All Forum Posts by: Steve Hodgdon

@Steve Emling 3b 2ba. Large garage so they fill ir and can't move. 1500 sf or so.

@Onaje Tyler what's your superpower? What can you bring the money partner?

How can you guarantee you can protect someone's life savings?

Market just shifted. Timing is going to cost me $100k potential profit on one project. I may get my money back but not much more.

Prove you put investors above yourself.

In the meantime bird dog a killer deal and call me :)

We've migrated from creating our own notes to buying partials. If you're interested in selling the front part of a loan I'm interested. Been buying/selling front 1/3 of unpaid principal for 1/3 of the payments. Benefit to you is you don't have to discount and you retain the majority of principal when note is returned at the end of the purchase term.

 Example:

$45,000 note 10% 15 years

-$484.57 monthly P&I 

we'd buy 60 payments for $15,000

You get loan back with 120 payments remaining. 

Take a breath. We gave folks forbearance because of the last two hurricanes. This is just another disaster. Part of the business. NONE of the forbearances ever caught up. Just resumed payments or collapsed because they lost it all in Houston. 

That's called a land contract or contract for deed. Think of it like a car lease. You keep the title until it's paid in full, sold, or refinanced. State laws apply. A deep Google dive and searching more here will help. 

Not a CPA, but I pay ordinary income tax on the interest paid. If my basis is 80k and I sold for 100k, then 20k is a capital gain. Up to your advisor whether you pay tax incrementally or after return of basis. 

I bought a 45,000sf strip center with 25% down and $600k in cash for remodel. Thought that would be plenty to cover. That was 12/2006. By 3/2008 it was 80% dark and worth 1/2 what I paid for it. Fed the beast $100k/year for 8 years until market recovered.  Still working back to where I was in 06. 

You need reserves. Rents don't always go up.  today's cap rates aren't guaranteed to hold. If interest goes up, then investors need to pay less per door to make it up. 

In 2006 DFW market was 93% occupied. in 2008 it was 75%. 

Hope you're maxing out a Solo 401k! 

Sellers always want some skin in the game. Shows you're committed. 

What is the seller going to do with the money? Start there. If going in a 1% bank account, maybe he's interested in 8% from you. If not, maybe there's something he's not telling you about the house.

@Scott Kimberly Great advice so far from @Bill McCafferty and @Chris Seveney 

I'd like to add the old guy's point of view. You're starting out and stating you have a 10 year goal. I would guess that many people try notes, decide they don't like them and try something else. Go short. Buy two years of a note. Learn the mechanics, pitfalls, upside. Then stack up some more cash and do it again. A "ladder" in bond parlance. 

The big upside of nonperforming also has a big downside. I've been on both enough to know I like steady monthly mortgage and rent payments. 

@Kirsten Ostby FANTASTIC! Congratulations! If your seller provided financing, I can make him an offer on the note. I'd be the nicest banker you ever had :)