Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Which Real Estate Niche Do the Wealthy Prefer?

Alina is the founder and managing partner of SAMO Financial, a boutique private equity firm specializing in helping a select group of people passively invest in commercial real estate. Which Real Estate Niche Do the Wealthy Prefer?


For over six years, Alina has been an equity partner in various multifamily private placements nationwide.

Her business motto has been articulated well by Warren Buffett: “Someone is sitting in the shade today because someone planted a tree a long time ago.”

Her passion is to teach others how to build wealth. As such, Alina is the founder of two meetup groups named “The Power of Passive Investing Through Real Estate,” which gather in New York and New Jersey.

In addition, she offers educational webinars in collaboration with various administrators of self-directed IRA companies. Topics revolve around aspects of getting started investing in real estate, particularly in syndications by using funds in solo 401(k) or self-directed retirement plans.

Alina has helped her clients acquire and invest in: over 1,200 apartment doors, over $10MM in funds focused on self-storage, and over $10MM in funds focused on mobile home parks.

It was a beautiful sunny spring afternoon about three or so years ago. I had a meeting set up at Starbucks with a potential investor, Stu. Why Starbucks? You probably guessed it—it offers a comfortable and semi-private setting for people to have a conversation and enjoy a Grande cup of expensive (yet mediocre) coffee. Consequently, Stu and I both opted for bottled water.

From a cursory look, Stu was a regular guy who blended in, which obfuscated just how much cash he has been sitting on for quite some time.

We exchanged the usual pleasantries and went through the normal banter about appreciating warmer weather so early in the spring. I inquired about Stu’s family. He described his family: his wife of 30-plus years and his two kids, both of whom were grown and lived on their own. So then I pressed on to ask Stu about his investment goals. He paused for a second, and then in his own quiet way inquired about my background.

As I shared my story, our conversation flowed as if we were old friends. I weaved in a few more questions about Stu’s and his wife’s professional journeys. He casually responded that in the past they both had worked at banks, but they retired early to enjoy life. I was simultaneously impressed and surprised since I don’t meet many retirees who prefer to diversify into new types of investments. Which Real Estate Niche Do the Wealthy Prefer?

Why the wealthy choose syndications

I decided to ask Stu directly: “If you are already enjoying your retirement, then you don’t really need more money to build your wealth, do you?” Stu basically agreed, and elaborated that his and his wife’s main goal was to continue building their wealth in order to help others re-create what they were able to retain and produce for their family.

Next, I asked about how they were able to build their wealth? He smiled and admitted that most of his family’s wealth had originally been built by his parents—mainly his father who had discovered real estate syndications long before home computers existed, and back when real estate syndications were called “private placements.”

At this point, Stu said that he didn’t quite understand how so many well-off people (like his family) have been able to take advantage of real estate syndications, while many other investors are missing the boat. “Certainly,” Stu mused, “there are risks associated with this type of investment just as there would be with any other, but the benefits far outweigh the risks.” So, Stu and I discussed the aspects that people should consider before investing in real estate syndications. They are conveniently identified and discussed below.

A true passive investment

Your job is to research and understand what syndication is, and then how to evaluate an offering; at that point, your work is pretty much done. So if an investor has a primary business or practice, or is a professional with a successful career, or is simply enjoying their life and doesn’t want to spend time dealing with tenants or toilets, then investing in syndications is the way to go!

Preserving your capital

While it depends on each specific investor’s strategy, many look to find ways to keep risks low and minimize losses. It is not uncommon for syndications to earn on average 8-10% of cash-on-cash return over an approximate five-to-ten-year period.

While the stock market targets around 7% annual return, it has many drawbacks. Most notably, the stock market doesn’t offer nearly as many tax benefits, and it is absolutely unpredictable.

Relying on calculated risk

When it comes to real estate investing, diligent underwriting is critical. Experienced syndication operators ensure that the risks associated with a particular investment are accounted for in their underwriting.

Leveraging tax advantages

There is absolutely no doubt that real estate is one of the most intelligent ways to reduce your tax burden. This can be accomplished in a number of ways: depreciation, cost segregation, 1031 exchanges, Opportunity Zones, and tax-loss harvesting (just to name a few). And all of the aforementioned tax strategies may be utilized when investing in a variety of real estate syndications.

In general, real estate offers great tax benefits. It all comes down to hiring an expert CPA who is not only knowledgeable regarding tax compliance, but is also real estate savvy and can offer tax strategies to help you plan ahead.

Generating residual income

You review the offerings, make a decision as to which individual asset or real estate fund to invest in, subscribe, and wire the funds. That’s it; your work is done. Really? Yes, really! From this point on, you sit back and allow the operator to do their job, while you collect your monthly or quarterly dividends directly in your bank account.

Risks to consider

No investment is without risk. Here are some things to consider before diving into syndications.

No management decisions

When you invest passively in a syndication, you are essentially giving up your right to participate in the decision-making process for this investment. This comes with a bonus though: you’re investing as a limited partner, and hence your liabilities are limited to your original investment.

It’s not your typical liquid investment

If you buy a stock or a mutual fund (or anything on the stock exchange, for that matter), you technically can sell it any time you want. This sort of liquidity is not possible in real estate syndications. The way real estate syndications are structured, an investor basically invests and forgets about it until the deal has a capital event or the property is sold.

There is some flexibility, however, when it comes to investing in closed-ended funds. Closed-ended funds usually have a so-called “lockdown period”—which may be a year or two—after which you’re free to take your investment out.

Longer duration

If you plan to invest in a value-add type of project or even new construction, be prepared for the long haul. It may take a while for a project to go through its full cycle. A common underwriting period is usually five to seven years. So as long as you invest money on which you will not be relying within that time period, you are good to go.

Grow your wealth through passive investments

As one of my most favorite investors of all time, Warren Buffett, once said, “If you don’t find ways to make money while you’re asleep, you are going to work till the day you die.” So, the greater the number of these passive investments that are ongoing simultaneously, the better off you are. Not only are they generating passive income, but they are also helping you save on taxes.

Before leaving Starbucks and going our separate ways, I asked Stu if this was enough material for him to start spreading the word—so that more people could start taking advantage of the same strategy that well-off folks like him had for years. Stu looked at his notes, nodded, and thanked me.

After all these years, I still think back to that conversation with Stu about the incredible investing strategy that: one, generates passive income for you while you sleep; two, allows you to save on taxes; and three, in some cases, also makes a positive impact on communities. I hope you can take something from this and apply it to your own investing plans. Which Real Estate Niche Do the Wealthy Prefer?

The inspiration for today’s edition came from this original article:

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

 Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: What $27 Trillion In Debt Looks Like!

Visual Capitalist has released another analysis filled with their usual nifty visuals that puts the sheer quantity of the government’s rapidly increasing debt into perspective. What $27 Trillion In Debt Looks Like!

The rapidly climbing chart actually looks better than it is because, as you can see, 2020 is broken out into quarters and doesn’t even go all the way until the end of the year. Indeed, the chart appears to be exponential, which is not a good thing when it comes to debt. After all, what can’t go on forever, doesn’t.

At least regarding the deficit, however, things are projected to improve and get back to a more “normal” deficit. Unfortunately, it is still not projected to get anywhere near a balanced budget anytime soon. Indeed, over the past 35 years, we only had a positive surplus for a very short while in the late ’90s.

The debt, on the other hand, has grown enormously both in real terms and as a percentage of GDP. And Visual Capitalist notes:

“U.S. debt was relatively moderate between 1994 to 2007, averaging 60% of GDP over the timeframe. This took a drastic turn during the Global Financial Crisis, with debt climbing to 95% of GDP by 2012.

“Since then, America’s debt has only increased in relative size. In April 2020, with the COVID-19 pandemic in full force, it reached a record 122% of GDP. This may sound troubling at first, but there are a few caveats.”

The government debt has effectively doubled over the past 15 years.

And of course, as every borrower knows all too well, this amount of debt comes with very large interest payments that continue year in and year out as the debt grows larger. “For FY2019, this was approximately $327 billion,” per Visual Capitalist.

Components of the federal debt

The piece by Visual Capitalist also notes where all of this spending goes. A full 62.2% of spending, or $2.735 trillion, goes to mandatory spending, including things like health programs ($1.1 billion), social security ($1 billion), and income security ($301 billion).

30.4%, or $1.338 billion, goes to discretionary spending, which includes things like transportation ($100 billion) and education ($72 billion). But by far the most goes to the military, at $677 billion (which accounts for 37% of the entire world’s military spending). And again, there’s that pesky $327 billion that goes toward debt service.

I should note that this doesn’t include state and municipal government spending, which is where most of the spending for things like education comes from. What $27 Trillion In Debt Looks Like!

The inspiration for today’s edition came from this original article:

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

 Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Hidden Value of Distressed Properties!

 Are you sick and tired of being outbid for investment real estate in this overheated market? Or even worse, are you overpaying for real estate just to deploy capital and get in the game? Hidden Value of Distressed Properties!

If you’re on the first path, you may be settling for dismal returns and missing out on real estate’s amazing tax benefits and appreciation. And you may be subjecting yourself to the whipsawing stock market or dismal yields in bonds. Or enjoying a lumpy mattress stuffed with cash.

If you’re on the second path, you might be on the tracks of an oncoming freight train. It may work out. I hope it does. But hope isn’t a sustainable business strategy for most of us, at least in my experience.

I’m writing today to propose a better path. A powerful path that could…

* give you access to deals others miss.

* protect you from downside risk.

* provide income and growth others only dream of.

* pave a path forward for your success in any market or economy.

Notice I didn’t say it was easy. Nothing good is easy. At least that’s what the old-timers say.

Also, notice I didn’t say it would work in every asset class. I believe the principles apply to every asset class, but certain types of real estate lend themselves to this type of thinking and action. Others, not so much.

Intrinsic vs. extrinsic value

Warren Buffett told us that price is what we pay, but value is what we get. Discerning the difference is the key to what I’m about to lay out.

The price of an asset reflects its extrinsic value. The intrinsic value is the often overlooked and typically unknown value locked within the asset. It takes a skilled eye to spot the latent potential in that asset and a skilled hand to extract that value.

Thousands of real estate assets are performing “fine.” They are operating exactly as designed, and their owners are quite satisfied with them. And these owners are elated that the rising tide of an overheated market can fetch them top dollar when they sell.

Now, if you are a savvy buyer with an eye for intrinsic value, you may be able to see the potential of the asset that is being completely overlooked by the seller who’s done things his way for decades.

You can’t change the cap rate, and you probably won’t talk this owner down to a lower price. And you can’t get this property from a bank that repossessed it.

In this overheated market, you will probably pay full price. But if you can see the hidden value and know how to extract it, you can make a fortune for yourself and your investors. Yes, even after paying full price.

An ancient Rabbi told the story of a valuable treasure hidden in a field. A man discovered this treasure and buried it again. Then he went and sold everything he had and bought that field. This is what I’m talking about in this post.

The extrinsic value changed dramatically. But the intrinsic value remained the same. It took our operating partner to see this value and extract it on behalf of investors.

I believe this strategy can work well for all types of real estate. But after being involved in many asset classes over 20+ years, I see a few issues that stand out.

First, I believe this works especially well for commercial real estate assets. Why? Because appreciation can be forced. The value is based on a math formula. The value can be raised by increasing the numerator and compressing the denominator (when possible). Often dramatically, as we’ve seen.

The commercial real estate value formula: Value = net operating income / cap rate.

Secondly, I recommend you choose an asset class with a fragmented ownership base. One that has a large percentage of unsophisticated owners and operators who don’t have the knowledge, resources, or desire to increase income and maximize revenue.

These owners have greatly profited from the rising tide that raised all boats in the past decade and never dreamed of the price they could now receive for their run-of-the-mill asset.

Third, I recommend you seek off-market deals. This certainly isn’t necessary for the strategy to work, as we see in case study #1 above, but it sure helps. And finding off-market deals is a game for the obsessively passionate, full-time real estate strategist, for the most part.

So, what if you’re not full-time in real estate? Can you still get these benefits? Certainly. I have never run a self-storage facility and never managed a mobile home park. As a professional passive investor, I make good money from passively investing in these assets through professional syndicators.

This may be the era of overheated real estate. But if you know how to find deals like this or know someone who does, it’s a fabulous time to invest. As it always is. Hidden Value of Distressed Properties!

The inspiration for today’s edition came from this original article:

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Should You Buy Mortgage Points?

Just like many investors and homeowners, I was recently considering refinancing a rental property I own. After submitting my application, I received a table of rates available to me. I could get a mortgage with an interest rate around 3.5% with minimal closing costs, or I could choose a lower interest rate if I was willing to pay a larger upfront closing cost for mortgage discount points. Should You Buy Mortgage Points?

This scenario is undoubtably familiar to anyone who has secured a mortgage before. A lender offers a choice of a “base rate,” or a lower interest rate in exchange for more money upfront. It begs the question—when should you invest your money in a lower interest rate?  At what point is it beneficial for the borrower to shell out some additional cash at closing?

To answer this question, I searched for a mortgage points calculator and what I found was terrible! Of the five or so websites I looked at, not a single calculator properly evaluated when to buy down your interest rate on a mortgage. All I found was overly simplistic calculators to mislead borrowers (intentionally?) and benefitted the lending institutions. It frustrated me more that I should probably admit. I could not let that aggression stand, man. The dude does not abide!

Here’s what we’ll discuss today:

* Buying points can either boost or hurt your returns depending on two primary factors: how long you plan to remain in the loan, and what you would do with your money if you didn’t invest it in mortgage points.

* Using net present value (NPV), we can weigh an investment (buying points) against an alternative investment. When the NPV is positive, the investment will deliver the better return. When NPV is negative, the alternative investment is the better choice.

* The shorter your intended hold, the less likely it is you should buy the points (because you won’t enjoy the benefits of lower monthly payments for long enough to justify the upfront expense).

* The higher your discount rate (the return on your alternative investment), the less likely it is that you should buy points.

What’s a mortgage discount point, anyway?

When you apply for a mortgage, the bank factors in a complex set of factors in determining which rate to offer you. You can see my deep dive on interest rates here, or TL;DR: The federal government, the broader economy, and your personal credit worthiness all play big parts in the interest rate of any given loan.

But the banks have flexibility in what rate they offer you. They offer you a base rate, but then also offer you “points,” or discount points which reduce the interest rate on your mortgage. Every point costs about 1% of the mortgage—so buying a property at $250,000 means one point would cost $2,500. 

Buying a point reduces your interest rate by about 0.25% for the lifetime of your loan. For a $250,000 mortgage, you’d pay $2,500 in exchange for a 0.25% reduction in your interest rate over the lifetime of the loan.

Good deal, right? Maybe? Who knows?!

Should I buy points?

Whether or not to buy points comes down to a simple tradeoff:

* Pay more upfront to save money later or…

* Save money now in exchange for higher monthly payments for the lifetime of your loan.

While this seems like a simple matter of personal preference, there is actually a mathematical answer to this. You can actually calculate whether buying points is a better financial decision than taking the base rate.

To them, all you have to do is figure out how much buying the points costs you at closing, then divide that by the monthly savings. Voila, you know how long you need to hold a property in order to benefit from buying points.

Let’s use an example to further illustrate this concept.

Let’s say Molly Mortgage is looking at a rental property that costs $400,000. She is putting 20% down, and therefore is taking out a loan of $320,000. For a 30-year fixed mortgage, Molly is offered a 3.5% interest rate, with closing costs of $4,500. This means her monthly payment for principal and interest comes to $1,437.

Alternatively, Molly can buy her mortgage down three points to a rate of 2.75%. This would increase her closing costs to $14,100 but reduce her monthly payment to $1,306.

If the banks and other websites were right, then all we need to do is calculate the break even points. Here’s what you should know first:

* Break even: The cost of points divided by the monthly savings, expressed in a number of months

* Cost of points: The closing costs with points, minus the base closing costs

* Monthly savings: The base monthly payment minus the monthly payment with points.

Here’s how to calculate this in Molly’s example.

* Cost of points: $14,100 – $4,500 = $9,600

* Monthly savings: $1,437 – $1,306 = $129

* Break even: $9,600/$129 = 74 months

So, if Molly holds on to her property for greater than 74 months she wins, right? No! This is the oversimplified math banks want you to use.

As an investor, you need to be thinking about how else that $9,600 could be used if you don’t invest it into buying mortgage discount points. This is where the “time value of money” (TVM) comes in.

Time value of money

If I were to give you the choice between receiving $5,000 today or $5,000 in three years, which would you chose? Most people would say they want the $5,000 today. Who in their right mind doesn’t want cash in hand?

But there is more to this question than the simple desire to have more money today. The reality is that the $5,000 you could receive today is actually worth more than the $5,000 in three years.


Because you can invest it. If you take the $5,000 today and invest it for the next three years—presuming you have positive ROI on your investments—you’ll have more than $5,000 in three years.

This is the idea behind the time value of money: Money today is worth more than the same amount of money in the future.

Let’s continue the example of receiving $5,000 today or in three years to further this idea.

If you chose the $5,000 today, you could take that money and invest it into an index fund that returns 9% per year.

Using the compound interest formula—principal *(1+rate of return)^term—we can see that in three years we would have $6,475.15. By choosing to take the $5,000 now, you are gaining $1,475.15 you would not have if you took the $5,000 in three years.

Put another way, the $5,000 today is worth $1,475.15 more than $5,000 in three years. That’s a big difference!

The time value of money and mortgage points

The time value of money must be factored into the mortgage discount point buying decision. We have to take into account the fact that the monthly savings we enjoy from buying points is not worth the same over the lifetime of the loan. The value of that savings decreases over time!

We need to discount the value of our future cash flow (savings on monthly mortgage payments) to account for what alternative investment we could be making with that cash.

We do this using a very handy financial metric known as net present value (NPV). This allows you to measure the return on one investment, such as buying points on your mortgage, versus an alternative investment—like investing that money in an index fund.

Essential to the NPV calculation is the “discount rate,” which is the rate of return you expect you could generate from an alternative investment. Using our example above, our discount rate would be 9%, which is the return on our index fund.

This number could take on any form, though. If you invest your spare cash in a savings account that yields 2% annually, use that as your discount rate. If you wouldn’t realistically invest the money saved from not purchasing the points, then use 0%.

Best of all: NPV is super easy to interpret. If it’s positive, the primary investment (buying points) is the better option. If the NPV is negative the alternative investment is better. Easy!

Again, we’re not going to get into the details of the math here (after all, I built a calculator for you all to use), but take a look at the table below:

As you can see, each month we have our cashflow. In month 0 (the origination of the loans), our cashflow is -$9,600, which is what it costs us to buy three mortgage discount points. Every month after that we expect cashflow of $130.57 in positive cashflow.

But knowing what we do about the time value of money, we know that that future money is actually worth less than money today, and we therefore need to discount it! We do that with the discount rate and a formula called present value, which you can see in the third column. When we factor in the time value of money, the value of the monthly cashflow declines every month!

Lastly, we get NPV, which is basically the sum of all the values in the “present value” column.

And there we have it—the proper way to evaluate whether or not to buy mortgage discount points. If the NPV is positive on the date you exit the loan, you made the right call. If the NPV is negative when you exit the loan you should have gone with the alternative investment.

To hammer this all home, let’s get back to our example from Molly. When we last left her, she had calculated her break even point at 74 months, using some website that misled her.

The break even point is actually a moving target, based on your discount rate. As we can see from this chart, the lower the discount rate, the lower the break even point. And that makes sense! If Molly were only earning 1% on her alternative investment, buying the points is a solid investment, and would pay her back in just 76 months.

However, if you’re earning 9% in an index fund like Molly could be, it would take 108 months for Molly to break even.

See how this works? If you could be earning a great return elsewhere, the proposition of buying points becomes worse and worse. And this is true regardless of what interest rate your mortgage is at or how many points you buy:

Sure, the exact break even point—when the line hits zero and NPV becomes positive—depends on the interest rate of your loan, but the pattern is always the same.

So, if this scenario were real life, and Molly were presented these options with a discount rate of 9%, the calculators I looked at the other day would have told Molly her breakeven point was 74 months… when it is really 108 months. That’s almost a three-year difference! This type of discrepancy can make a huge difference in investing returns over time.

Always factor in the time value of money when making an investment—especially if you’re considering purchasing mortgage discount points. Should You Buy Mortgage Points?

The inspiration for today’s edition came from this original article:

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: THE BEST MEMORY CARE!

Dementia, and specifically Alzheimer’s, is a serious, growing problem. In fact, 1 out of every 10 adults over the age of 65 has Alzheimer’s dementia. As Houston’s senior population continues to grow (22% growth between 2013 and 2017), so does the concern about aging and the risk of cognitive impairment. THE BEST MEMORY CARE!

In Houston, the number of deaths for those 65 and older caused or partly caused by Alzheimer’s disease rose 134.7% between 2013 and 2017. To put that in perspective, the number of deaths from all causes for that same age group only increased by 12.71%, showing that Alzheimer’s is a growing concern in the region. Overall, the percentage of seniors’ deaths related to Alzheimer’s is similar lower than the rest of the nation (5.61% in Houston vs. 6.46% in the U.S.).

To help families and caregivers of those with Alzheimer’s or other forms of cognitive impairment find the support and care their loved ones need, we applied our unique methodology and spent dozens of hours researching senior living communities in Houston. In addition to an overview of the communities’ best features, this guide highlights the best memory care facilities in the city, and gives information about pricing, types of care provided, residents’ reviews, and more.

According to the Alzheimer’s Association, 83% of all caregivers are unpaid family members, relatives, or other friends, and nearly half of all care is for older adults with some form of dementia. Caregiving, especially when it involves Alzheimer’s or dementia, is extremely exhausting and time-consuming, leading many caregivers to feel isolated and overwhelmed.

As a loved one continues to progress through the stages of dementia and his or her cognitive abilities continue to decline, behavioral problems, safety, and general care often become more than one caregiver can handle. This is when it’s important to find extra help, and residential facilities that have specialized memory care programs are often the best solution.

In addition to providing a safe environment, memory care programs seek to delay or halt cognitive decline while providing the opportunity for a social, independent lifestyle. THE BEST MEMORY CARE!

The inspiration for today’s edition came from this original article:

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Introducing Cru Hemp Lounge!

Cru Hemp Lounge, a hookah bar and restaurant known for its over-the-top cocktails and CBD-infused offerings, will officially make its Houston debut this week. Introducing Cru Hemp Lounge!

Per an Instagram post, the restaurant is expected to open its doors for a “soft opening” this week. Located at 311 Travis Street in Downtown Houston, this is the first Texas outpost for Cru, which was founded by club promoter and restaurateur Dennis McKinley about a decade ago. If that name sounds familiar, it was because McKinley was long involved in a highly dramatic — and televised — relationship with Real Housewives of Atlanta star Porsha Williams. The two have since split.

In addition to a menu of small plates like chicken wings, lollipop lamb chops, and quesadillas, Cru boasts an extensive menu of “Crutails,” or super-sweet cocktails like the Henny Hulk, mixed with Hennessy, Hypnotiq, and the bar’s housemade fruit punch. Hookahs are also a popular offering at Cru, filled with CBD flower and shisha in flavors like orange-mint, exotic berry, blueberry, and Fruity Pebbles. Because this is a hemp-centered restaurant, the menu will also boast gummies and tinctures that are infused with cannabidiol, a non-psychoactive compound in marijuana that is said to induce feelings of relaxation and calm, among other alleged health benefits.

Cru isn’t McKinley’s first foray into Houston as a restaurateur. Last year, he opened an outpost of his popular Atlanta eatery the Original Hot Dog Factory at the Shops at Memorial Heights. Since it opened in September 2020, the restaurant, known for its creatively topped hot dogs has racked up pretty solid reviews on platforms like Yelp and UberEats.

Cru Hemp Lounge will open at 7 p.m. on Friday, March 26. Stay tuned for more details on the restaurant’s normal hours of operation and the Houston menu. Introducing Cru Hemp Lounge!

Address: 311 Travis St, Houston, TX 77002

Phone: (713) 393-7483


The inspiration for today’s edition came from this original article:

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Biden looks to boost to homebuyers and builders!

A contractor frames a house under construction in Lehi, Utah, U.S., on Wednesday, Dec. 16, 2020. Private residential construction in the U.S. rose 2.7% in November. Biden looks to boost to homebuyers and builders!

Anyone looking to buy a home today is likely frustrated by sky-high prices and slim pickings. But President-elect Joe Biden, who takes office Wednesday, will aim to ease those issues as he gears up to implement his plans for the housing market.

From home financing to home construction, Biden’s plans are focused on affordability. Here are some policies he could push for:

* $15,000 first-time homebuyer tax credit

* Urging big banks to get back into FHA lending

* Encouraging new construction of both single- and multifamily housing

* Strengthening the Community Reinvestment Act, which is intended to help low- and moderate-income areas

In December, the number of homes for sale plummeted nearly 40% compared with December 2019, according to Competition for what was on the market was fierce, with the typical home selling in just 66 days, two weeks faster than the year before.

“Looking forward, we could see new [inventory] lows in the next couple of months as buyers remain relatively active, but a surge of new COVID cases may slow the number of sellers entering the market,” said Danielle Hale, chief economist at

Mortgage rates begin 2021 on an upward climb, motivating borrowers to act

Home prices are also rising at the fastest pace in six years, according to CoreLogic, more than 8% higher in November year over year, driven by record-low interest rates and pandemic-driven demand from buyers looking for larger, suburban homes.

Several proposals from the Biden housing plan could take the pressure off both home prices and the supply of houses for sale, with changes potentially coming to both lending and the home construction markets.

Tax break for first-time homebuyers

Biden is proposing a $15,000 first-time homebuyer tax credit, which could be accessed immediately by the buyer, thereby serving as down payment assistance. High home prices, along with strict lending standards, have made it difficult for young buyers to come up with the cash needed to secure a mortgage.

First-time buyers, defined as those who have not purchased a home in at least three years, made up 32% of all November homebuyers, according to the National Association of Realtors. Historically, that share is closer to 40%.

The tax credit could exacerbate the inventory shortage, by juicing demand even more. But the nation’s homebuilders, who have had a difficult time keeping up with demand, could also get a boost from Biden. They have been hampered by the high costs of land, labor, materials and regulations.

The Trump administration’s restrictive immigration policies exacerbated an already severe labor shortage for builders, as many documented and undocumented construction workers had left the industry during the last housing crisis. As the construction industry flourished again, some workers were still afraid or unable to come back into the U.S.

In addition, Trump’s trade wars hit builders where they live. Prices for everything from lumber to concrete to metal increased dramatically.

“The tariff trade wars have raised the cost of goods and services. Lumber from Canada got ridiculously expensive compared to what it was just a year ago. Labor shortages due to immigration policy and more have made it difficult to build homes,” said David Stevens, a former Federal Housing Administration commissioner under the Obama administration and former CEO of the Mortgage Bankers Association.

“I do think that in a Biden regime, some of that will loosen up, and builders are going to want to do everything they can to take advantage of the tax credit. They don’t want to lose potential homebuyers that may have a limited window by which to execute.”

Stevens is not convinced, given the sheer volume of economic stimulus Biden is proposing, that the tax credit will make it through Congress at such a high level. The credit was part of the original housing platform Biden ran on.

FHA lending to take larger role

The prospects are likely better for another type of relief for lower-income buyers — a drive to increase lending by the FHA, which is a low down payment loan option heavily favored by first-time buyers. The FHA could also reduce its monthly insurance premiums under the new leadership, according to Stevens, who has been talking to Biden administration insiders.

“The FHA program shows exceptional profitability, much better than expected, and that provides the Biden administration the opportunity to cut prices. That will really help entry-level homeowners, particularly minority homeowners who turn to the FHA program more often,” said Jaret Seiberg, financial services and housing policy analyst with Cowen Washington Research Group. “Not only does that help housing, but it also helps the Biden administration deliver on some of its social justice priorities.”

The big banks exited FHA lending almost entirely after the Great Recession because of enforcement actions that came against them for how they managed the program. They were hit with those actions under the False Claims Act, resulting in very expensive settlements. Independent mortgage bankers stepped in and now not only dominate the FHA space but account for the majority of mortgage lending.

“I think you’ll see a pronounced effort from both folks at the National Economic Council and the Biden team in the White House, as well as the new team at HUD, to do what they can to pressure the banks back in,” Stevens said. “I would include a Senate Banking Committee led by Sherrod Brown and with Elizabeth Warren sitting on that committee, calling hearings with bank executives trying to push them back into the program.”

Big banks could not only help broaden the availability of more affordable mortgages, thanks to their ample capital, but they are also bound by the Community Reinvestment Act, which nonbanks are not. Banks have a statutory obligation to commit to reinvest funds from communities that they take deposits from. Biden wants to strengthen the CRA and make it apply to nonbank lenders as well.

“And so that puts an obligation in place, and I think you’ll hear more about that in the Senate Banking Committee,” added Stevens.

Competing priorities

There are, however, some inherent roadblocks to the Biden housing agenda. Opening up lending to more low-income and first-time buyers, and then trying to create more affordable housing, butts up against other important administration goals, specifically protecting the environment.

In order to make housing more affordable, Biden said he will push for more high-density multifamily construction. He could want to ease some of the regulatory burdens on single-family builders. The trouble is, a lot of those regulations are environmental.

“The Biden administration wants to encourage more development, they want to get rid of outdated zoning regulations, but they’re not going to do it in a way that you know they view as degrading the environment, or they can be attacked as not being pro-environment, and that is that’s a sticking point,” noted Seiberg.

And then there is the elephant in the room — mortgage rates, which are now on the rise. Rates have hovered near historic lows for the better part of the past year, which both helped fuel the boom in homebuying and the boom in home prices. Low rates gave buyers more purchasing power, allowing them to bid higher in this competitive market.

The Federal Reserve has been buying mortgage-backed bonds, which in turn kept rates artificially low. That not only helped buyers during the pandemic, but was its own form of economic stimulus to homeowners, who could refinance their mortgages to record low rates. The savings on monthly payments was not insignificant in a time of crisis. But that will come to an end.

“As the nation’s economy recovers … the need for the Fed to be there, buying up the mortgage-backed security supply, is going to be lessened, and you take out that biggest buyer. That’s going to put upward pressure on rates,” Stevens said.

Stevens does not expect a major surge. He, and others, are predicting the average rate on the popular 30-year fixed mortgage to be more in the mid-3% range. After hitting a record low of 2.76% in December, it is now around 2.9%, according to Mortgage News Daily.

While Biden has no direct control over mortgage rates, his impact on the economy will surely influence Fed decision-making. If Biden’s economic stimulus and his aggressive vaccination plans lead to sustained economic growth, then the central bank will be less inclined to funnel money into the mortgage market. Biden looks to boost to homebuyers and builders!

A stronger economy should offset even a small move higher in rates, especially since they’re coming off a record low.

The inspiration for today’s edition came from this original article:

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Ways to Find a Partner for Your Real Estate Investments!

Here are several ways to create value that you can offer a new real estate partner. Ways to Find a Partner for Your Real Estate Investments!

How to Win Over a Partner in Real Estate

1) Interest on Money

If your partner is investing money into the deal, you can offer them equity—but also interest on their money. This gives them two revenue streams from this partnership. The interest can be paid out as interest only, a lump sum, or monthly principal and interest payments.

For example, in my first deal, I took on a partner who put up the funds to purchase a duplex with cash. We each received 50% of the cash flow but he also received a monthly principal and interest payment. We set up an amortization schedule for his investment to be repaid over 15 years at 5.5% interest. There was also the option to refinance with a bank and to pay him off at any time.

2) Real Estate Tax Benefits

Depreciation, capital gains tax, pass-through deductions for losses, deferred capital gains, and tax write-offs for real estate investors are benefits that not all potential partners may realize. It is important to point these out—tax savings are a big benefit of real estate investing!

3) Regular Payouts

By offering monthly payments, you could be helping your partner substantially with their investment. Communicate this early on and see if this is something they would be interested in. This could correlate with paying out an interest payment if they put money into the deal. Making it clear that your partner would be receiving a monthly payment for a rental can be enticing. Who doesn’t love mailbox money!

When you put together your partnership, you can structure it to provide opportunities for your partner to earn extra money from the relationship, too. Put together a fee schedule—if a partner completes that task, they are paid out of the partnership. This would be paid out over and above cash flow.

4) Knowledge

If you are reading this, you have probably already emerged yourself in podcasts, books, blog posts, and forums on real estate investing. Knowledge is an amazing asset to a partner. There are a lot of people who want to invest in real estate but don’t have the time (or want to put in the effort) to actually do the research. Because of this, they have yet to get to a place where they feel comfortable doing it on their own.

Heck, even people who have done tons of research can get stuck in analysis

Reading, listening, and absorbing information is great, but you can also get hands on experience, too. Find a part-time job that will pay you to be a leasing agent, fulfill maintenance requests, or assist a real estate agent. There are many side hustle jobs you can do in real estate that will give you access to a network of people, documents, the market, and regulations.

Don’t forget about offering your services as an intern to someone. I like the idea of getting paid while gaining experience, but there are a lot of things you can do right from home to benefit an investor. Partners may come knocking at your door once you’ve acquired a few successful partnerships and can share that knowledge.

5) Time

Time may be something you can offer someone who has a lot on their plate. Many who want to invest in real estate don’t have time to take a deal from start to finish. That is where you could come in! Make it as much of a passive investment for them as you can.

The Bottom Line

These are simply five of the main things you can offer a new real estate partner, but keep in mind that there are many more. Everyone has different skillsets when it comes to real estate investing. Determine the assets you have to offer to reframe the beginning of a new partnership. Ways to Find a Partner for Your Real Estate Investments!


The inspiration for today’s edition came from this original article:

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: MI Cancellation Explained!

Being able to cancel mortgage insurance is a huge selling point for you as a lender. As you’re talking to borrowers that might be considering MI in order to finance a home, talking about the benefits of MI – especially the fact that it’s cancelable – can help them feel more comfortable about having MI on their loan. MI Cancellation Explained!

However, there are many LTV points and guidelines that you must understand to be able to explain how and when your borrower can cancel their mortgage insurance.

MI cancellation and termination can be confusing, so let’s break it down to help you master the topic.

What is the HPA

The Homeowners Protection Act of 1999 is also commonly referred to as the PMI Cancellation Act. It was passed to protect consumers from overpaying for private mortgage insurance.

Within the HPA, there are guidelines for determining a few things:

  1. When borrowers can request to cancel their PMI and stop paying premiums
  2. When lenders must automatically stop charging borrowers for PMI (automatic termination)
  3. Disclosures that lenders must provide when a loan requires PMI
  4. How MI companies must handle unearned premiums that homeowners pay

The guidelines set out by the HPA apply to single-family primary residences that were purchased with a loan requiring borrower-paid mortgage insurance (BPMI).

When can my borrowers request to cancel their MI under the HPA?

There are two key numbers to remember when it comes to cancelling or terminating MI under the HPA: 80% LTV and 78% LTV.

80% LTV: Borrowers can request to cancel their MI when their loan LTV is scheduled to reach or actually reaches 80% LTV of the original value of the property.

78% LTV: Servicers must automatically terminate MI when the loan reaches 78% LTV of the original value of the property

There is one more cancellation point to know about – final termination. When the MI does not get cancelled or terminated due to the previous two provisions, the loan servicer must terminate MI charges after the loan reaches the mid-point of the original amortization schedule.

What’s the difference between original and current value?

You might have noticed that the LTV points we mentioned above were tied to the original value of the property. This is the value of the home at the time of origination. The HPA defines it as the lesser of the sales price of the secured property as reflected in the purchase contract or the appraised value at the time of the loan’s origination.

While the HPA bases the cancellation date LTV calculations on original value, some investor guidelines base the cancellation date LTV calculations on current value. This is the value of the appreciated home based on home improvements or increase in value in the area in which the property is located.

How do my borrowers cancel their MI subject to HPA?

If the borrower is requesting cancellation, they need to contact their servicer in writing around the time the LTV of the loan will reach 80% of the original value to request that the MI be cancelled. Your borrowers can find their servicer on their mortgage statement.

Again, servicers are required to terminate PMI once a current loan, subject to HPA, reaches 78% LTV or the mid-point of the scheduled amortization.

What other requirements must my borrower meet to have their MI cancelled?

There are a few other requirements your borrowers will have to meet to be able to request to cancel their MI:

* Be current on payments

* Have a good payment history – no 30-day lates in last 12 months and no 60-day lates in last 24 months

* Satisfy requirements of loan holder – 1) value of property has not decline below original value and 2) property is not subject to a subordinate lien

While this might not be something you get into with a borrower at the time of origination, it’s possible that your borrowers could come back to you close to the time when they can cancel their MI to ask you what other requirements they must meet.

Are there ways my borrowers can speed up the time to cancel using original or current value?

Here are some helpful tips to help borrowers speed up their time to cancel their MI:

* Pay ahead on their mortgage

* Invest in home improvements to increase the value of their home

* Check their property value to see if it has increased

* Refinance with an LTV under 80%

Is there anything else I might need to know about MI cancellation?

The rest of this information is in-the-weeds and more related to your borrower’s servicer requirements.

  1. Servicers must complete an escrow audit each year to alert borrowers to their amortization schedule status. They must also alert borrowers if they will be eligible to cancel the coming year based on the loan’s scheduled amortization.
  2. Loan servicers must alert the borrower when their PMI is canceled as MI companies such as Genworth send refunds to the servicer, not the borrower.
  3. Servicers are required to refund any unearned MI premiums to the borrower within 45 days of the cancellation notice. Genworth refunds any unearned premiums to the servicer within 30 days of receipt of the cancellation notice so servicers can meet that obligation. MI Cancellation Explained!

The inspiration for today’s edition came from this original article:

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit:

Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Investing for Equity vs. Cash Flow: Which Is More Important?

And by “equity,” I primarily mean built-in equity (i.e., buying properties under market value). Of course, if you buy a property under market value in Orange County or New York, it probably still isn’t going to cash flow. You’d either have to flip it or hold it at a loss with the hope that it appreciates. Investing for Equity vs. Cash Flow: Which Is More Important?

As with most things in real estate, your primary focus depends on your situation and goals. But in this instance, for most people, most of the time, focusing on one goal is better.

Is It Better To Have Equity or Cash?

First and foremost (and something you might be wondering), why not both?

You should definitely aim for a property that has both a significant equity margin up front and good cash flow. Additionally, seek out a property in a decent area that will be relatively easy to manage and has a good likelihood of appreciating.

But like the Rolling Stones song says, “You can’t always get what you want.”

Choices have to be made, and you will need to consider one criterion or the other more significant. Generally speaking, the more important thing should be to go for built-in equity. But there is one noteworthy exception. This exception probably only applies to about 0.1% of investors, but it’s still worth a mention.

When Cash Flow Matters More

Most years, I attend an event called the IMN Single Family Forum (I wrote about one such experience here). A bunch of mid-sized investors like myself attend, but the events are dominated by large, institutional firms that buy 100-unit portfolios on a routine basis (or lend to them or provide services for such companies).

And for institutional investors, cash flow is the name of the game. They are constantly talking about gross yield (annual rent divided by the price of the properties) and what their “buy box” is (what range they’ll accept for the gross yield of a portfolio).

These firms need to hit a certain return for their investors. For example, a fund might estimate an 8% return for its investors or an insurance company may estimate it needs a 9% yield to cover their expected losses. For these types of Wall Street firms, built-in equity is nice, but cash flow is the name of the game.

When Equity Matters More

Most of us on BiggerPockets (and in real estate in general) are entrepreneurial investors, though. I certainly am (or would at least like to think of myself as such). We don’t have to hit a specific percent return for our clients since we don’t have any. Thereby, we can focus more on getting a deal with a large chunk of equity up front than on satisfying a client’s yield requirements.

Buying with built-in equity allows us to BRRRR a property, get all (or most) of our money out, and repeat the process more quickly than we would have otherwise. Even if the “otherwise” here involved a house with better cash flow. Furthermore, it’s built-in equity that protects us from the dangers of leverage and allows us to take advantage of its upsides (which are very big).

As I mention frequently, the IDEAL acronym (I: Income, D: Depreciation, E: Equity, A: Appreciation, L: Leverage) is a great explanation for why real estate is such a good investment:

If you buy a property for $100,000, but get an 80% loan, you only put down $20,000. Now if the property goes up in value by 5%, your return is actually 25% ($5,000 / $20,000). Which is a huge return.

Now yes, leverage is a two-edged sword. Real estate can go down, which would lead to a 25% loss… But if you get a good deal, that insulates you from the risk of leverage.

For example, if you buy that hypothetical deal above for $100,000, but the property is worth $120,000, you have a $20,000 cushion right off the bat. If the property goes up in value by $5,000, you made 25% (assuming you got an 80% loan). But if it goes down in value by $5,000, you still have $15,000 of built-in equity and haven’t lost anything.

This doesn’t mean that cash flow doesn’t matter. You still need to buy properties that cash flow. There are a few occasions when the trends in an area are so strong it makes sense to hold a property even if it bleeds each month. But these instances are few and far between and should only be done with a small percentage of your portfolio. Going big on properties with negative cash flow is, more or less, just speculating.

However, entrepreneurial investors can pound the pavement and find the gems that slip between the bristles of the broad brush institutional investors use. This allows us to take advantage of the inefficient real estate market by finding motivated sellers, value-add opportunities, and mislisted properties (most often by institutions). This is the big advantage that entrepreneurial investors have and the biggest reason real estate is, in my judgment, the best way for someone of modest means to become independently wealthy.

And it’s equity that makes you wealthy. Cash flow is just the cherry on top. Investing for Equity vs. Cash Flow: Which Is More Important?

The inspiration for today’s edition came from this original article:

If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit: