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Investment Strategies: Stocks, Bonds, and Real Estate

Investment Strategies Stocks Bonds And Real Estate

Over the past decade, as stocks and bonds have become more volatile, investors seeking greater control have turned to private real estate investing.  Let’s examine which investment path has generated better returns for investors with lower risk.

  • BONDS RETURNS:  Bonds typically have lower risk and lower returns.  They often expire after a given amount of time and stop paying out any returns.  In a recent study encompassing the years from 1870-2015 the average bond yield was 2.5% annually and were often negative.  While bonds offer some stability, paying about the same amount to investors each month, the cost in lost returns over the long haul is high.

  • STOCK RETURNS:  Considered a liquid asset, meaning they can provide quick cash flow, income from stocks is passive and individual investors have little to no control over the amount of this income.  Stocks do allow for diversification over industries and there is no minimum amount to invest in them. The downside to investing in stocks is that it can take decades for them to produce significant income for investors, unless you are one of the lucky ones to get in on a successful IPO.  In the same report as above, these equities yielded 6.9% average annual return.

  • PRIVATE REAL ESTATE RETURNS:  These investments are considered an illiquid investment that is known for its lower risk and high returns.  In the same study referenced above for bonds, the rate of return for residential real estate yielded a 7.05% annual average return (average CA trust deed offering return is 8-12%).  Real estate is a physical asset that offers many benefits stocks and bonds do not. Profits can be increased through improving the valuation of the property or boosting rental income. Additionally, there is a tax benefit associated with real estate investments.

Historically, real estate investments have been viewed as a safe haven for investments and an opportunity to preserve wealth for generations to come.  It is plain to see why many investors make real estate investments an essential portion of their portfolios.

For those of you interested in investing in real estate for higher returns and live in California, call our office at 707-523-2099 and maybe we can get some business going.  Here at Sun Pacific Mortgage we have been in business since 1988 offering alternative financing for real estate needs. 

What Happened With San Francisco and the Peninsula Real Estate?

What Happened With San Francisco And The Peninsula Real Estate

According to one of the recent reports on the real estate market in San Francisco, the average sale price in September for a single-family home was $2,091,655, an increase of $251,312 over August.  The average days on the market was 28. The inventory of properties for sale in San Francisco as of October 5, 2019 was 1174. This number included 317 single-family, 666 condos, and the balance multi-unit properties.  

There was a total of 354 properties sold in September and an inventory of 3 months remaining. This figure represents a strong Seller’s market, which has been the reality for many months.  Of the 317 homes sold in September, 25 homes sold below asking price, 6 homes sold for asking price, and 91 homes sold for over asking price.

On the Peninsula, the average days on the market ranged from 14-33 days, with San Carlos at 14 days and Menlo Park at 33 days.  In every city the September sales price exceeded the asking sales price for 1%-5%. Foster City, Belmont and Burlingame sold for 1% over asking and San Carlos sold for 5% over asking.  

The market continues to look strong despite the daily “gloom-and-doom” messages we receive regarding the economy’s future.  The indicators of a resilient real estate market should encourage sellers and buyers to pursue their investments with the confidence since at least this segment of the economy seems to be holding steady.

If you are looking for financing for your real estate investments, give Sun Pacific Mortgage a call at 707-523-2099 to discuss your situation.  For more than 3 decades we have given hope to many who could not quite qualify for conventional loans, providing alternative financing with our Hard Money loan programs. 

The Housing Market In The Next Economic Slowdown

The Housing Market In The Next Economic Slowdown

Recent reports seem to hint at the dreaded economic “Big R” [Recession].  According to the 2019 Zillow Home Price Expectations Surve, released June 5, 50% of the surveyed economists, investment strategists and housing market analysts believe the next recession will begin in 2020, with 19% predicting it will begin in the third quarter.  When asked what might trigger a recession, these same experts replied: trade policy; stock market correction, geopolitical crisis. Notice the absence of the housing market in their analysis. 

Since the real estate market was a major target in the last recession, there is reason for concern.  The good news for property owners is that these same experts continue to see reasonable appreciation into 2021.  Specifically, they forecast 4.1% this year, 2.8% in 2020 and 2.5% in 2021.

Because of the restrictions placed on lending since 2008, the “under water” state of homes is largely a thing of the past.  While housing isn’t expected to be problematic on a national level in the next recession, some markets will likely take bigger hits than others. 

Experts say that most homeowners are in a good place with the predicted slow-down of the economy.  Even if home values experience a dip on a national scale due to the slowing economy, it would not instantly lead to foreclosures.  The housing crisis in the Great Recession was caused largely by the fact that job loss was combined with the fact that most homeowners did not have much equity in their homes.  For the most part, homeowners aren’t making the same mistakes as a decade ago, and they have more equity in their homes, especially if prices drop. Unemployment rate is also at an all-time low.

Bottom line:  Relax! If you can continue to make your mortgage payments, you are in a good place.  Yes, there may be some minor real estate adjustments in housing values, but we are not looking at any severe drop in home equities.

Real Estate Vs. Your 401K

Real Estate Vs Your 401K

All of us would like to think we are going to retire someday, and hopefully, it will be comfortably. To that end we are encouraged to contribute to a 401K.  Unfortunately, the growth rate of most 401K accounts will not offer us the retirement we anticipate. As an example, even if you were to put $250 a month into a Roth and get a modest 3.5% return on your investment, the return most likely would not be enough for a comfortable retirement.  

So, what are the options?  If you have a self-directed Roth IRA, you could invest in hard money trust deeds that would minimally yield 10%, putting you in a much better position for retirement.  Yes, these investments come with a much higher risk, but the real estate market over the long haul has always proven a safer investment than most others. Additionally, it is tangible and will always carry value so ensuring you have decent equity at the get-go for each investment, this will serve for a safer investment overall. 

Hard money trust deed investments allow you to enjoy the advantages of real estate ownership without the inevitable landlord problems and hassle.    This type of passive investing comes with a professional lender responsible for vetting prospective borrowers. Additionally, using a loan servicing company to collect mortgage payments and ensure payments for taxes and insurance, eliminates virtually any intervention on your part.  In the end, you are left with a retirement account that is growing at a much faster pace than any 401K.

Sun Pacific Mortgage, a family owned and operated business since 1988, offers hard money trust deeds.  These opportunities are regularly emailed to our investors, with enough information to make an informed decision regarding risk and profit.  If you are interested in turning your slow-growing 401K into a turbo charged retirement fund, give us a call at 707-523-2099!

Multigenerational Homes Are in Greater Demand

Multigenerational Homes Are In Greater Demand

In 2018 the Pew Research Center released a report showing that almost 1 in every 5 Americans lives in a multigenerational home.  In fact, the numbers of two or more adult family members living under the same roof increased from 26.8 million in 1960 to 64 million in 2016.  Why the increase in this type of living arrangement?

Generally, two reasons prompt the move to a home that can accommodate this type of family living.  It either comes down to cost savings or a way for families to provide help to aging parents. Since the average life expectancy in the United States is 78 years old, this concern has become more of an issue.  Children want to take care of their aging parents or just want to spend time together. 

The benefits of being part of a multigenerational household extend to both grandchildren and grandparents: The University of Oxford did a study that found that children who are close to their grandparents have fewer emotional and behavioral problems and are better able to cope with traumatic events in their lives.  Boston College reported on a study that revealed emotionally close ties between grandparents and adult grandchildren reduced depressive symptoms in both groups.

This is not to say that there are no challenges in this type of living arrangement.  It may be difficult to meet privacy needs, and responsibilities regarding chores and financing can cause issues if they are not discussed before the move.

Besides the reasons stated above, some other factors that prompt the move to this housing arrangement include college grads who find it difficult to pay for their own apartment and still pay off education loans; millennials who “fail to launch”; immigrants who find living together as a blended family a natural way of life; suddenly single parents who need help starting over; and finally, some people just love the idea of living with family.

Whatever the reason for multigenerational living, today’s house seeker has an increased likelihood to consider this option when shopping for their next home.  

Don’t Get Caught Up in the Drama du Jour – Real Estate Stability

Real Estate Stability

Lately, we have seen the financial media spouting fear, uncertainty, drama, and doubt.  Wall Street sends us on a roller coaster ride every day, while the Everyman continues to go to work, get the same paycheck, pay the bills and largely tries to ignore all the drama.  This explains why investing in Main Street has proven to be so attractive. 

While stock prices are on a dizzying ride, the real estate market offers some modicum of stability.  Real estate’s resilience isn’t invincible, just consider the pain of the 2008 market, but investors in real estate can usually react in time to avoid disaster.  These investors continue to collect their passive income and acquire equity, untouched by all the drama on Wall Street.

Watching macro-trends is still vitally important to any investor.  These provide clues about long-term patterns and warn of systemic breakdowns.  Staying abreast of market fluctuations makes for a successful investor.

The Wall Street roller-coaster ride may be exciting for the young and daring, but most folks want stability, ease, and the ability to keep ahead of real-world inflation.  This is the main reason income-producing real estate is so attractive right now. 

Renters, coming to the realization that they are paying someone else’s mortgage, not their own, are entering the home buying market in increasing numbers.  With prices stabilizing and inventory inching up, home buyers are beginning to look once again at becoming homeowners. In addition, some existing homeowners are taking the appreciation gained over the past several years and investing in a rental unit.  It behooves Realtors and Lenders to relay this to their potential clients. 

Don’t want to deal with the messy issues involved in being a landlord?  Perhaps, you might want to consider becoming a private investor in hard money loans.  In this scenario you achieve passive income on your investment but avoid the “landlord blues”.  Your money is much safer with real property and, if borrowers are vetted well, you can rest easy that your hard-earned money is safely preserved and producing more than the normal return interest for you.

Sun Pacific Mortgage is a family owned and operated hard money lending business.  We have been in business for 31 years and enjoy a sterling reputation with our investors and our borrowers.  

Brokers & Lenders, Realtors and potential Investors feel free to give us a call at 707-523-2099 to discus the various ways we can assist you in increasing your success rate or diversifying your portfolio. 

You can also find out more about what we offer and how you can work with us on our website at www.Sunpacificmortgage.com 

Thinking of Renovating? Buckle up!

Thinking Of Renovating Buckle Up Hard Money

Renovations have been known to lead to many unforeseen disasters, but it doesn’t need to be that way.  With the proper preparation and due diligence, pretty much anything can be avoided. We have all heard the horror stories of living a totally upended life during a renovation, and of timelines being ignored by professional contractors.  If you are contemplating a renovation, the suggestions listed below may save your “mental health” and your wallet:

Make Living Arrangements Well In Advance:  For larger renovations the ideal solution would be to check into an extended stay hotel or move in with family or friends for the duration.  If that is not feasible, or the reno is smaller, find a space out of the way of the construction to make your meals and/or “hide” for your sanity.  Take-out sources may become your new BFF during this time if you have a kitchen reno on your list.

Protect Yourself With A Detailed Contract:  If you go into renovation with a contractor without a specific and detailed contract, you risk finding the project stalled or worse.  This contract should include the address, a start date, a completion date, and details of what is and is not going to be done. As an additional incentive, you might add penalties for not meeting required deadlines.

Keep All Your Receipts:  Hold on to every receipt related to the reno in case you need to return the item.  These receipts will come in handy at tax time or at the time of resale.

Organize And Remove Items: Box and store items from the cabinets and closets.  Labeling will save you from hunting for things during the reno and help you to unpack later.

Save Décor Ideas In A File:  While some of your décor items may still be useable in the new space, you may want to freshen-up the visuals with a new look.  Gather any idea or picture that offers an inspiration for your “new look” and keep them in a file.

Protect Against Dust, Debris, and Damage:  Take down or cover any items you cannot move with a protective tarp or sheeting.  Do your own damage control, don’t depend on your contractor.

Following these few steps and advice hopefully saves you time and your sanity, during one of the most stressful experiences homeowners live through.

Four Things Parents Should Consider Before Buying a Home

Four Things Parents Should Consider Before Buying A Home

Parents shopping for a home have different considerations than other demographics.  As parents, their primary concern is the safety and well-being of their children, at the same time, they are also concerned with the happiness of the entire family.  

Most buyers start their home search with a list of “must-haves”.  When children are a concern, there are some additional factors to be considered.  While they may seem obvious, it is tempting to forget them when under pressure to find a home quickly, or when you discover a fantastic feature in a home that you “can’t live without”.  The following are some of suggestions to keep in mind as you look for your next family nest:

  1. Placement of the bedrooms:  Depending on the age of the children, you might want them on the same floor as your master bedroom, or if you have older children, you might opt for more separation.
  2. Yard placement:  Most parents want the visibility to observe their children at play in the yard.
  3. Walking distance to amenities:  Life will be easier if you can avoid or shorten car trips to deliver children to their activities and their schools.
  4. Neighbors:  This is a vital part of any parent’s concern.  It makes sense to check out the neighbors who live nearby.  There are helpful websites to access, like Megan’s Law, and simply meeting the neighbors before purchasing, may be reassuring.

When all is said and done, life will be less stressful after the move if these considerations are part of the decision making.

Why Do Most People Invest in Rental Real Estate?

Why Do Most People Invest In Rental Real Estate

With Spring comes an uptick in serious buyers looking to invest in property, each with their own agenda.  Among the most common reasons buyers will tell you that they have chosen this type of investment, five stand out as most common:

  1. Cash Flow: Buyers are looking for a monthly cash flow.
  2. Equity:  Buyers are counting on selling the property for more than they paid for it.
  3. Debt Paydown:  The tenant who will be living in the property will be the ones that are paying down the mortgage for you.  In ten, twenty, thirty years from now, you have a property that has been paid off by a tenant. You then own an asset that will still be producing income.
  4. Depreciation:  Buyers are able to depreciate the property for tax purposes (after consulting a tax accountant).  Being able to depreciate your asset over time is a big advantage in offsetting income.
  5. Appreciation:  This is the Big One! When all is said and done, the result homeowners are counting on above all else is Appreciation.  In the West we have seen an impressive appreciation over the past several years. Property ownership remains a major contributor to individual wealth.


When we think about the home where we grew up, and consider what it was worth thirty years ago, if we had kept it all these years, we would probably be very wealthy!

If you find yourself in a position that does not allow you to qualify for a traditional loan currently, consider alternative financing.  Sun Pacific Mortgage offers many programs that can make real estate investing possible when it looks hopeless. Our hard money loans are often used to purchase rental properties until a conventional loan becomes possible.  We await your call at 707-523-2099, we are here to help.

Why Are Millennials Buying Now?

Why Are Millennials Buying Now

A recent study of Millennial buyers examined the reasons they are choosing to buy a home at this time.  Here are the results:

1. To Control their Living Space – 93%

Many a renter has dreamt of painting their space to reflect their personal style. Some Millennials yearn for a pet they are prohibited from owning because of rental agreements. They have gotten to the place where they don’t want to wait any longer for these dreams to be fulfilled.

2. To Have a Sense of Privacy – 90%

Security has new meaning for everyone these days, so it is no surprise that it ranked #2 in this poll.  We all want control over who enters our home, and how we can secure it.

3. To Live in a Nicer Home – 81%

Similarly to point #1, when you purchase your own home, you can renovate to suit your style, as well as accommodate for a growing family or a member who may need to move in.

4. To Feel Part of a Community – 75%

Because your home value is linked to the community and neighborhood in which you live, owning is a powerful motive to engage in civic activity.

5. To Have Flexibility in Future Decisions – 53%

Rather than see their rent money increase the financial well-being of their landlord, Millennials are seeing their housing investment as a savings account that may be available in the future to support themselves.

The recent article in Keeping Current Matters  sums up the findings by stating:  “The majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons – including control of living space, flexibility in future decisions, privacy and security , and living in a nice home.”

It’s definitely a good time for millennials to get pre-qualified to buy a home. Locate your local, licensed and experienced Lender to assist you with this. Get out there any buy this summer!

As always, if you’re self-employed, turned down by the banks, or in need of special financing. Contact Sun Pacific Mortgage & Real Estate for a free consultation at (707) 523-2099.

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