Showing posts with label mortgage. Show all posts
Showing posts with label mortgage. Show all posts

Tuesday, January 21, 2014

Florida's Mortgage Components

The components that make up a Florida Mortgage

I was surprised to find out most people, who are home owners or my students, do not know what their mortgage consists of! Biggest financial transaction of your life and you can’t recall the interest rate that you are paying? As the sports analysts say – "C'Mon Man!"

One of the questions I ask my Real Estate Mentoring Students or Clients, what are the three parts of a Florida Mortgage? Most say the mortgage and stop with blank stare? So today I am going to discuss the three parts that make up your Mortgage in Florida. They Are:

  1. Note
  2. Mortgage
  3. Deed

That is why you have so many papers to sign at closing!

Note or Promissory Note

A note or Promissory Note can be drawn up using a template you bought in Office Depot! It is real simple! A note is contract or document signed by the people who agree to pay the debt. It doesn't have to be you! It is anyone willing to pay back, usually with interest and terms, a debt that has been incurred.

In real estate, it is typically a borrower or buyer agreeing to make monthly payments of principal and interest over 15 - 30 years to a lender, usually a bank but it could be an individual. (Good Cash Flow Strategy!) If the borrower doesn’t pay, the LENDER can sue "under the note" for breaking the contract. Usually in Real Estate, the property serves as collateral if there is a breach of contract.


A mortgage is document that transfers interest in property. While a mortgage is tied to the debt created by the note, it is not a promise to pay the debt. It contains language which gives the lender the right to take back the property if the borrower/buyer goes into default and doesn’t pay under the terms of the note signed. In other words, what will happen if you breech the Promissory Note.


A deed is the document that passes the TITLE from the grantor (Seller/Owner) to the grantee (Buyer/Future Owner). There are two basic types of deeds.

  • Quitclaim Deed - passes whatever title or rights the grantor (Seller/Owner) has in the property to the grantee (Buyer/Future Owner) without any warranty.
  • Warranty Deed - contains promises made by the grantor (Seller/Owner) about the title or rights conveyed. In other words, he is warranting a "Clear and Marketable Title."

A deed must contain legal description of the property and must be signed in front of a notary public in the State of Florida.

A title is the bundle of legal rights the owner has in real property or asset. In other words, the title is the ownership of the property.

P.S. Make sure you sign all documents in Blue Ink and the mortgage is recorded at the Clerk of Court office.

Written by +Bob Burns.

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Bob Burns at MREIA meeting"The only thing more expensive than education is ignorance" - +Benjamin Franklin!
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+Real Estate Investor
Telephone #: 305-586-5280

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Wednesday, May 29, 2013

Building Your Foundation before
starting Real Estate Investing

Before You Start…

  While holding monthly meetings and giving presentations to the attending audience, one of the more common questions we receive is: “How do I start?”

That is a great question!

When we started, we jumped right in. We purchased 15 distressed condominiums, each 2 bedroom/1 bath, in Miami, Florida. The units were controlled by a private investor who held the note on the individual units. Every unit stopped paying their mortgage and was living rent free. The existing owner was burned out and wanted to quit being a landlord. He asked for $30K for the note. We bought the note at a substantial discount and closed the deal.

That was the easy part!

Talk about being over our heads. We had no idea how to proceed. Suddenly, we had to learn the following:

  • Landlording
  • Real Estate Financing
  • Rehabbing
  • Foreclosure Law
  • Evictions
  • Termites
  • Liens and Violations
  • Water Liens
  • Sales and Marketing
  • On and On and On…
We had nothing in place to proceed. We had to learn the hard way. It took time and time is the enemy to investors. The longer it takes the more money you are losing in the real estate investment business.

So before you get your feet wet with your first deal, make sure you have the following items setup and running.

Starting Your Investment Strategy

  • Before you Start Looking for Deals:
    • Make sure EVERYTHING IS IN WRITING. Need I say more? This is the beginning of your business plan that can be show to investors, bankers, partners, private money lenders, etc.
    • Go to a Real Estate Investor Associations, REIA meetings to Network:
    • Open a Florida Corporation
      • For Florida go to to open your own corporation.
      • Create Articles of Incorporation:
        • Identify corporate Officers: President, Treasurer, Secretary, etc.
        • Need to declare number of outstanding shares and price per share.
    • Buy/Sell Agreement or Share Ownership Agreement.
      • Want the ability to move shares when boards of directors change.
      • Make sure you have a Shotgun Clause or clause in agreement.
        • Dictates that if you are in a partnership and the partners want to get rid of you, you have to be bought out.
    • Company Seal – This is old school but some attorneys still use them.
    • Meeting Book – Corporate meeting notebook.
    • TAX ID # or EIN # - Uncle Sam wants their share.
    • Print up Your Business Cards – Got to let everyone know what you are all about.
      • Get creative – Don’t make your business card boring. Make people remember you through your card.
    • Business Bank Account
      • Documents Needed to Open an Account
        • Drivers License with Photo
        • Articles of Incorporation
        • Certificate of Status
        • EIN #
        • Signatures of Corporate Officers
        • Order Checks
        • Order Credit and Debit Cards
      • Make sure all the documents you order have the proper information. No delays due to typing mistakes.
      • Bank Stamp for Deposits - Cashing one of our $40K checks was delayed due to an improper bank stamp. We didn’t have one!
    • Build Your Team
      • Real Estate Accountant – Someone who understands real estate investing.
      • Real Estate Attorney
        • Paul B. Woods – Florida Land Trusts
        • Bruce Jacobs - Attorney at Law
      • Business Plan – You wouldn’t go into the woods without a map or a GPS. Your business plan is your map or GPS.
        • Eduardo Paz – Straglobus, Inc.
    • Attend Conventions – Network big time and get ideas.
    • Develop A System – Streamline your processes, save time, make money.
      • Outsource your weaknesses and work on your strengths.
        • I hate paper work and accounting. I get someone else to do these processes for me.
Like building a house or anything else you must lay the proper foundation to support what you are trying to build. We give a copy of this outline to all of our mentoring students who are just starting real estate investing.

Next Step - Finding the Deal

Related Links, Blog Postings, Presentations or Articles:

Written by +Bob Burns.
Robert Burns sign.Building Our Foundation.
Bob Burns Print Signature Photo
+Real Estate Investor
Telephone #: 305-586-5280

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