Mortgages and Notes

Be the Bank With Your IRA to Invest in Notes

July 6, 2016

Guest post by Bob Malecki:

If you invest in real estate you know that “cash flow is king” — but at what cost? If you own rental property you know first-hand the challenges that reoccur such as repairs, vacancy, vandalism, insurance and many more details that erode your profit and time. If you have these in your IRA, then you have added costs for property management. Plus your IRA may need to use leverage to magnify your ROI. Continue reading…

The 8 Steps to Trust Deed Investing

April 6, 2016

Guest post by: Ignite Funding

Deciding where to invest your money is never an easy task. The biggest question is: Where are you going to get the most return on your investment? With the stock market being so erratic and unpredictable, people are looking now more than ever for other ways to intelligently invest their money and diversify their investment portfolio. Continue reading…

Investing in Notes for Passive Returns

March 10, 2016

Guest post by Earl Green:

If you’re using a self-directed IRA, HSA or similar investment account, you’re probably looking for a strong and predictable alternative to the stock market roller coaster. If this is true, investing in notes may be for you. These wonderful pieces of paper can provide strong and predictable returns that can be secured with real estate. Continue reading…

Financing Rental Properties to Get the Most Out Of Your IRA

March 9, 2016

Guest post by Gregg Cohen:

Savvy investors are becoming aware that it is possible to buy properties in your retirement accounts. However, many people have no idea that financing rental properties in your retirement accounts is also possible – and very powerful!  Continue reading…

Convertible Debentures – An Option in Volatile Markets

February 29, 2016

Guest post by Nelson Garcia:

The year 2016 has, so far, been the definition of volatility, which for many was unexpected. For some investors, switching from equities to fixed income securities (bonds) would be prudent to ensure the safety of the principal and a fixed return. Continue reading…

IRA Lending with Non-Recourse Loans

November 2, 2015

Don’t have enough in your retirement account to buy that investment property you have your eye on? Your IRA can get a mortgage, but it has to be a specific type of mortgage referred to as non-recourse loans.

Non-recourse loans just ensure that the IRA owner cannot be held personally responsible for repaying a loan for the IRA. Remember the IRA has a few options when buying investment real estate. It can:

  • buy the property outright with sufficient IRA funds in the account
  • partner with another IRA or individual to pay for part of the property the IRA might not be able to afford (or to split the risk with someone else)
  • be issued a non-recourse loan to fund the full purchase of an investment property

Below, the Senior Vice President of First Western Federal Savings Bank, Roger St. Pierre, outlines important information every IRA owner should know about non-recourse loans.

Trust Deed Investing for Turn-Key Commercial Real Estate

May 29, 2015

Guest article by: Ignite Funding

When banks are not lending, hard money lenders are. Hard money lenders fill a void in the financial market, especially for short-term funding for commercial homebuilders. Borrowers seek funding typically between $500 thousand-$5 million to purchase land, start development, and get their residential communities ready for market. Because the size of the loan is too large for a community bank and too small for a large institutional bank, plus the 6-18 month timeframes do not appeal to banks either, first trust deed investing may be a great fit for investors.

There is an abundance of borrowers seeking capital to build new communities throughout the U.S. As an investor the borrowers pay you an interest rate to use your funds – making you the bank! Integrating alternative investments into your financial portfolio diversifies you into real collateralized trust deed assets. Trust deeds are considered an alternative investment option as they are not directly correlated to Wall Street or the stock market.

There are few things to consider when seeking capital preservation in collateralized turn-key real estate offering:

Acceleration – Many hard money loans are short term, ranging from 6 to 24 months in length. This provides opportunity to try a new investment out without locking your capital into a state of illiquidity.

Control – You control all aspects of the investment choosing where to invest your money, how much you earn in interest on your money, and the type of loan being offered on a project! You can choose to invest with your self-directed IRA allowing you to unlock your retirement funds and earn greater and faster returns.

Transparency – Do your due diligence on anyone you partner with for investments. Some hard money lenders offering trust deeds release Loan Portfolio Performance Records showing results and supporting data needed to evaluate the business.

Collateralized – First trust deeds provide a first person lien position on the actual property, meaning your name, or the name of your IRA when investing with a self-directed IRA, is on the title as a collective with the other investors. This provides you extra security to take back the property should the borrower default on their loan. You have control over how to disperse of the property and regain your value.

Loan-to-Value – When investing in trust deeds ensure that the underwriting evaluates the value of the loan and asset at no more than 75% LTV. Evaluating the property at 55%-65% LTV provides immediate equity in property you are loaning your money on.

There are various options in how you can invest in trust deeds however trust deed investing with a retirement account is easier than most think, this is due to the lack of awareness of self-directed IRAs. The IRS allows investors to hold alternative investments alongside typical Wall Street investments such as stocks, bonds or mutual funds in an IRA (Individual Retirement Account). In order to do this, a qualified IRA custodian, such as NuView IRA, must be identified to hold the funds on your behalf. Once an account is opened and funded, you are ready to identify new alternative investment opportunities, such as trust deed investing. When investing in trust deeds with a self-directed IRA the investments are purchased by the IRA and all revenues return to the IRA to grow your retirement account under your direct control.


Ignite Funding offers first trust deeds to commercial home builders in the Southwest and provides the everyday investor with the ability to expand their investment strategy.

17 Tips for Note Investing

April 1, 2015

Guest Article by Tracy Z. Rewey:

Want the security of real estate without the hassles of the 3 T’s (tenants, toilets, and trash)? Then it’s time to consider investing in real estate notes.

Be The Bank

When you own a promissory note, you are acting like the bank. You are the one receiving the payments. If something needs fixed the owner has to do it. And like the bank, you also have the right to take the property back in the event of non-payment. You can then sell the property for cash or take back another note.

A Note Investing Example

Seller financed mortgages and trust deeds are a staple of private note investors. The note is created when the owner of the property allows the purchaser to make payments over time rather than getting a traditional bank loan. While seller financing has always been around it has seen historical increases over the past 5 years.

The deals come in all shapes and sizes so we’ll look at one example of a well-seasoned transaction involving an owner-occupied 1971 mobile home with land in Texas.

The property sold with owner financing for $32,500 with 5% down. After collecting 95 monthly payments the note seller wanted to sell the remaining payments for cash today. The payer still owed a principal balance of $8,924.50 with 9% interest payable in 25 remaining installments of $392.88 per month.

With a slow payment history, delinquent taxes, and lapsed insurance, there were few interested investors. Satisfied with the equity position against the land value alone, my self-directed retirement account made a net offer of $2,531.

The seller, tired of the headaches and in need of cash, accepted the offer. The Note and Deed of Trust were endorsed and assigned to the Retirement Account Administrator for the benefit of (FBO) the individual retirement account.

By investing $2,531 for the right to receive the remaining payments the self-directed IRA was able to yield a return of over 180%.

The note eventually paid in full, however, if the buyer had stopped making payments the retirement account could have foreclosed and resold the property.

Tips for Investing In Real Estate Notes

After 25 years of buying and selling seller financed notes there have been both wins and losses. If you are just getting started these are my 17 tips for new note investors:

1. Learn From Others – There is no reason to reinvent the wheel. Learn and network with other investors to find the opportunity and minimize the risk.

2. Refer a Deal First – Before investing your own funds get some hands-on experience. Start by referring a deal to another note buyer and earn a referral fee. Once you understand the process then consider note investing for your own portfolio or with retirement funds.

3. Discover The Why – Get direct with the note holder to find out why the note is being sold. Does the seller need the money for another investment? Are their financial challenges? Is there a certain sum that will solve the seller’s needs or wants? Understanding the why will provide insights valuable to both deal structuring and due diligence.

4. Always Talk to The Payer – Go beyond the basic estoppel and actually talk to the person making the payments each month. You will be surprised the things you will learn. They might be in the process of refinancing (think early payoff), just lost their job (better rethink that ITV), or stopped making payments a year ago (funny the seller didn’t mention that). Better to know the good and the bad before writing that check.

5. Verify Everything – Some sellers lie. Sometimes it’s on purpose, sometimes it’s by omission, and other times they just don’t know the facts themselves. Make it a practice to verify everything.

6. Embrace The Boring – Due diligence can seem tedious and mundane. So can brushing and flossing every day. But we do it anyways. Why? Because it is essential to good health and preventing bad breath. Establish a checklist and follow routine due diligence procedures to ensure a healthy investment (and to avoid the deals that stink)!

7. Plan for The Worse – If the note stops paying you get to take the property back. Of course it takes time and money to initiate foreclosure and there is inevitably some fix-up or back taxes. There are no TARP funds for private investors. Be sure to keep the Investment-to-Value (ITV) at a level that allows you to get out whole at the end of the day.

8. Partials Are Your Friend – You don’t need to buy all the payments remaining on a note. Partial note purchases can be both the safest and most profitable transactions.

9. Master The Time Value of Money – Learn how to run a financial calculator. Understand the 5 keys to cash flow calculations and how to structure deals to increase yield and ROI.

10. Encourage Early Payoffs – When you buy notes at a discount an early payoff can mean increased yields. Take a solid 10% return and turn it into a 20% return by incentivizing the payer. We’ve used discounted payoffs, lower interest rates, and even a TV to encourage the payer to accelerate the amortization.

11. Originals Count – Get the original promissory note. Have the original note endorsed at closing and keep it in a safe place. If the seller is not the original note holder be sure there are endorsements that follow the chain of title. You will want this if you ever need to enforce your lien position or prove holder in due course status.

12. Seek Professional Help – Get title insurance and use the closing services of an attorney or qualified escrow agent. Seek advice from competent legal, tax, and financial advisors.

13. Use Solid Servicing Procedures – Track the payments each month including interest and principal applications. Act quickly to start collection efforts when payments are missed. Check to be sure real estate taxes and property insurance are paid when due. Use the services of a servicing professional whenever possible. It’s easy to get busy and let too much time pass before taking action.

14. Understand When Laws Apply – There are laws that may or may not apply to note transactions. It can depend on how the note was created, the state, and/or the number transacted each year. Do your homework on the Dodd Frank Act, Safe Act, RESPA, Fair Credit Act, SEC, and others to determine whether or not they apply and how to comply when necessary.

15. Spread The Risk – It is better to buy five notes for $50,000 each than one for $250,000. In addition to spreading the risk among several deals, smaller balance notes often provide greater opportunities for increased yields.

16. Know When To Fold – Once upon a time I bought a mortgage note without proof of property insurance on the collateral. It had been in place then lapsed the day of closing. Rather than pull funds or delay closing we finalized the deal. The house burned down over the weekend. While “Burn to Learn” makes for an entertaining story I should have played that hand differently.

17. Be Creative – To find value where others overlook you need to get a little creative. You can buy a 4% face rate note and still yield double digits. The seller that won’t take a discount might consider a split funding or 50/50 partial. Realize that most seller financed notes fall outside of some conventional lender’s strict guidelines. You will need to think outside the box to minimize risk, secure a good return, and still create a win-win situation with the seller.

Tracy Z. Rewey is the author of How to Calculate Cash Flows and co-owner of Diversified Investment Services, Inc. She has handled millions of dollars in owner-financed real estate notes and alternative cash flow purchases since 1988, becoming a well-known industry expert. Visit to receive a free eBook on the 5 Ways to Cash In on Notes.

Profits Without Ownership: Sandwich Lease Options

November 3, 2014

Guest article by Augie Byllott:

You may be asking yourself, “What’s a sandwich lease option?” It’s an incredible financial instrument for creating profits without ownership. Let me explain.

It gets its name for the way everything is structured between the seller, you (the investor), and the tenant-buyer. You step in and negotiate a long-term option agreement with the seller, which gives you the right (but not the obligation) to close on the property within 1-5 years. Often, you also negotiate in the ability to assign the contract, and to let someone else other than you live in the property.

You then go find a potential tenant-buyer, perhaps someone who is a good person that has had a few financial knocks. Individuals who don’t qualify for traditional financing are prime clients for this sort of transaction. Often they will make ideal homeowners, but simply need a few years of documented on-time payments to help repair a spotty credit record. You then place them in the property with your own option agreement. If you structure it correctly, you can earn a spread on both the sales price and monthly payment amounts that you make to the original seller.

This is, of course, is a highly simplified explanation of sandwich lease options. But my intent is to show you how it is very possible for you to start earning money through sandwich options.

By targeting areas with “pretty” houses in good neighborhoods, you will vastly increase the potential number of buyers you can attract. Since you don’t actually own the home, finding properties that are already in good condition is paramount. To make the most of your investment dollar, you will want to spend most of your money on marketing rather than repairs and cleanup. Additionally, properties in nicer neighborhoods minimize your risk exposure, as you won’t have to worry as much about vandalism or depreciating home values.

Sandwich lease options are an ideal strategy for the new investor because they carry limited
risk and great upside potential. Further, they are an ideal match to the current market
conditions. Motivated sellers and potential buyers with damaged credit are much easier to find. This technique of options has the potential to earn you a nice sum of money, but it does require work.

As with any investing technique, you need to find the right strategy that works best for you, learn it inside and out, and most importantly, TAKE ACTION!


Augie Byllott helps people buy and sell homes and investment properties in all price ranges without using lots of cash or credit. He is a full time real estate investor, speaker and coach with Personal Action Coaching & Training. He is also a founding member of Common Wealth Trust Services, LLC a land trust service provider.

Self-Directing How To: Leveraging IRAs

September 30, 2014

Article by NuView President, Glen Mather:

We’re often asked during our seminars and continuing education classes on self-directed IRAs whether investors can use their IRA to make a down-payment on investment property, and the short answer is yes. But there are two rules to be aware of when leveraging IRAs:

First, the IRA must purchase the entire property, not just provide the down-payment. The property is titled in the name of the IRA (NuViewIRA, FBO (client’s name) IRA). The mortgage then would also be issued in the name of the IRA.

Second, the loan must be non-recourse, which means that in the case of non-payment the lender is limited to only taking the asset secured in the loan that is owned by the IRA. The IRS actually prohibits a disqualified party of your IRA, which includes yourself, to provide credit to your IRA (IRS Section 4975).

There are considerable benefits to leveraging IRAs. It certainly could provide a way for the IRA holder to purchase higher-valued property than the balance their IRA account may allow. While partnering can provide additional funds, leveraging IRAs allows you to retain all of the net gains rather than just a partnered portion. It may also permit several properties to be purchased instead of just one, increasing diversification inside the IRA.

So, is it even possible to get a non-recourse loan? The best source may actually be the seller of the property, although that would normally require that the property has sufficient equity in order for the seller to offer such terms to your IRA. There also are several banks that have created a special loan program for IRAs that clients often find attractive.

Lenders to IRAs normally require not only an appraisal, but also an assessment as to the likely cash flow of the property, including rental history and projections. After all, the lender to an IRA cannot assume that the IRA holder can or will make future contributions to his account. At NuView IRA, we can set up automated payments to the lender, ensuring that available funds are transferred according to the agreed-to terms of the loan.

Before you get started with leveraging IRAs, be sure to seek guidance about potential taxes your IRA could incur, Unrelated Debt Financed Income, which takes effect when an IRA makes a profit of more than $1000 per year from the leveraged portion of the rental property. Also, state laws may differ on the exact protection for the borrower of the loan.

Our transaction experts at NuView to answer any questions on the process of leveraging IRAs, and, as always, tax professionals and advisors can help with specific investment details you wish to make within your IRA.