All Forum Posts by: Patrick Desjardins

The biggest misunderstanding is that this is a legal and finance business, not a real estate business. Legal is the biggest expense and will make or break your note investments.

People recommend setting aside 3,000-3,500 for legal. That is well and good until something goes wrong and you're paying that $3,000 PER MONTH in legal fees. Many of us here have cases where the legal fees amount to more than 20k, sometimes more than the price of the note.

I have a case in Florida still going strong after 3 years in court.

You need to be well funded. 

Oops, I missed that part. You recorded the deed in lieu made to the previous lender?

That's how deed-in-lieu works, it moves the title to you and you now own the house and can do what you want with it. But as usual, ask an attorney if you have questions about it.

 I'm not concerned with the government as much as the judges. Those guys go rogue and have no accountability. Your only remedy is to appeal and spend thousands and thousands in legal fees.

I'm limited in what I can say since this case has been going on for 3 years and isn't over, but a judge signed off on cancelling a foreclosure auction that sold to a 3rd party bidder, 6 months after the sale proceeds had been disbursed. In secret, while I was in Canada. We (or our attorneys) were never notified of the hearing, and so we had no legal representation at the hearing.

Stuff like that is why I cooled off a lot on note investing. I don't mean to sound all negative about notes, it's possible to be successful, but there's a lot of gambling involved. I would prefer if it was more predictable.

Crammed down or stripped?

No offense but your message is confusing since you talk about getting payments, but also about your note being stripped and worthless.

To get stripped, they have to file a motion in the courts and have a judge sign off on it. You can fight it and present your own evidence. In THEORY, if you have $1 of equity then you couldn't get stripped.

My point is.. if your loan is stripped and "worthless" then you should have been made aware of it and you should see it in their bankruptcy documents.

Completing the plan by itself doesn't make your note worthless.

The US legal system is too unpredictable and slow. It makes it so note investing in NPNs is almost like gambling at times.

Judges just do whatever they want. I told you guys about that note where my appraiser with 25 years experience said the value of the house was 200,000. Their joker appraiser (who used a torn down house as a comp and other provable wrong things) said it was worth less. And judge still sided with the defense. His arguement was something like.. your appraiser is probably right, but the house needs repairs because it hasn't been maintained, so it would sell for less. Well duh.. let's reward the borrower for letting their house rot. And completely disregard that property condition is already included in the appraisal.

Anyway.. we've had a few cases like those the past 2 years.

My outlook has changed a lot. In the past I would have said go for it, either performing or non performing notes. Good returns, worth learning.

After getting hurt by legal fees and countless mistakes from "professionals" in the industry, I would say stick with performing loans. The knowledge barrier to entry is small and the returns are still very good. NPNs not worth it right now.

I use a simple app called Financial Calculators. Use the IRR one, input 4 of the 5 variables and solve for the 5th.

Very convenient for calculating various things like, what should the price be if I want 12% return? Or what would the payment be if we have a 7% interest and amortize it over 25 years?

I think TREIA has a subgroup for it, and I know some note investors in the Cary area. I'd join the main group and go from there.

This country's legal system makes note investing a bad investment.

It all looks great and profitable until it happens to you.