Week 7 – The Four Hour Work Week…Kind Of

This week has been productive and business focused. I’m reading a new book, The Four Hour Work Week by Tim Ferriss (if you haven’t read it you need to now). I’m about 1/2 way into and finding a ton of ideas to help myself cut back on work time and have a lot more me/play/family/free time. While it doesn’t happen over night, I’m starting to implement some of the ideas little by little and am focusing on the tasks that I can outsource now.

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Monday Feb. 8th – Sunday Feb. 14th, 2016

Monday (2 hours) w/o reading

  1. Read for 1 hour.
  2. Called 6 banks that I found were high candidates for selling non-performing loans using distressedpro.com. I got a live person or email contact with 3 banks. I left voicemails for 3 additional and 1 indicated they are not selling currently.
  3. Received updates from many of our vendors. Found out one borrower that was repaying didn’t make Feb. payment. Disappointing news, but the name of the game. Knowing it was always a possibility we are prepared to foreclose if needed.

Tuesday (1 hour)

  1. Got a new loan boarded with my servicing company and made sure the paperwork transition went smoothly.
  2. My attorney confirmed we have officially filed the 45 day demand letter for a borrower in NC. I also received a letter of indemnification from the original title issuer. After my attorney pulled title in preparation to foreclose, they found there were title issues that needed to be rectified before moving forward. I contacted the original title policy company, opened a claim and received the letter about 4 weeks later. It was definitely a set back in the timeline, but all is well and on track now.
  3. Read for 30 minutes.

Wednesday (4 hours)

  1. Closed on our newest deal in Pittsburgh, PA. Smooth, easy, and a $3,000 upfront pay day for us.
  2. Looked at new inventory and submitted offers on 4 assets. 1 was rejected (our pricing was way to far off from each other). The other 3 I should hear back from in a week or two.
  3. Started an account on EverNote (I know I’m way late to the game). I will be using this to store my business receipts, paid invoices, etc. for my new bookkeeper to easily have access to without a paper trail and conveniently located in the cloud!
  4. Hired a new assistant to help set up my bookkeeping using Xero. I found an extremely qualified and highly recommended bookkeeper on ODesk. I will be using them on a trail basis at first in hopes all will go well!
  5. Outsourced searching for qualified bank leads to sell inventory on distressedpro.com to one of my best VA’s. This will save me at least 1 – 2 hours per week.
  6. Inspection was completed for the sale of our property in Tipton, IN.
  7. Read for 30 minutes.

Thursday (3 hours)

  1. Monitored the work of our VA’s on a new tape that was submitted to us from a client on tapetechs.com.

Friday – Sunday (VACATION!)

Total Income for this Week: $3,152.59

 

Week 6 – Wheelin’ and Dealin’

I love getting a new deal and seeing a pay day in sight. This week I felt I got a lot accomplished toward my overall goals which obviously feels great! Take a look at the action this week.

Monday Feb. 1st – Sunday Feb. 7th, 2016

Monday (3 hours)

  1. Our Tipton property went on the market officially today for $52,000.
  2. Received the BPO back from our realtor for the new deal in Pittsburgh, PA. The value was right on point with our expectation.
  3. Paid 2 invoices to our vendors for recent work that was completed. Checked in the progress of our current deals.
  4. Explored distressedpro.comdistressedpro.com, which helps source non-performing notes and REO (foreclosures) direct from banks, credit unions, and servicers with BankProspector software. I had heard a lot about it but finally tried it our for myself. Lets just say its AWESOME! It really does help you find the exact banks in the markets your are targeting that not only are healthy enough to sell but see if they have a history of selling and are prepared to sell now. Instead of calling every bank I could, I now have a super targeted list of qualified banks to call.

Tuesday (1 hour)

  1. One of our borrowers called and wants to modify her loan. I provided her with our servicing companies info to get her income verification and see if a modification or forbearance plan will work.
  2. Received title back on our newest pending purchase in Pittsburg, PA. There were WAY more taxes than expected so I had to reopen negotiations. I was able to knock down our purchase price from $57,500 to $50,000.

Wednesday (4 hours)

  1. Got an offer of $50,000 for our Tipton, IN listing (only $2,000 off asking) just 3 days on the market! We accepted and will have inspection next Tuesday with closing on the 29th of Feb. Considering we’re all in this deal at $29,500, we’re expecting to see some great results in our total ROI (expecting a $16,000K profit and a total of 54% ROI!)
  2. Attended my monthly REIA meeting at CFRI (Central Florida Real Estate Investors Association). While I wasn’t speaking this time, I did volunteer which is always a great opportunity to meet and network with new individuals and really make myself present within the organization. After we had a few drinks with fellow real estate investors and talked really good shop! We got some great ideas for additional income streams.

Thursday (3 hours)

  1. Finally received the electronic collateral files for the Pittsburgh, PA purchase and 66599346had some major new findings. The borrower is contesting (although their case is not very strong) and there was even more taxes owed than the title report showed. Because of the risk we run with this borrower in particular and their past correspondence in regards to this loan, we renegotiated. We came to an agreed upon closing price of $40,000 (a $17,500 deduction from our original purchase price)!
    (In PA , to get the most accurate info requires a tax verification to be pulled. This takes about 10 days – 2 weeks to receive. This is why I did not have that information until the collateral files were sent).
  2. Looked at 4 new assets, decided not to place a bid on them. Just didn’t meet our buying interests.

Friday (day off)

Saturday (2 hours)

  1. Wrote this post.
  2. Updated a lending agreement, executive summary, and docs for our lender for Pittsburgh deal. We should be closing Wednesday.

Total Income for this Week: $443.95

 

Bradenton REO Case Study

Another great deal, bought and closed. This was deal was completed with a “JV Partner” (Joint Venture) and was completed in a whopping 47 days! Our company, Seasoned Funding, LLC acquired this deal from a note wholesaler. While this was our first time working with them, we have closed several more and are looking forward to completing many other home run deals like this in 2016.

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As you can see, this deal was a seriously killer deal. We ended up selling it for way more than we initially anticipated and in less time (both great things). There were some small complications with the original closing because the title company the seller went with did not understand our creative structuring. We securitized our JV partner with a 1st lien private mortgage with a lenders policy which was rejected by the closing company 3 times before they finally had legal review it and accept it!

We got clean up started right away but had set backs once again because it fell during the Thanksgiving holiday. We finally got everything buttoned up and on the market within about 3 weeks, and as you saw it was smooth sailing from there!

If you want to see some of other portfolio holdings, or find out how to get involved with our company and see returns like these, please visit our website, gives us a call, or email us!

Week 1 – Starting 2016 Right!

 Monday 12/28  – Sunday 12/3

This is my first week of tracking my progress to a $120,000 year! As you can see, this post actually starts a few days before 2016 hits, but I thought I should track it anyways. I also wanted to clarify why I chose my financial goal of $120,000 in this first post.

While this may not seem like much to other investors, or to someone with a higher paying salary job, my goal of $120,000 is a big income leap for me. Coming from a teachers salary in Florida (let’s just say it isn’t much), I am way more than doubling my income and I am doing it through my own business, on my own terms, and my own timeline. I’m not clocking in from 9 – 5 to make this salary. I’m working when I want, where I want, and on the deals I want. I wanted my financial goal to be a realistic number that was attainable but also somewhat of a challenge. I very much hope as I reach the 6 month mark in the year, I realize I undershot what I’m capable of and move my goal up a notch or two, but for now, I’m very happy with $120,000!

Anyways, here is my summary for the week.

Monday (about 6 hours in all)

  1. I spoke with three potential private lenders/partners that are interested in our company and want to invest money on deals. This is a huge part of our business because for every deal we acquire we need to have money ready to be allocated accordingly to close the deal. We raised upwards of $50,000 just from these calls.
  2. I did a lot of deal follow up with the holidays the week prior, many of the companies we use for contracting, attorneys, and other vendors were closed. I wanted to make sure everything was still on track with the current deals we had so I made several calls and emails to follow up.
  3. I also worked with my VA’s reviewing their work on a tape of 80 assets that was sent to us to be scrubbed for a client.
  4. Paid taxes on one of our properties & paid 2 invoices for vendor work.
  5. Read for 30 minutes.

Tuesday (Only 2 hours total of work with some shopping and R&R)

  1. I called and/or emailed 8 potential sellers of assets/notes. This is one of my areas of weakness and is definitely one of my least preferred tasks. While it’s not a difficult job, I just never seem motivated to call new sellers. So calling 8 today was a big accomplishment for me!
  2. I finalized contracting work on a rental we have (rehabbing interior, roof, etc) and got that officially started.
  3. Received another tape to be completed by the VA’s from tapetechs.com, so I sent that to the VA’s and made sure they began the task in a timely manner.
  4. Read for 45 minutes.

Wednesday (Goal Planning Day! about 4 hours in all)

Okay I’ll be honest. I love to goal plan. I wish I could simply create dream boards, write down my 6 month, 12 month,  2 year , 5 year goals all that time! For obvious reasons, I choose my goal planning time strategically. I always like to start my year off with a good goal planning session but also do it randomly throughout the year as I see fit.

  1. Listened to an AWESOME podcast on the topic of goal planning from http://www.notemba.com – you can listen to it here!
  2. Wrote my monthly goals and annual goals for both my financial and personal life.
  3. Recreated my dream board with new and updated pictures.
  4. Rewrote/reorganized our office white board which houses all of our current and pending deals with the stages of the workout they are in, and other important information.
  5. E-Recorded a deed for a property.
  6. Read for 30 minutes.
  7. Updated my tax information for 2015 and sent to my accountant.

Thursday & Friday – New Years Eve & New Years Day, Time Off

Saturday

Read for 3 hours (just started Tony Robbins Money Master the Game) and I’m loving it so far!

Sunday (about 1 hour in all w/o reading)

  1. Finished today’s blog post
  2. Worked on my social media sites
  3. Ordered a new marketing case study from Fiverr.com
  4. Wrote my Jan. Newsletter – which if you aren’t receiving you can grab here! (Freebie code to try TapeTechs.com services included)
  5. Read for 2 hours

Total Income this week: $458

Preliminary Due Diligence: Why Do I Need It and How To Do It!

Knowing how to properly complete both preliminary and formal due diligence is an absolute must for a note investor. Your success in the workout and return of the note investment relies on how thorough this is completed before the acquisition of the note. For new note investors, this is a tedious and somewhat intimidating process as there is a great deal of research to conduct on each note. I wanted to dig deeper into this process and give you an idea of how we use this process at NoteInvestingClub.com to train our VA’s to do the preliminary due diligence for us. We then, can make quick and informed decisions to bid on assets. diligence

Preliminary Due Diligence

This is the “informal” stage of due diligence if you will. This research is conducted before submitting bids on properties and is intended to give you the property information, value, and potential costs associated with the note. This stage is extremely important because it allows you to make an educated bid on a note or pool of notes to ensure your position is not jeopardized and you are leaving enough room for profit in your offer.

What to look for in this stage…

  1. item3Property Information: This includes number of bedrooms, bathrooms, building type, year built, sqft., and any additional features of the home such as pool, garage, fireplace etc.
  2. Property Condition: In the preliminary due diligence phase this typically means Google Images. Although google can be quiet outdated, you’re looking to see how old is the picture and what condition the property is in at time of the picture. If it was taken 2 to 3 years ago and was falling apart then, this tells you it’s most likely in worse condition now.
  3. Neighborhood Demographics/Condition/Crime: I like to use Trulia.com to asses the crime, although there are many other websites out there such as crimereports.com. Look around on google images at the neighborhood. Is it residential in similar condition, is it located on a busy road or in a more industrial area. This will help you asses potential sale factors.
  4. Property Value (CMV): I like to use comparable properties for a value of my home, not just the estimated values some websites provide like zillow.com, trulia.com eppraisal.com, or realtor.com. Although they are taking the average sales price into factorimages-2 there a lot of variables that can affect the price of the home that aren’t considered in their valuation systems. I look at condition and style of property, similarities and differences between sold properties and my property (size, sqft. extra features, etc), and location/neighborhood. Sometimes one street can make a difference of $20,000 in value, or more! In addition, I use more recent sold dates, sold within 3 months or sooner, in comparison to a lot of the valuation systems the other websites use, giving me a more accurate Current Market Value (CMV).
  5. Unpaid Taxes: You will need to locate the tax assessors or tax collectors website for the county the property is located in and determine if there are any unpaid taxes on the property. Many time there can be 2 – 3 years or more (FL, LA, MI, NJ, NY, it’s not uncommon to see 3+ years delinquent). There may or may not be tax liens or potentially tax deed applications on the property. Tax deeds are important to be aware of because they can jeopardize your position as a lender and need to be paid off immediately if it’s pending tax deed sale.
  6. Liens/Judgements: This part of the process is crucial and completing this search thoroughly can save you LOTS of money in the long run. Some counties do not offer their public records for free or online, which means you cannot complete this process without Judgment-liens-real-estatepulling a formal lien search. If it is offered online, you need to search for any potential liens, secondary positions (such as a 2nd mortgage), or judgements that have been placed on the property/borrower. Creditors such as credit card companies, IRS, HOA, or the county itself can place liens or judgements on properties that will supersede the foreclosure process and remain an unresolved lien/judgement even after you’ve foreclosed. It’s important to be aware of any existing liens and discuss with a local attorney if that has the potential to jeopardize your position, or outlive your foreclosure and eventually have to be paid by you. This has helped me locate a number of notes that I was interested in buying but realized had been sold in a Tax Deed Sale, HOA Foreclosure, or had Judgements and Liens that would outlive a foreclosure that valued $10,000+. Without finding this information out I could have been stuck with a contract on a note that had no profit margin, or worse, bought a note and wasn’t aware these even existed.
  7. Status of Bankruptcy: You will have to set up a Pacer.gov account to search BK records but is important to be aware if your borrower is actively in bankruptcy or not and what stage or type of bankruptcy they might be involved in. The type and stage within the timeline can potential effect your position as a creditor.

Now you need to use the information you’ve gathered in this process to help you make an educated and informed bid on the note to the lender and if your bid is accepted, you can start the next part of the due diligence process – the formal due diligence which will be coming your way soon! OnlineBidding2The cool part, once you’ve figured this system out you can 100% outsource this to an assistant or virtual assistant as we have. I’ve talked about how we did that in our free training at NoteInvestingClub.comCheck it out here! As always, let me know how you liked the post or leave me any comments or questions!

Bankruptcy: Know The Rules So You Can Profit

BankruptcyBankruptcy can be a problematic element of note investing if the investor doesn’t fully understand the process, rules, and regulations of bankruptcy and the implications it may have on their particular investment. Our company recently bought two notes from the same borrower which had filed Chapter 11 Bankruptcy, which is a re-organization of an entity or company (similar to Chapter 13 which is for an individual). The borrower had over 11 properties that they she was surrendering and had declared she wanted to keep her homestead only. In my mind I thought it was the perfect scenario, the borrower was pending an approval of their Ammended plan, and contact with their bankruptcy attorney indicated they were willing to provide a deed in lieu on the properties. We decided based on the evidence from her case, we would buy the notes and have a quick and easy turn around on both notes.

Shortly after our purchases, both the borrower and attorney went AWOL, I mean NO response after multiple attempts! Although the workout is taking MUCH longer than expected, and the dreaded foreclosure had to be implemented, we are still going to make a nice profit on the two deals, and have learned a lot along the way.

We realized that although we were aware of bankruptcy and believed we understand how it effected us that there was a lot we still had to learn. I wanted to write this post to help you understand what to be aware of before buying a note with a borrower in bankruptcy.

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Timeline for Bankruptcy
Chapter 7 ( Typically 4 – 6 months)
Chapter 13 or 11 (Average of 3 – 5 years)

Contact with Borrower
When a borrower is in bankruptcy you are legally prohibited from contacting the borrower directly and must speak with their attorney or trustee until a lift of stay has been filed and approved.

Gaining Title
Even if the property has been surrendered (the owner does not want it anymore) or the debt itself is observed, you still need a Deed In Lieu or Foreclose on the property to gain title.

How that effects you…
In order to initiate contact with the borrower and potentially start the process of the “workout” you will need to file a lift of stay. After a lift of stay has been requested it typically takes 30 – 60 days to be given a court date to have the hearing to receive approval. So this could extended the workout timeline on your note.

Automatic Stay
Automatic stays are put into motion after the borrower enters Bankruptcy. It is intended to prevent creditors from further contacting, harassing, or attempting to collecting debts from the borrower. You must apply for this to be “lifted” and be granted approval within the BK court. It is typically granted to creditors that have collateral that is not properly being protected so they can take the next steps to protect their asset such as foreclosure.

How that effects you…
Although applying for a lift of stay is rather easy, being approved for it in court can be more of a challenge. For instance, the court will not lift the stay when an unsecured debt will be included in the debtor’s discharge (so for Chapter 11 or Chapter 13 plans). If you’re early on in the plan or your borrower files for Chapter 11 or 13 right before the final judgement (this actually happens a lot more than you’d like to know), it could take up to a year or longer before their plan is approved and you start to see some form of payment or workout solution. In the mean time you’re stuck waiting with a note you can’t do anything with! 

Proof of Claim and Transfer of Claim
In Chapters 7 and 13 and 11 bankruptcy cases, all unsecured creditors must file a proof of claim for their claim to be allowed.  Certain secured creditors, however, do not have to file proofs of claim to participate in a bankruptcy case. For example, lien holders and other secured creditors do not have to file a proof of claim to preserve their liens in a bankruptcy case. You have 90 days after the first meeting of the creditors to file this claim. proof-of-claim

Transfer of Claim happens when a creditor has changed, for example if the note is purchased from the current lender on file, you need to file a transfer of claim to prove you are the new creditor.

How it effects you….
I suggest checking with an attorney that is familiar with the bankruptcy process in the state the borrower is located within to find out if you a required to file a claim or not. This is especially important if your borrower is in Chapter 11 or 13 and a payment plan will be made to the creditor on file for the specific property. You want to ensure that your note/property will be properly addressed in their plan.

Bankruptcy Plans
A payment plan is created in both the Chapter 11 and Chapter 13 BK cases. This must be approved formally by the court before set into motion and can take up to two years before it is formally approved. It outlines the exact amount secured creditors will receive in the form of payments and for how long.

How it effects you…
Reviewing the plans before buying a note that has a borrower in BK is extremely important. If a payment schedule has been created within this, it will allow you to see what you are expected to be paid per month, for how long, and at what interest rate. If you are buying this note as a “re-performing loan” then this is the sole determining factor of your ROI and must be looked at carefully. There can be amendments to the original plan, so make sure to look for that as well. It’s also important to know if the plan intends for you property to become a part of their repayment plan, or if it is being surrendered. If it’s surrendered then a foreclosure or DIL is necessary before you are able to do anything with the property.

Now there are other elements to be aware of within Bankruptcy and many rules and regulations that were not discussed in detail here. If you want more information, glossary, or tips with BK, I suggest you take a look at the BK “Cheat Sheet” and Due Diligence checklist we provide to our paid members of NoteInvestingClub.com  for more help. Let me know any questions you may have about this post or bankruptcy itself below!

bankruptcy-questions

Remember, I am not an attorney. This post does not provide legal advice and the Provider is not a law firm.  None of our customer service representatives are lawyers and they also do not provide legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer if you want legal advice.

The Truth about Servicing Companies

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Servicing companies are big players in the note investing world. National laws allow each individual state to determine their rules & regulations for servicing loans and surprisingly do not always require you to have you loan serviced be a professional company.  While it’s possible to service your own loan, I  do not suggest it simply because of the time value. Is saving $25 – $50 per month really worth the hassle and liability/risk you’re putting yourself into but servicing itself? Hopefully your answer is no, it’s not. If you do decide to have your loan serviced by a company, the next problem you have to solve is; well, which company do I chose? There are TONS of servicing companies to chose from and each of the vary slightly in price and services but offer essentially the same thing:

  • Ability to collect payments.
  • Workout the loans (handle talking to the borrower, negotiating, or starting/executing foreclosure).
  • Filing & Sending paperwork (TILA/RESPA letters) borrower options, correspondence.
  • Keeping payment records from borrower.
  • Correctly taking out and holding escrow for taxes and insurance.

I talk with a lot of investors that ask “have you found a good servicing company yet?” and my current answer is, “I’m with _____ right now and I am happy with their results and services, but it hasn’t always been like that.” The truth is, I’ve gone through several different servicing companies and each of them have positives and negatives to their day to day operations and I’ve had to make a switch several times to hopefully find the one that works for me. Some have quick payout times when you’re collecting payments, and I’m able to get my money quickly, but their workout specialist services are not up to par. Or maybe they have lower rates, but do not respond to anything you ask and are terrible at follow up with both the borrower or the client. I even had one servicing company that didn’t send my TILA/RESPA letter but asked for a boarding fee when I was handling the workout! They literally did nothing for me or my loans, but expected their servicing fee. Let’s just say I will NOT be working with them again.

To be honest, there is no perfect servicing company. You’re just going to have to search around and do your own digging. My suggestion is to try working with them on 1 loan initially, actually receiving their services will be the true sign if their company will meet your needs or not. Even with client reviews you’re still going to have to try it out yourself and see if their services or expertise meet your needs. When I was dissatisfied with my last servicer, I asked a fellow colleague about switching to the company I’m currently using (and happy with). They said they had a very poor experience with the company I’m happy with, and that they were making a switch themselves to a new company because of it!

Here is a list of servicing companies. By including them on this list, I am in no way endorsing their company or services. My goal is to make the searching period easier for you by housing them in one location.

When you make your initial contact with them, ask them the following questions about their services; *Also check for their pricing online, if it’s not online ask for the pricing to be sent to you*

  • What information is needed from me if I board with you?
  • Do they send the TILA/RESPA letters?
  • What do they do as a part of their “workout/collection services” do they skiptkace? Send someone to the home of the borrower, or just try to send letters and make phone calls?
  • How quickly do they typically see results with their borrowers and when do they file foreclosure if the borrower is unresponsive?
  • How fast is the money deposited into my account when I am successfully receiving borrower payments?
  • Is there an online portal for me to access my records, borrower payment history, borrower correspondence, etc.?

So start interviewing and hopefully you’ll find the right servicing company for you!

Calculating a Deal – The Method’s and the Outcomes

DealOrNoDealHead

Lots of people have different methods for calculating and analyzing their note deals. While there is no “perfect” or one solution, you need to know that you’re coming up with the right numbers for your potential profit as well as your expected costs so you’re not stuck with a unpleasant surprise half way through your workout. Today I’ll be focusing on how we analyze our deals, plan for costs, and ultimately decide to do a deal or not.

Analyzing

While the old pen and paper work here, if you are not utilizing technology, such as excel you are doing yourself an extreme disservice! Excel has AMAZING tools to automatically calculate percentages, basic addition and subtraction, to even calculating complicated algorithms. I suggest watching basic explainer videos on youtube or doing some web research  on how to properly create your automated calculations and save into a spreadsheet. I have one for calculating yields for payments over time (such as a re-performing or performing note), and one that helps me with the DIL or Foreclosure routes (see examples below). All I have to do is plug my numbers in and it tells me my yield! Talk about easy. It’s so much better than working the numbers into your 10bii calculator every time (although I love my 10bii calculator and use it every day for other reasons).

Excel Calculator for Notes

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Calculating Costs

I’ve noticed some investors low ball this area and I think it’s a huge mistake. I almost always round up and prepare for unexpected costs with every deal I do. I also ALWAYS prepare for the outcome of a foreclosure, meaning it’s built into my cost calculations and effects my expected yield before I place my bid. If the deal doesn’t make sense with those numbers, I counter, or move on to another deal. It’s always a potential and should be properly prepared for. Some additional costs I always factor in is servicing for 1 year. It if goes to foreclosure, I can expect (depending on the state) for my property to be tied up with a servicing company for roughly 6 – 12 months (sometimes more)! Even at the standard self-workout, non-collections fee of $25 – $35 that’s an additional $300 in a year. If you’re not prepared to pay that, it could effect your end yield. We also account for things like documentary stamps, property maintenance and security (which can be super costly surprise if you’re not factoring this in up front!), and forced placed insurance.

Deal or No Deal?
Ultimately, that’s up to you and you alone. Using the measures I mentioned above to analyze your deals will seriously help you determine if you move forward or not. I do want to remind you that it’s better to do no deal than a bad deal! You may want a deal bad, but remember you never want to be in a position that you want it bad enough to do a bad deal. Determine a yield % you expect in every deal that way if it’s above your required yield you’re good to go!

I hope you find this post helpful in understanding what better to prepare for in your deals and get you closer to a quick answer on each deal you do!

Orlando Note Deal Case Study

I was talking with a fellow note investor the other day about past deals we’ve completed over lunch. While we both swapped stories of great deals and ones that required a bit more work than expected, I was asked if we send out case studies on the deals we do? I’ve heard of doing this before, but had never actually taken the time to make one for our each of our deals, and quickly realized now how terrible that is! I need to continue to put our past deals out there for other investors and interested lenders to see what we’ve done, how we’re doing it, and the real ROI’s were getting on these deals.

So without further adieu, here is our first case study (I say first because there will be many more to come). This was completed with 2 joint venture partners, and worked out completely by us (Dennis Smith and Liz Brumer) owners of Seasoned Funding, LLC and Note Investing Club.com.

Orlando_Note_Deal_Case_Summary3

We purchased the note from a fund and began the workout right away. What you don’t see in the case summary is how challenging it was to find the borrower initially. She was living in Georgia but had “relatives” living in the property. Initially, they refused to give us the number, but then realized who we were and what we were trying to do and happily gave us the number to the home she was living in Georgia.

As you saw in the case study, the borrower had a judgement with a credit card company. This took quiet a while to resolve because it required an document signed by the borrower authorizing us to negotiate with the company. When we requested the letter from the borrower, she got scared and worried we were doing some sort of harm and went dark on us for an entire month. Finally, after numerous letters, calls, and pleas with her grandson – she refused to answer the phone, we helped he realize we were there to help and pay off the judgement, we just needed her consent.

It then took another month to receive the release of judgement from the credit card company and get it publicly filed so we had clear title to receive the DIL. This set us back about two and a half months into the work out. All in all it took about 6 months to successfully get the Deed In Lieu from the borrower and have it publicly recorded. From there we did repairs/minor renovations, and got the property on the market. While we got an offer on day 3 of being listed, it was FHA which required an appraisal that put the property $10,000 under what the buyer offered it for! We we’re super bummed about having to lower the price, but still were happy with our ROI.

There were some issues with title when closing, apparently the legal description had been incorrectly recorded for multiple sales and no one had caught it until now. This took another month to rectify which pushed closing back! Talk about frustrating! This deal definitely took longer than expected at 10 months but that’s exactly why you always over estimate timeline, costs, and potential issues that way you over deliver in both the time and results to your partners or lenders. All parties involved were very happy with the outcomes and results and are looking forward to doing more deals!

The 5 Things the Note Gurus Aren’t Telling You!

Note investing was how I got my start in the real estate world. At my very first REIA meeting one of the leading Note Educators or “Gurus” spoke at our monthly meeting. I didn’t know much about notes or real estate at all, but boy did they sell me on the idea of no tenants, repairs, and the prices couldn’t be beat! I was in. I bought into their program and have continued our education ever since. While their programs gave me a wealth of knowledge and resources, I quickly came to realize there were a few key items the gurus were leaving out in their pitches and courses and I was learning the “hard way”.  So I’m here to tell you what I believe are the top 5 things they don’t tell you upfront.

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