What The Gurus Do Not Teach You In Note Investing - Part 2

[Chris Seveney]

Coming back for an encore, as I have stories, I have lots of stories - how is that the case? Because unlike other gurus out there, I am ACTUALLY buying loans. OMG can you imagine, I do not need to make up stories or brag about how long I have been doing something, because like life, it all becomes a blur at some points.

Here is another classic - We had a loan where the borrower was using the property as a rental in Danville VA (not a place I recommend investing). It was a duplex and they were collecting the rent but not paying the mortgage. We filed for foreclosure and also offered a deed in lieu and would waive a deficiency. The borrower originally agreed but (this is where its important to take notes as the gurus do not teach this), - what do you do before getting a deed in lieu? You run title. We ran title and there was recently a $20k lien filed by a property manager.

Thus we were not going to accept the deed in lieu because we would then owe the PM. We offered them $1,000 to go away and they laughed at our attorney and said "we are gonna get our $20k" (I was like, umm  nope no you are not...) - So we ended up foreclosing, but the borrower contested it (BAD MOVE by them). So the foreclosure took longer and cost us more, evnetually we foreclosed and took the property back and sold it (at a loss).

So damn I lost money on this deal.... Nope, I did not. We got a $50,000 deficiency against the borrower and secured it to their primary residence in 2nd position which had around $150k equity. When you get a deficiency we could then foreclose on that home or reach an agreement with the borrower which is what we did. We then placed a second on the property and they made payments. After around 2 years of payments we sold the loan and went from a loss to a very nice gain. 

A Guru would just tell you to just get the deed in lieu (they forget that whole title part) or foreclose and take it back.... They do not tell you to check if the borrower has other assets that you can claim.

[Marco Bario]

Quote from @Chris Seveney:

Quote from @Marco Bario:

@Chris Seveney

"After around 2 years of payments we sold the loan and went from a loss to a very nice gain."

I know this one... and it's still paying every month on the first of the month. 

 And I bet whoever bought it :)  - enjoys the cashflow.

I had a small monthly payment I was making, and I "hired" this note to make it for me. 

When I buy stuff or services at retail but buy assets to pay for them at a discount, it's like buying those assets and services on sale.