All Forum Posts by: Eran Lifshitz

I totally agree that Paperstac is only a platform to connect sellers and buyers and to give the ability to everyone to buy notes.

still, performing due diligence is under the buyer sole responsibility.

if you don't know to check what you are buying it is better you won't buy it.

 I understand your frustration Mike.

I can tell you that when I first tried using this platform a year ago I was also seeing too many offers which were listed in un-realistic pricing.

but since then I did saw the huge improvement in this platform and today I enjoy using it.

the amount of listed offers increased (which enable you to be able to locate good opportunities. I have acquired few already), and the entire purchase process is very smooth and user friendly, and seems they have thought about almost everything (for example - offer you escrow service for the funds transfer).

You need to take into acount that in such on-line platforms, some sellers might try to take advantage and market their offers in un-realistic pricing in order to try and found someone that will be willing to pay it.

@richard allen

@brett burky

The only suggestion I have (offered it few months ago in one of the posts after Brett mentioned you are trying to offer similiar user experience as E-Bay does) is to add option to rate sellers.

Such seller rate can be based on a lot of parameters (buyer rating the seller, feedbacks, number of transaction done, maybe even average diff between offering price and close price).

I think it will take the seller-buyer realtionships in your platform to the next level.

beside that you have a great platform!

@Marco Bario

Well done for this excellent deal.

Seems like you have done the entire chain, from NPN to foreclosing to locating borrower and seller finance it to him.

This is extremely important that you get into details regarding who are your borrowers and you use this knowledge to optimize your deal, I am always trying to do the same.

Indeed there is endless financial creativity, and you do need to keep learning and inventing yourself every time over and over again in order to be able to keep getting the high returns you aim to.

@Joe Splitrock

I have read thoroughly your detailed explanation, and while you indeed raised few valid points, I think that you have missed 2 major points which turn this BFF strategy into a powerful one.

The first is that in this strategy you usually seller finance the property to the borrower in ~20-25%% higher price than what you might sell it in ordinary way. This is because the borrower is willing to do that in order to be able to buy it with mortgage he can't get out of the bank, and as long as his monthly return is less than rent it is a win-win situation.

Of course, as always, the point here is to be able to acquire the property in less than its market value (for example - buying a property in reasonable shape, put a small rehab in it and increase by that its value) to have more protection and profit.

The second, and more important point, is the power of Spitzer loan.

According to Spitzer, taking $100K, for 360 terms, per 10% interest (reasonable rate in seller financing deals), the monthly return is $877.57.

So, after 24 months (and I assume you will agree that a buyer who put 15% down payment will do all efforts to pay at least his first payments) you got back $21,060.

But, thank to dear Spitzer, do you know what will be the loan balance after 2 years?

$98,830!!

Meaning, our dear borrower paid $19,900 as interest and only $1,700 as principal.

No doubt that thanks to this great guy Spitzer it is worth being the bank (-: 

(and indeed you rarely see banks loosing money (-:)

I can tell you that I owned few Duplex as buy & hold investments in Indy, and the 3 T (tenants, taxes, termites...you can add trash, toilets...) caused me to see how my 9% or 10% target return to turn into 4% or 5%.

Not mentioning occupancy problems and such.

And last point - 

You have mentioned a point that reflect another advantage in this strategy - Every month you are getting back principal & interest, meaning, you decrease your investment amount, and you get your money back allowing you to re-invest in the another transactions (line buying another note every 2-2.5 years).

I can tell you that I have invested in multiply strategies in REI (done flips, had buy & hold) but I found the notes investment niche as the one the had the best potential-risk ratio, mainly because you have a property to guarantee your investment, and of course because you don't need to care about the 3T (Which cause you to earn more/invest less time in each investment).

You don't have such powerful guarantee in almost any other investment.

And seems your strategy is completely based on appreciation - While if you look at 100 years range, no doubt the real estate values greatly increased. But, what go up sometimes go down, sometimes strongly, sometimes for long period, and it might happen that after 10 or 15 years when you wan't to cash out your rentals, the current market condition will be that their value did not appreciate, or maybe even decreased.

I totally agree with your bottom line - I have read all thread from the beginning, and it is fascinating to see how each one has a different point of view and strategy, and maybe this is what so amazing in REI.

There are so many ways to make money in this investment niche.

And indeed this is a great discussion allowing all to re-think about the different strategies which exist and allow them to verify that the path the are going in is the most suitable for them.

Eran

@Andrew Angerer that is a very clear example which indeed help to demonstrate the advantages and strengths of the BRRRR strategy.

But your story is missing its end - 

Now you have $128K loan that you need to return.

Need to assure your monthly cash return from the rent is higher than your monthly loan payment so your cash flow will be positive (while taking into account unexpected expenses such as vacancy, repairs and such). 

@John Corey, @Andy Mirza, @Gil Ganz and @Martin Saenz - Very interesting insights.

I think that my personal opinion is a merge of all.

Focus on what you do best is important, but in parallel always keep your investments bucket diversified.

Few months ago I saw one of Tony Robbins fascinating lectures and he gave an example of a well known business man who went up all the way to wealth of few hundreds of M of $, lost all and came back all the way up, and when asked him what did he learn out of it his main lesson was about the important of diversify your investments and not focus only on one segment.

Hi BP Notes Investors!

I am looking for a software tool to manage my notes financial balance (income & expenses).

Currently I am doing that in excel - Do you have any better suggestions for me?

Thanks,

Eran

Interesting @Nate Marshall - Will be happy to get more information from you about that.

Thanks @Dan Deppen - Just saw yesterday your movie about the Cincinnati note - Excellent material!

I agree with your point and I invest in all of those in addition to notes.

Thank you @Logan Hassinger as well - We agree about that, although I know you are strong into the notes business. 

Each one of us has his own wealth targets, the question I ask myself is if you can hit those by only investing in notes.

Should we diversify our real estate investment portfolio (like I believe in - I invest in notes but I already completed few flip projects and I hold few buy & hold Duplex's as well) or go "all in" into notes business?

And what should be the notes investor ultimate goals (same as a flipper which start with a SFH is aiming to grow to multifamily projects or new constructions) - Growing to invest in commercials notes for example?

Appreciate your thoughts.