All Forum Posts by: Rob Cee

I'm a trust deed investor and fund hard money loans though HM brokers. Do you have a problem funding a hard money loan if the borrower owns the escrow company that is handling the closing? In this case this is a experienced rehabber that has used this HML many times. I just wondered if this should be a reason I should pass on this one.

 I think one way to look at it is from what takes the least amount of time to most amount of time:

-Investing in hard money funds (takes none of your time besides the initial vetting of the fund)

-Investing in trust deeds originated by brokers (takes some time to sift though the brokers deals they send and pick and choose the ones you want to invest in, analyze the appraisal, the borrower, the paperwork)

-Investing in trust deeds you originate all yourself (takes even more time to find borrowers and arrange everything and do all the due diligence yourself)

I think a lot of investing choices depends on how much time you have or want to spend, and if you want a J.O.B or an investment.  Flipping, wholesaling, non-performing notes for example to me aren't investing, they are just really a small businesses like any other small business, that happens to be in real estate.

Thanks everyone.

Justin, there are a lot of people posting on BP selling properties.  They may be all fine.  But definitely get some non biased advice from a experienced investor (that won't be compensated if you buy) before you buy.

There used to be a lender called Loan Junction that did loans on mobiles.  I will have to Google it.

Does anyone know of any lenders/banks offering financing on single mobile homes on a rented space for an owner occupant?   

Hi Brian, I'm in the process of cutting loose a negative cash flow looser rental in ABQ NM from when I was a lot dumber 10 years ago. I will have to write a big check to escrow to close the sale. I'm amazed and delighted I even found a FHA buyer at a decent price.

I couldn't do a short sale as I didn't want to wreck my credit and go though all of that (and I have no hardship and cash in the bank).   I looked at the lease option angle.  It might have worked OK, I don't think it's a bad way to go.  I just decided to unload it and take a big loss and write it off.  One of the things I looked at was there were a lot of big ticket items that I was on the verge of needing to replace (roof, furnace, etc...).  And I just wanted to unload it before these came up and I had to sink more money into it.  I just didn't want to spend a lot of time and effort anymore on a property that was just a loser for me and far away and out of my control.  And I had no idea where prices would go in the future in ABQ which has a bad economy.  But saying all that, a lease option might have worked OK and saved me a lot of money had I had the patience and time to put into it.

As a side note, I always say now that newbie investors can be "weapons of financial destruction" when they take action before they know what they are doing.  It takes a lot less then people think to lose a ton of money on a negative cash flow rental that you bought wrong, especially if it is far away and out of your control.  The price doesn't have to fall much and you will lose a ton unloading it with all the transaction costs involved in selling real estate (Realtor commission, closing costs, vacancy period while listing to sell, fix costs).  If the price falls 10%, you lose a lot more then 10%.  Plus the total of all the negative cash flow the years you held it.  It is a very expensive seminar!

1. It's not just the turn key company you want to research, do a lot of due diligence on the city you are investing in and the neighborhood.  The neighborhood is key (Is it getting better?  What is the demographic make up?  How are the schools?  What is going to attract strong tenants who stay a long time?)

2. Try to get some non biased opinions on if what you are buying is a good deal from other local landlords that are NOT AFFILIATED with the turn key sales company (maybe you can find some local investors on BP that you could run the property you are looking at by that have no connections with the turn key company).  

3. Try to find an out of state investor who has owner similar properties in the area you are looking at over the LONG TERM.  The key word here is LONG TERM.  You will find a lot of people who post on BP that just started buying out of state properties 1-3 or so years ago.  You want to find someone that has owned say for at least 8 years.  Then you will get the full unvarnished truth of what it is like to own a similar property to what you are contemplating over a long period of time.  People who are just getting started are often in the "honeymoon phase" and you won't get the true story. 

4. Try to look closely at the comparable sales in the appraisal, make sure all the comps aren't just other "turn key" properties sold to out of state investors.  

5. Make sure you get a really good home inspector that has no affiliations with the turn key sales company.

I don't know if all HML funds sell their higher LTV loans off, just one of the ones I talked to did this. This one told me since the fund started 6 years ago it has paid a 10% or more return every year. But in 2014 they are expecting it to be 9-9.5% because more money available out in the market has driven down rates a bit for the loans they fund.

How much have you noticed they charge for service fee and share of profit? I have seen most funds say they deliver a 8-12% annual return. I don't know if this is before of after their fees. It is a lot less work though to not to have to constantly look for that "next trust deed" and do the due diligence on them every time another trust deed pays off and you have to go find another one. It's more of a just "invest and forget about it" type of investment like a target date index fund. And I like how all the interest income you earn can be re-investing for the effects of compounding. When in a fund you also have "all" your funds lent out all the time earning interest, vs. when you buy "one-off" trust deeds there being down time when you are searching for the next trust deed to buy. So with buying individual one-off trust deeds you may not have all your money lent out all 12 months. Also some of the larger hard money lenders that I have talked to that have funds keep their best loans in the fund and sell off the more higher LTV ones as "one-off" trust deeds to investors. So they keep the average LTV in the fund portfolio pretty low.