Selling your mortgage note is not all about or just about price. It is also about working wit a buyer who will follow through and actually close at the agreed price. If you have a note to sell and you are not sure who to call, who to trust or what to look for yo will want to watch this short 9 minute video
What’s My Note Worth?
A question all note sellers have and have a right to know.
Timing Your Mortgage Note Sale is everything.
So, when is the correct time to sell your mortgage note?
The following utube video with my friends Walter Wofford and Jim Ingersoll is so to the point as to the value of trusts in any form of a real estate transaction.
They discuss the ultra importance of transactional privacy and how that helps with asset protection.Under what circumstances would you want the general public to know the properties you own?
Trusts provide privacy and effectively separate all of your investment assets. They are not hard to use and provide tremendous privacy in your deals as a trustee is used to hold title and the trust agreement is not recorded at the courthouse.
Under what circumstances would you not like the public to know that you own a property?
What are the benefits of using trusts?
1. Privacy – Keep your name and LLC out of public records
2. Liens and judgments
3. Probate benefits
4. Sell the entity, not the property
5. Personal property trusts for IRAs, cars, boats, etc
Today I cam across this article title,” The Three Ds of Doom: Debt, Default, Depression”. Without sounding negative, it certainly makes one think about the current economy. Everything appears to be booming, at least here in the greater Phoenix Metroplex. But………..what is under the covers. What goes up always comes down. It is a fact of life. Now apply this to the niche business. It is the paper side of real estate.
In the very near future, Capstone will be launching a Utube note training series on buying Notes. One of the topics as part of the due diligence series will be a deep dive into Investment to Value and Loan to Value. In other words, what is the note buyers safety net in the event of a downturn. How to minimize the pain in your portfolio. The only way I know is to have an EQUITY SPREAD. For instance, if a note has a $100,000 unpaid loan balance (aka UPB), what is your risk tolerance. What safety net do you require? The Capstone safety net is an Investment to Value (ITV) not exceeding 65% and a Loan to Value not exceeding 70%. Some say this is too big a filter. I guess time will tell. Anyway–moving on to the article.
The Three Ds of Doom: Debt, Default, Depression
July 17, 2019
“Borrowing our way out of debt” generates the three Ds of Doom: debt leads to default which ushers in Depression.
Let’s start by defining Economic Depression: a Depression is a Recession that isn’t fixed by conventional fiscal and monetary stimulus. In other words, when a recession drags on despite massive fiscal and monetary stimulus being thrown into the economy, then the stimulus-resistant stagnation is called a Depression. Read more
The August 7th Note Investors Forum Meetup focus on:
TOPICS: Several New Case Studies
Where Does a New Note Investor Begin
Bring your questions, This will be an interactive meeting.
The Next Note Investors Forum Meeting will be
Wednesday, August 7th 11:30am-1:30pm
La Famiglia Restaurant, SE corner of Dobson & Guadalupe, Mesa
will be Wednesday, August 1st 11:30am-1:30pm
La Famiglia Restaurant, SE corner of Dobson & Guadalupe, Mesa
Note Due Diligence 201
one offs or a pool of assets.
Expect standing room only. The room is maxed out @ 50 attendees.
Buffet lunch served.
I receive Harvey MacKay’s inspirational emails from his weekly column. This particular email caught my attention.
I’m back with another installment of street smarts, those skills that go beyond what is taught in school – the lessons we learn by experience and practice. Never underestimate the value and importance of “extracurricular” education.
First idea: Don’t be afraid to make a decision. Be afraid NOT to make a decision. Good judgment is a critically important skill for any person to have, but especially for those in leadership positions. Good judgment is such an important attribute that it is often listed first by employers as required qualities of job applicants.
In business, the success or failure of the organization hinges on judgments made at all levels. Good judgment is the ability to make the best decision possible based on the information you have, without being swayed by others or predetermined ideas.
What kind of a decision-maker are you? Take a few minutes to contemplate the question, because once you become aware of how you make (or don’t make) decisions, you will be more apt to make wiser choices in the future.
Next idea: Never make a decision until you have to. Always bargain for more time to postpone doom. Things can change over time.
For example, there once was a king who was trying to find someone who could teach his horse to fly. As the king was conducting court one day, two guards dragged in a beggar who had just stolen a loaf of bread.
The king said, “Take him away and chop his head off!” As he was being dragged away, he said, “But my king, my king, I can teach your horse to fly. Just give me two years.”
“Granted,” the king said.
As the beggar is being carted out, a guard quizzically asks him, “Why did you promise that?”
“Look … In two years, I may be dead. The king may be dead. Or who knows, maybe I can teach the horse to fly!”
Next idea: Practice the rule of ten thousand. This rule helps determine whether something can’t be done or whether someone doesn’t care enough to get it done.
The Rule of Ten Thousand says, “If I give you an extra $10,000 to get to work by 8 a.m. every work day for six months straight, can you do it?” Watch how fast the obstacles disappear, contingencies are set up, departure time from home is earlier and so on.
You don’t necessarily give people $10,000, but it’s a good way to see if something is possible.
Next idea: Always put the pressure on yourself and tell everyone what your goals are. I do this with all kinds of projects. It’s great motivation.
Next idea: You can take any amount of pain, as long as you know it will end. For example, I was running the Twin Cities Marathon several years back and a woman stopped me with two miles to go and said she wasn’t sure she could finish. She said, “Mr. Mackay, motivate me!” I gave her this lesson on pain as we ran side-by-side.
Next idea: It’s not the people you fire who make your life miserable … it’s the people you don’t fire who make your life miserable. And whenever I say that I get more amens than a Billy Graham sermon.
Next idea: Maximize your education dollars. When your company sends its people to conferences, make sure you get maximum value. At our company, we insist that our people come back from conferences and teach the rest of the staff what they learned. This way we get a terrific return on our investment.
Next idea: Never give an ultimatum unless you mean it. A close friend shared this story of a high stakes negotiation. He’s living in Minnesota and wanted desperately to buy one of his competitors in Los Angeles. He had information that whatever his bid was, the owners had a local businessman who would bid for the business as a wedge to get the price up.
There was a summit conference call with the six owners plus my friend to negotiate and finalize a price. Then came the knockout blow. My friend bid 15-20% more for the company than his previous proposal, but his new offer was on the table during the call only. They either accept it or they don’t. The offer was so good the owners decided to take it. They weren’t going to chance it on their friend matching it.
Mackay’s Moral: Use your street smarts to outsmart your competition.
Fellow Note Investors:
Our special guest will be Charles Parker of AZ Credit Medix.
He will discuss how to build business credit so a business owner can borrow funding without personal indemnification.
Additionally we discuss the broad basics of seller financing your investment properties with a case study.
Look forward to seeing everyone Tuesday March 6th 11:30am – 1:30pm!!
RESERVE YOUR SPOT @
1644 S Dobson Rd Mesa, AZ Dobson Ranch Inn Resort–Fiesta Bar & Grill
SW Corner of Dobson & Superstition Route 60
investigating real estate mortgages.
This short video explains the variables.. WATCH HERE
The new federal tax law took away some benefits of homeownership but
gave real estate investors a gift they might not be aware of yet.
Owners of investment property — from mom and pop landlords to big-time real estate moguls — could get a federal tax deduction of up to 20 percent of their net rental income for tax years 2018 through 2025. Most people who own shares in real estate investment trusts can also
deduct up to 20 percent of their ordinary REIT dividends.
This income limit would apply to real estate agents but would not apply to real estate investors because their principal asset is their property, not their skill, said Kenneth Weissenberg, chair of real estate services at EisnerAmper.
If you are not a service professional and your taxable income exceeds $157,500/$315,000, then your pass-through deduction may be limited by a convoluted computation. It says: Yo
ur pass-through deduction can’t exceed the greater of either 50 percent of W-2 wages or 25 percent of W-2 wages plus 2.5 percent of the “unadjusted basis” of depreciable assets, which generally means what the owner paid for the assets, excluding land. Real estate investors would be subject to this nutty math if their income exceeds the limit.
To get the deduction, real estate investors must have net income from a property. Many real estate investors have net losses thanks to depreciation, interest, repairs and other expenses.
Suppose Donna is single, earns $100,000 a year working for a tech company, and owns a duplex that generates $20,000 a year in net income. Her taxable income, we’ll assume, is $10
Under the new law, her pass-through deduction would be 20 percent of $20,000 or $4,000. It is not reduced because $4,000 is less than than 20 percent of her taxable income..
Now suppose she makes $200,000 at her tech job and her taxable income including the rental is $208,000. In this case she would have to do the complex computation.
We’ll assume she bought the duplex for $600,000 but $100,000 of that was land value. Her unadjusted basis is $500,000, and 2.5 percent of that is $12,500. She doesn’t pay anyone a salary, so her W-2 wages are zero. Her deduction still is not reduced because $4,000 is less than $12,500.
“The wages and depreciable property limits won’t impact most real investors,” said Stephen L. Nelson, a CPA in Redmond, Wash., who wrote a monograph on the new deduction.
One gray area is whether people who own real estate in their own names and file their rental income on Schedule E would qualify for the pass-through deduction.
“It’s not 100 percent clear,” said Jeff Levine, director of financial planning with Blueprint Wealth Alliance. To get the percent deduction, “it has to be a qualified trade or business.” The new law does not clearly define trade or business, and the term is defined differently in different parts of the tax code. “Depending on IRS interpretation, a taxpayer’s involvement in the rental property could be a factor” in whether he or she qualifies.
Luscombe said he believes Congress intended real estate investors who use Schedule E to qualify for the deduction, and a congressional committee report supports that idea.
Weissenberg said they clearly would qualify for the deduction.
Nelson also said they should qualify, “but we’ll have to see what the IRS says” when it issues regulations.
Real estate investors do not need to form a limited liability company to take this deduction, Nelson added. They can put property into an LLC (many do for liability reasons) as long as it’s not taxed as a corporation.
The law does state that people who own shares in a real estate investment trust can deduct 20 percent of their ordinary dividends (but not capital gains dividends) starting in 2018. This deduction cannot exceed 20 percent of their taxable income, but other limits do not apply.
“Real estate is a big-time winner” in the tax law, Weissenberg said, thanks to this and other provisions.