Bulk packages from Institutions and private sources

[David Roberts]

I have a couple certified sources that I can get bulk packages from. How much success have you guys had with buyers for large packages?

As an example I have a package with 78 properties in Canton OH for $4.5mil

I can get performing and non performing notes as well. I would love to JV these with someone who has experience with Bulk portfolios or who has a verified buyer. Look forward to hearing from everyone!

[Dion DePaoli]

It has been a while since one of these posts came up.  

Loan pools are not unicorns.  Loans trade in pools every day from distressed to prime.  Loans pools range in size from one loan to many.  Generally pools solicited for private consumption are smaller in size not exceeding $20 Million and even then those pools generally allow investors to bid and buy smaller portions of the pool.  The better sized pools are around $1 to $3 Million depending on the assets inside.  Institutional pools can grow up into the $100 Million range but those are few and far between since there simply are not enough investors in the market who can capitalize such a trade and qualify as a counter-party to the seller.  Often institutional pools will target around $50 to $75. There are NO Billion dollar pools trading of whole loans in the market.  Those losses can not be sustained and the idea of one is just silly. 

The problem with some pools is they tend to get into the hands of brokers.  98% of the brokers who touch them have no idea what they are doing.  Have never owned or traded a loan.  They do not understand the asset class in general. 

What they do see is a large dollar amount, which they assume they can go earn X% to broker a pool.  Enter dreams of becoming millionaires overnight.  The dubious methods of some brokers in the market are amazingly deceitful.  Brokers brokering Brokers.  It is dubbed the Broker Joker Circus.  The brokers try and create rules to put on top of other brokers and potential investors to help them filter out folks they believe will be successful.  I suppose in some comedic irony, they all end up using each other's same ideas and nobody ever gets anything done.
  
The conversations usually deal more with how they will get paid and less about how to execute the trade and the loans within the pool.  In other words, completely off track. I will be happy to tell every broker trying to broker a pool in the US, if you think you sending an email is worth 3.0% of anything, you are sadly mistaken.  

My firm acts in broker capacity from time to time.  When we do, we do A LOT of work. We do not earn the level of fees that I often get asked for or have seen being requested and we know what we are doing quite well.  As such, I guess I crush a lot of broker dreams.  This is not some learn overnight thing.  It takes time and experience to learn such things.  So then the next big issue is, the joker/broker sends the pool out in blasts and that frankly diminishes the desire to get involved with the pool by legitimate folks.  

I will disagree with Bob's reference to be able to trade a pool, once you buy it, for profit.  This is how you loose a lot of money really fast.  Loans do not carry innate value increases.  This has been a very common theme amongst new note investors who want to try and step into this type of model of investing.  Sometimes called Velocity.  Where the loans are not intended to be dispositioned only to be resold.  If you are going to buy a pool of loans, buy them to work them out.  As a function of working them out, you will sell some because that is how you manage portfolios.  Managing time and expenses.  Short term capital demands does not match well with long term asset disposition.  Ergo, sales.

Neither of the two firms mentioned asking for any of these are worth talking to. There is no such thing as a "Soft POF". Why the heck would I want to know how much money you have in some generic fashion? That is broker talk.

How on earth can anyone write a LOI, Letter of Interest or Letter of Intent for something they have not seen? Again, broker joker talk. It really cracks me up when they expect some pricing level included in these LOI.

NCND....for the love of holy things.... As a principal, no Broker owns my firm or my assets.  They do not get exclusivity, no real principal is going to do such a thing.  If I did feel like I needed a broker to help sell something, then the broker and I will make our deal and it will be clear, he will not own the buyer that comes forward either.  These dumb things started when brokers thought they could find one buyer and one seller and the principals would go on auto-pilot to sell billions and billions of loans to each other (doing all the work) while the broker drinks pina colada on the beach somewhere.  Utter none sense.  

There are good brokers in the business that are out there.  You will never see an NCND from them.  They will never ask you for an LOI.  In most cases, they will talk to you and figure out if you have $100 or $1.0 Million.  They will not be cavalier about capital, it doesn't grow on trees.  They will use the word transparent 57 times in a sentence.  They will not refer to a "mandate" or a "seller/buyer rep".  They will know what they are doing.   When you know what you are doing, these things are the unicorns not the assets.  

I really have no idea what a "certified source" is or means.  No such thing. 

If one source for the OP is legit, then why the heck are they asking for these things (LOI/POF).  I point this and say, see how quickly the slope slips.  When I call someone I know to trade or broker, I don't need a LOI or POF or fairly dust.  That is just a waste of time and energy.  They know I am looking, I know they have or vice versa and we talk about the assets and trade execution.  Not all these other things which are not loans.  You may know the second source, but that doesn't mean they know loans.  From my vantage point, it seems to point to the fact they don't know loans or loan trading at all.

I like Bigger Pockets (A LOT), there are real folks in the business here.  Many still new to it and many trying to get started.  There is no place here for broker joker ideologies to take hold.  I am not saying the OP is one of them.  I am saying I am more than happy to provide commentary to ensure they don't spout here.