Real Estate Note Investing: Using Mortgage Notes to Passively and Massively Increase Your Income

by Dave Van Horn

Overview

Learn to harness the power of paper with this introduction the note investing business! Read the author's story of his investing journey; first as a Realtor, then a rehabber, then an investor, commercial real estate fundraiser, and finally as a note fund founder and manager. Dave Van Horn has done it all and details his wins and mistakes along the way. Learn first-hand how the concept of note investing in some way, shape, or form has helped to build the author's portfolio and investing habits, while also taking him to the next stage of the game. Walk away from the book with the realization that everyone is in the note business (whether it’s through a mortgage, a credit card, car loan, etc.) and that it pays big time to get from the side of the borrower to the side of the note owner. By doing so, one can improve their real estate business, diversify or add to their investment portfolio, and even gain true financial freedom.

Product Details

ISBN-13:	9781947200005
Publisher:	BiggerPockets Publishing
Publication date:	06/01/2018
Sold by:	Barnes & Noble
Format:	eBook
File size:	3 MB

About the Author

Dave Van Horn is the founder and executive chairman of PPR Capital Management, a holding company managing several funds for residential and commercial real estate nationwide. Dave has spent more than 35 years in real estate investing as a licensed realtor, contractor, and fundraiser. As the latter, Dave has raised over $300 million in private equity for both notes and commercial real estate. In addition to his own investments, Dave’s biggest passion is teaching others how to build and preserve wealth—he is a national speaker and author with work featured in publications like BiggerPockets and Forbes. Dave currently lives in Paoli, PA.

Table of Contents

TABLE OF CONTENTS

Introduction: The Accidental Note Investor

Twenty Units Free and Clear

My Financing Problem

The Power of Leveraging Connections & Knowledge

Invest in Debt

How I Built My Wealth by Being like the Bank

The Goal of This Book

Introduction Takeaways

 

Chapter 1: How Notes Really Work

The First Note

My First Note

Case Study: The Beef Band House

How the Bank Really Makes Its Money with Your Mortgage

Banks Don’t Just Make Money on Mortgages

How to Be like the Bank

Chapter 1 Takeaways

 

Chapter 2: Financing Real Estate: The Best Notes Are Your First Notes

The Football Game of Life

My First Property        

Buying Purposefully and Structuring the Best Note Possible

Residential vs. Commercial

Why Buying in Your Name Initially May Make More Sense

Owning vs. Renting

Chapter 2 Takeaways

 

Chapter 3: When Traditional Financing Dried Up Part I

Using Unsecured Notes to Purchase Properties

What It Takes to Own a Home

Buying Investments with Unsecured Debt

The Real Lesson

How I Bought My First House with a Credit Card

Chapter 3 Takeaways

 

Chapter 4: When Traditional Financing Dried Up Part II

Using Secured Notes to Purchase Properties

Using HELOCs to Build Wealth

The Risks of Lines of Credit     

Chapter 4 Takeaways

 

Chapter 5: When Traditional Financing Dried Up Part III

Using Private and Hard Money 

Private Money

Why Private Money Can Beat a Joint Venture

How to Protect Your Private Money Deal

How to Find Private Money

Self-Directed Accounts

Things to Consider as a Private Money Lender

Hard Money

How to Become a Hard Money Lender

Case Study: Taking a Banker to Lunch

Chapter 5 Takeaways   

 

Chapter 6: Other Ways Notes and Creative Financing Can Fund or Create Deals

Highest and Best Use of Your Property

The Life Cycle of a Deal

Another Way to Use HELOCs

Lease Options

Chapter 6 Takeaways

 

Chapter 7: Taking Over a Note (and a Property) via Subject-To Investing

What Is Subject-To Real Estate?

Walking into a Note: The Advantages of Subject-To for the Buyer

Walking Away from a Note: Advantages for the Seller

The Pitfalls of Subject-To

The Due-on-Sale Clause

Insurance

Chapter 7 Takeaways

 

Chapter 8: Use Notes through Owner Financing

Multiple Offers

Seller Seconds

The Lease Option Returns

Advantages for Sellers Carrying a Second

Advantages for Buyers Purchasing with a Seller-Second

Selling on a Wraparound Mortgage

Leasebacks: An Alternative to Owner Financing

Chapter 8 Takeaways

 

Chapter 9: Using Notes for Commercial Real Estate

My First Commercial Building

Mobile Home Parks

Debt vs. Equity Financing for Commercial Real Estate Deals

Case Study: A Mobile Home Park in Western Michigan

Chapter 9 Takeaways

 

Chapter 10: Institutional Notes

Calm Before the Storm

The Perfect Storm

PPR Is Born

Chapter 10 Takeaways

 

Chapter 11: How Institutional Notes Work

Lifecycle of a Loan

Two Paths for a Note

How Notes Are Sold

Chapter 11 Takeaways

 

Chapter 12: Advantages of Investing in Institutional Notes

Owning a Performing Note Is Easier than Owning a House

Owning a Note Portfolio Is Easier than Owning a Property Portfolio

What You Can Do with a Note

How Note Investing Can Be Beneficial

Chapter 12 Takeaways

 

Chapter 13: Where to Find Notes

Note Buying Is All about Relationships

Sources for Notes

Chapter 13 Takeaways

 

Chapter 14: Due Diligence for Note Buyers

Vet the Seller

Performing Notes

Nonperforming Notes

Chapter 14 Takeaways

 

Chapter 15: Exit Strategies

Option 1: Exiting through the Property

Option 2: Exiting through the Borrower

Utilizing a Servicer

Chapter 15 Takeaways

 

Chapter 16: Recapitalization

Recapitalization Method No. 1: Selling the Note

Recapitalization Method No. 2: Flipping the Note

Recapitalization Method No. 3: Selling a Partial Note

Recapitalization Method No. 4: Collateral Assignment of Note and Mortgage

Borrowing Private Money Utilizing Collateral Assignments

Chapter 16 Takeaways

 

Chapter 17: Sources of Capital and Getting Started in Notes

College for a Fraction of the Cost

Free or Low-Cost Insurance

How to Get Started in the Note Business

What Kind of Investor Are You?

Fund Investing

Buying Notes

Chapter 17 Takeaways

 

Chapter 18: What I Would Do Differently Today as a Real Estate Investor

My Do-over

My Philosophy

 

Glossary

 

What People are Saying About This

From the Publisher

”I've known Dave Van Horn a long time. What I appreciate most about Dave is the way he breaks down complicated ideas and makes them easier to understand. In his latest book, Real Estate Note Investing, he breaks open the ‘black box’ of the financing side of real estate and shows ordinary investors how to think ‘like a bank’ so they can do more deals and be more profitable. Highly recommended!“

—Joe Fairless, Bestselling Author and Podcast Host of Best Real Estate Investing Advice Ever

”Dave Van Horn is a master of investing in notes. Dave shows you, with tangible examples, how to obtain tax-free income through investing in IRAs and how to better leverage your home equity. Regardless of your experience, Dave's book has something for you.“

—Brandon Hall, CPA and investor

”Dave Van Horn's book Real Estate Note Investing is a perfectly balanced conversation, taking a complex topic and putting it into a friendly relatable language. This book is a must-read for all real estate investors, not only for the purpose of understanding note investing, but also to see the business from a lender's eyes.“

—Matt Faircloth, General Manager and Founder, the DeRosa Group

”The book shares personal experiences, lessons learned, and will enlighten investors at any level. Dave puts together multiple strategies to create a seemingly infinite number of income streams. However, Dave's true genius shines through in his ability to size up any situation and quickly turn it into an opportunity to his advantage. The book should allow the reader to learn new and exciting methods to increase and preserve wealth.“

—Carl Fisher, Founder and Principal, CAMAPLAN

”This book is the ultimate compendium written by one of the pioneers of the note industry. Dave reveals the financing model of real estate investment that is only known and understood by a small minority. Dave shows the investor how he can passively invest with less risk and higher yields. Study this book and you'll have the ability to orchestrate your financial future!“

—Dr. David Phelps, Founder and CEO, Freedom Founders Mastermind