All Forum Posts by: Michael Terry

Good morning all, 

My wife and I have been discussing the idea of going into mortgage note investing for almost 18 months now with me doing the lion's share of the research. I am on board with the idea of passive income, generational wealth, and everything that comes with smart investing through real estate. She, however, is still on the fence. 

Investing in something like managed mutual funds gives you average returns of 7-8% annually, even during a pandemic or wartime. My question is, aside from finding assets with the same or higher returns, why did you choose to invest in mortgage notes or real estate over traditional forms of investing? Is it the monthly payment consistency? Is it avoiding market volatility? Is it to learn the business to build recurring wealth over time? 

Cheers.  

When you get a brochure for an asset in Note Investing, and the displayed Rate of Return/High Yield Return on Investment is 6%, 8%, 14%, how is that calculated? I have done research and am seeing different calculations for different types of real estate. I'm just not sure how it applies to Notes specifically.

Is it just a matter of punching in values into the 10bii calculator? Or are there different values and calculations that lead to a specific final calculation and result?  

There are discussions happening amongst my investors comparing the best investment vehicles - mutual funds (7%-10% ROI historically) vs. note investing (6%-14% depending on the asset).

Thanks all! Appreciate the input.  

 Hi George, 

Could you please elaborate? From my understanding, when investing in notes, an LLC is an important insulator for a lender to have to avoid any personal risk, unwanted communications with problem borrowers, and an effective way to keep that investment strategy passive. I have done a good amount of research and asked many note investors if they have ever invested in their own names without an LLC. All of them said they never would.

When working with my note broker, he specifically requested all the information for that LLC as part of the process so it must carry some kind of importance no? 

Finally, establishing my LLC cost me less than $500 all told, so it wasnt an enormous investment for the protection it provides. There are annual costs, but those exist with any investment.

I'm interested to know your thoughts on the matter to the contrary. Thanks for the response!  

I do. The loan will be financed through a self-directed IRA and all payments will be paid into a Rollover IRA I have established. I am just wondering if that is taxed the same as regular income. Thanks Bob!

Good morning all, 

I have formed an LLC out of state in order to insulate myself when buying mortgage notes. If I put that asset in the name of my LLC and receive payments through it, I am assuming I will have to pay state and federal taxes on it when the time comes.

Are those taxes set up like other small businesses or how does that process work? I plan on getting a tax professional to handle all this, but any color or context I can put to the question would be helpful. 

Cheers.

@Bob E.
Wow! That's not bad at all.

Did you create your own LLC to protect you against any unforeseen liability? I spoke to the Manager of Acquisitions over at SN and he said he has seen it both ways from customers. I am interested to know if this is a standard practice as you get deeper into notes.

Cheers. 

@Bob E. Afternoon Bob, 

Higher than banks (which is everyone) for sure. But I was aiming for double digit returns over the life of the repayment. From what I have seen, this looks like the vehicle.

I chose SN Servicing Corporation out of Eureka, CA. They've been in the business since '87, I was told.

Cheers.

@Jay Hinrichs, 

Hi Jay. Their website is Invest Brilliantly Dot Com. They have a coaching program. It seems right. I just had my first call with them. It was eye opening to what they are trying to do. I'll keep you all posted.  

This is all excellent information to review from the beginning of the year. My thoughts on this matter havent changed all that much, except for the fact that I know now that even performing notes are not passive and there will be some management necessary on my part. In doing the research, I really dont mind what is in store. 

I have also decided to work with the ACI Legacy Group, Desi Arnaz and his team in San Diego, CA. Their mentorship courses so far has been stellar, they include due diligence in their note offers, and can guide me on my journey through the space.

Has anyone worked with them before? Heard positive things? I have an introductory phone call this afternoon. 

Thanks for all your help everyone. It's great to have you all as resources.