All Forum Posts by: Account Closed

 He filed chapter 11 in 2009, cased was closed 5/2013.  The properties are in Texas.

So a couple updated pieces of info on this, I chatted with the bank and they are selling absolute, whether is 50c or 100c on the note. So I have a chance based on my numbers. Secondly, after speaking with the bank, he has stopped making payments for two months, three on a couple properties which have already been served a notice of default. I would anticipate this loan not performing based on owners previous history. Rarely over 30 days late, and being now 60 going on 90 days is odd. With $14K p/i plus escrow and bank makes him lock away $2k/mo for repairs, its at breakeven after living expenses for him so anything big happens and he's behind. I think the bank is trying to unload it before it officially goes NPN. So my questions now are since he's in a bankruptcy structure, how easy is it to initiate the Automatic stay/AOR? I have no experience in this, but that seems to be a huge part of my potential cost on how quick I can receive those rents, whether is 6 months or 12 at $25K/mo. Would it be easier to foreclose in this situation? I know they can do several things to try and modify their bankruptcy, and have no idea what a bankruptcy lawyer might cost to fight this. He filed chp 11 in 2009 fyi. Thanks again for the help, getting close on this thing bid due by end of the month.

Really good advice Dion, I appreciate it. I think you are right in a lot of aspects. I can see his equity on each loan, they vary a little bit but in general they are all 20% or less equity, with a few 102-105% LTV's, most are in the 90's though. After his closing cost at disposition I dont think he will have a lot of cash, but it may be enough to survive. Current gross rents are $25K/mo, P/I with escrow is $19K/mo. Leaves a little room for vacancy/op-ex but not a ton. He may be able to get another loan in 2 years. If I plan on paying, for example, 55c on the dollar (1.047mm) , and he performs at 5.5% coupon on $1.9mm loan, then ROI projections are pretty ridiculous for 2 years, regardless of the timing of his payments. And worst case scenario I have to spend $50-100K foreclosing, $40K in taxes/insurance in a 12 month court battle, and miss out on $150K rent for a year, then I'm all in for 67-70c on the dollar and still a happy camper, sound right? Are those rents recoverable/assignable during the litigation period, so is that something I dont model as lost revenue? Once again, learing a ton and greatly appreciate the advise. The above numbers are purely for example, I dont know if they would sell that low, I need to chat with bank, and with a better grasp on the procedure I'm getting close to having that discussion with them. I just wanted to be a little more educated before that process took place.

Cavan

FYI one other thing, I know somebody mentioned above I'm new cause I dont post here, but I've been investing for 9 years, 3 years heavily in RE, and have approx $4.5mm in SFR's solo and $1mm passively in commercial partnerships. This would be our first note purchase solo so I'm learning quite a bit, but know a lot more than your typical "newb". My partners I purchased the other notes with were commercial deals but we knew they wouldnt fight it based on our conversations with the now previous owner. That cost us $10K to foreclose, but they are larger notes and singular in volume. I'm trying to get some guidance on a higher volume scenario with lower dollar properties, sub $200K and with the potential of the owner fighting the foreclosure. Ive reached out to local RE lawyers but wanted some real world experience/guidance. Anything is appreciated.

Good questions, he is current, but often 30+ days late. According to the payment history, I dont see any payments since July, but not sure if he hasnt paid or the bank hasnt updated their docs, TBD. Rent assignments were completed during the bankruptcy restructuring but not sure if bank still takes them, I dont believe so based on the communications I've seen between him and the bank. Borrower is a person with $800K in assetts, $4.5mm in debt on $5mm in RE. Credit is 555, which is why I dont think they will be able to refi along with other reasons. Note holder is a small community bank and the LTV is above 98%, so I dont think anyone will touch it. Properties are in Texas. I am building cases for performing and nonperforming scenarios, but I believe with the info I have they will not perform in the future and I'm building my upside scenario on that. Ultimately they are properties I want to own, base scenario would be it performs and he refi's. Obviously I would be purchasing the note at a discount so I'd be fine with it performing through maturity and making the easy money. Thanks for your help, any further advise with the additional info provided is appreciated.

Yeah I'm aware what I get when buying a note, have participated passively on some distressed notes, and know the other side of foreclosure at the courthouse well.  I've just never gone through the foreclosing myself so dont know what that could cost, especially if someone fights it.  The taxes and insurance are pretty minimal cost, about $40K/year on $2mm in notes.  The notes have taxes and insurance escrowed for the time being, he's relatively current but might go delinquent as the notes mature in 1 year and have large balances.  Its the legal fees that are my unknown.   Any guidance on someone past experience would be appreciated.  I know it can vary a ton, but please share your experience.  Thanks,

Cavan

I've been presented an opportunity to purchase 12 non-performing notes for some duplexes.  My question is what could I anticipate the cost being to foreclose on these notes?  They are individual loans but are all owned by the same owner.  I would anticipate he would fight them best he could, and draw it out as long as possible.  He filed bankruptcy in the past and these notes were restructured at that time.

I've had some success recently buying foreclosures at the steps and online through hud and auction.com, but I'm curious of any other auction houses yall know of out there that the banks are using. I found genesis acquisitions but couldnt verify their validity of inventory without fully registering my LLC which is a bit shady. Can anyone recommend genesis or other auction houses? Thanks for the help.

Cavan Copeland
owner, Sierra Halo LLC