All Forum Posts by: Kelly Foydl

Got it. 

I'm not anti PN, just was developing a plan I liked, forgive me for attempting to do so. My plan wasn't PN, but NPN, but hey, to each it's own.

I never read any gurus FYI. Just you guys on BP and Gordon Moss' site. My bad, I thought I was listening. 

You all can go back and answer the original questions. I'm sorry that I temporarily accidently hijacked any portion of this thread.

@Dion Depaul

I appreciate your POV. 

Re: servicing on my own, I've read some about it....found NoteSmyth software. Not sure why this would be such a big problem, but again, these are just thoughts. Reality may force me to have a servicer, but I'm open to it either way. Remember, I did mention lawyers, so it's not as if I am going to do all of this blind.

Re: buying one, I certainly am not spending 50k on a single note. I have found a few notes that are likely not great but well under 10k, some as low as $1k, figure if I can't find someone local that is willing to help me like a mentor, it's a small cost for education. For my training note, I would absolutely look for a note that is about done, NPN, so the amount out of pocket is small.

I'm not looking to lose. I'm looking to learn. I read every thread. I've read a couple books. I watch so many videos. I'm waiting for the next REIA in my area to see if there are any other note investors in my area. At some point, I have to DO and not just read.

What I really want to do and what I am able to get done may be two different things. I'd like to cut my teeth with a mentor, like almost anyone would. But what if I can't locate one in my area? I have to try, otherwise I'm a 99%er.

I have little interest right now in 1st mortgages that are performing. I don't want to flip notes. I want to buy and hold for the long term (average is 7 years til someone sells I know). I think what Gordon Moss is doing, buying, get it re-performing, hold is where I want to be. 

I'm sure you can poke holes in my response. My point is simple. I have a back up "try" to get involved if my plan A, find a few others in my local community fails.

I too have been researching and these are great questions.

My personal view is as follows. I'm going to some local REIA meetings hoping to find others that invest in notes, if not here is what I am going to do.

Find 1 note in one of the local market places to "learn" on. For me that would be a very low cost 2nd, probably non performing. Work it based on my readings, and see what happens, how the research paired up with what happened. Get the right partners involved (lawyers) etc. But I think while the number of notes I own are low, I will service the loan myself.

I've read that you should start with about 50k at least, and that doesn't seem to include any money for things that starting the foreclosure process to get your borrower's attention or tracking them down. 

The biggest hurdles for me are:

where to find small pools of NPN juniors, 3-6 at a time. I don't know where to find these Hedge Funds that sell smaller pools off.

finding others in my local area that I can talk to

Lastly, I am looking to go to some of the conferences, but can't make the one in late April through PaperSource. But I am going. Ideally I would love to find a way to go down to San Diego and join the same groups as a few people I've read about if I can put that into my routine.

Good luck!

If I got terminology incorrect, I do apologize. I seem to apologize a lot. 

Let's face it, regardless if you call it cashflow or profit, whatever, it's the share you take out of your investment to support your lifestyle. But with Notes, you have to maintain and grow your capital/investment to continue that income stream or there is an end date. In order to avoid the end of the cup that giveth, you must refill lthe cup. There seem to be quite a few on this site that have already found the path to buying notes and quiting their 9-5 job to become a full time investor. That tells me that they are removing some funds from the stream to live off of and still growing their portfolio. 

Notes differ from buy and hold in the fact they need to be replaced or your well dries up. 

I have learned a lot just from this thread and all the other reading I have done. My eyes hurt and I have so many bookmarks. 

I appreciate all that have taken the time to reply. BP is an amazing, amazing tool.

@Jay Hinrichs

Honestly, it was some of your posts regarding selling off properties and doing more HML and fundings that encouraged me to keep an open mind and consider the other side. I think that making similar returns and being able to do it from the lending/financial side offers some great opportunities.

I know scaling is likely faster and easier with RE. I'm a absolute no to flipping. That I already know. Love concept but that is a JOB that holds no interest for me long term. I know me, I would become obsessed with it and that is not the end game I am looking for.

I'm not looking to buy into other people's problems either which is why the original thread was asking how to scale PN notes, where the threads are on that topic. Everyone seems to only talk about scaling with the NPN which is what I was trying to avoid, but could do. I can sell, have before, I can negotiate, have before, confront people, not problem, just wanted to see if the PNs could work too. I'm trying some ideas on to see which fits best for my needs, wants and reality.

@Bob E. thank you. Although now I will have to research more on selling the front end of a note to see how to make your thought work, it is the type of answer I was asking for. So there is a way to scale the business with PNs. Would love to hear more about the topic of selling off partials and keeping the tail, the math involved in that.

@Jay Hinrichs thanks! I'm not anti NPN and working. I just want to be sure I'm not taking on more than I need to to get to my end game.

To get to the goal I am trying to define. On this site, when you are beginning, one of the pieces of advice it says is to see what you want your life to look like (whether it be a business, time, whatever) and work backwards. Do I want to deal in NPNs and create a J O B for myself? Do I want to use leverage and buy a ton of rentals? Can I work with PNs and still get it done? I'm exploring. I have limited capital like most of us. I want to be smart. I want to understand my goals, know that my game plan supports my goals and that I am headed in the direction I want to end up in. My plan will likely evolve and look incredibly different years from now, but if I don't understand where I am going, what I am trying to achieve, I risk just treading water instead of moving toward my intentions.

Hence asking the question about how you can grow your portfolio best with PNs. Cashflow is what is important to me. Time. Rentals are semi passive. Ons can be more passive. NPNs can be fun, and easier to do out of state than some rentals (I'm guessing based on reading) and the expenses more predictable than rentals, repairs, rehabbing....etc.

That just can't be all there is...too many investor buy notes for this to be true. There must be some decent methods to grow your own investments in Notes without being a broker. There are people out there that are successfully building a portfolio, growing it and now work it full time. My guess is that most of them use NPNs to finance that growth, this I do believe. 

If in order to be in the Note portfolio investment field, buying NPNs and get them back to re-preforming and then offer them back on the market is still in some ways better than rentals I think.

I believe there is a way for the average Joe to be smart and work your own portfolio at enough yearly profit to replace your J O B and still grow your investments.  I simply believe. I may be asking the wrong question(s). 

The average investor is an investor and not a broker. I presume that being a broker means licensing...I sure hope rentals aren't better for a single investor wanting to grow their own little note world. 

So, to restate what you are saying is basically they are buying pools of notes, keeping the ones that met their criteria and selling off the others for profit? Can the average investor do that as just an investor? Is that realistic?

Sorry, thought I was being extremely clear.

If I have 100k to invest (as an example), buy a single performing note...how do I scale that to 2 notes..to the third note AND generate some cashflow for myself. The reality is that you aren't going to buy many performing notes for the equivalent of 2 years of revenues from the 1st note in this example. Even if you took that initial 100k and bought 2 or 3 lessor notes, still the same issue...how to scale more rapidly.

@Mike Hartzogmentioned basically time. You save the payments and reinvest. If its just that, got it. But if there is a better way, like selling your notes after 2 years, somehow making it more valuable, that is what I am asking. How are people doing it...keeping part of the monthly to always maintain their initial investment balance and considering the other part for cashflow or another method.

I'm asking if there exists a thread (or someone explain) how to effectively scale and eventually (the sooner the better) have cashflow to support my business (me) AND reinvest. 

If I'm truly unclear, I have no idea how to be more clear. 

There's just so much more information out there regarding NPN junior notes and how to really generate and scale, I have been looking for the same information but on PN if it exists.

Sorry, regarding NPN, I know there are several people that like to collect back fees/payments if they can get the loan back to performing, I did call it downpayment, but I just meant a lump sum from the borrower regarding their arrears/fees or perhaps new arrangements that help you get back a portion or all of your initial investment pending what you bought the lien for. I have listened to Gordon Moss' videos and this concept has been repeated. I apologize if I got terms incorrect.

Thank you for the explanations. I was thinking terms of borrower's principal and interest just for the example to get the question out there. How do people divide up the monies? Do they use the example of the principal and interest or what you have stated that has little to nothing to do with the loan repayment but investor usage. 

I'm trying to envision PN with a growth model PLUS cashflow. I read all these threads and everyone says great cashflow...I am wondering how people are scaling their business models and creating a living. People that are not brokers, but just investors. There must be a point, a place where you are have enough notes to create cashflow a person wants then all other notes are for reinvesting; it just appears that would take quite a while. (not a bad thing)

I completely understand that this has a max lifecycle per loan which is the entire amount of payments. I also understand that on average, in reality, most loans will be paid off in 5-7 years either due to refinance or selling off the property. So you would have to plan to buy more than 1 note to really make it work...and then another. As much as a PN is passive, you still need a plan to sustain the money stream. You can't just spend it all, then you have nothing left if the loan completed. And if you spend all the payments and year 7 of the loan the borrower paid it off, you would have a reduction in your amount to invest if you only had the payoff amount...again, you have to do some planning to really sustain this over time...to maintain what you want for cashflow all things working perfectly of course.

It just seems that purchasing NPN junior liens, turning them around is the clearer path to growth but if you want a little less interaction with borrowers, a little less of the chase, but still want to scale, you have to have large amounts of funds to start with or it will take a seriously long time. None of these things are bad, just trying to ensure I really understand what I am reading.

Lastly, I totally understand hands on is my best bet to finally really understand...buying a few and seeing it all come together. I'm finalizing all the research phrase and about ready to start really investing. There are tons of options and working backwards from how I want my life to look and picking my main focus, notes fit. Technically buy and hold does as well, but of late I'm leaning toward notes. Both will have a learning curve and I'm not looking for a get rich quick plan. Just attempting to understand how to scale. In buy and holds, so easy to see if you have a good down payment, buy right, refinance, use the funds again to buy another....clear. Not as clear with PN vs NPN. I think I read that David Van Horn said that to really make money in PN or notes in general its about the turnover.

Again, thank you for the info, it's awesome. I love BP because you can find anything you need.