JV Partner Wanted For 25 NonPerforming Note Pool
Silverwood Capital, LLC is looking for a Joint Venture Parter(s) to help acquire a pool of 25 NonPerforming 1st Lien real estate notes. We can pick up this pool for 20 cents on the dollar. These low dollar, distressed assets are how we and other note investors make above average returns, though we can not guarantee the return. We anticipate this will require $100,000.00 to $120,000.00 depending on how many we have to foreclose on.
We can buy $1.433 million in Unpaid Principal Balance (UPB) for 2.44 cents on the dollar. The total payoff is a staggering $2 million+. There is $43,309.90 in taxes owed, though most of that won’t need to be paid right away. With taxes, we are acquiring for 45 cents on the dollar, still less than 1/2 the value.
About 1/3 should start repaying and we can sell the re-performing loans after 12 months, or keep them for the cash flow. About 1/3 should sign over the deed to us and leave with little or no additional costs besides some cash-for-keys when needed. We can then sell AS-IS to a rehabber, or light rehab with paint/carpet to bring a higher price. The final 1/3 should require foreclosure to obtain title, then we can sell AS-IS or after light rehab.
Here Are The Numbers:
- Purchase Price: $35,000.00
- Fair Market Value: $174,400.00
- Unpaid Principal Balance: $1,433,404.93
- Total Payoff: $2,016,758.74
- Average FMV: $6,976.00
- Average Monthly Payment: $520.67
- Average UPB: $57,336.20
- Average Payoff: $80,670.35
- Expected Monthly Costs: $3,000.00 Month 1-3, then $1500 Month 4+
Please contact me for more info...
Christopher Winkler
The Note Whisperer
Silverwood Capital, LLC
1-844-2-BUYNOTE
1-844-228-9668
Comments (2)
Hi Jeff, great questions, I'll do my best to answer them. On this pool, its not that cut & dry. Some are occupied and some are not. It's not a pool of vacant REO's, so we have to take into account historical information.
As is typical of all occupied NPNs, about 1/3 of the notes will start repaying. We buy them for so low, we will give them a break on some of the UPB and Arrears. We typically have a 6 month forbearance period to make sure they can make payments on time. If they can make it through that we can, if needed, our licensed servicer is also a RMLO that can modify the loan, if needed. We can then sell it after 6-12 months of payments for 60-80% of the UPB, or keep it for that cashflow without the headaches of toilets, tenants, and termites.
Otherwise 1/3 end up being either Deed-In-Lieu of foreclosure, maybe cash for keys, and we get title w/o having to go through foreclosure.
The final 1/3 would be a foreclosure, regardless if occupied or not. The party is over, they have to leave if they don't want to repay. That cost can be anywhere from $2,000 to $5000+ depending on state, amount of work, and current/past due taxes that are typically demanded.
Sooooo, with that said, we could end up with a number that are repaying and give us some cash flow, and a number that we get title on. Then we can either sell AS-IS to a rehabber, or give it paint & carpet and sell it for a higher price. I wrote an article recently called 12 Ways To Profit From Real Estate notes http://bit.ly/12-ways-to-profit-from-notes that goes over all the ways you can make money from them.
We also have fresh Broker Price Opinions (BPOs) from last month, and it looks like some of them are undervaluing them, which can give a bigger payoff than forecasted. So that is how we determine the current value. We also have a local Realtor go out while we perform our Due Diligence to confirm values.
Regarding access to the interiors, only the vacant ones, in states we can legally enter, once we buy the notes can we see, otherwise, that's why we rely on the Realtor. No contact at all before we do with current occupant, unless we can get a Realtor to convince them that they have a potential buyer and if they want to sell. That's typically great news as we can allow the short sale and if there is equity, its theirs. If not, it's ours.
Otherwise we can't see inside, though the exterior is a good indication of the interior, to a certain degree. I hope I answered your questions and you or anyone else, please feel free to ask any others.
Christopher Winkler, over 9 years ago
What difference does it make what the monthly payment or the UPB was if payments are not being made? The only thing that should matter is the value of the houses compared to the price of the notes. How did you determine the value? Have you had access to the interiors?
Jeff Rabinowitz, over 9 years ago