Mortgage Note Case Study With Eddie Speed - Real Estate Investing

Mortgage Note Case Study With Eddie Speed - Real Estate Investing

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Publish Date:
2 March, 2021
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PROPERTY overview:
- Class D- property that was neglected and very distressed - termites, bad roof, no heat or AC, bad wiring and plumbing
- Original plan was to remodel for a rental (would have lowered the rehab costs by perhaps $5k) but a visit in Jan '19 changed our plans
- Upon joining NoteSchool in Jan '20 we flipped to selling this house and holding the note
- We did the demo and gutted it and used our contractors to add a new roof, added HVAC, repair termite damage, new electrical, new plumbing) and remodeled the entire interior 
- Highly stable workforce neighborhood with long term home ownership and few rentals
- Low crime, excellent elementary and middle school within the community
- Purchased the property in 2017 using money out of pocket and a small 2 year note and which we paid off prior to closing
- At the time of sale (July '20) we were at $88,770 (in the property) = $58,250 (purchase) + $30,500 (rehab)

NOTE TERMS overview:
- Sales price of $145,000 
- PBB Buyer, D-F Qualified, $4000 down, escrowed T&I
- Note Price $141,000 which we papered using a Title company as $98,750 (sales price to lower tax basis) + $46,250 (repair cost) @ 6.5% for 360 months
- PI of $891.22
- Secured a PLEDGE at the time of closing for $40,000 for 4 years at 6% to recoup the rehab costs and 10k above that 
- We plan to secure additional Pledges when this one expires as well as consider Partials

FINANCING overview:
- funds in the house+$4000
- down payment+$40000
- Pledge+$141,000
- 30 year Principal over time+$179,838
- 30 year Interest over time-$45091 - Pledge payments over time
+$226,977 Profit

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