Do you think this will this trigger any type of red flags though?

I've been working hard to save money so I could start my first investment and now that I'm there I'm a little trigger shy.

If you close this year, even with no payment, his recapture will be triggered, at the least.

Who would make the decision on when it should be triggered and filed, I don't know.

@David Driscoll - either your prospect is ignorant of tax laws or giving you the tax story because they don't want to tell you the truth (or deal with you or the problem at this time).Your job is to find opportunities that you can solve problems for principles in exchange for value.Perhaps there are other triggers or catalysts that would be a more effective approach with this prospect.I'd check out the owner's financial situation, beginning with home ownership.

Again, investing with your money is fine, buying a note, if you're in a partnership that can change the flavor and become a brokerage situation.Thing about buying illegally is that you could put yourself in a situation where you could not enforce the terms of the loan if the debt was acquired in violation of law.I suggest you talk to an attorney, you'll want to know that the debt was initially made in compliance.

I've read that LOs can trigger due-on-sale clauses in most mortgages.

Typically an action of foreclosure by the first could trigger a foreclosure response by the second, so now the borrower has to deal with both.

That the note is a valid debt, in compliance with applicable law and created, that the remaining balance due as of a certain date be truly owing, that the collateral security has been properly perfected and if the lien is subject to any other liens.

Characteristics to consider include performing or non performing, commercial or residential, personal guarantee, credit score of borrower or guarantor, loan to value, loan to sale price, seasoning, payment history, area property is located in, financial strength of borrower, cash flow of property, vacancy issues with property, type of tenants, type of property, state foreclosure laws, quality of "paperwork", compliance with applicable Federal, state or local laws, stated interest rate, prepayment penalty, due on sale clause and a thousand other characteristics depending on the individual note.