All Forum Posts by: Logan Turner

Dan Heuschele Where are you finding your deals that your making offers on? MLS? Off market? Pocket listings? I'm personally torn on this market. I'm currently renting in San Diego and buying cash flowing properties in Texas. I'd love to put some money into the market here in an owner occupied house. Checking out foreclosure houses so I can do some value add. But the numbers currently make no sense. Maybe they will in 3-5 years IF prices rise and WHEN rents do.

In case anyone is interested. Commercial lender got back to me and they will in fact issue me a loan strictly off my note. How it works. Note receivable will be assigned to bank as collateral should I fail to make payments. The note receivable must have a promissory note and deed of trust and no other lien on the property. Commercial lender will lend for a max of 15 years and up to 80 percent of cost, note UPB, and house appraised value. Whichever is the lowest. They will make an exception if for example my all in cost was 60k. Note was 95k and house value was 100k. They would then lend 100 percent of cost. So 60k in this example. Again they won't amortize a loan for 15 years if the note is 10 years. So it has to be equal or less on length. Since it is the collateral. So here's what it looks like broken down. Cost 60k, note 92k @10 percent for 10 years house value 95k Bank will issue me a loan (check in mail) for 60k 5.8 % interest and 10 year am. I receive 1256 from the note each month I pay 662 on the loan each month. Plus I get my 60k back and rinse and repeat. That my friends is arbitrage at it's best.

@Roman M. you're saying a community bank won't loan against a note secured by real estate? I'm contacting a couple local commercial guys now to see what they think. But I believe that's what Bill Gulley mentioned doing that. 

I'll report back what I find out from two local commercial lenders

Christopher Winkler any suggestions? You send pretty knowledgeable on the subject

I've been reading a few note guides, and came across the concept of using your note as collateral for another loan. This way instead of selling, paying taxes, you can borrow against it and invest again. Anyone have any idea how to do this? I have a note with UPB at 91k and 10 percent interest rate and I'd love to get a personal loan for around 25-35k. I can sell the note for 74k but would be hit with a tax cost of around 40 percent. And I don't need all 74k right now. I'm also not too keen on a partial note as I feel my position in the repayment if a default occurred would risk me losing it all, since all lawyer fees etc get paid first! Anyone able to help me get creative and squeeze out some money from this note without selling it all or partial?

@Charles Street this may help you, based on what Kevin said above

Should say now you *control 1 million*

First of all congrats on the beautiful family and the success you've had so far. I like the saying, control 1 million, own 1 million, make 1 million. You've now owned 1 million and are cash flowing so that's great. One thing to consider is tax increases. (Of course rent will increase with inflation and maintenance etc..) You're in a tough situation because 5k is decent money. Enough to pay the bills, but you're still putting yourself and your family at risk. Because you have set the bar to JUST barely making enough to live on. If something happens you will be forced to sell, pull a HELOC etc. You're obviously a smart guy, based on engineer background and ability to dissect your situation. But I would do what Brandon turner did and keep working until your cash flow is double what you think you'll need. The more you buy now the happier you will be in the future. Also, living below your means got you to where you are now. But that's no way to live a life. We live in an abundant world. You and your family should have the privilege to access that gift. Don't live below your means, expand your means! (Doesn't mean driving Ferraris) but it does mean being so frugal you don't buy the bottle of wine you truly want. Or you don't stay a few days longer on a vacation spending time with loved ones because changing flights will cost you 1k more. So you end up sacrificing. If you have the ability to sacrifice on your wants needs and desires and the ability to have them, why would you ever choose the former?

@Andy Mirza great call. Would not make sense if property securing the note was upside down. 

The property is valued between 95-105k. But it would need a BPO or appraisal to be certain and a discount would be needed on the UPB. Sale price was 99k, 4k down, and current UPB is 91, xxx

thanks @Dan H. great breakdown and analysis. I'm curious where this property resides? If it's way inland and in a low appreciation D area, I'd pass. C+ to B areas near the coast I'd jump on it. 

It's not a bad long term play. It's just hard to pull the trigger and wait 5-10 years for it be a great deal. Cash ROI is only 1.1 percent!!! For year one. (Not counting capital infusion to get it rent ready.)

$150*12 months /155k down.