All Forum Posts by: Jim Goebel

@Robert Collins

Thankfully no.  But, almost.  Our primary residence was condemned and was on the edge, but we brought it back to life.  The financial hit would have been substantial to have to build from scratch.

@Tim S.

@Logan Hassinger

Thanks guys I really appreciate it.  I feel I've learned more from this topic/thread than from all the rest of my time put together trying to learn about this note investing stuff.

Still more questions, though...

So, firstly, what would be my best vehicle to search for notes that are specific to my area (currently central Iowa, Des Moines market)? Two platforms were mentioned: Notes MLS and paperstac earlier. Are there more? Is there a parallel analog to getting criteria set up on the MLS and getting notes sent over via a filter?

Second, I feel that I want to better understand that 'end' of the foreclosure process and how that affects ones' returns.  At least in Polk Co here my understanding is that the lender has to offer the property for auction, and sometimes takes control if they're the highest bidder.  So, just thinking out loud, let's say that the note that someone paid $60k on, has a house that maybe is worth $150k.  Let's say that note investor does their diligence and then decides (please confirm, do they decide?) to offer the property for $80k, which is a number that if someone bids higher, they're ok selling at, at which point they make that $20k of course minus costs up to that point.  If no one bids, the note investor takes the property - however what's still kind of confusing me is, does this mean the note investor has to pay the county the difference, or does what is usually paid to the county here go towards the lender to make them whole?

Also, I would be curious of how the above changes from location to location?  I'm mainly just sharing my anecdotal experience from Polk Co in buying stuff at auction. 

Interestingly I'm looking at this note investing as a possible avenue to get into the mix in acquiring properties, perhaps, and to diversify.  We're dedicated landlords and like our portfolio, and have no intention of wanting to move completely away from that.

I'm also wondering about the more dedicated outfits that do note investing, too.  

@Chris Seveney

Chris maybe this more applies to you, or others.  But I pick up the vibe that some note investors pool funds from others so that they can then invest in larger pools of notes, perhaps getting better deals?  I'm a little confused why this would be a fit for someone just starting with note investing, vs getting into the diligence and some of these platforms like paperstac, etc oneself?

Also, wouldn't that pooling funds from others make it an area ripe for fraud?  That's been one of my main concerns to date, but I really do appreciate sharing the info about platforms like paperstac, etc. as it allows me to see the market.

@Will Barnard

Hey Will, just wanted to dig into your statement about granite counters being outdated.  How do you figure?  They're still pretty, they are still made of rock, so last forever, and I guess... I'm confused.  That's the first I've heard of that.

I would guess you're on the Quartzite or Concrete counter bandwagon now?

@Samuel Fletcher Hardy

Samuel you'll need to adopt a ROI on an individual project mindset to be successful. That'll help you as a contractor too. Basically, when selecting those light fixtures (and the optimal light fixtures) you'll want to maximize ROI. If you buy those $1000 fixtures that take longer to install, but they get you that extra $75/mo, you'd want to compare that to your $230 option that gets you bottom of the market rent.

Do that for every single design decision and you'll do great.

@Tristan Colborg

@Chris Mason

Chris, I disagree substantially with your tone and advice except for one item.

First, Tristan is 100% doing the right thing by getting prepared to negotiate.  That's the nature of negotiation and he will without question have better results by doing this.  Second, most construction engineering programs (ie: college undergraduate programs) are training folks (future GCs, and other leaders in the building industry) to do something akin to what Tristan did (or at least, tried to do), which is to put together a scope of work and facilitate a competitive bidding process.  These programs are best able to train folks who will be far ahead of their competition, and providing value to the market, by being prepared with a scope of work and getting competitive bidding going.  Third, the A/E field, and many online marketplaces exist to post design docs, and do exactly what Tristan's setting out to do.  ISqFt is one platform of a few that do this, and it's common.  

It's as though you are advocating that Tristan doesn't do exactly what your dad should be doing, as a GC, to ensure a competitive bidding environment.

That said, I think the advice for Tristan to get 'hands on' is apt, and very good.  Tristan, when you're starting, that hands on experience gives you credibility in dealing with building folks, but it also let's you split up a project into its sub parts better.  That way, you don't need the GC, who you pay to know when to bring in the plumber.  You know when you need a plumber, and you bring them in.

@Steven Lowe

Tristan, I believe some of Steven's feedback is spot on in terms of some very slight course correction.  For instance, some contractors can add value by generating their own scope of work independent of what you've already done.  Don't be so rigid as to not allow for that and invite it.  Next, sure, letting someone know they need to be competitive is apt, however I usually like to do that in person, as dropping a hint.  Make them feel special, and advertising that you're bidding the job to 10 people really just screams that there's a good chance they won't get the project and their time may be wasted.  It's a subtle difference, but by signaling that they need to be competitive, vs. outright saying it, I think you'll find better results.

@Logan Hassinger

@Tim S.

Thanks for the input.  I've got some follow up questions, too.  Firstly, I'd like further clarification on the statements about an owner with significant equity.  I'm seeing some notes for sale with non performing firsts, with say an unpaid balance of 30% of the property's value.  I understand that the owner may know they have equity and won't willingly give up the property - but if the note is non performing, I'd like to better understand how this goes (please weigh in to confirm my understanding of 'ways' this goes').   More specifically, I don't understand the statement (used twice) that they will 'fight' - I guess, what I don't understand about that is that they signed a mortgage and are in default.  How can they fight?  If anything, perhaps they can stall?

With regards to the main 'ways' a note can go (say for buying 1st position non performing) ; please confirm my understanding below:

First option would be they find another lender, source of funds, and pay off the whole balance - does this ever happen?  Is this a big pay day for someone buying that non performing loan at a steep discount?  Does this ever happen?

2nd would be they never pay.  I'd like to better understand the time horizon of how this might go.  Someone mentioned bankruptcy protection - I'm wondering best case, worst case-  does it depend a lot on the state as to working through the process?  I can't imagine a bankruptcy court not giving the asset (eventually) to the first position lien holder, right?  I mean, is there any risk of being wiped out as a 1st position lien holder and not getting control of the asset (or at least getting the option to take the asset to competitive bidding market?)

3rd would be they get back on a payment schedule, whether its a modified one or if it's getting back to whole.  

Of these three, for those investing primarily in 1st position non performing, what are your biggest money-makers, in terms of outcomes, what do you really try to avoid, and why?

Also, I'm picking up that most folks in this world aren't too picky about their geographic area.  Seems a little risky to me to not do detailed macro analysis on a market, to at least get a feel for the trajectory of the prices backing the assets.

Thanks for all the info.

@Cameron Hillebrand

Well - I've never owned an old school masonry building, but there's multiple reasons that structures stopped being built that way in the early 20th century.  One is that when there is a failure of some sort, like heaving, cracking, etc - it's systemic in nature and affects how it looks and also makes the structure compromised.  The next is the upkeep - I watched a video of that gun and sure, if you already have masonry there it may be easier / cheaper especially if you're doing the labor.  Good masonry work though is becoming harder and harder to hire out.  Not many people do it anymore.

The other reason is one you touched on.  I don't know St. Louis climate well, but brick has an R value per inch of roughly 0.20 / inch.  Compare that to maybe an R value of 3-5 / inch for actual insulation, and yes, you're either paying huge bills or passing those along to your tenant(s), unless you can figure something else out.

@Chris Seveney

I have some questions:

First: How many people buy notes with the intention of that being part of their buying strategy for operating under a buy and hold strategy?  What I'm wondering is if we get some properties with a really strong equity position, say, 1st position and non performing - with the intention of taking control of the property.  I understand at least here that the bank has to bid on the property during the County auction, so I guess in a sense that ensures there's no guarantee that the note investor would be the one taking control of the asset?  I'm just wondering how different the foreclosure process is by area and if anyone does this with the intent of using this to buy houses.

Second: Thanks for mentioning paperstac and Note MLS, I've been browsing those because I wasn't aware of where the actual 'marketplace' for these are - a few acronyms are not familiar to me: what's ITB and ITV stand for and what do they mean?

Third: In terms of buying in a Self Directed IRA; does the foreclosure process become extremely convoluted in working through a custodian on that? Or, is that navigable? I saw on paperstac they integrate with many Self Directed IRA custodians - and said 16% of volume was done this way. Wondering how this route is related to my first question.

Forth: How do you see this fitting in with an overall strategy - it seems Chris that you're doing this primarily but I'd wonder if you can comment on how you see this fitting into a landlord's portfolio?  Just some diversification?  Avoid properties too far away or does that not matter anymore?

@Mark Miller

If separately owned - I'm not certain that you can't line up the dates, if all the title work came out and you requested the same closing attorney's office.  You wouldn't want to stall/slow down one though too much if something was slower on the other, in my opinion (not nice, fair, etc).

If they are owned by the same person/entity, sure, why not?

@David R.

Yeah, I'm with most others here.  That's not fair to ask the tenant for anything there and I'd bet most if not all judges would agree, even the most pro business, anti tenant ones out there!

There are times when a tenant is really negligent in their 'observations' and 'communication' and although I like that you have some of that verbiage in your lease - the best that it does is allow you to talk through things and set expectations clearly when someone moves in.  Only in very, very, select circumstances would a tenant be observed to really be negligent in this way.

@Patricia Steiner

@Matthew McNeil

I 2nd what Patricia said.

Just last night, we lamented that our favorite local Mexican restaurant raised their prices (and they were still full, and doing great business)!

Last interaction with our go-to concrete contractor, he came in high, and was booked out 3-4 weeks.  We again lamented that we may not work with that good crew again, but in both cases, we are happy for their success.

Businesses change, and grow, and understanding whether there's alignment in where you're at, and where your service providers and suppliers are at, is very very important!