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Category: Chaz Guinn

13th Annual NoteWorthy Investor Summit

Revolve Capital Group is proud to be Title Sponsor of the Noteworthy Investor Summit 2020.

“Regardless of which state you traveled in from, we’ve all come for the exact same reason – to grow our passive income. Over the course of the next three days, you’ll definitely LEARN how to do just that.

It doesn’t matter whether you’re a rookie looking to complete your first deal, or a seasoned note investor looking to take your portfolio to the next level, you’ll learn lots of valuable information that will ultimately lead you to SUCCEED and profit…passive profits.

But here’s the most important part of the formula…you have to CONNECT.

Walt Disney said it best, “The way to get started, is to quit talking and begin doing.”

That’s what the Summit is all about. We’re not going to wait until we get home on Monday to get started or take that next step. We’re going to CONNECT today! We’re going to make some key connections and meet the right people…and see results while we’re here. Whether you’re brokering, buying, creating or selling notes, you’re in the right place. The Place for Passive Income.

Summit attendees will learn information surrounding how to make their portfolios profitable; including, learning the 5 profit pillars of note investing.

Chaz Guinn and Jason Kurtz of Revolve Capital Group will be speaking at the event.

Event Highlights – Day 01, Thursday February 27th

7:30 am 

Registration & Breakfast

2:30 pm 

Chaz Guinn and Jason Kurtz will be discussing Portfolio Management & Disposition of RPLs/NPLs

Chaz Guinn  – “Chaz Guinn is the President and Managing Director of Revolve Capital Group “Revolve”. Chaz, specializes in 1st lien NPL/RPL whole loan trading, and has built a track record of structuring, negotiating, and executing some of the largest trades in the lower-valued market segment.

Over the past decade, Chaz established whole loan trading desks for two large private equity firms in the U.S. that managed well over a billion dollars in delinquent loans. Chaz has been focused on building lasting relationships with Wall Street, Investment Banks, GSE’s, large real estate funds, qualified national vendors and servicers to allow Revolve Capital Group to become a household name.

Chaz and his partners decided to form Revolve Capital Group, whose primary objective is to be a market leader in the lower-valued asset-class and provide solutions to both the banking sector, distressed homeowners, private investors, and local communities that have been affected by the financial downturn in the housing market. Our focus is centered on loans secured by properties with market values of less than $150,000.

Chaz is positioning Revolve to be one of the largest private real estate groups acquiring non-performing/re-performing debt. Combining his education in Finance and Economics with the practical management of supply and demand, Revolve made a conscious strategy to allow other private investors, real estate funds, family offices, and non-profit organizations to participate in this recovery as well.”

Jason Kurtz – “After receiving his degree in Real Estate Finance from San Diego State University in 1996, Jason started his career in investment real estate. Between 1996-2010, Jason purchased thousands of multi-family units across the country. He started in acquisitions for a privately-owned Apartment syndication group located in Irvine, CA who had over a billion dollars under management. Jason purchased over Five thousand multi-family units for this firm. His roles and responsibilities included deal origination, due diligence, acquisitions, market research, Debt and equity procurement, underwriting and investor relations. In 2004, Jason became the Director of Acquisitions for the Bethany Group. From 2004-2010, Jason would be responsible for the acquisition of twenty-two thousand apartments. Jason developed relationships with large REITS in over 15 state across rust belt and lead the acquisition of 67 different buildings. His roles would include raising over 400m in equity, procuring over 1.6 billion in First Trust deed financing and structuring and negotiating 450 million in Mezzanine Financing. Mr. Kurtz has experience in many different facets of real estate, including Hospitality, both in hotel acquisitions and franchise development, Fix and Flips, Rentals, Non-Performing and Re-Performing mortgages. Over the last ten years, Jason has spent significant time in loss mitigation, servicing, analytics, acquisitions, dispositions and trading of Non performing notes. Currently, Jason has been involved in over $350M in note acquisitions. Jason has spent over 23 years in the investment real estate arena. This experience and track record continue to play a key role in the growth and success of Revolve Capital Group.

We look forward to meeting and connecting to you at the event.

2019 was a year of breakthrough for Revolve Capital Group as a company. It allowed us to establish and grow stronger relationships with large sellers, buyers, and vendor network. We were able to bring consistency and reliability to the market.

We are aiming to re-shape the way investors grow their portfolios through fix-and-flips, rentals, auction homes, by building long-term wealth through residential real estate. We aim to introduce investors to a sophisticated and passive way they can step into the shoes of the bank… through, Note Investing.

In 2019, Revolve Capital Group has been able to:

  • Acquire over 16 different portfolios
  • Purchase over $40M in single family mortgages
  • Purchase over 500 homes
  • Offer trial payment plans or full loan modifications to over 250 families
  • Headline Sponsor at 3 National Conferences

In 2020, Revolve Capital Group expects to:

  • Open up our Trade Desk, and aiming to sell thousands of loans to our of clients (MONTHLY)
  • Acquire over 2,000 loans
  • Introduce REVOLVE+ to our Elite Members
  • Grow our investor/buyer base to over 5,000 qualified buyers
  • Introduce our Online Platform: Offering education, Transparency, Ease of use, All managed and controlled with a smart phone

Recent Federal Rate Cuts

After interest rates rose a total of 9 times since December of 2015, the Federal Reserve made the decision to cut rates 25 basis points again in September. This represents a downward trend as the last Federal rate was cut a quarter of one percent in July, just two months ago.

Climbing interest rates are a positive for the banking industry and those with money invested tied to interest-bearing accounts; however, as the rates fall anxious investors can look to the distressed real estate market for some active investment opportunities.

While back-to-back quarter pointcuts in themselves do not indicate a true economic recession, the signs are currently in place for an economic slowdown and a possible recession if the trends continue. Many traditional real estate investors still have the bad taste of 2008 in their portfolios when the housing market and economy went crashing downward. Many homes went into foreclosure, workers were laid off and wages were reduced. Few sectors were left standing where savvy investors could still actively see profits steadily increase, one such market was the distressed note industry when 2008 was one of the most profitable years for most note investors.

Housing Industry Trends

If the economy slows and wages become stagnant or even decrease, delinquency rates on mortgage loans will inevitably increase. It is likely that financial institutions, ranging anywhere from smaller credit unions to large Top-Tier banks, will look to increase the quality of their holding by getting rid of some of these underperforming notes. With the writing on the wall of another Federal rate cut, some estimate that over the course of the next 12-18 months, many financial institutions will look to sell off these lesser performing notes.

Recession Investment Opportunities in Distressed Real Estate Industry

In the downturn of the housing market in 2007-2008, the investors that took advantage of distressed real estate investment opportunities often did well, while traditional real estate investing took the biggest hit. By holding onto distressed notes, investors can typically expect neither time nor financial investment in the upkeep of physical property by taking a less hands-on involvement. If a recession occurs, supply is expected to increase. Following the recession, during an economic expansion the value of notes (even lower-value notes) are expected to increase in value.

While every investment opportunity incurs some level of risk, the acquisition/management/sale of underperforming loans is generally a less-risky opportunity, especially in the event of a recession. By purchasing a real estate note and choosing to work with the homeowner, you can even assist the borrower with staying in their home by renegotiating their terms, which will avoid displacing families and ultimately help those same families avoid foreclosure.

As we see fluctuations in the housing industry and the continued Federal rate cuts, there is a likelihood of subsequent increases in delinquent loans. Investors who focus on purchasing underperforming bank notes historically can strategize by “riding out” the wave of the changing economy and expand their investment portfolios. Continue to look for distressed inventory releasing from banks and credit unions to forecast a possible upcoming recession.

Are Housing Trends Showing Signs of Upcoming 2020 Recession?

Real estate professionals everywhere are warning of our economy heading towards a recession in 2020. Now there might be some housing trends to back up the claims.

Delinquent Mortgages

An area that has not received enough attention, according to Keith Jurow, is the “growing problem of re-defaults on (US home mortgage) modifications.” While 8.7 million permanent modifications were made since 2007, there is a reported 17 million temporary modifications made (according to the non-profit Hope Now consortium).

Even with the modifications, slightly more than half of the borrowers either re-defaulted or continued to remain delinquent according to the OCC.

The Market Watch also shows a graph provided by the Fitch report showing the Cumulative Default Rate by Number of Modifications. The housing trends show that two or even three plus modifications provide a spike in re-default rates.

Miami Housing Trends

Shifting focus to specific cities, the recent housing trends in Miami are also showing evidence of a possible collapse. Harris Kupperman (Moguldom.com) claims the prices South Beach are down 20-35% from peak prices. He continues explaining that the turn a profit on a rental is “mathematically impossible”, and “the only way owning is viable, is if prices go up and allow you to extract capital to fund the carrying costs – though debt service then makes the monthly cash flow much worse.” Kupperman warns that Miami has traditionally been a leader in the national market trends, meaning the national real estate market may be headed towards a similar pattern in the next year. We can compare patterns of the 2008 recession vs a possible 2020 recession.

Manhattan Housing Trends

A new report claims the “prices in Manhattan real estate took their biggest plunge since the 2008 financial crisis (Robert Frank, cnbc.com). The Douglas Elliman Q3 Report found average sales prices decreased 14.1%. Houses are still being sold, however the prices homebuyers will most likely receive at this time fall short of what the prices once were when they got their home for in 2014. There is an increasing number of luxury listings on the market, but a decreasing number of property values.

Foreseeing Economic Activity

Analyzing market trends in the housing industry can traditionally foresee economic activity. When times are good housing demand is high and prices rise, but when times are bad there is a surplus in property listings followed by low-bid offers on homes. What are your thoughts on a the timeline on when/if our country will enter a 2020 recession?

Last week Revolve Capital attended the IMN Opportunity Zones (Midwest) in Chicago.

The conference discussed Opportunity Zones surrounding the Tax Cuts and Jobs Act of 2017. Opportunistic zone areas include neighborhoods infected by factors such as distressed mortgages, lost jobs or boarded up neighborhoods. By building in these areas, investors can actually retain their capital gains tax instead of paying it to the government. What exactly are opportunity zones, who can invest in them and how can you benefit from these incentives?

What are opportunity zones?

According to the IRS, the Tax Cuts and Jobs Act (TCJA) is a “Major tax legislation that will affect individuals, businesses, tax exempt and government entities”. The Act added the IRS Code of 1986, which essentially effects multiple major taxed sectors: individuals, estates, business taxation, corporate tax, churches and nonprofit organizations, distressed communities, and more.

Opportunity Zones are defined as “economically-distressed communities where new investments, under certain conditions, may be eligible for preferential tax treatment”. These qualified zones were “created by the 2017 Tax Cuts and Jobs Act. Designed to spur economic development and job creation in distressed communities throughout the countries, they provide tax benefits to investors who invest eligible capital into these communities.”

Who can invest into these zones?

These opportunity zones are open to every private investor that has the sophistication and wherewithal, who knows how to structure their fund based on the rules and limitations of the Jobs Act, and who would like to tap into the opportunity zone revenue dollars and concurrently defer capital gains taxes. Historically, these types of opportunities were sometimes available only to accredited investors (typically requiring a net worth of $250-500K+) to invest in these projects. The Qualified Opportunity Zones program can be utilized by investors on any end of the spectrum… whether you are a private investor, a small investor, a new investor or a larger seasoned investor, you can benefit from the advantages of building in these areas.

Note, there are special reporting requirements. Reporting ensures the restabilization of the distressed area is being pursued.

How can investors benefit from these types of investing opportunities?

If you are interested in diversification into other asset classes or are already diversified, then investing in opportunity zones might be a revenue stream you should explore. Sectors such as commercial, strip malls, communities, hotels, gas stations, land, homes, etc. can take part in building in the distressed zones. By looking for ways to invest dollars to A) avoid capital gains taxing and interest from the IRS to be retained into your projects; and B) seeking to find a way to help revitalize these opportunities (by purchasing acres for housing development, revamping strip malls, creating gas stations and hospitals, etc.) you can play a part in this economic development tool. Revolve Capital Group has product (both non-performing and re-performing loans) located across the nation, many assets being directly located in these areas of opportunity.

By utilizing alternative asset class diversification, our investors can segue way into putting single-family home investments into the fund. Meanwhile, making these areas livable, appealing and fundamentally opportunistic. In return, we can expect an influx of first time home buyers, renters, borrowers, and families. When you create charming up-and-coming neighborhoods filled with Walmarts and Targets then people will be incentivized to move there, filling the demand of customers.

There is a big crossover between building in opportunity zones that lasts between 7-10 years and economic growth of communities that have been boarded up, people have moved out, building has been condemned. Communities that might have previously been more attractive, had a larger population, and where investors and developers were once putting their investment dollars. That is the crux of the message… that these opportunity zones create a number of different ways to invest into single-family homes, commercial properties, land, etc. in terms of both long-term and short-term benefits. Now that we are 11 years removed from one of the biggest crisis since 1929, you can tell banks, lenders, communities, developers, builders are not interested in those areas. The government is creating an opportunity to go back to these areas and develop.

Revolve Capital Group has continued to be at the forefront of revamping communities. Our firm and many of our investors purchase homes that are pre-foreclosure all the while helping families avoid foreclosure altogether.

What are the disadvantages?

While anyone can benefit from investing in these areas, the only way to qualify for the tax incentives is by purchasing the investment through a qualified opportunity fund. EIG.com released information explaining “You cannot simply purchase real estate in an opportunity zone, there has to be improvement to the property to ensure it meets the qualifications of the investment and providing economic stimulation. Additionally, the Fund must invest at least 90% of their assets in a qualified Opportunity Zone.”

According to the Economic Innovation Group, Opportunity Zones incentives are “tied to the longevity of an investor’s stake in a qualified Opportunity Fund”. They continue on explaining…

“There are three core tax incentives:

Temporary deferral: A temporary deferral of inclusion in taxable income for capital gains reinvested into an Opportunity Fund. The deferred gain must be recognized on the earlier of the date on which the Opportunity Zone investment is disposed of or December 31, 2026.

Step-up in basis: A step-up in basis for the deferred capital gains reinvested in an Opportunity Fund. The basis is increased by 10% if the investment in the Opportunity Fund is held by the taxpayer for at least 5 years and by an additional 5% if held for at least 7 years, thereby excluding up to 15% of the original deferred gain from taxation.

Permanent exclusion: A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in an Opportunity Fund if the investment is held for at least 10 years. This exclusion only applies to gains accrued on investments made through an Opportunity Fund. There is no permanent exclusion possible for the initially deferred gain.”

Essentially, if you choose to invest in qualifying opportunity zones your capital could be tied up for 7-10 reducing additional opportunities to invest in a variety of other asset classes.

The Opportunity Zones is a step in the right direction for the government to stimulate economic growth in underserved areas; however, our company firmly believes it is more advantageous for investors to focus on preforeclosed assets. There is not a requirement to hold a distressed note investment for an extended period of time if it is not providing the expected return, you have the option of investing in any nationally located area, and most importantly you can still revamp communities by choosing to keep families in their homes

For a more passive income stream that provides economic stimulation, potential growth for lower income distressed neighborhoods and multiple exit strategies we suggest considering notes for your future investments. Contact us today to learn more information on how we can help you grow your portfolio.

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Sources:

Economic Innovation Group (2019), Opportunity Zones FAQs
Retrieved from: https://eig.org/opportunityzones/faq

IRS (2019), Tax Reform
Retrieved from: https://www.irs.gov/tax-reform

IRS (2019), Opportunity Zones Frequently Asked Questions
Retrieved from: https://www.irs.gov/newsroom/opportunity-zones-frequently-asked-questions