I recently hunted down the owner of this building and he is all the way on the east coast (im in seattle) and I would LOVE to acquire this property but of course I don't have 2 million to put up or the collateral to get a loan that big.

Your buy formula is a personal choice as far as target yield.Due diligence in broad terms covers:1) marketability of note, legal, etc. documentation2) the borrower (credit worthiness, payment history)3) the collateral (equity, other liens etc.)If you are proficient with a financial calculator make sure your settings are correct for # of payments per year.to calculate "i"/yrenter "n" number of remaining paymentsPV= the price you pay for the note if its $50,000 enter - 50,000PMT= scheduled monthly payment if it's $500 enter +500FV= usually "0" if it is fully amortized (if there is a balloon enter that number +)Most people get tripped up on when to use a negative or positive number.then press "i/yr" that will be your annual expected yield

With tax liens, investors who needed a short term holding were willing to hold a tax lien for a year and get 2%-5% with the underlying real estate as the collateral.

@Justin YoungDeposit accounts balances, years in business, sales and the credit worthiness of the business are factored into the decision of the bank in addition to collateral which is the #1 reason.  

I don't see where OP said this is cross collateralized.

When selling, you want to make sure the value of the air rights is priced in.Investors of air rights have a hard time securing a mortgage due to the lack of collateral.

I don't really see HUD getting to involved in a residential equity fight or foreclosure, unless there is an issue for bigger fish to be fried, like investors being scammed and such notes were given as collateral for other investments.Buying a note from an individual usually doesn't give you much to fall back on in the event of fraud or omission, they get the money and spend it, how would you force them to repurchase the note if they don't have the ability to do so....The proper origination and compliance of origination can be covered in the purchase contract for the note, a repurchase required if the note is found to be worthless, but look to the ability of that broker or "institution" to do so.On any note originated after July would need either the seal and number of a MLO or the Bar number of the attorney who originated the note for me to be comfortable, perhapse if I had true copies of the transaction and could show clearly that the seller was exempt in that transaction, I'd consider it.

In any event, you will need a minimum down payment (or other collateral) of perhaps 10% of the total loan they will be extending.

I agree with others, this is usually very poor collateral and unless you cut a deal with the perator of the resort or property management, you could be stuck with a timeshare that your grandkids would be using.It really depends too on the resort or property and the quality of the property as well as management.

The borrower lives in a different state than the collateral securing the notePacer shows that BK 7 was discharged and closed in February of 2015, over a year agoFMV of the property is 1/5 of the UPB on the noteTaxes are current and paid by the borrowerpreliminary O&E shows nothing outstanding on the property besides the 1st lien that I'm contemplating purchasing.The questions:With BK closed, can I contact the borrower directly WITHOUT initiating FC?