Val-Chris Annual Broker Mixer!

A big Thank You to everyone who joined us last week for our Val-Chris Annual Broker Mixer! 

The food, cocktails, and conversations were all fantastic. It was great catching up with familiar faces and finally meeting some of you in person after so many phone calls.

Nothing beats connecting face-to-face over good wine and great appetizers. Here’s to closing even more deals together before year end, as there’s still time to make this an amazing year for private money loans! 

Jeff LaMotte with Val-Chris Loan Officer Jack Staurskiy

Hard Money Loan Versus Private Money Loan - What is the difference?

I often hear the question - What is the difference between a hard money loan and a private money loan? 

Personally, I think they are pretty close to the same thing, but the difference is usually associated with where the loan comes from. 

Hard money loans are from a licensed company that is in the business of offering loans. The capital for those loans is almost always provided by individual investors looking to invest their money. Most hard money lending companies act as a broker or intermediary between the person borrowing the money and the investor lending the money. The company is basically the company that sources loans for the investor to review and the invest. In some cases, the hard money lending company uses its own money to fund the loans and then sells the loan off to a private investor later. 

A private money loan is usually looked at as a loan where you borrow from an individual, licensed or unlicensed, who may or may not be in the business of lending money. For example, you need cash for your business, so you call your wealthy uncle to lend you the money in exchange for a certain rate of return or fee. 

However, if you look at the source of money in each situation, they are the same. Whether you go to a hard money lending company or your wealthy uncle, the funds are sourced from a private individual looking to lend their money. 

This is why the terms Hard Money Loans and Private Money Loans are so interchangeable. While you can argue there are differences, the source of capital remains the same.

Construction and Rehab Loans: Are You Using a Pre-Construction Budget Review? (PCR)

Rehab and construction loans are a huge part of lending. They are excellent products that offer significant value to borrowers across the nation. When done right, it provides the capital and opportunity for regular people to buy properties and add value to them. Often called “flippers”, they find properties that need some “love” and bring them back to life. Many times, and hopefully most of the time, for a profit. 

Another side of the same coin would be construction lending. Construction and rehab loans can be similar, though in my mind, they are very different. While rehab loans start with a house that’s already built but needs upgrades, construction loans typically start from scratch and are built up from the ground up.

How are they different from “normal” loans? 

Most loans use what is called “as-is” value. That is the current value with no upgrades or changes. When you are doing a rehab loan, you typically base the loan on the “After Repair Value” or ARV. How do you get the ARV? Typically, through an appraisal, however, the appraiser will need to know what you plan on doing with the property. Usually, the borrower or lender will provide a list of work along with the amount they will spend on upgrades. Then the appraiser can go and find comparable properties with similar upgrades or finishes. 

Before the work begins

This is where it gets tricky. To properly start the process, you need a contractor bid and a lender ready to lend. As a lender, you have to know that the contractor’s list of work and the order of stages make sense and can be relied on. 


One way to make this happen is by using a PCR, or Pre-Construction Budget Review. A 3rd part fund control company typically does these before you fund the loan. They will review the budget, do a search on the contractor for outstanding liens or lawsuits, and then give you a summary based on their review. Sometimes the review will come back with recommended changes to the budget or draw schedule before you fund the loan. The few times I’ve done these types of loans, the person doing the PCR is a contractor and they will give their 3rd party input on whether or not the budget makes sense.

Not everyone’s cup of tea 

My Input? I don’t like these types of loans. It’s not that they aren’t good loans, but they require a significant amount of work. Some lenders specialize in this type of lending, and it’s literally all they do every day. Whether they have years of experience in this type of lending or are a licensed contractor who has transitioned into lending, they possess the expertise to manage these loans effectively. 

I joke that the “real work” on rehab or construction loans doesn’t actually start until after the loan funds. Obviously, there is truth behind most jokes, and frankly, I prefer to have the work done once the loan funds. 

In summary, rehab and construction loans are a great tool and can be a fantastic product when done by the right lender. Tools like PCR and a third-party fund control company can offer another layer of protection and expertise to ensure the transaction is as smooth as possible. 

Reach out if you have any questions on this type of lending, and I’d be happy to discuss.


Lawsuit Filed Against AB 130!

Summary: On September 8, 2025, a coalition of mortgage lenders and trade groups filed suit in federal court challenging the constitutionality of California’s new law, AB 130. The case, California Mortgage Association v. Bonta, was filed by attorney T. Robert Finlay.

The lawsuit argues that while AB 130 was intended to address so-called “zombie mortgages” (old junior liens that resurface years later), the law goes far beyond that purpose. According to the complaint, the statute “casts a much wider net” that severely limits or eliminates the enforceability of nearly all subordinate liens on residential property in California.

Finlay contends AB 130 violates multiple constitutional protections, including the Contract Clause, Due Process, Takings, and Equal Protection provisions, and is also preempted by federal laws such as the Truth in Lending Act and RESPA. Critics warn the law could effectively wipe out second mortgages in the state, while supporters argue it provides needed protections against abusive foreclosure practices.

What does this mean?

This means that a lawsuit was officially filed to challenge the language within AB 130. The hope, and in my opinion, the correct outcome will result in a massive re-work of the bill with the guidance and input from the mortgage industry.

The fact that such a poorly written bill was rushed into law with essentially no input from industry professionals is both shocking and surprising.

While there is no word yet on an injunction, we will keep our fingers crossed for some relief from what we consider an unconstitutional law.

New Law - AB 130 - Does this kill junior lending?

Brief Summary of the new law:

California’s new law, AB 130, has major implications for lenders making subordinate loans. The law creates new technical requirements that, if not met, can render a junior lien unenforceable—even for something as small as missing a monthly mortgage statement. This effectively prevents many lenders from foreclosing, even while a senior lienholder may still proceed with foreclosure.

Several major trade groups (CMA, CMBA, CBA, UTA, and the Credit Union League), with support from law firms, are preparing to challenge the law in court and seek an injunction. They are also seeking additional plaintiffs who have been directly impacted, such as lenders who can’t foreclose due to the new rules or those who have decided to stop making subordinate loans in California altogether.

Will this kill junior loans?

No, I don’t think it will. Honestly, after reading through the law, it sounds scarier than it really is. That’s not to say it’s well-written or addresses the correct items, but at least it doesn’t kill Jr. lending.

The new requirements surround the servicing of the loan. So, assuming you have a legitimate loan servicer who will file the new required certification, you should be fine.

However, that doesn’t mean this won’t delay things. The new law is ripe for abuse by ambulance-chasing attorneys and borrowers who like to play games.

While a lawsuit against the new law is pending, we will continue to provide Jr liens as a product for our clients. We have made and will continue to make adjustments to our loan terms to ensure that we continue to provide a favorable product for both our investors and borrowers.

What Next?

We hope the pending lawsuit against CA will prompt the state to recognize that the new law is poorly written and doesn’t effectively address the issue it was intended to solve. It was pushed through too quickly, and its impact extends much farther than intended. We hope that the lawsuit will provide an injunction while the industry attorneys fight the law.

Business purpose loan updates

As many of you know, private lenders primarily do what is considered to be “business purpose loans”. What is a Business Purpose Loan? A business-purpose loan is a type of financing where the borrowed funds are used primarily for business-related activities rather than personal, family, or household purposes. We operate under the business purpose exemption since it enables us to provide financing with more flexible terms to borrowers who need quick access to capital for business ventures, real estate investments, or other commercial activities. Relying on this exemption ensures that we remain compliant with applicable laws while meeting the specific needs of your business clients.

 

I have been asked many times what we do to prove that our loans are being used for business purposes, so I wanted to elaborate on the process and disclosures we use. 

 

  1. Purpose letter. We get a letter (typically handwritten or on business letterhead) from our borrower on every transaction where they explain what the loan proceeds will be used for. 

  2. We get a “certificate of business purpose” where they describe in bullet point format how the loan proceeds will be broken down to further provide insight in to how the funds will be used. 

  3. We review the loan proceed breakdown at the end of the transaction to be sure a majority of the loan will be used for business purposes. 

  4. We have an additional business purpose affidavit called “Affidavit Regarding Business/Commercial/Investment Loan Purpose” that we have the borrower sign with loan documents AND NOTARIZE to verify completion and understanding. 

  5. Our loan application was specifically built for business purpose loans with additional language added to make it clear we don’t do consumer purpose loans. 

 

These five points ensure that our file is well-documented and clearly for business purposes. 

American Association of Private Lenders

Jeff LaMotte will attend the American Association of Private Lenders (AAPL) annual conference on Monday, November 11th in Las Vegas, NV. The American Association of Private Lenders is the oldest and largest national association for the private lending industry. Each year, they host the nation’s largest private lending event featuring the right mix of comprehensive education and networking.

Nevada Update!

Val-Chris Investments Now Lending in Nevada's Major Markets

I am thrilled to announce that I am officially lending in parts of Nevada! With our Nevada license active, we are expanding our trusted lending services to new horizons. Our focus will be on the major metropolitan areas and their surrounding suburbs, where we see tremendous opportunities for growth and investment.

Our expansion into Nevada means that we can now offer our specialized business purpose loans to a broader range of clients. We provide both 1st and 2nd deeds of trust across all property types, including residential, commercial, industrial, and mixed-use properties. Whether you're an investor looking to capitalize on Nevada's booming real estate market or a business owner seeking financing solutions, we're here to help.

Why Choose me for loans in Nevada?

  • Expertise in Business Purpose Loans: We specialize exclusively in business purpose lending, ensuring you receive knowledgeable and professional service tailored to your investment needs.

  • Flexible Loan Options: With both first and second deeds of trust available, we offer flexible financing solutions to help you leverage your investments effectively.

  • All Property Types Supported: Our loans are not limited to specific property types. We are equipped to finance a wide range of properties, providing you with more opportunities.

Gradual Rollout in Select Areas

As we embark on this exciting journey, we will gradually roll out our loan services in select areas of Nevada. This phased approach allows us to ensure that we maintain the high level of service and compliance that our clients have come to expect. You will begin to see more information about our Nevada lending opportunities in our future communications.

Committed to Compliance and Service Excellence

Compliance is a top priority for us. We sub-service our out-of-state loans through an external servicer who handles payment collection, ensuring that we adhere to all out-of-state servicing requirements. This commitment to regulatory compliance allows us to focus on providing you with seamless and efficient lending experiences.

Join Us in This New Endeavor

We are excited about the possibilities that Nevada's real estate market holds and are eager to build lasting relationships with new clients and partners in the region. If you're interested in exploring financing options for your next business or investment property in Nevada, please don't hesitate to reach out to us.

Stay Tuned

Keep an eye on our upcoming communications for more details about our Nevada lending programs. We're here to provide you with quality trust deed opportunities and are committed to helping you achieve your investment goals.

Broker Event!

We had our annual broker event on October 24 at Andrei’s in Irvine. The event was fantastic and we had over 70 real estate brokers attend. This annual event is always a blast and gives our loan officers and staff the opportunity to show our appreciation for the brokers that send loans to us for funding.

Legislative Changes

Governor Newsom has signed Senate Bill 1146, sponsored by the California Mortgage Association, which will take effect on January 1, 2025, to address the usury issues created by the In re Moon decisions. The new law allows any licensed broker to negotiate or arrange a forbearance, modification, or extension of a loan with an interest rate over 10% while retaining the broker exemption from usury caps. This legislative fix comes after the 9th Circuit's Bankruptcy Appellate Panel limited lenders' options in In re Moon, requiring the original broker's involvement in forbearances to maintain the usury exemption, thus constraining lenders trying to help borrowers avoid foreclosure. With judicial appeals unsuccessful, SB 1146 provides a solution by expanding the broker exemption, offering more flexibility for lenders and borrowers alike.

Announcing Our New President: Jeff LaMotte

Announcing Our New President: Celebrating the Leadership of Jeff LaMotte at Val-Chris Investments

We are pleased to announce that Jeff LaMotte, a dedicated member of the Val-Chris Investments team since 2009, has been appointed as our new President. This is an exciting milestone for our company, and we couldn't be more thrilled to have Jeff lead us into the future.

A Proven Leader with Deep Roots in Val-Chris Investments

Jeff's journey with Val-Chris Investments began almost two decades ago, and his impact has been profound. Starting in a managerial role, he quickly demonstrated exceptional leadership skills, a keen eye for industry trends, and a deep commitment to our clients' success. His ability to navigate the complexities of the private lending market has been instrumental in our growth and reputation as a trusted provider of quality trust deed investments.

Driving the Company Forward

In his new role as President, Jeff will continue to manage daily operations with the same dedication and strategic vision that has characterized his tenure with us. His focus will be on:

  • Innovation: Introducing new services and technologies to enhance our investment offerings.

  • Client Relationships: Strengthening our commitment to providing personalized service and building lasting partnerships.

  • Market Expansion: Exploring new opportunities in emerging markets to provide our clients with diverse investment options.

"I am honored to take on this new role and continue working with our talented team to drive Val-Chris Investments forward," said Jeff. "Our clients are at the heart of everything we do, and I am committed to ensuring we deliver the highest quality trust deed investment opportunities available."

What This Means for Our Valued Clients

Jeff's promotion signifies our unwavering commitment to excellence and stability. Under his leadership, clients can expect:

  • Consistent Quality: Ongoing access to meticulously vetted trust deed investments that meet our rigorous standards.

  • Enhanced Communication: A continued emphasis on transparency and open dialogue to keep you informed and confident in your investment decisions.

  • Personalized Service: Tailored solutions that align with your unique investment goals and risk tolerance.

A Look Back at Jeff's Contributions

Throughout his time with Val-Chris Investments, Jeff has been a catalyst for positive change. Some of his notable achievements include:

  • Operational Efficiency: Streamlining processes to improve efficiency and client satisfaction.

  • Team Development: Cultivating a team of skilled professionals who share a commitment to excellence.

  • Market Adaptation: Navigating the company through market fluctuations with strategic foresight and adaptability.

Looking Ahead

The future is bright for Val-Chris Investments. With Jeff at the helm, we are poised to continue our legacy of providing exceptional investment opportunities and fostering strong relationships with our clients.

We are grateful for your trust and partnership over the years. Your success is our success, and we are dedicated to helping you achieve your financial goals.

Join Us in Congratulating Jeff

Please join us in congratulating Jeff LaMotte on his new role as President. We are confident that his leadership will bring continued prosperity to our clients and the Val-Chris Investments family.

Stay Connected

We invite you to reach out with any questions or to learn more about how our services can support your investment objectives. Here's to a new chapter of growth and success together!

Understanding Property Taxes and Their Impact on Real Estate Investments

Property taxes are a significant aspect of real estate investment that can affect your bottom line. This post will explain how property taxes work, factors influencing them, and how to mitigate their impact on your investment.

How Property Taxes Work: Property taxes are levied by local governments and are based on the assessed value of the property. The rate at which these taxes are imposed varies widely depending on the location and the type of property.

Factors Influencing Property Taxes:

  • Location: Properties in areas with higher public service demands generally have higher tax rates.

  • Property Value: Higher-valued properties incur higher taxes, which are reassessed periodically based on current market conditions.

  • Exemptions: Some properties qualify for tax exemptions, which can significantly reduce the tax burden.

Mitigating Tax Impacts:

  • Research: Before investing, understand the tax landscape of the area. Lower-tax areas might offer higher net returns.

  • Legal Avenues: Explore possibilities for contesting property tax assessments or securing abatements.

  • Efficient Property Management: Maintaining and improving property efficiency can help keep operational costs low, offsetting higher taxes.

While property taxes are an unavoidable cost of real estate investment, understanding and strategically planning for them can help minimize their impact. By factoring in taxes to your investment calculations, you can better predict your true return on investment and make more informed decisions.

The Pros and Cons of Investing in Commercial vs. Residential Real Estate

Investing in real estate can be highly lucrative, whether you choose commercial or residential properties. This post will discuss the pros and cons of each type to help you decide which aligns best with your investment strategy.

Commercial Real Estate: Pros:

  • Higher income potential due to longer lease agreements and higher rent charges.

  • Less turnover, which can mean less frequent maintenance and renovation costs.

  • Tenants often handle some maintenance costs (depending on the lease agreement).

Cons:

  • Larger initial investment and higher property management costs.

  • More significant impact from economic downturns; businesses are more likely to default on leases during a recession.

  • Complex valuation processes which require understanding of commercial market dynamics.

Residential Real Estate: Pros:

  • Consistent demand for housing makes it a stable investment.

  • Easier to finance and manage, especially for new investors.

  • More liquidity in the residential market compared to commercial properties.

Cons:

  • Potential for high tenant turnover, especially in certain markets, which can lead to fluctuating income.

  • Smaller returns on investment compared to commercial properties, depending on the location and property type.

  • Managing tenants and property maintenance can be time-consuming.

The choice between investing in commercial or residential real estate depends on your financial goals, investment capital, and ability to manage properties. Each type offers unique opportunities and challenges that should be carefully considered before making an investment decision.

Long-term vs. Short-term: Choosing Your Real Estate Investment Strategy

Real estate investors often grapple with deciding between long-term and short-term investment strategies. Each approach has its own benefits and challenges, which this post will explore to help you make an informed decision.

Long-term Investment Strategy: Long-term real estate investments typically involve buying properties to hold for periods of several years. The focus is on capital appreciation and rental income. Benefits include the potential for steady cash flow and significant appreciation in property value over time. Challenges include managing ongoing maintenance and dealing with fluctuating rental markets.

Short-term Investment Strategy: Short-term strategies often involve flipping houses or investing in properties to rent for brief periods (such as vacation rentals). These investments can yield quick returns but require a keen market sense and timing. The main challenges include higher turnover costs and the need for active management.

Comparing the Two:

  1. Risk and Return: Long-term investments tend to be less risky and provide returns through appreciation and rental income. Short-term investments can offer higher returns but at a greater risk.

  2. Time and Effort: Long-term investments require ongoing management over years, whereas short-term investments are more intensive in the short term but can be liquidated quickly.

  3. Market Dependence: Short-term investments are highly sensitive to market conditions, while long-term investments can weather short-term market fluctuations better.

Choosing between long-term and short-term real estate investments depends on your financial goals, risk tolerance, and commitment level. By understanding the nuances of each strategy, you can better align your approach with your overall investment objectives.

The Impact of Mortgage Rate Changes on Your Real Estate Investment

Mortgage rates are a critical factor in the real estate investment landscape. This post explores how changes in mortgage rates can affect your investment strategy and offers tips for navigating these fluctuations.

Understanding Mortgage Rate Fluctuations: Mortgage rates can fluctuate based on broader economic conditions, such as inflation, economic growth, and Federal Reserve policies. Lower rates generally make borrowing cheaper, boosting demand for real estate and driving up property values.

Strategies for Investors:

  1. Locking in Rates: When rates are low, locking in a fixed-rate mortgage can protect your investment from future increases.

  2. Refinancing: During periods of lower rates, refinancing existing mortgages can reduce costs and improve cash flow.

  3. Timing the Market: Understanding trends in mortgage rates can help investors time their purchases and sales to maximize returns.

Expert Tips: Real estate experts recommend keeping a close eye on economic forecasts and central bank announcements to anticipate changes in mortgage rates. Planning your investment strategy around these predictions can provide a competitive edge.

Mortgage rates significantly influence real estate investment decisions. By understanding these impacts and employing strategic planning, investors can enhance their portfolio performance and mitigate risks associated with rate fluctuations.

Flipping Success: Strategies for Profitable Real Estate Investments

Flipping houses can be a highly profitable real estate investment strategy when executed correctly. This post outlines key strategies and tips to help you succeed in flipping properties for a profit.

Finding Properties with Potential: The first step in a successful flip is finding the right property. Look for undervalued homes in desirable neighborhoods, or properties that require cosmetic updates rather than major structural repairs. Utilize online real estate platforms and local auctions to find potential deals.

Economics of Flipping: Calculate the After Repair Value (ARV) of the property to estimate the potential sell price post-renovation. Deduct purchase costs, renovation expenses, and a buffer for unforeseen costs to ensure a profitable return.

Budgeting for Renovations: Set a realistic budget for renovations that enhances the property's value without overspending. Focus on high-impact improvements like kitchen and bathroom updates, flooring, and curb appeal.

Marketing and Selling: Once renovations are complete, market the property effectively to reach potential buyers. High-quality photos, virtual tours, and staging the home can make a significant difference in how quickly the property sells.

Flipping houses requires careful planning and execution, but with the right approach, it can be a lucrative real estate investment strategy. By understanding the market, budgeting wisely, and marketing effectively, you can maximize your returns on each flip.

Predicting the Future: How Economic Indicators Affect Real Estate Markets

Understanding economic indicators is essential for anyone involved in the real estate market. This post will explore how various economic indicators can predict changes in the real estate market, aiding investors and homebuyers in their decision-making processes.

Key Economic Indicators:

  1. GDP Growth: A strong indicator of economic health, GDP growth affects consumer confidence and purchasing power, which in turn influences real estate demand.

  2. Employment Rates: Higher employment rates increase income levels and housing demand, pushing up property values.

  3. Consumer Confidence: High consumer confidence usually leads to more transactions in the real estate market as people feel more secure in making large investments like buying a home.

Analyzing the Trends: To use these indicators effectively, monitor reports such as the monthly employment statistics from the U.S. Bureau of Labor Statistics or quarterly GDP reports from the Department of Commerce. Understanding these trends can help predict periods of high activity in the real estate market.

Expert Opinions: Economic experts believe that while these indicators provide valuable insights, they should be considered alongside local market conditions and specific property evaluations to make the best real estate decisions.

By staying informed about economic indicators, real estate professionals and investors can better anticipate market shifts and position their investments for success. This strategic approach can lead to more informed buying, selling, and investing decisions in the real estate market.

The Essential Documents for Securing a Real Estate Loan in California

Securing a real estate loan requires thorough preparation and understanding of the necessary documentation, especially in California where the real estate market is highly competitive.

Key Documents Required:

  1. Loan Application Form: This is the starting point and includes personal and financial information.

  2. Credit Report: Lenders will pull this report to assess credit history and risk.

  3. Proof of Income: Pay stubs, tax returns, and W-2 forms show your ability to repay the loan.

  4. Bank Statements: These demonstrate financial stability and cash reserves.

  5. Property Appraisal: A report from a licensed appraiser to confirm the property’s market value.

  6. Title Insurance: Ensures the property title is clear of issues.

  7. Purchase Agreement: The contract between buyer and seller stating terms and conditions of the sale.

Navigating the Process: Understanding each document’s role in the loan approval process can help streamline your application and improve your chances of success. It's also beneficial to consult with a real estate attorney or a financial advisor to ensure all paperwork is complete and accurate.

Proper preparation of the required documents can significantly ease the process of obtaining a real estate loan in California. Being well-prepared not only helps in securing the loan but also speeds up the transaction, allowing you to close deals faster.