All Forum Posts by: Lupe Santiago

Dave Van Horn, wow that was a really great description and exactly what I was thinking of doing. That's so helpful. Thank you very much for your words of wisdom and experience. I will look into this more and message you if I have questions. Have a great day!

This is all great information. Upon doing further research, I don't believe I can alienate any part of the loans I've made. I operate under an exemption in NRS 645B.015 (7), which reads:

"Any one natural person, or husband and wife, who provides money for investment in commercial loans secured by a lien on real property, on his or her own account, unless such a person makes a loan secured by a lien on real property using his or her own money and assigns all or a part of his or her interest in the loan to another person, other than his or her spouse or child, within 3 years after the date on which the loan is made or the deed of trust is recorded, whichever occurs later."

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The key starts with "... unless such a person makes a loan secured by a lien on real property using his or her own money AND ASSIGNS ALL OR A PART OF HIS OR HER INTEREST IN THE LOAN TO ANOTHER PERSON, OTHER THAN HIS OR HER SPOUSE OR CHILD, WITHIN 3 YEARS..."

So looks like a no go for this way in Nevada! At least, if you're operating under this exemption.

Jon Holdman, thanks for the response.

Is my strategy not the same as taking out a personal loan and then using a note I already own to securitize the repayment of it? Forget about selling the loan A to friend after funding loan A. I agree - that's probably brokerage.

What about borrowing money from friend to make Loan B, and securitize his note with Loan C, that I already funded a month ago and hold in my portfolio? Would I be able to use a note as security to borrow money that is essentially a personal loan?

Thanks

Although one could argue that I'm making the profit when escrow closes and the borrower receives $96k for a $100k obligation. I guess my friend would be stepping into my shoes at $100k, and it wouldn't be considered a profit. The profit is booked at close of escrow, but the cash flow is received when my friend buys it.

Thanks for the responses, everybody!

Bill Gulley, A few other details - These notes were originated with my own capital. I am looking to raise more capital to meet the needs of my borrowers, however I will end up making a profit on it. Here's an example of how my loans work.

Let's say borrower needs 100k. With my fee of 4 points, I net fund 96k at escrow and the principal is $100k. What I want to do is sell that note to my close friend (not family) for par value at the stated APR. Then I can continue to service my borrowers with more capital. In effect, I'm making 4 points when I sell the loan to my friend. The sale would occur within a week of funding the note myself.

David C., There is no limit to the number of loans you can make in Nevada as long as you fall within one of the exemptions set forth in NRS 645A/B/C. In my case, I make non-owner occupied loans on residential real estate so I'm exempt from any kind of licensing requirements.

Hi! I am looking to raise capital from some family / friends for my real estate lending business. I am an unlicensed hard money lender (legal in my jurisdiction - no broker license needed for non-owner occupied) and have a substantial sum of notes that I have lent upon.

Problem: Need to raise more money to continue lending w/ current clients, but probably can't sell the note via assignment of note & deed of trust because I'm not a broker. I operate as an unlicensed sole proprietor.

Here's my idea: Say I have 10 notes, each with principal at $100,000, with properties my borrowers purchased for $125,000 securing each note. Now I want to raise $90k from a friend so I can continue lending to my borrowers. Therefore, I would execute a note in favor of my friend for $90k, then pledge one of the notes of principal $100k as security. Upon an event of my default on the $90k note, the note & deed of trust would automatically vest in my friend, and he would step into the shoes of the lender to my borrower with the $100k obligation and property - friend is ultra secure and is basically getting 90 / 125 LTV based on not the market value, but the purchase price of borrower. That, in a nutshell, is how it would work.

Question...

1. My friend wants to be damn sure that he's the only person who has a claim on that note. How can I assure him of that when there doesn't exist an equivalent, well-established land-title recorder system for notes? How does he know I didn't already hypothecate it to someone else?

2. Any other issues or does anyone have experience in this area? I'm still trying to figure out how it would legally and operationally work!

Thank you very much!

Leon Yang, can you describe the kind of financing you get from sellers? How much do they finance and what do they charge you?

Thanks!

Phillip Dwyer and Andy Chu Thanks for the welcome! Is there a recurring live meeting of all the Las Vegas BP'ers? It'd be great to meet some of them, talk shop, and make connections for the future.

Those are some great counterpoints to arguments against ab284. Have you noticed if Short Sales are going through the roof? The article I linked at the bottom indicates that this seems to be the case. While it may be good publicity for the state to not have foreclose rates through the roof, it's also not fair to have people living in their homes without paying rent or a mortgage for the foreseeable future. There needs to be a real enough threat of foreclosure to create an incentive for home owners to do a short sale to clear the inventory.

I suppose clearing up the market comes down to a flood gate or slow trickle philosophy. Pros and cons to both, but one way or another, it needs to happen.

http://www.lvrj.com/business/clark-county-foreclosures-rise-sharply-in-october-179375181.html

Hello again! Las Vegas is hot right now. Assembly Bill 284 (places greater liability on banks during foreclosure process - essentially makes them disclose that they have knowledge of the property condition) so it's put the market in an inventory squeeze. Prices have gone up drastically in the last 5 or 6 months (+35%), but you better believe there is still a huge inventory of foreclosed homes that have yet to flood the market.

I think that makes the market dangerous to get into right now unless you find a steal of a deal. There's lots of investors here and even some hedge funds are getting into the game. Prices are expanding too rapidly so I'd be cautious when investing. Same goes for lending. In my world of hard money, it's not too safe to lend at anything above 65% LTV right now. Financing is currently expensive due to lack of credit and capital in the economy (which is why I'm in the market to loan), so great returns can be realized, but collateral has to be secured at the right price. If AB284 gets relaxed and banks start flooding the market again, that's when it'll be the right time to deploy investment money, pick up all the property you can or make loans because property values will dip again once the banks can dump their crippled assets. I hope that comes soon. My only advice - don't get too invested in LV real assets right now if your time horizon is short.

Hello!

I've posted off and on for the last few months, but thought I'd finally make a post in the newbie section. My family and I have been investing in distressed real estate for close to thirty years and are now in the private lending lending business. I split my time between the greater LA area and Las Vegas, and am always looking to network with fellow BPers and establish new professional relationships.

Hope to talk soon!