All Forum Posts by: Kevin Moen

You mentioned Trust Deed Investing, which is essentially investing in paper secured by real estate. There are a few funds that invest in notes, which offers good downside protection due to the discount the fund is able to buy the note at relative to the properties value. I know of a few funds that offer preferred returns, and project double digit returns in total. Feel free to message me for details. 

My attorney recommended I put the properties in a trust, we created a new LLC which serves as the trustee, and I am the beneficiary of the trusts. I am insulated from liability coming from these properties, and it is much more difficult to determine what I own now via public search. You may want to seek legal council to determine a similar model, which from my understanding is not impacting the due on sale clause.

Kevin

Equity trust can be slow, charge fees to expedite service (often needed for note deals) and their fee increases as your balance does. I don't like paying a fee/tax for my success, so I moved my funds to a local custodian. Quest certainly has a knowledgeable staff and I have not heard any negative feedback about their services. 

Kevin Moen

I believe if you go it alone, try to figure out every question to ask, and from scratch try to determine what the full spectrum of due diligence includes, you will lose money. 

We are talking about trading securities and being subject to the Fair Lending Act, Dodd Frank, SEC, CFPB, etc. There is a lot to know.

Do you know what a right of redemption is? How about a Point of Sale Inspection? What are your rights and limitations when calling borrowers? What happens if the property is blighted? 

These are just a few questions most investors don't even know to ask, let alone how to mitigate those risks. If you think you can mitigate all risks associated with note investing through bigger pockets and figure out on your own what the property due diligence is, you may have a rough experience investing in notes.

Just my two cents, but the great thing is its a free country; do what you feel comfortable with.

@Cameron York If you knew the business and had capital you could approach a broker, fund, or asset manager. There are other sites like FCI Exchange as well, but they tend to be the lower end inventory that real investors have already picked through, or over priced for the collateral. I got started through a mentorship program which cost me more than my Engineering Degree, but shaved my learning curve down. I also started attending industry events, trade shows, and networking opportunities to build my buyer and seller list. There is a Note Expo in Fort Worth, TX coming up that I will be attending to continue education, and network expansion. 

In the note business there is an incredible amount of knowledge needed to protect yourself from a mistake which can strip your profits, and possibly your capital. That is why I would recommend a joint venture, or hiring a mentor to learn and understand the business.

@Cameron York You are absolutely correct, this is a relationship business and finding the inventory is about networking with asset managers, brokers, and fund managers. Attending industry trade shows, marketing on social media/craigslist, etc are all necessary avenues to build a list. However they will vet you, and if you dont have the capital or knowledge, you will be blacklisted. 

You can also learn the business by engaging in joint ventures with seasoned note investors, and earn some money while you learn the business. 

Kevin

@Brendan Harrison I have a saavy CPA, I just established my SD IRA so he hasn't done my books since establishing, but he knows real estate and business. He's located in Bellevue and if you message me I can get you his contract info. You could at least pick his knowledge on your questions above.

Secondly no, you cannot use SD IRA funds to invest in a company you have ownership of.

I agree with these comments, and splitting that loan up into two notes. Keep in mind the shorter the term, higher the interest, lower LTV, higher borrower credit, strong pay history, all add up to higher resale. However the strategy of creating a note just to turn around and sell it will not be a profitable one. Buying notes at a discount, or buying REOs at a discount and financing a sale at a higher price are where note investors play.

@Brian Pleshek They are allowed to work with up to 35 "Sophisticated Investors". That term is loosely defined by the SEC but anyone who has done any seller financing, certain types of real estate investing, or learning/educated in notes should qualify.

Thanks Gabe. For a loan mod we are pretty far off in the discount I would require.