Geographical Preference for NPN's

[Andy Mirza]

For those of you that are buying pools of NPN's, which states do you prefer to buy in and why? Are there some states with difficult laws/regulations that are better to avoid?

I assume that non-judicial FC states would be preferable to judicial ones. I also assume that the difficulty in one's ability to FC would affect what one would be willing to bid on notes from a particular state i.e. if it's more difficult to do business in state "X," the investor would require a greater discount on any notes he buys in that state.

I'm researching my own state (California) first, seems like a good place to start. I have experience buying at trustee sales but I know I have a lot more to learn from the "other side" since notes are not RE. The notes in CA tend to require a lot more capital so I'm interested in expanding my research to a couple of more states, especially ones where foreclosing/modifying isn't as difficult and the cost of acquisition per note is less. I'm interested in what the experienced guys here on BP suggest.

[Rick H.]

I definitely have a bias for CA notes.

Understanding the collateral is essential. Having the ability to determine values efficiently and some ability to assess the property condition is important, obviously. I have friends who do both well allowing them to buy notes nationally and be pretty effective at it.

Not me, I'm lousy at this.

Now, add the legal element into the mix. I'm pretty up to speed on CA foreclosure laws. In fact, I'm a go-to source for many probate attorneys in my home state in this topic. 

However, go to a neighboring state such as OR, NV or AZ and, despite being non-judicial foreclosure states, I'm not confident enough to buy or lend and still feel confident that I'm sufficiently knowledgeable, at least not to my satisfaction. 

Go to a judicial foreclosure state and my already stretched level of patience would be tested beyond anything I can imagine. 

Since In my day-to-day biz I work a very tight nano-niche and mostly originate, I don't talk to many brokers.

As you're working with a broker, they have motivation for you to buy anything and everything they have to offer, regardless of location. Unless the biz profit model includes them having skin in the game, especially more than commission or fee-based equity, you may be left holding the bag. Or worse, chasing the bag. Just something to consider.

I had lunch and spent half the day with Ward Hanigan in San Diego yesterday. He still offers  training to a limited number of students (he's 75 now). 

Dave Van Horn in PA offered training at NPP, until recently. Gerald Lemoine in Garden Grove has a little group of note people that gather monthly in OC. Jeff Armstrong use to publish a few books on the topic.

And, of course, Gordon Moss has a little intro book ('Performance Anxiety') and I think he still offers a video training  course. He's a good friend and seems mostly retired as he's an avid surfer, boxer and sports guy. 

I think that you'll find all these guys helpful.