Take as a for instance: A third year NFL player who’s had a few stand out years nearing a new contract, and is expecting a salary jump equal to his impact. He’s confident in his game, he’s also now confident mixing with businessmen, owners and managers. Opportunities come his way regularly and more are expected with the new contract. He’ll see options for real estate investment with varying degrees of risk. Friendships and emotion may come into play in his decisions. After all the loan risks have even been spelled out to him, he’s confident – and no one gets into an investment expecting failure. But if the deal goes into default and he hasn’t protected himself, he could lose a whole lot more than his initial investment. Confidence in his game came from years of practice and hard work but bringing that confidence to investing without preparation could affect him for years to come.

I’m often called for help with defaulted loan negotiations by high net worth clients who have made investments involving a personal loan guarantee that has them in a perilous financial situation. Often their problem could have been avoided altogether through basic investment analysis combined with prudent asset protection planning.

Sometimes they don’t even know the difference between a straight cash investment, where their risk involves their original investment capital only vs an “at risk” investment, which involves the investor becoming liable for the entire project’s debt by signing on as the guarantor of a bank loan to the project.

The typical example is investing in a real estate deal either with pure cash, called an “equity” investment, by putting up cash for say 20% of the deal vs an equity and “risk” investor by putting up cash and taking the additional risk of signing a bank loan to finance the deal for say 40% of the deal. Is the additional return worth the risk portion of the investment? It’s hard to say without a detailed analysis of the specific project, however the investor is many times too consumed with the potential returns to spend the proper due diligence on ways the deal going south could impact them in a negative way – beyond any cash invested. Even a small project can involve loans in the millions of dollars, and if the project fails, the banks will be looking for the guarantors to pay off the entire loan. In a financial analysis the additional risk might seem worth it, but if there are multiple loan guarantors and only one of them has available assets that are not protected, that guarantor could be faced with the liability of the entire loan amount – which can be a pretty daunting prospect.

When I’m asked about the quality of a potential investment, especially when the investment involves direct ownership of a business or real estate, my first question is always “are you signing any bank loans personally?” And, if they are, “have you protected your personal assets?” All too often, especially in this economic climate, the investment later hits a wall, fails to perform as hoped, and the debt is looming as a catastrophic liability to the investor who signed on as a guarantor of the loan. In many cases the investor did not receive enough of an increase in potential profits to in any way justify the risk of signing for the loan. In other words they would have been far better off to be a passive investor, contributing and risking only cash, rather than risking a loan being called and the bank reaching into their personal assets, including cash, stocks, cars or homes.

Does that mean an investor should never sign a loan guarantee? The additional risk can be very lucrative, but the answer depends on the investor, the investment, the financial strength of any other guarantors and the level of the investor’s personal asset protection. If the returns justify the risk and the guarantor has prudently taken asset protection steps, then the right deal may justify the additional risk. The decision should be based on a clinical look at the facts, including a realistic analysis of what could cause the deal to fail, and what the personal asset ramifications are in case of a failure, not solely on how much confidence the investor has in the deal.

The goal is to win the game without the alternative costing you an arm and a leg.

Loan Guarantee Risk Assessment for Professional Athletes is a post from: Cranewoods Development LLC

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November 8^th 2010 – St Augustine, FL   Bank and Real Estate development consultant Cranewoods Development announces that it has managed the final property closing of a planned multi-phase waterfront community in St Augustine Florida consisting of a future multi and single-family development that included a 3500sf West Indies style luxury home.

The St Augustine market had been hit particularly hard by the real estate downturn, ultimately creating intriguing opportunities for investors and homebuyers willing to step in and buy while prices are depressed.

“Properties are selling and inventory is being absorbed. Those are the indicators that prices are recovering. Now it’s a question of how fast,” stated Andrew Howe, President of Cranewoods Development. “This project had terrific value just sitting there, our job was to let people know about it in a way they understood.”

Cranewoods, a real estate development and consulting firm with offices in Florida and Ohio, has been assisting banks with distressed asset liquidation throughout the economic downturn. Several of the projects, including this one, were managed by Cranewoods prior to the financial crisis. Their expertise in the regional development market made them a logical choice to assist the original lenders in finding the best solution for their St Augustine properties through sales.

Cranewoods transformation from a real estate development firm to one offering financial, construction and real estate development consulting services is one of the success stories to come out of the financial crisis. Cranewoods has always provided consulting services but the economic downturn demanded more of their financial and market analysis experience than ever before.

“We’re brought in to review everything from the original financing to the original design and then asked to reimagine, essentially redevelop, an existing property in a way that minimizes risk and maximizes the asset,” said Howe. Cranewoods has assisted banks with troubled asset sales, management, and mortgage purchases. In addition to assisting others, they have found their own opportunities in the current market. Among Cranewoods’ more high profile recent projects is the McFarland Lofts, a condominium project in the Cincinnati Ohio’s West Fourth Street Historic District.

***

About Cranewoods Development:                                                                                    

Andrew Howe, President of Cranewoods Development, is an award winning developer and real estate consultant with over 35 years of experience. Cranewoods offers full service real estate consulting to lenders and investors. Services include: development consulting, bank loan workout solutions, court appointed receiver, turn-key development management, construction management and general project problem solving. To explore Cranewoods further, visit: http://cranewoods.com

Jacksonville, FL | Cincinnati, OH.

 PH: 513-257-0749 | 904-758-3434

Bank consultant announces sellout of St Augustine real estate project is a post from: Cranewoods Development LLC

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ENR is the leading news magazine for engineers in the construction industry in America and they rightly point out, “For developers able to roll with the recession’s punches, some new activity in markets this fall has owners and lenders finally mustering some optimism and cautiously returning to the fray.”

The article points out that Cranewoods rolled with the punches by realizing their expertise in construction and real estate development financing was needed by troubled investors, lenders and borrowers. Cranewoods began consulting long before the world’s economic troubles but their unique knowledge was in greater demand when so many projects and loans had to adjust to the changing economic conditions.

 The article calls Cranewoods a “poster child of survival” and quotes Andrew Howe on how it adjusted.

“When a local bank brought Howe aboard as a consultant on a stalled condo project in Jacksonville last year, “a light- bulb went on,” he says. Cranewoods took over the project, resurrected construction and brought the eight-story condo project to completion. The strategy that worked was “putting together a plan where everyone loses something, but no one loses everything,” Howe says.”

………..

“Having both construction and development experience is what kept us in the game,” he says, even though the projects presented some challenges. “[Taking over] half-finished projects is a specialized field,” he says. “Since the time when those projects were initiated, the markets had changed, which required we make design changes. We’re now in the business of fixing broken projects.”

As they say, go read the whole thing HERE

Cranewoods featured in Engineering News Record (ENR) is a post from: Cranewoods Development LLC

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Lenders lose about 40 percent of a property’s value on a foreclosure vs. about 19 percent on a short sale, according to industry estimates.

The program also offers $3000 in moving costs to the homeowner and some mortgage support if the owner moves into HUD approved housing. Read more about it here.

Incentives to Avoid Foreclosure is a post from: Cranewoods Development LLC

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A court appoints a receiver only after both sides of the litigation are given an apportunity to give input upon the specific receiver and the goals of the receivership. In real estate, those goals could be as diverse as selling the property to completing construction to financial analysis and auditing.

The Court and Receiver
The litigants counsel define the skill set needed in a receiver for their particular property and identify an agreed upon receiver. But once the court accepts their choice, the receiver is an extension of the neutral court.

“Parties with an interest in the receivership should treat the receiver as an arm of the court and should not seek ex-parte communications with or special treatment by the receiver.”

What to look for in a receiver

“A receiver should be chosen on the basis of background, expertise, neutrality, availability, compensation rate and temperament, and not because of perceived alliances and relationships.”

What you need to know
If you think your situation may require a receiver, go read the clear yet short article and learn more about the process and what you may need to look for. Your familiarity will aid you and your counsel in choosing the right path and goals of the receivership in your specific situation. PDF on Court Appointed Receiver here.

Receivers and Receivership is a post from: Cranewoods Development LLC

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“According to National Association of Home Builders President Jerry Howard, “This injection of capital will enable a lot of our members, a significant number of small and medium sized builders that have been hanging on by their fingernails, to keep their doors open, and hopefully with this increased stimulus and demand from the tax credit, to be able to get back on their feet and get the country moving forward again.”” Source.

What does that mean for Real Estate buyers and investors? Morning Star gives a hint:

“Many builders are flush with cash and have already cleaned out their inventory of “C” and “D” locations. Most builders aren’t going to let loose of their precious “A” and “B” locations at a time when several in the industry have moved back into land acquisition mode and quality land is actually scarce in several markets. With survival not in question for the vast majority of public builders, many will opt to keep their land rather than sell it at fire-sale prices for tax purposes.”

The extremely low prices currently being seen in Real Estate won’t last long when new units are being designed to deal with with the growing pent up demand and the new demand created by the extension of the first-time home buyers credit and the added home-owners credit also recently passed by congress and signed by President Obama.

The Tax Loss Carry Back and what it means to Real Estate Investors and Buyers is a post from: Cranewoods Development LLC

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