Trajan Financial Updates and News…

Please remember that the deadline for making a 2010 IRA contribution is April 18, 2011, because Emancipation Day, a holiday observed in the District of Columbia, falls this year on Friday, April 15, 2011. To ensure that prior year contribution checks are ingood order and meet the 2010 contribution deadline, the envelope in which the contribution is received must be postmarked on or before April 18, 2011.

AN END IN SIGHT FOR FANNIE & FREDDIE

Friday, the Obama administration presented a plan to wind down Fannie Mae and Freddie Mac by 2018, with Treasury Secretary Timothy Geithner citing “very broad consensus” that the government should play “a much smaller role” in the housing market. So what will replace them? The plan puts three options before Congress. In one option, the government would leave the mortgage market save for the VHA, FHA and other existing agencies. Two other options would set up “re-insurance” programs. A limited version would guarantee private mortgages only in economic or real estate downturns; another would provide a backstop for mortgage investments already guaranteed by private insurers. All three options would pave the way for higher mortgage costs. The Treasury and HUD have also suggested phasing in a short-term requirement for borrowers as Fannie and Freddie are unwound: homebuyers would have to put 10% down for any mortgage backed by the GSEs

As of right now, the total value of distressed commercial real estate in the US has reached $186.9 billion, including properties in distress, foreclosure and lender REO, according to data from Real Capital Analytics.

The office sector continues to represent the largest share of distress, at $47 billion, according to the report. The hotels sector is now in second place with $36.6 billion in properties in default or foreclosure, plus lender REO, followed by apartments, which has $35.3 billion.

Some say this is a sign of a plateau .  But no one has a crystal ball…

starting rate at 8.5%

Loan Amount: $100k to $3 million

Residential and Commercial Properties OK

Investment and Second Homes OK

Condo’s and Condo Hotels OK

Purchase – Refinance – Cash-out OK

Foreign Nationals OK

Partial construction loan from luxury home OK

This is a stated type of program, verifiable assets, needs to show ability to pay.

Up to 55% LTV

South Florida Only

Acquisition of Non-Performing Notes

(Commercial Portfolios)

$2MM - $50MM

Lending for borrower’s that want to purchase loans (which are in various stages of foreclosure) from a third party lender at a discount with the intent of obtaining ownership of the underlying assets.

The loan will be structured to provide the borrower with the flexibility to complete the foreclosure actions and pay our lender off as each of the assets are obtained, refinanced or sold. Our lender expertise with the workout and foreclosure process allows them to quickly assess the various risks associated with these transactions, while providing the borrower with the needed leverage needed for acquiring notes.

Lender will lend up to 85% of purchased note.

Debt Settlement, a better option

Trajan Financial Corp has teamed up with an affiliate who is an accredited member of the United States Organizations for Bankruptcy Alternatives and who’s negotiators can reduce your debt by 50% or better. If you have unsecured debt of over $10,000 and are looking to be debt free in 3 years or less contact me today! 305.431.2828  Ask about our referral program!

Income Producing Properties

Loan Amount: $2MM and up

Purchase/Refi: 5.00 fixed/35 years

Rehab/New Construction: 6.50 fixed/40 years

*All rates are subject to change. Higher LTV’s available with compensating factors.

Commercial Private Lending also Available

Nation Wide: $300k and Up!

International: $10MM and Up!

Purchase, Re-fi’s, Equity-Joint Ventures

Kenny Childs is an attorney with Kyler, Kohler, Ostermiller & Sorensen, LLP (“KKO Lawyers”), who regularly helps his clients with estate planning issues. He has written this article to share some advice with us on how to handle and “pass-on” the family business.

Is fairness between your children important to you and your family? How do you divide your estate between your children who have worked and been involved in the family business all their lives and those children who haven’t? Should the children in the business buy the business on sweetheart terms and still share equally in the estate? This is a major issue for those families operating their own businesses. The biggest mistake you can make is failing to address this issue in your estate plan. Failing to make these sorts of decisions before you pass away can cause years of contention and pain for your surviving family members.

Generally speaking, we believe that if you have children involved in the family business and both you and the children want to keep the business after you pass on, it is critical that the children who are in the business buy or inherit all of the business interests and if possible, the business real estate. Otherwise, the family is left in a state where they have serious conflicts of interest. We have seen relationships between family members destroyed because a parent thought it wise to leave a child not involved in the business his or her “share” of the business so he or she could receive an income stream and not feel left out.

The problem with this is that most family owned businesses do not pay significant dividends; the child not working in the business owns a valuable asset but it is useless to him or her unless the business is sold. On the other hand, if there is a significant dividend or distribution out to the child not working in the business, the children in the business feel as if the non-working child receives significant dollars while doing nothing. Also, children in the business will also have different investment and cash flow goals for the business than the outside child. This does not mean that all of the children cannot inherit equal values; it just means that the children outside of the business should inherit other assets, not the business.

In dealing with dividing the business real estate, we usually recommend that the children in the business either buy or inherit the property. When this isn’t possible, consider putting in place a lease that can only be terminated by the company and that sets a fair market value for rents based on an appraisal done every few years or a lease involving automatic increases. The children in the business can also be given an option to purchase the real estate within a certain time period for its fair market value. This allows them to buy some time after the parents have passed on to prepare to purchase the real estate from the estate.

In order to accomplish the goal of having a clean break between the children involved in the business with those that aren’t, there needs to be liquidity within the estate in order to “pay off” the children that won’t be involved in the business. Other assets that may pass to children not involved in the family business include the personal residence, retirement plans, savings or investment accounts, rental or other investment property and life insurance proceeds. If your estate is lacking in other assets to pass to children not involved in the family business, then life insurance is almost always the best route to take to give liquidity to the estate.

As we have discussed in previous newsletters, in order to avoid estate taxes on life insurance, we use an Irrevocable Life Insurance Trust that effectively gets the life insurance out of the estate before you pass away in order to avoid the insurance proceeds from being added to the value of your estate. Beware however, that this strategy is not one to implement on your death bed as you would obviously be uninsurable at such a time and if you do pass away within three (3) years after an existing policy is assigned to an Irrevocable Trust, the full value of the policy is subject to estate taxes.

Another way to give liquidity to your estate is to begin investing now outside of the business. So many times our clients are focused exclusively on re-investing inside the business, which is obviously very important, however this creates all of the wealth to be passed on limited to the business itself, which fails to provide liquidity for those children outside the business. Consider not paying off all of the business debts immediately and consider making investments apart from the business. A 401(k) or other retirement plan may be a good start. Obviously there is a delicate balance to be struck here and decisions regarding where and when to make such investments should not be taken lightly.

The biggest mistake you could make is failing to implement a plan long before you pass away. The older you get the more limited your options become in implementing different strategies to both minimize estate taxes and to ensure fairness in dividing the family business between your children. Furthermore, providing all of the children a plan in advance gives the children time to come to terms with the division of the estate and do their own planning for the future based on the division. Allow a way for your family to avoid the grief and pain caused by failing to properly plan for a division of the family business long before you pass away.

If you feel this is an issue your family needs to address, please call the offices of KKO Lawyers to make an appointment with Kenny Childs and tailor an Estate Plan to your situation. If you have any questions or feedback, feel free to comment.

LoopNet, the largest online marketplace for commercial real estate properties, said a recent survey showed most of its members don’t expect a recovery in the market until 2011.

The fourth quarter 2009 LoopNet Pulse Poll said the number of respondents that think commercial real estate transactions will rebound in 2011 jumped to 46 percent from 13 percent in its third quarter survey.

And 50 percent said they anticipate a rebound in 2010, down from 66 percent in the survey taken in the third quarter.

The poll was taken by LoopNet members, which include commercial real estate investors, brokers and owners.

Investors were slightly more pessimistic in the fourth quarter, and had a median expectation of recovery timing that’s about one quarter later than that of brokers and owners, LoopNet said.

Bizjournal

By Anton Troianovski

More evidence that commercial real estate continues to worry the Fed: The minutes from the September meeting of Federal Reserve’s Open Market Committee.

The underlying theme of the Fed’s view of the real-estate market comes as little surprise. Even as the housing market shows signs of life, commercial property continues to be a drag on banks and the economy. We recently reported on the Fed’s commercial real estate concerns in a story about a Fed presentation saying that U.S. banks are slow to take losses on their commercial property loans.

The Fed minutes add some color to that theme. Committee members echoed what landlords out there know well: commercial-property fundamentals are far from hitting bottom. “In contrast to developments in the residential sector, commercial real estate activity continued to fall markedly in most districts, reflecting deteriorating fundamentals, including declining occupancy and rental rates and very tight credit conditions,” the minutes say. While most of the committee’s members believe that the financial markets are improving overall, some are concerned that “many regional and small banks were vulnerable to the deteriorating performance of commercial real estate loans.”

Read full article:

http://blogs.wsj.com/developments/2009/10/14/commercial-real-estate-continues-to-worry-the-fed/