All Forum Posts by: Charley Gates

Quote from @Marc Marquez:

Quote from @Charley Gates:

Hi Marc,

You ask great questions and I'm happy to share my thoughts.

I am not familiar with the Memphis market.  I invest in Pittsburgh, PA, and in Atlanta, GA.  

I have also looked at turnkey single family homes in other states, but have never pulled the trigger.  I felt that the turnkey homes that I looked at did not have enough equity at the listed price.  In other words, there was not a lot of meat left on the bone.  It is so critical in real estate to buy well. 

I wish you luck in your investment journey!

Very true on your points, but I’ve read several different opinions on this very issue, especially if the equity is a wash with the investment itself, especially initially. The goal is that the equity will get there and build over time eventually, but one would have to hold onto the property itself for a bit longer and thus have the benefit of the higher cash income to offset this over the time it takes to build the equity.

I also learned that it may make more sense to invest some money yourself in the beginning to create some equity as well at the time of the purchase so in the event of a backwards market period, one is not upside down at any point in time.

Good points.
I would say that there is a hierarchy of deals.   The best deals have instant equity, but these are hard to find.  A deal can still be good without instant equity.  
Also, the issue of instant equity becomes less important if the property cash flows after all expenses including debt service and capital budgeting.
Positive cash flow also protects you in a market downturn since you less likely to fall under pressure to pursue a major capital event (sale, refinance, etc) in a challenging market. 

Hi Marc,

You ask great questions and I'm happy to share my thoughts.

I am not familiar with the Memphis market.  I invest in Pittsburgh, PA, and in Atlanta, GA.  

I have also looked at turnkey single family homes in other states, but have never pulled the trigger.  I felt that the turnkey homes that I looked at did not have enough equity at the listed price.  In other words, there was not a lot of meat left on the bone.  It is so critical in real estate to buy well. 

I wish you luck in your investment journey!

Hi Chris,

Thanks for your message.  

Biggest aha moment:  realization that selling a partial is a way to recapitalize.  It reminds me of a cash-out refinance after the unleveraged purchase of real property.  

Best content:  books.  I am avid reader and there is a lot of great content out there. 

Best regards.

Charley

Thank you, Don and Chris.  Excellent thoughts and insights.  I appreciate it. 

Best regards,  Charley

Quote from @Don Konipol:

Quote from @Jared W Smith:

UPDATE: Went ahead and opening Self-Directed solo 401k account with Titan Bank. Awaiting old 401k rollover funds to clear to start investing.

There are some asset protection issues with having all of your investments directly owned by the trust representing your 401k.  For ultimate asset protection the trust should be manager/owner of either separate LLCs for each asset or a different series of a series LLC for each asset. That way any liability created by the ownership of any one asset does not put the other assets at risk as the liability is limited to the entity holding that one particular asset and not the trust.

 Hi Don.  Thank you for your thoughts.  

Is there liability associated with owning a mortgage note that could exceed the value of the note itself?  For instance, at a rental property, if there is a slip and fall, the liability is potentially enormous and far exceeds the amount of the investment in the rental property.  In the case of note ownership, what type of event, if any, could create a liability in excess of the value of the note?

Thank you for your thoughts.

Charley

As others have indicated, you should not need to have an LLC in addition to the solo 401(k) in order to open a bank checking account. You can open a checking account in the name of the solo 401(k).

I would consider creating an LLC owned 100% by the solo 401(k) for asset protection purposes if the solo 401(k) was going to foreclose and take ownership of a home. Ownership of a home carries liability risks which could expose all of the assets of the solo 401(k) to creditor attack in the event of an accident at the home and a judgement that exceeds the amount of the liability insurance policy on the home.

Thank you to everyone for your input.  I appreciate it. 

Hello!  

I am a buy-and-hold investor who is learning more about investing in notes.  I am interested in recommendations for online courses or books (or other sources of information) that people have found useful. 

I understand that notes is a business best learned by doing, but I am trying to lay a good foundation of knowledge as a starting point.

To date, I have read these books:

"Invest like a Bank" by Beaux Blast

" Little Green Book of Note Investing" by Fred Moskowitz

"Real Estate Note Investing" by Dave Van Horn

"Note Investing Made Easier" by Martin Saenz

"Invest in Debt" by Jimmy Napier

"Profiting from Non-performing Mortgage Notes" by Amed Hazel

I welcome any thoughts or recommendations that the group may have.   Thank you in advance. 

Best regards,

Charley

Thank you for your thoughtful replies.  I appreciate it.

Best regards.

Charley

Hello.  This is my first post on BP!

I am new to the note investing world. To date, I have done traditional ‘buy and hold’ rental property investments. I currently own no notes, but I am interested.

I have a question about high inflation.

In the world of ‘buy and hold’, it is advantageous to use leverage and to carry debt from the bank (assuming a cash flow positive investment). This is even especially true in a high inflation environment. Inflation is helping to erode the debt.

In the world of note investment, does high inflation impair the real return on investment (compared to the nominal return) for the long-term note investor?

Thank you for your thoughts.  Best regards.

Charley