All Forum Posts by: David Hite

Good morning everyone!

  I am reviewing my potential first note purchase, and there is an equation I want some input on.  

  In determining how many payments are left, many tapes will have a note maturity date.  There are two types of equations I can run in Excel to estimate the number of payments left on the note.  Both will run from Today's Date until the maturity date and show us the number of months in between.   One will round up, and the other will round down.

  Which one do you use to help understand total number of remaining payments?  I would assume that using the rounding down would be the most effective in predicting returns.  Because its better to underestimate number of payments remaining by one than overestimating by 1.  As well the final payment may only be a portion of the normal payment amount (since last payment on an amort schedule is always smaller/different).

Any info/input on this?

Thank you!

David Hite

@Jay Hinrichs

The Deed Trust notes are performing, since they are such short term.  I suppose they could go non-performing at anytime, but they are purchased as performing.

@Edward B.

What are the other considerations?

Good evening everyone!

 So, I want to get people input on investing in deed trust notes vs note funds.

  By deed trust notes, I mean you can find companies that issue shorter term loans, basically hard money, who then turn around and sell the note to that loan backed by the real estate.  Usually it’s for ~3 years or less, most will offer between 9-12% on that note.  Usually interest only payments with balloon at the end for  the initial investment amount.

Versus a note fund, which will have a minimum investment, say $10k, give a return of 12%, and then after three years you are given all your initial principal back.   Ie PPRnote fund.

  Thanks 

Dave

Thanks Mike!

Good afternoon everyone!

So in my self-education on notes, of course learning about that the interest portion of payments are taxes as normal income (assuming no self-directed IRA situation).

  Is there any strategy to buying notes that are later in their amortization schedule than new notes because of that fact?  Since we are taxed on the interest portion of the repayment, the further towards the end, the lower the % of the P+I payment that is interest.

  When we get data back from our servicer, I assume (haven't bought any notes yet), that it will show how much of each payment (or total payments annually) are principle vs interest.  

  Where does the "kicker" weigh in here.  The discounted price difference, does that come into play, i.e. come across as a taxable income?  Or will we only look at the Interest portion of the payments based on the amort schedule, (even if we paid less for it?)

  Hopefully my question makes sense!

I appreciate the help!

Dave H

  For example:

Hey everyone!

  I am delving into the note-investing world!  I am still in the data gathering/learning phase.  

  Although to start I want to focus on 1st Lien Performing Notes, I want to narrow which states I buy in based on the foreclosure requirements and how friendly that process will be towards us as the note-holder.

  In browsing the forums, someone posted the following link: madisonmanagement.net/investors/foreclosure-by-state/

  This seems like a pretty good chart with some of the basic requirements of each state in the foreclosure process.  (I am not worried about specific fees and anticipated costs, I know those can vary).

  I had some questions on some of the other items listed, and wanted your input on which of these items are "make or break" when it comes to choosing which states to purchase notes in.  I am looking in general for states in which IF foreclosure becomes needed, that it will be the least amount of hassle/time (there will always be hassle/time, but looking for less if possible!).  My goal is to not have to get to this point, but it will inevitably happen, so want to be in a good position to start.

Foreclosure Type: From what I gather, Non-Judicial is easier/faster

Acceleration Letter: I know what it is, the letter that states either pay in full (with late fees etc.), by date or will go to foreclosure.  I would assume that a state that doesn't have this requirement would be easier?

Redemption Period: Not sure, I assume its a timeline to repay in full or will move forward.  Kind of the same thing as the acceleration letter?  I would assume that less is better.

Eviction period: Not sure, assume that its a timeframe that the current tenant has to evict before the foreclosure process can move forward.  Would be better without one I would assume.

Deficiency Judgement: Also not sure, but anything that doesn't require judicial intervention should be more straight forward).

Sale: Is it preferred to have one sale type over another?

Any info would be greatly appreciated!

Dave

Thank you Cody!

Yeah the current owner just sent me a map of the property.  It looks like the hookups, spacing, and cement work is originally all for mobile home pads, but used half of them as an RV park instead, putting two per location.  So, I think taking it back to the original intent shouldn't be a problem as far as utilities.

I will try to get ahold of original licensing to double check that.

I appreciate it!

Dave

Hey everyone!

  First time poster on the forum.  Been heavy into the podcast and doing research and I want to tap into your collective knowledge-base.

I am exploring a property in Kansas, which is a mobile home park but also has some RV hookups/spots.   I am not a fan of the RV side of the business and want to transition it to a 100% tenant owned mobile home park.

  The seller mentioned that in Kansas the zoning laws are different, and we would be able to turn every 2 RV spots into a Mobile Home Lot.  I tried doing some digging in the county and state laws, but not coming up with anything.  I, of course, dont want to move forward with this as an assumption.

  Anyone with experience in Kansas able to enlighten me?!

Thank you!

David Hite