All Forum Posts by: Zak Parks

@Will Carter it seems to me that you're answering your own question so I don't think you're missing anything. A mortgage note is always going to provide the investor with more protection than just a promise(promissory note). Could give the 100k guy the first position lien and the 4k guy the promissory note? If less paperwork is a bigger concern than the asset protection, then yea just toss all parties a promissory note and call it a day. You would write the promissory note from yourself or the LLC. The only time this would matter is if you're business fails and you're trying to get out of paying your lenders by exercising your limited liability. This is why most banks make an individual guarantee the loan to an LLC, basically making you forfeit your limited liability.

For the record, a mortgage note is probably not as much paperwork as you might think and your closing attorney will handle it all for no extra charge. I just tell attorney the rate, terms, and mortgagee name and he includes the note in my closing docs(like 2 pages).

Will Carter it sounds like you're asking the difference between a mortgage note and a promissory note. The first is secured by the asset purchased whereas the second is more like "hey I can come after you in court for your assets if you don't pay me back". So it's just your word. Which is why most people would prefer to have a mortgage note rather than promissory note; because it's a lot cleaner if you can't pay them. My company secures our investors with a first position lien on the property. We think this is safer and we also don't ask for the money until we're going into escrow, because we don't want to pay interest on their money if we aren't using it yet(in response to your idea of just having the money and using it whenever). Good luck!

^Same :)

@Steve Compton best of luck! Your goals are nearly identical to what I'm doing(passive income through buy and hold and BRRRR).

@Steve Compton why wait???  Prices are lower in the Winter ;)

Dusty A. Factor in 5-10% vacancy and this desk looks a little too thin too pursue.

David Denos agree with Russ Draper. I see you didn't include any repairs or capex. This is a negative cash flow deal!

Rohit Parchuri are utility meters not separate? I'm not familiar with the area, but if the landlord pays all utilities, I think you can count on electric and water costing significantly higher than what you have listed. All in all, it looks like a solid deal but not a home run either. Vacancy, repairs, and capex are thin compared to what some use (10% vacancy and 15-20% for repairs and capex), but that would just be a personal preference!

Hamdaweh Sulemana don't mean to be negative, but the numbers you give makes this a break even deal at best after you factor in taxes, insurance, maintenance, mortgage(assuming refi), etc. You're correct in shopping around more though. If it was 6 months ago, you can find a lender who will give you 75% cash of the new appraised value rather than what you put in.

They won't take the condo. They will just require these dues to be settled on upon changing hands. I bought a condo where the seller was several months late on dues. I give my money to the closing attorney and he settles debts with the HOA before paying the seller. Another repercussion could be that they report to the credit bureaus but I've heard this is rare.