All Forum Posts by: Gail Greenberg

Hey Dragos, I have a seller financed duplex property available if you're interested. 

@Marco Bario  another simple way to think about this is: you'll be getting a monthly payment of $316.30 minus your servicing fee (probably $15/month if it's performing). So in that scenario, your yearly net income - assuming you don't have to pay for forced-place insurance on top of that - is $301.30 x 12 = $3,615.60.  If you pay $43,196.47 for that note, your cash-on-cash return is only 8.4%.  You can buy performing notes where there's no history of delinquency or BK that yield 10-12% so why take a chance on this guy?

Now here's the real buzzkill. My servicer charges me a premium for a note that's in BK because it's a little more complicated for them monitoring the situation - they won't let me monitor the situation because, I suppose, they have compliance issues they have to legally abide by. But, bottom line is, you're probably not EVEN going to net $301.30 so your COC return will be even lower. I say.....NEXT!

Yes, @David Piqueira exactly. Some people only buy notes where the house is underwater for this reason. Slight correction - you will have gotten the house for the price of the note PLUS the price of the foreclosure plus any other liens that stick after FC - like property taxes.  Many types of liens are wiped out in FC, but not all.  A borrower who has no equity and hence nothing to gain in a foreclosure should also be more willing to give you a deed-in-lieu. But you have to do a very good title search before you agree to that because with a DIL, you will have to pay all the liens to get clear title, including those that would have been wiped out in the foreclosure. Sometimes it's cheaper to foreclose.

@Jay Hinrichs Could you explain what you're doing then? I didn't understand it and the folks in this thread certainly aren't going to either since they're very new to note investing. This is what you said - it sounded to me like you were selling turnkey properties to investors with seller financing and creating performing notes that way.

Also we do not do anything with OWNER OCC thats where all the issues come from with Dodd Frankenstien etc.. we want solid payors with dual income streams one solid borrower and two rents at 2X or better of the note payments and many are 3X or more.. that is what makes a solid note. you have rental income then you have the owner of the rental with 30 to 50% equity in it they are not going to let it go over a 250 mortgage payment.

So @Jay Hinrichs, you are selling turnkey rentals to investors with seller finance? Thereby avoiding the need to do a Dodd-Frank process with your borrower? Do you sell on land contact or originate a conventional note? Where are your properties? 

By the way @Clint Galliano, I'm trying to find a house for me in New Orleans - in case you know anyone ;)  My daughter lives there and I'm in the Krewe of Nyx. It's a cruel accident that I live in Philadelphia.  I want to spend 1/2 the year here and the other half in NOLA. 

@David Piqueira say you own a note with Unpaid Balance (UPB) of $50,000 on a house worth $90,000. The final step in the foreclosure process is the house HAS TO BE PUT UP FOR AUCTION. The only reason that wouldn't happen is if the borrower gives you a Deed in Lieu of foreclosure - essentially signs the house over to you. You set the minimum bid at the auction and it consists of your UPB + Legal expenses to foreclose + sheriff's fees/costs to auction + any other money you advanced on borrower's behalf like taxes and insurance. These expenses become part of your UPB. So maybe all that totals $65,000. The minimum bid is $65,000 but the house is still worth $90,000 so it could very well sell for $65K or $70K or 80K. IF it sells for $80K, you get your $65 and the borrower gets $15 minus any costs he's responsible for.

@Clint Galliano, you might want the house, but can you see how it's only fair to the borrower that he gets anything above what's owed to you? That's equity that belongs to him. If you really want to end up with a property, only buy notes where the UPB is close to or more than the value of the house.

If you're flipping, the safe formula is (Conservative - not wishful thinking ARV X 65%) - (EXPENSES AND PROFIT WANTED) = PURCHASE PRICE.

You didn't put holding costs and the cost of money in your expenses and a $5000 profit on a flip is way too low. One budget surprise on the job or a slight mistake in figuring ARV and you have now just broken even or possibly even lost money on the deal. If you're wholesaling, $5000 for your profit is fine but you have to figure the price you're going to sell to a flipper the way I'm showing and THEN your $5000 also gets deducted from the purchase price you're negotiating.

Hey @Account Closed, I have Canadian JVs. I also know Canadians who invest in the US. You will have no problems with investing in notes from there.

I can't get into all the intricacies here but I would just say this: I question the idea that NPNs are more risky than PNs. NPNs are having problems now, but you have lots of financial room to solve them and still make a profit; with PNs you're putting more money at risk and are far more dependent on things going as expected with no surprises.  In notes as in life, I don't like to depend on everything going perfectly ;)