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RealEstate-IRA.jpg?width=178You attended a seminar on passive income generation with mortgage notes, learning how to enjoy high returns while sitting on your couch, and you are ready for your first purchase. But, hold on. Is this how you make your investment decisions? There is no doubt about the efficacy of mortgage notes, but you must understand them before buying your first note.

In this post, we’ll look at the basics of a mortgage note and the tax benefits of adding mortgage notes in 401k Solo retirement plans.

What is a mortgage note and how does it work?

In simple words, mortgage note is a legal agreement, involving a lender and the borrower under which, the borrower agrees to repay the loan amount along with interest in a definite period. Every mortgage note must include the names of both the buyer and the lender, descriptions of the property, the term period of the loan, the interest rate, installment amount, any legal protections favoring the borrower in case of a default, and details of previous financing, if any. If this is your first purchase, try to include detailed descriptions of the legal terms of the loan and cover any loopholes in the process. Once a deal is struck, the borrower deposits monthly repayments along with the interest to your account. You can hire a service company to manage the note and send regular payments for a monthly fee of under $100.

What are the different types of mortgage notes?

  • Fixed and adjustable mortgage rates: The most common types of mortgage notes are those with fixed and adjustable mortgage rates. As it sounds, a fixed mortgage rate comes with a fixed interest for the complete loan term, and the principal amount decreases after every single payment. On the contrary, adjustable mortgage notes have a varying rate of interest, which tends to be lower initially, and then changes in accordance with the economy.
  • FHA and VA loans: These are loans guaranteed by the government and are available through federally approved banking institutions. The credit requirements and down payment terms are strict in comparison with private lenders, although there is a guaranteed repayment, making them an attractive investment option.

Why invest in mortgage note through 401k Solo plans?

Self directed Solo 401k retirement plans are retirement solutions for small business owners and self-employed individuals, offering privileged features such as self-directed investing, checkbook control, and participant loans. According to the current IRS guidelines, a Solo 401k plan holder can invest in a wide variety of investment assets including mortgage notes, tax liens, real estate, and other untraditional investments.

What gives Solo 401k an edge is the tax-deferred growth. You can purchase mortgage notes under the name of the plan, and redirect your repayments into the account, where they enjoy tax-deferred growth until distribution. In case of Roth Solo 401k, the taxes are paid upfront and there are no taxes upon distribution, offering completely tax-free growth.

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The real estate industry is being flooded with new marketing tools, platforms and strategies, which are being rolled out in anticipation of a new housing boom and explosion of new Realtors but is this doing more damage than good?


The real estate business has long been plagued by endless expensive and ineffective lead generation tools aimed at Realtors. Now there is a new surge to cash in on all of the players entering and reentering the business from Zillow and the acquisition of Buyfolio to The Real Estate Book’s new internet marketing makeover of old and overdone tools to Listingbook and others.


In fact, one of the biggest risks to new real estate agents, brokers, investors and even mortgage companies is training and spending themselves into bankruptcy before they even really get going, despite the slick pitches of how ‘great’ the next exotic marketing ploy is.


Savvy real estate professionals know that they need to be constantly seeking the best possible ROI for their marketing budgets, while putting their blinders on to block out these distractions, yet keeping one eye on real future trends and emerging lead generation tools which are truly revolutionary and valuable.


After all, why give up your hard earned capital to overpay for others’ experiments in advertising or give up your highly valuable leads and referrals to someone else to work for you and no doubt cash in on in other ways? Or why blow big money on complex advertising campaigns which don’t improve results or speed up production?


This is especially true when effective and affordable solutions are at hand for delivering fast results for finding distressed multifamily properties, REOs and other real estate which needs to be listed and sold.


After all, winning in the real estate game today is all about controlling the listings or at least having off market properties to offer. Fortunately the latest software, like BankProspector has made this much easier, faster and affordable to do. This tool in particular means no need to waste time and dollars on fielding calls from unqualified prospects and being able to leap gatekeepers to lock up distressed properties for sale from institutions.


Don’t underestimate opportunities like this, which present the chance to get ahead of the competition, while improving speed and profit margins to continually compound and increase success. Only those who innovate and demand top results will be able to separate themselves and stay in the game long enough to really achieve what they set out to.

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Anyone remember MLS books? I remember when I first got into the business, we had to pay our Board of Realtors for this HUGE ass book that double the size of a telephone book that showed every active listing in our market.  I'm probably aging myself, but this was before the internet and even before computers were a standard staple of any office. Back then, the way we kept track of our clients and leads were by post-it notes and handwritten notebooks.

Good news - The times have changed! There is a plethora of great realtor software programs that now exist and are fairly cheap in the scheme of things, BUT...walk into any real estate office and your guaranteed to find at least a few agents still stuck in the last millennium using post-it notes and index cards as their best means of organizing leads and follow up.  I with I could report that the "post-it note agents" that are using this method were high producing agents that have stuck with a system that has worked well for them through the years.... but in my experience that is rarely the reality.

What's the best lead follow-up systems you've seen? What the worst/most embarrassing ones you've run across?

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It's no secret that my operations have moved into the Hotel business again, however, this time it's hotel real estate and operations. I'd like to share with everyone why I've decided to focus on hotels.

I've always had a heart for hospitality. From being in the front lines at McDonald's learning their "fool-proof" system, to mid-size hotel operations and financial accounting, my spot was in Hotels. I also loved real estate. When I was working for a hotel, I managed to study and get a real estate license. I loved both industries.

My father, also a real estate broker in New York, has a heart for hotels as well. He was more of an owner/operator. He loved how it changed his life when he first bought his first motel and ran it himself and decided that real estate was his passion as well. He now works with me in California.

So why now, after these years of REO's and BPO's in the residential field?

Our opportunity now comes in a form of a private group from China with LARGE sums of cash. We are talking 9 digits dollar figures and they want flagged properties with existing management operations. We must not let this opportunity go past us!

This group is mainly from overseas looking for USA opportunities and moving their currency from the undervalued markets in Asia.

Quite an interesting thought here because when they move the money to the US, then the valuation of their currency stablizes (most likely in a few years), they are going to make a ton of money when they sell their properties. In the meantime, they will bank on US dollars with the cash flow of the hotel operations each year until they liquidate! What an amazing concept!

Our perspective, since our initial contact with the buyer-client, we are sure that there will be smaller groups that will come around and seek our expertise and help and in return alleviate the distressed hotel market that the nation is experiencing. (Currently over 200+ NPN and/or defaulted hotel properties in the SF Bay Area alone!!).

We consult and advise any new owners how to run a hotel operation, large or small.

If you have any hotel NPN and/or assets you need help with, please look to us. We can bring buyers in with agressive action without compromising operations.

We are Legacy Hotel Group

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