All Forum Posts by: Andrew Smith

We generally pass on loans not serviced by a licensed servicer. The loan documents should be drawn up and reviewed by a licensed attorney. These are big roadblocks for us if either one is not in place. As far as terms go, most note buyers purchase at a discount to Unpaid Principal Balance (UPB) and expect double digit returns on their investment. No pay history means more risk so buyers generally expect higher returns (and purchase at a deeper discount to UPB). calltheunderwriter.com can also help with origination. Any decent performing note calculator can help you see what investors might pay you based on the terms of the note.

A bigger down payment always means less risk for the lender...

One area I am actively investing in is 1st lien mortgage notes.  However, there are essentially no tax breaks which is drastically different than buying developed property to rent out.

To deal with this, I invest from a Self Directed IRA to defer those tax consequences. There are lots of great providers including Quest trust, Forge trust, NuView, Millenium Trust and AltoIRA.

These custodians will let you invest in note funds and buy individual notes.  Fees vary, so check out the fee schedules first.

Thanks,

Andrew