a penalty.  The Law also requires homeowners to receive at least 10 days’ advance notice before a disciplinary hearing.
  • Written decision: After a disciplinary hearing, the HOA board must issue a written decision to the homeowner within 14 days. 

Context of the Law:

AB 130 was enacted to address and curb what lawmakers and housing advocates described as excessive and punitive HOA fines that contribute to the state’s housing affordability crisis.  The goal was to rebalance power between homeowners and HOA boards, focusing on compliance with regulations rather than using hefty fines as a form of revenue or harassment. 

What violations allow fines over $100?

Under California’s Assembly Bill 130 (AB 130), an HOA can fine a homeowner more than the $100 cap only if the violation creates an “adverse health or safety Impact.”

The board must first issue a written finding detailing the specific risk at an open meeting before imposing a higher fine.  While the Law does not provide an exhaustive list of qualifying violations, legal experts and related HOA sources have provided examples.  These are generally conditions that expose residents to a risk of harm or negatively Impact the well-being and safety of the community.

Examples of health and safety violations:

Safety hazards: Violations that create unsafe conditions in common areas, such as:

  • Use glass containers in areas near pools or other hazardous locations.
    • Parking illegally in a fire lane or in a way that blocks visibility for drivers.
    • Setting off fireworks.
    • Not properly securing aggressive or dangerous pets.
    • Hazardous construction or maintenance on a property.
  • Public nuisance and property damage: Actions that cause damage or threaten the structural integrity of a property:
    • Severe hoarding that leads to insect or rodent infestations.
    • Improperly disposing of hazardous materials.
    • Performing unpermitted or dangerous work, such as with plumbing or electrical lines.
  • Air quality issues: Some HOAs may classify secondhand smoke as a health risk, potentially allowing for higher fines.  This is especially the case for secondhand marijuana smoke that infiltrates another unit.
  • Excessive noise: While a single loud party may only warrant a $100 fine, a violation that significantly disrupts sleep and well-being, particularly in high-density buildings, may be deemed a health issue.
  • Short-term rentals: Some HOAs may impose higher fines on unapproved short-term rentals, mainly if they are found to disrupt community security. 

What is required for higher fines:

 To enforce a fine higher than $100 for a health or safety violation, the HOA board must follow strict procedures: 

 ·       Hold an open meeting for homeowners.

·       Make a written finding that the violation poses a specific, adverse health or safety risk.

·       Include a copy of this finding in the disciplinary hearing notice sent to the homeowner. 

What other enforcement options can HOAs use besides fines?

In addition to fines, California HOAs can employ several other enforcement options, including suspending a homeowner’s privileges, pursuing legal action to enforce compliance, and engaging in alternative dispute resolution (ADR).  These options are typically outlined in the association’s governing documents, such as the Covenants, Conditions, and Restrictions (CC&Rs).

 Suspension of privileges:

An HOA may have the power to suspend a homeowner’s rights to use specific standard amenities for violations, provided that due process requirements are met and permitted by the governing documents.

 Examples of suspendable privileges:

  • Use of standard facilities like pools, gyms, or clubhouses.
    • Access to community meeting facilities for non-association functions.
    • Special services, such as valet or guest parking.
  • Limitations: Under California Law, an HOA cannot suspend an owner’s right to:
    • Attend board meetings (except for executive sessions).
    • Vote in elections (as of 1 January 2020).
    • Access basic utilities like water, electricity, or gas. 

Alternative Dispute Resolution (ADR):

For many disputes, California Law requires an HOA to engage in ADR before filing a lawsuit.  If a Member requests it, the HOA must participate in a “meet and confer” to resolve the issue.

 Mandatory ADR: Civil Code §5930 requires ADR for most enforcement actions in the superior court.

  • IDR (“meet and confer “): An internal dispute resolution process where the Member and HOA board meet in good faith to resolve the issue.  If the owner requests IDR, the association must participate.
  • Mediation: If IDR fails, the parties can agree to mediation with a neutral third party. 

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Legal action:

For severe or persistent violations, an HOA can seek legal remedies to force compliance.

Injunctive relief: The HOA can file a civil action in court to obtain an injunction, a court order that requires the homeowner to correct a violation.

  • Litigation for compliance: The association can file a lawsuit to enforce its governing documents legally.  If the HOA prevails, the court may order the homeowner to comply and pay the association’s legal fees and costs.
  • Foreclosure: While fines cannot be used for nonjudicial foreclosure, if a homeowner fails to pay assessments, the HOA can place a lien on the property and pursue a judicial foreclosure. 

Self-help remedies:

In some cases, the HOA’s governing documents may grant the board the authority to take direct action to correct a violation on the owner’s property.

For an unapproved modification that violates architectural rules, the board might be able to enter the property and remedy the violation itself.

  • Caution: This option is high-risk and carries significant legal exposure; therefore, it is rarely used and should only be considered after consulting with legal counsel. 

Dan Harkey
Educator & Private Money Real Estate Lending Consultant
[email protected] 949 533 8315
www.danharkey.com

Private Money: Procedures and Strategies for Loan Originations

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How do brokers and lenders locate hard money loans?

By Dan J. Harkey

Summary:

Loan officers and mortgage professionals, with their diverse marketing strategies, have a significant potential for success. Closing more deals per month can lead to higher earnings and a place in the top 10% of the industry. The top 20% of successful agents earn 80% of the available fees. This potential for success is not just a dream, but a realistic goal for those who are willing to put in the effort. So, how do we work our way up to that prestigious position?

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Article:

First, develop a list of prospects:

Customary methods for developing a list of prospects include identifying first-time home buyers, searching public records from title companies for characteristics such as low loan balances that originated more than ten years ago, monitoring construction permits for additions, and identifying property owners with delinquent property taxes.

A new method in California involves identifying burned-out neighborhoods, a bad joke.

A few subsets of borrowers/ properties that have a propensity to need private money loans include:

  • Properties on a loan default list
  • Properties that have delinquent property taxes
  • Properties that lack maintenance
  • Properties under the control of beneficiaries of a deceased property owner
  • Properties with a current private money loan

Since there are numerous reasons for a property owner to choose a private money loan, it is challenging to quantify these characteristics into a statistical model for a probability list.

The concept ‘We locate a Buyer; we don’t create the buyer’ applies.

The best way to locate private money loans is to develop an extensive network of professionals with multiple clients. The type of professionals best to network with in the area:

  • Mortgage brokers, both those who specialize and those who do not specialize in private money loans
  • Real estate agents, both residential and commercial
  • Accountants and Enrolled Agents
  • Estate planning, divorce (family law), and probate settlement lawyers
  • Real estate transactional, estate planning, probate, and business litigation lawyers
  • Financial planners
  • Contractors, builders, and developers
  • Income property owners and speculative real estate investors

There are several methods for developing these lists. Marketing strategies are discussed in subsequent articles on this website.

If you have 500 leads in your network and each of them has 500 leads in their network, then your universe of possibilities is 250,000 (500 x 500).

If you have 1000 leads in your network and they each have 1000 leads in their network, then your universe of possibilities is (1000 X 1000= 1,000,000).

At any given time, someone associated with the professional service provider may need your services to obtain a loan.

Maintaining your network by consistently providing value to your members is key. This keeps you at the top of their minds and can lead to potential loan opportunities. Maintaining presence means being fully engaged and focused on the present moment, every minute, of every day, both physically and mentally.

Your correspondence should be from you, personally, rather than some ordinary advertising/subscription newsletter-those are a dime a dozen and mean nothing. Your communications will need to be authentic, personalized by you, and designed to help your client’s business development. This personalized approach shows respect for your clients and can help build trust and loyalty.

Referrals and repeat customers are not just necessary, they are the lifeblood of successful loan officers and business professionals. They can significantly boost your sales volume, accounting for 80% of the available funds. Without a strategy and an action plan, you may find yourself in the bottom 80%, which only accounts for 20% of the available funds. This underlines the importance of a strong referral network and can inspire you to focus on building and maintaining these relationships.

Loans procured directly from the public:

There are many media platforms where you can advertise to solicit direct property owners who need alternative financing. Almost all of them provide an advertising option for a reasonable advertising fee. Google, Facebook, LinkedIn, and others are ready to sign up. The quality of these leads, however, is suspect. Establishing reliable communication with cold lead borrowers from these advertisements and obtaining the necessary data is, at best, difficult.

Personal contacts with lists such as defaults and property tax delinquencies are possible. The amount of research, work, and follow-up with a personal call or written correspondence may only place you in a pool of competitors for the same prospects.

Asking the Right Questions:

When a loan agent receives a loan inquiry, it is not just another task, but a crucial moment to ask prudent, industry-standard questions. These questions are not just routine, but fundamental for any lender to make a preliminary decision to inquire further into a complete credit package. Your role in this process is significant, and your questions can significantly impact the outcome.

These questions are industry standards and apply to direct lenders and loan agents who make or arrange loans for property owners as agents for borrowers. The loan broker may act as an agent, fiduciary of the borrower, lender, or both.

Mortgage brokers, loan agents, and direct lenders are responsible for developing a comprehensive package of related documents and disclosures that are sufficient for a lender to make a prudent credit decision. The mortgage broker must create an executive summary to submit to a direct lender for consideration.

The borrower should provide the following information:

What is the required loan amount?

Is the subject property a single-family owner-occupied or non-owner-occupied? Or is it an income property, residential or commercial?

Purpose and use of loan proceeds. A business purpose, a consumer purpose, or a combination of both is essential.

Is the use of loan proceeds primarily for business purposes? Or what portion will be used for consumer purposes?

Is the borrower looking for a private money loan, which is typically funded by an individual or a group of individuals, or an institutional loan, which a bank or financial institution funds? Understanding the borrower’s preference can help you tailor your loan options to their needs.

Value of collateral property. How did the borrowers determine the value?

When did the borrower acquire the property, and what was the purchase price?

Existing liens are used to determine whether the loan-to-value is acceptable.

Who occupies the property? Owner, tenant, vacant, or partly occupied.

Does the property have a rental income stream? What gross rents, vacancies, and expenses are required to determine net operating income (NOI)?

A borrower’s estimate of value is often incorrect or intentionally exaggerated.

An appraisal report by a licensed and certified appraiser may be required.

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If the loan request is for a junior loan, information about the senior loans will be required. They may include a copy of the promissory note, loan agreements, and a recent payment statement from the senior lien holder or loan servicer. It may also be prudent to review the recorded documents related to the senior lien associated with the deed of trust.

Does the first lien have a written provision in the deed of trust referred to as an alienation clause, or what some call a due on further encumbrance clause, that would require the lender to obtain written approval to place a junior lien on the property? Is the property owner/borrower a private individual or an entity?

This fact is important because, in many cases, the original borrower may have been parents, possibly deceased members, siblings, co-trustees of a family trust, ex-spouses, or other miscellaneous parties. Some earlier property purchases were taken subject to a lien that prior owners obtained in the past. Handling a property sale subject to means that the purchaser/borrower intentionally failed to notify the first lien holder of the transfer. Was the sale transfer kept a secret, deliberately? Therefore, the loan documents still list the prior owner as the obligor on the note and deed of trust.

Does the person requesting the loan have the sole authority to borrow and encumber the property with a new lien? Are there other parties of interest who may object to recording a lien on the property? An example would be an estranged ex-spouse, such as an ex-husband or ex-wife.

Are there multiple borrower parties that a lender must include in the application, processing, underwriting, and closing process? A lender’s frustration will occur when it is discovered that the borrower has intentionally excluded an undisclosed, hostile party. I promise you that an unknown borrower party won’t fool the title company. When the title insurer underwrites its coverage, it will ensure that the correct parties have signed the documents. Verifying the proper parties is part of their insurance underwriters’ and approval process.

When a loan broker submits a loan to a lender:

No amount of advertising will enable lenders to reach all borrowers. Most borrowers develop relationships with one or more loan agents in their search for loans. Loan agents gather information about borrowers and properties and interact with prospective lenders or other agents who represent them.

Loan agents vary significantly in their experience, the amount of effort they are willing to put into a transaction, and the level of professionalism they exhibit.

Loan agents who desire a quick and professional response should take the time to organize their files and convey a coherent set of facts to the funding lender. Managing in today’s world means submitting documents in a digital PDF format for online submission.

Develop an executive summary to include the following:

  • Submitting the broker’s name, contact information, and requested fee
  • Proposed new loan amount
  • Purpose of loan: purchase, refinance, equity 2nd, consumer, business purpose, consumer purpose, both
  • Summary of the proposed transaction, term, and cash out
  • Are the loan proceeds of more than 50% to be used for business purposes?
  • Will a portion be used for consumer purposes of less than 50%?
  • Summary of the proposed transaction, term, and cash out
  • Explain the collateral property address, type, description, amenities, and property condition
  • Loan application form, either a standard residential 1003 or a commercial loan form.
  • Commercial applications and financial statements are preferred
  • Estimated value conclusion and source of facts
  • Provide an income stream for income property, if it exists, with the rent roll and financial statements.
  • Availability of cash flow from the borrower and the property to make monthly payments
  • Potential exit strategies: sales, refinance, receiving an inflow of money from another source.
  • Any noted strengths and weaknesses of the borrower or collateral property. Withheld and overlooked facts are ill-advised.
  • The Funding lender’s job will be dramatically faster, more efficient, and more pleasant if the borrower’s loan agent takes the time to get to know their transaction and articulate the material facts the first time around.

Could you email an initial loan inquiry to the lender and follow up with a phone call?


There are many roadblocks to successful loan closings. Concentrate on eliminating activities and people who waste time and energy. The obvious task is to focus on the concept that time is money. Roadblocks include delays, setbacks, excuses, barriers, and misrepresentations that can hinder a successful closing in lending.

Leverage time utilization with the available techniques and tools. We can double or triple our effectiveness by utilizing available hardware and software applications.

Some mortgage brokers are highly professional and always submit a complete package with full disclosure in mind. Seek out those with whom you want to work with and make a mental note about the others.

Dan Harkey
Educator & Private Money Real Estate Lending Consultant
[email protected] 949 533 8315
www.danharkey.com

Repositioning Office Buildings into Apartments and Condominiums is a Complex Process

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In many cases, the demolition crew has a job of dismantling economically, physically, and functionally obsolete buildings.

By Dan J. Harkey

Summary

The process is slow due to regulations, environmental concerns, and the economic viability of the conversion. Add: engineering and seismic upgrades, parking, security, and positioning of lighting for openness. However, some buildings fail to be candidates for conversion.

Working from home has significant advantages. Lifestyle, commuting time saved, avoiding office bureaucracies, useless meetings, interoffice politics, and clutter in our economic lives are some of them. For the intrinsically motivated people, this has been a godsend. The marginal and parasitic class of workers were unintentionally delivered into a free lunch until companies wise up and fire them. It began with the government’s overreach and excessive force in response to the COVID-19 fraud. The government’s brute force created a mass exodus of office workers, millions never to return.

Radicalized governance triggered the law of unintended consequences. If the government works to kill businesses, they will leave and seek out more friendly states to operate in. Suppose the government kills offices, commercial corridors, and residential neighborhoods, allowing preferential treatment to large corporations, tolerating violence and criminal behavior. In that case, people will move out and seek more business-friendly and safer environments. That is what happened when we allowed dark forces to take over the government from within.

Occasionally, a technetronic shift emerges, such as the convergence of technology, electronics, and culture, that enables us to work from home, make purchases online, and utilize Uber or Lyft-style transportation.

Add the public’s response, which has created a shifting paradigm, marked by a significant reduction in the demand for traditional office spaces and a shift towards remote work. This has led to a real mess in some cities, with once-bustling office buildings now standing empty and obsolete, a clear sign of the irreversible change in our work culture.

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A Reflection on the Impact of Remote Work on Urban Office Development: The ‘Shifting Paradigm,’ a term I use to describe the significant changes in the real estate market due to the rise of remote work. This term refers to the profound shift in work patterns and the subsequent impact on urban office development.

One of the many and most significant unintended consequences of the COVID-19 lockdowns is that employees and organizations have increasingly adopted remote work arrangements from home. This shift, which I refer to as a ‘seismic shift in work patterns,’ a term I use to describe the unprecedented and fundamental change in how we work, has significantly altered how we work, leading to a substantial reduction in the demand for traditional office spaces.

The downside is that this new in-homeworking paradigm returned to haunt many prominent perpetrators who benefited most from the lockdowns. They were the mega-giant investment firms, large corporations, big pharma, and mainstream media-entities considered systemically too essential and exempt from many devastating consequences. These entities are now facing the challenges of a remote work environment.

The workforce has shown remarkable adaptability in the face of economic challenges, transitioning to remote work with innovative solutions such as Zoom meetings. The proliferation of software programs that facilitate the elimination of marginal employees and create a more efficient and leaner staff is a testament to our resilience and the potential for positive change in the face of adversity. This adaptability should instill confidence in us all for the future.

This shift, now the norm for tens of millions, has proven that we can be more efficient and productive than in a traditional office setting. Out of a workforce of 154,000,000, 12.2% work remotely full-time and 4.7% one-half time. This model is effective and holds promise for the future of work culture, offering a hopeful and inspiring outlook for the post-pandemic world.

https://remote.com/blog/remote-job-roles
https://www.usatoday.com/money/blueprint/business/hr-payroll/remote-work-statistics/

The benefits of remote work are numerous and promising, offering reduced traffic, flexibility to work at the most productive hours, increased productivity, and, most importantly, freedom from company politics and ideologies. This shift has allowed many, including myself, to work in a way that suits our natural rhythms, such as being a morning rather than a night person. We can work or be semi-retired, and it’s up to us. I am usually up by 4 am.

The economic implications of this shift are profound, particularly in the real estate market. Once bustling with activity, tower office buildings now stand empty and obsolete. The lack of demand for office space and a higher interest rate environment have intensified the strain on owners. At least 1 billion square feet of vacant and unoccupied office space in the U.S. requires repositioning.

The obvious answer is that office space should be converted to residential occupancy whenever possible, with special financing vehicles for construction and tax credits to help make the transition viable. This shift is a change in work culture and a significant economic transformation that necessitates the urgent adaptation of property owners, lenders, and the government. The government initiated this mess as a political power grab and needs to take the lead in rectifying the situation. The time for action is now.

Office buildings are typically classified as Class A, B, or C in the commercial real estate sector. The differences are subjective, encompassing pricing, location, construction quality, and amenities. Thousands of primarily Class B and C buildings need help staying afloat, with some experiencing a decline of 50% or more in their value.

https://www.statista.com/topics/3240/office-real-estate-in-the-us/#topicOverview
https://www.zerohedge.com/markets/chinese-offices-emptier-now-during-peak-covid-lockdowns-economy-crumbles

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Despite the challenges posed by the remote work trend, major owners like Brookfield, Blackstone, and Starwood Capital Group are victims of the “shifting paradigm,” A term used to describe the significant changes in the real estate market due to the rise of remote work. Many have chosen to adapt by abandoning older towers in downtown areas.

Renovations or repositioning of the building need to be revised. How about a 345,000-square-foot office building in Baltimore selling for $4 million, or $12 per square foot? There are hundreds of examples of office towers selling for pennies on the dollar, resulting in earthshaking losses for property owners and lenders who foreclose on the defaulted properties. Lenders may be commercial banks, life insurance companies, or vehicles with securitized offerings.

Additionally, on the commercial property front, the long-lasting impact of the COVID-19 fallout is that small businesses are under severe stress due to changing consumer habits. Consumers are financially stressed and lack the funds to spend. In particular, companies that rely on office workers are closing up shop. At this point, 40% of all restaurants are expected to close their doors for various reasons, including reduced foot traffic, rising prices, increased street crime, and regulatory challenges. With this will come commercial vacancies that will be released if new, willing tenants understand how tricky the restaurant business is. There are currently more than 1 million restaurants in the U.S., of which 70% are small, single-unit operators.

The second most prominent reason for moving to remote work is that progressive-leaning governments exacerbate the crashing prices by overlooking criminal activities and defunding police departments. Crime-ridden metro cities include Detroit, Memphis, Birmingham, Baltimore, St. Louis, Kansas City, Cleveland, Little Rock, Milwaukee, Stockton, Los Angeles, San Francisco, Oakland, and Seattle. However, considering the complex factors in these cities’ economic situations, such as high crime rates, housing affordability, and social inequality, is essential.

There is no end in sight, and nothing will change unless the metro leadership is replaced in primarily progressive-leaning cities and towns, which are based on Marxist governing ideologies. The rule of law (law and order) must be re-established, and this change is necessary and within our reach. It’s time for a call to action and a potential solution to the current situation.

Leaving urban blight and moving into the suburbs is part of the ‘Shifting Landscape.’ This shift presents an opportunity for positive change in urban and suburban development. We must address the issue of criminal acts going unpunished to ensure a balanced and safe urban environment. This is a matter of economic survival and a fundamental requirement for a thriving society.

Dan Harkey
Educator & Private Money Real Estate Lending Consultant
[email protected] 949 533 8315
www.danharkey.com

Potential Environmental Hazards in Real Property Require Investigation by Professionals

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Serious Risks and Liability for Real Estate Owners, Agents, and Lenders When Properties are Not Vetted Properly

By Dan J. Harkey

Summary

Check Out This Piece Of Soils Boring Equipment

Understanding environmental hazards in real property is not just a matter of concern but a crucial and complex task. It involves a maze of risks, consequences, and regulations that demand the expertise of environmental science professionals to guide interested parties to the best solutions. This understanding is paramount in the real estate industry, as it can significantly impact property value and potential legal liabilities.

Risks may stem from the property’s or surrounding properties’ historic uses, potentially leading to long-term consequences. The materials used in the original construction and the current property usage by one or more tenants also pose significant risks.

The risks may be above or below ground, in groundwaters, the air, and construction materials, like a giant squid with tentacles reaching far and wide, with liability overlays and use limitations.

Any real property practitioner should familiarize themselves with the basic understanding of regulatory compliance and act as a prudent fiduciary for their clients.

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Non-compliance with environmental regulations can lead to a situation where the cost of mitigation exceeds the property’s value. This could result in litigation against the real estate agent (associate licensees), the Real Estate/Mortgage Brokerage firm, and its responsible broker, alleging negligence, breach of fiduciary duty, and constructive fraud. The (Brokerage Firm and its agents (defendants)) could be accused of failing to disclose significant risks, underscoring the importance of environmental regulations. The potential legal implications, including hefty fines, loss of reputation, and even suspension or revocation of professional licenses, are severe and should not be underestimated.

The potential for litigation due to a fiduciary’s failure to disclose all material facts or engage in negligent misrepresentation should serve as a stark reminder of the need for thoroughness and caution in all real estate transactions. Breaches of fiduciary duty can lead to significant financial losses, damage to professional reputation, and even legal action. This emphasis on potential financial losses should instill a sense of urgency in the audience, highlighting the importance of regulatory compliance and the possible risks of non-compliance.

Assessment and Remediation of various contaminants has sprouted, and an entire industry of companies specializing in the evaluation and removal of toxic materials has emerged.

Why should I be concerned about things that happened long ago?

Owners, tenants, agents, real property lenders, insurance companies, and surrounding properties, extending through entire neighborhoods and municipalities, are covered by an overlay of liability.

Who do I turn to for help in identifying the risks?

Specialists licensed as environmental engineers are the go-to professionals for identifying ecological risks, reporting and assessing mitigation procedures, and communicating with property owners and agents. They work with contractors and the Environmental Protection Agency (EPA) to ensure environmental compliance, providing a reassuring and confident resource for the real estate industry. Their expertise is invaluable in navigating the complex landscape of environmental hazards in real estate.

What is an environmental professional?

An experienced specialist who draws from the disciplines of chemistry, ecology, geology, hydraulics, hydrology, microbiology, economics, and mathematics for the identification, reporting, and mitigation procedures of environmental issues relating to real properties.

The fiduciary responsibility of real estate agents, brokerage firms, and the responsible broker regarding environmental issues.

Whether in real estate sales or lending (real estate/mortgage brokerage firms, the responsible brokers and their agents are fiduciaries of the clients/ principals). They are legally and ethically accountable for acting on behalf of another to the highest standards and in the best interest of the clients/principals they serve.

Breaches of fiduciary duty happen when the agent acts in their best interest and damages the principals. Many actions by the agent will be deemed as a breach:

Failure to disclose material facts, such as property defects, cracks in the foundation, land slippage, noise, and conflicts with neighbors, among others, can be considered a breach of fiduciary duty.

Receiving secret profits and fees

Withholding offers for self-gain

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What is a Phase I environmental site assessment?

An environmental professional conducting a Phase I environmental site assessment performs a thorough, preliminary, non-intrusive review. This includes a comprehensive examination of public records, past usages of the subject property, and surrounding properties, including a site inspection. The thoroughness and comprehensiveness of this process should instill a sense of security and confidence in the audience about the comprehensive nature of the assessment.

The report will be available to the principals, property owners, lenders, loan agents, and real estate agents.

The purpose is to identify environmental conditions (RECs) or risks.

RECs are defined as the presence of hazardous substances or petroleum products in, on, or at the subject property due to a release to the environment; the likely presence of hazardous substances or petroleum products in, on, or at the subject property due to a release or potential release to the environment; or the presence of hazardous substances or petroleum products in, on or at the subject property under conditions that pose a material threat of a future release to the environment.”[PC1]

What is a Phase II environmental site assessment?

If concerns are discovered in the Phase I process, a Phase II environmental site assessment should be ordered. This process involves more detailed information gathering, including soil borings and sampling analysis of the soil, vapor, groundwater, and/or indoor air, to evaluate the nature and extent of any existing contamination and recommended clean-up requirements.

A report will contain a detailed description of the contamination, its severity, the cleanup requirements, and recommendations for further investigation.

What is a Phase III environmental site assessment?

Upon completing Phases I and II, the environmental professional will recommend site mitigation/remediation. This will include alternatives, relative costs, timing, and a final analysis of a remediation action plan required to address the contaminant and hazardous issues.

This Phase III assessment is crucial as it provides a roadmap for decontaminating the site, including the cost, timing, and reporting procedures to the EPA, ensuring a thorough and effective remediation process.

The environmental professional will provide a roadmap for decontaminating the site, including the cost, timing, and reporting procedures to the regulatory oversight agency.

Stories about breaches are a giant reservoir of sorrow and financial losses:

www.dre.ca.gov/files/pdf/The_Real_Estate_Brokerage_as_Fiduciary.pdf
www.nar.realtor/sites/default/files/handouts-and-brochures/2014/nar-fiduciary-duty-032213.pdf

Consumer and Agent Education:

www.mynhd.com/booklets/combined_booklets_engl.pdf
www.geo-techsolutions.com/sites/default/files/caleparesidentialenvironmentalhazardsguide.pdf
www.cdph.ca.gov/Programs/CCDPHP/DEODC/CLPPB/CDPH%20Document%20Library/ResEnviroHaz2011.pdf

Federal Oversight:

The Federal Environmental Protection Agency (U.S. EPA) plays a pivotal role in overseeing environmental issues. Its responsibility for developing and enforcing regulations, providing grants, conducting environmental studies, educating the public, and publishing materials underscores the importance of federal oversight in ecological issues. The agency’s role is crucial in ensuring environmental compliance and protecting public health and the environment.

The EPA oversees the enforcement of baseline regulations, from the Clean Water Act to the Clean Air Act to Superfund. RCRA enforces a national standard for using hazardous materials, disposal of dangerous waste, and discharges to the environment.

This should make the audience feel the weight of the agency’s role in ensuring environmental compliance on a Federal level.

https://www.epa.gov/aboutepa/our-mission-and-what-we-do

GeoTracker is a powerful online resource that real estate professionals must use. It provides invaluable information about environmental hazards in a specific area, empowering agents to make informed decisions and advise their clients effectively. GeoTracker can reveal past and present environmental issues, potential risks, and ongoing remediation efforts, giving agents a comprehensive view of the ecological landscape in a particular location.

“GeoTracker” is an online database system used by the California State Water Board and regional agencies to track and archive compliance data related to waste discharges to land, hazardous substance releases from underground storage tanks, and other environmental monitoring activities. It is a central repository for ecological compliance data with geographic location capabilities. (Real estate/mortgage brokerage firms and their agents) should become familiar with this resource as it can provide valuable information about environmental hazards in a specific area. Using “GeoTracker,” real estate licensees can access up-to-date information about environmental compliance in a particular location, which can help them make informed decisions and advise their clients/principals effectively. This tool is invaluable for identifying potential environmental hazards and ensuring regulatory compliance in real estate and mortgage transactions.

https://geotracker.waterboards.ca.gov/map

There are many, but the basics are as follows.

https://www.epa.vic.gov.au/for-business/how-to/manage-environmental-risk/common-hazards

Environmental Considerations in Real Estate: Managing Risks and Responsibilities – Keven Steinberg Law

Common hazards include air contaminants and toxic and hazardous materials discharged into the air from active manufacturing or stationary settings, such as those embedded in real property components.

Asbestos, a common hazard in properties built before 1978, is a serious health risk that can lead to cancer if exposed for a long time. Mitigation is crucial, and the decision to encapsulate or remove it should be made promptly.

Lead-based paint–Properties built before 1978 generally had lead-based paint on both the inside and outside. The federal government banned lead-based paint in residential properties in 1978.

Formaldehyde–

Carbon monoxide–

Radon–

Industrial pollution–

Land contamination–

Groundwater contamination–

Adjacent property and neighboring properties within many feet of the subject property.

https://www.cdc.gov/lead-prevention/prevention/paint.html

https://www.epa.gov/lead/protect-your-family-sources-lead#:~:text=In%201978%2C%20the% 20federal%20government,is%20usually%20not% 20a%20problem.

https://study.com/academy/lesson/environmental-health-hazards-risks-in-real- estate.html#:~:text=Formaldehyde%20is%20a%20gas%20found,states%20require%20disclosure%20of%20formaldehyde.

Mold is a fungus that can cause respiratory illnesses and death. It also permanently damages building materials and severely damages property.

Body of law: innocent purchaser

https://law.justia.com/codes/california/2009/hsc/25548-25548.7.html

https://www.chapman.com/publication-Environmental-Lender-Liability-Protection

https://www.epa.gov/sites/default/files/documents/lender-liab-07-fs.pdf

Research exhibits:

https://dtsc.ca.gov/wp-content/uploads/sites/31/2021/07/HWM-TP_Phase-I-Env-Assessment- Chcklist_Instructions_ADA.pdf

https://dtsc.ca.gov/wp-content/uploads/sites/31/2018/02/HWM-TP_Phase-I-Env-Assessment-Chcklist.pdf

https://www.epa.gov/sites/default/files/2017-07/documents/aai_factsheet_environmental_professional_epa_560_f_17_191_508.pdf

https://www.astm.org/e1527-21.html

https://www.jdsupra.com/legalnews/astm-1527-21-phase-i-environmental-site-1691134/

https://www.creativeenvironmental.com/what-are-the-4-phases-of-environmental-site-assessments/

Dan Harkey
Educator & Private Money Real Estate Lending Consultant
[email protected] 949 533 8315
www.danharkey.com

Lightning Speed of Closing Private/Hard Money Loans: The Pivot When Urgency is an Issue

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Sometimes Borrowers Have an Urgent Need to Get the Proceeds of a Loan to Solve an Urgent Problem

By Dan J. Harkey

Real-life example: a successful closing

Summary:

The primary benefit of private money loans is speed…

These loans are funded by investors motivated by yield, which is the return on investment. In this context, yield refers to the profit or return an investor earns on their investment. It’s a measure of the cash flow that an investor receives from a particular investment, usually expressed as a percentage of the investment’s cost. The higher the yield, the more attractive the investment. This key factor motivates private money lenders to fund these loans.

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The second benefit is flexibility in underwriting requirements, such as credit, income, the condition of the collateral property, and borrower documentation.

With fast approval and often funding within 2 to 14 days for bank declines and fallouts (instances where a bank-approved loan does not close due to various reasons, such as changes in the buyer’s financial situation or issues with the property), these loans provide a swift solution when time is of the essence. As a borrower with problems to solve, would you be willing to trade off lower interest rates at the bank for a quicker closing with higher rates and points?

Article:

The bank’s delay forced them to release the $100,000 deposit proceeds for a two-week extension. Then, the unexpected happened: the bank was fixated on a seemingly insignificant condition — a minor discrepancy in the property’s title — which became the ‘straw that broke the camel’s back.’

The couple was in a race against time. They needed to close the deal fast or risk losing their $100,000, a significant amount. The seller had a backup offer, which was a higher bid from another potential buyer than the couple’s purchase price. This meant they were on the verge of losing the property if they didn’t act swiftly.

In a state of panic, the couple turned to their knowledgeable mortgage broker for help. The broker’s ability to pivot to a private money lender for a bridge loan — a 12-month, interest-only loan — was a game changer. This astute decision, made possible by the broker’s knowledge and quick thinking, allowed the couple to close their deal and avoid losing their $100,000 deposit, relieving them of initial panic and stress. The broker’s role in this process cannot be overstated.

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The private money lender wasted no time. They swiftly acquired the loan file from the institutional lender, which included the open escrow, preliminary title report, application, financial statement, bank statements, insurance information, copies of the rental agreements, credit report, background search, and appraisal. With a quick review appraisal, the private money lender approved the loan, substituted itself as the lender, drew up the loan documents and disclosures, and closed the deal in just five business days.

With their speed, flexibility, and potential to save a deal, private money loans are a valuable resource for borrowers needing quick funding. The private money lender played a crucial role in this scenario, providing a much-needed solution. Their timely intervention ensured the couple’s deal was closed, bringing a profound sense of relief. The broker fee was well earned, and the couple was deeply grateful for the lender’s swift and effective action, fostering a deep understanding of gratitude and trust in their relationship with the lender.

Dan Harkey
Educator & Private Money Real Estate Lending Consultant
[email protected] 949 533 8315
www.danharkey.com

Life Of A Self-starter: A Lifelong Journey

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Self-starters are purpose-driven, intrinsically motivated, action-oriented, and demand to get things done.

By Dan J. Harkey

Summary

The journey of a self-starter is not just a destination; it’s a profound transformation, an attitude that reshapes our approach to work and life.

It’s a proactive journey marked by repeated achievements, such as mastering a new skill, completing a challenging project, taking calculated risks, accepting some setbacks, and overcoming personal obstacles. These achievements bring a profound sense of empowerment, a powerful fuel that comes with taking control of our destiny.

It’s about self-motivation, learning competencies, skill sets, and action habits, accepting some stagnation and setbacks, and achieving incremental successes. This journey is not about inherited abilities, but rather achievements resulting from hard work, such as consistently working extra hours to master a skill set or taking on challenging projects to push our limits.

Our successes do not occur along a corresponding linear upward trajectory, but rather from an oscillating up-and-down pattern. This means that there will be times of rapid progress and times of stagnation or setbacks. Understanding and accepting this pattern is not a sign of weakness, but a crucial part of the self-starter journey. It prepares us for the challenges ahead and fosters resilience and determination.

The 80/20 rule applies: With tenacity, 80% of our accomplishments will occur in the last 20% of the time, because we refused to give up.

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Article:

When we arrive at the status of a true self-starter, we will recognize it as part of our overt conscientiousness. We are comfortable being ever-present and pushing the limits.

The process involves developing action habits, attitude, motivation, enthusiasm, self-confidence, talent, tenacity, and flexibility through repeated and often redundant processes. Our successes usually stem from activities we are willing to do, but others will not because they are too tedious.

In a society that values hard work, risk, and the development of self-starters, it also expects individuals to appreciate abundance. What I mean is to achieve a better lifestyle for myself and my family. This hard-charging attitude, combined with the accumulation of experiences and successes, sets the self-starter apart, earning distinction in the top 10% of our field.

Self-starters are fearless in their uniqueness, boldly rejecting the path of easy and passive mediocracy. By rejecting mediocrity, we can foster a culture of empowerment and inspire others to do the same.

Too many individuals choose a path of least resistance and mediocrity, many engaging in the “great resignation,” “great reshuffle,” “quiet quitting,””mentally checked out,” and even finding fake or superficial work activity. They are willing to live within the confines of government-provided goods and services (free handouts defined as entitlements), occupation, mediocracy, entertainment, accepting indoctrination, submission, conformity, and mass procrastination. If others elect to sit in “quiet desperation,” offer to assist them, but do not allow them to affect your hard-charged attitude.

They may find comfort in the “group mentality” or “groupthink,” a phenomenon where individuals often conform to a group’s decisions or beliefs without critically evaluating them. This characteristic can lead to a lack of independent thinking and decision-making, hindering personal and professional growth. By breaking free from groupthink, we can cultivate a culture of excellence and individuality, inspiring others to do the same.

Conformity to the will of others often suppresses actions, leading to the forfeiture of one’s unique identity. Breaking free from this is crucial for personal and professional growth, as it fosters independent thinking and decision-making. By stressing the dangers of groupthink and the importance of independent thinking, I encourage my readers to question and reevaluate their beliefs, leading to growth and empowerment.

Anatomy of Self-starters:

Maintaining a positive attitude is a characteristic and a vital foundation of a self-starter’s journey. It sets the tone for their actions and decisions, guiding them towards their goals.

  • Self-assured
  • Highly energized
  • Prefers action to conversation
  • Thrives in fast-paced environments
  • Comfortable in non-conformity
  • Focusing on the present with a daily and long-term action plan and habits is crucial for the success of a self-starter
  • Willingness to take risks
  • Practices a great deal of tenacity (stick-to-itiveness)
  • Understands that the success journey of ups and downs is unlimited
  • Extraverted and gregarious (in a few cases, self-starters are neither extraverted nor gregarious)
  • Self-starters strive to learn from all sources–articles, research, and experience. This commitment to continuous learning is critical and the key to their success, as it keeps them informed, adaptable, and innovative. It’s a reminder that learning is not a one-time event but a lifelong journey that fuels personal and professional growth.
  • Thinks rationally and intuitively
  • Possesses a tactical, action-oriented mindset with the natural ability to adapt, think logically, and pivot when necessary, about facing setbacks, rejections, and criticisms with remarkable resilience. This resilience, a critical trait that allows us to keep moving forward, undeterred by obstacles, is not a gift but a skill anyone can cultivate. It inspires others to persevere in the face of adversity and fosters a sense of determination and persistence.
  • A self-starter is also ‘Sensitive’ to others, showing dignity and respect to all and understanding the importance of empathy and respect in personal and professional relationships.

Self-starters are rare, constituting only 10% of the productive population. As workers and producers comprise less than half of the population (163 million), self-starters are relatively rare, possibly numbering fewer than 3-5%. In other words, 95-97% of the population lack the will to develop motivation and capability, or to learn success techniques and become highly productive.

Becoming a Self-starter involves taking on many risks through repetitive actions, attitudes, habits, experiences, rejection, and failures, while focusing on sharpening skills until one has attained the coveted master’s level designation. The designation and reputation as a self-starter are valuable assets.

People are not born into the Self-starter club, unlike those from educated, wealthy families, well-connected, or the Mensa club. Becoming a Self-starter requires a decision and enlightenment to go forward in that direction as a lifestyle. Almost anyone with critical thinking capability can become a Self-starter in any field. Willingly adopting successful habits, such as time management, continuous learning, and resilience, is a good start. Practicing these established principles can help develop focused habits. For instance, effective time management involves setting clear goals, prioritizing tasks, and avoiding procrastination. Continuous learning can be achieved through reading, attending workshops, or seeking mentorship. Resilience is built by facing challenges head-on and learning from failures. Searching out new methods and changing and accepting new paradigms is necessary.

The Self-starter does not boast about or focus on his successes but on future visions. They thrive in the moment and the tomorrow. Those around the Self-starter may find the attitude infectious and want to join, developing a lasting friendship. Self-starting attitudes are a magnet for attracting new relationships and friendships.

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The mantra of the Self-starter:

  • I will maintain a positive attitude
  • I will strive for individual accountability and self-sufficiency
  • I will remain ever-present in the physical world around me
  • I will dwell in a world of action and performance habits
  • I am an optimist
  • I am a risk-taker
  • I am a visionary
  • I do not need to subscribe to the group’s norms
  • I am a non-conformist
  • I will execute my plan with determination

Tools used by the Self-starter:

  • Effective time utilization
  • Leveraging results through others and technology
  • Recognizing that success is asymmetrical
  • Seeking out mentorships

Focus on the most essential elements at any given time that yield the most outstanding results every minute of every day. Self-starters understand that 20% of our activities generate 80% of their intended results. Self-starters also understand that 20% of their customer base is responsible for 80% of their sales and, therefore, their income.

Leverage time through delegation

Certain activities maximize their value, while others are important but should be delegated to support staff or third-party independent vendors. Delegated job responsibilities are integral to overall success, but can be handled by knowledgeable and well-trained others. The Self-starter knows that each hour of delegated activities could double, triple, or quadruple their productivity and time value.

Technology

The self-starter recognizes that unlimited opportunities exist to utilize software packages to manage data, market, network, and process their jobs and daily activities.

Self-starters know that technology provides leveraging devices that enhance their effectiveness and multiply their results many times.

Symmetrical vs. asymmetrical growth

Personal and business growth is not accomplished on a constant upward trajectory. We do not automatically get improved results by X amount per minute, hour, month, or year. Variables that affect results change constantly. For example, the real estate loan salesperson may need to catch up around holidays, whereas the retail stores do their best during the same time. Socioeconomic or political upheavals may cause business results to drop dramatically, while positive news about the economy’s performance may accelerate new business activity. Attitudes and actions may modify results.

Balance of symmetrical growth requires constant modification of activities, action habits, and growth patterns. A person’s activities differ during high-production months compared to low-production months. A Self-starter recognizes that marketing strategies such as mass email or text marketing and a high volume of inbound calls may be followed by stagnant periods. During this, outbound solicitations are necessary to bridge the gap.

Exponential growth

Growth or success will increase in quantity over time at an accelerating rate. If the plan is executed efficiently, success will double or triple. Eighty percent of the results are completed in the last 20 percent of the allocated time. Focus, execution, constantly readjusting the plan, and tenacity are the keys to success.

Momentum is accomplished by sticking to a plan and modifying it when necessary. The opposite of exponential growth is exponential decay, where success shrinks with time if the plan is not executed. Loyalties, referrals, momentum, and results quickly cease when the person stops executing their plan. Catching infectious diseases, often referred to as “bad attitude,” “bad habits,” or “procrastination,” can easily cause a downward trajectory in success.

All plans and their execution must be constantly evaluated and modified. Stagnation and failure to modify action habits will cause a downward trajectory.

Organizational bureaucracy:

A bureaucracy is a work organization that refers to a body of personnel executing the organization’s directives. The term bureaucracy means “rule by desks.” As staff members multiply, inefficiencies diminish intended results. Each staff member’s agenda may differ from the organization’s intentions. The more each staff member deviates, the more inefficiency sets in. Inefficiencies drag on goals and profits. Even a tiny organization can have a drag on efficiency when most or all the decisions must be filtered through one party.

If a job is directed to particular staff members due in two weeks, misuse of time, procrastination, spending time on trivial matters, and delegating to subordinate support staff may be counterproductive and a drag on profits. Many staff only care about going through the motions and getting paid. This is an example of a process-driven approach rather than a results-driven one.

Many companies tolerate inefficiencies and hire more staff, which in turn drags down production and, consequently, bottom-line profits.

Governments actively encourage the multiplication of personnel, no matter how inefficient they become. Multiplying personnel and consuming public tax receipts become the primary goals rather than getting results. Entrenched bureaucracies can become cancer.

“Work expands to fill the time available for its completion.”

C. Northcote Parkinson, Parkinson’s Law, 1942

Time away from the pressures of work:

The Self-starter has learned to escape from business pressures and outside influences, which create 80% of life’s stress. Stresses include internal strife, external influences, family pressures, mainstream media, and the constant barrage of advertising.

Escape into a getaway zone, leaving all these pressures behind. Turn off your phone and TV, and refrain from reading the newspaper. Turn on the music, walk, or hang out in the man cave (or woman cave).

“If you do not read the newspaper, you are uninformed; if you read the newspaper, you are ill-informed.”

Mark Twain was an American humorist, journalist, lecturer, and novelist.

Discover a unique mental hobby shop, a connection of places and activities that allow one to escape. Plan for this valuable time in your schedule.

Only some people desire to become self-starters because it requires much effort. If someone can make a living and chart their course through life, there is nothing wrong with being average or living in a world of mediocrity. There is comfort, security, and a lack of stress in a world of mediocracy. Additionally, in a few cases, self-starters are motivated by deep-seated insecurity and a fear of failure, and compensate by becoming the opposite.

We choose a direction, recognizing that there are many others. We will make our own decisions–Rachet up your Self-starter motor. We will surround ourselves with kindred spirits.

Dan Harkey
Educator & Private Money Real Estate Lending Consultant
[email protected] 949 533 8315
www.danharkey.com

Financing Overleveraged Homeowners Who Continuously Refinance and Living Off The Proceeds

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They Perceived That Their Strategy of Continuous Refinancing Was a Smart Decision Until It Wasn’t

By Dan J. Harkey

Summary

The last mortgage broker who attempted a refinance for this savvy couple discovered that there was insufficient equity. The mortgage broker rediscovered the doctrine of impossible performance.

Meet a smirky couple, let’s call them John and Jane, who, with their savvy financial strategy, could be considered the kings and queens of leveraging.

Their journey began a decade ago when they purchased their home. As its value soared, they smartly refinanced and withdrew cash to cover their living expenses. This strategy initially seemed to be a stroke of financial genius, sparking the interest of many with its initial success and leaving the audience intrigued and eager to learn more.

They bought their home a decade ago, and as its value increased, they repeatedly refinanced. Refinancing, in simple terms, means they replaced their existing mortgage with a new one, often with better terms, and pulled out cash to cover their living expenses. This move should have raised some red flags and left many feeling uneasy.

The strategy involved choosing an adjustable-rate loan with an initial fixed-rate teaser low payment and refinancing at the end of the teaser period.

When the adjustment from fixed to ARM with an index caused their payments to go up the last time around, they found themselves in a situation they could not afford. This is a predicament that many of us can relate to and empathize with, fostering a sense of sympathy and understanding in the audience.

This couple’s story is a stark warning about the potential risks of repeated refinancing and the crucial role of building equity in property. It’s a lesson in financial responsibility that every homeowner should heed.

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Article:

Home prices in many areas have more than doubled since 2010, rising by 50% in the last ten years. There are occasional blips where values are flat or go down.
https://www.lewrockwell.com/2024/09/david-stockman/mother-of-all-housing-bubbles/

Consider this scenario: This homeowner defaults because their property lacks equity to refinance for the umpteenth time. Equity, in simple terms, is the value of your home that you truly own, which is the difference between the market value of your property and the amount you owe on your mortgage. This situation is a powerful reminder of the potential financial pitfalls of not building equity in your property. It’s a crucial lesson that every homeowner should be enlightened about.

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While the couple may have pointed fingers at the last mortgage broker, their situation underscores the importance of personal responsibility in meticulous financial planning and decision-making. It also sheds light on the risks for a mortgage broker participating in the refinance of such an irresponsible borrower. The mortgage broker, who is supposed to guide and advise the borrower, also bears responsibility in such situations. By emphasizing personal financial commitment, we can prevent such situations and take control of our economic well-being, empowering the audience to take charge of their financial future.

Overleveraging, which is borrowing too much money, can lead to financial instability and potential default. The couple in our story faced this risk; every homeowner should know it.

Dan Harkey
Educator & Private Money Real Estate Lending Consultant
[email protected] 949 533 8315
www.danharkey.com