All Forum Posts by: Jerel Ehlert

Until you get to about 40 loans, even the cheapest professional loan servicing program won't pay for itself.  You can check out some of these:

• LendingWise
• The Mortgage Office
• Loan Servicing Soft
• Lending Pro Software
• Loan Ledger
• Nortridge Software
• LoanPro Software
• Mortgage+Care

No leases, no proof of rents (rent rolls), no estoppel certificate....no deal.

Securities solutions get expensive quick, and that's why you see it when raising LOTS of money.  For small amounts when the F/F don't actively participate, just do a note/lien on terms.  That's the only place you can guaranty a return, because it is by contract on debt owed.  Anything else, statements about future performance is tap dancing on a landmine.

Some HMLs work with local and regional banks to fund part of each transaction. I've heard, in better times, of loans of 80% of the HML's note/lien. Between the point and interest rate spread, you get 5x PLUS on your capital. Another route is to start a debt fund. Mechanics work mostly like an apartment syndication, except instead of the fund buying an apartment complex, it buys your notes/liens (you build your own secondary market to fund your loans).

You can also work with warehouse LOC, but that gets weird on HMLs. Check Scotsman's Guide for those sources.

If you look at 3rd party crowdfunding platforms, they make you use their docs/underwriters, and you basically become a sales agent for them even though you must tablefund the loans.  See "Crowdstreet" and the like.

Small-scale, you can do the regional bank model with individual private money lenders. Basically, your HML company places PML capital on a 1-to-1 basis, with you servicing the loan. An alternative, is you fund, then sell to the PML and service the loan.

Go through a title company. They will search for any notices of liens against the property and owners/decedents. Any liens that pop up will need to be resolved.

Your biggest hazard is if you try to buy outside a title company and have to rely on your own judgment of what should be paid. That way leads to possible fraud on the estate and claims of creditors. If the "heir" is pushing for this, beware!

Hire a firm. They usually charge a % of what they save you. Save yourself heartburn.

Foreclosures in Texas are always the 1st Tuesday of the month, between 10 a.m. and 4 p.m.; unless that's New Year's Day or Independence Day. September's auction was 9/1/2020, the day you posted.

You need to get with an immigration attorney to discuss. The EB-5 program has lots of nuances. For instance $500K is if you start a business (not counting real estate) and it generates a certain number of jobs (not necessarily a direct hire) for a certain time period.  OR, you invest a certain amount of capital (which can include investment real estate). The amount can be more or less, depending on whether it is in a TEA zone or designated regional development zone. 

Without knowing a lot more details, private lending one-to-one is not a security (one lender on one note against one property). Your trouble starts when you start POOLING money from PASSIVE investors who RELY ON OTHERS to generate a profit (your BIL). That's the 2-minute version of what's a security. The 1-to-1 takes out the pooling element.

Hope this helps.

Company stock: $200K, liquidate at approximately 80% net yields about $160K.

Rentals: $220K refi 80% of the equity yields about $170K net.

Cash is cash: $60K; same for sale of house $100K.

You can't roll over your retirement until you separate, and then you can't live off it but can co-invest with your IRA. You will have to proportionately split profits with the IRA. For this analysis, it's a wash.

Total available for investing in income producing activities: $490K. For ease of calculations, I'm rounding up to $500K.

If your desired pre-tax yield is $80K, you need a 16% annual ROI. Doable, but you will need to be active, not totally passive. For this reason, syndication passive investing is probably not the right path.

Commercial might be available. If you find something with a lender who will give a 1.25 DSCR, you back into an NOI of $2.0M. Lack of personal experience in commercial real estate will work against you.

Private lending, when done right, can yield between 15-22% cash-on-cash. Problem is having enough deal flow to have most of your capital working most of the year. "Bench time" kills returns faster than anything.

Alternatively, if you cash out your IRA (not recommending), that adds about another $250K to your capital. An $80K yield on $750K is a 10.67% ROI. This is a highly attainable goal that can be reached by a small commercial property or private lending.

In the commercial scenario, take the same deal, but instead of maxing the loan for a larger property you keep the same property and borrow less, giving a better return because less of the NOI goes to debt service. More skin in the game might even give you better loan terms.

In private lending, you could take a more passive role in a debt fund - like syndication but the operator is lending money either directly to borrowers (like a HML) or lending to a HML who manages the borrowers (less overhead to the fund). My fund does the latter. No marketing for borrowers or chasing them down or servicing loans. Most any HML will pay out 8%. Some funds have a target return of 8, 10, to 12%. I've seen other funds advertise target returns higher, but YMMV.