All Forum Posts by: Jean G.

@Chris Seveney thank you for taking the time to reply. We own multiple commercial properties in our portfolio across several states (both local and not local), that we self manage, so that part I am not worried about at all. I find commercial properties easier and more fun to manage than residential ones.

Hello, I have been seeing increasing opportunities recently to bid on non performing notes on commercial properties that banks are trying to offload.

These notes usually have the following characteristics:

The note has reached maturity several months ago. Sometimes a year or two ago. Presumably the borrower is unable to refinance at current rates.

The borrower may or may not be making payments on the note, even though it is past maturity (is it a problem to foreclose if they are making payments?)

The notes are all on commercial properties (office, warehouse, shopping center, mixed use or sometimes multifamily)

The properties are either vacant or occupied by tenants, not owner occupied

The property value is usually higher than both the UPB and the legal balance, sometimes significantly higher than the

Now it is important to mention that I have very little experience with issuing notes and buying performing notes. No experience with non performing notes.

My idea is to buy these notes with the primary goal of accessing the property through foreclosure, knowing that there are several other possible outcomes. This is what I think I know:

- The borrower can choose to pay off the note at any time (by selling the property or just paying off the loan with other funds), so it is important that the legal balance covers my investment and some profit

- The borrower could file bankruptcy (can someone confirm that this will only cause delay, but not jeopardize ultimately collecting the legal balance of the note)

- Most of these DOTs will have a rent assignment clause, so I could try to enforce that and collect rents from tenants (essentially manage the property) while I am holding the note and trying to foreclose. Does anyone have any input on why this may not work, as it seems to not be a common thing for the banks to enforce.

- I could be successful with foreclosure and end up owning the property

- Since the note has reached maturity, it cannot be made to perform again by the borrower where I am stuck with it for years. There will be a resolution, one way or another, say within 6 to 24 months

Please feel free to comment on anything above that does not make sense.

Now my main question is: how are such notes valued? What is the seller typically expecting to sell these for, considering that the UPB and legal balance are lower than the property value?

In one instance I was told that the seller was expecting 92 to 94% of UPB, which was in that scenario equivalent to a 85% LTV, and I thought this was too high for the amount of risk and unknown involved.

I would love to be buying these around 50 to 60% LTV but don t know if that s realistic currently?

If the legal balance is already at 60% LTV for example, would a seller expect a higher amount than the legal balance possibly? Which would mean you loose money of the borrower immediately pays off, so not good at all. Just trying to understand what sellers expectations are.

Thank you for any pointers including things I may be missing.

So you have done with with an underlying USDA loan and it has not been immediately called?

We are planning to transfer it to a land trust, yes.

Roberto, yes, I can pull from a line of credit to pay it off with short notice if needed. Do you have any statistics for me on what the likelyhood is for a USDA loan to be called versus any other agency?

Hello,

we have the opportunity to buy a relatively new home that would make a great rental through a subject-to transaction / wrap. The underlying note is a USDA loan at 3% interested.

The interesting part is that there is about $60k of equity in the home after paying the entry fee.

One of my title companies is refusing to insure the transaction due to the underlying lender being USDA, and telling me that it is a bad idea to do this on a USDA loan. I'm sure I can find a different title company that will insure if needed.

I am looking for feedback from people that buy a lot of subject-to properties. What do you do when the underlying lender is USDA? What is your ratio and timeframe, for the loan to be called? Do they always and all get called? Or do they only sometimes get called?

In our situation, if the loan gets called it doesn't seem like it would be a huge problem, as we could just pay it off and the list the property and get the equity (probably $30k to $40k after selling expenses, assuming the market hasn't dropped).

Thank you in advance for any feedback anyone is able to provide on the subject of a subject-to sale with a USDA loan.

Jean

Is there any new information available from people that were able to apply for a loan using Schedule E income or outgoing payments to 1099 contractors in lieu of payroll, with an entity that does not have any W2 employees?

I could not find any information that explicitely addresses this in round 2 of the PPP loan program that is starting today.

Jean

Hello,

I am looking for a contractor who specializes in refinishing wood flooring in the Las Vegas area, for a flip I am working on. Any recommendations will be appreciated. Of course I am looking to keep the cost down and need someone reliable.

Thank you!

Jean

Hello,

just wanted to chime in here as a bank (Wells Fargo) also once told me to file a DBA for each Serie, and that this was the proper way to open bank accounts for them. It turned into a big problem because the banker had in fact no idea what he was doing, opened the accounts as if they were partnerships and Wells compliance department ended up closing all my accounts with the district manager getting involved as well.

The way I am doing it now is by using a bank who understand Series LLC (US Bank). I get a separate EIN for each Serie (on the IRS website), US Bank opens the account with that EIN in the name of that Serie, and there is no DBA filing required with the County. Properties are titled in the name of the Serie (for example if my Master is "XYZ LLC" then one of my Series would be "ABC Series of XYZ LLC" and that's what I title the property into).

It is correct that there is no place where each LLC is recorded with the government in that scenario, but that is also an advantage if you need to quickly open a new Serie. As long as the IRS website will spit out an EIN (which it does during weekdays), the bank can open the account same day.

In my setup, the master owns each Serie so all revenue flows up to the top and we file a single tax return for the master, but it doesn't have to be done that way, you could for example have different owners in different Series and have them file taxes separately (which works since you have separate EINs, so as far as the IRS is concerned, they're all separate entities).

I hope this helps.

Jean

Hello,

is there an HOA, if so how much, and what's the age of the property?

Jean

Hello,

does anyone know of a service to mail out letters that will allow me to mail single letters without minimums? This would be for when I have some individual "driving for dollars" leads, as opposed to sending mail to entire lists.

I'm looking for a service where I can get envelopes with a handwritten font, a real stamp, and a business style letter with a typed font (not handwritten).

Thank you in advance if anyone knows of a supplier for this.

Jean