All Forum Posts by: Valenda D.

Thank you Chris, I wiil NOT borrow.   It's too risky.

Thank You Chris, Wesley and Tim.Your insights and advice are really helpful.

Cfd or CDF? Chris and Tim, I saw the reference you made to cdf and CDF and Googled some BP posts as I was unfamiliar with them. I discovered Dion D. and Bill Gulley's in-depth commentaries in a post: "The Pain$ of Not Knowing About CFDs". Their comments are chillingly instructive. Scary! CDF's seem way too advanced for me at the present time.

I will heed yout recommendation to consider partials and JV deals. Thanks for those tips of what to look out for.

Tim, you mentioned CDF in your post - was that somthing different? I thought it was possibly a typo.

Marco, I'm in So. CA.

i will get a basic LLC here in CA. I spoke with the four investors in my South Bay, CA (Torrance-based) note investing group who actually have notes. The three sharpest have been noting for 4 and 6 and 9 years. The other one for I year. Two most successful have CA LLC's after previous experience with OOS LLC's. The newbie in NV, and the 6 year investor's IU s based in WY or UT.

Last night I've learned of and accepted an invitation to a local (Long Beach, CA) note group meet-up next week, just 2 miles from home. 

Wesley, your experience is very helpful. There is so much to know. Thank you for sharing. I will proceed with caution

I will also just keep saving and building up my investing capital.

QUICK QUESTION: Shoud I borrow to invest in notes? A line of credit from Wells Fargo was offerred when I inquired about opening a business checking account. 

I haven't applied yet, was just asking about the checking account and the rep asked if I might be interested. I said maybe, I'd let her know.

Hi Logan, so sorry about the wrong name for you in my previous response. 

I have considered note funds. I have been looking for a good one with transparency of its note holdings (i.e. a listing of the properties, their locations and ratings of them, such as A, B or C), a solid track record of earnings, no requirement of being an accredited investor, a  holding period of less than 5 years (3 years maximum preferably), a highly regarded management and low fees. 

Also, what return percentage should I be expecting?

Do you have a recommendation, please?

Thank you.

Thank you Laren, Tim and Chris,  for responding.

Laren, I've heard that I can expect to earn 10% -12% in general on performing. Maybe more; up to the high-teens. Possibly in funds or trust deeds, indivudually or thru JV deals.

QUESTION: What return percentage SHOULD I be expecting?

Tim, 

Yes, it's $800. That was a typo. Your assessment of the Notes networking group is what I've started to feel. Also, a majority of the "investors", 3/4 of whom have not yet bought a note, but have either JV'd on one or invest in rentals and are like me, transistioning to notes. They are looking to JV with a money partner. They offer to do the due diligence. EVERYone says a LLC is needed to do a JV deal and also say absolutey NOT to purchase a note in my own name.

QUESTIONS: 

-You're saying as an investor, rather than as a business, it's O.K then to do a sole proprietorship with a DBA? That no asset protection is needed through a LLC or trust?

-Also, how much money IS enough to start investing in performing notes?

-Can you recommend a note-friendly local attorney and a CPA that you use or know of here in the CA South Bay area?

I'm definitely no longer considering pursuing notes as a business-only as an investor. I definitely prefer a simpler option to the multidimensional entity structures I've been told about. Performing notes will be my focus as they are much safer and predictable than risky NPN's. Even if the returns are less than what I've been told to expect, performing notes are collateralized and thus more tangible than stocks and provide higher, steadier returns.

Chris,

QUESTION: What course of action do you recommend? Thanks for pointing out the identity exposure which would occur in a foreclosure.

Anyone, please respond. All reples are welcome.

Information, recommendations and explanations of why/why not and pros/cons are especially helpful.

Thank you.

Thank you Laren, Tim and Chris,  for responding.

Laren, I've heard that I can expect to earn 10% -12% in general on performing. Maybe more; up to the high-teens. Possibly in funds or trust deeds, indivudually or thru JV deals.

QUESTION: What return percentage SHOULD I be expecting?

Tim, 

Yes, it's $800. That was a typo. Your assessment of the Notes networking group is what I've started to feel. Also, a majority of the "investors", 3/4 of whom have not yet bought a note, but have either JV'd on one or invest in rentals and are like me, transistioning to notes. They are looking to JV with a money partner. They offer to do the due diligence. EVERYone says a LLC is needed to do a JV deal and also say absolutey NOT to purchase a note in my own name.

QUESTIONS: 

-You're saying as an investor, rather than as a business, it's O.K then to do a sole proprietorship with a DBA? That no asset protection is needed through a LLC or trust?

-Also, how much money IS enough to start investing in performing notes?

-Can you recommend a note-friendly local attorney and a CPA that you use or know of here in the CA South Bay area?

I'm definitely no longer considering pursuing notes as a business-only as an investor. I definitely prefer a simpler option to the multidimensional entity structures I've been told about. Performing notes will be my focus as they are much safer and predictable than risky NPN's. Even if the returns are less than what I've been told to expect, performing notes are collateralized and thus more tangible than stocks and provide higher, steadier returns.

Chris,

QUESTION: What course of action do you recommend? Thanks for pointing out the identity exposure which would occur in a foreclosure.

Anyone, please respond. All reples are welcome.

Information, recommendations and explanations of why/why not and pros/cons are especially helpful.

Thank you.

As a soon-to-be note in nves tg or I greatly appreciate the jnsights learned from these posts. They've provided the seasoned reality I been looking for. The local note investors' group in South Bay area of CA of 14 is mostly newbies with less than one to a few years. One gas 4 years and one has 6 years. Mostly NPN's.

I've been researching note investing through REIC networtking, books, podcasts and BP posts for a year, most intensely the past 3 months now that I finally have investment capital ($22K).

The info gained here has provided valuable clarity. Everyone's perspective has provided something valuable i would not otherwise have thought to consider. Special thanks to Don DiPaoli, Jay Heinrichs (I apologize in advance for name mispellings) for the "reality check" of possible pitfalls in NPN investing, by breaking down what timelines, note guarantees/replacements, early loan payoffs, diminishing interest payments, etc.really look like.

And very impirtantly, the difference between running a note business and note investing.

As a former buy and hold SFH investor disenchanted with rental property issues, the higher returns, lower stress and passivity of performing paper profits beckon and have become my goal.

There is such an abundance of info I've been distracted and confused daily during the past 3 months from my goal-with matters and concepts such as the following: Which entity: C Corp, LLC or a trust to invest through? Which state for my entity-CA? WY? NV? DE? MA? WhIch type of trust or LLC? Revocable trust? Land trust? Series LLC? Separate LLC for each note in the state it's located in? Separate trust for each note? Make the LLC the trustee of the trust? Make the LLC the beneficiary of the trust? A separate bank account for each note? Whew! No two half hour or hour long advisory consultations with professionals have been the same (Anderson, Fortune Builders, M2, Royal, Note Assistance Program, Robert Hall Tax Advisors, EquityTrust, note funds, nite crowdfunding and individual note mentor/investors).

Just a quick and dirty adding of the costs I've been told about but not spent so far would use about $13,000 of my $22,000 note investment stake before I even pop urchade a note. 

On what you ask? Consider the following: consultation fees (for "next level", customized business set-up ($149 to $479), entity costs ($600 each for a CA trust and CA LLC with a bare bones firm to $5,750+ for a multi-state C Corp / LLC / Trust set-up) at a full-service legal, accounting and business advisor firm, reserves for ongoing entity maintenance costs, transaction costs and fees, CA franchise tax, service providers (regIstered agents, P.O. box, note servicer, note PMI and title insurance, possible legal fees for loan workout or foreclosure letters fee from lawyer if NPN defaults, 2-day note training seminar of $3,500-$7,000 and miscellaneous costs (transportation to meetings or meals at all day semnars, books, due diligence "boots on the ground" fee for researcher of properties for OOS notes.

I'd roughly have only about $7,000 left to purchase a partial note or to partner on a JV deal.

I'll have an ongoing $1,000 to invest each month and prefer to avoid borrowing. As it is NOT earned income, I can't use a SDIRA.

After the info I've learned from reading this thread, purchasing performing notes as an INVESTOR imakes more sense for my goals for passive, sready income rather than creating a business buying NPN's. My purpose for the note ernings will be to supplement retirement income.

Any comments are welcome. ESPECIALLY  regarding what entity (ies) and where and note-friendly professional:  lawyer, CPA?

Also, an investor group focused on  performing notes in Southern CA.

Thank you in advance for your insight and wisdom. 

Hello BP Community, My quesion is which state do my fellow CA note investors prefer for their LLC's and why? Is a series LLC preferable to a seperate, srand-alone LLC for each note?

I'm a former buy and hold rental property investor in the learning phase of becoming a note investor in owner-occupied, fist position, non-performing notes.

Also, do you use land trusts for each note with your LLC as the beneficiary?

Finally, are there any REI-centric firms other than Anderson Business Advisors and Royal Legal Services with which you've had good service?

I'll also need a note-knowledgeable CPA.

Thank you.

Yesterday I attended a seminar in Los Angeles, at The Grand Expo for RE investors. One of the presenters was Merrill Chandler of Credit Sense and Fuunding Hackers sharing eye-opening info about how credit and loan decisions are made. Amazing. It's not at all what we think!  Google him.

Andy, Thank you so very much fot your informative answer. The DST is definitely not the right option for me. Just curious, is the registration fee and tax of the foreign LLC a lot less than the $800 franchise tax for a regilar (standard) CA LLC?

I'll heed your advice and insights about the Note Assistance Program (NAP). That is very useful info.  Starting out, those lower balance/lower cost notes are what I'll be more able to afford. The NAP  akso offers the kind of hands-on support I need.and as far as I hear, it's all good news about Jasmine and Natosha. Your objective assessment is much appreciated.

Forgive me if this is a silly note newbie observation and question, but it seems that a note with a lot of equity and lower balance is safer and less likely to be defaulted on - What am I not understanding or overlooking about why that isn't necessarily so? Again, Thank you.

Hi Scott, Thank you for your answer. I'm learning more everyday. 

Can you elaborate a bit more about the 'operating' LLC, please?

I am guessing that the operating LLC is also set up in Delaware at the same time as the trust for all the other note business activity?

Will the cost for setting up and maintaining the DST and the operating LLC cost less than the $800 CA Franchise tax, initially and ongoing?

Will the existence of the Delaware operating LLC require an annual 'foreign' LLC tax return to be filed with CA?

If so, and depending on the cost and complexity, will the benefits outweigh just paying the $800 CA Franchise tax?

I realize there is a lot that I am unaware of, but I am starting with a tight business budget. Reserves and operating expenses will reduce the amount available for investing further, so I am trying to avoid unnecessary set-up cost mistakes as"do-overs" can be very expensive.

Any comments and insights are welcome. Thank you.