10questions you must ask before buying real estate notes

10QUESTIONS

YOU MUST ASKBEFORE BUYING

REAL ESTATENOTES

www.passivenoteinvesting.com

Investing in real estate notes can be afinancially rewarding and lucrative investment.However, it can also be complex and disastrousif you don't do your DUE DILIGENCE.

Here at Passive Note Investing, we alwaysprovide our clients with a complete NotePackage that contains all the details anddocuments they need to review before theypurchase a note.

However, some investors are still confusedabout what they should look for when buying areal estate note as a high yield, low risk, turn-key investment.

ABOUT THIS GUIDE

What to Expect

Discover the value of passive note investing

Make better investment decisions by asking the right questions

Minimize risks and losses

Maximize profit by choosing the best note for you

Receive double-digit monthly returns in a low-risk environment

Know your options in case your note stops performing

Learn how Rylex Capital LLC Notes are originated and sold to investors

In this guide, "10 Questions You Must Ask Before Buying Real Estate Notes"you will learn how to:

PASSIVE NOTE INVESTING

MORE QUESTIONS?

Passive Note Investing focuses on providing its clients with turn-key,high performing investment opportunities secured with carefullyselected residential properties in the Texas market. The website isowned and managed by Rylex Capital LLC, a real estate propertysolutions firm that concentrates in the Lone Star State – Texas!

With over 50+ years of cumulative experience in the real estate sector,serving hundreds of satisfied clients and counting, our businesscontinues to help busy, hard working professionals, business owners,and investors put their hard earned money to work for them.

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1 WHAT SHOULD I LOOK FORWHEN BUYINGREAL ESTATE NOTES?

"Every note investor is required to performdue diligence before closing the deal."

Simply stated, due diligence is doing one's homework. Before aninvestor purchases a real estate note, it is very important that theinvestor does his/her homework on who is selling the note, thedocuments that support the note for sale, the terms of the note, andthe property and borrower that the note is associated with.

Due diligence gives the buyer the opportunity to check if the note is a"full doc" loan which includes all the underwriting and note documentsas well as property information.

NOTE BUYER DUE DILIGENCE CHECKLIST

Who is selling the note - a broker or the originator?The principal balanceInterest rateTerm or length of the noteThe property that the note is secured byThe borrower’s capacity to repay the loanMortgage & Underwriting documentsDodd-Frank and SAFE Act complianceCompliance with all other loan underwriting guidelines

The note seller may or may not provide all the documentsnecessary to verify the above-listed checklist. If the note sellercannot produce the "full doc" file for your due diligence, then bevery cautious and aware of what note is being offered for sale.

Rylex Capital, LLC provides all of these items in our NoteInvestment Package. You may call 972.638.7360 oremail [email protected] if interested inviewing a sample Note Investment Package.

10 Questions You Must Ask Before Buying Real Estate Notes

WHAT EXACTLY IS DUE DILIGENCE?

Geography plays a big role in making note investment decisions.

The place of origin of the note and the location of the property are twovery important factors to consider when buying a note. Tax implications,foreclosure laws, and the current market environment of the propertymust be taken into consideration.

2WHAT STATE WASTHE REAL ESTATENOTE ORIGINATED?

It's not just out of coincidence that our notes alloriginate in Texas.

We purposely choose to operate in Texasbecause of its many advantages.

PopulationGrowth

StrongHousingMarket

Low Cost ofLiving

BusinessEnvironment

Investor& LenderFriendly

THE ADVANTAGES OF INVESTING IN TEXAS

In addition to the advantages listed above, Texas is also knownto have some of the best foreclosure laws, making it easier forany investor to take back the property in case the borrowerdefaults on his/her payments.


WHY TEXAS?

3 WHAT IS A TURN-KEY REAL ESTATE NOTE?

The booming housing market makes us want toinvest in real estate now more than ever. But formost busy professionals, the demands of being alandlord just won't fit into their busy work andpersonal schedules.

Turn-key note companies like us offer a done-for-you type of investment.

Turn-key notes are a passive form of real estateinvesting that caters to busy professionals and investors

who don't have the extra time to manage theirinvestments on a daily basis but still want to earn safe,

secure double digit returns from their hard earned cash.

Passive Note Investing offers 100% Turn-key Operations.The team includes:

Acquisition (Rylex Capital, LLC)Residential Mortgage Loan Originator (RMLO)AttorneysTitle CompaniesInsurance CompaniesMortgage Servicers


By purchasing a turn-key note, you don't need to buy the property,find a home buyer, qualify a home buyer, incur significant expensesnor collect on the note on an ongoing basis. All of this is done for you.The borrower's monthly payment gets directly deposited to your bankaccount. Simple, easy, hassle-free monthly cash flow.

4 IS THE NOTE DODD-FRANK AND SAFEACT COMPLIANT?


An investor should be aware of the laws and regulations that directlyaffect his/her investment. There are a few laws that every real estateinvestor should understand and comply with. Non-compliance with lawsmay place you in hot water and can lead to all sorts of complications.

THE DODD-FRANK ACTThe Dodd-Frank Act was signed in July 2010. Included in the hundreds ofDodd-Frank Act provisions is new section 129C of the Truth in LendingAct (TILA) which provides that no creditor may make a residentialmortgage loan without first making a reasonable and good faithdetermination that the borrower has the ability to repay, based on 8statutory criteria, to promote responsible, affordable mortgage lending.

THE SAFE ACTIn 2008 Congress enacted the Secure and Fair Enforcement for MortgageLicensing Act (“SAFE Act”). The legislation creates comprehensiveguidelines to register or license all residential mortgage loan originatorsin the United States.

WHAT IS A RESIDENTIAL MORTGAGE LOAN ORIGINATOR?

An RMLO is defined as an individual who on behalf of the lender: (i) takesa residential mortgage loan application, or (ii) offers or negotiates theterms of a residential mortgage loan.

Rylex Capital, LLC only offers notes that are Dodd-Frank and SAFE actcompliant. We transact with licensed RMLO companies to ensure thatthe buyers are qualified for their mortgage.

A note is performing if it continues to receive monthlypayments as agreed in the note contract.

5 WHAT IS THE DIFFERENCEBETWEEN PERFORMING ANDNON-PERFORMING NOTES?


PERFORMING NOTES

NON-PERFORMING NOTES

WHAT YOU SHOULD KNOW

A note stops performing if the other party stops fulfilling hisobligations and is usually considered delinquent or in default.

Aside from the fact that performing notesreceive monthly payments, the main differencebetween performing and non-performing noteslies in the time, effort, and predictability of cashflow generated from the investment.

Performing notes are a more passive, securedtype of investment, while non-performing notesdemand more time and effort from the investorto get the note to re-perform or possiblyforeclose on the borrower.


Like any other investment, note investing has risks. Below aretwo of the possible risks that you might face as an investor.

6 WHAT ARE THERISKS INVOLVED INNOTE INVESTING?

IF YOUR NOTE STOPS PERFORMING

One risk is if the home buyer defaults by notmaking their monthly payment. Laws may varyfrom state to state and investing in the wrongstate can stop or delay you from recovering whatyou invested in case of default.

Even though notes are secured by real property, house pricesmay increase or decrease in value over time. Again, thelocation of the property plays a major role in determining thesuccess of your investment.

Texas currently tops the housing market charts across the U.S.The low cost of living compared to other states makes it anattractive destination for home buyers.

IF THE HOUSING MARKET DECLINES

Rylex Capital, LLC purposely chose to operate in Texasbecause of the state's investor-friendly courts. Foreclosureproceedings are carried out quickly with minimal costs andthe note holder can easily retrieve the property withouthaving to go through the usual legal procedures.


We discussed risks in Question 6. The good news is that if youbuy the right note, these risks can be mitigated and your capitalprotected. The key is understanding LTV or Loan to Value.

7 HOW CAN YOUMITIGATERISKS?

WHAT IS LOAN TO VALUE?

The term is commonly used in real estateto represent the ratio of the first mortgagenote as a percentage of the total appraisedvalue of the real property.

For instance, if a note has a loan balance of $80,000 and theproperty is worth $100,000, the LTV ratio is $80,000/$100,000or 80%.

In the event of a default or a downturn in the market, as long asthe note holder has a good equity position in the LTV, his/hercapital is protected. So, when buying a note, make sure you havea good LTV equity position in the note you are consideringbuying.

For more information on LTV, please contact us at 972.638.7360or email [email protected]

Many Americans are unaware of the benefits of a self-directedIRA. In fact, only a few are taking advantage of the option ofchoosing their own investments for their Individual RetirementAccounts.

8 CAN YOU HAVEMORTGAGE NOTES INYOUR IRA?


WHY A SELF-DIRECTED IRA?

TAKE HOLD OF YOUR FUTURE

Don't leave your fate to pension plans and governmentretirement funds. Don't expose your retirement funds to the

volatile stock market. Create a self-directed IRA and takecontrol of your retirement. Make the best of your golden

years by securing financial freedom.

WHY INVEST IN NOTES INSIDE YOUR IRA?

Notes provide you with high cash flow earnings at minimizedrisk but with little time and effort. You will also benefit from tax-deferred or tax-exempt interest if you choose to include notes inyour IRA.

For more information on how to set up a self-directed IRA orhow to divest your retirement funds into high yield, low risk realestate notes, please call us at 972.638.7360 or [email protected]

If you are looking for high performing income opportunities in a low-riskenvironment without having to do much work, then you may want toconsider investing in performing real estate notes.

Here's how our mortgage notes stack up against other investments.

9 HOW DO NOTESCOMPARE WITH OTHERINVESTMENTS


ARE NOTES THE BEST TYPE OF INVESTMENT?

MONEY MARKETACCOUNTS

The highest yieldon money marketaccounts is 0.90%

APY.

US TREASURIES

Yield on 10-yearTreasury note

remains at 1.75%

US CORPORATEBONDS

A-rated CorporateBond yields are 5%

on average.

BUY AND HOLDREAL ESTATE

Single family rentalshave approx. 8-10%

returns beforenecessary rental

costs

GOLD

Gold prices are atmulti-year lows

and do not providecash flow.

Our turn-key realestate notes earn

+10% yield securedby appreciated

property.

RYLEX CAPITALNOTES

Passive Note Investing provides detailed information anddocumentation to educate investors in the note purchaseprocess.

Follow our simple three-step note investing blueprint and startearning double-digit income by purchasing Rylex Capitalperforming notes.

10 HOW DO I STARTPURCHASING REALESTATE NOTES?


Step 1. LearnAccess our guides, books, and training courses for FREE.

Step 2. InvestSee our note inventory for a list of available investments.

Step 3. Talk to UsArrange a call with us to receive your note package. Feel free tocontact us at 972.638.7360or email [email protected].

Visit our websitewww.passivenoteinvesting.comto learn moreabout how to become a real estate note investor.

http://www.passivenoteinvesting.com/

WHY SHOULD I INVEST INPASSIVE NOTE INVESTING?


100% Turn-Key Program.High Cash Flow.Low Maintenance Investment. Low Risk.Capital is secured by a hard asset.Excellent Loan to Value (LTV).Flexibility: We can structure the Note terms to suit theInvestor. We focus solely on a market with a vibrant economy,strong property market and increasing home values

Our private mortgage notes offer above market yield & cashflow.We guide the investor through the note buying process,which includes property and note due diligence.We conform to all loan underwriting & documentationguidelines.We work with the title company who files the First LienDeed to ensure note security is in place.

WHAT SETS US APART

WHY CHOOSE US

GET A FREE CONSULTATIONCall us at 972.638.7360 or email [email protected] talk to a representative.

10questions you must ask before buying real estate notes

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