All states have penalties for filing false liens and a mortage is lien.Filing a mortage or deed of trust as a security instrument for a debt that was never consumated or truly perfected is a form of real estate fraud.A sham transaction, is a transaction that is accomplished where the usual intent and purpose of such transaction is not intended to be accomplished and the the intent is to achieve some other purpose or provide a benefit to the parties, usually accomplished between related parties.The IRS may deem a a transaction as a sham transaction under certain circumstances where a tax benefit is accomplished between related parties that would not have existed unless the transaction had taken place.Now, if you have an LLC and there is a good business reason to convey title or equity from a property held in another entity, with related parties, and the purpose for such transfer is convencing, then that transfer may be allowed even if there are collateral benefits.

George generally the note is not recorded only the security instrument (mortgage, deed of trust, deed of security).

And if you're in a non-cashflowing market, you'll have to make assumptions about the appreciation.)Anyways, I'm a cashflow investor at the moment so I like knowing how to compare my investments with other instruments as well as knowing what type of returns I might want to offer to future investors, if I go that route.Hope it helps.

Setting up a security instrument and note is not a DIY project.  

The main thing is to set up an LLC to hold the property and get everything in writing and have an attorney draft all of your partnership documents and security instruments for the funds. 

I hung out and played music with a band from Greentown at Ball State about 20 years ago or so...Jason was the guys name, can't remember his last name...wow...fond memories.From the sounds of it my wife and I have a lot in common with you guys, when it comes to REI.

We've had far fewer people respond than we'd have expected.We're getting ready for 2 major launches in the coming weeks, including the launch of an iPhone app -- which we're doing because you guys have asked for it -- and have several other projects planned, but your feedback is instrumental in what we do with the site.

BiggerPockets has played an instrumental role in my personal development and sparked a burning desire within me to achieve financial freedom through real estate investing.

Podcasts are great for workouts too, unless you really need music to keep you going! 

I suspect we are playing musical chairs and somebody is going to be left without a seat:)