All Forum Posts by: Chris Seveney

Look up RTL lenders as well as DSCR lenders. You still need 25% down typically but it does not go against your DTI.

 Welcome to  BP. If still doing work in FL we have properties in Ocala and Jacksonville that need full rehab as well as looking to build something in remote area of klamath falls. 

 I know some who use appfolio, some do it all in quickbooks and some use podio. Lots of options out there, its finding one that fits how you do business and your personal preference is what I have found as most can do almost everything you want them to do.

 I have bought one or two. 

 The same could be said for stock markets - I do not agree that everyone needs to take a test, if someone is worth $1M and wants to gamble $50k they should be able to. The issue I have is the limits are too low right now and the definition for what qualifies needs to be adjusted to todays dollars not 1984.

Many capital calls right now are about covering losses, not creating value. Some sponsors are also launching debt funds just to keep things afloat and delay the inevitable.

If the fundamentals are broken, more capital is not going to fix the deal. In many cases, it is better to face the loss than keep throwing good money after bad. But many sponsors avoid that because they are still trying to raise money for other deals and do not want to show a loss. To me thats not kosher. 

I say it is, for residential real estate, absolutely.

It is not 2014 anymore. The landscape has changed. The game is professionalized, competition is fierce, and the easy wins are gone. We are officially in the phase where skill separates the haves from the have nots. Over the last five years, cheap money covered up a lot of mistakes. Now, with cap rate compression and 7 percent interest rates, those mistakes have nowhere to hide.

NOI margins are tighter, debt is expensive, and execution matters more than ever. This is where operators who truly understand asset management, financing, and local market dynamics will rise.

As a note investor, understanding the value of the underlying collateral is one of the most important parts of the due diligence process. But not all value opinions are created equal. If you're relying on a BPO, CMA, or appraisal, you need to know not only how it was created but also what it’s actually telling you.

Let’s break it down:

CMA (Comparative Market Analysis)
Usually done by a real estate agent. It pulls recent comps and is meant to help get a eyeball value. This is informal and rarely used in note investing unless you are working with an agent you trust and need a fast ballpark number. It’s typically an as-is value, not adjusted for any repairs.

BPO (Broker Price Opinion)
This is common in the note world. It's more formal than a CMA but still prepared by an agent, not an appraiser. BPOs can be exterior or interior (rarely interior) and can vary in quality depending on the agent's experience. The critical part for note investors: always confirm if it's as-is or ARV. I have seen BPOs come back with numbers that assume the home is in good condition when the photos show otherwise. If you are buying a non-performing loan, that disconnect matters.

Appraisal
This is completed by a licensed appraiser and follows uniform standards. It is the most formal valuation, often required in traditional lending. For our purposes as note investors, appraisals are less common due to cost and access issues. Like BPOs, they can be ordered as-is or subject-to-repair. If it's being used to value an REO or note you plan to foreclose on, make sure the appraisal reflects reality, not just a best-case scenario.

Also people need to note as I am seeing this more often:

As-Is Value vs ARV

This is where investors get tripped up. If you are reviewing a value that reflects ARV but you are acquiring a loan secured by a property that is currently vacant, needs repairs, or is in legal limbo, then you are not buying that ARV—you are buying the as-is reality. I recently received some notes for sale that had valuations based on ARV even though the repairs were not done... Thus these properties were underwater.

What I recommend:

When reviewing any valuation, always ask:

What is the current condition of the property?

Is this valuation as-is or after repair? 

Were repairs assumed? If so, what kind? (BPO's have line items for this)

How were comps selected? (you do not want comps of all renovated properties)