Who do you use to record a promissory note

Question

I have a few investors interested in putting money up for my next property. This is the midwest so its not a huge sum (30-40K) I am having my lawyer draft up a promissory note to have two investors put in 15K - 20K each. The money will be secured by one of my houses that has equity and cashflow. So the money isn't tied to any future project. Do I need any other proffessionals to help with this? An accountant for INT statements or anything? I'm trying to ensure that I'm covering my bases without over complicating things.

One of the investors is considering establishing an LLC to invest with instead of using his own name. Any ideas on that? I know it doesn't impact me, but I was wondering for his sake if its worth his while.

Jay Hinrichs · Answer

;promissory note is not recorded.. mortgage is recorded.. this is very vanilla .. any closing attorney can wip this out for you in 15 minutes.

Account Closed · Answer

@Nathan Waters Excellent. An interesting dilemma people run into when trying to finance through banks is that banks will limit the number of properties they will allow you to have. Some limit at 4, some limit at 10 but if you are clearing $200 a month on a rental, it's like $2,000 if you have 10 properties. With Subject To and creative financing only your work ethic limits you. There is no limitation. That is how I've gotten to so many properties. PM me if you want to learn how to do these long term.

Account Closed · Answer

@Nathan Waters Heh, heh. heh. Your attorney didn't want to go through the learning curve, that's all. He probably won't do another one for years. I only do "zero down", creative financing, owner financing, Subject To, Wraps, Lease Options, Contracts for Deed etc and I had to go far and wide to find an attorney who even understood what I was talking about. Once you find them though, they are golden. Keep calling around and just ask if the attorney does Subject To, Contracts for Deed and Lease Options (you don't really need an attorney for Lease Options but it is a test to see if they are your new attorney). If they don't know what you are talking about, thank them for their time and move on to the next one. Good job for completing the task. From here on, it is a lot easier.

Nathan Waters · Answer

If anyone is following this thread, I have an update. My attorney took a while to get it for me but I got a promissory note from him. He is recording a mortgage for me as well against the property for my lenders protection. I don't know why it was so complicated for him. I am considering using a different attorney in the future because anything beyond a simple closing seems to get him wrapped around the axle. He's been great for me so far, but for some reason he seemed a bit put off by what I am trying to do. I basically got a house with seller financing so we're doing a contract for deed. The down payment is covered by my private lender and secured by one of my other properties. Seems straight forward to me but its taking quite a while to put together.

Nathan Waters · Answer

I remember buying a couple houses in Washington state and not using an attorney. I was only 20 and it was my first 2 houses. When I moved to upstate NY and my realtor asked who my attorney was, I was confused as to why I needed one. They were regular financed transactions. Its interesting how things are done differently depending on the regions and different state laws. Thanks for the input.

Jay Hinrichs · Answer

NOpe in IL you MUST use an attorney title companies won't do this .. I am talking west coast title and escrow companies we don't use attorneys out this way often for vanilla RE deals.

Jay Hinrichs · Answer

@Steve Racicot  Notary does nothing for a PG and or a promissory note.. not necessary and gives no further protection for the lender.... it  is not common to notarize those two documents.

you notarize the mortgage and record it.. that's what gives the investor their security..

the prom note is simply a prom to pay.. and establish's how much is owed if the lender has to foreclose and what the repayment terms are..

this is all very simple stuff a 10 minute visit with a closing attorney there in Il will get this done..

and out our way we would simply go to  a title company and they would prep the docs for you

Nathan Waters · Answer

Account Closed

Thanks. This is my 4th house in 18 months. It feels like I am moving at a snails pace, but all of the other ones were funded in more traditional ways. Either taking out a loan on my 401k or getting a traditional mortgage and using my own money for money down and repairs. This is the first stab at truly creative financing and I am crazy excited to get it done and roll into the next one.

Nathan Waters · Answer

@Jay Hinrichs

So you use a title company instead of an attorney? I have a working relationship with both here in Illinois. I already contacted my attorney regarding this and he said its easy to do. But I have not contacted my title peeps yet.

Steve Racicot · Answer

@Nathan Waters I currently invest with others and promissory note and a Personal Guarantee (letter) is what I do. Both Notarized.  I have the Promissory Note and the Personal Guarantee reviewed by my attorney before investing.  If you are looking for another investor please feel free to reach out to me. I might be interested.

Who do you use to record a promissory note

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