Secured Promissory Note

[Jan Brumec]

Hi everyone,

I am experiencing issues on a lending transaction that I am trying to put together with a friend of mine that is a citizen and resident of Italy.

It would be a promissory note: 12-months 9% interest only payments.

Now, my friend expects some kind of security/collateral; therefore, I was thinking of collateralizing through recorded deed of trust on one of the properties that I have recently acquired.

My strategy was to completely rehab the property, and then refinance (after 6-months title seasoning required by my US lender) into a long term loan through one of my US lenders, keeping the property as a long-term hold; and through the refinance process also payoff my Italian investor. Then move on to another deal and issue another note with my Italian private lender.

One of the issues that I am facing, however, is that my US lender is not ok refinancing on a property that has a lien with a non-US person. Therefore, I might find myself stuck when I will try to refinance.

Is there any other way that I can structure the loan with my Italian lender without compromising the title of the property? Maybe by setting-up a different type of security for my Italian friend?

Would I be able to structure it in this or similar way:

• I issue to my Italian lender a simple unsecured note payable without collateral.
• I create a separate contract in which I agree to sell the property to the open market if I don’t repay the note according to the terms, and with the proceeds of the sale, pay back the principal plus any accrued interest to the investor.

Any thoughts or advice would be highly appreciated.

Thanks!

Jan Brumec

President

JTRE Group, Inc.