Private Mortgage Notes
I am trying to expand my Creative Real Estate portfoliio to Buying Private Mortgage Notes. I recently attended a Robert Allen seminar and they made it sound very simple. Could a senior investor experienced on this subject please advise or at least point me to a good article on the subject:
I have obtained a list of private mortgage holders in a few different states near me and I was given what seems like a great script. I am in the process of calling the list and seeing if I can get any bites. A few questions before I get ahead of myself.
1. I am in the State of Georgia, do they require me to be a licensed broker or is there a minimum I can broker, say 4 or 5 a year and slide under the radar?
I am in the process of trying to get information from a Cash Flow company who will be the "money pool" in the deal. I will find the private mortgage note holder and get them to agree to entertain an offer. I will then fill out a Mortgage Purchase Worksheet form (on-line) at two or three Cash Flow companies and take the bids. (I will have then sign a Non-Circumvention Agreement for my protection.) I will deduct my finders fee from the bid then call the homeowner back and see if they will accept the offer.
2. The biggest and most compelling question I have is who does the paperwork?!?!?!?! Do I have to get the laundry list of paperwork? (i.e. credit check, appraisal of collateral, deeds, title... the list seems incredibly extensive)
3. Or are there cash flow companies that handle the paperwork??
If I have to get all the documents ready for the closing it almost seems that a $3 to $5k fee is not worth it.
4. Finally, Georgia passed a crazy law called the "Fair Lending Act" to try and prevent predatory lending. Are there any hidden "Issues" buying private mortgage notes in the State of Georgia?
Any feedback would be greatly appreciated. 
1. You are in business for yourself finding notes with the resources to fund them. You are a principal in the transaction, therefore you are not brokering the notes. You get a bid price from a buyer. You negotiate with the seller. The buyer does not offer to pay you any specific % or set fee for doing so. If you negotiate to a point that you are making $25,000.00 on a transaction, or $2.00, the note buyer does not care. He cares about the yield that is presented in his/her net bid.
2.Most note brokers/buyers will have all the neccessary paperwork, and will perform the due diligence themselves. When they make an offer in this instance it is called a net bid. When you do the close and the majority of the legwork, some buyers will quote you a gross offer as well as a net offer.
3. You are not lending anyone money, have no dealing with the borrower, and thus predatory lending does not apply. You are a buyer of notes, that someone else funds. you negotiate your own piece of the pie.
If you act as the middleman, and act accordingly, such as telling a note holder that you will find a buyer for their note, then you are brokering, and that is not kosher. What you ARE doing is buying notes period. That is what you tell a seller. Then you in turn, sell that same note to a note buyer. This way you are a principal in the deal.
[addsig]
Are you going through all the private indices to see who the mortgagee is holding the note? If it's not a bank, these are the noteholders?
Another tip is to look for notebuyers 12 months behind today's date. Usually these guys would like to get cashed out. I would be curious to see how you are digging the information out. Thanks.
Loan Wizard,
Thanks for the reply... when I described the scenario to a few others... they said "So basically you are a middleman" (i.e. a broker).
And all the paperwork I have received from the Cash Flow Companies says Broker Agreement... so mentally I was assuming I would be a broker. Some of the companies did tell me I did not have to be a licensed broker.
In my mind I am a principal in the deal and that is the way I speak to the note holder. If the note holder agrees, I tell them my partner puts a pencil to the deal and I will get back with them in 48 hours with our bid. My only question was will the State or IRS for that matter tag me as a broker. Your points are duly noted. Thanks!
enigma,
Yes, I look through the Security Deeds at the Courthouse (now online) if the Mortgagee is not a bank, there is typically a persons name... which is a "Private" lender. You can also get "Lists" of Private Mortgage Holders on-line through various services.
Hi Stacy,
Was the Robert Allen seminar the free 2 hour one thats going around right now?He'll be in town near me this week and I was wondering if it's worth the time. I'm not interested in a get rich quick scheme or network marketing!!
Ty
VBaugh,
Wlcome to tcinvestor forums. We do not encourage or allow advertising in the confines of the forum itself. Why don't you email Joel Webb, the owner of this site about becoming a partner, or advertiser on this site.
Thanks for your contribution.
Shawn Dostie(OH)
Ty,
I highly recommend the RAI. The 2 hour evening session is a "Teaser", which sets up for a complete weekend Fri - Sun seminar. Robert Allen is one of the foremost Creative Real Estate guru's (Personal Opinion) ever. Sold more financial books than anyone in history..., etc. He tought the likes of Carlton Sheets and other guru's you have heard of.... They cover Foreclosures, Subject To, Private Mortgages, Tax Liens, etc. You can recover your cost for the seminar with just one of the many ideas they teach you... This is a great foundation for your RE career, but with any career you must constantly continue your education... Dwan and Sharon spoke at a REIA and are solid "Mentors" and I have been greatly impressed with John $Cash$ Locke who has been very helpful. My partner and I are currently reviewing his Subject To manual. I have no ties to any of these folks... I am just a young aggressive investor "sponging" off all the great knowledge... Okay I am stepping down off my soapbox. Best Wishes!!!
Stacy,
What other strategies are you using to have more exposure as a note buyer and seller? Thanks.
Dear Tracy,
I also joined the Robert allen Seminar.
Would you plaese let me know where I can get the list of Private mortgage note holders? You said they can be found online. I live in CA. I have contacted the county public records office. They do not have a list.
Would you please advise
Thank you
Sepideh nullnull
Why not,
Get on line hit the real estate classifieds find invester ads. Call them and ask if they need any cash today. investers have notes