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September 30, 2022 by Coastal Capital 0 Comments

September 2022 Newsletter


Each month Coastal Capital strives to bring you the latest updates and insights into the California real estate market for both investors and brokers. We always welcome new investors who enjoy above-average returns that are not correlated to the equity markets. As always, we appreciate both new investor and broker referrals, as the network builds it brings more value to all through diversification.


It seems that California’s real estate market has swung back to a balanced market where buyers and sellers are actually negotiating over price a bit and contingencies. No longer are buyers being forced to come in with all cash offers above asking price to secure a property in the residential markets (not true for multifamily income properties that are still in incredible demand.). The crazy appreciation rates of single-family homes in the past bull run are coming back down to normal levels as well. We all knew that 10%+ annual increases in our home values wasn’t sustainable in the long run. We welcome the return to normalcy as it promotes a healthy, long-term market.

It is no secret that the driver of this cooling off is rising interest rates pushing up the cost of monthly mortgage payments. 30-year fixed mortgages are at a 14-year high Nationwide coming in at 6.29% up from 6.02% the previous week according to Freddie Mac, but still well below their long-term historical averages of 7.76%. Average buyer mortgage (excluding all refis) is $900 per month higher than a year ago crushing the lower end of the market (under $700K) that is hyper payment sensitive according to Here in California with an average price home value of $860,000 we don’t really have much a lower end market since only the affluent can afford to buy. As of August 2022, only 25% of Californians could qualify for an average mortgage.

Skimming recent headlines, you might think the housing market is crashing. We all know headlines sell newspapers (at least they used to) and now get lots of clicks. Now those headlines do carry weight in the rest of the Nation where some markets are seeing some price deprecation. The average median housing price in the US is up 7.7% from a year ago. Sales volume for homes priced under $750,000 fell 13% in August 2022, versus 2021; for homes above that the decline was just 3%. If we dive specifically into our California market, we see that:

  1. August sales pace was up 6.1% from July
  2. Median price was up 0.7% in just a month in August from July
  3. Most California local markets have less than a 2.5-months of inventory (4 to 6 months supply is considered normal)

Now a headline that we are shocked didn’t make the headlines is that the Federal Reserve stopped buying Mortgage-Backed Securities (MBS) this month to fight inflation. The Fed used it as a tool in late 2008 to repress mortgage rates and inflate home prices as part of the cure for the Mortgage Crisis. From its infancy till April 2022 the Fed’s balance sheet ballooned to over $2.74 Trillion (a truly mind-boggling number) in MBS. For this reason, it would surprise us if rate are North of 7% by year’s end (keep in mind that the historic average of mortgage rates is 7.7%.)


Specifically, to our Fund we are still experiencing incredible demand from long term residential income property owners. Landlords continue to get insane rents, especially throughout Southern California, anywhere near the Bay area and Tahoe region. Also starting to see an uptick in 1st position trust deeds flow across our application desk as landlords are scrambling to come up with cash to close fast on any and every multi-family property on the market.

Fix and flippers are exiting the market quickly and not taking on many new projects. The only deals we are seeing are slam dunks that are too good to pass up. Our small business owners are experiencing the squeeze from big banks that have tightened their guidelines for the self-employed. The fund continued to grow in the month with many of our current members exiting the stock market and choosing the safe haven our trust deeds.


This month’s highlight is from a landlord adding to his mini-rental empire. The borrower had the chance to scoop up another property in C if he could come up with the cash. We were able to get him $150,000 fast and now he has his fifth duplex in his portfolio after accessing the equity in this one. The good news is that he owns the new property free & clear and is planning for us to do a quick 1st position loan on it so he can get upgrades done ASAP and command higher rents!

The Fund has built its stellar reputation with brokers one deal at a time by following through on our offers (as long as no surprises come up title or escrow.) Being the one that gets it done pays off handsomely for all of us!

  • SFR 3 BED / 2 BATH
  • South Gate, CA
  • Position: 2nd TD
  • Rate: 12.50%
  • CLTV: 65%
  • Appraised Value: $1,000,000

Please visit our blog section of the website for the latest updates
and check out each loan origination.

Looking for a way to get more from your retirement savings? A self-directed IRA (SDIRA) could be the answer. We constantly get asked on how to set this up and asked the firm we recommend to provide some insight with our investors:

What is a Self-Directed IRA?

Self-Directed IRA (SDIRA) is quite simply, an IRA. All IRAs abide by the same laws and possess the same capabilities. Unlike other IRAs held at banks, brokerage firms and other institutions, with a SDIRA, you’re not limited to stocks, bonds, or mutual funds.


What are the benefits?

A SDIRA gives you the opportunity to build a more diversified and resilient portfolio. It allows you to take advantage of alternative investments such as real estate, precious metals, private equity, notes, and more. A custodian/administrator is required to do the record keeping for the assets in your account, but nothing moves in or out of it without your direction. You decide how much, when, and most of all, what to invest in, giving you the freedom to invest in what you know best.

Investing in Real EstateWith a Self-Directed IRA

Real Estate is a popular investment among SDIRA holders because it is a tangible asset that people know and trust. With a SDIRA, you can invest in a wide range of real estate assets: residential or commercial properties, developed or undeveloped land, condos, hotels, mortgage notes, and more. Depending on what type of account you choose, earnings can continue to be either tax-free or tax-deferred.

The level of control and flexibility associated with a SDIRA does come with its own set of responsibilities. For example, investments made with your SDIRA are owned by your SDIRA, not by you personally, making self-dealing prohibited. Click here for more information on SDIRA rules. 

Getting Started

The first step is to decide what type of account you want to open. Then, establish how you’ll fund it. Make sure to consult with a legal and/or tax advisor before you begin can help you to answer these questions. If a SDIRA sounds like it could be the answer to your retirement questions, get your copy of the Self-Directed IRAs Basics Guide.

Brokers Always Welcome

Coastal Capital is always looking for referrals from brokers and open to new investors in the fund. Please share this email or connect us directly.

Asset Based Loans on Business Purpose Real Estate

  • Loan Amounts: $25,000 to $500,000
    Exceptions required for larger amounts
  • Origination Fees: 1 to 3 points with a  minimum of $2,000
  • Serving Location: State of California Only
  • Purpose: Business or Investment Purpose Only
  • Types: SFR, Multifamily, SFR Additions, Fix & Flip, Light Commercial & Retail, Land.
  • Fix Loan Term: 6 months to 18 months
  • Rates: from 10% up to 15%
  • Loan to Value: 65% without exceptions, higher available
  • Loan to Cost: Up to 80% with hold back for exceptions
  • No minimum credit score. Low FICO credit score okay


Chris Tomasewski

Scott Griest

Chio Baldocchi

Phil Guertin

How to Know When Your Clients Need Private Money

Even if the majority of the loans you broker are through traditional banks, it’s always a good idea to have other solutions available. Not everyone qualifies for conventional financing through a bank. To best serve your clients a full repertoire of financing solutions for all these scenarios.

Real Estate Investor Who Owns Multiple Properties

Clients that plan to invest in multiple properties can’t always get a traditional mortgage. Conventional lenders are limited to financing a maximum of 5 to 10 properties per borrower, which includes a principal residence. Often the borrower’s debt-to-income ratio also prevent them from securing traditional financing even though all the properties as a whole cash flow each month. Depending on the type of loan and the borrower’s credit score, they may need a DTI as low as 36 percent.

Private money lenders have no limit on the number of properties they will finance and are more lenient about DTI ratios, as long as the borrower has sufficient equity. Real estate investors that want to start new flips while others are in progress will need to find a lender that will work with them and deliver as promised.

Poor Property Conditions

Conventional lenders require properties to meet certain conditions.   Most private lenders don’t have the same limitations as a traditional bank. The whole point of a flip is to improve the property enough to make a profit on reselling it, so many ideal flips don’t meet bank requirements. When your clients work with a private lender who specializes in fix-n-flips, it gives them more flexibility to purchase foreclosures and other homes that have fallen into disrepair.

Limited Cash on Hand

Fix-and-flips require an investment in improvements, and not everybody has enough cash for this kind of significant investment. A fix-and-flip lender provides financing for the purchase of the home and a percentage of the improvements. Keep in mind that fix-and-flip lenders do require borrowers to contribute some cash, usually 30% or more depending on the property.

Low Experience Level

Experienced flippers may occasionally be able to secure financing through a conventional lender, but this is rare. First-time flippers and those who don’t have an established relationship with a traditional bank will need to find another source of financing. Fix-and-flip lenders reduce their risk by using the property as collateral, which allows them to be more flexible with less experienced flippers. Even if a borrower has never flipped a home before, you can help them get a loan.

Here at Coastal Capital we’ve been assisting brokers in buying fix-and-flip along with loans for real estate investors.  Since 2007 we’ve built our successful real estate fund by delivering for brokers.  If we say “Yes” to a deal it funds as long as no surprises show up along the way.  If you want a partner you can count on please visit us at for more info or just give us a call.

Residential Real Estate Prices Continuing To Rise

It’s no secret that real estate prices have been on the rise, and it appears that trend will continue into 2022. When coupled with an undersupplied market, the result is fierce competition. For real estate investors, this means you must sharpen your keen eye for a good deal and have quick access to cash to stay competitive.

Housing Demand Shortage Pays Off For Fix-and-Flips

The real estate market is booming these days as a result is a shortage in good housing inventory for buyers to choose from. With limited stock available, especially of move-in ready homes, investors are jumping in and improving existing properties and selling them for a profit. Competition is cutthroat, especially among real estate investors who have the ability to make cash offers. Fix-and-flip financing is one solution that can help you stay competitive and take advantage of the current real estate market.

Housing Stock Expansion Through Renovation

With sales prices going up and inventory going down, home renovations will be critical for expanding the housing stock. Although new home construction will also contribute to building inventory, it takes longer and costs more, especially with the current labor shortage and high price of materials. New construction also requires a larger variety of materials because you’re starting from scratch. When renovating, you might just need lumber, drywall, paint, and other finish materials, but a new home needs plumbing, electrical, and more.


Whether you do some of the work yourself or outsource it to qualified contractors, renovating a distressed property is often more cost-effective than building a new home. When done right, it also offers the potential to make a nice profit. Although it’s true that profit margins on renovations may not be as lucrative as new construction, with increasing labor and materials costs, they are definitely less risky.


Renovations also have some built-in risk mitigation that many other types of investments don’t have. If the market shifts during the renovation process, you can always hang on to the property as a rental to generate income until prices go back up.

Fix-and-Flip Financing

Most people don’t have the cash on hand required to invest in renovations, so they have to borrow it. In many cases, a conventional mortgage is not an option, either because of the borrower’s finances or because of the condition of the property. Trust deeds are designed to cover a portion of the purchase price of the home and the renovation costs. They are typically short-term loans because the intention is to sell the home within a certain time frame. However, if you decide to keep the home as a rental or you need more time to renovate, you may be able to get a traditional mortgage with better rates and longer terms.


Coastal Capital is a trust deed lender that offers fix-and-flip loans to real estate investors with a broad range of experience levels. Whether you’re a seasoned investor or are just starting out, our team can help you get the financing you need to achieve your investment goals. We offer loans throughout the country, and our personalized services allow us to build long-term relationships with borrowers, so you know we’ll be here for your next project.


To finance your first or fifteenth fix-and-flip, give us a call: (310) 280-9173

The 7 Most Important Real Estate Numbers for Investment Analysis

To succeed as a real estate investor, you NEED to be able to analyze potential investments. So, where should you start with an investment property analysis? What are the real estate numbers that you must be aware of? In this blog post, we’ll go over the 7 real estate numbers you need for analyzing investments.

There is a lot of real estate data that you’ll need to collect and analyze before making an investment. However, the following 7 are some of the most important:

1. Property Price

The first thing to think about is property price. You probably have a budget set, and even then, you’ll be on the hunt for a good deal that will save you money. Property price is also driving many other important metrics, such as fair market value and appreciation, as well as other important numbers in this blog.

2. Rental Income

The profit you earn from real estate investing will depend heavily on your rental income. As you likely know, gross rental income is simply the rent payments you receive from tenants. The time of payments is based on both the lease agreement and rental property type. Traditional long-term rentals earn rent on a monthly basis. Short-term rentals, such as for an Airbnb, usually mandates nightly or weekly payments. The amount will depend on the real estate market where the rental property is located, demand for rentals, the property type and strategy, rent control laws (if they apply), as well as general economic trends.

3. Price to Rent Ratio

The next of the real estate numbers is price to rent ratio, also known as P/R. As you can tell from its name, this metric is calculated using the property price and rental income data:

Price to rent ratio

The price to rent ratio indicates whether it’s more affordable to buy or rent property in a specific location:

  • A low price to rent ratio (1 to 15) means it is more financially sound to buy a property than to rent one.
  • When P/R is moderate (16 to 20), it is usually more affordable to rent a property rather than to purchase one.
  • A high price to rent ratio (above 21) means it is much better to rent than to purchase a property.

The ranges are obviously relevant to the average resident of a housing market. They are, however, also significant to real estate investors. Areas with moderate to high price to rent ratios, for instance, will enjoy higher rental demand and are thus better places to invest in. At the same time, these markets do come with very high property prices and will make for great investment locations specifically for investors with deep pockets (or the ability to leverage real estate).

4. Rental Property Cash Flow

While rental income is a beneficial metric, it doesn’t give the full picture of rental property profitability. Gross rental income doesn’t, for example, take rental expenses into account. Luckily, there is a metric that does just that called cash flow. Here is how rental property cash flow is calculated:

Cash Flow

As the difference between rental income and rental expenses (not operating expenses, which exclude financing costs), cash flow can be calculated on a weekly, monthly, or yearly basis.

5. Cap Rate

While rental property cash flow paints a more accurate picture of profit than rental income, it shouldn’t be used in isolation. The cash flow’s main limitation is that it does not showcase profit relative to the property’s price or value. To do that, we use what is known as return on investment (ROI) metrics. One of the most essential real estate numbers of this kind is the cap rate. Short for capitalization rate, it is calculated as:


The cap rate depends on two variables, as seen in the formula. First is the net operating income & the second is fair market value or the current value of an investment property for sale. The cap rate measures ROI regardless of property financing. As a result, this rental property ratio is an excellent way to quickly compare multiple properties during an investment property analysis.

6. Cash on Cash Return

Similar to cap rate, cash-on-cash is also one of the most useful real estates that represent ROI. The main difference between the two is that the cash-on-cash return includes financing costs in its profitability estimation. It’s mainly used to measure the current performance of a rented property. Here’s how it is calculated:

Cash on Cash return

The first number needed to calculate the cash-on-cash return is the annual pre-tax cash flow. Annual pre-tax cash flow is, as the name implies, yearly cash flow before taxes. It is the difference between the property’s net operating income and debt service. Debt service refers to financing costs, such as mortgage principal and interest payments. If debt service is set at zero, cash on cash return and cap rate will be the same value.

7. Airbnb Occupancy Rate

The last of the important real estate numbers is the Airbnb occupancy rate. This number is important if you’re looking to invest in short-term rentals. It is the ratio of the time a short-term rental property is occupied to the time it is available for rent. Airbnb occupancy rate depends on location, seasonal trends, and available nights.

While real estate prices are at record highs, many of Coastal Capital’s borrowers are successful real estate investor that are reporting great deals in the market that cash flow.  Yes prices are high but rents are skyrocketing make the hefty price tag seem like a bargain in the long run   To finance your first or fifteenth real estate investment property just give us a call: (310) 280-9173

Covid-19 Has Changed How Californians Live & Work

As the Covid-19 pandemic continues in California we want to take a deep dive into how its effected where Californians live.

Since the start of the pandemic, it’s been reported that Californians abandoning their usual way of life for greener (and cheaper) pastures. There are the San Franciscans who weathered lockdown orders in Lake Tahoe, and the Los Angelenos with new desert cabins in Joshua Tree. Tales abound of Silicon Valley types moving home to Miami and Seattle; or renting acres of land in Idaho.

1. How The Real California Story Goes

The story goes like this: The coronavirus and the ability to work remotely have fundamentally reshaped where we want to live — and large California cities, particularly Los Angeles and San Francisco, are not on the list.  But is any of that true?  Let’s start with the short answer. There hasn’t been an exodus from California, but pandemic forces have shifted where people reside within the state. Those patterns of relocation mirror what we were already seeing before Covid-19, but on overdrive.

California’s population dropped slightly in 2020 but nowhere near what the media pushes of a mass migration to other states. The drop was just 0.46% according to Cal Matters.  The main drivers being coronavirus deaths, a lower birthrate and fewer international arrivals.

In fact, 82 percent of Californians who moved last year stayed in the state, according to a report from the California Policy Lab. That figure has been basically stable over the past five years.

State forecasters stress that the factors that contributed to this population dip are unique to this period — and therefore temporary. In 2020 roughly 51,000 Californians died of COVID-19. Travel restrictions and fear of contagion also dramatically tamped down the number of new arrivals from abroad, the main source of the state’s population growth over the last decade. 

2. What To Expect In The Future For Californians?

Californians who moved last year stayed in the state 82% of the time, according to a report from the California Policy Lab. That figure has been basically stable over the past five years.

“A lot more people are moving around within the state than they are out of the state,” Eric McGhee, a senior fellow with the Public Policy Institute of California. “That movement tends to be within a certain metropolitan area, and a lot of that is people moving to suburbs and exurbs.”

Californians are likely to move from Los Angeles to the Inland Empire or from San Francisco to the fringes of the Bay Area or the Sacramento region, McGhee said. That’s because they want cheaper housing but don’t want to end up so far away that they need to change jobs.  These were the largest county-to-county net migrations in California between 2015 and 2019, according to census data:

  • Los Angeles to San Bernardino (20,809 people)
  • Los Angeles to Riverside (13,949)
  • Los Angeles to Orange (11,879)
  • Alameda to Contra Costa (9,246)
  • Orange to Riverside (8,282)
  • Los Angeles to Kern (6,032)
  • San Diego to Riverside (5,892)
  • San Francisco to Alameda (5,469)
  • San Francisco to San Mateo (4,239)

The Inland Empire tied Phoenix in 2020 for the biggest gain in households from migration nationwide.  The flow of humanity into Riverside and San Bernardino Counties increased by 50 percent compared with the previous year.  This reflects Californians’ desire to escape the exorbitant home prices of more coastal regions. In Riverside County, the median single-family home price in August was $570,000, compared with $830,070 in Los Angeles County and $1.85 million in San Francisco.

The overall numbers of Californians coming and going mask much larger changes within the state. The more dramatic “exodus” has not been from California to Florida, but from the Bay Area to the Central Valley and from Los Angeles to the Inland Empire. As financers of Trust Deeds throughout California we keep a close eye on growth trends.  While it may seem prudent to push up loan-to-value ranges in growing areas, we still remember 2008 & 2009.  We will working our winning formula that maximizes capital preservation while returning above average returns.  There’s a reason why long-term California real estate investors consider Coastal Capital their financing partner of choice.  

Top 5 Ways Real Estate Investors Find Off-Markets Deals

When the seller’s market is so hot that homes are going under contract in under two weeks on average, a real estate investor’s best bet is to find off-market deals. Off-market properties are simply properties that aren’t listed for sale. Once a property hits the market, buyers flood the listing, and the competition is immediately fierce. But if you can find off-market deals, you might be able to snag them without any competition.

Let’s count down the top five ways real estate investors are finding off-market deals.

1. Wholesalers

Wholesalers are investors who get a property under contract, then sell the contract to a new buyer. Wholesalers are essentially middlemen who agree to purchase a property at a price below market value, then sell the right to purchase to the eventual buyer at market value and pocket the difference.

Wholesalers are typically well-connected and often find off-market properties through their networks. And technically, once they get the property under contract, it’s no longer active on the market, so it is an off-market deal at that point.

2. Auctions

In many states, off-market properties can be purchased through auctions, the most common of which is a property tax auction. These properties are auctioned off to recover back property taxes owed by the homeowner.

Counties in tax deed states, like California and about 30 others will publish notices of upcoming tax auctions. Anyone is welcome to attend and bid on the property. But be prepared to bid against lots of seasoned real estate investors. And be prepared to invest a fair amount of money in renovating the property before it will be ready to rent or re-sell.

3. Network With Attorneys

Attorneys often learn of potential real estate listings, so networking with attorneys can give you a connection to sellers before they list their homes on the market. Divorce attorneys, for example, might be able to tell you when a couple is planning to sell the home as part of their division of assets. And an estate attorney can tell you if a family will need to sell the home of a deceased relative.

For empathetic investors, this can be an opportunity to help families in need of quick sales. Divorced couples and grieving families might appreciate a no-hassle sale with a short escrow period so they can pay their bills and start the next chapter of their lives.

4. Real Estate Databases

In the age of Big Data, you can subscribe to real estate databases that contain clues to potentially motivated off-market sellers. PropStream, for example, cross-references databases to help you find distressed properties with owners who might be willing to sell quickly. The database includes divorce filings, bankruptcy filings, and pre-foreclosure notices, as well as county property records and MLS data. Databases are great for generating targeted lists of homeowners that might be receptive to a direct mail campaign. Many of the databases even include skip-tracing to help you find the owner’s contact information. 

5. Real Estate Agents

No one has their finger on the pulse of the housing market like real estate agents. Real estate agents are typically the first to learn of upcoming listings because potential sellers contact agents to get more information about the selling process weeks, or even months, before listing. So if you have a relationship with a real estate agent, you get on the inside track to be notified of motivated sellers. 

Not only that, but agents talk to the other agents in their brokerage. When one agent gets word of a potential listing, that agent will let the others know so they can start lining up potential buyers.

While it’s still a seller’s market with fewer off-market listings our borrowers are still scooping them up. It always comes down to connections and being able to perform.  Many of them count on Coastal Capital to provide financing in days to get these deals closed fast.\There’s a reason why long-term California real estate invesotrs consider Coastal Capital their financing partner of choice. 

How Private Money Loans Can Solve Real Problems

A private money loan is simply a short-term loan secured by real property and funded by a private investor or investors that allows the borrower free use of the cash proceeds to solve their real-world problems.

Should You Buy A Home Now? Economists Think Prices Will Rise In 2022

Home prices are expected to rise through 2022 and most agree you should buy a home now. with interest rates near historic lows — some 15-year rates are near 2% and some 30-year rates are below 3% — many prospective home buyers are wondering whether they should buy a home sooner rather than later. Here’s what experts say about home price trends and whether you should buy now.

How Much Are Home Prices Going To Appreciate?

Of course, no one has a crystal ball that can foresee the future of the real estate market, but a report from the National Association of Realtors revealed home prices will likely climb 5.5% in 2022. Taylor Marr, lead economist at Redfin, says that while the company reported that home sales grew 16% in August, “our economics team’s view is that price growth will slow to about 13% during the last few months of this year, relative to 2020.” And for its part, “Zillow economists expect the typical U.S home value to increase 4.7% over the next three months (August-November), and to end August 2022 up 11.7% from August 2021,” according to a report the organization released in September. (Zillow’s home values take into account the prices of all homes, whether they are for sale or not.)

“That’s incredible growth compared to historical norms, but slower than the current pace. Inventory has shown signs it is finally headed up, which would rebalance the market to some extent and start to moderate the home price explosion we’ve seen over the past year or so,”

Jonathan Lee, senior director of mortgage sales for Zillow Home Loans. Tweet

Should You Buy Now, Or Wait?

Potential buyers should think about their personal situation first when deciding when to buy a home, rather than trying to time the market, some experts say. “You should buy now if you’re sure you’re ready and you can afford a home. It’s best not to try to time the market. If you wait on the expectation that prices will fall in a year or two, you might be disappointed,” says Holden Lewis, home and mortgage expert at NerdWallet. And buying now could mean you lock in a very low interest rate, as mortgage rates are still near all-time lows.
Denny Ceizyk, LendingTree’s senior staff writer for mortgage, says the decision of whether to buy now depends on whether you’re financially prepared for homeownership and how long you plan to live in the home you’re buying, because even if home prices dip, they generally recover in the long run. “While home prices are rising, interest rates remain at 60-year lows, making it much more affordable to buy higher-priced homes. At some point, inflation pressures could push mortgage rates higher, which argues for buying sooner than later. If your employment was affected by pandemic-related layoffs or furloughs, it also makes sense to pad your cash reserves before you buy so you’ve got extra funds to cover an extended period without a paycheck,” says Ceizyk.

Here at Coastal Capital we help borrowers throughout California with business purpose loans. For more info or give us a call: (310) 280-9173.

Buying and Flipping Foreclosed Homes

With the looming expiration of moratoriums, it’s good to have a team lined up and ready when opportunities arise so you can make a solid real estate offer.

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