.

sure i agree with you... im just putting this in the "investing with ppl who you don't know" criteria

just don't get why anyone would do that

edit: not saying you're not trustworthy.. its just something i wouldnt do and im surprised that other ppl would

I have nothing whatsoever against foxfox1 (I consider him a nice enough guy and reputable enough), but I am strongly opposed to this post being allowed to stay in this forum. If this is allowed, then this forum would have to allow OODLES of posts that are inappropriate.

where/how are you finding your customers?

whats the minimum investment?

Agreed. Also the thing I'm not clear on is if they default on your loan wouldn't they also likely default on their mortgage payments? Why would you then get first claim to their property rather than the bank who did their mortgage?

I have no comment regarding foxfox1's post because I don't know enough (not even close) about the topic. However, I am intrigued because I love talking/thinking about investing and below is my two pennies.

Loaning to high-risk individuals doesn't seem like a good idea, even if the loan is collateralize by an asset. The reason is when you do obtain said asset, you won't know what to do with it (as in, your edge is minimal when comparing against other real estate investors). Remember, you are not in the business of real estate investment. You are in the business of structuring loans. Foxfox1, do you have any experience with selling/maintaining/renting rental properties? Or do you plan to just let it sit there once you obtain a property? If so, how are you planning to get the initial principal once this happen? Letting it sit there and wait for a buyer doesn't seem like a good investment idea, especially when you consider the opportunity cost of what said money can do for you.

Also, although real estate investment is a good idea, I find it very hard to believe someone's word when he said it is a better investment than the stock market. Perhaps you can expand on why you liquidated all your stocks in favor of real estate and the ROI of such a move so far?

Lastly, to say that a person doesn't have to pay taxes because the investor's money is in an IRA account is misleading. You don't have to pay it now. But, and this is a huge but, you will have to pay whatever amount you own down the road when you withdraw the money in the future. I think you should change the sentence to YOU CAN DELAY YOUR TAX PAYMENTS IF YOU HAVE AN IRA ACCOUNT.

Again, I hope you don't feel like I am attacking you. I really want to make that clear.

Good luck.

i don't have anything against foxfox1 either. however, implying that there is virtually no risk and guaranteeing a 10%+ return is silly. why do you think banks have been going bankrupt? because the collateralized loans they were making defaulted and the home value fell below the full value of the loan itself. not that i'm saying that there will definitely be another housing price meltdown as we've seen of late, but i want to make sure people are careful with what they do with their money. the sales pitch you're making seems VERY suspect because of its no risk promise, imo.

also, i agree that this more belongs in something like BFI rather than these forums. otherwise those guys pitching the nike and random ass **** to "high stakes players" would be equally valid because they are targeting a "higher net value" customer.

+1

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seems too '100% risk free' to me

In investing, usually if something looks too good to be true, it probably is.

have you ever staked anyone on the internet? if you think that your relationship with somebody you've IM'd with a handful of times is any different than this, i'm sorry.

Sorry. If the concensus is for deletion/movement, please do.

Lots of phone calls and business cards I hand out at real estate investment clubs.

These properties that are being collateralized are owned free and clear typically. So, I always have a first lien position. I'll never do seconds.

haven't decided yet, but based on feedback, $2500 seems like the right number. I'm meeting with the attorney next week to figure out how to structure this whole thing.

#1. A typical foreclosure takes two months. We'll go with the 200k property, 100k note idea again. The general idea is to claim the property and list immediately with a realtor. So, even if it sells for 100k, your ROI has reduced slightly, but if it sells for anything over the 100k, after points and payments you may have received, your ROI will be huge. I suggest you look through the sales database on your local tax appraiser's web site and take a look at how much homes are selling for relative to their tax value. If that # is less than 75%, I'll be really shocked.

#2. I've listed the ROI on everything. I mean obviously RE being better than stocks is my opinion. But I know the learning curve on stock investing is huge. Everybody can invest in the S&P 500 and just ride the wave that is the stock market, but I KNOW exactly what my return is. I have full control over everything.

#3. The IRA thing is true. If you have a SEP or traditional IRA, you will pay taxes on the back end. The cap on a sep is somewhere between 46 & 47k. But, if you have a ROTH like I setup for my wife, the cap is 5k and there are no taxes. So, yes, I should have clarified that.

#4. I appreciate the questions and no I don't feel like CONSTRUCTIVE criticism is attacking. Thinking is good.

Banks were going bankrupt because lending requirements were much looser AND they lend at higher loan to values. Again, sorry about the post in this thread.

Sorry bud, MSNL isn't the forum for this

So, you're a loan shark?

This isn't what Dan Harrington was talking about, I surmise.

Adam Smith:

"A dwelling-house, as such, contributes nothing to the revenue of its inhabitant ; and though it is, no doubt, extremely useful to him, it is as his clothes and household furniture are useful to him, which, however, make a part of his expense, and not of his revenue.

"If it is to be let to a tenant for rent, as the house itself can produce nothing, the tenant must always pay the rent out of some other revenue, which he derives, either from labour, or stock, or land. Though a house, therefore, may yield a revenue to its proprietor, and thereby serve in the function of a capital to him, it cannot yield any to the public, nor serve in the function of a capital to it, and the revenue of the whole body of the people can never be in the smallest degree increased by it."

By investing in real estate, you're earning money for yourself that other people would otherwise earn. But you're not creating a product which contributes to the general economy. It's not bad, but don't fool yourself into thinking you're reaching your highest potential.

I know you said you already have "done those deals" but you sound like someone that just came out of a seminar. (the fact that your referred to a foreclosure in "months" terminology is throwing me red flags...1 rough foreclosure can KILL your ROI)

FWIW, there is money to be made in hard money lending and other creative forms of "case by case" lending. However to "beat the banks at their own game" you need experience. There is a lot bigger learning curve then most first timers realize. And the few that "pull off the big %'s" usually took on more risk then they realized at the time, and hence ran good. (they didn't realize how big of a risk of ruin they were actually running)

Basically for every 1 good partnership I watch develop, I must see 10 or 15 that fail miserably.

I hope you succeed and prove me wrong fox, but as someone who is in the RE business and is fairly active in BFI, I feel I should at least warn others. (hard money lending and other creative case by case lending is NOT n00b play...you can get burned! If you want to get your feet wet in RE there are much safer/easier ways to get started imo)

OH, and you wanted someone to raise their hand that beats 6%....consider my hand raised. My "re money" destroys 6%...and so does every "real" Re investor.

That'd be like asking poker pros how many can beat NL25...pretty much every pro can/does. (although I admit there are some RE pros that don't, and some poker pros that can't)

Rika, my thoughts exactly. The edge here is seeing opportunities that the banks don't see, and exploiting it by becoming a psuedo bank.

The problem is, the variance in this game is huge, and by doing this solo, you're missing out on a lot of value adding that banks can do easily. To make up for that requires innate skill and a huge 'bankroll'.

Investing in subprime real estate, what could possibly go wrong?