Mike,
Good discussion. Thanks for sharing.
I have three questions or comments.
1. You said that you assumed the loan and the attorney handled the paperwork.
Legally I believe the end result is you were added to the note but technically the prior borrowers are not removed. If you were to default the lender has the legal right to go back after the prior borrowers who were on the note at one time or another. Assumptions increase the number of borrowers on the note but do not remove priors.
I did not check with an attorney to really verify the above. What did your attorney tell you about this?
2. You said that the note holder has a portfolio of notes which they buy at a discount. He is earning 8% to 10%.
Is that all he is making? It seems low for a buyer of notes at a discount.
3. Taking Mike-OH's view that 40% to 50% of the gross income from a rental goes back out in expenses a wrap might make a lot more sense than people think. No real upside from appreciation or rent increased unless you have something more creative in place. At the same time no short term expenses. In a market that is not appreciating very quickly the cash flow might be better with wraps.
Note that you have to recreate the business as the notes will get paid off compared to just holding a rental.
Is your thinking largely along the same lines as #3 above?
John Corey