All Forum Posts by: Tracy Z. Rewey

Hello @RachelN A Promissory Note is the obligation to pay and spells out the terms (interest rate, payment amount, due date, late fees, etc.)  The Mortgage is the document that places a lien on the property as collateral.

In Florida they usually record both the Mortgage and the Note in the county where the property is located. In some states it is just the Mortgage that is recorded and the Note is unrecorded. In other states they use a Deed of Trust and Note.  Either way it is important they keep the original Note in a safe place.

A mortgage holder reports interest at the end of the year using IRS Form 1098.  If there is a servicing company they will handle this for you (in addition to keeping track of the monthly principal and interest application for amortization).  Even with family, I suggest using a third party servicing agent (I'm not a servicing agent so that is not a "plug" I promise).  It keeps things official and should your relatives ever want to sell the note they have a nice verifiable payment history.

It's a great event.  There is no selling allowed from the stage and vendor's can be visited at their table in the exhibitor's hall. This will be my 3rd year attending.  Last year there were about 500 people and it keeps growing but stays small enough you can talk one-on-one with other investors.  This year I'll be manning the table for the NotesDirect platform so please stop by to say Hello.  

@Wayne Brooks I definitely don't recommend non-performing notes to newbie investors.  One of the criteria for buying non performing notes on the NotesDirect platform is the person has already purchased at least 5 non performing deals and brought them to resolution. For the performing notes new investors are welcome as long as they have past real estate experience that enables them to feel comfortable with their due diligence.

I also understand what you are saying on the auction situation. If an investor did bid at auction the foreclosure costs would be covered as well.  The spread on low balance notes like this one is definitely small overall dollars (just $5,000) but it has potential for larger returns.  For many investors it is where they get their start.  It helps spread the risk and not put all your eggs in one basket so to speak. After 20 years of buying notes I still prefer 5 small deals to one big deal.  

Over time those smaller dollars add up, especially in a tax-deferred or tax-free investment vehicle like a self-directed retirement account.  Of course others would argue they like the bigger deals as it takes less time to do one big deal over 5 small deals. So it comes down to personal preference, capital on hand, good due diligence, and reliable exit strategies.

It's always enjoyable to see another way of looking at deals.  What kind of notes or real estate deals do you like to target?

Hello @Wayne Brooks  Thanks for your comment. If an investor forecloses on a note and gets the property back then they are able to sell it for the full fair market value.  The BPO on this is at $76,000 which means there is the possibility to invest 27K (plus foreclosure costs/time) and own a property worth $76K.  They could sell this to a buyer for cash or with financing.  The upside potential on this strategy is the ability to collect the 76k.

This is a strategy some rehabbers or wholesalers use to find properties, especially when the REO market is so competitive. They are basically buying the deal before it goes to REO.

Another possibility is an investor can work with the borrower to restructure the note and get them paying again. In that case they collect the monthly payments and earn the interest on the note plus discounted yield. 

For example investing $27,306 to receive 476.29 per month for 96 months (the remaining term) would potentially yield an investor 14.125% per annum based on time value of money PV/FV calculations.  In this situation that is probably the more likely scenario as it would be unusual for the borrower to walk away from that much equity. 

When starting out with note investing we suggest investors first get some experience with performing notes and then consider whether non-performing notes are right for them.  The performing notes can make good passive investment options for self-directed retirement accounts.

NON PERFORMING NOTE

LOUISVILLE KY - 1st POSITION

$32,521.93 UPB @ 8.99% $476.29/mo

BPO $76,000

Purchase Price $27,306.00

To Complete NDA and view transaction details with collateral docs (note, mortgage, servicing notes, payment history, BPO, title, etc) you can visit https://notesdirect.com/

Please note, this is neither an offer to sell any security or an offer to purchase any security. Nothing in this communication is intended as legal or specific financial or investment advice or intended to address the objectives or needs of specific individuals. If you require legal or specific financial or investment assistance please consult your own attorney, financial planner or Trustee for legal or financial advice. 

PERFORMING NOTE FOR SALE

OMAHA NE - 1st POSITION

$31,349.31 UPB @ 7.5% $366.11/mo with 122 months remaining

Purchase Price $27,745

To Complete NDA and view transaction details with collateral docs (note, mortgage, servicing notes, payment history, BPO, title, etc) you can visit https://notesdirect.com/

Please note, this is neither an offer to sell any security or an offer to purchase any security. Nothing in this communication is intended as legal or specific financial or investment advice or intended to address the objectives or needs of specific individuals. If you require legal or specific financial or investment assistance please consult your own attorney, financial planner or Trustee for legal or financial advice. 

NON PERFORMING NOTE

JOHNSTON SC - 1st POSITION

$40,564.27 UPB @ 11.05% $420.69/mo

BPO $45,000

Purchase Price $23,141.58

To Complete NDA and view transaction details with collateral docs (note, mortgage, servicing notes, payment history, BPO, title, etc) you can visit https://notesdirect.com/

Please note, this is neither an offer to sell any security or an offer to purchase any security. Nothing in this communication is intended as legal or specific financial or investment advice or intended to address the objectives or needs of specific individuals. If you require legal or specific financial or investment assistance please consult your own attorney, financial planner or Trustee for legal or financial advice.

REO FOR SALE
WACO TX - $86,000 BPO
SINGLE FAMILY 5 bds / 2 ba 2,376 sqft
Purchase Price $67,000
LockBox Code Available

To Complete NDA and view transaction details (including BPO and Title) you can visit https://notesdirect.com/

Please note, this is neither an offer to sell any security or an offer to purchase any security. Nothing in this communication is intended as legal or specific financial or investment advice or intended to address the objectives or needs of specific individuals. If you require legal or specific financial or investment assistance please consult your own attorney, financial planner or Trustee for legal or financial advice.

PERFORMING NOTE FOR SALE

MEMPHIS TN - 1st POSITION

$39,510.26 UPB @ 5.0% $214.73/MO

Purchase Price $22,750

To Complete NDA and view transaction details with collateral docs (note, mortgage, servicing notes, payment history, BPO, title, etc) you can visit https://notesdirect.com/

Please note, this is neither an offer to sell any security or an offer to purchase any security. Nothing in this communication is intended as legal or specific financial or investment advice or intended to address the objectives or needs of specific individuals. If you require legal or specific financial or investment assistance please consult your own attorney, financial planner or Trustee for legal or financial advice.

NON PERFORMING NOTE
BOLLINGBROOK IL - 1st POSITION
$103,032.49 UPB @ 7.25% $732.35/mo
BPO $109,900
Purchase Price $56,670
To Complete NDA and view transaction details with collateral docs (note, mortgage, servicing notes, payment history, BPO, title, etc) you can visit https://notesdirect.com/

Please note, this is neither an offer to sell any security or an offer to purchase any security. Nothing in this communication is intended as legal or specific financial or investment advice or intended to address the objectives or needs of specific individuals. If you require legal or specific financial or investment assistance please consult your own attorney, financial planner or Trustee for legal or financial advice.