All Forum Posts by: Pat Jackson

First off, if you have no idea what a note is check this out:  https://www.biggerpockets.com/blog/2015/03/12/introduction-investing-notesbe-bank/

So a note is born, but where does it come from?  Did a stork drop it off?  Did a buyer fall in love with a seller?  Did it spontaneously appear?  It has to originate from somewhere, right?

I'm wanting to originate a few notes on single family homes in Missouri.  I want to have the option of selling all or part of these notes off after they're originated.  I don't know much about Dodd Frank or the Safe Act, and though I'm learning I doubt I'll ever know as much as a loan originator.  So my question is this, if you wanted to create sell able notes on single family homes in Missouri, would you:

• Do them yourself
• Have a title company create them?
• Have a mortgage loan originator create them?
• Some other option I haven't thought of?

The only constant is change.

@David Orrick whatever happened?  Did you do a wrap mortgage?

@Frank Rolfe

Thanks Frank! Why doesn’t everyone invest in parks?

@Frank Rolfe thanks. I assume you’re wrapping repairs and capital expenditures into one number?

I realize the answer to my question is "it really depends".  Is the park new, is it old, does the park own the mobile homes or just the lots, etc.  

In this situation the park owns the majority of the homes (90%), 50% are 2001 or newer, and it's city water, sewer, and electricity.  For single families I generally save 10% of rents for repairs and 5% for cap ex.

On one hand mobile homes are more "fragile" than a brick and stick house.  On the other they're pretty simple.  What are the percentages folks use for such parks?  Newish homes, not a lot of deferred maintenance?  Same question if all homes were sold off, and it was just a lot rent park?

Thanks!

@Benny Morfas

Good luck. 

1. Buy it.

2. Leave LA and move there.

3. House hack!

4. For marketing purposes, call it the Spreadsheet Magic Apartments.

@Roman M. Thanks!

So hypothetically 90 cents on the dollar, pending some unknown variables? How does one determine the demand for such notes? I’ve never played in this sandbox.

I'm becoming very interested in owner financing houses.  I've been reading a lot about wraparound mortgages.  Now I'm wondering if the wraparound mortgage can be avoided all together.  Here's my thought:

Do the first two steps of a BRRRR

Buy a distressed house

Rehab (with cash)

Then owner finance to a buyer.  Require a 15-20% downpayment.  Setup up a 15-30 year note.  

Collect payments

Sell note

My question is this:  How soon after I sell the house and collect payments till I can sell that note?  What what is a reasonable % on the dollar of the note?  Here's a numbers example (I'm buying in Missouri so the numbers are reasonable):

Purchase Price: 28k

Rehab and Holding: 25k

Owner finance for 85K @ 8% over 20 years.  Get a 15% down payment (12.75k), and have a 20 year note for 72.25k @ 8% (670.99 monthly payments).  

How long would I need the buyer to perform before I could sell the note?  What's a reasonable price for this note?