lien flipping

[Sean Harris]

can someone please inform me about lien flipping.  newbie here searching for a way to feed my family

[Dion DePaoli]

Originally posted by @Jim Farrell:

@Dion DePaoli , I'm curious to what you attribute the upward pressure on price? At what price tiers? Is note investing becoming "trendy"?

Thanks in advance. 

 Let me address those in reverse.  Is note investing becoming "trendy"?  YES  Simply look around BP for samples of the trend.  Real property has become hard to acquire in price ranges suitable for profit.  In many cases mid level assets are stuck in limbo.  So lower band assets are almost everywhere.  Lots of folks trying to get into second liens because of the lower capital barrier in hopes of high returns.  Likely disregarding the true risks involved.

The higher level stuff seems to get worked and pushed out in the market at a much faster rate than the mid level and lower level stuff.  Lots of the lower level stuff gets competitive because of the capital barrier as well.  If you only have $100k and you want a little diversity you can buy two $50k deals.  To diversify with into median priced assets you need almost $500k.  So, each band is restrictive in that manner.

Interestingly enough, there was just an article about the mid level price band of assets and potential consumers being under served.  Here is the story First Time Buyer Problems

Upward pressure on price.  I suppose some note investors not so in tuned with instutional markets might not like to hear the trade levels going off but pretty large trades pushing up into late 67% range of RE Value for non-performing stuff.  BTW, that is not the idea short term dispo stuff like non-judicial states, those pools were mixed fairly well.  A simply unleveraged note investor can't typically hit that level of trade.  Not sure anyone would want to.  The institutional investors have more rabbits in their hat in regards to accessing cheaper capital.  In addition, their threshold for returns is lower in general than most street level investors.  You do not see many street level investor running around talking about buying into new mortgage originations at 4.0% yields now do you?  

There is a pretty big trade out there right now, ok, well it's huge.  Defies logical in some ways really.  If we can get a pulse on the levels it trades at when it's done, I will likely post something about it for conversation sake.  

Outside of that trade most of the stuff floating around is low level stuff that is not really all that exciting.  We are trying to hunt some decent trades are closer to median values and are having a hard time.  Many peers I know are also have the same issue.  The huge boys are playing on their own court right now and there are not very many tickets for sale to the game if you know what I mean.  When big trades go off at high prices, that price demand eventually makes it way down - whether it is logical or not, unfortunately.  All that said, we will see what the end of the year brings, it should be interesting.