Anyone currently holding 3 to 5 Notes?

Question

Hello all,

I’ve been playing in the real estate space since about 2018 and made the transition to notes in late 2019 with my first purchase being a partial on a 1st lien performing residential note.  I’m currently reviewing my business plan, setting financial savings and purchasing targets for 2020 and would like to hear from those individuals who are one or two steps ahead of me currently.  If there is anyone out there that is currently holding 3 to 5 notes (1sts and 2nds, residential, partials, commercial or other), would you mind sharing your experiences so far as well as any advice you might have as to how I can best transition to the next phase of my note investing business?  Feel free to DM me if you would prefer not to post publicly, I’d love to hear how your journey has gone so far and what your plans are for moving to the next phase of your business!

Andy Mirza · Answer

@Adam Johnson I was at 3 to 5 NPNs just a few years ago. At that time, the most important thing was to come up with a system to manage them, which meant to organize tasks and keep deadlines. It only takes an event or two to let you know how important this is. For us, it came in the form of almost missing a Proof of Claim deadline. Our servicer alerted us that our attorney hadn't filed a POC when the deadline was the next day. He had dropped the ball and we had to scramble to get it done in time. Now, these things get taken care of far in advance.

I wrote about our use of "SmartSheet" in your other post on systems. That's what we use to keep track of things.

I understand the hesitancy on raising capital when you don't feel you already have a handle on what you're doing yet. Raising capital has been a lot tougher than we've anticipated and it's taking some time to build up steam. I have no doubt that it will get easier and that things will flip to where we can bring in more than we need or can handle. In the meantime, let people know what you're doing. Let potential investors see you grow your business. When you're ready, then you can approach and raise capital. It will be easier when you have established relationships and have built trust over time.

Steve Hodgdon · Answer

@Adam Johnson My very 1st note is a CFD in Greenville in 2016. Your backyard! He''s still paying. Since then we've bought 33 notes, sold some, had some payout and others go to foreclosure. Also found solid success in seller finance deals where we combined our real estate and note experience to make WIN/WINs for renters and us. Controlling the property has been a good hedge against counter party risk. Often it's WHO you deal with, not WHAT you buy.

Steve Hodgdon · Answer

@Adam Johnson  Well, I've been buying/collecting unsecured debt for 30 years. Was an active investor in bank card, payday loans etc. "retired" in 2006. I owned collection agencies for 18 years.I bought one Harbour Portfolio non performer to get my feet wet. Decided I understood the concepts and had enough similar experience. So, I found Dion DePaoli here on BP and we bought a small pool from a fund, then some one offs from various sources. Got creating my own paper in Pensacola where I had a contractor I trusted. We rehabbed 4 properties and sold them on terms. Un-retired and building a discounted paper business which includes medical loans and 2nds.

Jamie Bateman · Answer

Hi @Adam Johnson, I started in notes last year but really cranked it up (relatively speaking) in the last 12 months. One thing that has helped me is to think about this business as having three main components: deal flow (access to notes), capital raising ($ to buy notes), and asset management (overseeing the day-to-day operations of your notes).

All three components can be time consuming, but scaling in the note industry is absolutely doable. Performers can be great for cash flow but non-performers have more upside potential.

You can check out my blog posts (on BP and on my site) or DM me  for more info. Good luck!

Logan Hassinger · Answer

@Adam Johnson

I currently have a portfolio of 70 notes, all residential 1st position.

What are you looking to do with notes (strategy, casflow goals, “value add”, etc.)?

Account Closed · Answer

@Adam Johnson - A strategy I have been doing is loaning rehab funds via 2nd position note recorded on the properties trust deed.  I have some that are in the later phases of the rehab and serves as strong collateral ranging 15-19% interest.  Feel free to reach out if you are interested.

Dennis M. · Answer

@Adam Johnson

I buy the houses with cash or owner financing then I resell them using owner financing  on terms I create mortgage and deed/ note and collect the checks

Dennis M. · Answer

I hold a few notes . I’m transitioning from landlording to notes . Much better way to “ do” real estate . Less liability less resistance and more profits

Jamie Bateman · Answer

@Adam Johnson, I began with performing but have moved more into the non-performing space. Nothing wrong with performing notes, especially for cash flow, but there is not as much upside and any performer can quickly become a non-performer that you paid way too much for.

On raising capital, I agree. Don't take others' $ until you know what you are doing. With that said, you will run out of your own money before you know it. Borrowing to invest at a higher rate makes a lot of sense, and it's something I do.

Chris Seveney · Answer

@Adam Johnson

Sounds like you are looking to make the jump

From investing in notes to having a note business.

You will need to put together a marketing plan, a budget and an operations plan.

Put a detailed plan in place and how you will IMplement it.

It starts with what are your goals- is it to have 2 notes or 100 notes?

Make sure you have realistic goals that you can work towards

Anyone currently holding 3 to 5 Notes?

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