Notes buying and selling

23 Replies

1. Does anyone know what episode on bigger pockets talks about note buying ?

2. When buying notes, do most transactions involve title search and assignment of Security deed and subsequent proper recoding at Court house in buyer of note name or company name??

@Daniel Peavey

Google @Scott Carson if you want to know about notes

He has over 180 episodes on a podcast and several different training programs based on you knowledge

Also feel free to shoot me a private message and I can provide you more info

I talked with a guy who wholesales Notes.  Actually, he creates notes to flippers, resells them to investors.  

I asked him if each note is a Security deed and filed at courthouse??  Also, after he creates note, and sells to Investor, is Security deed reassigned to Investor?

He kind of gave me silent treatment!!

But, am I thinking correctly??

If I buy a note, I would only do it if I had the collateral of property!!

Does this always occur in note transactions??

@Daniel Peavey before you buy any wholesaled notes I would also recommend learning more about them so you know what you're getting into. I can also recommend @Scott Carson 's podcasts and videos. Lots of free advice there and you're also welcome to pm me if you have more questions. 

Note MBA has 140+ episodes on podcast. Great material there as well. I can also second what has been said about Scott Carson. He interviewed Katie Moton and Gail Greenberg who were both new to the business. Listen to those episodes first then dive in deeper with the other episodes.

To answer question #2, yes to all parts of your question. Standard due diligence includes an O&E report, which is a limited title report and assignment of mortgage needs to get recorded with the county. It is the buyers responsibility to get the recording done.

Notes can be lucrative when done correctly, but there are a lot of ways to lose your investment as well. Just like any investment one should ever make please learn to do good solid due diligence. Note investing isn't something that one jumps into without first becoming educated. There are too many laws that one needs to be aware of before investing. 

Just one example would be,

An investor shall not contact the buyers of the home until after the investor has closed on the note.

Please use a mentor of your choosing. I do agree Scott Carson is more than extremely fair and knowledgeable. I have met him and attended his NOTE CAMP and I enjoyed the interaction very much. Whereas I have not yet had the pleasure of meeting Dave Van Horn, but he still has a lot of great information online. Do your research, obtain a mentor, achieve success.

1. If I was originator of a note, hypothetically to a fixer / flipper, it would be my responsibility to create also a security deed and have it recorded , fixer / flipper putting Jp his property for collateral, correct??

If I sold the note, I presume it would be buyers responsibility to do same process, also having me , the originator of note, assign him my Security deed

I do not see this legality mindset among note buyers!!

When I listen to these podcasts, maybe then my thinking will be confirmed 😊

@Daniel Peavey :

1.  If you originated a note, you will also originate a security agreement (either a mortgage or a deed of trust, depending on the state).  You would record the security agreement.  The security agreement is what makes the property collateral for your note.  You would foreclose to enforce your security agreement.

If you sold the note, the note buyer will expect to receive originals of both the note and the mortgage or deed of trust. You would assign the security agreement.  The assignment needs to be recorded. You would also endorse the note.  

Hi @Daniel Peavey - yes if I buy a note from you, I would ensure that you endorse the Note to me and sign an Assignment Agreement to transfer the security instrument to me (in TX this would be a Deed of Trust). After that it would ultimately be my responsibility to ensure everything is properly recorded, since I would want to make sure my lien position is clearly established. 

Of course. I'm always happy to speak to you more about notes if you like. You can find me on linkedin and my contact info is on there as well.

@Daniel Peavey Thanks for starting a thread on seller financing. We do some of this along with buying discounted paper. 

For seller finance, you can't beat Paper Source University . com's free materials. They've been around for 30+ years.

Counter party risk is huge. Is the creator of the note compliant with Dodd Frank's SAFE act? Likely not. Is the loan predatory? Is it a high interest loan? All moot if you're funding flippers. I do that at 50% LTV, 4 points, 10% for 3 years. Those are business purpose loans.

Then you get into the underlying asset. Would you want the house back? What is foreclosure like in that state? If loan to flipper/investor, what is cash flow expected? Can that service the debt. 

Know your partner. Once you lend money you have a partner. Know the asset. Know the local rules. First time? JV with somebody experienced to learn the ropes. Check out @Dion DePaoli threads on note forum for a life time of information and experience. There's a good story from me on my first note drama. 

Lots of folks here to help. And to sell you something. Go get 'em!

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