an real estate investors guide to transitioning to note investing sponsored by: real estate vs. note...
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AN REAL ESTATE INVESTORS GUIDE TO TRANSITIONING TO NOTE INVESTING
SPONSORED BY:
Real Estate vs. Note Investing
About the Presenter
Martin Goodman California Broker Bought and Sold > 500 properties Originated more than 3,500 loans | $80M Fund Purchased of 3rd Party Loans Attended over 10,000 foreclosure auctions Active Personal Note and Real Estate Investor Founder of www.LoanMLS.com Founder of www.PrivateMoneyLendingGuide.com
The Big PictureInvesting in Notes vs. Real Estate
Similarities Collateral Valuation Inspections Appraisals Title Escrow Due Diligence Insurance Closing
Differences Lien vs. Ownership Borrowers vs. Tenants Credit Underwriting Documents Leverage Foreclosure
Collateral, Collateral, Collateral
Evaluate the Collateral As If Buying ItArrange InspectionDrive By if PossibleRun Your Own CompsOrder an independent BPO / Appraisal
Important Note: Ability to Evaluate depends on Originating New
vs.Buying Existing Note
Tile, Escrow & Insurance
Lender’s Policy for New OriginationTitle Endorsement for Existing NotesUse an Escrow to CloseInsurance –additional insured vs. policy
holder
Due Diligence
Review Note and Loan DocumentsUnderwrite Borrower’s CreditInspect and Value PropertyReview Title Preliminary Reports
Differences in Note Investing
Lien vs. OwnershipBorrower vs. TenantsCredit UnderwritingDocumentsLeverageForeclosure
Lien vs. Ownership
Less risk, but not “no risk”No maintenance (generally, unless borrower
bails)Multiple choices of liens
1st – safest 2nd – risky and more difficult to service 3rd + uber-risky, but high yields
Borrowers vs. Tenants
No “TNT” (Tenants and Toilets)Service a Borrower (outsource this)Monitor other LiensWatch Property for “waste”Monitor Insurance
Credit Underwriting
Care as much about Borrower as CollateralThe 3 Cs to Underwriting
Credit Capacity Collateral
Documentation & Leverage
Similar to Real Estate Investing, But… Mortgage (or Deed of Trust) vs. Deed Disclosures to Borrower Loan Servicing
Leverage Cannot easily obtain against a note investment There are not “mortgages” against “notes”
Foreclosure
Foreclosure is like an Eviction of a non-paying tenant, but typically expect a foreclosure to be: More Expensive Take More Time Requires More Knowledge and Diligence Rules vary by State Potential Liability from Municipalities
Resources
LoanMLS –Loan Exchange 6,000 Members Buy Notes by Geographic area Sell Notes without paying a commission Demo Site
Private Money Lending Guide Find hard money lending brokers & articles Borrowers use the site to find hard money lenders Demo Site
Thank You
Thank you for attending.
Visit LoanMLS at www.LoanMLS.com
Visit the Private Money Lending Guide at www.PrivateMoneyLendingGuide.com
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