All Forum Posts by: Marco Bario

Any debt older than 6 months has a 50% chance of being collected. It deteriorates from there. Since, people have ignored paying it what would you be doing differently to finally collect?

It's a common practice to keep selling the bad debt to the next guy who gets ignored as well. Also, there is a statute of limitations issue on a lot of the debt you would be buying and that means your only recourse is to continue sending letters to collect. 

 Seems like a pretty tough way to make a living when real estate is so much easier and more profitable.

I'm sure done correctly there's the potential to make money. Certainly much more speculative than RE secured debt. I know there are funds out there that raise money in this space. I admit to knowing very little about it. 

@Gary Headrick - from what I understand, the strategy for an investor not already in this field is to purchase a portfolio, then engage a collection firm licensed in the respective states. Very similar to hiring a loan servicer who also handles loss mitigation. 

Spoken like a true real estate "baller!" Thanks for sharing and best wishes for continued success.

Although this is a thread about insurance, there are other options for a 21-year-old to create incredible long term wealth and provide for a family he doesn't have yet.

For instance, you could consider a self-directed Roth IRA. (Or, if you are a solo-entrepreneur, a Solo-401K with a Roth component can be even more powerful.)

Imagine annual contributions where the earnings grow completely tax-free – and imagine the ability to invest in high return assets such as real estate and notes. 

When you die, it becomes a "Beneficiary IRA." Your heirs inherit what potentially has become an extremely valuable asset with great tax benefits.

Mat Sorensen's "Self Directed IRA Handbook" is a great resource on this topic.

I don't have specific car advice (although my Subaru Outback has 54K miles and I intend to drive it past 100K).

But on the topic of personal finance, John Shaub gave a talk at PaperSource a couple of years ago where he shared a story about a friend who has a rental portfolio. He gives each of the houses he owns a "job." The income from one of the house houses pays his insurance, another pays utilities, etc... This gentleman was older and getting too old to do his own yard work. He was planning to add another rental with the "job" of paying a landscaper.

By the time my Subaru ends it's useful life, I plan to have an income property or a note who's "job" is to make car payments.

Currently, US residential homeowner equity is high, and foreclosure numbers are low. 

At the same time, there's a rise in unsecured consumer debt such as debt consolidation loans, credit cards, and retail accounts. 

I'm wondering who has experience investing in non-performing unsecured consumer debt, and how it compares to NPL real estate loan investing.

For those who offer joint ventures, do you assign the note to the capital partner? If not, what protection does the capital partner have beyond seeking a judgment based on the JV agreement and hoping to be paid on that judgment?

@Bob Malecki - Love the chart. I keep one similar in my estate plan binder (sorry to be so morbid). Mine has far fewer pieces, but it's still going to be complex to take over when I'm not here to ask questions too. For good or for bad, taking over assets that don't sit in an E*TRADE account is less complex than what I've got.

@Adam Adams and @Andy Mirza mentioned putting things on autopilot. I left that part out of mine. When I turn 60 in ten years, my plan is for mine to be as low maintenance as possible. I think the ratio of passive vs. active is an important aspect. I'll be willing to earn less with new investments made after the point I transition toward more passive goals in exchange for free time. 

@Scott Trench - I'm guessing you aren't turning 60 ten years, and that's amazing. "25-75 years" - Amen Brother! This is a notes forum. Although you aren't holding notes, your debt strategy is a big part of your plan. speaking the language of many of us here. The more I learn about debt, the more I feel understand money and investing. 

Thanks, everyone for your replies. I feel like this would make a great compilation book. 

@John Underwood - The "Solo-k" should be a great tool for rental properties b/c you can buy using non-recourse leverage. That was the thing that first caught my attention vs. a standard self-directed IRA. I'd say you're going to kill your goals.

@Adam Adams - I hear you. My girlfriend is a Geriatric Case Manager who sees first hand what it costs to grow old. Costs for care facilities and health care are rising much more quickly than inflation. In fact, that was a motivating factor for me turning to real estate investing. So no to welfare, and able to support me in my old age. 

I live in Southern California where we're lucky to have a number of long-running investment groups. No matter the topic, I enjoy attending meetings to meet other investors face to face. This week I've been busy - attending meetings the last two nights and planning to attend FIBI in Pasadena tonight. 

People often ask one another what they do, or what they invest in. While interesting, I find I can get to know someone better by asking about their investment goals. Are you passive or active? What's your time horizon? Do you seek current cash flow, long term appreciation, or both? What's your risk tolerance and how do you manage it? What's your tax strategy?

Personally, I wear two investor hats:

1. I have a Solo 401K where I know I won't touch the funds for at least 10 years. Hopefully longer. Here I invest passively in commercial syndication deals where often there may be short term cash flow, but ultimately I underwrite for long term capital appreciation. My 401K  also holds a small portfolio of performing and non-performing notes. The performers are often formerly banged up assets where there may be higher risk, but also the potential for higher returns. The non-performers are assets where the timelines could stretch out. I don't have a problem being patient because I don't need the cash immediately.

2. I also have a fully taxable (kills me to write those words) entity where I acquire assets meant to put a roof over our heads and food on the table. Much different priority than the retirement account. In notes, this endeavor looks for shorter timelines and less risk. My first note purchases here were performers whos "job" was to cover the business's overhead. Rentals mix in well here because of tax savings. This is my ATM machine. Speaking of ATM machines, this entity recently invested in an ATM fund where we fully depreciate the ATM machines over the first several years. As investors, we expect monthly cash flow combined with tax savings from deprecation. Happy-Happy.

One other thing... I have goals and milestones set for both endeavors. I invested in the stock market for years without this. That was a mistake.

So... that's me. 

I would love to learn about other's goals.