All Forum Posts by: Harrison Silverstein

Quote from @Anthony Howell:

 I attended a meeting at my local REIA and they were talking about note investing. One strategy they mentioned was to sell a partial. But the way they described it made it seem like due to the time value of money if someone buys the last 10 years of a partial note with today's money, when they receive the payments the future value of the money will be disappointing.

If the question is whether this will be profitable for you or not, It's all about the math: Compare how much you're going to be paying for the partial and calculate your return/yield based on how many payments you're getting. 

If your return is so slim that you're worried about the value of money decreasing over time, it may not be a good deal. 

However, I will say Note Investing is a great strategy to beating inflation as a while. Making your money continuously make more money passively is exactly what you'd want, and is what I do with my performing portfolio. 

Whether you can combat the inflation the same way in a partial, is just going to depend on the terms of the agreement. 

Quote from @Michael Terry:

Good morning all, 

My wife and I have been discussing the idea of going into mortgage note investing for almost 18 months now with me doing the lion's share of the research. I am on board with the idea of passive income, generational wealth, and everything that comes with smart investing through real estate. She, however, is still on the fence. 

Investing in something like managed mutual funds gives you average returns of 7-8% annually, even during a pandemic or wartime. My question is, aside from finding assets with the same or higher returns, why did you choose to invest in mortgage notes or real estate over traditional forms of investing? Is it the monthly payment consistency? Is it avoiding market volatility? Is it to learn the business to build recurring wealth over time? 

Cheers.  

 Great question Michael,

My "why" for note investing is because, much like yourself, I wanted something that was recession-proof and driven by logic. (Unlike stocks, where it is mostly driven by emotion). I've been note investing since 2019 and the largest growth I've had in my portfolio was through the pandemic. 

1) I wanted to be able to find an investment strategy that I could work passively. Overall, the amount of work I put into notes is far less (barely breaking a sweat) compared to stock trading, flipping, renting, etc. (even Non-Performing notes) For all of 2021, I was in Australia and I grew my portfolio from 3 notes to 10 notes. Since then I've just been sitting back and collecting passive income, and passing the ball on my Non-Performing projects. 

2) Overall, investing in notes is the most efficient use of my money. I'm able to achieve higher ROI's than most other investment strategies I've compared it to. (even in my worst case scenarios)

3) The flexibility and creativeness to make money: Even if the market crashes, I know I can make money a dozen different ways if I think out of the box. With the massive discounts we get I could still make money selling a property wholesale. Maybe I want to wait it out until the market recovers? I can choose to seller finance so I'm getting cash flow even in a downturn. I can choose to rent (not my preference), I can sell the note itself, etc. There are so many ways to make money, no deal really scares me as long as the numbers make sense. 

I can keep going, but from a young man who had $25k to his name for his first investment strategy.. there really wasn't anything that was going to get me to where I wanted to be this consistently. I'm all in on notes and I've never looked back. 

Quote from @Chad U.:

Quote from @Harrison Silverstein:

Hi all! 

In some states such as OH, the local gov'ts only accept original copies for recording. What companies have you used to accomplish this? Some smaller companies struggle with trying to record for the more complex states, so I thought I'd ask and see what note investors are using in these situations!

I've used Simplifile for several different doc types in OH, no originals required, and never had any issues.  

 Really! Which county was it? I think I was in Montgomery County that asked for originals.. maybe some things have changed since I last inquired with them. 

Quote from @Chris Seveney:

@Harrison Silverstein

Companies that handle this are Metasource, Richmond Monroe and kc Wilson

Some servicing companies will also handle this for you (I know BIFI loan servicing and madison management do if you store collateral with them)

I have gone back and forth where I did it myself for a while then used a company. Right now I do a hybrid where if it can be recorded online through simplifile I will do it otherwise I send it out for someone else to do it

 I'm familiar with Richmond Monroe! If I use a service I'm going to stick with something more established, I've heard some pretty bad stories of smaller recording services losing collateral.

Most states seem to accept online recording, but it's those pesky states like OH where they only want the originals sent to them that makes me want to use a professional service. 

Hi all! 

In some states such as OH, the local gov'ts only accept original copies for recording. What companies have you used to accomplish this? Some smaller companies struggle with trying to record for the more complex states, so I thought I'd ask and see what note investors are using in these situations!

Quote from @Chris Seveney:

We have a good percentage of our portfolio in notes at this time. We take a tag team effort in our family whereby my wife who runs a 9 figure portfolio for her work manages all of our liquid assets (stocks etc) and I manage the illiquid assets (real estate and notes) as that is what I have been involved in for the past 25 years. I would estimate about 50-60% is in real estate / notes. 

I enjoy notes because of the creativity and flexibility in the business - its 8 AM writing this and I was up at 6 doing note stuff before heading off to work.  

Same here! Often times I'll be taking care of my portfolio items in the morning before heading out to run errands. Notes can fit into your life fairly easily haha

Quote from @Andres Vanegas:

Residential multi family and crypto, heavy emphasis on crypto. Would love to pick up some notes though!

 Awesome! That's some nice diversification! Have you done some notes in the past? 

Hi everyone! 

Reflecting upon historical and recent events, I can't help but appreciate our note investing niche. Given the insane amount of influencing factors for other investment types (i.e. Stocks, Crypto, Currency, etc). I'm never worried about waking up one day to see if my investment has tanked due to someone tweeting that their stock price is too high; or by nations going to war. Even in a recession, I know I can still make money. We have quite an insane amount of options at our disposal. Like all investments, we too have risks, but most of which are covered by good DD, budgeting, & insurance. 

What does your investment portfolio look like? Are you heavily invested into notes? Diversified evenly through different investment types? 

Between Performing and Non performing notes I have everything I love right in my portfolio.. anything else is just a hobby.

Quote from @Jamie Bateman:

But have you had your CFD borrower's unsuspecting tenant stop paying your borrower rent because your foreclosure suit was published in the paper? And then have you had that tenant leave your attorney a voicemail that he would not be alive if he had not been carrying due to your borrower and others trying to jump him as he moved out?

Or, separately, have you had your CFD borrower do an illegal lease option for a sales price of 3 times what your contract price was, and then go cut the power at the property because their tenant was 5 days late on rent even though your borrower stopped paying you many months prior?

You are correct that every deal has a story, and in the lease-option/CFD world they tend to have a bit more drama. They do make for some good podcast material, though.

You could write a novel with those kinds of stories! Definitely some good content

Quote from @Peter Mckernan:

Quote from @Harrison Silverstein:

Hi all! A bit of an interesting story that I thought I'd share!

I recently acquired a note in 29 Palms, CA for ~90% UPB (About $50,000 mid 2021). This asset is a Lease Option contract that has been Non Performing since 2019. My initial plan is to legally recover the property and sell it wholesale to an investor.

While waiting for assignment creation/ recordings to complete the servicing company & our attorney were contacted by the current occupants to find out that the borrower (technically 'tenant') lives at a different address and for the past few months have been illegally subletting the home to another family! We let the occupants know that they should not have been rented to in the first place and give them the heads up that an eviction was going to be taking place for the original tenant/borrower. 

Some time after that, our servicer suddenly hears from the tenant who has been non communicative for years! (I'm assuming the current occupants decided they didn't need to pay rent to their fake landlord, so that prompted her to finally communicate). Now she claims the occupants are professional squatters, and is requesting assistance from us to evict them! (How the plot thickens!)

Drama aside, this doesn't change our strategy one bit. Regardless of who is what, the easiest procedure moving forward is an eviction of everyone that doesn't belong, so everyone has to go regardless and we're not getting involved in the drama between tenants. They can sort it out after the fact. I just thought this whole tale was amusing! (some good 'tea') 

We're currently in escrow with the cosigner of the LSOP for $175k as a special consideration if they want to keep the home in the family. He was able to get outside financing, so this saves us the trouble of the legal process, win-win! 

Hope you guys found this as amusing as I did. Notes truly are each their own adventure! haha. 

 I am interested to know the size and the area of that property? That area has a lot of diverse properties and $175,000 seems a bit steep depending on size and areas. 

 It's almost right in the middle of 29, I'll be happy to write a full synopsis of this deal once its concluded!