January 2015

Welcome.

It is our goal to keep our investors, borrowers, closing agents, and other stakeholders informed and in-touch with the latest developments at TF Management Group LLC. We aim to accomplish this by providing you updates, education and industry news through this Monthly Newsletter. We hope you enjoy it and welcome your feedback.

This month features:

  • Recent deal examples
  • Commonly asked questions

Mike Zlotnik, Managing Director


Recent Deal Examples.

  • Naples Florida Project February 2015 Newsletter
  • Naples, Florida
  • Purchase Price $150,000
  • Rehab $10,000
  • After repair value $200,000
  • Loan Amount $140,000
  • Funded November 14, 2014
  • DeMotte, Indiana - Real Estate Project
  • DeMotte, Indiana
  • Purchase price $68,250
  • Rehab $42,000
  • After repair value $250,000
  • Loan Amount $115,000
  • Funded May 23, 2014
  • Closed December 31, 2014

Commonly Asked Questions.

Happy, Healthy and Successful 2015!

In this issue of our monthly Newsletter, I would like to chat about CHEAP OIL, and how it impacts the economy, politics and the real estate market in general.

First of all, let me make an assumption that the OIL price is going to stay at the current level, plus/minus $15 for an extended period of time. Why? This is simply because EXPENSIVE OIL stimulated exploration and technology development to boost world supplies (e.g. Shale Oil developments). While supplies grew, the demand started to weaken given car fuel economy regulatory requirements, written for years out. OIL markets didn’t catch on to what was going on gradually. Instead, the OIL market went (and is still going) on a rapid price collapse. OIL supply is still growing faster on demand, and the picture will not reverse for quite some time. Politically speaking, the US wants to see CHEAP OIL keep the pressure on Russia and Iran, and so we are likely to see all kinds of forces at play to keep the oil at the current levels.

So, what does CHEAP OIL mean for the US consumer? It’s a moderate ECONOMIC BOOST. Oil goes into the cost of transportation of many goods and services. Low OIL is very deflationary for the economy. Goods and services become cheaper. Add that on top of the savings from the lower prices at the pump, and you get a boost in the consumer buying power. The middle class will feel most of the benefit; it’s like everyone has realized a flat tax cut of $500-800 per year. It is both meaningful and impactful for an average household.

In contrast to the US Consumer, World producers of oil and related products are suffering, and are rapidly trying to restructure, to be able to survive in the cheap oil environment. The shock of change from $105 to below $50 is so massive that the industry will need time to adjust down and to stabilize.

So, what does it mean for the US real estate market?

Every market is local! Oil producing /refining regions economic conditions will negatively impact the demand for housing. Some areas might see serious degradation in pricing. Oil consuming regions should see the opposite, but on a smaller scale. Cheaper oil reduces heating bills, cost of construction or renovation of properties. Ultimately, most real estate is purchased on affordability. Income boost from cheap oil doesn’t directly impact mortgage qualifications, but it does improve buyer’s confidence.

Recently, Financial markets have experienced increased volatility due to Oil price collapse to the current levels. I think we have entered a period of higher levels of volatility in general, and the markets just need to get used to it. Oil price will stabilize sooner or later. My personal view is that we might see OIL below $40 before we’ll see it above $60 again.

In any case, time will tell. Have a great 2015!