All Forum Posts by: David L.

@Henri Meli  I made a couple informal inquiries toward securing access by land for the lot, because I knew that would add tremendously more value (more than 10x what I'm selling it for), but was not successful in identifying an approach that I could control in the short term to accomplish that and decided to just sell it as-is for a quick return.  The thing that worked in my favor for this particular lot is that it was directly on a lake (waterfront lot) and only a short distance from a public boat launch.  The buyer is looking to build an off-grid weekend home and is willing to take a boat to his property.  If it was truly landlocked on all sides (no means of access at all), that would have been a bigger issue and I probably wouldn't have bought it, all other things equal. 

Actually, I consciously decided not to mail to several other owners in the same subdivision on this mailing because they own internal lots without direct water access.  After looking into things, some of those internal lots might potentially play some role in getting land access to the first lot, and the buyer I'm working with now might have interest in those for that reason, so I'm considering adding those owners to my next mailing.

Thanks @Henri Meli  and big thanks to Seth Williams, Jaren Barnes and the RETipster blog and podcast. Got the deposit/down payment yesterday from a buyer on that first lot I mentioned above.  Bought it for $200, selling for $8k+ on a 12 month term.  I've covered closing costs on both sides, purchase and sale, but even factoring in those and the cost of the mailing, it'll be about a 400% return.  Could have saved a bunch more on closing costs, and probably will in the future, but with this being my first deal I decided to pay an attorney for a couple things to make sure I don't screw anything up.

Consider me hooked!

Hey, I know this wasn't my thread but just wanted to post an update here to say that a week or so ago I finally sent out my small mail campaign, a la Seth Williams style, as mentioned above, and got a couple of quick responses so far.  One was pretty surly ("I got this letter from you, but it don't tell me nothing") and probably won't be selling me his property.  This afternoon I got an email approving my offer for the second one, though.  Just sent them the purchase agreement, so fingers crossed that they'll sign and return it shortly.  It's about a 1 acre, land/water-locked parcel on a country lake for $200, but everybody's gotta start somewhere. :-)

Thanks @Linda Hastings, I've been listening to Seth's podcast and reading his blog a lot over the last several weeks, and actually based my mailer on his blog posts.  It's good to get some independent confirmation.  Sounds like I just need to get moving.

I am curious, do you think an initial list of 68 is sufficient?  I've heard people in this space talk about success rates of 1 to 3 percent, so just curious if others think this is enough to make a first mailing worth it.

@Ben Dao or others doing direct mail. I've been researching land flipping for the last several weeks, as well, and have prepared a list of 68 parcel owners in one county that are behind on property taxes, many of whom are out of town or state, as well.  I planned to start with a direct mail campaign to that list...but I've never done a direct mail campaign before.  Any recommendations for good resources on direct mail for land deals?

I've got a letter drafted and priced up a yellow letter campaign with ITI Direct Mail with for my 68 recipients at about $150, including one-time (first mailing) setup fee, but I've been feeling a little gun-shy.  Any thoughts, suggestions, things I should be doing before pulling the trigger?

Thanks @Mike Hartzog 

I appreciate the response. Makes sense. Given the recent jump in rates, looks like even with a discounted payoff at 60% of UPB the borrower's monthly payment would basically stay the same, and that's assuming they're a well qualified borrower which is far from certain, as you pointed out.

Will keep looking for my first deal but won't be this one.

Hi all,

I am new to note investing - so new that I have not closed my first deal yet, so I have what is most likely a very rookie question.  

I'm working on a deal where I would purchase a re-performing note (10 payments on time after workout, so far) at around 50% of UPB. The reason for the seller's willingness to discount that much in today's climate, from what info I have so far, is due to the extremely low rate on the modified loan (less than 2%, recast for a new 30 year term).

So due to the rate, even at 50% of UPB, the return on my investment would be around 4% after considering servicing fees, etc., which is not nearly enough to interest me in this deal, considering the risks of borrower re-default, etc. However, the steep discount relative to UPB seems interesting. If the borrower pays off early, I would make a nice return, obviously, but I wonder, what motivation is there for the borrower to pay off a sub 2% loan early. From some info I've found, I suspect that the borrower is renting out, not owner-occupying the home, and at this rate, I expect they should have good positive cash flow each month. So if I were them, I would be inclined to ride this loan out for 30 years as they're never going to find another deal like this.

Which brings me to my question(s). Can I purchase this note and then offer the borrower a discounted payoff? Say 60% of UPB good for the next 12 months, which should yield something like a 20% return on my initial investment (10% of UPB cash return / 50% of UPB initial investment). I know these types of deals are offered routinely with NPN, but is this generally done, or can it be done, with performing loans? If so, is this something that a third party servicer could do at my direction? I am not a licensed servicer/debt collector and would almost certainly mess something up if I attempted on my own the first time. :-)

Lastly, what other questions should I be asking or what other input would the BP crowd offer for this situation?

@Ben Armstrong  I like the concept in general, but after spending some time reviewing the Groundfloor website, I still have many questions.  For instance, as a potential lender, what happens, specifically, when a borrower is late, defaults, etc.?

On your website, I can only find the following passing reference (under Education > FAQ, all the way at the bottom), and even this only provides partial clues related to the above question:

So I'm still trying to figure out, how does Groundfloor handle late payments and borrower default, and how does this impact the lender?  What percentage of Groundfloor's loans are in the first lien position?  Is the lien position stated in each loan listing (after looking at a couple, I don't see it), and can a lender filter loans by lien position?

Are you planning on starting to lend in VA? If and when you do, will lenders still be restricted to GA residents only, or would it be opened to VA residents at that time?

Jorge,

Very interesting location, that end of the mall.  One that's had some significant changes in recent years, and has more coming very soon.  Since the location on your posts indicates you might be from out of town/state, here's a very recent article that goes into some detail on the current redevelopment plans, and timeline, for the movie theater near the property you're looking at: http://www.c-ville.com/new-owner-says-downtown-regal-to-reopen-as-dine-in-movie-theater-next-fall/#.VGjO38lWmng

Up until the Stonefield development opened almost exactly two years ago (late 2012) with more screens, stadium seating and IMAX, the Regal downtown mall theater was pretty much the spot in the greater Charlottesville area for the dinner-and-a-movie crowd.  After Stonefield, those patrons and dollars have steadily been going to the new theater and its surrounding restaurants outside of downtown instead, so Regal switched the downtown theater to all indie films to differentiate it and is now divesting themselves of it completely.  From the above article, it appears current plans are to close the Regal Downtown within just a couple of weeks for the new owner to begin demolition, and reopen the fancy new digs in about a year.  Certainly there are often unknowns associated with construction projects like this, so I wouldn't want to count on that timeline holding.

If you've seen enough of the restaurants' recent financials to confirm that they've continued to do well in the past year or so (after the "Stonefield effect" would have fully kicked in) then presumably they're not heavily dependent on the popular-movie-going crowd from the wider area for their customer base, so there's probably nothing to worry about from the above project, and in fact, it should only help, eventually.  On the other hand, if there's any evidence of a significant decline in business over the past year to 18 months, then I'd be prepared for that trend to possibly worsen before it gets better.

All that said, there's also major new development going on right now just west of the Omni/mall, which I'm not sure but think is supposed to include a good amount of residential (something that's been a bit lacking in the area immediately surrounding the downtown mall for years).  Should be good times coming, assuming you and/or the tenants can get by in the near term.  Good luck with your decision!

@Joel Owens  Just to clarify, the Charlottesville downtown mall is actually the old Main St. which was closed to traffic and turned into a pedestrian mall: 

http://en.wikipedia.org/wiki/Downtown_Mall#mediaviewer/File:2008-0830-Charlottesville-DowntownMall.jpg

It's been a very successful and long-running concept.  Just look at the size of the trees that are growing "in the middle of the road"!

@Jorge Perez  Is the property right on the mall (E. Main St.), or on one of the lesser traveled side streets?  There are a number of restaurants on the mall that have been going strong for at least as long as we've lived here (almost 10 years) and a few of those that I know to have been staples for far longer, but it seems like some of the pedestrian-only side street locations have had tenants come and go.  Not as much foot traffic but probably still very similar rent as the main thoroughfare, I'm guessing.  Then again, it seems to me there may be even more long-lasting restaurants just slightly further off the mall, possibly because they're more visible to motorists and closer to the parking lots (South Street Brewery, Bang, Mono Loco, etc.).  Point being, unless it's very much reflected in the purchase price, you might consider sticking to either Main St. or nearby vehicle-accessible locations.  Just my 2 cents.