All Forum Posts by: Chris Serger

@Andy Mirza, the borrower is the rental owner, not his entity. And, yes, BK11 info is in PACER. I can't seem to find much info on how to proceed short of engaging an attorney, but given the low UPB on this one, I really don't want to start incurring those expenses since the payoff would be so little.

Does anyone have experience with a NP 2nd on an investment property which is part of a BK Chapter 11? I'm familiar with all the note education concerning BK 7&13, but I haven't come across 11. I've already learned that the most important thing to understand is where you fall in the debt structure and that you can learn this likely by talking to the attorneys involved. 

Has anyone actually dealt with this themselves? If so, do you have any advice? I'm trying to figure out if this is even worth the time as the note is low UPB and there's a remedy in the sales agreement if a BK is initiated.

My wife and I are considering an investment with this company. Effectively, they're like a Cadre or Upside Avenue, but for parking. I've run the numbers and they make a lot of sense. And there are lots of things to like about something as boring as parking. Just wondering if anyone here has any experience with them or another similar parking syndication offering. Thanks!

Thanks for the reply, Jay. We did discuss foreclosure in Martin's class, but there was so much to cover we didn't get into it in depth or specific scenarios.

In my sample above, I should have stated, the borrower is current on everything on his credit report except this 2nd lien. The price of the note is a fraction of the $25K UPB, so I'm just trying to figure how I get my $25K UPB paid out -- I'm not worried about ROI in this scenario--just understanding the foreclosure auction process.

Let's amend the numbers like this:

I draw 2 conclusions from this. 

1. If my goal is to simply get paid the UPB on the note and not have to deal with the property at all, then I need to ensure that 2/3 of the appraisal price (i.e. the minimum auction bid) will cover the 1st & 2nd. In this case, the property must be valued @ $117,250.
2. If I don't mind dealing with the property, I could bid at auction to secure the property over and above the 1st ($50K+court/attorney fees = $53500). Then I simply sell the property for--let's say for $100K--and collect the difference. 

Please tell me if I'm going wrong. 

I'm new to notes, have read/listened a bunch and attended Martin Saenz's workshop. I'm still not clear what's required of the investor in the event you have to foreclose (though that is not what my goal in this business is). Let's use this scenario:

• Ohio property - $90K FMV/appraisal (for sake of this example)
• Senior/1st Lien - $50K
• Junior/2nd Lien - $25K (this is what I'm buying)
• Total Equity - $15K ($100K - $50K - $25K)

The borrower isn't willing to work out a loan modification so I foreclose. The property goes to auction and bids start at $60K (Ohio law is 2/3 of appraisal). I don't want the property and I don't want to be on the hook for $60K. I just want to be made whole on the $25K value of my 2nd position note. 

How does this work? Thank you in advance.

I'm an REI newbie and have been talking to several MF syndicators and have learned they mostly use IRR when promoting their offerings. I get conceptually how IRR differs from ROI, and I'm good with Excel and know how to use the formula. I need help actually understanding, in dollars and cents, how to use it when looking at a deal.

These are my notes based on a call with a syndicator where he was describing a recent deal. None of this seems to square for me.

• $34M purchase
• 7% preferred return
• Cash and Cash - 8.5% over 5 years
• When deal sold, the principal is returned and 70% of proceeds based
• Equity multiple 1.94
• "Over 5 years, you're basically doubling investment."
• 15.9% IRR

Using that -- and some if the info seems contradictory to me -- how do you simplify to, "If I invested $100K here, assuming their numbers are true, I could expect to earn $XXXX each year and $XXXX total after 5 years"?

It can't be as simple as using 15.9% as a compounding interest rate over 5 years, can it?

I'm primarily interested in "recession-proof" multi-family and I've compiled more than a dozen "Best Places to Live", "Best for the Middle Class", etc. lists to see which cities show up on many of the list and where they rank. That, coupled with what I know about state politics (e.g. I would never invest in CA or IL), I've come up with these as my primary markets to investigate.

• San Antonio, TX
• Ft. Worth, TX
• El Paso, TX
• Raleigh, ­NC
• Columbus, OH

Now I just need to go identify a team in those markets and buy something. That's the easy part, right? :)

• I second "How to Create Wealth Investing in Real Estate by Grant Cardone" -- it's brand new, but eye-opening. And it's not about buying duplexes or fourplexes either. His podcasts are a little nuts, but I do learn from them. 
• "The ABCs of Real Estate by Ken McElroy" is a good primer on the whole industry, but doesn't focus on MF.
• I really enjoyed "Crushing It" by Brian Murray. If you're looking to get into apartments and want to run your own property management company as part of your business this guy seems to have it down. 
• I've not read Michael Blank's book, but I plan to as I enjoy his podcasts.

Thanks for all the great feedback, everyone. It's very helpful as I move towards deal #1.

Thanks for the advice, @Eddie Sorrell. Someone I trust made the point that if you never manage a property you won't know how to manage the property manager, which makes total sense to me, but I just don't think it's a valid option for me. 

I would like to hear from people who have actually done this: newbies to RE that have always used property managers from Deal #1. How has that gone for you?