All Forum Posts by: Ken Hobbick

@Gordon F.

Advice by @Chad U. and @Don Konipol is sound and should be contemplated.   You have to start somewhere and its always with the first one and having risked your own money and been successful several times over.   

Each person experience and circumstances are different and in general not a good practice to compare perceived progress with others that have started out as a "Rockstar" as we don't know the background information or how accurate it is.  If it is true they are doing 10+deals in matter of weeks after returning from a weekend training with investors funds,  I find it quite unsettling that many people are investing with them with no experience and will eventually encounter problems.  

@Gary Baker I feel your pain with lower amount to invest in IRA accounts and being kicked by stock market... For some accounts such as Roth which have contribution limits its difficult to build up enough to purchase notes. Some strategies for these accounts is to 1. find performing 2nds which can be found at lower price point and still provide a nice return. 2. combine IRA accounts together for investment 3. invest in partials and take over the payment stream for the next 60 payments, in case of borrower default the note owner will take responsibility back to get it reperforming.

Although there is no way around the significant paperwork involved and combing account method doubles the paper work.  

@Gordon F.   I agree with @Bob Malecki  as well providing very good advice building a network, rapport and trust with potential investors over time.  

As someone who invests through SDIRA I love the long terms aspect of note investing collecting monthly payments for the next 10, 20, 30 years... Another factor to consider is timing, I recently had a borrower refinance a performing loan so it is paid off and provided a significant boost to the ROI but will now need to start my search for a new investment.

Since this is my IRA account, do far more due diligence on notes and potential JV partners than I do selecting which stock or index fund to invest in. Typically I this would require 3-6 month vetting process with multiple interactions references and past experiences.

This is significant work involved getting to the point where someone would close "10 deals using investors in one week" and it can be discouraging comparing ones perceived progress to someone else.  It would be like comparing Picasso doing a sketch of someone in 10 minutes creating a master piece.. but in practice it took him a lifetime of work to acquire the skills to do that.    

It doesn't sound too late as there is no mention of signed documents or committed funds.  Without information on the numbers the bank is going to want a large down payment to protect its interest,  seller financing if they are willing can provide more favorable terms and everything is negotiable just work to make it favorable for both sides. 

@Loan Tran   There good bits of advice in each of these answers but its up to you to determine which direction to go, but since you asked the question if you should invest in real estate I think you already know the answer.  Your individual circumstances will be different and there is not a definitive answer on what is right for you.    I can tell you I have done both maxing out 401k in my 20's to early 30's  and lowered contribution (receive match) to 401k and invested in real estate in my 40's   

I wish I would have invested more in real estate earlier,  yes its more involved but you also have control of your investment unlike the 401k which involved two significant market crashes and as mentioned its two different types of asset classes when comparing.  Which is another important aspect of diversifying income streams and not have everything in wall street.   

Currently,  I have moved my a portion funds to SDIRA to have more control and wish I could access all the money in 401k without significant taxes and penalties.   I would suggest calling your employer plan and tell them you would like to move your money or take out a loan and see how difficult it is..  Another item I have discovered is your plan custodian  (your employer)  has considerable latitude in investment options and what is allow for loans and the restrictions they place.   I agree it can become trapped in your 401k and limit your investment options.  

One final thought,   even if you stop contributing you can always contribute more when life circumstances change,  being the easiest way to lower your taxable income hopefully that will change in the future

@Mickey Bradshaw there really is quite a lot of detail that goes along with a being a JV partner, much more than is suggested by gurus. Thanks @Jay Hinrichs for sharing your knowledge, experiences and perspective,  its definitely not something to take lightly and should seek qualified legal counsel for each individual case. 

@Jay Hinrichs I admit I increased my vocabulary looking up definition of hoary, meaning old, white or ancient... but point well put and found way to Howey test (1946) for securities is broad and can be applied to JV's, LLC and general partnerships

As such, those being a sponsor of agreements should have proper legal counsel to advise them appropriately with caution,  as mentioned its all great until it doesn't go right and money is lost. 

@Mickey Bradshaw  I would agree with several points already made by others,  @Chris Seveney second the option if your funds allow to have multiple JV partners to see the differences in approaches. As you will find experienced note investors will have a limited amount of time, bandwidth and quality investments they would be willing to take on new JV partners. Also, have a discussion prior as to your involvement if you would like to be completely passive and simply receive quarterly updates on your investment progress, or if you would like to know the challenges and why specific decisions were made along the way... latter of course takes additional time commitment.

Also think of your investment strategy, NPN's (1st or 2nd) take longer with inherent risks involved, which can be minimized partnering with experience note investor. For myself I consider a mixed portfolio approach that includes performing notes as well... I believe that is what @Jay Hinrichs was alluding to being easier to buy a performing loan and collect the future payments and keep 100% of proceeds,  they downside is quality performing loans have a higher price point. 

Lastly, I second @Chad U. there is a cap on the expected capital to be invested from JV partner. In such cases which the property is take back there, its quite difficult to project expenses involved in a rehab without being able to see the inside of a property when the note was acquired. You can make sure assumptions based on the condition of the neighborhood and outside condition but there is always a wild card involved. That's also one of the aspects I like about note investing is multiple exist strategy and can be a future discussion with JV partner if a rehab would be best option or simply sell as is.

@Wayne Snell   Congrats on your 1 year anniversary!   I would be interested in seeing the video and your journey to financial independence.  Also your take on the different training available I have started to look at all of these to a certain extent.    I will PM you for more info

Thanks for the warm welcome all.