All Forum Posts by: Bob Malecki

One thing to also note is if an investor is using IRA funds to invest in a MF syndiation where leverage is being used (which is typical), there will be UDFI tax imposed on the portion of the profit that was attributed to the leverage ratio. So if for instance there was 60% leverage on the property, then up to 60% of the profit for the IRA would be subject to UDFI tax 

Hi @Joel Hutchinson we operate a private equity fund that deals mostly in 2nd position residential mortgage notes. Right now the performance is surprising since most of the assets in our portfolio have equity above both the senior and our loan, so borrowers are either refinancing us out or coming to the table to negotiate a loan mod to protect their equity. Feel free to contact me if you would like more info.

Hi @David New I agree with Chris's analysis, althought it depends whether you are planning to do your investing as the primary sponsor or in a note or tax lien fund. The fund model is a lower yield but spreads your risk across multiple assets, where as if you directly buy a note or tax lien your money is allocated to one asset that could go south and create negative cash flow. 

To invest in notes does not require you to have any kind of accreditation. Some private equity funds that invest in distressed debt may require accreditation, depending on what exemption the fund is registered under. Many of the smaller distressed debt funds like ours at Notable Capital allow for non-accredited,  sophisticated investors to participate as funds subscribers.

Fyi, after my research on about a half a dozen property management companies I ended up engaging with Spinnaker in Tacoma mainly due to the fact that they don't provide any brokerage services just pure property management. Also their offices are within a few miles of my property so it's much more convenient.

Hi @Nastassia Baltodano Noteworthy is sponsoring a class by Kevin Shortle who is really knowlegeable. Feel free to contact me for the URL as I suspect the BP moderator will delete my reply if I post it here

Just curious-- my checkbook controlled LLC owned by the IRAs of multiple family members acquired a rental property in WA state which is in forclosure. The former owner and signor on the loan gave it to our LLC via quit claim deed. So now he's on the line for the loan buy my SDIRA owned LLC is the owner on title. We intend to sell the property to pay off the loan and reap the equity, but if timing goes sideways, could our LLC file chapter 11 BK to stall the sale? I figure the answer is 'no', but thought I'd put it out here for any of the IRA experts to opine

Hi @Kevin Hoodwin welcome to the "club"! I would recommend the book Paper Profits, written by my business partner @Joshua Andrews : https://www.amazon.com/Paper-P...

He provides a great overview/intro on how mortgage note investing works. 

Bob

Hi @Nick Taylor here is an excerpt.

How does a Joint Venture work?

Two or more partners agree to form a new entity to pursue a specific business opportunity. Sometimes partners in JV's contribute equal amounts of cash to the new venture or one partner may contribute cash while another partner contributes his expertise and the personnel resources to operate the Venture. When we establish a joint venture, typically we take the role of the manager, using our experience and expertise to supervise all of the operations of the project, while our partner/investor provides the funding for acquisition and expenses. Depending on the outcome/exit of the project, monthly cash flow from a restructured note and capital gain from the liquidation of the note or underlying property are split between each venture partner.

Typically 100% of the principal payment is allocated to the Investor and interest income is split 50% between Manager and Investor. We target real estate investments that we believe possess cash flow potential and may benefit from the implementation of a rigorous, value-added asset management plan. This plan involves due diligence, price negotiation, asset repositioning, and eventual liquidation through appropriately selected channels.

I have my story on BP podcast 211 https://www.biggerpockets.com/...