All Forum Posts by: David L.

@Greg Horn was trying to organize something.  Can check with @Jeremy Santy and @Waylon Brun also.

 Thank you gentlemen.  Now that was the kind of answers I was hoping for!  Those were great eye openers.

@Paul Birkett, thanks for sharing your experience and the reality of note purchasing. To hear you say that note investing is a career pushes me off this topic a bit. REI at this point in time can only be a side thing for me. So I'm glad you've showed us a real life perspective for us.

@Dion DePaoli, I know exactly what you mean by those "workshop" guys. I've seen them in all industries - not just REI. They've gathered some experience in the field and then start to "share their experience" and make money off their own kind (other investors). Not to dog on all people who do this, but I've seen many who do it poorly. It is because of these types of "workshops" that I am cautious and asking the questions. So far, the only legitimate short cuts I've seen don't really get you much ROI.

@Jay Hinrichs, you paint a very hands on picture there. Quite the contrary to what I imagined. It seems to be that most of the problems come from notes in a position lower than 1st. Is there a reason why 1st position is not as frequently acquired? And I might be going over my question limit here, but not entirely understanding the connection with the HML example you presented there?

But Paul's blog post made it sound easy! lol Thanks for bringing in the "down side" I was looking for, @Jay Hinrichs.  

So I guess what you're saying is, investors can obtain notes because, well, the banks don't want them.  And why do they not want them?  Probably because the guys "paying" the notes are a pain.  And that pain could be passed on to investors.  Sometimes it's a misunderstood pain but a good amount of times, they truly are the real pain in the ***. 

A little lost as to why a lot of notes are needed tho.  

If one were to stop at one cycle, sure, there's no added value here.  But when it starts approaching 3 or 4 cycles, the number of assets (jobs in your example, which I wouldn't want to increase) increase and more profit comes in. The main benefit I'm seeing here is a some what quicker acquisition of assets using the vehicle of notes. 

I do have my suspicion about notes though.  They seem easier than rentals - don't have to deal with land lording issues, capex, etc. and has the potential of the note of being paid off earlier.   But I imagine there must be a down fall to it otherwise why wouldn't more investors use it?

@Wayne Brooks, any guidance as to what we're looking for when it comes to "garbage notes"?

Hoping to clarify David Greene's note strategy in the podcast. Please correct mistakes I might have made in these steps:

1. Buy a property through a conventional loan.
2. Buy a note.
3. Combine profits from #1 and #2 to pay off mortgage of #1.
4. Mortgage of house #1 is paid off in 5 years.
5. Refinance house #1 and repeat.

And here is an image of how I envision it - $ in the house means paid off:

So if I'm understanding it correctly, there are a few requirements that need to be met in order to do this: 

1. You need enough initial income to buy both a house and note.
2. Every asset purchased after a refinance needs to be cash flowing.  I would think, then, that a note would be a more logical purchase.

Any thing wrong with how I'm seeing this?  We are essentially paying off the initial house over and over and over again?  

I can't tag @David Greene for some reason.

I understood the 12.5% to be required if the loan was co-signed by a non-spouse, "non-eligible" participant. 

TLDR; VA Dad wants money during his retirement. He just wants the cash and for me to burden the means of getting it, lol. Any way to do that?

So my father is approaching his 70s and is a veteran. He has no debt and currently owns his home free and clear. I was wondering whether there was any creative ways he could utilize his ability to use a VA loan to bring in some cash flow for himself. He's expressed desire to have some additional funds during his retirement but he really doesn't want to deal with picking up new liability, etc. He just wants the cash flow and to hand me the property when he's gone.

The way I understand VA loans, this is a high level of what can be done:

1. Get the loan.  
2. Live in 1 year. 
3. After 1 year, can rent out.
4. Collect rent, do bucket list, kick bucket, give home to kids.

There are a few things that he would want to avoid, so my questions are:

• Any way around him living in the new home?  He likes his current home.  Can he just leave the new one empty or something?
• Is there a way that I can be on the loan so I can help minimize the debt and risk to him? I understand that we would have to put down 12.5%, but he's afraid that I'll die (gee thanks) and he'll have to pick up the rest of the mortgage afterwards.  I suppose at that point he could just sell.  But just wondering if there's another way to minimize his "involvement."

Sadly, locals aren't the buyers over here.  I have an area over here where in two month, empty lots (yes, no house) jumped from $380k to $420k.  I can tell you for certain, it's not locals w/ the average salary buying. 

Btw, what site are you using in your examples?

Curious... if these are acutally PTR ratios, where are these charts getting their rental data from?  I have a terrible time finding any good, reliable rental data for Hawaii. 

 Which stat are you finding the most troublesome here?  Median house price?