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From Speculation to Strategy How Smart Investors Build Real Estate Wealth Excerpt from Dirt Rich

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By Jose Berlanga

Every successful real estate investor starts somewhere, and it’s often with more questions than answers, more uncertainty than confidence. In my own journey, I discovered that the true game-changers are not flashy deals or quick wins, but the overlooked opportunities hiding in forgotten neighborhoods and undervalued parcels of land. What begins as speculation can, with vision and preparation, evolve into strategic wealth-building. At the heart of it all lies one timeless truth: the money is made when you buy.

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Hidden gems and untapped opportunities often go unnoticed. Initially, I navigated real estate transactions with tentative and uncertain steps, guided by a desire to profit without fully understanding how. Through the years, I developed a strategy focused on transforming old neighborhoods and capitalizing on great locations that had been forgotten. In my early real estate days, I built homes, a story detailed in my previous book. The essence of this tale lies in the properties I stumbled upon, which redefined 37 entire neighborhoods and transformed my finances. I realized that land itself, the soil beneath our feet, held immense value and potential. While I didn’t fully grasp the rapid increase in property values at the time, hindsight revealed the power of land appreciation. Imagine acquiring properties with the right vision, Imagine acquiring properties with the right vision, letting time pass, and watching them appreciate with minimal effort. Land speculation, especially in certain neighborhoods, offers the highest probability of rapid returns.

It’s a testament to the power of land, which is a silent yet potent force capable of elevating you to financial magnificence. Land is the core of superlative returns, and its potential for doubling or tripling your investment is unmatched in the real estate world. Power of Strategic Selection Ultimately, the primary goal of our business is selecting the right property. The question is, how? This decision shapes your strategy and objectives as an investor. Understanding your purpose for the land and estimating the time for the investment to reach its development potential is critical.

During this process, you will make choices that reflect the potential and characteristics of your goals. Let me illustrate this with the beginnings of my own real estate career. In the mid-1990s, my brother and I started a real estate venture with a clear purpose, which is essential for making all the pieces fit together. Our objective was to build houses at the lowest possible cost, providing a rare opportunity for consumers to purchase new homes near downtown areas at an affordable price. This involved speculative aspects: finding land cheap enough to build inexpensive houses while ensuring they remained desirable for buyers. Easier said than done! At that time, inner-city neighborhoods were rundown, contrasting with the beautifully designed suburban communities. Yet, a new opportunity seemed feasible.

What now seems like an obvious choice—to invest in early twentieth-century inner-loop neighborhoods—didn’t make much sense then. Remarkably, you could acquire lots for just a dollar or so per square foot. You had to have vision, as it seemed likely that your investment might stagnate indefinitely without appreciation. That was a significant risk. Some properties we purchased in various pockets and subdivisions took longer than others to gain traction. While we made some smart acquisitions, others weren’t immediately profitable. For example, we acquired several properties in an area known as the First Ward, which had stunning downtown skyline views, but it took over ten years to see any real appreciation. This illustrates that real estate involves time, risk, and potential for error. You need to be prepared for that. Just as you might strike oil on your first try, you could also face long periods without progress. However, the advantage with land is that you’re unlikely to lose your principal, especially as you gain experience and secure the right tenants.

Consider a property bought at land value for $100,000 with a $25,000 down payment. A tenant covers the property’s expenses, ensuring positive cash flow. Now, envision the area’s potential unfolds, and your dollar-per-square-foot investment grows to four dollars per square foot. Your $100,000 investment is now worth $400,000. With an initial $25,000 down payment, your investment has increased thirteenfold. Even if the value only doubles to two dollars per square foot, your $25,000 equity grows to $125,000—a fivefold increase. This is the power of leverage in land investment. These transformations in land speculation are not everyday occurrences, but they have a significant financial impact when they happen. I share this not just as a success story but as a real possibility.

Fast forward, and the properties I acquired cheaply now represent substantial value increases, currently worth $100 or more per square foot. This demonstrates the power of recognizing trends and capitalizing on societal changes. If I had known the extent of these returns, I would have held on to more properties instead of developing them for modest returns. Investors who waited patiently profited far more than we did as builders. Who could have known? In the future, we will discuss spotting and even creating trends to drive such transformations. This pattern has always existed; the key is recognizing potential pockets and aligning with a community’s metamorphosis.

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Let’s face it: within the realm of real estate, as with most investments, the timeless truth remains: “The money is made when you buy.” Success is determined upfront. Your investment’s outcome becomes more certain as you better understand what you’re buying. True wealth in real estate is created not by chance, but by deliberate choice, grounded in growing knowledge and strategic planning. This philosophy mirrors the ancient military strategies of Sun Tzu, who emphasized that the battle is won before it is fought. Similarly, in real estate, victory comes from thorough preparation and informed decisions.

Engaging in a transaction should only occur when success has been meticulously planned and the desired outcome is clear. Victory in real estate transactions lies in a series of intricate and carefully calculated steps aimed at achieving the projected win. Decisions driven by emotion and impulse, though sometimes guided by instinct, are insufficient for securing profit. I’ve made this mistake—relying on gut feelings instead of thorough evaluation. While I’ve had mixed results, relying on luck rather than facts is not a sustainable strategy.

Guessing lacks the detailed thought process and meticulous planning required for success. Beware of the enticing allure of cheap prices, reduced listings, or hot markets that can make every transaction seem like a home run. However, buying based on price alone isn’t wise. Instead, purchase because it makes sense and because the potential is evident through a thorough evaluation of the property’s fundamental economics. Soon, we’ll delve into what these fundamentals entail. While none of us can predict the future, the more I navigate the business world, the more I see history and commerce intertwine. Despite differences, past cycles offer 41 valuable lessons and data.

Business logic and philosophy evolve, but human behavior remains driven by fear and greed. Acting analytically, using common sense and information, can lead to wealth. Have you noticed that everyone buys property when the market is booming? This trend stems from our emotional nature rather than pragmatic analysis. The best deals often occur when the market is quiet—that’s when fortunes are made—yet few take advantage of this. We are emotional beings, prone to reactive decisions rather than proactive evaluations. I’ve made this mistake too, reacting to market trends instead of analyzing them, which led to failures.

A clear vision of your intentions, combined with working the numbers according to your specific objectives, is indispensable. When I started, I focused on whether a home’s final sales price would attract buyers. This valuation was key to my exit strategy. Numbers tell a story and become the blueprint for your goal and strategy, guiding you toward success. Becoming the architect of your results is the ultimate mission. A speculator’s goal is to narrow the gap between luck and certainty, reducing the margin of error. Opportunities in real estate are endless, but mastering this approach requires knowledge and skill, which I aim to share through this book. The main advice here is to conduct thorough research and make educated decisions. The key to success is to act based on data, not impulse.

Real estate wealth is not built on chance, it’s forged through deliberate strategy, clear vision, and disciplined preparation. While hot markets and bargain prices may easily tempt investors, lasting success comes from analyzing fundamentals, running the numbers, and buying with purpose. Just as Sun Tzu taught that battles are won before they are fought, real estate victories are secured long before the closing table. With patience, foresight, and informed decisions, overlooked land can become the foundation of extraordinary financial growth and long-term security.

DIRT RICH: EXPLORE THE WORLD OF LAND INVESTING AND DEVELOPMENT

Jose M. Berlanga

Berlanga Explores Land as the Foundation of Civilization and a Powerful Path to Wealth

In an era of rising interest in real estate, investment, and sustainability, Dirt Rich: Explore the World of Land Investing and Development (September 16, 2025; $19.99) offers a fresh and powerful perspective on land, not just as an asset, but as the foundation of modern life.

Written by entrepreneur and investor Jose Berlanga, Dirt Rich draws on his decades of experience in land speculation and real estate development to illuminate the hidden blueprint behind the everyday, including the streets we drive, the neighborhoods we inhabit, the cities we build. With both practical insights and personal storytelling, Berlanga reveals how understanding land can unlock not only financial freedom but a deeper connection to the world around us.

“Have you ever wondered how your city came to be? From its industries and layout to its flow and function, nothing was accidental,” Berlanga writes. “This book reveals the hidden blueprint behind the everyday and how understanding it can empower you to shape your own corner of the world.”

Part entrepreneurial memoir, part field guide, and part cultural meditation, Dirt Rich is a timely and accessible read for aspiring investors, real estate professionals, and anyone curious about the forces that shape our environment. It challenges readers to see land not simply as dirt, but as opportunity, responsibility, and legacy.

Topics covered include:

  • How to evaluate, acquire, and develop land
  • The importance of due diligence and feasibility studies
  • Land use, urban planning, and community design
  • Real Estate tax Strategies, new design, construction and investment trends
  • Investing with purpose and vision in a rapidly changing world

“Land is not just a commodity. It is the raw material of civilization,” says Berlanga. “Dirt Rich is for anyone who wants to build something lasting, contribute to their community, and grow generational wealth.”

In a market filled with transactional advice, Dirt Rich: Explore the World of Land Investing and Development stands out for its heart, humanity, and big-picture vision. It’s not just about making money. It’s about making meaning.

About the Author:

Jose M. Berlanga is a seasoned entrepreneur and real estate investor with over 35 years of experience in land development, residential construction, and strategic investing. A co-founder of Tricon Homes and a native on Mexico City, he combines backgrounds in business, economics, and philosophy to offer a thoughtful, visionary approach to building communities and wealth. Jose is the author of The Business of Home Building and now his latest book, Dirt Rich. He mentors aspiring developers through writing, workshops, and consulting, earning a reputation as a trust voice in real estate and leadership.

Title:                Dirt Rich: Explore the World of Land Investing and Development

Author:           Jose M. Berlanga

Publisher:       Writers of the West

Price:               $19.99

On Sale:          September 16, 2025

ISBN:               9798280221468 (Softcover)

Land – The Investor’s Greatest Secret

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By Jose Berlanga

Every real estate venture begins with the same indispensable ingredient: land. Long before walls are raised or businesses open their doors, the ground beneath it all is fixed, finite, and full of potential. Land is the foundation; it’s the permanent fixture on which every possibility rests. While buildings deteriorate, markets fluctuate, and styles fade, land endures. Its permanence, scarcity, and resilience make it one of the most powerful wealth-building assets available to investors.

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At the very core of every real estate venture lies the piece of land on which it is built. Whether it’s a residential property, a commercial complex, or an industrial facility, every project begins with the acquisition of land. Land is the starting point, the foundation that holds the potential for endless possibilities. While improvements and structures may come and go, the land remains a permanent fixture, undeterred by the ravages of time. Unlike buildings or structures, land is unique and irreplaceable. Each parcel of land possesses distinct characteristics, from its location and topography to its surrounding environment.

This uniqueness contributes to its scarcity and, in turn, adds to its value. The law of supply and demand comes into play, especially in urban areas where available space is limited, driving up its desirability and potential for appreciation. Investing in land also offers certain tax advantages. Property taxes on land are typically lower than those levied on developed properties because taxes on improvements are separate and added to the taxes on the land they occupy. In some areas, there are even strategies to further minimize or eliminate property taxes altogether, which we will discuss later.

Additionally, the appreciation of land often outpaces the taxes, making it a financially viable investment in the long run. Land is often considered a long-term investment asset. While buildings may depreciate over time and become obsolete, land retains its value and, unlike structures, tends to appreciate with increasing demand and urban expansion. Savvy investors recognize the potential of land as a valuable asset that can serve as a stable and profitable long-term investment. The real estate market is subject to fluctuations and economic downturns, which can affect property values and investor confidence. However, land is less susceptible to such market volatility. Its intrinsic value remains more constant, less influenced by shifts in trends or economic cycles. This stability offers investors a sense of security and a reliable investment option.

Contrary to the common notion that real estate investment necessitates immediate development, owning land opens up various profit-making opportunities without the need for extensive construction or renovations. Strategic land acquisition can result in substantial profits through land flipping or holding for appreciation. Land stands as a headache-free asset, offering investors and developers a stable, low-maintenance option. Its uniqueness, limited supply, and long-term investment potential make it an attractive choice for maximizing returns and unlocking the true value of this timeless asset. Here’s the thing: while it’s true that all real estate appreciates, land appreciates faster than all other real estate components. Improvements—such as buildings or structures—are integral to most investment models, but they do not hold the same level of unique importance as land itself. Improvements can always be replaced, removed, updated, or remodeled, but land cannot. The scarcity of the surface where these improvements sit is unparalleled. No piece of land can be replaced or replicated in exactly the same location, as each one possesses its own unique characteristics.

It’s safe to say that in every real estate investment, the portion that experiences the bulk of appreciation percentagewise is the land. While we tend to think of entire properties—houses, apartments, commercial or office buildings—as appreciating, it’s primarily the land that drives this appreciation, especially due to location.

For example, a house built in a thriving, up-and-coming inner-city neighborhood will appreciate exponentially faster than the same structure built in a remote area with low economic growth. Now let’s discuss what improvements represent. Improvements require constant upkeep and maintenance. You regularly need to spend money just to keep them in good shape. I’m not suggesting that improvements are a burden or that they aren’t a great investment—because they are. The point is that they require more active involvement than land itself. Their value and function revolve around the importance of the land they sit on. And unless you reinvest a portion of the income generated by improvements, those improvements will depreciate due to wear and tear.

This is why improvements are considered depreciable assets in both accounting and taxation. One of the most attractive aspects of land ownership is the minimal maintenance it requires. The list of perks of owning land is long: you don’t have to worry about theft, break-ins, damage, termites, foundation problems, or structural issues. There’s no need for roof replacements, new air conditioning units, plumbing repairs, electrical upgrades, or replacing hardware. You won’t get calls from tenants needing urgent repairs, nor do you need to worry about flooding, natural disasters, or casualty insurance.

Land doesn’t suffer from deterioration, doesn’t need new coats of paint or insulation upgrades, and won’t go out of style or feel outdated. Unlike structures, which inevitably experience wear and tear, land requires none of this. Landowners are spared the headaches of ongoing repairs and maintenance that often plague property owners. And there are even ways to generate income without any of these hassles by leasing land for various purposes. To make my point clear, under certain circumstances and in some particular cases, once you understand the business, you can even buy land without actually ever stepping foot on it.

I have purchased tons of properties and constantly continue doing so without visiting them, seeing them or even driving by them. There is simply no need because there are no structures of value to inspect. Looking at them on a map and understanding the location is enough. Additionally, land itself may provide other valuable assets, such as water rights, mineral rights, and outdoor space. Land offers flexibility for future uses, allowing you to capitalize on potential changes down the road. Leasing land has become more popular than ever for activities such as farming, commercial ground leases, storage, recreational purposes, and more—all of which can generate profits without the headaches associated with traditional property management.

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Land is the most tangible asset—one that will never disappear or evaporate like a bad stock pick or a company that went out of business. There are even innovative ways to profit from land while helping the planet through “green leasing programs,” using farmland for windmills, water conservation, solar panels, and capturing and storing carbon dioxide. Land gives you options, and as populations grow, demand increases. This simple statement alone can make you money, as the money supply increases and wealth grows, but land remains constant.

At its core, real estate wealth is not about bricks, beams, or blueprints. It’s about the ground they stand on. Improvements may bring short-term value, but they also bring expense and eventual decline. Land, by contrast, requires little, depreciates not at all, and steadily grows in worth as populations and demand rise. For those seeking lasting wealth, the true treasure is not in what’s built, but in the land itself, fixed, finite, and forever valuable.

DIRT RICH: EXPLORE THE WORLD OF LAND INVESTING AND DEVELOPMENT

Jose M. Berlanga

Berlanga Explores Land as the Foundation of Civilization and a Powerful Path to Wealth

In an era of rising interest in real estate, investment, and sustainability, Dirt Rich: Explore the World of Land Investing and Development (September 16, 2025; $19.99) offers a fresh and powerful perspective on land, not just as an asset, but as the foundation of modern life.

Written by entrepreneur and investor Jose Berlanga, Dirt Rich draws on his decades of experience in land speculation and real estate development to illuminate the hidden blueprint behind the everyday, including the streets we drive, the neighborhoods we inhabit, the cities we build. With both practical insights and personal storytelling, Berlanga reveals how understanding land can unlock not only financial freedom but a deeper connection to the world around us.

“Have you ever wondered how your city came to be? From its industries and layout to its flow and function, nothing was accidental,” Berlanga writes. “This book reveals the hidden blueprint behind the everyday and how understanding it can empower you to shape your own corner of the world.”

Part entrepreneurial memoir, part field guide, and part cultural meditation, Dirt Rich is a timely and accessible read for aspiring investors, real estate professionals, and anyone curious about the forces that shape our environment. It challenges readers to see land not simply as dirt, but as opportunity, responsibility, and legacy.

Topics covered include:

  • How to evaluate, acquire, and develop land
  • The importance of due diligence and feasibility studies
  • Land use, urban planning, and community design
  • Real Estate tax Strategies, new design, construction and investment trends
  • Investing with purpose and vision in a rapidly changing world

“Land is not just a commodity. It is the raw material of civilization,” says Berlanga. “Dirt Rich is for anyone who wants to build something lasting, contribute to their community, and grow generational wealth.”

In a market filled with transactional advice, Dirt Rich: Explore the World of Land Investing and Development stands out for its heart, humanity, and big-picture vision. It’s not just about making money. It’s about making meaning.

About the Author:

Jose M. Berlanga is a seasoned entrepreneur and real estate investor with over 35 years of experience in land development, residential construction, and strategic investing. A co-founder of Tricon Homes and a native on Mexico City, he combines backgrounds in business, economics, and philosophy to offer a thoughtful, visionary approach to building communities and wealth. Jose is the author of The Business of Home Building and now his latest book, Dirt Rich. He mentors aspiring developers through writing, workshops, and consulting, earning a reputation as a trust voice in real estate and leadership.

Title:                Dirt Rich: Explore the World of Land Investing and Development

Author:           Jose M. Berlanga

Publisher:       Writers of the West

Price:               $19.99

On Sale:          September 16, 2025

ISBN:               9798280221468 (Softcover)

Discover the Latest Insight, News and Investing Strategies at a Realty411 LIVE Event Near You

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Please review this important post. Thank you.

Network with Sophisticated Investors from Across the State and Nation at Realty411’s Next THREE Live Events in California

Dear Friends,

We are excited to announce our new “Realty411’s Invest with Confidence Expo” Tour, which starts next month in Santa Clara, California — the heart of Silicon Valley.

Next, we will be hosting our event in beautiful Santa Barbara, known as the American Riviera. This area is great for a wonderful weekend escape. We have guests joining us from around the state and throughout the country.

We’ll be back in Southern California on December 6th to celebrate our latest magazine release in Pasadena. Our special holiday expo will have amazing insight and networking. We are planning ahead and preparing our readers for a prosperous New Year!

Guests who join us at our Invest with Confidence Expos will gain specialized knowledge and learn diverse investing subjects. We have reserved fantastic venues, perfect spaces to learn and grow in your knowledge of wealth-building, life-changing principles.

We have also secured complimentary parking at two events and discounted parking for our third expo in Pasadena. Our special one-day conferences will host fantastic speakers from around the country and locally as well.

These professionals are ready to share their valuable insight with our guests. So be sure to register today and join the fun! We hope YOU can attend one of our events or ALL three of them.

NEW Realty411 Events

Oct. 25th – Silicon Valley, CA
Nov. 15th – Santa Barbara, CA
Dec. 6th – Pasadena, CA

Some of the Awesome Educators Joining Us Include*:

Ken Letourneau – “The Tax Sale Master”
Presenting at all three events!

Merrill Chandler – Get Fundable
Speaking at all three events!

Michael Ryan – Mortgage Broker
Presenting at all three events!

Mark Chaw – Zoom Casa
Speaking in Santa Clara

Marcella Silva – Dirt is Gold
Presenting in Santa Clara

Kris Miller – Legacy Wealth Strategist
Speaking in Santa Clara

Ryan Chow, PharmD – Investor/Coach
Speaking in Santa Clara and Pasadena

Mark Robbins, JD – Lending Resources Group
Educator for Santa Clara Event

DaShunda Morris – Realtor and Pro Rehabber
Speaking in Pasadena

Barry Duron – AltLender Mortgage
Exhibitor in Santa Barbara & Pasadena

Devon Aguirre – PadSplit
Speaking in Pasadena

Amanda Hart – Easy Street Lending
Speaking in Santa Barbara

Trevor Flor, MBA, MSRE – Aimpoint Investments
Speaking in Santa Barbara

Michael Morrongiello – BAWB.info
Emcee/Host for Santa Clara Event

Rick Tobin – Real Loans
Exhibitor – Emcee
Santa Barbara – Pasadena

Dan Ringwald – SB REIA
Exhibitor – Emcee
Pasadena – Santa Barbara

Paul Wilkins – AIC
Approved Inheritance Cash
Exhibitor – Emcee
Santa Barbara – Pasadena

Dana Ehrlich– ENRG.realty
Exhibitor/Mentor in Pasadena

Scott Mednick – Twin Creeks Capital
Exhibitor and Emcee in Pasadena

PLUS, MORE TO BE ANNOUNCED!

*Please note our speaker schedule may change due to unforeseen circumstances.

Since 2007, Realty411.com has assisted top companies expand their visibility and grow their business.
Contact us for a complimentary marketing session. Investors, do you have questions about real estate investing?
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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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Article:

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

Keeping Good Tax Records Is Essential

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By Robert P. Russo, CPA PC

An essential part of tax planning is keeping good records. Having an organized recordkeeping system makes it easier to file a tax return or understand a letter from the IRS. Here are some tips:

Good recordkeeping helps taxpayers in a number of ways, including:

  • Identifying sources of income. Taxpayers may receive money or property from a variety of sources. The records can identify the sources of income and help separate business from nonbusiness income and taxable from nontaxable income.
  • Keeping track of expenses. Taxpayers can use records to identify expenses for which they can claim a deduction. Tax records help determine whether to itemize deductions at filing. It may also help them discover potentially overlooked deductions or credits.
  • Preparing tax returns. Good records help taxpayers file their tax returns quickly and accurately. They should add tax records to their files throughout the year as they receive them to make preparing a tax return easier.
  • Supporting items reported on tax returns. If the IRS selects the return for examination or if the taxpayer receives an IRS notice, well-organized records make it easier to provide answers.

In general, taxpayers should keep records for three years from the date they filed the tax return. It is important to develop a system that keeps all their important information together – whether it is a software program for electronic recordkeeping or labeled folders to store paper documents.

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What Records to Keep:

1. Tax-related records. This includes wage and earning statements from all employers or payers, interest and dividend statements from banks, certain government payments like unemployment compensation, other income documents, and records of virtual currency transactions. Taxpayers should also keep receipts, canceled checks, and other documents – electronic or paper – that support income, a deduction, or a credit reported on their tax return.

2. IRS letters, notices, and prior-year tax returns. Taxpayers should keep copies of prior-year tax returns and notices or letters they receive from the IRS. These include adjustment notices (where an action is taken on the taxpayer’s account), Economic Impact Payment notices, and letters about advance payments of the 2021 child tax credit. Taxpayers who receive 2025 advance child tax credit payments will receive a letter early next year that provides any payments they received in 2025. Taxpayers should refer to this letter when filing their 2025 tax returns in 2026.

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3. Property records. Taxpayers should also keep records relating to property they dispose of or sell. They must keep these records to figure their basis for computing gain or loss.

4. Business income and expenses. For business taxpayers, there’s no particular method of bookkeeping they must use. However, taxpayers should find a method that clearly and accurately reflects their gross income and expenses. Taxpayers who have employees must keep all employment tax records for at least four years after the tax is due or paid, whichever is later.

5. Health insurance. Taxpayers should keep records of their own and their family members’ health care insurance coverage. If they’re claiming the premium tax credit, they’ll need information about any advance credit payments received through the Health Insurance Marketplace and the premiums they paid. Need help setting up a recordkeeping system that works for you? Don’t hesitate to call.

MEET ROBERT P. RUSSO, CPA PC

As the founder and principal of Russo CPA, P.C, Bob pleasantly surprises clients (plus the IRS and lawyers) with his proactive, caring, and interested approach. Bob’s authentic passion for both numbers and people is why his accounting firm is sought after by everyone from solopreneurs to CFOs. And it’s what energizes his fast-growing team of top CPAs who follow his lead by providing impeccable service to clients – without the CPA geek speak.

The only thing geeky about Bob is his favorite reading material: the latest tax regulations, codes, and rulings (so he can secure every possible tax advantage for his clients). You might mistake Bob for the charismatic entrepreneur and CFO behind an internet travel startup or a visionary real estate developer. That’s because he held those roles during his 30-year career as an accountant, which began at a high-profile accounting firm. While CPAs aren’t required to have “field” experience, the best ones do. But Bob doesn’t define success by his own achievements, it’s what he achieves for his clients. Because of his entrepreneurial past, Bob relates so well to his clients. In addition to serious tax savings most firms would miss, he empowers his clients with real-world accounting and financial insights to increase business.

Bob is even results-driven outside of work, whether it’s finishing the 2012 NYC Iron Man or volunteering for 12 years as President of a kids’ soccer league. While his bottom-line results are always impressive, what matters to Bob are the people who benefit from them.

When he’s not immersed in accounting, Bob is with his family, cooking up elaborate 18-course meals or globetrotting.

Robert P Russo CPA PC
Certified Public Accountants
231 W. 29th Street (bet 7th & 8th Ave)
Suite 500
New York, NY 10001
O: 212-279-9800
C: 917-207-9278
F:866-396-2310
www.robertprussocpa.com 

Realty411’s VIRTUAL Event – Co-Living to Boost Cashflow with PadSplit

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Hello Investors;

Are you looking for new opportunities to grow your wealth through real estate? Join our exclusive webinar tailored for savvy investors like you.

What You’ll Learn:

  • Why co-living is becoming the lifestyle of choice for so many
  • How investors can maximize their properties using this strategy
  • Discover how technology is changing the rental market paradigm
  • A LIVE Webinar with Devon Aguirre, account executive, with PadSplit

Webinar Details:

📅 Date: Wednesday, October 3rd, 2025
⏰ Time: 11 AM PT / 2 PM ET / Noon MT / 1 PM Central
💻 Where: ONLINE

LEARN MORE PADSPLIT:

Co-living: Boosting cashflow, expanding buy boxes, and solving the housing crisis!

PadSplit is the nation’s largest shared housing marketplace, designed to help property owners earn more income while addressing the affordable housing crisis.

By converting single-family homes into safe, attractive co-living spaces, PadSplit enables investors to boost returns while providing members with an affordable place to live.

Since launching, PadSplit has created thousands of affordable units nationwide and continues to expand into new markets like Southern California.

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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Article:

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

Asset Prices Surge Amidst Dollar Devaluation Trends

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By Rick Tobin

How are so many asset prices (homes, commercial real estate, gold, stocks, etc.) today at or near all-time record highs, while the purchasing power of the dollar is at all-time record lows? Is the economy booming like never before or is the dollar’s purchasing power seemingly crashing and burning?

A recently published Statista Consumer Insights survey that was conducted in June and July 2025 found that 49% of U.S. adult respondents said that the high cost of living was their biggest daily concern.

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The Top 8 answers provided in this survey of 4,098 adults between the ages of 18 and 64 were as follows:

1. Cost of living – 49.1%
2. Physical health – 26.3%
3. Mental health – 26.0%
4. Work-life balance – 25.8%
5. Political or social issues – 22.7%
6. Age-related concerns – 16.7%
7. Housing – 16.6%
8. Career dissatisfaction or uncertainty – 16.2%

Why does it seem that many items are less affordable today than in previous years? One answer is that our dollar’s purchasing power continues to rapidly decline at an accelerating pace.

Dollar’s Purchasing Power Turns to Ash

The federal government’s published inflation rates in 2025 are still lower than inflation rates back in the 2021/2022 years that peaked near 9%. However, it sure doesn’t seem like our dollar buys the same amount of goods and services here in 2025 whether or not the published inflation rates are 2%, 3%, 4%, 5%, 9%, or 10%.

Here’s a summary of the decline of the dollar over the past 112 years:

  • $1 in 1913 (the year when the Federal Reserve was formed, ironically, as a way to “contain inflation” and “stabilize the dollar”) now has the equivalent purchasing power of almost 3 cents today.
  • The purchasing power of $1 fell to about 7 cents over the past 50 years, so most of the dollar’s decline in value has taken place during this 50-year time period that followed the removal of the dollar from the gold standard during the 1971-1973 years.
  • Since 2000, the dollar’s purchasing power has dropped by -41%.
  • The M1 money supply (cash or cash equivalent) increased from $4 trillion dollars in January 2020 to $20 trillion dollars by October 2021. The more money in circulation, the less purchasing power for the dollar.
  • The dollar’s purchasing power has fallen 10% in the first seven months of 2025 as the dollar’s losses are accelerating.
  • Because real estate has proven to be an exceptional hedge against inflation and an imploding dollar or fiat currency that’s backed by “thin air,” these are key reasons why home values today are near all-time record highs.

Falling Rates & New Buying Opportunities

The average 30-year fixed rate over the past 50 years was about 7.7%, which is actually much higher than today’s 30-year fixed rate average that is almost 1.5% lower as of the first week in September 2025.

The peak high 30-year fixed rate over the past 50 years reached 18.63% in October 1981, while the low rate average fell to 2.65% in January 2021.

On September 5, 2025, the 30-year fixed rate reached a 6.29% rate average, as per Mortgage News Daily and CNBC. This rate was near the lowest 30-year fixed rate average dating back to October 2024.

Even if the Fed takes short term rates down to near zero again like in past years, the 10-year Treasury yield may still increase due to factors such as fewer foreign buyers for our Treasury bonds, rising federal debt, and potential future credit downgrades by credit rating agencies such as Moody’s, Standard & Poor’s, and Fitch.

To learn more details about potential interest rate directions, please read my article published on August 8, 2025: Are Lower Rates on the Horizon?

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Commercial Real Estate Trends

Each commercial asset class like multifamily, industrial, office, retail, and mixed-use across our nation has both positive and negative trends.

For some commercial properties owned by fortunate landlords, they may see 100% occupancy rates, record high rents, and all-time peak high property values. For other property owners, they may experience high vacancy rates, negative cash flow, and upside-side down values because their mortgage debt exceeds their current market value.

Let’s take a look below at some of the latest commercial real estate trends:

  • The estimated total dollar value of commercial real estate was $22.5 trillion as of Q4 2023, which makes it the fourth-largest asset class in the nation following stocks, residential real estate, and Treasury securities. (Federal Reserve’s April 2024 Financial Stability Report)
  • By July 2024, the national office vacancy rate reached a whopping 20.1%. This was the first time ever that the U.S. vacancy rate surpassed 20%. (CommercialEdge)
  • By early 2026, Moody’s forecasts office vacancy rates hitting 24%+.
  • In August 2025, the delinquency rate for office mortgages securitized into commercial mortgage-backed securities (CMBS) spiked to 11.7%, the worst ever default rate and a full percentage point above even the peak meltdown rate of the Financial Crisis (10.7%) during the 2008 to 2012 years, according to data by Trepp.
  • Almost 45% of all office buildings nationwide that are leveraged with debt are upside-down or underwater where the existing mortgage debt exceeds the current market value, per Bloomberg and Morgan Stanley.
  • To learn more details, please read my Are You Focused on Commercial Real Estate article.

Ballooning Commercial Loans & Motivated Sellers

Unlike most residential one-to-four unit properties that have 30-year fixed rate terms, most commercial properties have shorter term mortgages that may only last for a few years before they balloon or mature and must be paid off or refinanced.

Let’s review the ballooning commercial mortgage numbers below:

  • Approximately 20%, or $929 billion, of the $4.7 trillion dollars’ worth of outstanding commercial mortgages owed to lenders and investors were scheduled to balloon or become all due and payable by the end of 2024, as per the Mortgage Bankers Association’s 2023 Commercial Real Estate (CRE) Survey of Loan Maturity Volumes.
  • However, many of these ballooning loans were extended well beyond their maturity date because banks don’t want to acknowledge all of their current financial losses, just like back during the 2008 to 2012 era, or their bank’s stock value may go “pop.”
  • Upwards of $2.7 trillion for commercial and multifamily mortgages are set to balloon or mature by the end of 2026. (Mortgage Bankers Association)
  • In 2024, the U.S. apartment construction industry was expected to break a new all-time record for apartment units delivered with well over 500,000 units completed, which is 30% higher than back in 2022. (Fannie Mae)
  • When apartment unit supply exceeds tenant demand, rents and values tend to fall.
  • The rising multifamily apartment loan default rate is increasing due to a combination of rising adjustable rates that are resetting after 3, 5, or 7-years and skyrocketing insurance costs that creates negative cash flow.
  • The largest issuers for these ballooning commercial loans are community banks and thrifts that hold over half of these maturing loans through 2028.
  • Realloans offers interest-only and asset-based, no income verification commercial property loans with up to 30-year terms for most property types.

The Importance of Income-Producing Assets

Nearly 60% of Americans say they live paycheck to paycheck, according to surveys published by LendingClub.

Wealth distribution has become increasingly concentrated in the hands of fewer people since 1990. Overall, the top 10% of wealthiest Americans own more than the bottom 90% combined, with more than $95 trillion in wealth for the top 10%.

U.S. homeowners are 43 times wealthier than tenants. The average homeowner at retirement age has 83% of their net worth tied up in their main home.

The average age of a first-time homebuyer in the U.S. is 38, while it’s 49 here in California due to much higher prices, as per the National Association of Realtors.

The average U.S. home seller age in 2024 was 63. For many of these sellers, they first took a risky chance and bought their home more than 30 years earlier in their early 30s or late 20s.

The average homeowner at retirement age has 83% of their net worth tied up in their main home. Unless you’re in the Top 1%, the odds are quite high that the bulk of your wealth is concentrated in real estate if you’re fortunate enough to own now.

The average Social Security benefit here in 2025 is $1,976/mo. ($23,712/yr.), per Kiplinger.

The fastest growing demographic percentage increase in the workforce in 2024 was over the age of 75 because Social Security and pensions aren’t high enough, according to Pew Research.

Either you work hard for your money or you let your money or investments work hard for you when you’re awake or asleep. Yes, investing can be scary, but so can the thought of not having enough monthly income to cover your debts.

To be able to actually retire these days, many people need some form of income-producing assets creating monthly cash flow for them. It’s much riskier to do nothing today than to start investing as soon as possible.

The best time to start investing is now. Your future self and your family will later thank you.

Rick Tobin

Rick Tobin has worked in the real estate, financial, investment, and writing fields for the past 30+ years. He’s held eight (8) different real estate, securities, and mortgage brokerage licenses to date and is a graduate of the University of Southern California. He provides creative residential and commercial mortgage solutions for clients across the nation. He’s also written college textbooks and real estate licensing courses in most states for the two largest real estate publishers in the nation; the oldest real estate school in California; and the first online real estate school in California. Please visit his website at Realloans.com for financing options and his new investment group at So-Cal Real Estate Investors for more details. 

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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