All Forum Posts by: Emma S.

Hi Elizabeth,

Just curious, how bad was your foundation issue & how much did it end up costing you?

Before you spend $, start with doing search right here on BP for: Note Investing, How to invest in notes, mortgage notes etc & read the articles, forum posts and blog posts.

As far as books, see this post: http://www.biggerpockets.com/forums/70/topics/77473-invest-in-debtgreat-read-i-want-more

p.s. you may want to revive an old thread rather than starting a new one so folks who know about the subject are more likely to respond...

@Ciro LoCascio

Make sure you vet the HOA and not just the individual units that you are considering. Did you ask for HOA docs? Look at how well the HOA is run, how frequently they have increased HOA fees, when where the last capital expenditures & do they have good reserves for upcoming CapEx. E.g. a condo I looked at had cracks in the wall & it looked like there was issues with a shifting foundation. That means a special assessment on HOA fees is around the corner.

All this to say, try to run your numbers with best/worst case scenarios and maybe try to negotiate an even lower purchase price. The more room in your numbers to allow for some increase in HOA fees, the better.

Re: mortgage, at such a low interest rate, definitely go for a longer term since that would mean a lower monthly payment and frees up more $ for other investments. OTOH, since the loan is from a family member, I would feel bad giving my family member only 2.5% for 20 years when they can get much better returns on any number of investments. Maybe consider a 5 year loan with 20 yr amortization & get conventional financing later.

Jean, no need to freak out. Prepare a detailed plan on what/how you are going to make this deal generate great returns and be confident in your ability to execute it. I'm not experienced but it seems to me that you've done the hardest part which is finding a great deal so I'm sure the financing will work out as well.

This company seems to do the immediate cash out refi without having to wait 6 mo's in case you go that route...

@Jean Bolger you mentioned using $130k from your 1031 exchange. How are you financing the balance?

Whoa! Triplex to 29 units is quite a jump! Congratulations! You must be very excited and rightfully so!

I'm a newbie but I'm going to apply a quick formula I picked up from one of Joel Owens' posts today to check if it's a good deal or not.

86k x .50 = 43k (Joel uses .40 if you were paying water but you aren't)

For a 10 cap - 43k x 10 = 430k

You purchased this for 330k which is 100k below a *good* deal so it sounds to me like you got a fantastic deal! Especially with no utilities and not even full occupancy. It's even more special that a woman gets a home run like this! Hope Josh and Brandon take note & have you on their podcast sometime so we can hear more of your experience. Great job! @Joshua Dorkin

How long is the travel from your home to your investment property?

Jon, if this property is still on the market, the price may not be as firm as initially stated. Why not reevaluate the deal & consider either offering the $140k Joel calculated or else ask for help on BP with crafting an offer using creative financing. I recommend listening to the recent podcast with Aaron M where he describes a seller financing deal (went over my head but was fascinating to listen to nonetheless).

Good luck.

Actually, it's a Roth Solo 401k with no LLC but does have a checkbook.

@Ellis San Jose so if the custodian is Wells Fargo, then the title on the note should read "Wells Fargo custodian for Jane Doe Roth 401k", and the paper itself would be mailed to Jane Doe but the payments mailed to Wells Fargo, correct?

@Ellis San Jose the house is built 1940. Your suggestion sounds great but it's something I want to put on the back burner for now. Reason being, this going to be my learning experience for out of state investing, dealing with PM's, what maintenance is involved with owning property etc. I really want/value that exposure & whatever comes up I'll consider as tuition expense for learning the ropes firsthand :). Fortunately, I have an *excellent* PM through a referral from a wonderful mentor who uses the same PM.

But maybe after a couple of years, I may consider originating a note as you proposed. One question about notes - they don't provide a hedge against inflation the way that real property does, correct? What if $650 is only worth $500 a few years from now? Then the deal may not look so good ???

@Tiffany H. can you please share your calculations? What purchase price did you use & how long to pay it off?

@Kelly P. thanks for sharing. Those % make sense for medium or higher priced properties but for this type of property 10%=660 which is not much, right? As Ellis said, you end up with a higher ratio of expenses overall.

@Jerry W. yes, the rent to price ratio is great & no I'm not investing for appreciation but for 1) cash flow & 2) experience. I had to venture out of state for this deal since I can just about buy a car for this amount in my area (So Cal) ha :)

I was wondering about the logistics of how it works when buying notes in a SD retirement account.

Say you use you write a check to buy the note. I assume the note needs to be titled "John Doe Roth IRA" or however the retirement account is set up, correct?

Do you then send the actual physical note to the custodian of the retirement account to be held there? In other words, how does the paper trail have to be set up in order not to alert the IRS to an early distribution to buy the note versus the note is bought as an investment within your IRA or Solo 401k? Does my question make sense?