All Forum Posts by: Kevin Moen

@Sue Bishop  The first place most credible note buyers start is by verifying the broker contacting them with a note is either the owner of that note, or in direct control of selling that note. Daisy chains and joker brokers are quickly sniffed out, and you will not make it in the note business looking to assign a note. The inventory is much more plentiful that real estate and finding and reviewing notes is not nearly as hard as great distressed property. That is why wholesalers exist in real estate, but are far and few between in the note industry.

A better business model would be to find a solid performing note, find an investor interested in buying a partial, and closing both simultaneously for minimum out of pocket (assuming that is your goal behind assigning).

@Ray P. I would invest in notes. I would buy a partial or entire low balance note; or JV with an investor who buys NPLs and does a workout etc. It can be tough to find good inventory for $15k, but you don't need to worry about UBIT, UDFI, or prohibited transactions if you partner with another investor who manages the investment.

@Matthew Drouin There are many prohibited transactions, and many people in this community more capable of answering your last question with more clarity. I do know you cannot invest in a deal you manage, or vertically within your family; meaning parents, grandparents, kids, grandkids deals. If you are interested in notes and loans, why not just invest in a note with your SD IRA vs buying a piece of real estate, and all of the headaches, restrictions, taxes on leverage, etc that come with buying RE with SD IRA? There are also a few funds you can invest in that invest in notes which make you a passive investor and no worries about prohibited transactions.

If you really want to get ahead of the game, and not find yourself feeling about real estate in a few years as you do about rentals right now, have you considered investing in notes instead? Its nice to be the bank, and with performing notes there is not much that reduces your net income, vs a rental where a cap ex can greatly impact your annual gains. I like the fact there is a ton of note inventory and not many buyers. Complete 180 from real estate in 2016.

@Gaurav Seth I would strongly recommend on starting with the end goal in mind. Sounds like you are interested in passive income and have about $40k or so to invest, yes? That being the case you may be able to find a smaller performing loan to immediately create cash flow with a nice yield. Have you also considered investing in a fund, so your capital can be spread out over many deals effectively decreasing the risk of a single note defaulting and bringing your yields down?

If you prefer just to do a one off deal you may also want to consider a partial, where you buy a portion of a note, earn the payments until paid what you are owed, and move on to the next. Message me if you would like to talk in more detail. 

Kevin

You should have all received an email from me. Please message me if that email did not come through for any reason. You can also call or text me for a faster response. Just message me for me cell, I think posting that will get a post flagged...

@Trevon Peracca I agree with most all of the comments above. Not enough/any quality product at that price point. However, you could buy a partial note from a note holder. Might be tough to do with $5000 but I know a company that might be interested in selling a partial at that price range. 

FYI a partial is a portion of the note being sold by a primary note holder to a new investor. Its not fractionalized, both investors are not getting a split of the monthly payment, instead you would get X number of payments in exchange for your $5000, say at an 8% yield, and the primary note holder would resume collecting payments after you are paid in full. 

Message me if you want to talk in greater detail. 

Kevin

@Neil Andrews have you considered investing in notes vs originating them? If all this feedback seems like more work than its worth, it might be. Are you looking to retire, or start a new career? There are lots of note buyers, hard money lenders, etc that could help you out if all you are looking to do is build a passive income stream and grow your retirement with double digit returns. I know of a few note funds, and if you want to take the passive route would be happy to chat in more detail.

@Frank Lindeman are you looking for distressed property to make cash offers on? If not, I am curious as to why you would want to make cash offers vs utilize leverage which is one of the greatest benefits of real estate. Are you nearing retirement?

@Jay Hinrichs which is of course why its important to protect one's downside with equity and buying at 75% or less of the properties value. Secondly, re-defaults can be minimized when working with the right borrower, and structuring the modification the right way. Allowing a mod for someone who lost their job, has been in their home for 10+ years, and now has an income again is win win for all, and done the right way reduces re-defaults from occurring. Its tough to scale, but that is why our model is more of a surgeon than a steamroller.