To all of our real estate investors and business owners out there...
The Current climate of our country churns of a recession or even total implosion. Many investors are greatly worried. Each and every recession in the past 70 years has been preceded by an inverted yield curve. An inverted yield curve is when interest paid on short term bonds is higher than interest paid on long term bonds. An inverted yield curve currently exists.
This suggests that investors are greatly worried about the short term. Setting aside the yield curve, we all know that nothing good lasts forever. The economic cycle will eventually turn, or at least correct, possibly even worse - implode. The last recession wreaked devastation to real estate and equity investors across the country.
In the 2008 mortgage crisis, those seeking our Asset Protection strategies soared...primarily because of outstanding personal guarantees on real estate loans and business loans. Many of them experienced being served with lawsuits in front of their families and employees as well as having their assets attached and foreclosed.
Real Estate Always Cycles.
When markets are rising and the economy is expanding, real estate investors, developers, and business owners are happy to sign personal guarantees because they see no downside (this is short-sighted). So long as the real estate market appreciates, there are few defaults, fewer bankruptcies, less litigation, and no collections.
But when things go bad in a collapsing real estate market, those who are unprepared really suffer – and sometimes beyond repair. Being unprepared includes signing personal guarantees which subject the guarantor (you) to personal liability for all those obligations of the business or real estate investment which weren’t really analyzed in a worst-case scenario.
When the real estate market momentum swings and investors are over-leveraged, then defaults occur, foreclosures ensue, and personal guarantees signed in an appreciating market now become an albatross around your neck.
The exposure becomes real.
Banks stop financing real estate. Construction projects halt. Permanent financing dries up. Developers can’t start new projects because there are no banks lending. And the banks are hemorrhaging. Defaults, litigation, foreclosures, and debt collection ensues.
Lines of credit are harder to come by or are just simply terminated unilaterally by the bank overnight. The bank writes you and says, “We have closed your line of credit.” No “sorry” or anything. Happened in mass in 2007-09. And it will inevitably happen again because of the cyclical nature of real estate, over-leveraged investors, and derivative fractionalized lending.
Maybe you have signed a personal guaranty and want to plan for the worst. Or if you simply have exposure that you want to remediate.
Let us show you how easy it is to limit your risk and eliminate being wiped out because of cyclical real estate and mortgage lending events or unforeseen events beyond your control.
