All Forum Posts by: James C.

Ryan,

You are correct,  the first advice is to get in touch with an attorney.  Anything I say here ain't legal advice,  'cause I ain't no attorney. 

With that said, 

A) Yes,  or their legal representation  (get in writing )

B) The sale was a SUB2 sale,  and the original borrower wasn't released. It also appears that the new borrower didn't assume any liability. So, theoretically both the original borrower and everyone on the deed would need to sign off on the short sale. Doesn't affect the maturity,  it ends when it ends, and someone has to cough up the cash. The recourse to not paying off is foreclosure, or a rewrite/modification of the note. 

C) You are foreclosing on the original borrower (or anyone on the note).  Any ownership interest on the part of the new owner is subject to the existing mortgage.

D) Varies by state. Generally commercial is easier to foreclose on than an owner occupied property. 

Assuming you can purchase the mortgage at a correct discount,  I would purchase the mortgage and start foreclosure.  It's the easiest and cleanest way to get this done. 

NJ does give the borrower lots of opportunities to redeem,  but a good attorney can allow you to get control of the property as soon as possible.  You can always accept a Deed in Lieu of Foreclosure, and get the property that way.  

If I was going to do this, I'd purchase the mortgage at 50% or preferably less of the lower of UPB or 30 day sale value of the property (check current note sales for a closer value). I would take it into a SPE, probably an LLC. Once I bought the note, I would try to get in touch with the borrower, new owner and anyone else on the note or deed and see if they want to start paying again, or quitclaim it over. If I couldn't find them or I can find them and they are playing games, then drop the hammer and foreclose. I'd give them 10 days to figure it out if I got in touch with them.

Oh, and I'd do it soon, so you either get it going or move on to the next property. 

Hope that helps. 

Good luck, 

Jim 

Jake,

I would suggest that there isn't much you could have said to make the seller change his mind.  Oh sure you could have ground him down and beat him up and maybe gotten the sale, but not worth it in the long run. You aren't more important than family.

The better strategy is to do what you did, with one twist, keep in touch.  Sellers will forget you, but you don't forget them. It's what CRM databases are for. 

You spent a bunch of money to get them to can you. Now spend just a fraction of that to stay in touch.  Keep your message in front of them, contact them on a regular basis and always be willing to help. You might also ask if they know anyone else who wants to sell.

Remember,  "no" just means "not now" and as professionals, it's up to us to get them when they are ready.  A side tip, if they want or need full retail, you can either list it of you're a broker or create excellent goodwill (and maybe some cash, subject to laws) with another Real Estate agent.

Hope that helps. 

Good luck, 

Jim 

Phillip, 

Thsee are mostly easily handled up front with some qualifying questions or statements. 

First, before you set foot in the house, check that all the parties that need to make a decision will be there, because you want to make sure that everyone has the opportunity to hear you and ask questions so that everything is above board  ( or something equally as good ). You are a businessperson and don't want to waste anyones time. 

With regards to an offer, simply indicate that your offer could vary depending on what the needs of the seller are. Then go into the many options that you have available (with loads of qualifying  questions, whe all the decision makers are there, of course). Let them know that you are happy to make an all cash offer,  however without knowing what they really want, you cant help them. You want to help them and make sure they keep as much of their hard earned money as possible. 

There is always another guy. Indicate that you are ready to close whenever they like, and you are ready to write a contract now, with the full offer in escrow pending (whatever you want to have for contingencies). If not the full amount,  then some large chunk of cash, anything that says you are serious. Ask if the other guy was willing to do that "no?" Then they are just wasting your time, and you won't do that. You are a serious businessperson. 

Low ball? Qualify seller with question,  and ask what do you think is a lowball offer? Why? Or If I could meet your needs, why would I lowball you? I will show you exactly how I come up with my number. I don't lowball, I give fair market value based on known market pricing. (Any or all the above). You could ask if they are serious about selling now.

Also, realize that some folks are just wanting a million dollars for a doghouse in their fantasy and no matter how good you are, you won't get them.  Best thing put them into your CRM and keep following up. Then go get another appointment and find someone who wants to sell.

Hope that helps.

Good Luck, 

Jim 

Jason,

It happens all the time. It's "the one that got away".

My best advice: The best way to get over a lost contract  is to get under another one.

Keep plugging along. The more contracts you dance with, the better you get at dancing.  Just never forget who brung you.

On a different note. Losing 25k in profit sucks, but not as much as losing 25k in cash. One is paper money, an opportunity and you'll get more of those.  When you actually have to put cash on the table,  that hurts, alot.

If you felt you couldn't swing both.. then you made the right decision. To try and do both would have potentially cost you real money. You got some learning,  but didn't lose your shirt... consider it cheap education. 

Now,  go find another deal or two or two dozen!

Hope that helps.

Good luck, 

Jim 

Dan,

Nope. As long as you have your W2 income, you should be good to go. The only issue is if you leave your W2 income before or during the loan application process. 

So, yes you can get a commission if you are an agent -buyer while having a license and working a W2 job. It's subject to whatever deal you have with the broker you have your license with.

Hope that helps. 

Good luck, 

Jim

Wei, 

Ok, a couple of things here. 1) You only offer what a property is worth to you based on your numbers, your business model and your ability to finance it. You've done what appears to be some excellent research and have a good handle on the properties value to you.

2) Your seller (if he's any good) is going to look at backup offers as if they were primary offers. This is because a backup offer can very quickly become a primary and then they are required to perform to that contract. 

My advice, make the offer at your price and terms as soon as possible. It will either be accepted or not.  If so, then go with it. If not, go find another deal,  because there is another one out there waiting for you. 

Hope that helps. 

Good luck, 

Jim 

David,

I agree with Tom. Unless you can get the borrower to start paying again,  or get a DIL, you're forced to go after them. 

Typically, you have a interest rate bump in your acceleration clause,  18+%, plus fees etc. So long as it's not usury in the state you are in. Crank up the rate as high as you can and make their equity disappear. 

If you end up with a shortfall at the end, you can always go after them for the difference. 

You can also report them to the credit companies. 

I wouldn't be shy about letting them know that you can and will do everything to protect your investment.

Then see if they are more amenable to paying or giving a DIL

It's not a time to be wishy washy. Take firm action straight away. 

This assumes that you have already exhausted all other avenues, and you know that the borrower has the ability to pay. If they can't pay  (in over their head),  then maybe a modification is in order.  If they won't see the light at all, then it's hammer time.

You could also sell the note as non-performing and break even or make a bit. Some HML I know will finance NPN pools as part of their lending strategy. It might be an avenue where you turn a non-performing asset into a perfoming one.

Hope that helps. 

Good luck, 

Jim 

Paul, 

I got in about the same point in the market cycle as we are now in a super rural state. 

I threw a newspaper route (actually 3 of them) for the local paper during the week. I also taught computers, networking and Internet courses at a local junior college.  

Once I got about a year in, I picked up doing BPO's, which got me listing for MGIC. From there, property preservation, and a few other clients for REO work. Property preservation and clean out followed, then onto purchasing NPN.

Dropped the newspaper thing about 3 years in. The newspaper routes were my farm. I kept teaching because I liked it. 

The non-listing bits were all over and above the regular client listing and selling stuff.

Hope that helps.

Good luck,

Jim 

Anya,

There are many different ways to deal with the negativity. First off, as long as it's not illegal or immortal, or there is no other objection (specifically religious), then for my mind, go ahead.

Part if the negativity comes from the "debt collecting" part of the job, "throwing" folks out of their houses, taking advantage of little old ladies and the like. Sure there are some operations that work like that, but they tend to go out of business. Most NPN folks I know are in this for the business, and it's a numbers based game. It's better to get a NPN performing financially (usually) than to foreclose.

Unless you have been on both ends of the process, you don't have a clue about it. Most folks have only been on the receiving end of the debt calls/foreclosure, but have no idea of how the business works. Your friends are speaking from ignorance, I think.

I wouldn't go so far as to dump your friends (unless it gets untenable), but I would avoid the topic with them, unless they genuinely bring it up to see how it is working for you.

In general, I would talk about NPN as a business, and like any business, you are making a profit (would they like to share in those profits?) by helping two groups of people. They are lenders, and borrowers who have had an unfortunate turn of events in their life. You are looking to help those borrowers rebuild their life. If you get lots of negative feedback, obviously excuse yourself politely.

As always, surround yourself with competent, knowledgeable professionals, (not yes folks), that will push you to be the best businessperson you can be.

As WWII general Joe Stilwell often said "Illegitimi non carborundum". It's a great motto to keep in the back of your mind.

Hope that helps.

Good luck,

Jim

John, 

It all depends on how many properties you have and how you set up your accounts. 

The best way for a small number of properties is 3 accounts.  1) an escrow account for holding security deposits. 2) a deposit account  (savings or checking) where the tenants place there monthly rent. 3) an operating account where the money from account 2 is moved (sweep or manually moved) to pay the bills for the properties.

Two accounts can do the trick, but there is a bit more liability in my mind since your tenant has the account number for the operating account to deposit into.

For a small number of properties, this setup works well since you get an understanding of your cashflow and operating requirements in a very hands on way. 

From there as you grow, you can move on to one if the online platforms  (or not). At least when you do, you'll have an understanding of how the underlying process should work. 

Personally, I wouldn't be accepting personal checks from  tenants,  I would be having them deposit directly into my bank account.  It's 2018, not 1978, and online banking has been around for a while.  An exception might be for an elderly tenant, but I know plenty of 70+ folks who are excellent at working with computers and the Internet. 

Hope that helps. 

Good luck, 

Jim