Asset Pricing - Make Sure To Understand Collateral

[Chris Seveney]

Just a PSA for people, recently I have been reviewing a significant number of assets on the market which to me are overpriced. One of the main reasons I am saying this is many of them have significant title defects that can be remedied but will also take significant time, effort and cost.

For example I was reviewing a performing 2nd mortgage recently but the mortgage did not include the legal description and metes and bounds as required by the county. So if we were to foreclose we would have to reform the mortgage and the property does have a lien junior to this which could also argue it. Is this the same price as a lien with no issues? The seller believes so but I do not believe so.

There is no FOMO in the note space - there will always be assets for sale so do not think you need to force a deal. If sellers are coming to small main street investors for assets that is because they cannot sell to larger investors. Do not fall into the trap of over paying.