What is the most hands off way to deal with PNs gone sour?

[Gary Dezoysa]

Hi,

Being on the other side of the world (Asia) I am looking at performing notes as a way to get safe above market returns. The hands-off factor is a big deal to me, I might do a little paperwork if it makes sense to. But obviously I do not want to foreclose, take possession etc if I can help it.

What is the most hands off way for an out of state/country investor to minimize losses on a note that turns sour? Is it relatively easily to turn around and sell a small note or partial interest to an NPN investor? Or would I need to have a rolodex of specialists on hand to be safe?

[Bob E.]

  @Gary Dezoysa  there are several things to consider.  

Our servicer does almost all of the work on our non performing notes.  They send out the letter of default, hire a lawyer, and do all the mandatory followups.  Along the way I track the key dates and follow up a week latter to make sure the next step has been initiated - this is a half dozen reminders to myself to send an email to the servicer.  If there is no resolution with the borrower a week or two before the auction we will set the opening bid and any minimum price.

If you want to be even simpler then that buy a well secured partial where the seller has a large residual interest and a strong incentive to buy your out if things go sideways.  You can get 10% and be very well secured.