Castle Rock Capital Management

Here’s rant #2 for the day. I have a preliminary call in a few minutes with a person that wants to get into private lending and wants to engage our loan consulting side to assist. When we asked “what they were currently doing, what they planned to do, and how we could help.” The response was that they paid a guru to teach them how to do 100%, 2nd mortgage financing to real estate investors for purchases and down payments. I looked this person up and they have a bajillion followers/disciples (I think bajillion is a number). The guru has zero lending background…zero. They also didn’t even get into anything remotely real estate-related until 2011. They also had a professional license taken back by regulators. The guru has never seen nor have they survived a downturn. Do you see all those commercials by Baltimore Oriole great Jim Palmer touting those 100%-125% 2nd mortgage loans? Me neither. That company went belly-up during the last crash long before this guru even thought about real estate investment let alone finance. I’ve done this 33 years now. I’ve seen high-highs and low-lows. To you folks that are paying gurus to learn lending, make sure 1) they actually have a formal credit/lending background and 2) make sure they went through at least the last major crash of 2007-2009 and lived to tell about it. To those who are doing 100% financing for down payments and EMDs…a train is coming. I highly advise that you get off the tracks. End of rant #2 for the day.

This chart shows mortgage interest rates over the past 30 days. Rates are directly tied to the 10-Year US Treasury which are impacted by not only our market-driven economy, but also government action (or inaction). I’ve been saying for many months that I did not see a path to dramatically lower interest rates like government officials, the media, and many real estate pros were touting. Today’s economic news…heck…economic news for the last several months seem to continually be “worse than expected”. The US Federal Reserve (do they ever really help out or simply get in the way) is notorious for taking action way, way too late. One of my biggest bones that I have to pick with them is this fascination with “2% inflation”. When I studied Econ in college, we used an average 3.1% inflation rate as an assumption. When I was working for banks and did financial planning for customers, we used 3.1% as an assumption. The 2% inflation target was adopted by New Zealand in the 1980s and then other central banks followed suit. That certainly doesn’t mean that such a low target is a good idea. The Fed under Paul Volcker and Alan Greenspan, there was no 2% target. Ben Bernanke mentioned it and then Janet Yellen and Jerome Powell are all in for 2% inflation. Damn the rest of the economy! The Fed is fixated with 2% inflation, but they are ignoring what is best for average Americans who are just trying to put food on the table. Couple with it the dramatic increase in currency in circulati...

????Are you or a client struggling to find a home worthy of your standards? ????Can’t find a home with a pool? ??Have you decided to “stay put”, but need to renovate to be happy? We can help.?? You’ve always know that Castle Rock is a superstar when it comes to real estate investor construction and flipping finance, but did you know we NOW OFFER RENOVATION FINANCE for consumers? ??We can roll your mortgage and renovation funds into one, market-rate Conventional, FHA, VA, or USDA loan. If you’re a consumer or real estate pro looking to expand your property-buying pool or a contractor seeking a financing partner, we would love to speak with you today! ??

????As I watch Fed Chairman Powell hammer home a 2% target inflation rate following today’s Fed Meeting, I remember Econ 101 in college (the late 1980s) where our instructor, Dr. Harrington, discussed an inflation target of 3.1%. So, why 2%. Why now? The truth is…2% is completely arbitrary. Fed Chairman Volcker didn’t set a target like this. Neither did Chairman Greenspan. Our current Treasury Secretary Yellen, when she Chaired the Fed said “I believe that heading toward 2% inflation would be a good idea” seemed to be the one to publically voice that number. Now that seems to be the arbitrary norm. In the past, Chairman Greenspan thought about getting it around 2%, but he shut his mouth about it so it wouldn’t cause issues in the market. Behind closed doors, he said “I will tell you that if the 2 percent inflation figure gets out of this room, it is going to create more problems for us than I think any of you might anticipate.”Powell and Yellen have painted themselves into a corner with this 2% target. The Fed has a tendency to act way too late and then overcorrect. Waiting to get inflation to 2% is like a doctor waiting to see if the patient in critical condition dies before administering the appropriate medicine. I’m not a fan of this arbitrary 2% target. End of rant. ????

????I keep hearing "I'll wait until the rates fall a bit", but are the rates really that bad right now? Historically, they are about where they normally would be on average. The red line on this Federal Reserve chart that tracks the average 30-year fixed rate back to 1971 shows where we stand right now vs over the past few years. There are 4 really good explanations for the real estate market being so slow right now... ????Rates were artifically low over the past few years. If you're sitting at a 3.5% rate, why would you move? It makes it difficult to justify putting your home on the market if your new home is going to cost you a ton more than what you're paying now. That means there are fewer homes on the market. ????Taxes have skyrocketed. As values have increased, so have taxes. In Florida, the taxes on your homestead can only increase by a small amount each year. That means when you go to buy a new home, you might get sticker shock. ????Florida insurance rates are out of control. Thank hurricanes and door-to-door home improvement salesmen saying "I can get your insurance company to pay for your roof". ????The future is uncertain. Politicians from both political parties have spent money poorly. The additional currency in circulation and the debt we are incurring as a nation (government and personal) causes our dollar to devalue and we get more and more inflation. Not knowing what is next has most people frozen where they are. That causes a downward spiral...

???It’s getting really hard to find the right home. There’s not a lot on the market right now. Can’t find what you want? Let us finance the purchase and the renovation of your home in one loan! ??We can do renovation loans with our Conventional, FHA, VA, or even USDA loans. With our experience in renovation lending, we’ll work with your contractor and real estate agent to get you into the home of your dreams! Let’s discuss how right away! ??Doug Smith, Castle Rock Capital Funding (NMLS 1984040 personal and 2318381 business, https://lnkd.in/e8cuvSjQ), 813-727-3621, [email protected]????

????Our looking for a new home this weekend? Don’t commit to using a lender regardless of how many “closing cost” money they promise you to go with their “preferred lender” without letting us review the loan estimate? You’ll be shocked at how much we can save you. ??Doug Smith, Castle Rock Capital Funding (NMLS 1984040 personal and 2318381 business, https://lnkd.in/e8cuvSjQ), 813-727-3621, [email protected]. ??

??Needing an approval over the weekend? I’m working! Call me and let me get your loan approved while you home shop! Call us today! ??Doug Smith, Castle Rock Capital Funding (NMLS 1984040 personal and 2318381 business, https://lnkd.in/e8cuvSjQ), 813-727-3621, [email protected] ??

??Unlike the big national lenders that use call centers to handle your file. We’re super-experienced, local Florida lenders, so we’ve got your back. We know Florida lending and we’re the right choice to handle your loan. Call us today! ??Doug Smith, Castle Rock Capital Funding (NMLS 1984040 personal and 2318381 business, https://lnkd.in/e8cuvSjQ), 813-727-3621, [email protected]??

????“You kids get off my lawn!” So many loan officers are posting nonsense or shaking their fannies on social media expecting you to be impressed by that. You wouldn’t choose a heart surgeon based on a social media dance. Why would you choose a loan officer based on that criteria? I’ve been a lender for more than 33 years and I’ve closed thousands of loans in my career. You want the best. I’ve got the experience to get you the best deal on your next loan. ??Doug Smith, Castle Rock Capital Funding (NMLS 1984040 personal and 2318381 business, https://lnkd.in/e8cuvSjQ), 813-727-3621, [email protected] ??(that's not really me in the pic...I just thought that guy was funny)