question about 2nd note and trust deed

[Gary Kurtz]

Forgive me if I've posted this in the wrong forum. I'm reading R. Mike Weese's book 'Janitor to Multi-Millionaire" and I'm trying to wrap my head around the concept of him "...'creating' a 2nd note and trust deed...in the amount of $60,000." to be then used as a part of a down payment for a larger purchase.

In context he 'created' this second note and trust deed from a collection of properties that he owned and was renting. If it's a second note that means the first note and deed of trust was being held by whomever sold him the collection of properties - right? How can he make a second note and then have someone else hold a deed of trust on the same property? Was he in essence loaning himself the equity that he had in the collection of properties to use in helping him purchase the larger property?

I know this is probably a 'stupid' question for many but I'm not used to thinking like this and I'm trying to understand the concept and learn it's application. Thanks in advance!

[Account Closed]

Originally posted by Gary Kurtz:

So he DID 'loan' the money to himself in the form of a 'loan obligation' (note)?

Gary,

To echo what Ellis said above, he borrowed more money and used the property as a collateral. Say he owes $100k (1st loan) on a property that's worth $200k. He went to the bank and asked for a $50k 2nd loan. Basically, he increased his leverage on the property. So his monthly mortgage payment obligation would also increase because he has to service two loans instead of one.

You can have as many loans on the house as you want, or as the lenders will loan. Btw, Rich Weese also posts on here so you may want to connect with him and ask as many specific questions as you would answer.