First Position Commercial Mortgage Notes

Barry Kornfeld pic

Barry Kornfeld

Financial advisor Barry M. Kornfeld, based in Boca Raton, Florida, is co-owner of First Financial Tax Group. The firm concentrates on tax, estate and income planning for individuals of retirement and pre-retirement age. Barry Kornfeld and his team have made a particular study of the value of more conservative financial vehicles, including first position commercial mortgage notes, or FPCM’s.

An FPCM is widely considered one of the safer fixed-income alternatives when planning finances and seeking monthly income. Also called secured bridge loans, FPCM notes offer the potential to avoid the uncertainties of the markets in stocks and bonds. Additionally, an FPCM note typically earns a higher rate of interest, currently an annual percentage yield of 6 percent. The interest is paid out monthly, typically via direct deposit into the client’s bank account.

In today’s tight credit market, many potential commercial borrowers are unable to secure long term mortgage capital in an expeditious fashion. This is how an FPCM loan can help. It serves as a “bridge” over a temporary lack of capital funding sources for these borrowers. These borrowers accept the easier terms and higher interest rates of an FPCM when they need it to purchase or improve a property, then pay it back using the resulting new income streams.

Secured by a lien on specified real property, the FPCM loan is thoroughly vetted, including through a title search. As its name states, “first position” means that the holder of an FPCM is the first creditor in line for payment should a borrower default on a loan. As an additional and vital safeguard, the mortgage company that First Financial Tax Group sources its FPCM transactions through, contractually obligates itself to make the payments to lenders, even if the underlying property owner, does default. They will do this to protect their own second interest, which is subordinate to our first position, in the exact same property that we are involved in. In other words, they have skin in the same game, also, and this makes the transaction safer all around for everyone involved.


What is a Lien?




Barry Kornfeld is a proficient and sincere financial advisor. Also a supporter of Shriners Children’s Hospital, Barry M. Kornfeld co-owns the Boca Raton-based First Financial Tax Group with his wife of 29 years. Mr. Kornfeld focuses on assisting pre- and post-retirees with retirement & income planning, and he specializes in First Position Commercial Mortgage notes (FPCMs). FPCMs pay a 6% yield over one year and are considered a safer alternative to other financial products.

FPMCs provide clients with a first mortgage position, also known as a first lien position. This assures the owner of the FPCM the first lien position, which is the most secure and highest priority. This position differs from secondary or tertiary positions which are only repaid after the first lien position.

A publicly recorded legal interest, known as a lien, is an encumbrance on an asset or property that remains in effect until the debt is repaid. First liens must be properly developed and recorded to be secure and binding. Mr. Kornfeld and his resource partners work to ensure that all FPCM holders have properly recorded liens in the county land records where the subject property is located, so that all FPCM note holders enjoy a low maintenance and smooth experience for the duration of their holding period.

The Psychological Adjustments of Retirees

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Barry Kornfeld helps retirees plan for their financial matters through his company First Financial Tax Group. This focus correlates with Barry Kornfeld’s interest in the psychology of seniors, something on which he takes continuing professional education.

One of the most pressing concerns as people approach retirement age is financial security, so much so that people tend to equate retirement preparation with amassing wealth. However, a smaller percentage of people consider the psychological implications of retirement.

Professionals who have been working their entire adult lives may find the transition difficult for a number of reasons. For those who have come to be associated with their jobs, there is the impending loss of career identity. The workplace is also a source of one’s social life, so severing ties with people who have become part of one’s support network can prove to be a challenge. For some people, their jobs keep them active physically and intellectually, so they are presented with the challenge of looking for activities that can keep them stimulated. While some people can easily adjust to these changes, psychologists have found that other people can experience depression and anxiety.

Considerations for Reducing Retirement Tax Liabilities

Reducing Retirement Tax Liabilities  pic

Reducing Retirement Tax Liabilities

Experienced in first position commercial mortgages, Barry Kornfeld leads First Financial Tax Group. With diverse financial experience and acumen, the company’s co-founder, Barry Kornfeld helps individuals establish conservative income strategies to sustain their retirement.

With the guidance of a tax professional, individuals can take the following steps toward reducing income tax during retirement:

Keep income low to avoid social security tax.
At the age of 62, you gain access to social security benefits. Depending on your combined income, which takes into account adjusted gross income, nontaxable interest, and half of your social security benefits, you may be required to pay social security benefit taxes. For couples filing jointly, income must remain below $32,000 to qualify for exemption.

Stay under the 15 percent tax bracket.
In 2015, the 15 percent tax bracket for single filers ranges from $9,225 to $37,450. Married people filing jointly make between $18,450 and $74,900. If you are in or below the 15 percent tax bracket, you may qualify for tax breaks, such as the earned income tax credit, which refunds a portion of taxes to people with low to moderate incomes. In addition, income earned from dividends will not be taxed.

Choose a Roth IRA over a traditional IRA.
A traditional individual retirement account (IRA) helps you save money for retirement without taxing deposits. However, upon withdrawal during retirement, you will be assessed taxes at the present rate. Conversely, a Roth IRA accrues pre-taxed dollars, so you will not have to pay taxes when you make a qualified withdrawal. To qualify, you must be more than 59-and-a-half years of age and have made contributions for more than five years prior.