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Volume 3: Issue 1 | Date: January 2, 2018
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PRIVATE CLIENT NEWSLETTER
You are receiving this letter because you are either a high-net-worth client of Blackburne & Sons Realty Capital Corporation (since 1980) or you once applied for a commercial real estate loan of $1 million or more using C-Loans.com or CommercialMortgage.com. Blackburne & Sons and C-Loans, Inc. are sister companies.
Today we’ll discuss how, as an investor, to handle a falling stock market and a strong economy. We have lots of cute, clean jokes, some funny pics, and a hilarious video of a guy trying to throw out his Christmas tree. If you do nothing else, guys, you’ve GOT to scroll down to the bottom and watch this funny video.
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Joke Du Jour
Oliver Purblicoff was teeing off from the men's tee. On his downswing, he realized that his wife, Maureen, was teeing up on the woman's tee directly in front of him. Unable to stop his swing, he nailed it, and hit her directly in the temple, killing her instantly. A few days later, Oliver got a call from the coroner regarding her autopsy.
Coroner: "Oliver, your wife seemed to have died from blunt force-trauma to the head. You said you hit a golf ball and hit her in the temple, is that correct?”
Oliver: "Yes, sir, that's correct.”
Coroner: "Well, inexplicably, I found a golf ball wedged up her butt."
Oliver: "Was it a Titleist 3?”
Coroner: "Yes, it was."
Oliver: "That was my mulligan.”
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You Are Now a Private Client of Blackburne & Sons
Please be sure to tell us when you call. "George asked me to mention that I am a Private Client of the firm.” My loan officers are trained to snap to attention. Our commercial mortgage office number is 916-338-3232. Alternatively, you can apply for a commercial real estate loan or a non-owner-occupied home loan by clicking here.
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Math Joke
If I had 50 cents for every math exam I've failed, I'd have $6.30 now.
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Want to Speak With a Loan Officer From Blackburne & Sons?
Blackburne & Sons, our private money commercial lending company, continues to seek slightly-flawed first mortgages between $100,000 to $1.5 million on standing commercial properties nationwide.
To apply for a private money commercial loan from Blackburne & Sons, please find your favorite loan officer below:
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NMLS #382122
CA DRE #01873244
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NMLS #389678
CA DRE #01430908
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NMLS #1014118
CA DRE #01919403
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NMLS #1535540
CA DRE #02012847
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Sick Friend Joke
My Chinese friend got really sick one day and had to go to a hospital. I went to see him the next day. He just kept whispering, “Nǐ zhàn zài wǒ de yǎngqì guǎn shàng,” over and over and then died. I was very sad and Googled his last message after the burial. Apparently, it means, “You’re standing on my oxygen tube.” (I promise that no friends were hurt in the making of this joke - Haha!)
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Earn Up to 12% Interest in Your IRA or Your Kid’s College Fund
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Friends Don't Let Friends Drive Drunk
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Where to Invest When the Dow is Falling
But Main Street is Cooking
- Today's Observation, Part 1 of 2 -
You may recall that back on November 14, 2018, I wrote to our investors: "...You need to get out of your FAANG stocks and your S&P 500 index funds immediately…." So how did the FAANG stocks get so overvalued? Arguably we can blame much of it on Warren Buffet. He once said on CNBC’s show, On the Money, 'Consistently invest in low-cost index funds.'
The problem lies with the way that S&P 500 index funds are structured. When a new dollar enters a S&P 500 index fund, that dollar is invested proportionately based on the market cap of a particular stock, divided by the total capitalization of all of the stocks in the S&P 500. As the market capitalization of the FAANG stocks started to increase, a larger percentage of every new dollar entering an S&P 500 index fund was poured into these FAANG stocks. This drove up the price per share of these stocks and made their market capitalization climb even higher… The smart money is now pouring out of FAANG stocks.
… You will recall that I sold all of the stocks in my company’s pension plan and my personal IRA 90 days ago. (I actually shorted the S&P 500 and got out the day before the 1,000-point rally. Phew!) Because FAANG stocks make up so large of a percentage of S&P 500 index funds, a five percent decline in the price of a FAANG stock is going to have a disproportionate effect on the return and value of such index funds. And because S&P 500 index funds have performed so well for individual investors, they are going to be reluctant to abandon them. The smart money will therefore get out of FAANG stocks first, followed by the smarter investors in these index funds, and followed lastly by the average investor, who will bear the brunt of the losses. The economy, however, remains strong. I do NOT see another financial crisis."
Part 2 of 2 Continued below.
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Vegan Joke
There’s that moment when you put your steak on the grill, and your mouth waters all over from that amazing smell. Do vegans feel the same when they mow the grass?
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Need a Commercial Real Estate Loan?
C-Loans.com is a commercial mortgage portal. It will take you just four minutes to complete your mini-app. Then C-Loans will sort through its databank of 750 commercial lenders and produce for you a custom-generated Suggested Lender List containing twenty to thirty lenders who are perfect for your particular deal. You put a check mark next to six lenders and then press, "Submit." Within minutes hungry commercial lenders will be contacting you with offers.
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The Man Had a Sense of Destiny
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Cake Joke
Many years ago my just married young cousin moved into an upstairs apartment and invited some of her women friends over for the evening. She put out snacks and then came out with a cake that looked like a disaster. She apologized and said she didn't know what happened to the cake because, she explained, "I even used the high altitude directions because I live upstairs."
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Where to Invest When the Dow is Falling
But Main Street is Cooking
- Today's Observation, Part 2 of 2 -
Therefore the stock market is arguably not falling because of the trade war with China, some missed profit estimates, or a loss of confidence in the President, but rather it is falling simply because it became overvalued. The Nifty Fifty blue chips stocks reached a similar level of overvaluation in the early-1970’s, and they underperformed the rest of the market for almost a decade. As Mark Twain once as said, “History doesn’t repeat itself, but it often rhymes.”
Okay, so where do you invest right now? Because the FAANG stocks are likely to generally decline for years, an S&P 500 short fund looks attractive me. (At the moment, my retirement accounts are entirely in cash and first mortgages.) I wonder if there are any index funds that specifically exclude the FAANG stocks? I would love to be short the S&P 500 and be long the rest of the market. What about gold? Surprisingly, gold is only a so-so inflation hedge, but it actually thrives during violent deflation, when investors are frighted of default on most paper assets.
But here is the point of today’s Private Client Letter: Don’t fail to expand your personal business simply because the FAANG stocks are unwinding their overvaluation. Main Street is booming. According to the Washington Times, 2018 was the Year of the American Worker.
"Not in the last 50 years has the jobs market been as strong as it is today. Start with the fact that at 3.8 percent the unemployment rate is matching its low point of the last half-century. Almost half of the states in the union now have their lowest unemployment rates ever recorded by the Labor Department. The labor market is so attractive for workers today that America is literally running out of qualified workers to fill all the jobs.
The latest jobs report spotlights 7 million more job postings than workers available to fill them. That’s a bigger number than the entire population of Indiana. An all-time high 130 million Americans now have a job.
The Black and Hispanic unemployment rates in October were lower in 2018 than they have been at any time since the day Neil Armstrong walked on the moon. This super-tight labor market gives workers more bargaining power with their employers. More and more Americans are demanding wage hikes from their employers and millions got those deserved raises. Pay gains in real terms this year are now estimated at 3 percent — one of the biggest increases in two decades
And don’t believe the Trump-haters who say that only the rich benefited. The Wall Street Journal reported last month that the lowest-paid Americans got the biggest gains. Who needs the minimum wage, when we have a booming economy with a tide that lifts all boats. In 2018 some 4 million workers got pay bonuses from employers thanks to the Trump tax cut. Companies from Disney, to Walmart, to Fed Ex to Amazon handed out bonus checks and benefit boosts typically ranging from $1,000 to $3,000…
On top of these bonuses, my colleagues at the Heritage Foundation report that the typical middle-class family received more than a $2,000 tax cut this year thanks to the Trump tax plan. But more than any catalog of statistics, it may be the real-life news stories over the last year that help us appreciate the great American employment surge. CNBC reports that hiring of ex-convicts is rising rapidly as employers search for ready and able workers. In some instances, employers are so hungry for labor that they wait outside the prisons for the inmates to be released so they can hire them. Or there is the story of truckers in the oil patch in Texas getting $50,000 and even $100,000 signing bonuses — as if they were superstar professional athletes.
In other areas of the country, manufacturers are now advertising on billboards that prospective job applicants don’t have to pass a drug test to be considered. Even 94 percent of high school dropouts who want a job, have one. The bottom line is this: There has never been in most of our entire lifetimes a better time to be looking for a job than today. Unemployment is nonexistent in almost all parts of the country. Wages are rising for the first time in two decades. Americans are again the most productive and among the highest-paid workers in the world.”
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If You Cannot Find a Lender on C-Loans, Then Try Our 2nd Portal
We actually own another commercial mortgage portal, CommercialMortgage.com ("CMDC"). I paid $100,000 just for that domain name. Ouch. Actually it was very worth it. Anyway, CMDC is a much easier and faster commercial mortgage portal than C-Loans. In addition, CMDC enjoys over 3,000 different commercial lenders.
So why shouldn't you just always use CommercialMortgage.com? Unlike CMDC, C-Loans.com actually allows you to submit your commercial loan to dozens and dozens of commercial lenders, six lenders at a time. But if C-Loans doesn't produce just the right lender, then you should move on to CommercialMortgage.com. And best of all, both our our commercial mortgage portals are 100% free.
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Postman Joke
I scared the postman today by going to the door completely naked. I'm not sure what scared him more, my naked body or the fact I knew where he lived.
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Don’t Be Afraid of 7% to 12% First Trust Deeds. We Have Been Selling Them For Almost 40 Years
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Barber Joke
A local barber in my area just got arrested for selling drugs. It blew my mind because I’ve been his customer for years. I had no idea he was a barber.
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Here's Why You Want to Stay Close to Blackburne & Sons
Founded in 1980, Blackburne & Sons is an old-time syndicator. There are very few of us left. The Tax Reform Act of 1986 pretty much nuked the whole syndication industry off the face of the Earth. Because you know a syndicator, you now have access to some special money.
If you need a fix and flip loan, a buy-to-rent loan, a bridge loan, or even a permanent loan on, say, your single-wide trailer park in Georgia, we'll make you a private money loan. We've been syndicating hard money loans for 38 years.
If you have some dough set aside for your kid's college, and you want to be extra careful with it, we'll put you into a first trust deed investment (6% to 9% yields) on, say, a nice 8-unit apartment building in San Jose, California.
Let's suppose you are richer than Crassus, and you want to speculate in 11% and 12% first trust deeds. We've got them.
Do you find yields of even 11% to 12% too tame? Want a chance to earn 16% or 17%? We put together syndicates to make preferred equity investments.
Are you a wise investor? We put together syndicates to buy investment properties for all cash. (This strategy has my strongest recommendation.) Because you would own the property free and clear, you should be able to weather just about any recession. Right now we are buying industrial buildings close to downtowns in big California cities.
We have not yet raised equity capital for a developer, but if someone brought us a development deal on a small, multi-tenant industrial building located within a mile of downtown of a large California city, we would definitely take a look at it.
Do you own any first mortgage notes? Want to sell a note at a discount? Better yet, why not simply borrow against it? This is called a hypothecation, and we do 'em.
Please be very wise and play close attention to the following:
Because every loan we make is a new syndicate (as opposed to a fund investment), Blackburne & Sons is always in the market.
When the stock market has fallen by 40%, when real estate values are falling like a knife, and when your own bank is too terrified to lend you a dime, Blackburne & Sons always has a group of savvy investors willing to lend - admittedly at a price - when blood is running in the streets. We are one of a tiny handful of lenders who remained in the market, making loans, every single day of the Great Recession.
So stick close to us. Syndicators are pretty rare, and now you know one.
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Text Joke
8 p.m. I get a text message from my girlfriend, "Me or football?!'
11 p.m. I texted my girlfriend, “You, of course.”
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Sweet Apartment Loan Program for "A" Deals
You're probably used to thinking of Blackburne & Sons as a subprime commercial lender, but since our acquisition of CommercialMortgage.com (I paid more than a house), some of the nation's largest commercial mortgage investors are giving us wonderful opportunities. Please be sure to check out our great new apartment program.
To apply for an apartment loan from Blackburne & Sons, please find your favorite loan officer below:
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NMLS #382122
CA DRE #01873244
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NMLS #389678
CA DRE #01430908
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NMLS #1014118
CA DRE #01919403
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NMLS #1535540
CA DRE #02012847
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Final Funny
Father buys a lie detector that makes a loud beep whenever somebody lies around it. The son comes home in the afternoon. Father asks him, “So, you were at school today, right?”
Son: “Yeah.”
Detector: “Beep.”
Son: “Okay, okay, I went to a movie.”
Detector: “Beep.”
Son: “Alright, I went for a beer with my friends.”
Father: “What?! At your age, I wouldn’t touch alcohol!”
Detector: “Beep.”
Mother laughs: “Ha-ha-ha! Well, he really is your son!”
Detector: “Beep.”
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Read the C-Loans Blog
Pick up lots of great commercial brokerage practice tips for free.
Click here and bookmark it.
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BLACKBURNE & SONS
Realty Capital Corporation
4811 Chippendale Drive, Suite 101
Sacramento, CA 95841
P: (916) 338-3232
F: (916) 338-2328
NMLS #103430
CA DRE #829677
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Angela Vannucci
Executive Vice President
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A member of the Blackburne Family of Companies
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