All Forum Posts by: Trevor DeSimone

 Reading a copy of the book currently! 

 Hey Bill, 

Can I connect with you regarding a small PML opportunity?

Thanks!

 Hey Rick, 

Thanks for taking the time to add to the post. Other than speaking with an attorney, and recommendations for education that are vetted and trusted by yourself?

 Thanks for the insight Tom, is it common practice to record a deed of trust during the closing or can this done with relative ease after an individual or entity owns the property?

Jeff this is a very well-written passage from someone who clearly has a lot of experience in PML. I do appreciate you taking the time to respond and your passion on the subject is notable. 

I'm aware that my skillset is limited and experience minimal and that I'm missing key pieces of information regarding PML that I intend to correct for future deals.

My only disagreements with you would be that strangers on the internet and strangers from a real estate club in NH are both strangers to me. You, yourself are another stranger. I spoke and vetted the individuals I'm working with now the same as I would if it were a face-to-face conversation. Where I will very much agree with you is that you've pointed out I'm at significant risk with my investment for not speaking with an attorney prior to my investment, not recording my note, and exposing myself to potential risks without access to the lender's title insurance. 

I do very much appreciate the lesson, and no need to apologize for the cynicism, it only expresses your concern, clarifies the severity of my method of doing business, and persuades me to seek additional resources. 

Besides speaking with a lending attorney, would you be willing to offer any other recommendations in ways I could educate myself properly on the subject? Books, courses, anyone else I should speak to?

Maybe you could clarify a few questions I have right out of the gate;

Can an entity give a personal guarantee (meaning can the entity guarantee to pay debts do with other assets owned by the entity?) Or are personal guarantees strictly from "persons".

How at risk is my position not being on the fire and hazard insurance? If the policy pays to the borrower, wouldn't the borrower pay me as the lender? (Assuming they had proper coverage, such as an Actual Cash Value policy based on the ARV). Or is this really to ensure that the borrower has proper coverage?

Once again, Jeff, thank you. I am still feeling secure about my current investment, and getting routine updates on progress, but I think a tactical pause once this note is paid is needed, and I appreciate you shedding some light on the matter.   

Thanks for your response Rick. Hypothetically, assuming the lender was unable to pay back the loan, and we went to litigation, couldn't we go after other assets held by the entity? If I was relatively confident they had other collateral, is my investment still secure?

Saving up would really be beneficial in your case. Lenders like when you have equity in the deal. It's you equivalent to having skin in the game. 

Alternatively, if lenders and traditional private money lenders aren't able to fund you, you could either bring on a partner or source funds from family and friends. Set realistic expectations and don't borrow if you're unsure of your ability to meet your debt obligations. 

Hey Shawn, congrats on your newest acquisition! For your size and scale you really can't go wrong with something cheap and effective as QuickBooks. If you end up utilizing a CPA in the future they can easily be granted access to view and edit your existing books. Of course using QuickBooks for your own book keeping you'll want to utilize the following practices. 

-Connect your business bank accounts and credit cards to the software to automatically uploads your transactions into QuickBooks.

-Save and attach receipts for all business expenses. Photos and copies of receipts are acceptable by IRS standards, and if you're ever audited, you'll need to have them available.   

-Login and keep track of everything as you go. Don't fall behind, it's easy to do so and you'll find yourself back tracking at the end of the year. 

Hope this helps!

I would technically hold a second lien position on the property; However I'm learning that perhaps I should be recording this lien properly so that it is "attached" to the property. Also I'm not afraid to say I don't know everything and I do expose myself to a certain amount of risk in doing so. The company also holds a number of additional assets, which could be liquidated in the event of default. A provision in the note also covers reasonable attorney and legal fees in the event I had to progress to litigation.

Investment Info:

Single-family residence private money loan investment in Garden City.

Cash invested: $52,000

This is the second time I've acted as a PML; the connection was made on Facebook of all places; A local group had advertised the need for private money to fund rehab on a fix and flip in Ohio. After some introductory calls and vetting the business, we agreed to a $52,000 note with a 5-month term at a 17.38% return with the expectation we could perform future business.

What made you interested in investing in this type of deal?

I preferred the relatively guaranteed return within a short time frame.

How did you find this deal and how did you negotiate it?

Facebook; Reached out and made contact with the group and went from there. Have to put yourself out there!

How did you finance this deal?

I liquated my brokerage portfolio to fund the deal. Better rate of return based on my investment history in the markets.

What was the outcome?

Pending; Note term ends in December.

Lessons learned? Challenges?

Have solid negotiation and people skills; I was able to raise the interest rate from the initial offer after building a good repour with my point of contact, learning what the competition was offering, and then coming in at a lower price point. I was told they would be willing to meet me in the middle and preferred working with me because I was well-liked.