All Forum Posts by: Marco Bario

@Scott Nichols - I have experience with a $20K mentoring program. The one I chose is a solid group of experienced, reputable professionals, has a constant flow of content, and access to input when you're off track or relative to your specific deals & questions. In hindsight, however, I wish I had allocated that capital into assets. Will I make back the money I spent on the program? Yes. But I believe I would have based on other education I've paid for at lower price points taught by equally reputable and smart professionals. Not to mention free resources which I'll also cover below. 

Not knowing your goals, experience, potential focus in the note space, or personality - I'm going to wing this and see how it goes:

1. Listen to the entire "Note Inc." podcast. It's laid out like an introductory course on notes. Entertaining and worth the time. (Free)

2. Search the "The Note Queen" on YouTube. I really like Dawn Rickabaugh's take on "Property and Paper." On YouTube you'll find her recorded webinars. You can also sign up to participate live where she'll help you to drill down on deals if you ask her to. (Free)

3. Join Facebook groups on notes. Some who run the groups also host podcasts which are educational. (Free - except for allowing FB to know everything there is to know about you)

4. Read any or possibly all of these books: Invest in Debt (Jimmy Napier), Real Estate Note Investing (@Dave Van Horn), Note Investing Made Easier (@Martin Saenz), Bulletproof Title Due Diligence (Alex Goldovsky). As you may have guessed, Mr. Van Horn and Mr. Saenz are accessible through this forum as well.

5. Consider purchasing a performing (preferably not re-performing for your first note) note from someone reputable for your first deal. Mine was from a flipper/turnkey operator on a house in Memphis. An almost brand spanking new note created by someone I know and trust who I know would most likely buy it back from me if it ever goes south. It won't and I'm still collecting payments on it today. I recommend this so you get used to buying "paper" and everything that goes with it.

6. Listen to the Good Deeds Note Investing Podcast. @Chris Seveney co-hosts this one with @Gail Greenberg. It's like tales from the non-performing notes front lines. I love it and pick up great stuff all the time.

7. Lastly, I have positive first-hand experience with a couple of other paid educational resources: "Note Investing Academy" and "Note Investing Tools." Of course, you could consider joining one of these sooner rather than later, but I gave you some free stuff to wet your whistle first... and it's good stuff at that. 

Hope this helps. I love to learn and especially have enjoyed learning about notes. Go get 'em...

@Tyler Mutch - As a platform, Paperstac is great to work with. The note listings are posted by individuals who are unaffiliated with Paperstac. It’s up to you to understand what you’re buying and vet each asset prior to purchase. 

Some will have a 3rd party servicer in place, others may be self serviced by the note holder. 

Once you own the note you can board it with any servicer licensed in the state the note is from. There are several big players out there, medium players and smaller players. Each has strengths and weaknesses. It’s difficult to make a blanket recommendation. 

The senior lienholder would call the loan. You'd have the right to pay it off as would the previous owner. It's doubtful the previous property owner would do so because they'd only be adding to your equity position. 

A potential backup plan should that happen (generally it does not) is that you'd refinance, or write a check if you're in a position to do so. At that point, it's possible the lender would agree to a discounted payoff to avoid the time and expense of foreclosure.

Hi Todd - If you were to purchase the 2nd pre-foreclosure and take it to auction, you could end up with the property subject to the 1st. Often that’s an advantageous position. You’ve gotten a property with financing in place. And the financing remains in the previous owners name. Most loans have a due on sale clause. There’s risk there because the lender could accelerate the loan. Most don’t, but if there’s  due on sale it would be within their rights to do so. 

Make sure there are no other lines ahead of you besides the 1st... taxes, municipal, etc. 

I’m not familiar with Oregon laws but you may need to be licensed to purchase existing real estate loans. Consult an attorney on that and the costs involved with foreclosure. 

El Segundo has skyrocketed. It's next to LAX as well, not to mention Chevron and the water treatment facility. I wasn't aware PDR was lagging, and would also be curious regarding people's thoughts. 

Companies like Prescient provide full criminal, civil, and credit reporting. Whether a private placement of JV deal, you can ask whomever you're investing with to allow you to run these checks. I the answer is no, my feeling is there's no need to proceed further.

Google searches such as "[first name] [last name]" accompanied by "fraud," "ripoff," "scam," lawsuit," "judgment," etc. are good to run as well.

Search for podcasts featuring Jeremy Roll where he discusses due diligence and underwriting. The topic if who he invests with is big for him and he discusses the topic clearly. 

- Marco

@Paul Winka - The pilot analogy is a great one, and it's interesting to hear your background. You may have noticed there are a lot of "engineer types" in the note world. Structural engineers, software developers, pilots, compliance professionals, etc. Believe it or not, I used to produce entertainment  - television and films. I was responsible for the scheduling, budgets and crewing aspects - so I suppose I'm pretty "left-brained" as well. 

I'd imagine there were times in your Air Force career when things didn't go as planned and you might have followed a procedure with the necessity to improvise as well. That's the note world to me. Every house has a heartbeat, and every asset takes on a life of its own. I still find myself at the edge of my seat waiting for the next plot twist and anxious to see how I'll handle it. 

Thanks for sharing.

Welcome Paul -

Would you be open to sharing a story from one of your deals? Change the names to protect the innocent, and promise you you're in a place where we've had some less than stellar outcomes.  

"I haven't failed. I've just found 10,000 ways that won't work." - Thomas Edison

I'm a fan and a client of Mat Sorensen. I highly recommend his book - The Self-Directed IRA Handbook.

My self directed account is a Solo 401(k) which owns an LLC. Both the 401(k) and the LLC have checking accounts. I am the custodian (no 3rd party custodian) and beneficiary of both entities and can invest from either as I choose. I also like that I am able to borrow from my 401(k) and avoid UDFI (read Mat's book to learn more about this).

Mat helped to establish my Solo(k) through his law firm a few years ago. He's since launched a Self-Directed IRA company with Mark Kohler called Directed IRA. I don't yet have experience with the new firm, but expect it's worth checking out.

Best of luck -

Marco Bario

@Nay H.- Note investing can be profitable, but it can also lead down messy (aka expensive) roads and loss of capital. My two cents is to be cautious in learning this niche with other people's money.

To answer your questions:

1. - Some note professionals obtain capital in the form of a loan, offering 10% - 12% and collateralized by the note(s) purchased with their capital. You have to market and network to find these people.
   
2. - There are also JV deals where there would be "Funding Partner" putting up the proceeds and sharing in the split of profits with the professional bringing the inventory and usually the majority of knowledge to the deal.

I've told you enough to dangerous. There are regulatory concerns to be aware of, especially connected to the JV option. You'll want legal counsel involved, which of course costs money.

There is another option: Brokering. Similar to house wholesalers who find properties and bring those deals to investors for a fee, Note Brokers find notes and bring those deals to those looking for notes, then collect a fee. You can Google Dawn Rickabaugh (The Note Queen) and Jeff Armstrong (Armstrong Capital) to learn more. Dawn has great free videos on YouTube and regular free webinars. 

This is a great business. Best of luck to you and let me know if I can be of further help.

- Marco Bario