My second note deal went down last October, but... - Posted by Tom Nagle PA

Real Estate Investing
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Posted by John Behle on January 26, 2000 at 22:13:00:

That would be an excellent note to borrow against. Institutions take time and finesse to create a financing (borrowing) relationship with, but private investors ought to be thrilled with a note like this.

Selling a note is “Killing the Golden Goose”. You may have to borrow at a higher rate than you could sell it at (maybe not), but in the long run it can be very worth it to start building your portfolio. Borrow against this note, buy another, borrow against that, buy another …

I wrote an article a while back called “Let the Goose Live”. I’ll track it down and post it at my site.

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My second note deal went down last October, but… - Posted by Tom Nagle PA

Posted by Tom Nagle PA on January 26, 2000 at 21:28:05:

Hi folks,

I haven’t posted here in a while, but I have a question about a note deal I did last October.

It was my first note deal, and I wanted to flip it. The only problem was - I didn’t flip it. I am still holding the note. I have $40,000 of my money in it that I would like to put into other deals. I have used it as collateral on two deals since then, but I wanted to get some ideas on the salebility of the note.

A few details of the deal.

House appraised by LSI at $59,000.

I had a buyer put down $10K and closing costs. The buyer and his wife have a Beacon of 535 and a FICO of 538. The buyer had a BK go through in June of 1998. My first mistake : the buyer started the paperwork in Jan 1998, so I thought since two years had elapsed, the salebility of the note would be greater. I didn’t know that the BK didn’t go through until June. The buyer hasn’t had any credit issues since then.

I created a first for $40,000 (67.7% LTV) at 11.75%, with a balloon in 7 years.

I created a second for the remainder, interest only, at 12% with a balloon in 3 years.

I thought I would wait until June to sell this, but I was wondering what I could possibly get for it now. I have a couple of local investors might be interested in it as well, but I don’t want to dry up that pool of cash. I am in no dire need to sell this, but I would appreciate any feedback as to what I could expect to get for it now.

Thanks and see you in Atlanta (hopefully at John’s seminar)!

Tom Nagle
Allentown, PA

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Ballpark wise … - Posted by Michael Morrongiello

Posted by Michael Morrongiello on January 26, 2000 at 23:20:22:

Tom:
Assuming the note is paying timely, you have collected around 6 months of payments and you can document then? and the terms are 360 /84? this note can bring 37K +/- in ready CASH to you if you wanted to sell it.

I would have interest in the paper and can easily confirm my pay price to you with a review of some simple documentaiton if you choose to go that route?

Michael Morrongiello