All Forum Posts by: Darren Eady

Great question for your SDIRA custodian.

I was in a similar situation before and bought the home at auction for much less than the pay-off on the first mortgage.  2nds kind of stink - I hope you get your money back!

Me!

What do you want to know?

The last financial crisis taught us how insecure 2nd position can be when values decrease. Never lend in 2nd position unless there is "significant" equity and ONLY if you have the cash available to purchase the 1st mortgage. 

Considering how far values fell, and where they currently sit, I don't believe another financial crisis could have the same affects on values they did before. 

If a home went from a value of $80,000 to $40,000 and is now back to $60,000 in value, chances are the value won't go to $30,000 in another crisis. 

Considering the slow increase in values we've seen the last few years, I don't know if you should be worried too much about this until 2018 or 2019. 

Are you looking for performing or discounted non-performing notes?

@Shawn Casinader

I'm not sure if you would like or need a caution here, but I have seen many people get stuck with a loan against their SDIRA on a property that can become a liability.  

Performing mortgage notes are a better investment for your SDIRA as they are assets only.  

If you purchase a home and max out a loan with your SDIRA and the tenant thrashes the property, and the home sits vacant, you MUST use your SDIRA to pay for the repairs and hold costs.  What if your SDIRA runs out of funds?  You get stuck!

@Account Closed

You can either become a hard money lender yourself, which requires starting a company, website creation, legal assistance, program creation all to find yourself marketing a product that you have possibly little experience in, and potentially losing money for awhile . . . OR . . . you can work with a hard money lender that has been through all of that, knows what they are doing, and could use your funds to reimburse their loan money disbursed, and see if they will part with their performing mortgage notes. It allows you to BE THE BANK without actually buying the bank!  DO NOT JUST "TRY" LENDING.  Good luck!

We want to see assets to cover your purchase, rehab, hold-time and reserves, a good deal that cash-flows for you as a rental or significant profit on a flip, and your track record at doing this previously.  

You will probably by able to avoid showing income or credit to a private money lender, but they are good, feel free to tell them.  

Also, everyone on BP seems to start out by saying that this is there first deal.  Private money lenders like me typically stop reading at that point.   Show us you KNOW what you are doing, or at least TELL us you do!  Good luck!

@John V. I have seen many people create an LLC for holding performing notes, but it seems somewhat unnecessary to me as you typically do not need protection to hold an asset, only a liability. All of my properties are in LLCs, which is owned by a parent company, an FLP, but my notes have never required this protection.

Make sure you trust the fund investing in notes as I personally would rather own one note than be grouped in with a fund manager making decisions for you on what to hold.

Good luck!

Thanks for the promo @Sandy Uhlmann!  @Mark Senecal I'll message you directly.  I do have a few performing loans/notes available right now written on three different duplexes.  Thanks!