All Forum Posts by: Tracy Z. Rewey

@Burt L. An unusual situation.  We have bought quite a few notes from heirs over the years.  The main challenge usually surrounds probate/estate issues.  You want to be sure that the Assignment of the Mortgage or Deed of Trust will be insurable by a title company.  They will usually want to see evidence of who can sign for the estate (Administrator or Executor/Executrix) of the estate.  That process can vary by state.  The next challenge will be locating the original note so it can be properly endorsed by that same party to follow the Assignment chain.  It is also possible the estate will have costs that have to get paid out of the sale of any assets (like the note). You may need to assist this potential seller with finding a good attorney to handle the estate/probate.

In the meantime, you could get an Option Agreement for the Note (Mortgage/DT) signed by the party you think/hope is the sole heir. The suggestion by @Bob E. to pay an option type fee for first right of refusal could also entice the potential seller.  You might need to look at that as "gambling money" rather than "grocery money" as it could be tough to enforce before probate is complete (or even after...).  I've had deals where we have recorded an Option Agreement so it showed on title we had a potential interest while the title issues were worked out.  You just have to be sure to have an attorney review to be sure that is appropriate for your state and situation.

Quote from @Robert Oshea:

@Tracy Z. Rewey

Thank you for this information. I would have never thought of combining Wholesaling and creating partial notes.

You are welcome Robert. The challenge with a small investment and a long term note is your partial will be pretty far out into the future.  You could get the benefit of an early payoff but that isn't something you can count on or control. Another idea would be to roll your note referral/wholesale fee into the deal as a "reverse partial".  That is where the investor would pass-through the most immediate payments to you (say the next 6 or 12 months depending on the cash flow).  That would allow you to create more velocity by doing that over again sooner.  This type of arrangement is more of a private investor transaction (versus institutional investor funds).  The institutional investors will do partials also but the won't usually "passs-through" so it would be a standard partial vs a reverse partial.  The key here is finding a marketing for the notes.  Once you have a deal the investors will usually work with you to get creative!

Hello Robert, One way to get started is to market for notes and then refer to an investor to earn a referral fee at closing.  It is similar to wholesaling real estate.  As you create deal flow, you can find opportunities to work yourself into a deal.  For example you can sell an investor the first 25 years on a 30 year note keeping the last 5 years for yourself (using the investor's funds to purchase the full from the note holder).  We call that buying full and selling short using the partial purchase. 

Welcome to the world of Note Investing.  These are my top 7 reasons for investing in notes:

• Generate interest income

• Purchase at a discount for increased yield

• Backed by real estate as security

• Less hands-on than owning property

• Licensed third party servicers can manage payments and collections

• Ability to re-work the note, take a deed in lieu, or take the property back through foreclosure in the event of non-payment

• Profits are tax-deferred (or even tax-free with a Roth IRA).

My husband is fond of saying...

"I don't like math but I like money!" 

I am the odd duck that likes math and partials are all about math using the Time Value of Money (TVM) formula.  You establish the cash flow, decide your desired return, and calculate the Net Present Value. 

Once you are satisfied with the math then you have to document it.  The purchase agreement will outline what happens if the note pays off early, what happens if the note doesn't pay, and who controls the right to enforce (and the asset serving as collateral).  Not all purchase agreements are created equal and some favor the seller while others favor the buyer of the partial. 

I also prefer to buy the most immediate payments but I have also sold partials where I retained the back-end or future payments.  I suggest getting comfortable with TVM, using a good third party servicer, working with reputable buyers/sellers, and have a good attorney review the documentation.

Happy to share my general checklist for note due diligence if you want to message me.

Quote from @Chris Seveney:

@Mitch Franklin

If you can work the numbers sell property to get your cash out of the deal then carry a second for cash flow.

I second Chris's suggestion.  Another alternative over selling a first and keeping a second is to structure a first and sell a portion of the payment stream (keeping payments on the back-end).  They both have advantages with the main one being you keep yourself in the deal and get the benefits of residual income via interest and payments.

I also agree with the comment that you may need to increase the term to 20-30 years to keep the payment down depending on affordability.

Two amazing days of presentations from women investors with one goal in mind: Help Each Other Build Wealth!

No Selling. No Hype.

Register to receive free tickets at www.WizeWomenExpo.com

#realestateinvesting #noteinvesting #SDira #wholesaling #shorttermrentals

Friday, October 22 (All Start Times in EST)

10:30am - Tracy Z, Wealth Doesn't Know You Are A Woman
What group is adding to their assets at a rate of $5 trillion per year globally? It’s women! Explore tips and strategies to take control of your financial security in today’s market. Join the movement.

11:00am - Liz Faircloth, 7 Roadblocks To Women Investing & How to Overcome Them
What I’ve learned from growing a community of over 10,000 women! During Liz's jam-packed session, she will share how women can powerfully overcome any roadblocks they are facing on their journey of financial freedom. She will share practical steps and strategies that women can implement immediately in their lives to create the life they want on their own terms!

Noon - Rachel Richards, Getting Your Financial $hit Together
Passive Income, Aggressive Retirement: The Secret to Freedom, Flexibility, and Financial Independence (& how to get started!)

1:00pm - Wendy Sweet, Short Term Rentals - How Do You Finance That?
Short-term rentals are one of the fastest growing investments in the real estate world. With the unique houses and experience adventures available, options are abound and increasing. But, how do you get them financed? In this presentation, we will go into sourcing short-term and long-term financing for short-term rentals.

2:00pm - Laurie Itkin, Options for Earning Investment Income in a Low Interest Rate Environment
Learn the pros and cons of various investment types for earning income. This session will cover high-yield savings accounts, certificates of deposits, bonds and fixed income, preferred stocks, dividend-paying common stocks, real estate investment trusts (REITs), master limited partnerships (MLPs), annuities, and covered calls.

3:00pm Marishka Pilch, No Hassle CashFlow: Making the Transition from Landlord to Lienlord
Most people who get into Real Estate – whether it’s Fix and Flip or Buy and Hold Rentals – start out thinking this will be an easy way to create cashflow. Andrew Carnegie proclaimed that ninety percent of all millionaires became so through owning real estate. However, many investors have found that this investment vehicle often comes with some unexpected headaches. Discover how to build cash flow backed by real estate without being a landlord.

4:00pm - Laura Landgraf, The Pandemic and You: Developing Hope and Strength During Uncertainty
The pandemic changed things. Lots of things. Women were impacted enormously. How do we slog our way through the layers of our altered reality with any measure of grace, let alone health? It’s on us to care for ourselves, mentally, physically, emotionally. Let’s explore how.

Saturday, October 23 (All Start Times in EST)

10:00am - Becky Nova, Picking the Right Investment Strategy for your Goals!
In this workshop, you’ll learn how to stop chasing other people’s dreams and get realistic with your own! Then, identify the right strategy to match your goal to guarantee Financial Freedom and Success through Real Estate Investing!

10:30am - Jemila Winsey, How to Purchase Your First Office Building in a Post-Pandemic Market
Learn how to purchase your first office building, diversify your real estate portfolio, and expand your residual income.

11:00am - Haley Gant, Tips for Successful Self-Directed IRA Investing Basics of Wealth Building
Learn how self-directed IRAs allow you to establish long term wealth for retirement, decrease taxation, and maximize your income and profits by being able to invest in non-traditional assets like real estate, notes, LLCs, land, oil and gas, and many other private assets tax-free! In this presentation, you will hear Haley's top tips for building wealth while learning interesting and insightful strategies for your self-directed IRA.

Noon - Laura Alamery and Liz Klingseisen, How to Wholesale Virtually in ANY Market

What exactly is Wholesaling and how you can do it too! We're going to go over what works TODAY, the 4 Core Strategies of Wholesaling (there are 4 sub-niches to wholesaling) and how you can capitalize on them for real estate investing.

1:00pm - Sue Hough, How to Run a Smooth Construction Project
Learn how to analyze your project and successfully communicate it to all of your tradespeople, how to get your contractors to work with you, and the best practices to protect your valuable assets.

2:00pm - Mary Hart, Estate Planning for Real Estate and Note Investors
Estate planning fundamentals that everyone over the age of eighteen should implement to protect their hard-earned wealth!

3:00pm - Darlene Root, Growing and Protecting Your Wealth in Our Changing Economy
With the increasing uncertainty of the economy, taxes, and privacy, there has never been a better time to start creating a tax-advantaged/tax-free wealth fortress. Darlene will outline her secret weapon to not only invest using Self Directed Retirement Accounts, but doing so with anonymity as part of her asset protection strategy.

4:00pm - Tracy Z, My 30 Year Romance With Creative Financing
Are you looking to have a positive and creative relationship with money? From seller financing to note investing, Tracy shares the tips and strategies that have fueled her passion for creative financing over three decades.

Originally posted by @Sue Hough:

Originally posted by @Kelly Alyssa Valdez:

@Jennifer Pauyo Hey Jennifer! I’m new to bigger pockets and semi new to investing. Is there a female group on bigger pockets I should know about?

There is a great national group hosted by one of our own fellow members Liz Faircloth, The InvestHer Group.  You can find them on MeetUp and Facebook.  They also host a podcast on Bigger Pockets.  They are fantastic and I am proud to be part of their group!  

Good luck ladies!

Liz is a great proponent of women investing in real estate.  She is a repeat speaker at our annual Wize Women Expo and I've had the honor to speak with the InvestHER group on note investing.  A great way to find and network with fellow female investors.

Originally posted by @Chris Seveney:

@Tracy Z. Rewey - have I convinced you yet to get into NPL's or CFD's.... :)

LOL - Not yet on the NPLs. I jokingly say I buy enough performing notes that go NPN I don't have to go looking for them :) to which all my NPN friends answer... but wouldn't you rather have bought at NPN prices? Fair enough response. I have bought some decent reperformers lately.

CFDs I've bought since the late 80s. I prefer them from Mom and Pop sellers over the "Headline News" CFD sellers. I do like to convert them whenever possible to a Note/Deed of Trust or Note/Mortgage. The buyer gets the benefit of having the Deed and I have a more marketable product on the secondary market.