You will quickly find, as you generate local person-to-person relationships, how many opportunities open up! 

In short, this would be an entirely appreciation-based investment.Given the state of the economy today, with high interest rates and the seller-buyer lock out effect, I want to discuss the pros and cons of this investment at length, specifically in the context of all the other properties / neighborhoods that I have been evaluating. 

Here are some general guidelines: Lien Position1st Position LienEquityMinimum Down Payment of 20-25% (a 30% equity to sale price is preferred)Down Payment made in certified funds and not borrowedMaximum Funding of 70% ITV (Investment to Value)SeasoningMinimum of two monthly payments already made12 months or more preferredPayer CreditCredit Score of 650 or higherNo major derogatory trade lines (No 90-180+ days delinquent, foreclosure, repossession, bankruptcy, etc.)No decline in credit since purchase of businessTermsPrefer 60 months or lessMaximum of 72 monthsNo Balloon Payment preferredCash FlowBusiness has positive cash flow1.25 debt service coverage ratio preferred.DocumentationPersonal guarantee from a creditworthy individualStandard documents including Note, Security Agreement, and UCC-1 filing.Tax Returns on the business that substantiate profit and loss statements.OtherPayment history current and verifiablePayer Interview indicating buyer is satisfied with business and comfortable making paymentsMotivation for selling the note is not a result of a deteriorating businessConsideration of high risk businesses or geographic areasIn these situations, sometimes a partial is a better option. 

Consider balancing liability protection with administrative costs, and consult with a CPA to align your structure with your financial and legal goals.This post does not create a CPA-Client relationship.

Jermee is very responsive.Jermee Jones SVP, Specialty Banking Relationship Manager / Enterprise Bank & Trust12695 Metcalf Avenue / Overland Park, KS 66213

Since I don't have the experience that I aspire to have yet, I'm looking to create a relationship with some guidance without being taken advantage of.

Some of the materials we choose and asked him to pick up (such as flooring) he replaced with low quality materials, I assume to keep more of our money for himself. 

I guess they have more land to build there so it might reduce the appreciation there?

Although the cost is high for these areas there is little new construction.

Each property should be evaluated based on its characteristics and overall quality as an investment.