All Forum Posts by: Timur Abdullin

This is called hypothecation if you're trying to search online. Selling a partial will be much easier. What I would recommend you do is call someone who sets up self directed IRA's, those people love these.

@Roman M.  I used to do these all the time with my commercial bank not sure why you think a commercial bank won't touch it..  its called a Hypothecation.. quite common.. Easy and works great..

I did mine when I was in the timber industry.. it was common for me to log a property then sell said property to buyer on contract.. but they had to go through the building permit process and in Oregon that can take a year or two.. so I would sell on contract.. then take my contract to my trusty commercial banker and hypothecate it.. IE pull the cash out of it so I could go buy more timberland to log.. get payments from my buyer .. pay the bank their payment then when my buyer cashed me out I cashed out the bank and got my equity... for me it was not as much a tax play as a get stuck money out now without massive discount to a NOTE buyer pimper .. who is looking to get notes with massive discounts.  my bank would do this for 1 point and going rate at the time on interest which was about 6 to 7% .. I usually got 8 to 9 on the seller carry.

In case anyone is interested. Commercial lender got back to me and they will in fact issue me a loan strictly off my note. How it works. Note receivable will be assigned to bank as collateral should I fail to make payments. The note receivable must have a promissory note and deed of trust and no other lien on the property. Commercial lender will lend for a max of 15 years and up to 80 percent of cost, note UPB, and house appraised value. Whichever is the lowest. They will make an exception if for example my all in cost was 60k. Note was 95k and house value was 100k. They would then lend 100 percent of cost. So 60k in this example. Again they won't amortize a loan for 15 years if the note is 10 years. So it has to be equal or less on length. Since it is the collateral. So here's what it looks like broken down. Cost 60k, note 92k @10 percent for 10 years house value 95k Bank will issue me a loan (check in mail) for 60k 5.8 % interest and 10 year am. I receive 1256 from the note each month I pay 662 on the loan each month. Plus I get my 60k back and rinse and repeat. That my friends is arbitrage at it's best.

@Roman M. you're saying a community bank won't loan against a note secured by real estate? I'm contacting a couple local commercial guys now to see what they think. But I believe that's what Bill Gulley mentioned doing that. 

I'll report back what I find out from two local commercial lenders

there is a way but only thru a private lender who has an appetite for this. No bank will touch this.

Once you find a private lender who I will assume will charge you north of 7% rate, You will need a business lawyer to prepare all paperwork to structure this to make sure that everyone interest is protected. You will need to place your original note in escrow with an attorney and a UCC lien will need to be filed against the note. 

Not everyone understands the concept of pledging note as collateral for a loan so it won't be easy to explain to your potential private lender if they are not familiar with concept.

HI @Logan Turner, the partial is an option, until/unless they stop paying for any number of reasons. But you would not lose it all, it just becomes a non performer and it would be interesting to see what happens if the homeowner stops paying. Anyone who sells partials care to comment if they sold a patial and the homeowner stopped paying?

Otherwise find someone to loan you the money, and use the note as collateral. You could make up an assignment, not record it, and send it to the person to hold to secure the loan, but if they recorded it, you would be screwed.

I would start at your bank or a local small bank and see if they will loan against it. Good luck and I'll let you know if I come up with any other brilliant ideas. :0)

Hey all,

Last year I worked with a local lender on a single family property and initially was told 25% down was my only option for an investment property. I knew that wasn’t the case and pushed back on the lender and ended up with a 20% down and 25 year term. I wanted to double check to see if I am able to possibly do 15% down as an option? I’m aware that some investors are able to go with this option so I would like to confirm before moving forward with a new lender.

My plan is to purchase a 2-4 unit property by end of Q4. Grateful for any advice or assistance with this question.

Best,

Ivan