All Forum Posts by: Danielle Phillips

A member of our LLC holds a Real Estate License in the State of NJ.

Hi Steve -

Looking forward to hearing from you. 

Danielle

Hello - 

I have a property under contract in Shelby County. 

As a wholesaler in NJ, I feel that it would be prudent to partner with someone on this deal in that area. 

Please contact me, and provide references. 

Thank you -

Danielle Phillips

This property is perfect for an investor who wants to have multiple exit strategies. 

You can do the repairs (approx. $15,000) and sell for ARV - $235,000.

OR

Do less repairs ($8,500) and rent as a section 8 property. The section 8 office in the County says that rent will be $1950/month PLUS they will include utilities. 

Property taxes are $4378, and property insurance (as an owner occupied is $1390/year). 

So what do you want to do?

Buy and flip for a $81k gross profit?

Or

Rent it out? 

OR

Sell on a lease option or a seller finance?

So many options...but you better decide fast, cause at this price it won't last! 

Hello Everyone!

Name is Danielle Phillips and I am currently wholesaling a property in VENTNOR CITY that is close to the BEACH, shopping and AC nightlife.

It's 2 bedrooms/1 bath, and in WONDERFUL condition. Whether you choose to rent it out monthly or weekly on an Airbnb type site, or put a long term tenant this is a great find.

asking $69k.

Repairs (if you want to change from the black/white tile floor) are $5k BUT not needed.

ARV is well over $100k.

Please contact me at 973-919-8313

You can also view all the details including photos, info sheets and realtist reports at http://www.keepandshare.com/doc14/show.php?i=2624241&cat=2

Thanks for looking! 

I am not sure that I am posting this in the right place. 

I have come across a really good deal for a 96 unit apartment complex, and the person I believed would be partnering with me on the deal is unable to come up with the necessary funds. 

I am trying to figure out the best way to find a new equity partner to help me be able to close this deal. I'm not going to sugar coat it - this is my first deal of this type. However, I worked as a property manager on a property in midtown Manhattan and am familiar with getting struggling properties performing. 

So that said - where and how should I be looking to meet someone? Should I be looking closer to the property (which is out of state, but near family I have in the state where the property is located) or should I be looking closer to me?

Any help or input would be greatly appreciated. 

Thank you in advance -

Danielle

 I apologize but I don't see a huge connection there. 

A Car is an asset that IMMEDIATELY depreciates when you drive it off the lot. Huge downpayments are required because with the interest rates that the dealer sells the car for, you're ALREADY UPSIDE DOWN, before you adjust your mirrors and put on your seat belt. 

This is a property - not a car. It's not going to immediately depreciate the minute you put out a mortgage. 

Plus - repoing a car is hard. Why? CAUSE THE CAR MOVES. I have yet to see a situation where they house picked up and skipped town. Maybe the owner or the renter did...but the unit is usually right where you left it. 

As for skin in the game - in these houses, we call that SWEAT EQUITY. These homes need work when they move in. That's the reality. So, to make it attractive, a low down payment is taken (usually about the amount of a security deposit) and they are off to work. 

I've seen owners of some of these types of houses (not the owners on the list). They take pride - the reality is that the bank wouldn't give them a home. Why? Lots of reasons, lack of funds for a huge downpayment, credit problems, DTI.

And the obvious - banks don't want to finance houses in those areas and in those price ranges. I know some banks who won't write a mortgage for less than $50-$75k. 

These people take pride, because they know that there was No other way for them to potentially own a home. They work hard - some do the work themselves. 

Are the homes beautiful? Not to me. But to them, it's perfect, cause they own it. 

It's just like how section 8 tenants will take care of their units. They don't wan to lose their voucher. Well guess what - these people don't want to lose their home either. 

More  on the above

Yes, they are low value notes, some are in rough areas. Down payments are low for two reasons.

1. The properties are not always in move-in condition. WE DO ABSOLUTELY NO REHAB, and the person purchasing the property is told that. Depending on the originator of the note, some will ensure that the buyer has sufficient funds at the time of purchase to ensure that they can get the property into habitable condition and obtain CoO.

2. In an effort to attract people who typically rent, an effort is made to keep the down payment low so that

a "why rent when you can buy" mentality is present.

You had also mentioned the note values - the originator of these particular loans takes such low values, and puts the note out for a 10-15 year term, because he wants to ensure a lower default rate, and frankly the people occupying these units couldn't afford more. By making the home affordable, the payments comparable or in some cases even lower than renting, he has reduced his default. What is the exact default rate? I would need to ask the originator this afternoon when I speak to him.

Because of the lower payments, the owner is responsible for the property taxes and insurance. I always recommend that people keep some type of insurance on the property anyway, unless you're able to self-insure (which I am not)

IRA money - I get IRA money, and frankly I don't want you to throw your money away either. My goal is that you're happy with your note, and that you come back again and buy more. I love IRA money because it allows so many tax benefits, and frankly, none of us wants to be a burden on our children, and possibly leave them an heritage free from heavy inheritance taxes.

These notes are 10-15 year terms, some are as old as June 2014, and at the time the list was compiled, they were performing. Can I guarantee they will always perform? No, but with servicing that does hard collecting, your chances are higher.

And frankly, if the owner does default, you still have the asset, and could originate a new mortgage, and re-sell the note if you're still not happy. So I'm not stuck on the idea that once you had it, you would be "stuck" with it. I wouldn't recommend converting it to a rental, simply because I've watched owners do that and had the headache they didn't anticipate...tenants.

In my mind I treat these as if it a lower end rental. There are lots of investors who do those. 

So Hello Jay. 

My name is Danielle and I am working with Mike and NPC. I was the one who sent you the email before - I apologize for the lack of email signature, as I sent it from my phone, and forgot that it defaults to sent from my iphone. 

Now on to business -

Let's talk about this. Yes, sub-prime notes are a risk. YES there is a risk of default. 
Are all those things necessarily bad?

NO. 

EVERY investment is a risk. Whether you're investing in notes, fix and flips, or buy/hold and tax liens. They are risks...calculated risks, but risks. Regardless of the category ANY note can stop performing. 

Are the chances higher with sub-prime notes? ABSOLUTELY. 

What are the benefits and disadvantages of dealing in sub-prime notes and notes in general for that matter. 

#1 - Sub-prime notes...they're easy to get into because the price is cheaper.  Cheap isn't always better - it's cheap. 

#2- They pay similarly to rental income, without the expense of a property manager, and property maintenance. THE BUYER IS PAYING THE PROPERTY TAXES. Not the person holding the note. You CAN have the property taxes sent in with the monthly mortgage payment, to avoid tax sale. That's your choice as the note carrier, just as it would be with a prime or portfolio loan. 

#3 - Default. Let's get it out there. It's possible. Performing sub-prime loan is almost an oxymoron. Can it happen? ABSOLUTELY! 

What can you do?

Well,  If they default on the loan, you can do cash for keys, or foreclosure (I prefer cash for keys). Then START A NEW NOTE, TAKE A NEW DOWN PAYMENT & If you don't want to carry the new note...SELL IT.

If you're not willing to do that? RENT IT OUT. You own the property free and clear, you're only going to do need to do whatever improvements to make it ready for tenants. Section 8 it if you want more stability - at these rates 7% to a property manager is still cheaper than driving there to collect rent. 

#4 - Remember that everyone needs some place to live, and these houses are in neighborhoods that you and I  may not want to live in. But guess what - there are people who do, and people who want to. I have found in my experience that while the high end market can be very lucrative, there are times when those properties sell, and guess what...There are times where you have to practically give them away. 

But if you seller finance a lower end home, make it an affordable alternative to rent...I have yet to see a shortage of buyers that are reasonably qualified. 

#5 - Screening. The buyers of these properties have been screened, and you are welcome to any information you'd like to determine their ability to pay. No questions asked.

 Someone brought up a case where the first property was foreclosed and then resold to the same person. Yes this happens, I mean, obviously it happened. People go through tough times, fall behind. EVEN DONALD TRUMP HAS DECLARED BANKRUPTCY. Does foreclosure or bankruptcy in someone's past make them a BAD person? No!

Does it mean that they're going to do it again? Maybe...it depends on the person. 

#6 - servicing. These notes are being serviced. Either by a private servicing company that does HARD collecting if need be (calls, etc), or FCI. And if the loan isn't being serviced by FCI, it's conforming that you could move it to FCI if you chose to, or another company if you wanted to. 

#7 - if You do not understand, or are not willing to accept the risk. DON'T BUY THE NOTE. Or any investment for that matter. 

Investing is risky. That's what it's an investment, cause if it wasn't it'd be called a "money maker". Not every investment makes money. 

If it doesn't make money? Talk to your attorney or accountant about taking it as a tax deduction. 

As for value - if you know anything you know that value is what the market will bear. Are these notes selling for $.80/dollar? 

YES. So while it may not seem like a worthwhile investment to you, obviously there are people buying them. 

Each person is entitled to their own opinions. The point of this site is to partner together, give constructive criticism, and network. Not attack people, their investments, their business models. 

the reality is that there are multiple levels and ways to make money in this business - this isn't an investment for YOU. And that's fine. I know flippers who won't do a deal with less than $100k NET, and people who insist that buy/hold of 4 family units is the ONLY way to go. If you showed them one of your investments (whatever your particular specialty is) They would hate it, cause it's not what they do. 

And a final word - if you do run into problems, reach out. We are happy to help you put out a new note, have people who can put a for sale sign on the property, screen potential buyers, etc. 

  I find that it is far easier to run a reputable business with solid practices, than it is to run a sham and have to get the hell out of dodge every time something goes wrong.

We want you to buy again from us. The notes on this list are not the ONLY source we have for our notes, this is just the particular batch that we happen to have at this time.

I've said my peace for the night - I wish everyone good fortunes, and luck with their investments. If you wish to contact me directly, I invite you to do so, I am happy, willing and able to answer questions, or concerns. 

Health, Wealth and Happiness -

Danielle
NPC co-president.