All Forum Posts by: Terence Wang

Thanks for all the advises above. The borrower did agree with my terms. I will to remove NOD once a payment is received. They used to have excellent credit score so I don't want to give up on them so quick.

I started the foreclosure since the borrower stopped payment for 3 months. About 3 weeks after I recorded notice of default, the borrower requested to remove NOD because he's doing refinance and new lender wouldn't lend for a house in foreclosure. I have no clue if this is true or not. So I said we can do a loan mod by adding all accrued interest to principal and a mod fee in order to remove NOD.

The house has plenty of equity so I'm not worried and I won't give any discount. If borrower's lying, I'll have to do foreclosure again in 3 months but I at least collect the loan mod fee. Does this sound like a good strategy? How much would you charge for loan mod?

It's supposed to be closed 30 days ago. Due to seller's attorney out of town, we agreed to postpone 2 weeks. Then, we could not close because of conditions. The seller and seller's attorney never answer the phone. Seller replied to emails from time to time but would not set a closing date.

I paid appraisal and deposit already. What's the best approach now?

Forget about cap rate if you don't know what it is. My example shows 5% return without leverage and 2.7% with leverage. Which do you prefer?

@Account Closed 

Here is an example. Say a $100k will generate 5% profit, $5000 in a year. If you put down 30% and borrow $70,000 at 6%, the annual interest is $4200. So cash-on-cash return becomes ($5000-$4200)/$30,000 = 2.7%.

In order to get better cash-on-cash return by leverage, the interest rate has to be less than the cap rate.

@J Scott 

Can you elaborate how to find a borrower or broker that pays 15%-18% rate? Is it mezzanine loan?

@Rob Cee I saw one that charges 50% of profit over the preferred rate. Others charge asset management fee of 1% or so. The interest is paid quarterly instead of monthly.

I did not know HML keeps the best loan themselves. If so, that's a benefit.

I agree with you. I like to see borrower contributing at least 30% of the purchase price. When the borrower pays 50% or more in cash, the loan is fairly secured. Even if the property is being foreclosed, borrower probably won't trash to house (ruin his equity).

The fund always charges a service fee or management fee and share a % of the profit. That's the main reason I don't like it.

Hi, Rick

How do you train to become note buyer and where do you buy note? 

Assuming all paperwork is not correctly, the other way to look is whether you are willing to buy the property at the price you lend. In general, there are two outcomes. Either the loan is paid or you take the ownership of the property. If a property is appraised at $300k and you lend $200k and are willing to pay $200k for it. I think it does not matter whether the borrower pays the loan or not. Sometime I would prefer the borrowers don't pay back. Does it make sense?