Getting Started with JV

[Dan Golden]

First, thank you all for your generous contributions to the forum. The BP community is so welcoming to new investors.

I have a few questions that I'm hoping can help myself and others just getting started:

1. I've heard learn by doing is the best way to get going in the note space. The lower priced NPNs look like low hanging fruit but is that where a newbie should start? I realize foreclosure/servicing costs/etc. come into play but was curious if anyone has thoughts or would share a note evaluation sheet they use?

2. JV structure? For those of you who have done a JV. What does that look like? I'm sure it can be as varied as the notes we are dealing in but wasn't sure if there was a norm? Do we split the purchase price? Who pays for what? Personally, I see this as a great opportunity to gain some experience by doing while having some guidance from a seasoned note investor.

3. SDIRA funds have their limits. What would a minimum amount be needed to get started with reasonable confidence that expenses beyond purchase price won't exhaust the account. For example, if one has $50K in an SDIRA that can be entirely invested in notes. What should a max purchase look like? $30K note + expenses + reserve? Surely this differs NPN vs PN. But by how much?

Thank you again and I look forward to your thoughts and feedback.

[Richard Allen]

@Dan Golden @Linda Hastings It wasn't long ago (5 years ago) that my partner and I bought our first note. We came from a wholesale background and progressed into fix and flips. One day one of the REO agents that we work with called and asked if we wanted to buy a note. We purchased a frame duplex in Winter Garden, FL with a UPB of 100,000.00 for $8400.00. The asset was worth around 50,000 fixed up. We purchased 3 or for more NPNs and exited all of them over the next 6 months. We took our spreadsheet that showed our results and went to show a family friend with hopes that he would give us some money to invest with.

We struck it big and he offered us a million dollars to work with, and we were off to the races. We structured everything in an LLC with an operating agreement and agreed to do the grunt work and split the profits.

Fast forward to today, we manage around 5 million in capital and we are in the process of our first Reg A+ tier 2 offering. Our plan is to raise $50 million with a focus of saving the homes of willing borrowers. 

Along the way, we educated ourselves and took on a mentor via Eddie Speed and the Note School group.  This was an invaluable experience and a key ingredient to fast tracking our success.  I would encourage you to get some education, whether it's Eddie Speed, Scott Carson, Dave Van Horn, Note Force Academy, Google University or any other company.  I would recommend checking out the Bob Malecki podcast on BP and also the Note MBA podcast on your mobile device (apple and android).  Most all of the education listed above will provide you with the basics to evaluating a note. 

I believe that starting out, $50,000 is the minimum that i would want to have to begin investing in notes. 

The note space is a fantastic place to invest your money that will provide you with hearty financial gains along with the opportunity to do something socially responsible and save some houses.  At the end of the day its all about Connecting Money with Meaning