Promissory Note Written to Investment Group

[Trevor DeSimone]

Investment Info:

Single-family residence private money loan investment in Garden City.

Cash invested: $52,000

This is the second time I've acted as a PML; the connection was made on Facebook of all places; A local group had advertised the need for private money to fund rehab on a fix and flip in Ohio. After some introductory calls and vetting the business, we agreed to a $52,000 note with a 5-month term at a 17.38% return with the expectation we could perform future business.

What made you interested in investing in this type of deal?

I preferred the relatively guaranteed return within a short time frame.

How did you find this deal and how did you negotiate it?

Facebook; Reached out and made contact with the group and went from there. Have to put yourself out there!

How did you finance this deal?

I liquated my brokerage portfolio to fund the deal. Better rate of return based on my investment history in the markets.

What was the outcome?

Pending; Note term ends in December.

Lessons learned? Challenges?

Have solid negotiation and people skills; I was able to raise the interest rate from the initial offer after building a good repour with my point of contact, learning what the competition was offering, and then coming in at a lower price point. I was told they would be willing to meet me in the middle and preferred working with me because I was well-liked.

[Rick Pozos]

You need a deed of trust or mortgage that is recorded in the deed records or county clerk's office. It can be a second, but if they choose NOT to pay you, right now, there is no recourse. With a deed of trust or mortgage there is notice to the world that your 2nd is due on sale or according to the terms. You can also foreclose on a 2nd that is recorded.

You can NOT foreclose on a promissory note alone.