I just got my iPad2 & absolutely love it! I have been eyeing one of these babies for a long time now but have been hesitant to shell out the dough. Thankfully, I can justify my purchase because I use an app that was developed by my friends Kyle & Kenny who are amazing programmers & investors as well. http://www.inadaydevelopment.com/app-10biiCashCalculator-iOS.php I met them through my the investors mastermind group I co-founded with Jeremy Roll called FIBI (For Investors By Investors)http://www.meetup.com/losangelesrealestate/ They attended a series of workshops held by my mentors Gary Johnston & Clyde Wilson www.garyjohnstonseminars.com & were inspired to create an app for iphones, ipads, androids etc that could harness the power of the HPBII financial calculator & make it more visual & user friendly.

I have to admit that I still like to use my HP calculator for nostalgia, I have been using them since I was a Finance student in college. However, the ability to present & teach financial concepts on note buying using my new ipad to project calculations on a screen like a powerpoint presentation with Kyle & Kenny’s app is really exciting.

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Home » Finance & Investment » News » Investors Flock to High-Yield Funds in a Footrace to Resolve Distressed Assets
Investors Flock to High-Yield Funds in a Footrace to Resolve Distressed Assets
Jun 22, 2011 8:26 AM, By W. Joseph Caton, NREI Contributing Columnist

Over the past nine months, the newswires have been ablaze with announcements of heavy real estate fundraising from private opportunistic debt and equity investment funds.

First in the crosshairs of these fund managers are loans held on the books of weary lenders and their servicers seeking options to exit a two-year-long strategy of extend and pretend.

For instance, Lone Star Funds, an asset manager and high-yield investment fund based in Dallas, has just closed its second real estate debt fund this year alone, raising $5.5 billion in what seems like a marathon campaign.

The figure is well above the $5 billion cap the firm had initially imposed on that particular fundraising campaign. In just a few months, Lone Star expects to close its seventh distressed real estate debt fund since 2007, raising an additional $4.5 billion. These are stunning numbers for an industry still reeling from the worst three-year down cycle in recent memory.

Chicago-based Harrison Street Real Estate Capital, a high-yield investment and asset management firm, just closed its third equity fund by raising about $600 million for its latest effort, some $100 million more than its original target of $500 million.

Even on a smaller scale, fundraising is moving at a fast pace. Los Angeles-based Kennedy Wilson has now raised $118 million in equity for its most recent opportunistic real estate fund, Kennedy Wilson Real Estate Fund IV. The firm is well on its way to raise $300 million by mid- to late 2012.

New debt finds its voice

Meanwhile, the Federal Reserve is reporting that banks are accelerating the credit thaw from their three-year lending hibernation. The return of gun-shy lenders has sparked more deal announcements in the last nine months than the previous two years.

The Fed’s second quarter survey of senior bank loan officers revealed that 27% of respondents reported higher loan demand from large companies, and at the same time demand from smaller firms rose by a respectable 10%. This is the second consecutive quarter of such gains, and the first time it has happened since the first half of 2006.

There also has been a pickup in lending by insurance companies. The life company lenders are still trying to keep pace with private investment funds, encouraged by the emerging revival of commercial mortgage-backed securities (CMBS).

CoStar Group reports that although commercial real estate lending is still down 75% from its peak levels in 2007, it is rebounding, rising by a stunning 88% in the first quarter of 2011 alone compared with the first quarter of 2010.

These gains have been attributed almost entirely to life companies picking and choosing mostly large transactions for trophy assets in primary markets.

Bond market concurs

As major players like JP Morgan Chase and Wells Fargo go to market with new CMBS issues, the rating agencies are once again busy dissecting and analyzing transactions.

Global CMBS volume now stands at $14.6 billion, already exceeding the $14.1 billion in total volume for all of 2010, and is projected to surpass the $40 billion mark by the end of 2011.

Even the somewhat tarnished Freddie Mac is getting in on the act by bringing its second CMBS deal to market in the past month, and the firm’s sixth such offering this year.

Freddie Mac is offering $538 million in K Certificates (single-borrower certificates) backed by 19 multifamily properties owned by Apartment Investment & Management Co.

The footrace between high-yield investment funds and the flow from lending activities is giving rise to concerns about overheating in both the high-yield credit market and commercial real estate transactions in general. To be sure, these developments are playing out in the analyses of the rating agencies.

Standard & Poor’s is now raising red flags about underwriting even before CMBS makes a full comeback. The rating agency recently issued a report questioning what it identifies as increasingly aggressive property appraisals, pro forma underwriting, and “incentive management fees” to issuers that were at the center of the capital markets collapse in the first place.

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Jeremy Roll & I co-founded a investment network called FIBI (For Investors by Investors) 4 years ago. I consider him to be a tremendous resource of knowledge & information in the investment arena. Here is an article that I hope you will enjoy.

There is a common argument in the investment community between people that invest in lump sum pay outs or those that focus on cash flow returns. I believe there are many reasons to concentrate on investments that produce cash flow on a monthly or quarterly basis. Essentially, if your goal is to make passive income, cash flow should be your main goal as your expenses come in an interval schedule, rather than investing in stocks and bonds that do not create a steady and reliable income stream. I asked Jeremy Roll, a full-time investor and co-founder of FIBI, to write some words on the importance of cash flow in preparation for his upcoming seminar on the very topic:

“I have been a cash flow focused investor since 2002 and, after nearly a decade of cash flow investing, I have experienced the benefits of cash flow investing first-hand. For example, while the stock market was plummeting in 2008, my cash flow investments were on their usual schedule, paying on time and with the type of certainty that I knew I could count on. In essence, I could watch CNBC and hear about the day’s plummet while knowing that 10 minutes later I would fall asleep without great financial worries.

If this sounds too good to be true to you then I would highly recommend that you research cash flow investing further, as there are plenty of ways to invest for cash flow and I have nothing to sell you – except for a change of mindset. While most financial advisors continue to push stocks and bonds, both of which aren’t cash flow focused and have great uncertainty associated with them, many cash flow investors have learned that earning stable 10%+ returns in readily accessible cash that can have great tax advantages and that can be used to pay for living expenses and/or reinvest is not only a better path to take but can be much more lucrative than the historical long-run return of stocks and bonds (8% for the former, for example) and, in many cases, with equal or even less risk. As a Wharton MBA who knows many Financial Advisors, I can tell you that it’s a secret that financial advisors don’t want you to know because, in most cases, their earnings are directly tied to how much of your money you let them hold. It’s also how the wealthy invest, as they clearly don’t simply “roll the dice on” stocks and bonds like the majority of Americans.

If you’re a relatively low-risk investor and a conservative person, like me, then you’ll probably appreciate some of the benefits of cash flow investing, as it allows you to:

Earn more predictable returns than the stock market (with equal or less risk in many cases)
Earn better returns than the stock market (with equal or less risk in many cases), resulting in a higher net worth for you and your family in the long-term
Better plan for your future by being able to predict your future returns with more certainty
Have access to your cash flow for living expenses and/or for reinvestment, allowing you to spend or reinvest without encroaching on your invested capital

Sleep better – or at least with less worries – during today’s economically volatile times!
Although cash flow investing is a key focus from my perspective, passive cash flow investing is a more specific approach that makes cash flow investing that much more interesting and worthy of consideration. In essence, many cash flow opportunities exist that allow investors to participate passively, which means that they are operated and/or managed by an experienced investor who earns a fee that is typically aligned with the investor in exchange for managing the opportunity. This type of approach results in an investor simply collecting cash flow from the opportunity, typically on a quarterly or even monthly basis, without any additional effort. This strategy synonymous with “hiring experienced investors” on your behalf and it’s the strategy that I have employed since 2002 with some luck and good success.

Passive cash flow investing is clearly not for everyone, as it involves handing over control to the operator/manager, which some people are clearly not comfortable doing. It can also increase risk, as you’re now counting on an operator/manager and it’s imperative to find honest and capable operators/managers to work with (although these risks can be somewhat reduced by performing background checks and depending on the structure of the investment).

In summary, passive cash flow investing could open the door to a hands-off approach to earning cash flow for investors who don’t have the time to actively create the cash flow or for investors who simply prefer to hire experienced investors on their behalf, like me. It also presents the possibility of a more predictable financial future that allows you to sleep well thanks to less financial worries. If this sounds intriguing to you then you might want to take it upon yourself to investigate this method of investing in more detail, as I wouldn’t expect your financial advisor to make the recommendation to you anytime soon. Otherwise they might be out of a job!”

Jeremy is speaking on this Thursday May 26th at an FIBI event in Long Beach California. If you have not attended an FIBI event, they are networking events for investors that focus on education with absolutely no selling. This is a rare opportunity to hear someone extremely knowledgable speak on passive income without getting up-sold on books or tapes.

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I will be back for a return engagement at UCLA to speak about note investing to a Real Estate Investment Analysis Class taught by Jon Swire. Jon is a regular teacher at UCLA Extension’s Westwood campus. He is also the author of the book “There’s no free lunch in real estate”. Jon is a fellow broker/investor, he is affiliated with KW Commercial, where I sometimes can be found teaching & also doing business ( I have my license there as well).

My goal is to introduce his students to the little known world of trust deed investing & also the specialty that Gerald & I focus on with non-performing notes.

I wish I knew about note investing when I graduated from college. Hopefully, I can help some hungry students get started on the investment path the right way.

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This is a very insightful article by Lew Sichelman.

http://www.marketwatch.com/story/invest-in-trust-deeds-not-companies-pitching-them-2011-05-13

He is a nationally syndicated columnist who writes for Realty Q & A
Lew has been covering the housing market for more than 40 years, responds to readers’ questions on real estate.

We here at The Note Guys only deal with individual trust deeds. Although we have been asked many times to create a “note fund”, we aren’t convinced that is the right direction to go.

WASHINGTON (MarketWatch) — Question: I invested all my savings into two trust deed companies. Somehow, the chief executives of these two companies got to become multimillionaires, but there is no money for investors like me. Are trust deed companies Ponzi schemes? Does anyone regulate them? —K.S., Palm Desert, Calif.

Answer: I’m not exactly sure what happened here. If you mean you purchased trust deeds from the two companies you mentioned in your question (but I purposely omitted), the trust deeds and the property behind them are the collateral and your safety net, not the companies which sold them.

But it sounds to me more like you invested in outfits which promised a monthly income secured by a pool of trust deeds. That means you only own a fractional interest in the pool, and that would make the integrity of the company the issue, not the deeds themselves.

If the latter case is true, the companies are creating a mortgage-backed security. And as such, they are regulated by state and federal laws that apply to securities dealers. So if you have a beef, and it sure sounds like you do, that’s where you need to go to complain or seek redress.

I spoke with David Krunic, executive vice president of Reliant Financial, about your question. The Houston-based company buys financial paper backed by every conceivable type of property — residential, commercial, even churches. And Krunic has been what he calls “playing in the discount sandbox” for more than two decades.

He said you made a “critical mistake” in not investing directly either in individual properties or in deeds on individual properties. That way, if something should go wrong and your borrower fails to pay as promised, you “have something hard and fast” that stands behind your investment as opposed to some amorphous company.

In a quick, five-minute, down-and-dirty dissertation, Krunic also said would-be investors should stay local. Rather than invest across state lines, put your money to work no more than a car-ride away, and where you know and understand the laws, especially as they pertain to foreclosures and evictions.

Novices might want to start out learning about investing in trust deeds by attending meetings sponsored by local real-estate clubs, where they can pick the brains of those who have gone before them and avoid making the mistakes others have made. “Sit in a room with local specialists and soak up some guidance,” Krunic said.

Also avoid family deals — arm’s length transactions only, please — and overly urban and overly rural properties. Not only do they tend to be more difficult to resell, urban properties are more prone to being stripped and rural properties are more likely to be vandalized. “If you have to go in with an Uzi to collect your rent,” my expert warned, “it’s not a good place to be.”

What is a good place? “Any place where real estate has stood the test of time,” Krunic said. “That will give you a ready market when you go to resell.”

Look for properties or deeds on properties south of the frost-line, where the real estate won’t be damaged if the heat is turned off. Consider a resort area, particularly places where properties tend to hold their value, or near a college town. That way, if something should go wrong, you’ll have a vacation home you can enjoy or something you can rent to a ready-made market of college kids.

Krunic also says you should never invest at a rate of any more than 55% to 60% of current market value so you’ll have a built-in cushion of equity. “You’ve got to have insulation,” he said. “If the next payment never comes, you’ll have plenty of room to get out.”

By the way, getting out can be expensive: When you have to pay an agent to sell the place, a lawyer to handle your foreclosure, any unpaid back taxes and whatever repairs are necessary, your wallet could be $20,000 to $35,000 lighter when all is said and done.

Although Krunic said he believes investing in a company such as the ones you dealt with is a “recipe for disappointment,” he said you must do your homework if you want to go that route. Check them out with the authorities, for sure, but also ask for references from other investors and talk to them directly. Be leery of mass emails or mass snail mailings, too. It’s best that you are referred as opposed to being phished.

But even then, this expert warned, “it’s really scary” when you have to trust someone else to make your business decisions. Worse, he said, if it all falls apart, there’s nothing there for individual investors like you.

Nationally syndicated columnist Lew Sichelman has been covering the housing market for more than 40 years. MarketWatch readers are encouraged to send their real estate questions to him at lsichelman@aol.com . Answers will be presented in this column every Friday. However, because of the volume of e-mail he receives, he cannot answer every reader’s query.

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There continues to be a lot of discussion regarding MERS, the effect on how real estate transactions are viewed, & the resulting legal ramifications.  I came across this very insightful article written by Joseph M. Cobert, a well respected real estate attorney in Los Angeles.  Joseph frequently  serves as a legal expert on many local real estate panels & events.

ARE HIGH TECHNOLOGY AND TRADITIONAL

REAL ESTATE MORTGAGE FORECLOSURE METHODS COMPATIBLE IN CALIFORNIA?

A RECENT APPELLATE DECISION SUGGESTS

THAT THEY CAN BE

The mortgage industry keeps pursuing technological advances in the documentation, underwriting and servicing of loans in California.  Meanwhile, as the volume of real estate foreclosures — especially in the one-four family residential sector — continues to remain high, homeowners in default have looked for additional grounds to challenge the validity of trustees’ sales and other foreclosure activity.

We examined certain of those pitfalls in the November 2010 volume of The Joe Cobert Report.  There we looked at the “robo-signing” phenomenon and who really possessed authority to pursue and complete foreclosures.

I.         The “MERS” Concept

The move toward “paperless” record-keeping has added another twist to the authority controversy.  A central focus in this controversy is the entity known as “MERS.”

What is “MERS,” and how does it work?  MERS is the acronym for Mortgage Electronic Registration Systems, Inc., described as follows:

“MERS is a private corporation that administers the MERS System, a national electronic registry that tracks the transfer of ownership interests and servicing rights in mortgage loans.  Through the MERS System, MERS becomes the mortgagee of record for participating members through assignment of the members’ interests to MERS.  MERS is listed as the grantee in the official records maintained at county register of deeds offices.  The lenders retain the promissory notes, as well as the servicing rights to the mortgages.  The lenders can then sell these interests to investors without having to record the transaction in the public record.  MERS is compensated for its services through fees charged to participating MERS members.”  (Mortgage Elec. Registration Sys. v. Nebraska Dept. of Banking & Fin. (2005) 270 Neb. 529, 530 [704 N.W.2d 784, 785].)  “A side effect of the MERS system is that a transfer of an interest in a mortgage loan between two MERS members is unknown to those outside the MERS system.”  (Jackson v. Mortgage Elec. Registration Sys., Inc. (Minn. 2009) 770 N.W.2d 487, 491.)

Because MERS functions in this non-traditional way, a number of commentators had speculated that the MERS system would be found flawed and a few even predicted that chaos would ensue as to many loans which went through that system.  California’s first appellate decision on one of the MERS loans suggests that, at least as to nonjudicial foreclosures, MERS will continue to be viable and that the dire speculation was unjustified.  The applicable decision, Gomes v. Countrywide Home Loans, Inc., from the Fourth District Court of Appeal (which reviews matters from the San Diego, Orange County and Inland Empire courts), was rendered on Friday, February 18, 2011 and is discussed below.

II.         The Facts of the Gomes Case

In 2004, Jose Gomes (“Gomes”) borrowed $331,000 from KB Home Mortgage Company (“KB Home”) to finance the purchase of real estate.  Gomes executed a promissory note secured by a deed of trust which identified KB Home as the “Lender” and which designated MERS as “acting solely as a nominee for Lender and Lender’s successors and assigns,” while also listing MERS as a beneficiary.  The deed of trust which Gomes signed stated that he agreed that MERS had the right to enforce the lender’s interests “including, but not limited to, the right to foreclose and sell the Property ….”  Countrywide Home Loans, Inc. (“Countrywide”) was designated as servicer of the loan and retained the loan documentation.

After Gomes defaulted on his loan payments but before a trustee’s sale could be conducted, MERS (through its agent ReconTrust) initiated a nonjudicial foreclosure process in March 2009.  Without tendering payment, Gomes filed suit against Countrywide, MERS and ReconTrust, pleading a number of causes of action.  Most notably, he sought declaratory relief plus damages.  His declaratory relief claim was predicated on the allegations (1) that he did not know who was the beneficial owner of the note involved and (2) that MERS did not have authority to initiate the foreclosure because, Gomes believed, the current owner of the promissory note did not give specific authorization for MERS to so proceed.  Gomes pled no facts to support such belief.

III.         The Gomes Appellate Decision And Its Reasoning

The trial court sustained MERS demurrer without leave to amend and entered judgment for the defendants, finding that Gomes was not entitled to relief.  The Court of Appeal affirmed.  It emphasized that Civil Code Sections 2924 et seq. provide a comprehensive scheme to regulate a nonjudicial foreclosure sale of California property.  One of the purposes of that approach is to provide a creditor or beneficiary with a quick, inexpensive and efficient remedy against a defaulting debtor/trustee.  As such, California appellate courts have characteristically refused to read any additional requirements into the non-judicial foreclosure statute.

The appellate opinion said that Gomes’ attempt to seek judicial determination as to whether MERS as nominee possessed standing to commence the foreclosure process would have implied the existence of additional requirements and opened a floodgate for all kinds of new challenges to California’s longstanding foreclosure process.  The appellate opinion stated that “[n]othing in the statutory provisions establishing the nonjudicial foreclosure process suggests that such a judicial proceeding is permitted or contemplated.”  Indeed, such conduct would conflict with the purpose of the statutes involved, essentially being an attempt to “interject the courts into [the] comprehensive nonjudicial scheme.”

IV.         Unanswered Questions

In Gomes, the plaintiff possessed no facts to support the assertion that MERS lacked authority.  Indeed, having executed a deed of trust acknowledging that MERS was acting as “nominee” for the lender and its successors and assigns, Gomes had the burden of alleging specific facts demonstrating that such recitation was no longer applicable.  He did not and could not do so.  One unanswered question arising from the situation is what facts he would have needed to plead to overcome a demurrer.

A second unanswered question is how MERS would have fared had it proceeded to foreclose judicially.  A Kansas case from two years ago held that MERS lacked standing to intervene in a judicial proceeding brought by the lender there.  Landmark Nat’l Bank v. Kesler (2009).  Would California’s courts decide likewise, especially because the comprehensive scheme for quick and efficient nonjudicial foreclosures stressed as a rationale in Gomes would not apply in the judicial foreclosure scenario?

V.         Conclusion

As we expand use of electronic systems for reducing the mound of paperwork now appearing in mortgage documentation, further litigation on these and/or other questions is inevitable.  The Firm will keep you apprised.

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This is an illuminating article written by Ellen R. Marshall & Harold Reichwald  From Manatt, Phelps & Phillips, LLP. An extraordinary legal firm.

WHITHER MERS?

In the zeal to stall lenders’ efforts to foreclose on woefully delinquent mortgages, the plaintiff bar has put forward a variety of theories.  Some of the more interesting theories involve the relationship between the promissory note and the mortgage (or deed of trust) that secures the note.  The lenders may have made these theories easier for borrowers’ advocates to advance, when they created the MERS system for recordation.¹

MERS was designed as a system to facilitate the secondary market in mortgage loans by permitting the mortgage document to be recorded just once, in the name of MERS, and then having transfers of the mortgage noted electronically on MERS’ own records, with MERS acting as the title holder for all the successive owners of the note and the mortgage.  This was a smart idea, since the lag time associated with recording assignments of the mortgage document created a huge tracking problem for custodians and secondary market participants.  Nevertheless, with recordation in the name of MERS, rather than being in the name of the owner of the note, borrowers have found an opportunity to assert deficiencies in the foreclosure process entitling them to defend against foreclosures.

In the latest round of cases addressing this issue, a bankruptcy court in New York concluded that MERS does not have the power to foreclose the mortgage,² and another bankruptcy court in Kansas found that a foreclosure by MERS is perfectly fine.³ There are factual differences between these cases that may explain the apparently diverging results.  In the New York case, the court focused on the difference between a “nominee” and an “agent.”  Under the documents presented to the court, MERS had been appointed as “nominee” and “mortgagee of record” only.  That court had no documents before it that constituted MERS as an agent for any functions other than holding bare legal title to the mortgage instrument.  The court concluded that the role of nominee and mortgagee of record did not include the power to foreclose and take title to the real property in MERS’ own name.

By contrast, the court in Kansas found that, based on the documents before it, the role of MERS as nominee included authorization to act as agent of the noteholder for purposes of foreclosing.  The court quoted language from the mortgage itself saying that the powers of MERS as nominee included “the right to foreclose and sell the Property; and to take any action required of Lender.”

In reaction to the case in New York, and other challenges to the MERS structure, MERS has issued a notice⁴ recommending that its members foreclose in their own names, rather than in the name of MERS (even though the MERS procedural manual permits both approaches), to avoid these challenges until the case law becomes more settled.  It was important for MERS to react quickly to these developments, as some commentators have questioned the viability of the MERS model altogether.  What the cases reflect, however, is more subtle than that.  The MERS model requires precise explanation and adherence to its supporting documentation.  If the documentation for a particular loan provides that the nominee has only bare title, then MERS can only act as a holder of bare title.  If the documentation lawfully causes MERS to be a duly appointed agent for other functions, then MERS can act with those other functions.  But the parties should not assume that a court will infer the existence of broad agency powers, unless they are proven.

In a sense this latest skirmish regarding MERS is part of the larger war, and is akin to the battle over so-called “robo-signers.”  In a variety of different settings, the courts are making it very clear that foreclosure is a drastic remedy, and hence must be seen as technically demanding.  To use it, the lenders must conform to the precise technical requirements.

The latest court developments do not need to spell the demise of MERS.  While it is true that the MERS platform and forms of documentation could, with hindsight, have been created with better transparency and clarity as to these issues, the MERS arrangements are not inherently unenforceable.  As with all other aspects of the foreclosure process, what is called for is taking the time and attention to understand the loan-specific documentation, and to present to the court all of the pertinent documents.  Notwithstanding, if the MERS model is continually attacked, major participants may wish to pull out, which could leave MERS without the credibility or the economies of scale to survive.

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You may have read a lot about note investing lately.  Structured notes, how to buy notes for investment income, investing in debt etc.  One thing that is rarely addressed with note “brokers” is how to protect your note income against an inflationary economy.

Well, this is a concern I have because I am really more of a note investor than a broker of notes.  I attended an investment mastermind group this weekend in Las Vegas for 3 days with some of the brightest most seasoned investors that I know.  These are not “gurus” who are on the circuit with bootcamps that cost $2,000-$10,000 dollars, these are real people with real families who have developed REAL WEALTH.  I’m not talking about flashy Ferrari’s or Rolex watches.  The are the millionaire next door types who probably have never heard of because like like to keep very private.  Well, one of the subjects I brought up &  discussed covered was, how to protect note investments in an inflationary environment.  If interest rates are artificially low for the time being, what happens when inflation begins to rear it’s ugly head?  I think we are seeing inflation quite a lot lately, it’s just not spoken about at length in the media.  Have you filled you gas tank lately?  Noticed how much you have to pay at the grocery store?  A lot of people ask me “how can I learn more about note investing?  Are there any note buying tools or note buying software I need to use? Where do I find notes?  Those are good questions, but I suggest that there are deeper questions that you have to ask as well to become a successful investor.

Well, I will share with you a few things.  Jimmy Napier wrote a book called Invest in Debt, it’s a little innocuous book that many people will underestimate it’s power.  I like to read www.papersourceonline.com

This is a very busy time of year for me.  I am attending another mastermind group very soon with some of the brightest minds in real estate & note investing.  Sorry, it’s invitation only, but I am happy to share their wisdom what with our clients.

Stay tuned for more updates…

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I just got off the phone with Gerald, we found a great deal on a 2nd TD (tons of protective equity), in Fountain Valley.  He was already on the way to the property after I put a hold on the note to purchase.  Funny story…when I saw the note & the pricing I nearly fell out of my chair to get a bid in & cc’d Gerald.  It turns out Gerald was a step ahead of me & sent a bid before I did and was on his way to the property to take a look.  It turns out it wasn’t too far from his office…in fact Gerald & I had sushi at a restaurant in the same neighborhood not too long ago.

Although we invest in notes nationwide, I really like when we can find something in our own backyard.

We will probably joint venture on this one with another investor who has been patiently waiting.  Fortunately there are plenty more to come.

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Applying Wealth Principles to Trust Deed Investing

I am currently reading a great book recommended by Tim Ferriss, author of “The Four Hour Work Week” & more recently “The Four Hour Body”. The book is called “Poor Charlie’s Almanack- The Wit and Wisdom of Charles T. Munger by Charles T. Munger. Charlie Munger is the lesser know genius behind Berkshire Hathaway. Warren Buffet get’s the lions share of notoriety as a brilliant investor. However, this partnership which has lasted since 1959, exhibits some of the brilliance of decision making skills that have taken place through economic cycles & turbulence.

There are a few great quotes from the book that I intend to have mounted on the wall on my office at The Note Guys, here is one of my personal favorites…
“It takes character to sit there with all that cash and do nothing, I didn’t get to where I am by going after mediocre opportunities”. –Munger

“Accordingly, Charlie is willing to commit uncommonly high percentages of his investment capital to individual “focused” opportunities. Find a Wall Street organization, financial advisor, or mutual fund manager willing to make that statement.”– Michael Broggie

Did you know that Berkshire Hathaway’s annual compounded return since 1965 to 2009 was 20.3%?

The term “Compounding Machine” is borrowed from a money manager Chuck Akre (FBR Focus Fund). Two major components of his definition of a compounding machine were
1) A business that earns an above average rate of return on owner’s capital (equity).
2) A business that also has the ability to reinvest excess cash at above average rates of return.

We just may integrate this definition into the mission statement & identity of The Note Guys.

“We are an investment company that focuses our capital in exceptional opportunistic investments to earn above average returns on our capital & also reinvests excess cash at above average rates of return.”

Happy investing!

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