All Forum Posts by: Boyd McClean

You need to be creative.

FB and Linkedin is self promotion.

Go the secretary of states site and look up their LLC filing.

The attorney is probably their registrar.

There are numerous sites usually governmental that will indicate whether they have had any scrapes with the law. They also could be new enough that they do not have any track record.

Depending on the State of KY laws check to see what are the regulations concerning lending money.

Ask you contact person for a letter from their bank saying they are in good standing.

You have reason to be concerned.

Why not borrow locally rather than internationally?

If you insist on going internationally then I would spend the money to seek the counsel of a Barrister who has international financial experience.

Also I would contact the international dept. of a bank like Barclay's and get their opinion.

Be wise to take into consideration the exchange rates. Call Barclay's any given day and ask the exchange rate of Aus $ to USA $ and then look for the rate on Google to get an idea of the premium you will have to pay. Also ask your bank what they charge for wire transfer going both ways. Also ask how long a wire transfer would take. Ask your bank if they handle wire transfers directly or are they a corresponding bank. I have had international transfers take 2-3 days.

Ask the proposed lender for a copy of their agreement and a list of all charges they would make.

Ask a private lender what his.her requirements are. You have to have someone who will mesh with your philosophy. There are private lenders out there that will loan out of their state.

Be prepared to show a private lender a presentation of who you are, what have you done and why he should lend to you. Show them what is in it for them. This is a relationship business.

Ask a potential lender if they will do:

Debt financing

Equity financing

Combination of both.

Be creative. Be prepared with a detailed scope of the work that has to be done. Rather than approach a lender from the point of you want funding. Ask "Bob do you do private lending? And what are your requirements?"

Find out what are your states rules are for NOO funding.

Be cautious with Watermark. You pay, get the actual note after deal closes and if the file is not complete when you get it you are out of luck. You have no leverage. They just ignore your requests.

FCI platform allows you to see copies of all documents before closing so you know what to expect. Had a situation last week where the seller was unable to produce allonges. Deal did not close. With Watermark I should have insisted on getting a copy of the file before closing. I did ok got exceptionally high return, but I was missing a allonge which I never got.

Due diligence is the key. I notice on BP a lot of people are not doing their due diligence before hand. No credit reports, BPO, copy of tax bill, title report. Is the first current? Reading the mortgage or Deed of Trust for both the first and second (wha I buy) to check  for terms of modification if one occurred. Does the first allow for a second to be placed on the property? Search for BK reports. These are just a few of the things you have to look for.

I have a legal service that allows me to talk to a attorney in every state. So if I am looking at a note in Seattle and I live in Texas then I ask questions to a Washington state licensed attorney.

Talk to your servicer ahead of time and find out if they are licensed in the state you are buying the note. What are their costs? Make an excel spread sheet of all the steps you need to follow in purchasing a note, and then check off as each is accomplished.

One very important item. If buying a note have written confirmation of when the last payment was made. Does the time limit fall inside or outside the statutes of limitation? A lot of notes being listed for sale where the time limit is outside the statutes of limitations. You have no leverage, if you have to collect or foreclose and the time limit is outside the statute of limitations. "Caveat Emptor." Each state has different time limits.

The Supreme Court has recently ruled that the second can not be wiped out if under water.

Go to Pacer.gov and look up the BK filing.

Also don't forget that if you foreclose on the 1st CA allows 1 year right of redemption so if you get title to the house you are in limbo for 1 year.

If you pay more than 20% of UPB you are paying too much. Don't put yourself in the position of a bidding war. Do not be attached to the outcome.

I have a VA call finance companies within a 100 mile radius of where I live and ask if they have non-performing paper. It is a gold mine if you are persistent. Why because no one else does it.

Right now I have a car note paying 92% yield that I bought. Had a GPS installed so if the payor is late then by my iPhone I disable his ignition. I then no longer have payment problems.

Don't follow the heard. Be like Warren Buffet look for deals where no one else is looking.

Have the seller pull a 3 bureau credit report on the payor and see if he/she has the capability to pay the second. What other debt obligations does the payor have? Most people buying non-performing notes do not do their due diligence.

These are some of the things you need to know before buying the second:

Credit score of payor

Place of employment

Yearly income

Other real property owned?

Any pending lawsuits?

Are property taxes current?

Check municipality for code violations

Unfortunately all you hear about all those that made money from NPL you never hear about those that lost their shirt.

Go to Amazon and read Gordon Moss's book on seconds.

http://realestateandnoteinvesting.com/

Happy hunting.

Hard money lending can be whatever a borrower and lender decide on. This can be credit or asset based or a combination of both as well as a provision for SAM.

As a HML I find out what the borrower is trying to achieve and design a loan program around his needs, not my needs. I always give him/her 2 choices. Borrowers tend to look at the interest rate rather than the YIELD.

I eliminate a lot of borrowers when I tell them they get money only after a phase is completed, inspected and approved not before. Interest rate charged should be a reflection of risk. Does not a subprime borrower pay more for a loan than someone going conventionally.

It is best that you have a written agreement between you and your lender before you do anything. Then have an agreement with your lender that he or she has the funds sitting in a savings vehicle like a CD or savings account and can get access immediately. When a deal is found have them wire the funds to a title company or lawyer. It is best you never handle the funds let a third party like a title company do that so you are very transparent.

By having the funds wired to a title company a paper trail is established. If you were ever audited 2-3 years later by the IRS and they ask you to verify why $75K was put into you're checking account now you have to justify your transaction to them. If the money is sent to a title company which has recorded the paper trail then there is no question as to the source.

When I run across a cash sale deal, I have an accepted contract which I fax to my title company that then opens escrow. Then I email a list of investors I have and ask who wants to fund the deal. I have yet not had it funded in 48 hours.

If you have someone put funds with a title company and the try find the deal you put unnecessary pressure on yourself to buy something and could make a hasty decision that may come back to haunt you.

Good luck in your endeavor.   

If you have limited experience with notes pass on these notes.

Find a performing first with a non-performing second.

Make sure you have equity in the deal and have a plan

should you have to foreclose on the second.

You might be better off doing a couple with a seasoned investor

before attempting one on your own.

What ever you do make sure you get the original signed note

not a copy.  Know the laws for your state and whether  it is

a judicial or non-judicial state. I would advise you consult with a attorney

that has experience in this area.

Because of Dodd Frank there are certain procedures you have to

follow to foreclose.

Bill summed it up. Establish prior relationship with a Hard Money Broker. Every borrower wants the money yesterday. If you established a prior relationship then your issue would not exist.

Hard money is really not expensive at around 12% when you consider the risks involved for the broker and that you are saving time and you can get started right away. 

Consult with your attorney to see if you can do a fractionalized mortgage. Also have a written agreement drawn by  your attorney concerning the 3 way split. Indicate who has authority to make decisions about the fix up.

Keep it simple. Find a private lender with IRA money that will loan you money @ lets say 7% for 10 years. You will save on closing costs and if you are prompt with the monthly payment they in many cases will be willing to cash out at a discount after 5 years. Have an other private loan set to go in their place.

My experience has been they will take a 15% discount.

When you deal with banks you are dealing with bureaucracy.  Deal with a private lender and you have more leeway.

Find out in your area who are custodians for IRA's, search the recorder of deeds site for those custodians by name and it will turn up all those that have invested with IRA money.

Contact the mortgagee with a personal letter (hand written) and ask if they would be interested in investing in their community.

Custodians of IRA's have seminars for potential investors go to them and network. Then when you find one to invest in your deal then after about 90 days call and ask "who do you know in your circle of friends might be interested in investing with me as you have." Do you think a bank would do that.

Think outside the box. Just pretend that there was a law saying you could not borrow investment money from a bank, if the need was great enough you would find a way. Also think in terms of fractionalize notes. You need a $100K Mr. Jones says I will give you $50K ask Mr. Jones in his sphere of influence does he know someone that would invest the other $50K.

One area over looked are  women who are professional or business owners that make good money but don't have the time to invest. Look at Meet Up in your area for women groups that  cater to the above mentioned groups.