More Questions
have lent on a couple of mortgages. I have gone through the legal side of things but want to ask what happens practically when things go wrong:
1. I have lent 100K against a value of 190K at 10%. If the people declare bankruptcy - what haoppens what do I do?
2. If they take second and third charges and thne don't pay me and I have to forclose. What happens practically -do I forclose, add up all my charges and then sell it on the court steps?
3. I have a lot of money to invest in notes but move round the world a bit. Can still invest if I live abroad? Are there management services who will look after all my loans if they are in different states - Alaska to Florida?
4. How do I found out if the borrowers have paid for insurance and tax liens?
5. What do I do if they don't pay insurance or tax liens?
6. these notes I lent myself on day one. If I buy a note how do I check that it is all written up legally and that it is 'perfect' - does a title company do this or do i go to a lawyer?
These questions are dumb I know, but I am not an American so I have to overcome mike lack of knowledge about how your systems work.
Any help greatly appreciated.........
Well first of all I am surprised to see that you have actually lent money BEFORE finding out these answers.
1. If the people declare bankruptcy you are ok as you are a secured creditor. You may have to deal without receiving some payments for a bit, depending on the situation, but for all intensive purposes your money is safe.
2. All mortgages behind yours are Junior to your lien, so if you have to foreclose you get paid first and then them. Now certain tax liens are a different story.
3. You can live where you want and invest. I would suggest you get an attorney to draw up your notes for you and get a servicing company to collect the payments and deposit your money.
4. A good servicing company will be able to assist you in tracking records for insurance and tax lien information.
5. Again your servicing company can assit you with this, but it will depend on what your mortgage says when default of these requirements happen.
6. Again I would have an attorney review these and handle the closing for you.
Thanks, I have already asked the questions of attorney's etc - it is the practicalities of the situation that I am really getting at i.e. if a note goes bad, how likely are you to get ALL your money back and how much hassle is it.
With regards attorneys and drawing notes up, they will only act in one or maybe two States. I have $2M to invest so i guess I'll be buying notes from several states - hence the problem.
If you buy a note that is already drawn, I assume it is not rewritten - so is it up to your attorney to confirm the perfection of the note?
I am a seasoned UK property developer, so investing with risks is what I am used to - not knowing all the answers but knowing there is usually a solution is OK for me, so long as I eventually find the info. Strange I know.........
I need to generate income from cash so if anyone has any decent long term notes they want to sell....
Boy you must be making money like gang-busters as in a prior post you stated you had over $1M and now it is over $2M.
You need to find yourself an attorney, a mortgage broker and a servicing company and you are set.
A good attorney wil review your documents or can set the boiler-plate of how you want your notes to look. A good mortgage broker can work with the note your attorney drafted and lend out your money in accordance to your wishes (and also suggest ways you may be able to put a bit more of your money to work). And the servicing company will process things for you.
A good mortgage broker will also be able to put your money to work over several states, but in reality $2M is probably a drop in the bucket for them as that is only (10) $200K homes.
You are correct you cannot rewrite an mortgage if you are buying it, but if the broker or attorney know your criteria they can reject it before they even try to send it to you.
If you have to foreclose, there will be hassles and delays in getting your money back, but if you need this money to live off of, you shouldn't be investing it all. You need to have contingency plans in place because no matter how you write a note up there are ALWAYS situations that change and delayed payments.
I'm not trying to sound like a big shot...LOL. I just can't decide how best to make my money work and how much to use
I have money invested offshore which I live off, however I would far prefer to reinvest my other money in a business and let my offshore interest accrue.
Hence I have money available, but to make sense of this I need to get 10%+ of anything I invest.
Sorry for repeating myself but every attorney I meet says they can only draw a trust deed for that particular state - is that right?
Finding a mortgage broker and attorney I trust....hmmm
My limit for usuable money in all of this (so we get this straight once and for al) is about 2.8M I am thinking about 1.8M into long term loans 3 to 10 years and the rest into a high interest and higher risk hard money loan strategy for investors doing projects etc.
My problem is I move about. Anyone got a good mortgage broker contact in Florida or near the Ontario border for when i go back to Canada???
Well there are lots of ways to safe-guard your investments, you can limite the size of any one loan, you can limit the area you will invest in, you can limit they type of people's credit you will lend to, etc, etc, etc.
An attorney should be able to set up the general guidelines of note and you should know that not all states use Trust Deeds for notes. You should also be able to place all that money very easily within a single large city, so I am not sure why you are talking about multiple states.
I have a mortgage broker that does both hard money and conventional loans, but they are in Nebraska, but even in this city of 500K people, they could easily place $2M in loans and tell you what is realistic about the terms of your agreements.
I will say that if you want the highest of security, you usually have to come down on your rates. 10% is subprime which means usually higher LTV, lower credit scores or both.
Thanks -this is an education.
I want to achieve 10 to 12.5%. Credit scores don't worry me too much but LTV's do. Whilst I am not in this to foreclose I figure someone with a bad credit score but a 100K in the deal will fight hard to keep on paying.
Is 70% LTV (MAXXXXXX), interest rates of between 10 and 12.5% unrealistic?
Also if I stay in Ontario, do you see amy big prroblems with mainting say 5 loans in Florida, two in Kansas, five in Alaska and three in California.
The pro is that I am hedging against differeing property areas and markets, but the con is will it be hard to collect......
from your experience what would you do.....
Many thanks
From your first reply it sounds like you need to go the hard money route in order to get the 10% to 12% returns at a 70% LTV.
I would contact a mortgage broker where you want to invest and have them send you their typical real estate note and the criteria they use. You can then have an attorney look that over, but most brokers that lend hard money have their own shark tank of lawyers to protect you as they make their money on making loans and a bit on the interest spread.
So they want to keep you and your pool of money happy and safe so they can continue to make money.
Spreading your money around to different areas does make sense in some ways, but I would think it through a bit more and probably narrow it down to two or three states, personally. I would do East Coast, Central USA and if I was adding a Third West Coast. One city in each area.
I would roll out with a small amount of money to each broker and tell them if they are successful there is more to come.
Your attorney should be able to reveiw a document from ANY state and give you his thoughts on it. You can then make the decision on if it is something you want to be changed and talk to the broker why his notes are written up that way.
Well I am sat in Florida at the moment so I can do a few loans round here. am talking to a broker in Alaska who deals with a few states. So that should be far enough apart to hedge the property market!!
When you say hard money route do you mean lending to people with bad credit or lending to investors trying to make turns on property (I used to do this). I am comfortable with bad credit people at the right LTV....so this isn't a problem.
What percentage of these types of loans actualy go bad and you have to foreclose? Have you ever forelcosed?
Sorry if I am digging to much, but I find personal experience a much better tool than simply understanding the law.