Non-Performing Hard/Private Money Loans

[Eric Boshart]

Hi BP Community,

I'm a private money lender in the DFW metroplex, and I'm looking for creative ways to be helpful and scale my business. As the market is shifting, I'm curious to know if anyone is seeing any opportunities to buy NPL's from hard/private money lenders. Typically HML/PMLs' workout capabilities are more sophisticated, and their underwriting is more property-focused rather than borrower-focused, but nevertheless I'd love to be helpful to these private institutions that might have loans on their books that they don't want anymore. The note investing industry is very mature in the conventional mortgage sector, but I have yet to see opportunities to purchase non-performing, short-term, high-interest debt provided to investors.

As we're growing, I've raised more capital, so I figured this could be an effective way to deploy that capital within my core competency. I'd love any direction from more knowledgeable professionals than I.

Thanks in advance!

[Abby Shemesh]

@Eric Boshart

Hard Money Lenders (HMLs) typically do not wish to sell their NPL / HM-Loans/non accrual loans at a discount, which is typically require to step into the risk of short term fix and flip projects on properties that can be vacant and not cash flowing. I am not suggesting this does not completely exist, although the circumstances that push a HMLs to take a loss on their NPL loans rather than taking the property back in a FC action (especially in TX where FCs is a breeze in most cases), is far and few between. You may find more value in marketing if you are targeting lenders that do not participate in the short-term loan space. It does necessary need to be in the conventional loan space. Maybe focus on loans / lenders with their emphasis on borrower-sensitivity based lending as opposed to property/equity-based lending. Maybe focus on loans secured by special-use properties that no one is paying attention to such as manufactured home loans, mobile home parks (great sources of income for lenders and landlords), mix-use and commercial. Everyone has cash on the sidelines awaiting a residential market crash. There is much lower hanging fruit elsewhere if you are comfortable pivoting to different collateral types and longer loan structures. I hope this is helpful.