Question For Paper Investment Professional
What is the best book/course on buying real estate notes?
What is the best way to get started in buying real estate notes?
Where can I learn what to do if the debtor stops paying?
What is a typical ROI on this type of investment?
I am a principal investor, not a broker.
Thank you!
I have not found a good source of info as the requirements and powers granted under the note vary GREATLY from state to state.
If you're looking at doing this in CA, you basically need a finance license or a brokers (RE) license.
What is the best way to get started in buying real estate notes?
For buying notes, I have found tons of opportunites for which I didn't have access to capital from forelosure lists and being around the trustee sales and construction sites where people maybe looking for HML.
Where can I learn what to do if the debtor stops paying?
For me, I read the basics of it on line in various forums including the actual civil code. (WOW what's in there). Then I consulted a couple experts in the area to leverage all that w/ real world experience.
What is a typical ROI on this type of investment?
If you placing your own money, rates run here in the s. bay at 3-5 pts and 12-15% interest.
If just brokering, I have seen a couple point up front and 1-2% of the yield.
The reason it's so important to do this right is the penalties for not. Legally the note gets invalided, no money paid back, and you get in legal trouble.
I wish I would have had the foresight to have sold a bunch of stock, and used the cash to invest (even thru TDs) in real estate.
cjmazur,
not sure what you are talking about "3-5pts. 12-15%"
That is hard money loans, and I believe this gentleman was asking about buying real estate notes, like regular long -term mortgages and trust deeds, not short term HML.
Maybe I misunderstood. Best, Dave
cjmazur,
Thanks for your reply, however you said one needs a RE license to do this?!? Could you clarify this? If I sell my house and I carry a note I sure don't need a RE license to do that. Are you saying that I cannot buy and hold someone else's note without a Real Estate license?
Thanks!
Mark.
DaveHays,
I am interested in Hard Money loans as well as long as they are secured by Real Estate. Any idea where I can find borrowers for this type of loan?
Thanks,
Mark.
Mark, if you are looking for hard money loans it is as simple as doing a search in www.google.com and finding banks so you can interview them.
In addition, you may want to go to your local REI meetings and find rehabbers there who use hard money lenders, and ask them what their experience is and if they can recommend any lenders to you.
Best of luck, Dave
cjmazur,
not sure what you are talking about "3-5pts. 12-15%"
This is the typical rate rate that HML charge or investors get.
Calification in what I said.
RE broker or a finance license is required for HMLs.
MarkMarkov:
It's my understanding that even as a home owner, doing a carry back, unless the note is drafted thru a RE broker, you're subject to state usury laws.
I know of a couple HML broker/lenders in N-CA who are always looking for new capital.
PM if you'd like their names.
Here in WA, on a residential note you're subject to the usury law. Whether or not a real estate agent is involved is irrelevant.
My understand is there are two things to care about:
1. Are you a federally chartered lending institution? You're probably not, so see #2.
2. Is the loan for business purposes? Yes = no usury law. No = usury law applies. Doing something cute like trying to say that a loan for someone's residence is for business purposes is unlikely to be successful in court.
How do HMLs work in WA?
If you make a loan to a homeowner who lives in the home then you likely will need to obey the lender rules (federal and state). The disclosure docs that you receive when obtaining a loan should ring a bell.
If you are buying already existing notes from the owner then you do not need a license (or other) in most locations. Check your local laws.
John
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