All Forum Posts by: Gail Greenberg

When you think about it, all the defaulted bank notes originated since "the crash" are the excellent bank-screened borrowers you speak of. And there's plenty of them. If anyone could really tell who is and is not going to default in time, they'd be rich beyond imagining. It really doesn't matter ultimately because if one of my borrowers defaults, you just take back the house and do it again which is cheap and simple in most of the states I buy.

@Jay Hinrichs we carefully screen our home-buyers through a full and rigorous qualifying process with a licensed Mortgage Loan Originator and we do not sell to anyone who's income or anything else is marginal in any respect. We set home buyers up for success, not failure. And all this borrower qualification paperwork is available for review by any potential note-buyer. I understand that you have a different model, but I don't appreciate you implying without any basis that any notes I create using my process are somehow doomed to fail.  There are many people with lower incomes than yours who are excellent, stable borrowers who deserve a chance to own too. Considering I see defaulted notes all the time where the borrowers have great income but run their lives poorly, I don't see why a well-screened borrower with a lower income is a bad bet.

Hey @Account Closed, have you considered turning your current free-and-clear properties into notes? Maybe none of them are free and clear but, to talk about the concept - I'm a non-performing note investor but I'm also creating notes by buying properties and selling them on land contracts to create my own performing notes. Which can then be sold after seasoning for a windfall. Typical example - buy a house for $20K including closing costs, put $5K into fixing it up a bit (not full renovation, obviously, but make it safe and functional), sell on land contract for around $50K with a $3000 down payment. PI payment varies by term, but we generally structure to get it in the $400-500 range. You can make the term such that PITI is a bit less than your buyer is currently spending on rent. If the PI payment is $450/month - very affordable to most buyers - and, say, the term is 20 years, you can sell that note after seasoning for around $40K if you're giving a 12% return or $34K if you're giving a 15% return. You will get....
  $1000   Down payment (it's $3000 but deduct $1500 realtor commission and $500 MLO)
  $5400   12 payments of $450
$15000   Profit on the sale of the $40,000 - 25,000 in purchase and expenses

$21,400  Total profit on the deal

$21,400/$25,000 gives you 86% cash-on-cash return on your investment of $25,000

The other thing to say about this is - although the sales price to the buyer is high - my buyers are so happy to be given the chance to own homes at any price. Many are in their 40s and never thought anyone would give them the opportunity. I have been thanked 100 times by some of them. It's very gratifying.

Hey @Mike Ruscica I LOVE the note business. Haven't been around as long as you, Yoda, but I buy  1st liens, mortgages and contracts for deed. Love the lifestyle and love that I also get to help borrowers  and their communities while making big returns.

Hi BP friends - just closed on a small house in Flint that I need to get fixed up and sold on a land contract ASAP.

I need:

• Someone to pick up the keys at the title company and put a lockbox on the house
• Someone to fix some small items and cleanout and paint the interior (not too much stuff left in the house)
• Someone who can walk my notarized permission and deposit check into the Water Department and get the water put in my name
• Someone who can show the house to prospective buyers once it's ready to show

I basically need someone who can do the non-renovation jobs for me and manage the people who are doing the repair work.

Thanks in advance for your recommendations!

Hey @Chris Gordon, I'm a non-performing note investor and I have JVs who have asked me how to get to $10,000/month using notes. I wrote up an analysis and - strangely enough - it involves starting with $300,000.  Write to me at my email below if you'd like me to send you a copy!  In my own portfolio, I'm currently getting a minimum of $20/month income for every $1000 I have invested so if you could do the same, you'd only need $250,000 invested to achieve your goal. And it's very passive. 

Appreciate the effort @Tracy Z. Rewey made with that list - one caveat. If you want to be a note investor DO NOT use Equity Trust or uDirect as your SDIRA custodian. In fact, interrogate any custodian upfront about whether they 1) will fund a note purchase and 2) how long it will take from request to funds being wired. Equity Trust will never work fast enough. uDirect doesn't allow note purchases. I work with many JVs who are using IRAs or 401Ks. I have to say that Quest has impressed me the most. Camaplan is locatd near me and founder @Carl Fischer is terrific so I assume they're very good too. Just haven't had experience with them as funders yet.

Also @Brandon Z, are you planning to stay in one geographic area? Because obviously you need realtors all over the place if you're investing all over the place. And, you would need an attorney licensed in the state you're buying in. But why do you need one who will create notes? Are you planning to originate notes or buy existing notes? 

Sorry Aaron, got you mixed up with George Blower. Good luck with your investing!

I don't know why the so-called experts disagree so completely about these things. My IRA attorney who sets up checkbook IRAs told me that ANYTIME you combine IRA funds with non-recourse financing, UBIT DOES come into play and the rate if I'm remembering what I was told was in the neighborhood of....was it 35%? I never went down that road so I never had to deal with it. I bring it up as a heads up to someone new to doing real estate in an IRA. People on here are disagreeing, George, so be sure and talk to your own advisors.

Yes @Aaron Q. the vast majority of my JV investors in distressed notes are using self-directed IRAs or 401Ks. It's great because of the favorable tax treatment - you can build a big note portfolio by reinvesting income as your notes pay off or you sell them. $60,000 would not be enough to buy and renovate a flip and probably not enough to buy a rental outright. You can use your $60K as a downpayment on a rental and finance the rest with a non-recourse loan, but then all your profits will be subject to UBIT, which is a costly tax that eats into your return. On the other hand, when I was new in note investing, I had a property I owned the 1st lien on burn down after just 9 weeks. I invested $15,000 and got a complete payoff of my balance of $42,000 and it was in my Roth IRA so no taxes ever! That's my kind of real estate investing! And the borrower whose house burned was actually thrilled with the outcome too because she got enough to buy a new house outright. She'll never have to make another mortgage payment.