2. Look at the investment as if you may someday own the property you have loaned on, because if the borrower defaults you may have to do a foreclosure and end up as the owner of the property.

3. When selling a note position, do so without recourse unless you are willing to guarantee payment if the borrower does not.

4. Plan for the worst and hope for the best. You never know when times and circumstances may change for a borrower. I've had loans that ended up in bankruptcy for two or three years with no payments, and sometimes not one but three or four bankruptcies before you can finally get the property to a trustee's sale and are paid off or end up owning the property. This can mean lots of attorney fees, time, and inconvenience.

5. When selling off certain streams of payments on a trust deed note, this means you are in a second trust deed position if the borrower defaults. Do this only if you are prepared to pay off the first if it goes to foreclosure.