So, what’s the problem with these loans? First off, the property you want to buy has to be appraised and meet certain conditions. You also have to have a couple types of insurance on your home, including the upfront mortgage insurance premium, and the annual mortgage insurance premium, both of which will add to your payment over time.[/cs_text][/cs_column][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/2″ style=”padding: 0px;”][x_image type=”none” src=”http://www.expresscashflow.com/wp-content/uploads/2016/06/Express-Cash-Flow_May_The-Pros-and-Cons-of-FHA-Loans_Image-2.jpg” alt=”” link=”false” href=”#” title=”” target=”” info=”none” info_place=”top” info_trigger=”hover” info_content=””][/cs_column][/cs_row][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][cs_text]The upfront mortgage insurance premium is typically 1.75% of the mortgage, and the other is paid monthly and varies. You’ll have to pay these insurance premiums until you pay off your entire home. The second con of the FHA loan is that you’ll end up paying a lot more in interest over the period of the loan because you didn’t put down a larger down-payment. If you can afford a larger down-payment, that’s the better option for you.
Overall, FHA loans are a great option for families that can’t afford a huge down payment, but aren’t a great option if you can. They are, however, a great and easy solution for new homeowners and people who have a bad credit history.[/cs_text][/cs_column][/cs_row][/cs_section][/cs_content]
Cash Before Close
Phil Guertin launched a creative financial business with one element in mind: help real estate agents and brokers get commission advances within minutes to meet critical cash flow issues.
By Rick Weinberg, California Business Journal
If you’re a real estate agent or broker, cash flow is critical for such vital matters as meeting payroll, buying leads, or completing consistent marketing initiatives to keep up with the competition.
Yet with a property sitting in escrow, many agents and brokers often find themselves a little short on funds at those crucial moments. With banks unable to provide loans quickly, agents and brokers can often find themselves in dire straits.
However, thanks to a creative business model designed by Phil Guertin of Newport Beach, Calif., agents and brokers can get advances of up to $100,000 through Express Cash Flow (“ECF”) in a day—not weeks or months like at a bank, without even a credit check.
Recently, a Southern California agent approached the company late on Friday—15 minutes before the wire deadline. Within 12 minutes, the $2,000 advance was complete. It was the second transaction in less than two weeks that the agent requested. The first was for $5,000.
“There were a lot of moving parts that had to come together between the agent calling and funding the advance so rapidly,” Guertin says. “That’s one of the many major advantages of working with us.”
The company is self-funded and has significant capital behind it to fund commission advances. The company also quickly underwrites each deal since no two transactions are the same.
“It’s a much more streamlined process than any bank can offer,” says Jake Kucheck, Director of ECF. “Banks normally take 30-45 day to review a file, let alone fund the transaction.”
Express Cash Flow has grown exponentially over a six-month period in 2015-2016, advancing to agents and brokers from some of the largest franchises in the U.S., including, Berkshire, Century 21, Coldwell Banker, First Team, John L. Scott, Keller Williams, and many others.
ECF has experienced a 40% growth rate month over month and expect that rate to continue through the end of 2016, Guertin says. The company has proven marketing strategies that are scalable nationwide. In just a brief period of time, it has emerged as the top-ranked business in its space in California.
“High repeat business with top franchises and top producers along with great customer service has fueled the growth,” Kucheck says.
Approximately 50% of the business is generated from top real estate grounds and the remaining from independent brokers and agents.
Express Cash Flow features two primary products:
- Listing advances of up to $3,000
- Commission advances of up to $100,000 (advancing up to 75% of the net commission due)
Both with without a credit check and eligible for same-day funding.
The range of properties Express Cash Flow handles runs the gamut from the low end on a $87,000 property in Texas to the high end on a $15.7 million estate in Laguna Beach.
How do competitors compare?
- Express Cash Flow is usually a third less than the largest competitor
- Advances up to $100,000 per transaction while most competitors max out at $15,000
- The company provides creative custom solutions
Guertin has been in finance and real estate for his entire professional career spanning 20 years. Previous experience includes:
- Chief Financial Officer of the Miller’s Outpost family
- Restructuring of various portfolio companies for private equity firms
- Whole loan trader at New Century Mortgage trading bulk pools of loans to regional banks and Wall Street firms
- Other experience in factoring, business intelligence analytics, the family office space and capital markets helped
He researched various business models in real estate and finance and came up with Express Cash Flow, then he decided he wanted to go off on his own and start his own firm.
“I knew this would be a big business because you’re working with real estate and sales people—and real estate is huge in California and Orange County,” he says. “This model had every metric I was looking for in a business—it’s high yielding, it’s short term and scalable on a national level. Advancing $5,000 or more can be risky, but the possibility of a real estate deal closing is 90% depending on when you advance. I saw it as a huge possibility and a great opportunity.”
He built out a complex pricing model to take into account multiple data points for each transaction to price various risk factors.
There are similar business models to ECF, “but we’re more aggressive on our lending limits going up to $100,000 per transaction and we structure the advances in creative ways,” Guertin says. “We underwrite the transaction differently. We look at how active the agents are, how strong the transaction is, and how far out the close of escrow is, which determines the advance pricing. Typically, we save our clients 30 percent or more compared to other companies.”
Says Kucheck: “We saw an opportunity to improve on the existing model by adding a risk-based pricing component. The existing models were more of a ‘one size fits all’ approach. We wanted to give our clients more options.”
No two real estate transactions are alike. Because they’re different, ECF immediately sees what’s different about it and that will translate that into particular grades of risk to determine the cost for advancing funds.
“We review each deal and come up with a precise calculation of how likely it is to close, using our proprietary pricing matrix,” Guertin says. “What we want an agent or broker to do is take a portion of the commissions now and grow their business, buy leads and do their marketing so that it converts into two other leads or open escrows. Yes, you’re getting $5,000 from us, but we want you to get $25,000 or $50,000 from that reinvestment. If you look at that, the cost is very minimal.”
Without appropriate funds for marketing initiatives, for example, an agent cannot be as effective as their competition, which happens to be chasing down the same buyers and sellers.
“We don’t want agents to delay their growth and we want them to stay ‘top of mind,’” Guertin says. “Most agents are waiting for their commissions and then they’re reinvesting it. This way, they get to do it faster.”
Copyright © 2016 California Business Journal. All Rights Reserved
Express Cash Flow
Phil Guertin, Managing Partner
19800 MacArthur Blvd Suite 650
Newport Beach, CA 92612
We have worked in the world of advanced commission for a long time, which means we have seen things change in a lot of different ways over the years. Every time a major shift happens in the financial market, it immediately follows that things change in the world of escrow accounts as well. We track these shifts pretty closely as it is directly connected to advanced commission. The following is a list of some of the changes we have seen with the current market conditions.
Longer Escrow Wait Times
The financial market is improving, which is a good thing, but many different big institutions are now making it a little harder for people to get the financing they need. This is a good thing, as a little caution now can help prevent another big meltdown like the one that happened back in 2008. That being said, the advanced investigations create a longer escrow time. The money sits longer before being distributed to the deserving parties.
Larger Escrow Accounts
There are fewer loans happening, but we have noticed that these loans are growing in size. The larger loans mean larger down payments and earnest money amounts. All of that is the money that typically sits in escrow accounts. This means that the escrow accounts we deal with are larger in nature due to the growth in the economic market.
More Restrictions on Accounts
This goes back to the tighter restrictions happening with loans. Banking institutions cannot afford to be lax about the security of the accounts under their stewardship. This has affected the world of escrow by making it so fewer people have access to these accounts, and fewer loans are able to utilize an escrow service. This is especially true in the case of new construction loans. We believe that as the market continues to improve, this particular change will not be as stark a difference as it is right now.
The best real estate professionals understand what it takes to grow their business and stay one step ahead of their competition. 3 out of 5 top real estate agents utilize commission advances to support the growth of their business, as they realize the need for capital is real and it is an important component of a successful business. In addition, here are 5 other useful tips to help grow a successful business.
Develop a Business Plan for Real Estate
When starting any new business, it’s important to create a business plan. Your business plan should include information about your business structure, budget, and other things. Having it approved by a business attorney can also be helpful to ensure that you don’t forget anything and you are in compliance with all regulations.
Clients are using technology to find the businesses that they want to hire, so you need to use technology to find your clients. There are mobile applications, CRM systems for emailing, cloud storage, and many other technologies that you can use to boost your business.
Focus on Marketing
Marketing is important to gain more clients. You need to figure out the best method to reach your target market and make sure you allocate a sufficient budget to marketing each month.
Thank Your Clients
If you help your clients seal the deal on buying or selling their property or your clients refer someone to you, take the time to thank them. Write a handwritten thank-you note or drop off a meaningful gift to let them know that you appreciate their business.
Continue to Learn and focus on your Business Plan for Real Estate
After starting your business plan for real estate, don’t stop learning. You need to stay ahead of your competition by learning everything that you can about your field. Complete certifications, attend conferences, seek a mentor in your field, and find other educational opportunities.
When you’re just starting out, you can use these tips to help grow your business. And when you need realtor commission to help grow your business, stay one step ahead of the competition and use the advances to support the growth of your business.
Many real estate agents start their businesses on a shoestring. Even when an agent has been able to secure dozens of listings and potential buyers, there are a number of costs agents incur in the time between signing a listing agreement and closing a deal. Fortunately, today’s real estate agents can rely on commission advances from places like Express Cash Flow to ensure the bills are paid on time.
Here are 3 reasons commission advances can work for your business.
Traditional Loans May Be Hard to Attain
Traditional banks and lenders are often leery of loaning money to real estate agents and brokers. As you know, your income can be unpredictable, swinging wildly depending on the local housing market and even the season. Banks know this too, and many are reluctant to lend money to an agent who may have unpredictable income and is unwilling or unable to pledge traditional collateral. This can leave a hungry agent – even one with several deals in the works – in a difficult financial situation.
Running a Business Is Expensive
Though an agent may have an impressive number of deals pending, he or she may find themselves cash short when critical bills come due. Association and board dues can be a hefty expense, as well as access to the local MLS. To make matters worse, these fees generally come due at about the same time. Additionally, one of an agent’s most important expenditures – marketing – is ongoing. Those signs, flyers, open house goodies, and websites are a necessary part of doing business, and they aren’t free.
A Short Term Advance Can Hit the Spot
Traditional loans are great, but as a real estate agent, you don’t necessarily need a long term loan. While some banks will offer loans with repayment terms as little as 90 days, these loans are generally tied directly to an agent’s credit score. Since a credit score doesn’t factor in future income, this may not be the best way to assess a Realtor’s ability to pay back an advance.
Commission Advances are a simple and speedy way to finance your business’s immediate costs. There’s no reason to put off paying your marketing or other business fees until your next deal closes. A commission advance will let you pay those bills today, and continue to grow your business.
Advance commissions in California are a simple and speedy way to finance your business’s immediate costs. There’s no reason to put off paying your marketing or other business fees until your next deal closes. A commission advance will let you pay those bills today.