Self-Directed IRA Custodians Sued by Investors

Watch out note buyers!  The self-directed retirement account, a popular vehicle for purchasing notes, is under attack!

Tired of dismal returns in the stock market many investors turned to buying real estate, private mortgage notes, and other alternative cash flows.

They combined the power of high returns and compounding interest with the tax advantages of the IRA, Roth, Solo 401k, and other retirement accounts.

The self-directed IRA has a designated custodian that handles the paperwork and other administrative duties for the retirement account. Now these custodians are being sued by disgruntled investors reports the Wall Street Journal. Read more

One of Our Favorite Note Buyer Purchases

One of the best investments we made as a note buyer happened a bit by accident.

In 2008, we were contacted by a potential seller of a real estate note secured by productive farmland. He wanted to sell payments from his note to pay off his credit card debt.

The details were roughly as follows: Read more

Will 2012 Be The Year For Real Estate Notes?

To understand the current market for real estate notes it helps to go back in time.

Years ago the country was in a financial crisis. Gas was expensive. There were numerous political battles in Washington, DC. Houses were not selling. Interest rates were high.

Wait…what? Read more

Who Pays Costs When Buying Notes?

Wondering how costs are handled when buying mortgage notes?  You are not alone!  Here is a question we recently received from a note broker:

If the note buyer wants the seller to pay the closing costs, does the note buyer back the closing costs out and then send me the offer or do I back the closing costs out myself along with my fee and then present the offer to the seller? If I back out the costs, where would I get the cost of the closing to do this?

Great question!

There are generally two types of offers when it comes to buying notes:

1)    Wholesale – a gross offer with the note broker or seller paying costs; or

2)    Retail – a net offer with the note buyer/investor paying costs.

If the note buyer quotes a transaction wholesale and wants you, as the note broker, to pay closing costs then you need to subtract both your fee and the estimated costs from the note buyer’s quote before making your offer to the seller.

You could also just deduct your fee and have the note seller pay the costs. However many sellers are reluctant to pay any costs upfront so it is a selling point if you can eliminate the risk to them.

The amount of closing costs will vary by the state, size of the deal, and type of property. These costs usually include Read more

Real Deal #151 – Residual Income With Notes!

Welcome to Real Deals!  It’s always easier to learn from real life so here we share information from actual owner financed transactions.

Looking for residual income with notes? Does a future income stream of $1,000 per month for 10 years on just one deal sound too good to be true? Discover how the Buy Full Sell Short strategy works on this Real Deal! Read more

What is a Good ITV?

Sellers and investors often ask what ITV (Investment to Value) they should target when buying or selling a private real estate note.

You may have seen that some note investors claim they will go 85, 90, even 95 percent ITV. Frankly, I have yet to really meet them when it comes down to funding a deal in the current market.

As a refresher, the ITV represents how much is invested or paid for the note in comparison to the property value.  It is a different ratio then the buyer’s LTV (Loan to Value) or the discount percentage.

The lower an ITV the safer the investment, but you still want to stay competitive. Personally, I don’t like much over 80% ITV and prefer to be around 70% or lower depending on credit. You want some room in the event of a foreclosure or a down market (either of those sound familiar around now?).

A word of caution; don’t let a higher return push you above your ITV comfort zone. If you decide you want a 75% ITV and 10% yield then don’t be tempted with an 85% ITV and 13% yield. Someone once told me yield is irrelevant if you don’t get paid – they were right.

For more information on buying or selling notes for profit please visit the bookstore for Personal Profit Series: Notes – Your Complete Money Making System to Buying, Referring, Creating and Holding Real Estate Notes!

Is 2009 a Good Time to Buy Owner Financed Real Estate Notes?

This question is on the minds of many investors right now. With real estate values down and banks restricting credit, there are more seller-financed notes available. Although there is never a crystal ball, if you buy notes at a good ITV you have the opportunity for high yielding investments. Here are a couple things to look for… Read more