All Forum Posts by: Tracy Z. Rewey

Originally posted by @Codi Clausen:

@Jonathan G.

Hi! I invested with them last year. Feel free to message me for more information, but to be frank they just defaulted on their promissory notes to me.

Thanks for sharing your experience.  Did they offer any type of security for the notes that gives you some recourse?  I'll DM you if your prefer.

Originally posted by @Joshua B.:

@Mike Mitchell how about paying the taxes and in return getting a note/mortgage for the amount?

Advancing taxes and taking back a note with interest could be a good solution if it is all handled simultaneously. 

Technically the buyer on the CFD only has an equitable interest.

They won't get fee simple interest until the deed is recorded.

They can't record the deed until the taxes are paid.

The mortgage is a valid lien when the the buyer has title and it is recorded.

If @Mike Mitchell handled the advancement of taxes, recording of deed, and then recording of Mortgage all at once it could work.  I'd be curious to know what kind of tax amount we are talking and how delinquent?  

Hello Matt, I saw that as well.  The last email I received from them with a note for sale was mid- December. The two emails from Jan of this year mentioned registering for a new partner portal which appears to be property for sale rather than notes. Dave has bee a leader in the note space and it will be interesting to see where he goes with this expanded focus.

@Brent Wickersham I have worked with CFDs (aka Contract for Deeds, Land Contracts, Installment Contracts, Real Estate Contracts, etc.) since the late 80's. They have gone from being labeled the best thing since sliced bread to the evil tool of destruction used by predatory lenders. Like so many things in life, the truth is somewhere in between.

As mentioned here it varies greatly by state with some states making it as hard or harder to foreclose on a CFD than a mortgage. If you have a choice and are creating it upfront then the best course of action is usually using a Note and Deed of Trust (or Note and Mortgage if that state doesn't use the DT). If you are buying an existing CFD you need to know your seller. Just google: Harbour Portfolio contract for deed, and you will start to see the reasons behind the shift. There is still quite a bit of that inventory out there.

Do I still buy Contract For Deeds? Yes, depending on the state, the seller, and the paperwork. We have an expanded due diligence checklist we use for the CFD - with one of those being ordering title insurance (rather than just a report). You are taking fee simple title and that comes with inheriting some additional responsibilities (and potential transgressions of prior owners). You also have the legal obligation to deliver a deed and clear title once the buyer has paid the CFD in full. This is a greater obligation than just releasing your mortgagee's interest on a mortgage or your beneficial interest on a Deed of Trust.

We also work to convert them whenever possible. This gives the buyer fee simple title and creates a more standard set of documents. There are some institutional type investors on the secondary market that will not buy CFDs so the liquidity and price generally increase if you convert to a the standard DT/Mtge used in that state by traditional type lenders.

@Telless Cade I"m going to second @Terrence Evans and suggest you look into seller financed notes.  You are in Texas and Texas has been the number one producing state for owner financed notes for the last 15 years we have tracked the data.  It is much more friendly to new investors.  It is tough to break through to asset managers at the bank level when you just want to buy one note.  Not impossible but very hard. There are also institutional note investors that will buy the note and pay you a finder's fee at closing.  A good way to earn while you learn.

I have bought a Tax Deed (vs a tax lien) to control a property and then seller finance to create a real estate note. That was found through the county as mentioned by @John Underwood  I see the cost is $367 per month for the software you mentioned.  It would be good to hear from someone that has used it and felt the cost was justified.  I'll follow this post to see if anyone chimes in with feedback.

Thanks for sharing @Chris Seveney While finding a workout and repayment plan is always preferred over foreclosure it is an interesting situation for forbearance and then potentially eviction being mandated/delayed by the government without any solutions for the underlying cause.  Now is when our problem solving skills will be put to good use. I especially feel for landlords dealing with all the eviction moratoriums.  Makes me extra glad to be a note investor.  

@Chris Seveney This is a great topic.  We are working to put together a comprehensive resource to help investors research where the laws might apply to them.  None of us want to give legal advice so tend to tread carefully and leave the definitive answers to the attorneys.   As an investor I try to focus on the states with less restrictive requirements.  Your observation on the larger funds is interesting.  I've also seen some funds selling off groups of notes in some of the states mentioned as being more restrictive.

@Andy Mirza We also wait to advance until necessary to prevent a tax sale unless penalties are severe. 

I was talking to a fellow investor brainstorming ideas and they bought the tax lien on the property where they owned a non performing note.  They bought the tax lien through a different entity so they could then pursue foreclosure on the tax lien and wipe out their junior lien as the process for foreclosure was much simpler on a real estate tax lien.  I'm sure there are some caveats to that method and you must give the borrower ample chance to cure the default but I thought it was a genius solution.  Thoughts from the group?

We work with seller financed paper which includes a lot of rural property.  If it is rural and far from any major metro area then we rely more heavily on equity.  Not just equity from property appreciation but equity from down payment and amortization.  If the equity is strong with a good payment history we will still look at buying the paper (at a higher return of course).  A partial can also be a good option.  There is more risk in the event of default so not suggested if you are new to note investing.  If you're not sure, you can always see what another investor would pay and earn a referral fee for being the matchmaker between the seller and the investor.