All Forum Posts by: Daria B.

Not complete but I think enough that I understand initial capital "may" come back when a note is sold for profit. In the case of one that is paid off by the borrower, there isn't any initial capital considering the pay down / pay off but the principal that is included in the payments (P/I) is capital payback. I had always been accustomed to getting my initial capital back but then again we were always in the mode of selling after a period of time to another investor where there was still UPB.

In my example, purchase was $60k (not UPB), they paid down the UPB ($120k) doing extra payments including any arrears until paid off. Nothing to sell so the $60k invested?

For tracking purposes, I'm not really sure how to do a payoff because it appears that it's a loss with the way I am currently doing tracking, which is very, very, very simple. 

 I get that some investors need that protection. When I got into note investing it was education, education, education and not everyone follows that they just jump in without understanding. So I get the trying to protect those investors but one size does not fit all.

I read through a few articles on this proposed law since posting this and just don’t see this as a benefit for those of us who finally got into this space and have begun building up our portfolios.

#1 - agreed but those who don’t invest in stock and have turned to RE now face an upset in their portfolio.

#2 - I hope every IRA investor reaches out and writes a letter to address this. likely not going to be thought out and still won't affect their target, which means those below or on the fringe will be cut out from investing.

Thoughts on this….

This article was sent to me from my CPA after I asked a question about my current note investing and investments I am seeking to get in on, which includes anything from individual purchases with a JV to accredited investing with a fund company.

https://www.cnbc.com/2021/09/1...

My SDIRA also sent me this email regarding the proposed tax law on using IRAs for these investments.

How does the proposed legislation affect me?

The proposed legislation would prohibit IRAs from holding privately-placed equity and debt securities and other investments that require the IRA owner to meet certain minimum financial, educational or licensing requirements. For example, the legislation would prohibit IRAs from holding unregistered investments that are offered to accredited investors, like equity or debt investments in small businesses or investments in private funds. You may very well hold investments in your IRA today that would be prohibited by the proposed legislation.

The bill would also prohibit IRA owners from investing in (1) non-publicly traded entities in which the IRA owner and related entities (including the IRA itself) own more than a 10% interest or (2) any entity in which the IRA owner is an officer or director, regardless of ownership percentage. By way of example, single-member limited liability companies or any investment in an entity in which an individual is a director or officer could no longer be held in an IRA.

IRAs holding any of the above investments would lose all of the tax advantages previously available to the IRA.

I have been investing in notes since 2017 and it's been a pretty simple process. Several people in my area invest with a JV that manages the ins/outs and have had good results. We have had numerous discussions in our group about how to track income and what does that really mean.

Recently we had a note that was paid off so in essence it wasn't a sale - or was it? This is the first time a note was paid off by the borrower. 

We have had notes that truly were a sale and profited from what we originally funded to that of the sale and payments in-between that were what we gained as income.

I realize there are many levels to tracking and what is considered income (eg. capital gain, payments that are both principal and interest and is interest really only considered income where the principal is the capital investment). And then there is the discounted rate at which the CPA considers - not part of this topic.

To keep this very simple in terms of discussion: 

1-how do you track your profit when a note is paid off? Is it the same as a sale? 

For instance, you invest/fund to purchase a note at $60k for which the UPB is $120. If you sell after a couple years of payments for $75k then profit is anything over that initial $60k cost (sands any other expenses/fees just keep it simple). But if the borrower pays off the $120 (likely less since payments being made for a few years reduce the UPB), it's still greater than the initial $60k so do you consider that like a sale and just caulk it up to capital gain?

Just trying to keep this as a simple example - I realize there are a lot of moving parts to this.

You are lucky to skirt the payments prior to the city actually doing a proper (or supposedly) check up on residential properties for which we who own in the city have already been paying. This is just a structured (again supposedly) way of them actually doing inspections now. How have you not been paying prior to this? They have been looking at properties whose addresses do not match between mailing and physical and sending notices to collect, if the person can prove they are in fact not renting the house.

@Matthew C. Frey

For the first time one of my rentals suffered a horrible tenant - they just went complete opposite of anything we (me and the PM) just didn’t see.

They were evicted but left on their own after the order was approved. With that, I had to do a major clean up including dealing with roaches.

This stuff works like a charm.

Syngenta 383920 Advion Cockroach Gel Bait 4 X 30 Gram Tubes Roach Control, 4 30, Brown

Found it on Amazon and applied it to the hinges and under drawer corners.

Unfortunately, the new tenant came along and couldn’t just say no “we need to rid the roaches first”. So there are still some left but this stuff is being used to continue getting rid of them. Had I had another week they would have been gone. It was working well and easier to deal with in an empty house.

@Daniel Saunders

I am interested in what you mean by virtual if they are not local, wouldn’t it be the same as you managing and not being local?

@Chris Mcdonald

Can you recommend some companies in the near area that PM. I just need basic services.

@JD Martin

I am using the app on my phone where the photos are but the app doesn’t support images - that I could find. I’ll have to get to a computer and see if I can upload a photo.

The walls and trim were painted the same all throughout the house and I would like to do the fixtures in white. I don’t want to change the color scheme to match the fixtures.