All Forum Posts by: Derek Dombeck

What has been your experiences with belonging to Mastermind groups?
Are they local or National?
Do you meet virtually or in person?

I personally think the right group is priceless to be apart of once you find it. I am always trying to improve, so I'd love some feedback.

BTW, many people use the word mastermind to describe their seminar. That is not what I am talking about.......

You will want a promissory note that specifies the terms of your agreement, a mortgage, title insurance, and then you get your property insurance and list the seller as the lender to protect them in the event of a loss of the home. You should seek out a local title company and/or a real estate attorney to close this transaction. 

Most lenders will require monthly interest payments. Some of us will allow interest to accrue depending on the deal and the borrowers experience.

Ask them for a list of past clients that you can call and talk to. I have no problem supplying my clients with that info if they request it

The interest portion of each payment is taxes at you ordinary income tax rate and the principal portion is taxes at capital gains rates

The safest way for you is to Lease the property to them with an Option to purchase. By doing this, they do not have ownership until they exercise the option and pay you off. This should not trip the due on sale clause in your current mortgage. Also, if they fail to perform, you can evict them quickly and get them out without having to foreclose. 

Certainly there are other structures, but they have more moving parts and more risk.

Ask that lender for some contact info for their other borrowers. Call them up and ask about their experience. If the lender won't supply these contacts, walk away.

I'd be open to discussing it. 

Structure your end buyers balloon at least 1 year before yours is due. Also, make sure you have the right to transfer title or equitable interest to an end buyer in your documents with the seller. 

I would also try to negotiate an extension provision for your balloon upfront.  Start out asking the seller this question..... if the balloon payment comes due and the economy is bad or you are unable to pay it for other reasons, do they want the property back?

Most of the time, they say no. At that point I offer a smaller chunk of money to get an extension. This money is a 100% principal and comes off what you owe them. You may also offer to change the interest rate if they are hesitant. The nice thing is you are getting this structured right away BEFORE there are problems.

It works well. 

Our guideline is simple.  Never lend on a property you wouldn't want to own and if in 2nd position, you should have the ability to buy out the 1st position if things go bad. If you can't follow this guideline, don't lend the money.