Real estate investment has typically followed a conventional path: Your downpayment and interest rate determine how much you will pay per month. For example, if you were to purchase a home at 30 years for $400,000,with an $80,000 downpayment, the monthly payment would come to approximately $2,264 at a rate of 6.3%. The same home, however, with a downpayment  of $200,000, will generate a monthly cost of only $1,521. For the life of the loan, the transaction with an $80,000 downpayment will cost the buyer $815,956; the home with $200,000 will cost significantly less over the life of your real estate investment loan:  $547,660. That is a substantial savings. 

So the question becomes: How does one increase their downpayment? Whether you are buying a home for yourself or a $2 million dollar business building to lease out, your downpayment is key to how much of your hard-earned cash will go to the bankers, and how much you will get to keep for yourself. The A. B. Nicholas network can come in at this point and provide valuable assistance, at least for those owning at least $100,000 in stocks, bonds, or other marginable securities.  

Again, as with all our securities finance programs, much depends on your preferences and objectives. If your portfolio is “in the money” — if it has risen in value since you bought the securities therein — you might have significant capital gains taxes if you were to sell and use that money for a downpayment. On the other hand, if your portfolio stocks have dropped in value since you purchased them, selling will not incur capital gains, but you will be losing all possibility of recouping your losses by staying the course and remaining in the market. This could mean a significant loss. Individuals who have inherited securities from a family member might also feel some obligation to try to preserve their inheritance. This is not uncommon. There are therefore many reasons one might not choose to sell off their stock portfolio. 

Our network can supply the needed fix. Particularly for those investing in rental properties, but applicable to all, the ABN securities finance network uses the power of competition to deliver you the market’s best deals in terms of cash release and interest rates. By employing your portfolio as a credit line from one of the major banks/brokerages in our network, your savings over conventional retail applications can be substantial. 

 And none more substantial than total cost of your investment. As shown from the example above, those who have obtained a credit line against their stock portfolio — which can be up to 90% of the value of the portfolio in credit — can in effect rearrange their assets to achieve their objectives. 

This means there is the potential to avoid costly capital gains taxes or foregoing the recovery of your stocks’ value by selling outright. Instead, you deploy (“rearrange”) the asset where it can work for you best by saving you the most — in this case, a credit line that will deliver a downpayment that for the life of the real estate investment loan, can save you a great deal of money, certainly more than you would have without the ABN credit line. 

Though each borrower’s preferences and objectives will always be unique, our LeverageLine network typically offers rates below market. This alone will save you over the rate the bank is charging for your conventional mortgage. Averaging your stock loan rate via ABN into your mortgage loan rate can bring that total interest average and cost to you down a good deal. 

But our LeverageLine network is not just a means to obtain a good interest rate through competition. It is also allows you to obtain the highest possible cash release rate for your purposes. Much of course depends on the volatility/quality of the securities you own, but for the least risky securities — e.g., municipal bonds, T-bills — the release can easily be as high as 90% loan to value. And remember that each individual security in our system is carefully evaluated by our lending network participants. All bidders are aware that they are competing for your business too. A real estate investment loan that operates through this model can often result in big savings for borrowers. 

No one is contending that any loan or anything involving securities investments for that matter comes without risk. All stocks have some measure of risk embedded within them; that is the nature of investment securities. But our network uses only fully licensed, FINRA-member advisors at top U. S. public banks and brokerages, carefully selected, who have agreed to offer no-frills financing for our ABN clients. This means no extra fees, no hard-sell for other banking products, and full concentration on the loan product and nothing else. Every advisor is thoroughly vetted in our network. Any blemish on their records, of any kind, is grounds for automatic dismissal, which means they may not bid on our clients any more.  Safeguards for our clients are a priority at A. B. Nicholas.

Some individuals use a real estate investment loan based on “UPREIT” securities. Few if any lenders will accept these as collateral, but our network does. This means that if a real estate seller is paid in UPREIT stock, it has the same value as its REIT equivalent trading in the open market, but it cannot be sold without converting it to a taxable REIT first. This means that the UPREIT is non-taxable and therefore cannot be sold unless its status is changed from UPREIT to a market-ready REIT. That is fine if the seller doen’t mind doing so, but most of the time they need cash for other real estate investments. They are not eager to convert, however, since once that conversion has taken place, the stocks are immediately taxable. This can result in potentially major costs to the buyer who must forego the buying power of the UPREITs to avoid the tax penalties of a conversion. 

Our network has developed a product for these real estate investors that allows them to pay the seller in UPREIT securities, but also lets them use those same UPREIT securities as collateral for a competitive line of credit, in effect unlocking the value of the UPREITs without converting or selling them. 

Looking at the ABN program from a birds-eye view, you will see a program that has been carefully honed over a decade to meet the needs of real estate investors. Though our program is a credit line, not a mortgage, it can be a very useful tool for those who need to save money in the process of building their real estate investment portfolio. 

We invite you to apply at no cost at abnicholas.com/quot