All Forum Posts by: Adam Adams

An ROI would imply that I sold it. A yield is what you would get on a long term hold. I've not calculated my average. Every pool is different. Some are great, some are OK, and some get by. And since most of mine are with JV partners, then it doesn't matter how I do over all because my partners don't care about that. What matters is their return, whether it is 1 asset or 20.

Here are my thoughts on Notes vs Rentals.

A note is the same payment for 30 years. $500 a month today isn't going to be the same as $500 in 25 years. However, on a rental, I can raise the rent to fit the times. And as an owner of rentals, I do not get calls in the middle of the night. Get a property manager, @Cody Cox.  :P My property manager gets the phone calls and collects the rents.

You also get some tax benefits with owning property and appreciation.

However, I like having a mix though. Notes are predictable because I don't have the expenses that I do with a rental. We buy our notes when they are not performing. When I get them performing, or create a new note, I'm getting it at a steep discount. Personally, I wouldn't pay for a performing note because if they stop paying, then my return is shot. There are plenty of people out there that make a great living off of buying performing notes. And they are great for a retirement account.

In the end, it's all about cash flow. A little formula that I like to use is, $1000 in rents is the same as a $500 P&I Payment. At least in the here and now.

That's just my 2 cents in today's dollars.

To be honest, I think that would be a question for your CPA. Regardless of what anyone told me here on this forum, I would tell my CPA what I am doing and let him be the final word.

Course now the next question is, what is the quality of your CPA. Mine is an investor like myself, so he understands rentals, syndications, notes, etc.. There are a lot of CPAs out there that don't know jack about investing.

Title Insurance costs more and takes more time. Even after my story, I'm still going to be doing an O&E search. It's just a risk of the business. Just like repeat BKers, reperforming borrowers that pay, but not well enough to sell the note, and lawsuits.

I've learned the hard way that there are generally two types of title searches. 2 Owner Search, which is what you'll be getting for under $100. Then the 40-year search, which are usually done with title insurance. 2 Owner Search checks the liens on the last two owners. For example, when I bought a CFD from Harbour, they checked that property for liens with Harbour and Fannie Mae, the last two owners. What was not picked up was the lien that was missed during the foreclosure of the third owner. That didn't show up until we tried to sell the property and had to get title insurance they did a 40-year search. That's when the lien showed up. Why didn't Fannie Mae see it? Because their attorney screwed up in the foreclosure. Why didn't Harbour see it? Because the title was transferred with a Quit Claim Deed.

So just know that going in, 2 Owner Search works, but not 100% of the time.

Most people don't know what IRR is. KISS, Keep It Simple, Stupid. Maybe I should use, Keep It Sweet n Simple. That's my motto with just about everything including how I treat investors.

It's just their rule. Franco was my lawyer in OH. I wanted to use him and they simply had him fill out a form. Then he was one of their attorneys and I got to use Franco. It wasn't a big deal.

My opinion is that it is all up to you and how involved you want to be. When we were in commercial apartments, we learned to manage the managers. I don't deal with borrowers, I deal with loss mitigation firms, servicers, attorneys and property managers. And I don't call them every day. They know what their job is, so I check in on the status every once in a while. Sometimes I only check in once a month. That gives me time for the hot issues that do come up now and then.

The opposite side of that spectrum are investors that treat their vendors like employees and they are calling every day. That will keep you busy and it won't earn you many gold stars from the vendors either. In fact, if you turn out to be a burden, they'll fire you.

We've got over 60 active notes. And when I say we, the wife is the other part of that pronoun, but I do all the work. I don't put in a full 40 hour week. But I'm also very organized with my systems and I'm a manager of managers.

Depends on the deal. We're starting syndications now, so we're looking at as low as 20k for membership.

Just like Bob, we do a 50/50 split. 

I can't say I've seen anyone do a 60/40 split before where only 40 goes to the money.