All Forum Posts by: Bryan Hartlen

Hey Chris, we’re not going backwards.  We but non performing notes and can’t always complete a workout with the original payor.  If we have to FC, or they DIL, we end up with the property. Before we rehab the property we offer it for sale; as-is with a seller financing option.  If it sells with the seller financing option we want to make sure we can easily sell the new note and we remain compliant... so we want an RMLO to underwrite and provide assurances of compliance. 

I had assumed that there would be vendors offering this service for seller finance notes. 

Thx Fred. I should have been more specific. I was wondering if anyone uses a 3rd party RMLO that underwrites nation-wide?  

We buy NPL in several states. If they become REO's we usually offer them with an as-is seller finance offer.

For those of you that end up creating your own notes... who do you use as your underwriter?  Pros & cons if you’ve used multiple vendors.

Thanks, Bryan

Hi @Andrew Cheek I'm not an accountant but.... LLC's don't really pay taxes. They're a liability shield not a tax shield. Earnings and loses are distributed by the LLC to it's members through K1's. The members (individuals or corporations) then pay taxes on those earnings.

If you're holding a rental duplex in your name, I would highly suggest you move it into an LLC (with the assistance of tax / legal experts) to protect any liability claims spilling over into your personal space(home, car, investments).

If you're investments are large enough it could make sense to create a separate S-corp to perform management services that would have some tax advantages over having those fees performed by an owning LLC.

Hi @Paul Quinones, fyi your target buyers will change depending on whether your notes are performing or non-performing, if they're notes or CFDs, etc. (eg I'd be interested in non-performing notes or CFD's).

In terms of due diligence docs needed to sell:  notes, deeds, allonges (if notes have been sold before), payment history, O&E report (title history), BPO/RPR

Sierra Vista is south of Tucson close to the border.  Believe it’s predominently an army community.  Don’t really know much about it — Out of my wheelhouse.  Tucson’s cap rate is higher than Phoenix’s but not at 10%. I guess it’s possible that SV being a south Tucson could offer higher cap rate.

I think I’d be careful of partial section 8 rentals.  I’m thinking all section 8 might work... but having a mix I think would drag down rental rates on the non-section 8 units.  My understanding is that Phoenix has a multi month waiting list and in general tenants behave well because of the wait.  But still a stigma for the non-section 8 units.

Sorry I couldn’t provide more specific help.

@Shaun Edwards, like @Greg Scully I don’t see much you can do until you pay down some of your debt.  I mastermind with an investor community in Phoenix area and we use something that we call Velocity Banking to rapidly pay down amortized debt (eg mortgages) using simple interest revolving debt (eg HELOCs) and existing cash flow. Basically you use your cumulative net cash flow to focus on 1 asset at a time.  Once it’s paid off your net cash flow increases and you focus on asset #2 which gets paid off faster because of the increased cash flow. 

If you didn't care about paying off assets completely, you could use VB to pay down the principal in each asset to the point where your initial investment had been recouped and you were effectively carrying the asset with your forced appreciation - which would essentially be backing into the BRRR model.

@Ken Tsai we're just getting into MF and are live in Phoenix.  Average market cap in Phoenix metropolitan 5 - 5.5% for C class properties.  Seen a very few isolated properties sell at high 6's.  Haven't seen any real 10 caps. On Loopnet watch for the performa cap rate claims.  If the actual current cap rate is 10% then there's something else happening that has kept local investors (and worse, California 1031 money) out of the property.

Hi Paolo, I would ask why is a HML selling you a $700k note for $270k? HML lend on the value of the asset. If it could be sold as-is for $500k, most HML lenders would have more than enough resources to find a better exit than selling their note at 40 cents on the dollar.

That note is a 2nd... you need to figure out the status of the 1st.  Your in line behind them.  If it’s non-performing too, in many cases (maybe most), your note and investment gets wiped out if they FC.