Posted almost 9 years ago

What I Learned About Mortgage Loans I Learned From Spaghetti Westerns

What do a "Fistful of Dollars;" "For A Few Dollars More;" and the "Good, the Bad, and the Ugly" three great movies with Clint Eastwood as the stranger have to do with real estate investing?

Well and if you do NOT know about hard money lenders (I worked for one called a mortgage broker...well does the second word on their title tell you anything)?

Needless to say but I will say it anyway do NOT settle for these guys for getting your loans to fund your deals...just like the villains who wear black hats and carry a six gun in the Spaghetti westerns identified they were popular in the late 1960s cowboy western genre' I am a white hat... a good guy!

But then you the investor are the Good guy and the white hat becomes a symbol for strength... to rescue the frustrated seller who is now the motivated seller. Probably the house or apartment that is listed for sale is now to old that now this becomes an off market opportunity for a buyer...so does that become a problem for the seller? Only if he/she as the dauntless task of locating motivated sellers (I would imagine).

So in the fistful of dollars saga Clint Eastwood, AKA the stranger learns of two feuding families and what he does is simply magnificent...he "joins" both sides and then takes turns playing off their goals and objectives...M-O-N-E-Y could there be an opportunity for the real estate investor to duplicate the same behavior? YES. the business term is arbitrage...but I will let Investopedia give the objective definition (after all I am a good guy).

What is the 'Arbitrage Pricing Theory - APT'

The arbitrage pricing theory (APT) is an asset pricing model based on the idea that an asset's returns can be predicted using the relationship between that same asset and many common risk factors. Created in 1976 by Stephen Ross, this theory predicts a relationship between the returns of a portfolio and the returns of a single asset through a linear combination of many independent macro-economic variables. WOW! Can that same theory generalize to real estate investing?

BREAKING DOWN 'Arbitrage Pricing Theory - APT'

The arbitrage pricing theory(APT) describes the price where a mispriced asset is expected to be. It is often viewed as an alternative to the capital asset pricing model (CAPM), since the APT has more flexible assumption requirements. Whereas the CAPM formula requires the market's expected return, APT uses the risky asset's expected return and the risk premium of a number of macro-economic factors. Arbitrageurs use the APT model to profit by taking advantage of mispriced securities. A mispriced security will have a price that differs from the theoretical price predicted by the model. By going short an over priced security, while concurrently going long the portfolio the APT calculations were based on, the arbitrageur is in a position to make a theoretically risk-free profit.

HELLO!!!!

I believe we have a winner. Can this work with real estate brokers and mortgage loan brokers...how about sellers and buyers? YOU tell me. I am just the messenger. It is TUCO who says "There are two kinds of people in the world my friend..."it is here where the take away can be heard between TUCO and the stranger and why they should become partners. I believe that the message is based on leveraging ones assets...rent and watch the movie and see if you can determine what those assets are and then generalize those behaviors to the a working arbitrage theory...aka simultaneous selling...a GURU talked about that...does that exist? I found a youtube video that captures the moment in the GBU where there is only one outcome...

What I Learned About Mortgage Loans I Learned From Spaghetti Westerns

What is the 'Arbitrage Pricing Theory - APT'

BREAKING DOWN 'Arbitrage Pricing Theory - APT'

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