Note Investing - which states do you stay away from?

[Garrett Haefele]

Hi all,

Are there any states that you will not purchase notes in? If so what are they and why?

As I read through Alex Goldovsky's book Bulletproof Title Due Diligence (great book btw) and some of the potential title issues come to light, I'm wondering what jurisdictions you experienced investors have blacklisted and will not invest in. I'd think one may also even discount their bid for a note based on these facts as well.

[Andy Mirza]

@Garrett Haefele I've heard the same bad things about NY and NJ from other investors so we avoid those states as well.

We're doing good in Cook county on a few notes we have but we're probably just lucky since the borrowers haven't contested FC. We're very wary of the city of Chicago because of it's "Keep Chicago Renting" ordinance, which seems just crazy to me. $10,000 for cash for keys!

In Georgia, you need to be licensed with the state. I've heard that they are very diligent in finding unlicensed lenders and heard of investors that had to dump their portfolios for a loss. Never tried to get a license in GA but it doesn't look too hard. When we're ready to buy there, we'll apply.

I would have said "no" to Nevada a year ago but it's probably ok now. We were a few weeks from foreclosing on a note when the state passed a law in June, 2017, requiring mediation prior to going to sale. The sale was on hold until the state issued guidelines and set up the offices to handle the new requirements. (We got the mediation cert and had a sale date in April, 2018, but the borrower filed BK 13 a couple of dates before the sale.) We talked to our trustee about foreclosures in Nevada and it sounds like there's still a backlog but I'm sure it should get better in the next few months.