Actually that was intended for someone else on the board that I’ve placed some money with. As I was typing out my answer about not trusting and relying on someone else, I wanted to remind him that I’ve placed some trust in him. Sorry. Private joke intended for someone else as a gentle reminder. I never even thought of the name being Italian nor meant any offense.
Part of the joke is I’m the last person that ever wants to have to collect from someone or hold some third party responsible for a deal. I wanted to drive home the point of not wanting to be in that position.
The only assurance I have of getting paid for a note - or any other investment - is the collateral. Sometimes potential note investors do not realize the differences between “hard money lending” to people with poor credit and buying a nice safe note. It isn’t the same. People are drawn to it because it seems easier to let a broker do the leg work. In the long run, many times they are burned.
I am considering dealing with a mortgage originator.
In other words, they are putting together investors with
distressed property owners all over the country and helping then refinance. Returns are between 14% (conventional sfr) and 18%(manufactured homes). They are licensed as mortgage bankers in most of the states where they originate. John Behle said that scams abound in this field so I have grilled them pretty thoroughly.No complaints with BBB, etc. I have seen all license certificates. One point they keep stressing is that they are merely setting up the deal, they do not touch funds because they are wired right to the the title company or closing attorney. All docs will be faxed to me several days prior to closing so I am free to talk with appraisal company, title company, attorneys, whoever i want. There are no fees paid by me at any time. Borrower’s pay everything, including originator’s fee. Deals are
subject to my approval on a case by case basis. I can turn down every single deal ever brought to me and still will not ever pay a dime. I can’t seem to poke any holes in this, yet everyone I mention it to says 'forget it, its a scam" Why?
I know from your posts on the former taxsale.com board that you were a very active participate in the tax lien certificate market. Are you looking for greener pastures because you have decided that tax lien certificate market has gotten too competitive?
The scams that have been out there have had to do with people running away with the funds - but not always.
Many have had to do with phoney or inflated appraisals and investors getting into very high risk situations. If someone is in foreclosure, you run a very high risk of them going into foreclosure again - within a year.
If you do not have a decent loan to value ratio based on a legitimate, objective and professional appraisal - then you could face a big loss. Even with a good LTV, you could end up in foreclosure or bankruptcy with them. 14-18% return is not enough in that case.
The brokers doing these type of deals usually make their money in the points that they charge the borrower. They have a strong motivation to put deals together. Once the deals are done and they have their points they go off on the hunt for more “prey” and many times leave their ill-equiped and un-trained investor with a pocketful of problems.
There have been many of those types of deals and many investors have been hurt.
Bottom line is if you are investing money, you need to do the full “due-diligence” to tell whether a deal is good and should not rely on information provided to you by a broker, agent, etc. - unless you are willing to sent Guido after them to hunt them down when it comes time to get paid.
Bank, tax liens are still my bread and butter but I’m looking to diversify. Sub-prime lending seems a logical
choice to get high returns without excessive risk. Same
principles but different instrument. If you’ve seen my posts you probably also know that I am a foreclosure
attorney so this aspect of it does not scare me off and can be achieved in-house quite inexpensively. What happened to taxsale.com anyway? Last I heard Dave Bancroft was gravely ill.