All Forum Posts by: Liz Brumer-Smith

@Dennis Lanni, the judgement was a small amount and paying it off allowed us to gain title faster and cost less than a foreclosure would have. The investor price for buying it and fixing it was $5,000 under where we wanted to be for our ROI. We opted instead to do minor renovations (paint, update bathroom, new roof, clean) which obviously increased costs but gave us an even higher than desired/expected ROI.

@Jay Hinrichs you are right, there are headaches with any thing and definitely things that aren't fun, but it's our niche and serves us well. Thank you for your input. 

@Jay Hinrichs "if you had not, foreclosures in FLA take forever and can easily be contested and would have added quite a bit of cost to your all in price." - the borrower contacted us saying she tried to call every bank/company that bought her mortgage and even left messages saying she was leaving the house and keys and did not want the property. 

Her probate attorney had mentioned that she moved and no longer wanted the property, so we knew a DIL was a viable option and that she would not contest it. I actually have done foreclosures in FL and they honestly are not that bad. Typically 6 months. You are correct, if they contest it can drag it out, but it's not like it was two years ago when it took one year to one and a half years and most of the time their vacant or the borrowers have moved on. It's a pretty quick and seamless process.

I also want to add, that notes actually require very little "work". Most of the time it's sending a few letters, making some phone calls, and sending emails. My attorney's or servicing companies handle the rest. The profits are similar to a fix and flip but I hate rehabs, managing contractors, and all of the things involved with rehabs. To me, rehabs are drama and a LOT more work. I would much rather make the same ROI's, heck even slightly less while sitting on my couch or traveling. All I need is a computer and I can make money with notes! I guess, to each his own.

Hi @Shelley Weikert! You'll enjoy bigger pockets. I invest in NPN's and love it! I will say leveraging your money by using OPM is going to be key not just in flips but also in notes. While you learn about this business work on finding lenders to help fund deals or JV partners that might have some experience. That way your learning as your doing. Best of luck!

@Andy Mirza great question. Yes Plan B was foreclosure, although we wanted to avoid it as much as we possibly could. It would have put us back another 6 to 8 months easily. I do not believe she would have contested it as she did not want the property. 

@Damir Kamber thank you for the kind words. I will keep posting case studies along the way. As of yet, we haven't lost any money and hope it stays that way. We play close attention during the due diligence phase to make sure we're buying right. 

Yes, unfortunately sometimes the banks foreclose then sit on it, sometimes they start foreclosure, then sit and have to back out of foreclosure, and sometimes they do nothing with them vacant and un-foreclosed for 5+/- years. Banks, especially of that magnitude are not prepared or well equipped to handle this. There are a lot of flaws in their process.

I am looking for a 50/50 JV Partner for a Non-Performing Note in Winter Haven, FL. It's a Single Family Property that is occupied by the borrowers in a good neighborhood. Modification is the likely exit strategy and we would sell the re-performing note @ 80% of the CMV after seasoning. This can be a passive investment if desired, or active (meaning the partner is involved with the workout).

Basics of the property: 

CMV: $69,000

UPB: $131,569

Current P&I: $483.41

Cost of deal (including workout fees): $43,000

The property is well taken care of and in very good condition. It is a homesteaded property and rents are much higher than their current P&I payment. I believe they will be highly motivated to work with a modification because moving else where will be too expensive. 

I can send you a full executive summary on the deal that provides a lot more information. O&E to be pulled, Electronic Collateral File is available for review, and the deal will be executed with a JV agreement written by my attorney.

Please email me at [email protected] if you would like more information!

I see lots of people asking about notes and what happens in a note deal on this forum. It's a rather mysterious area of investing for a lot of real estate investors, and I wanted to shed some light into a deal our company, Seasoned Funding, LLC completed a while back. So here is the case study on the deal: I will be posting more of these over the next few months, (this was the first one I ever had made). Hope you find it helpful, and let me know if you have any questions!

This was completed with 2 joint venture partners, and worked out completely by us (Dennis Smith and Liz Brumer) 

We purchased the note from a fund and began the workout right away. What you don't see in the case summary is how challenging it was to find the borrower initially. She was living in Georgia but had "relatives" living in the property. Initially, they refused to give us the number, but then realized who we were and what we were trying to do and happily gave us the number to the home she was living in Georgia.

As you saw in the case study, the borrower had a judgement with a credit card company. This took quiet a while to resolve because it required an document signed by the borrower authorizing us to negotiate with the company. When we requested the letter from the borrower, she got scared and worried we were doing some sort of harm and went dark on us for an entire month. Finally, after numerous letters, calls, and pleas with her grandson - she refused to answer the phone, we helped he realize we were there to help and pay off the judgement, we just needed her consent.

It then took another month to receive the release of judgement from the credit card company and get it publicly filed so we had clear title to receive the DIL. This set us back about two and a half months into the work out. All in all it took about 6 months to successfully get the Deed In Lieu from the borrower and have it publicly recorded. From there we did repairs/minor renovations, and got the property on the market. While we got an offer on day 3 of being listed, it was FHA which required an appraisal that put the property $10,000 under what the buyer offered it for! We we're super bummed about having to lower the price, but still were happy with our ROI.

There were some issues with title when closing, apparently the legal description had been incorrectly recorded for multiple sales and no one had caught it until now. This took another month to rectify which pushed closing back! Talk about frustrating! This deal definitely took longer than expected at 10 months but that's exactly why you always over estimate timeline, costs, and potential issues that way you over deliver in both the time and results to your partners or lenders. All parties involved were very happy with the outcomes and results and are looking forward to doing more deals!

Sounds like @Ken Martinez and @Joshua Andrews hit the nail on the head this time. While getting hands on experience is key to really understanding the process, I would not suggest buying a note, especially a non-performing note, without some background knowledge and education in the area. There is lots of free resources online but takes some digging. Also, there are moderately priced weekend seminars on the topics from various educators which provide a ton of content on the topic. 

@John Fisher performing, re-performing, or non-performing notes are a great avenue of investing out of state. I invest throughout the United States buying non-performing notes anywhere from 45 - 60 % of the current market value. Have your investors thought about venturing into that arena? I know my company as well as some of my fellow colleagues are always looking for private lenders or JV partners to work with on these types of things and it sounds like a good fit.