Posted by Randy D. Pena on September 25, 2009 at 22:13:15:
I agree with you about getting advice and feedback from everywhere before even trying to attempt to make such a deal. That is the reason I came to this board to ask that question. It sounds simple and innocent, but then it could get complicated and controversial. Especially if I am unable to turn a profit to pay the mortgage as planned.
mortgage of an undivided interest - Posted by Randy D. Pena
Posted by Randy D. Pena on September 22, 2009 at 16:26:55:
I think that I am correct about this, but could I mortgage my share of an undivided interest in some property? I own 20% interest in like 10 different properties. I found someone who has like $2 million stashed in the bank. I was thinking that I could borrow like $200,000 from him and mortgage my 20% interest in all those properties. The way I look at it, is, if I can’t or won’t pay him, he could keep my share of those properties and he would become “partners” with the rest of the owners. I am thinking of offering him like 8% interest on his money. I am also thinking of asking him to lend me $300,000 and from that I could give him $100,000 as a finder’s fee type of arrangement. Then I would still owe him $200,000 at 8% interest (The mortgage will be for $300,000 and will encumber my share of all ten properties). For a 10 year loan, my payments would be like $3,000 per month. Then I could use that $200,000 to invest in properties and even get a few formal educational classes such as take an appraisal course. My question is: what are the advantages and disadvantages of making this deal work?
I am also thinking of offering to pay any penalties that he may suffer if he had to cash-in on a CD prematurely. All replies, criticism and comments are very welcome.
Not illegal but dubious - Posted by John Merchant
Posted by John Merchant on September 23, 2009 at 13:41:43:
While no law against this, as a practical matter it’s tough to find that lender so I wish you luck.
Be aware however that if you were to send a general solicitation out to a list of potential investors, your state’s securities commission and its agents could look at this as illegal solicitation of securities offering and give you some grief over that.
For anybody considering this, do yourself a favor and pick up the phone or drop by and visit with one of those sec. agents and get their reactions to whatever you’re wanting to do…BEFORE you do it and slip an ever-tightening noose over your head.
I’ve known of a number of innocent sounding ideas like this to get their owners and creators in some really hot water and best learn of the hazards beforehand.