All Forum Posts by: Kent Anderson

Hello Annette,

Hate to sound like a few of the “no-can-do” professional bloggers on BP but…simultaneous note purchases are very hard to do these days.

I closed a simultaneous note purchase two weeks ago here in CO with my note investor in FL. And let me say, the pro note investors buy nationwide but not all. Some stick to regoions.

My note investors purchasing guidelines required the transaction to be commercial and the note secured by commercial property.

95% of the note investors I know of will NOT do residential simultaneous closings because of respa concerns and rightfully so (min of 3 mo seasoning.) But then again, they are out there.

My simultaneous note purchase was commercial property, 70% cash dwn, 800 FICO on buyer with a 20 year proven rental history to boot and, secured by a good property in a good neighborhood in a major metropolitan area.

I’ve known the note investor for over 20 years and they have a 150 million private placement fund to buy notes and are credible, proven and reliable players in the note buying industry.

Annette, you won’t believe this but the idiots at SBA turned down the loan request so the transaction came to me from a realtor who sat in on my guest speaker 45 minute seller finance presentation last April.

Perfect example how five entrepreneurs and one individual can do business better than the entire United States Federal Government. Ra Ra Ra!! Go Free enterprise!!!

And oh yah, we closed in 5 days. That includes apprasial, title, credit and document approval.

My goal is servant leadership and I’d love to tell you who the investor is to help you and my note investor but… I’d be accused of and kicked off of BP for "solicitation," which I really couldn’t give a care but I must honor my agreement so, there you go.

The note investors are out there but it must be a real moochy transaction to close but, not impossible,

Hope you can get it done,
Kent
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Hello Page,

Of course, everything I write there is just my opinion and works best for my particular situation and comfort level.

Therefore, I am not saying any other approach is right or wrong; it’s just one of the many techniques I use to buy notes with a pension fund for tax-free growth and with draw.

My approach is always been work on a individual case-by-case basis.

The reason is, I only do business with decision-makers. In other words, the Note Seller must be the person receiving the payments on the note for sale.

Another reason I buy discounted notes on a case-by-case basis instead of "Pooling" my capitl is I like to remain in total control my money.

I refuse to “pool” my pension fund capital with other investors, regardless of how well I know them, how smart they are or trust them.

As I would then be giving up control of my pension fund capital to someone else and in my opinion, that is bad strategy.

Although, I do by partial interest in notes, which has worked very well for me in the past.

The following example is a “Tail End” partial note purchase.

The way I’ve done this is; I find a note for sale, offer to buy 100% of the notes remaining payments.

Then I broker a portion of the note to a sophisticated institutional investor and I place the "Tail End" of the remaining payments in my pension fund for tax-free growth.

For example, and keep in mind I’m making up figures for example only.

Let’s say I find a note for sale with 240 payments remaining and the note seller accepts my offer to buy all the remaining 240 payments at a discount.

Giving me, the potential to earn $1700 as a note broker fee on the sale of that note to my institutional investor.

Yet, instead of selling all 240 payments to my institutional note investor for my $1700 note broker fee, I sell 200 payments to my institutional investor and give up $700 of my broker fee in exchange for, the right to receive the remaining 40 payments.

At closing, my pension fund takes assignment of the remaining 40 payments (tail end) via Partial Purchase Agreement with the institutional note investor.

The assignment and partial purchase agreement are recorded at the county seat where the property is located and protects my remaining interest in the note in the event of default or early payoff.

Yes, there are risks, you need to be sure your investor will work with you in the event the note goes in default and you have enough the capital in your IRA to fund the foreclose subject to your investors remaining interest.

I found this note brokering technique to be an excellent way to direct profits to a tax-deferred or better yet, tax-free account (Roth) with minimal investment of cash from my pension fund.

The last tail End note transaction I gave up approximately $700 in broker fee, forgot all about it and then…

About seven years later when the payor refinanced the loan, I received a call from my institutional investor asking me where to mail my large (large to me anyhow) pay off check.

My only regret is I did not do this on every transaction when I brokered notes to my institutional investor these past 20 some years of buying notes and mortgages.

Yet in this example I embarrassingly need to admit that I directed the profits from my partial note purchase to a NON-tax-free account. Yes, shame on me… Now if only I could practice what I preach! ha ha

Then again, there’s nothing like keeping out from under the thumb of Uncle Sam and the IRS out of your transactions, legally, ethically and creatively.

Page, work the numbers on an example like this and you'll find that the yield is phenomenal as well as your cash-on-cash return. And that’s not even including compounding your profits tax free.

Let me know if any questions,
Kent

PS. I'll post a real estate idea tomorrow and, if you like this post click the VOTE button

I agree completely with Bill. Stay away from nonperforming notes and only buy local performing notes secured by property you know and understand.

Bill, seems I hit a sore spot or the High Horse has tender feet.

Relax, don't take the burden on yourself, no names were mentioned.

Humbly I admit and regret, I mistakenly marketed on my first post like a neophyte. Appropriately, I received a spanking by the moderator and since then, only thoughts and ideas.

Although I stand by my previous post... personal testimony is baloney and, as with MY POSTS and all others, feel free to trust but always verify as we all make honest mistakes.

“Trust but verify” BP is a place for thoughts and ideas but it is bad strategy to take action on anything posted without verifying it’s accuracy first.

No doubt, the majority of these posts are written with good intentions but we all make mistakes (including me) so as the old axiom says, “trust but verify.”

Be especially careful of undaunted advice and knowledge spewed by people who boast their credentials via “personal testimony,” because that is just what it is... personal testimony.

AKA, "blowing smoke"...

Over the years I have learned from the "best of the worst" to trust on the surface, but ALWAYS verify.

A technique… my associates and I have found very productive is take the extra time and effort to read the state statutes to gain/learn the fundamentals of the issue. Then you will have an intelligent discussion with your counsel.

This approach alows me to trust but verify, that the one giving counsel knows the issue inside and out saving time and money. And do not be surprised, if they blow smoke too.

Mr. Barnard,

I agree! That’s why this is a get rich SLOW business (if it happens at all). NOT get rich quick!

I know what is going to happen... I work my tail off like the typical self-employed, finally get free and clear, die, my children inherit and sell it all quick at .50 cents on the dollar.

Then do something brilliant like, buy a Cadillac.

My goal… give the kids a down payment each and give the rest away.

If I only knew when I’m gong to die… I could spend it all first!

Ahh, i can't help but laugh.

Take it easy,
Kent

My preference is to work with decision makers directly, face-face over the kitchen table.

Therefore, I'm limited to direct mail, referrals, searching neighborhoods for vacant houses and other likely prospects, and talking to neighbors.

As for your numbers, if I get 100 calls from a direct mailing (and hopefully a 5% response rate), after I prequalify on the phone, I would be happy to have 15 qualified prospects I am willing to spend the time and travel their home to discuss business.

Then, I’ll make 10 – 15 offers (when I make that effort to visit personally, I always make an offer, subject too newly unrevealed problems that kills the deal, which happens) and be happy to close one or two transactions.

Please note, My goal is to put one or two houses a year, I keep almost all my transactions so I’m am very picky.

Keep at it, they’ll come and good luck!
-Kent

No, Bill. I do not do business with anyone on BP and do not solicit anyone’s business either.

That is why I do not add my email address at the bottom of my posts.

If I did, I am sure people would be suspicious of my true intent... learning from and helping good people get started in the business.

Bill, I am more than accountable via my open profile and accessible background information and availability of all via internet search.

Kris, please go to the Southern Colorado Better Business Bureau. Here you see a verifiable, 22-year A+ rating.

Kris, please do not let Bill and my stupid bickering slow you down.

What a waste of time! For you and me.

Worst of all, it draws down the excitement of "deal making" and I sincerely apologize for being a part of that.

Quick note, in Colorado the O & E report give us copies of the recorded documents for details but I don't use them because they now required by law to charge a fee.

Proof you can trust but you MUST verify. Including my comments, I won’t lie to you… but I do make mistakes.

Enjoy the info gathering from the prospect. It really is fun and rewarding. Who knows, the car just may drive itself home!

Slap your results up here on BP and you will get some great and not so great, ideas for your future reference and business library.

And professionally draw this transaction a successful conclusion for all parties involved.

Again, look forward to your response so we all benefit from ideas gained from your hard work.

Sincerely,
Kent

Kris,

Absolutely do NOT, let the third stop you.

It already stopped Bill. How many other competitors are also out of the way.

There is plenty of potential with third, sub to the information you uncover. Then again, maybe not but how do you know until you ask?

Yes, get on line and get what you can from public records. Anyone can do that.

Or, save time by ordering an Owners and Encumbrance report, assuming it is free. Important, the O&E only quick and dirty info, NOT insurable and nothing to rely on, but saves time.

Going directly to the decision makers is professional and more importantly, you get good at talking business,

Siitting on the computer is what most your competition does. Be glad they take the easy way out..

To answer the question, “what’s the deal there” before you talk to the decision makers, is playing academic "what if" games.

Good for people who don’t have anything else to do over coffee but a waste of time until you know more

Set yourself apart from the competition and ask questions face-to-face, let them talk, of course remain fore square as always, ask the questions above and others that come to mind but don’t stay there longer than an hour (+ or -).

Doing so you'll answer Bills comments and most likely turn up information to determine if "there is anything to negotiate".

The reason for the whole process.

Looking forward to your results,
Kent

Just trying to figure out if any of the paper is negotiable, motivations and key issues.

Once we have these answers other poster will bing in good ideas too.

Hope it's not all in vain. But as we say, don't know till we try.

-Kent