All Forum Posts by: Peter Halliday

When you buy a note for pennies on the dollar, it’s not your loss.  It’s the seller’s loss. 

I understand how to underwrite a performing note. I also understand that underwriting a non-performing note is about checking the return against several possible exits. And you create an offer based on the likelihood return give the exits possible and their likelihood.

I saw a loan the other day that was listed as performing, but was sub performing. They borrower mostly consistently paid, but not the full amount. I’m wondering if people usually build a different mode entirely for sub performers like this, or if they build a non performing model that can handle it.

I’m newer to notes too, For me, making sure a property has insurance is a way to protect against the risk of damage occurring that can make the collateral to the loan worthless as collateral.  

Also, as an owner of a CFD too, I'd think this is even more true as some property condition issues may fall back to me.

As Jamie said, for some servicer syou don’t have to ok it, it not an option.  So, you may want to check with them. If not, it could be a hunt to find out if there’s still insurance in place and if it applies.  

There are several talks sprinkled around the internet. @Jamie Bateman one is great and I know @Dan Deppen has one too through his Fusion Notes podcast that was informative too. Don’t undersell Paperstac as a source.  

@TJ Addison not like you more ammunition. However my experience many people chase higher return rates and then end up with an actual return below the “lower” rates of a performing note anyway. 

@TJ 

@TJ Addison I'm new to note investing on the active side also. Like you I've had my experience on the other more tradition sides to start on: flips, multi-family. My first was a CFD, so it's not like so hard you should deter you entirely. Ti me it's important to act. Whatever way gets you to action. Be educated, so you can make sure your plan allows you to survive any mistakes

Ultimately I want more Non-Performing slogans, but knew I needed to learn how to close the loans and wanted a base of money coming in each month.  Plus I learn how to do due diligence, close it, record it, and board a loan.

wjen I do non performing I'll make sure I target a smaller size if I do on my own or else I leverage doing a JV if I want to risk a larger amount so I learn from someone else more experienced.

I’m wondering what the exit strategy is for a borrower on bankruptcy. I was reaching up to follow up with a seller I’d bought a note from. He asked me if I’d be open to a note in bankruptcy.

I realized that I don’t know much about the risks vs rewards. My loose understanding is that bankruptcy doesn’t erase your debt. Stretches out the time horizon.

@Rory Hansen if you are looking for less competition, I’d look at places that require you to be in person and don’t have an online system. Obviously outside of a major City will help too. Areas that won’t attract the hedge funds and players looking to sync a couple of million at a shot.

I’d stay out of Cook or any collar counties.  In those areas, a handful of investors spend millions to buy up all the tax liens at 0% interest.  They don’t plan on making any money on the interest.  Their goal is to view things as a portfolio.  Some go all the way to foreclosure and increases the return.  Another strategy they employ is selling the tax certificate. 

It's the closest to real if PV in the PMT function was the Total Payoff. When you use the UPB the P&I is way less than the loan. I suspect this exposes some mistakes were made. Either on the reporting side or constructing a workout somewhere. I do like the idea that the model incorporatse the facts as you are told them, but have indicators that can check and show when they aren't aligned to reality.