All Forum Posts by: Scott VanHee
Scott VanHee has started 0 posts and replied 22 times.
Post: Lending to first time investors... Are banks looking for certain qualifications besides the money?
- Denver, NC
- Posts 22
- Votes 7
Agree with Jon - shouldn't be an issue, presuming SFR, 20% down, and good credit score. As far as 'preparing' - obviously the 20% down and know your front and back-end ratios.
Post: Structuring/terms of small unsecured promissory note
- Denver, NC
- Posts 22
- Votes 7
You've raised a # of questions. Not necessarily in order of your questions:
1) With regards to filing a 2nd mortgage - do you know if the 1st mortgage lender permits or prohibits other liens? If it prohibits, you may be setting yourself up and causing the borrower to be in default on the 1st mortgage. Depending on the equity situation, this might backfire on you, depending on how the 1st mortgage lender responds.
2) You may already know this, but in FL the borrower will have to pay doc stamps on the mortgage you record, which I believe is separate from the recording fees. Might not be a lot of $, but it's an expense nonetheless.
3) With regards to not recording a mortgage, others gave some examples, but those also require recording. Bottom line, if you're wanting to 'cloud' the title to protect yourself and so that you get repaid (otherwise the title company won't insure for the buyer), you'll have to record something. You could have a mortgage executed and not filed... hold it in a drawer and then file if there's a default; however, if it's reached the point where you want to file it's highly likely that others have already taken action and what you think will be a 2nd mortgage could turn out to be something far worse.
4) I wouldn't recommend a structure with no payments, except upon sale of the property. The borrower needs to be disciplined into making payments and have some pressure on it to sell the property. Plus, you're telling the borrower in advance that you're OK with the loan (and no payments) until the property sells... setting an expectation that at the end of the 6 months, you'll roll the loan if the property didn't sell.
5) Absolutely you should get a PG. There's a reason the individual owns the property through an LLC - to protect himself/herself. Most likely the LLC is a single asset entity and then your only recourse would be to sue an LLC that's sole asset is pledged to the 1st mortgage holder.
Based on the info you provided, I agree with several others in the thread that there's a better place than this for your capital.
Disclaimer: I'm not an attorney and nothing contained herein should be construed as legal advice.