Investing in Trust Deeds (Mortgage Notes) and LLPs

[murf2222]

Actually, If I end up doing this it will most likely be lending on a SFR that an investor/flipper needs funding on. The Norris Group specializes in this type of Trust deed lending and the 12% yield is based almost entirely on these types of properties.

They also have longer term investment programs that are geared towards rentals, but the yield is only 9%

[34f3f3f]

Murf, here’s the worked example:

Property purchased for $100,000
Property worth when repaired $145,000
Repairs needed on the property $ 15,000
Loan amount would be 65% of $145,000 or $ 94,250

The borrower is also charged points and fees to close the loan. These fees,
along with the down payment, make sure the borrower has “skin in the game.”

The property was purchased at $100k, and the loan was for $94,250. The skin is $5,750 plus fees etc. Appraised value is unrealized gain, and not skin in the game. It’s a slight of hand.

[34f3f3f]

Murf, here’s the worked example:

Property purchased for $100,000
Property worth when repaired $145,000
Repairs needed on the property $ 15,000
Loan amount would be 65% of $145,000 or $ 94,250

The borrower is also charged points and fees to close the loan. These fees,
along with the down payment, make sure the borrower has “skin in the game.”

The property was purchased at $100k, and the loan was for $94,250. The skin is $5,750 plus fees etc. Appraised value is unrealized gain, and not skin in the game. It’s a slight of hand.

[34f3f3f]

Murf, here’s the worked example:

Property purchased for $100,000
Property worth when repaired $145,000
Repairs needed on the property $ 15,000
Loan amount would be 65% of $145,000 or $ 94,250

The borrower is also charged points and fees to close the loan. These fees,
along with the down payment, make sure the borrower has “skin in the game.”

The property was purchased at $100k, and the loan was for $94,250. The skin is $5,750 plus fees etc. Appraised value is unrealized gain, and not skin in the game. It’s a slight of hand.

[34f3f3f]

Murf, here’s the worked example:

Property purchased for $100,000
Property worth when repaired $145,000
Repairs needed on the property $ 15,000
Loan amount would be 65% of $145,000 or $ 94,250

The borrower is also charged points and fees to close the loan. These fees,
along with the down payment, make sure the borrower has “skin in the game.”

The property was purchased at $100k, and the loan was for $94,250. The skin is $5,750 plus fees etc. Appraised value is unrealized gain, and not skin in the game. It’s a slight of hand.

[34f3f3f]

Murf, here’s the worked example:

Property purchased for $100,000
Property worth when repaired $145,000
Repairs needed on the property $ 15,000
Loan amount would be 65% of $145,000 or $ 94,250

The borrower is also charged points and fees to close the loan. These fees,
along with the down payment, make sure the borrower has “skin in the game.”

The property was purchased at $100k, and the loan was for $94,250. The skin is $5,750 plus fees etc. Appraised value is unrealized gain, and not skin in the game. It’s a slight of hand.

[bearishgurl]

[quote=qwerty007]Murf, here’s the worked example:

Property purchased for $100,000
Property worth when repaired $145,000
Repairs needed on the property $ 15,000
Loan amount would be 65% of $145,000 or $ 94,250

The borrower is also charged points and fees to close the loan. These fees,
along with the down payment, make sure the borrower has “skin in the game.”

The property was purchased at $100k, and the loan was for $94,250. The skin is $5,750 plus fees etc. Appraised value is unrealized gain, and not skin in the game. It’s a slight of hand.[/quote]

querty, you gotta really have A LOT of confidence in this flipper to invest in him, IMO. Hopefully, he is a licensed general contractor who gets industry discounts and favorable payback terms on mat’ls. If he is, then why does he need to borrow the fix-up $$, too?? I could see him taking out 2-3 hard-money purchase loans to buy trustees deeds within days/weeks of one another but I cannot see him borrowing the fix-up $$ also. Not at those prices.

[bearishgurl]

[quote=qwerty007]Murf, here’s the worked example:

Property purchased for $100,000
Property worth when repaired $145,000
Repairs needed on the property $ 15,000
Loan amount would be 65% of $145,000 or $ 94,250

The borrower is also charged points and fees to close the loan. These fees,
along with the down payment, make sure the borrower has “skin in the game.”

The property was purchased at $100k, and the loan was for $94,250. The skin is $5,750 plus fees etc. Appraised value is unrealized gain, and not skin in the game. It’s a slight of hand.[/quote]

querty, you gotta really have A LOT of confidence in this flipper to invest in him, IMO. Hopefully, he is a licensed general contractor who gets industry discounts and favorable payback terms on mat’ls. If he is, then why does he need to borrow the fix-up $$, too?? I could see him taking out 2-3 hard-money purchase loans to buy trustees deeds within days/weeks of one another but I cannot see him borrowing the fix-up $$ also. Not at those prices.

[bearishgurl]

[quote=qwerty007]Murf, here’s the worked example:

Property purchased for $100,000
Property worth when repaired $145,000
Repairs needed on the property $ 15,000
Loan amount would be 65% of $145,000 or $ 94,250

The borrower is also charged points and fees to close the loan. These fees,
along with the down payment, make sure the borrower has “skin in the game.”

The property was purchased at $100k, and the loan was for $94,250. The skin is $5,750 plus fees etc. Appraised value is unrealized gain, and not skin in the game. It’s a slight of hand.[/quote]

querty, you gotta really have A LOT of confidence in this flipper to invest in him, IMO. Hopefully, he is a licensed general contractor who gets industry discounts and favorable payback terms on mat’ls. If he is, then why does he need to borrow the fix-up $$, too?? I could see him taking out 2-3 hard-money purchase loans to buy trustees deeds within days/weeks of one another but I cannot see him borrowing the fix-up $$ also. Not at those prices.

[bearishgurl]

[quote=qwerty007]Murf, here’s the worked example:

Property purchased for $100,000
Property worth when repaired $145,000
Repairs needed on the property $ 15,000
Loan amount would be 65% of $145,000 or $ 94,250

The borrower is also charged points and fees to close the loan. These fees,
along with the down payment, make sure the borrower has “skin in the game.”

The property was purchased at $100k, and the loan was for $94,250. The skin is $5,750 plus fees etc. Appraised value is unrealized gain, and not skin in the game. It’s a slight of hand.[/quote]

querty, you gotta really have A LOT of confidence in this flipper to invest in him, IMO. Hopefully, he is a licensed general contractor who gets industry discounts and favorable payback terms on mat’ls. If he is, then why does he need to borrow the fix-up $$, too?? I could see him taking out 2-3 hard-money purchase loans to buy trustees deeds within days/weeks of one another but I cannot see him borrowing the fix-up $$ also. Not at those prices.

[bearishgurl]

[quote=qwerty007]Murf, here’s the worked example:

Property purchased for $100,000
Property worth when repaired $145,000
Repairs needed on the property $ 15,000
Loan amount would be 65% of $145,000 or $ 94,250

The borrower is also charged points and fees to close the loan. These fees,
along with the down payment, make sure the borrower has “skin in the game.”

The property was purchased at $100k, and the loan was for $94,250. The skin is $5,750 plus fees etc. Appraised value is unrealized gain, and not skin in the game. It’s a slight of hand.[/quote]

querty, you gotta really have A LOT of confidence in this flipper to invest in him, IMO. Hopefully, he is a licensed general contractor who gets industry discounts and favorable payback terms on mat’ls. If he is, then why does he need to borrow the fix-up $$, too?? I could see him taking out 2-3 hard-money purchase loans to buy trustees deeds within days/weeks of one another but I cannot see him borrowing the fix-up $$ also. Not at those prices.

[EconProf]

Those numbers look a little too risky to me too. The examples I have seen of Norris Group loans, admittedly a few months ago, definately had more invested by the flipper. I would hold back some of the loan until the improvements were made in case it can’t be sold and must be rented out. If the buyer can’t come in with $20k of his own money then he is not a good risk.
These fixer-uppers are generally in the Inland Empire, so it would be no fun to take back the property and finish the fix-up and rent it or sell it.

[EconProf]

Those numbers look a little too risky to me too. The examples I have seen of Norris Group loans, admittedly a few months ago, definately had more invested by the flipper. I would hold back some of the loan until the improvements were made in case it can’t be sold and must be rented out. If the buyer can’t come in with $20k of his own money then he is not a good risk.
These fixer-uppers are generally in the Inland Empire, so it would be no fun to take back the property and finish the fix-up and rent it or sell it.

[EconProf]

Those numbers look a little too risky to me too. The examples I have seen of Norris Group loans, admittedly a few months ago, definately had more invested by the flipper. I would hold back some of the loan until the improvements were made in case it can’t be sold and must be rented out. If the buyer can’t come in with $20k of his own money then he is not a good risk.
These fixer-uppers are generally in the Inland Empire, so it would be no fun to take back the property and finish the fix-up and rent it or sell it.

[EconProf]

Those numbers look a little too risky to me too. The examples I have seen of Norris Group loans, admittedly a few months ago, definately had more invested by the flipper. I would hold back some of the loan until the improvements were made in case it can’t be sold and must be rented out. If the buyer can’t come in with $20k of his own money then he is not a good risk.
These fixer-uppers are generally in the Inland Empire, so it would be no fun to take back the property and finish the fix-up and rent it or sell it.

[Author]

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