Buy notes from the Bank.

Time Value of Money

They caught Willie Sutton, a famous bank robber and they asked him why he robbed banks. His response,"Because that is where the money is."

It has taken a long time to learn how to get into buying from the banks and why they would even consider selling loans to someone like myself. Figuring out what to offer and knowing what I am buying.   You see, we only pay pennies on the dollar. 

Bank paper has a higher quality, like using a high grade bond paper for your letters. The banks have underwritten the loans and at least at one time they had an appraisal, title commitment, creditworthy borrower and asset.  Seller financed paper lacks these qualities. The banks do not want to foreclose if they can keep from it.  The bank examiners will criticize the bank on some of their loans and force them to write the balances down by increasing the bank's loan loss reserves.  The bank is willing to give discount as long as the sales price is greater than their write down. 

When we buy the loan, we are providing liquidity for the bank. We are able to work with borrowers in ways that banks can't.   We restructure the loans and provide a workout plan that is better than the bank can do because of bank regulations. 

Most of the time we are able to buy more than one asset. Usually they will throw in some loan assets or judgments that they have written Totally off.  Most of the freebies have more hair than a good barber can cut in 6 months.   However,  we have used some of those to buy the asset it encumbers or trade for something we want to acquire.

Where do we get the money?  Investors that are tired of getting little or nothing by having their money in the bank.  Each deal is structured differently depending on investors level of risk tolerance and involvement. 

We recently acquired $1,775,000 face value on six assets.  Purchase price, $1,240,000. We approached investor on Wednesday and closed on Friday. Money works faster than RE sales. 

Investor will make $97,000 plus interest and our plan is to have him paid off in six months. 

Oh, did I tell you that one of the loans is in foreclosure and another one is a second on a house in my hometown that the borrower hasn't made a payment on in over four years?  The total story would take a long time to tell in detail. 

If you don't like big deals, just whack off 0's until you have warm fuzzy feeling and then execute. If you like bigger deals then add 0's until you get that tingle in your gut and then execute. 

The bank likes us because we close when we say we will. Remember, they don't want to fill out the quarterly report. 

Always work with your attorney and your accountant while looking at the deal. I am not an attorney nor am I a Dr., so don't call me because you have a tingly or fuzzy feeling. 

As always, please add you comments below and let me know how you are doing. Always willing to give you help if needed.