Posted by Bud Branstetter on November 18, 1998 at 14:49:19:
- Anything I am missing here?
Property taxes and insurance paid up and paid annually.
2.? Aside from going to the courthouse to assure myself that the first is the ONLY encumbrance on this property, what other due diligence should I perform? ?
Close at a title company or equivalent with title insurance. Assure yourself that the equity is there.
- ?Recognizing that I would be in a second position here, would it be too forward of me to ask the first to notify me if any payment is missed? That way I could make the first and foreclose on the second. ?
You can ask that the first and second be forwarded to a neutral third party for payment so that you know when any payment is late.
- ?Can I link the second to a missed payment on the first such that if a first payment is missed, that would put the second in default? ?
You can have a clause that says a default in the first is a default of the second.
- ?If I ran my calculator correctly, a $25,000 note for 5 years at 16% results in a payment to me of about $608 per month. Suggestions on alternatives appreciated.?
You can have most any terms you want. Prepayment penalties, Late fees.
- ?To put a paperwork package together such that if I needed to sell the note (after 1 year seasoning?), what paperwork would a note investor want? ?
On commercial properties the ITV figure is 70% many times. You could split into a 2nd or 3rd if you need to or be prepared to sell a partial.
You will want a very strong assignment of rents. Should he default make sure the trustee will have no problem having someone collect rents. Verify that the trustee is willing to do this.
Last but not least get a financial statement and get a personal guarantee.