All Forum Posts by: Account Closed

@Peter Thielemann

I used my self-directed ROTH/IRA to invest in real estate. I chose to lend the funds for a fixed return with the property as COLLATERAL. I don't own the property, just the cash-flow. No tax advantage to own the property and rent out in a tax-sheltered entity so why pay all the costs to own? Property management, repairs, turn-over, utilities.. I'd rather get 15% yield and have the ability to foreclose if they don't. Is the collateral good? The notes I've done in the PDX metro area could be paid off over 2x my principal. Just my 2 cents.

@Aaron Hollingshead

Personally I'd sell and use the proceeds on a 15% second position note with the subject property as collateral (Portland metro single family or multifamily) that, if foreclosed, can pay off the first and your second over 2x and yield $1400 a month.

Sorry for hijacking your thread Kirk.

@Juan Pardo

There is always risk in any investment. The risk is assuming the ARV of the project. The closer the project worth is to what is owed is your risk. It's your responsibility to determine the likely ARV. If you are unfamiliar with the projects market you can have a local agent perform a BPO to help your analysis. Your efforts are rewarded with high return for the amount of work you put in and you sleep well at night knowing you did your homework. Local title companies can confirm what is owed. Trust what is presented but verify everything.

@Juan Pardo

If the first position is in default and the lien hold initiates a foreclosure, the property would go to auction.  Sale surplus goes to the property owners after 1st principal/interest/fees and 2nd principal/interest/fees have been paid.  As a second position lien holder, you could also buy out the 1st position and own the property. 

@Steve S

For example, say Bob bought a SFH flip for $240k with financing. He needs about $100k to cover the construction and soft costs. I loan Bob $100k at 15% for 12-months. The notarized note is recorded on the project title. When the home sells the title company requests a payoff amount and an account number to wire the funds. Although this is hypothetical, the numbers are referencing a real project in Portland Or. and the lot was split a few years ago. The split lot was developed and the home which has identical specs as the project sold for over $500k. So $470k can be considered conservative and if you ever went to auction, after paying the 1st, 2nd (you), and there would be enough to pay your second position again.

Purchase (1st) position - $240k

Second position (available note) - $100k

ARV - $470k

@Kirk Hawkins

I'd invest in 1st and/or 2nd position notes on single family flips with the property as collateral yielding 8-10% simple interest.  For example you can see whether you are loaning the first or second position your principal will be well collateralize:

Purchase (1st) position - $240k

Second position (available note) - $100k

ARV - $470k

It appears you are also looking for a tax write off which this strategy would not do that.

@Celia Moore

How have I adjusted? I sold my rentals and use the funds as capital partner on flips. Essentially I act as a hard money lender for flippers. For example, I used the rental proceeds to fund a $500k second position note on a RV park with a $500k first position and worth about $4 million at 12%. I was doing good on my rentals but not this good and don't have to navigate all the changes going on. I've been doing second position notes for about 5 years. Mostly on single family flips. These typically look like a $300k first, $100k second, with ARV mid $500k. The yields are around 8% for a first and 15% for seconds. Two weeks ago, an associate of mine funded a second position note on a 9-plex in Canby Oregon for $100k at 18% interest. These projects come and go weekly.

I'm not sure what your goals are but I'd look into 1st or 2nd position notes on high equity flips secured with west coast collateral in high demand metro areas. You would conservatively yield $5k a month with no overhead. I have 3 notes maturing this year and will have nearly a million in the coffers for deals next year. Sure I could have made more not being the bank however I also could have lost a lot and wasted a lot of time. This week we recorded a $100k 2nd position  note at 18% on a 9 plex in Portland metro.

Check out my profile or message me if you have any questions.  

@Armando Neri - An option is to loan your capital for 6-months at a time as a "hard money" lender on local flips.  I do this quite often in between deals.  Essentially you act as a hard money lender. However since you don't need a license (2 or less notes in Oregon) and no overhead for that manner you don't charge points and your note yields 8% 1st position or 15% 2nd position. After you determine the project collateral adequately covers the investment, you sign the note at the bank, wire funds to escrow, and title records the note on the collateral's title. Once the project sells or the terms expire you are paid principal and interest accrued. For any reason the terms of the note are not met you can foreclose and force a sale to recoup all principal, interest, and penalties.

That's what I've been doing with my capital for a few years and even use self directed IRA and ROTH accounts to invest in these type of notes. I've built a relationship with a local flipping team that's very successful and serve as a capital partner on these type of projects. We can chat if you have more questions or look at some notes I've done in the past.

@Susan Tan

In that case you might be interested in the listing of the address below.  Although it's not in the neighborhood(s) of your choice the listing is leased by the room and currently does about $5600 a month minus shared utilities.  I spoke with the agent that happens to be the owner/property manager and looked at the lease agreements.  Maybe not the situation for you but could serve as a template to what you are trying to do.

12216 NE 119th St, Vancouver, WA 98682