All Forum Posts by: Tim S.

What is your plan for these houses?  Do you want take ownership through foreclosure?  Be aware that it can take years in NJ to complete a FC.  You need to know how much it will cost in legal fees, Could be $5-8K. 
If the people living there are tenants and not the borrower, then they don't need to pay you anything.  They have a contract (presumably) with the home owner, which you are not.  Owning the note gives you the right to collect mortgage payments, not rent. 

Also check with the county to see if there are any fines owed. Is there an HOA involved? If so, see if they are owed anything.

You need to be very sure how much the houses are worth in the current condition.  Do not trust what the bank tells you.  You need to have someone go look at them and give you an estimate.  The tenants may not give permission to see inside.  You have no rights to see inside until after you foreclose and take ownership. 

70% is usually expensive for NPN's. Not enough information to give any meaningful advice.

Tenant occupied, not owner occupied?  Owner Occ is usually much preferred.  Tenants aren't going to bring the mortgage payments current.  

What state, city?  What is the price range of the houses? 

You don't ask for due diligence, you perform it yourself. 

No chance a bank will offer financing. 

Probably get more response if you post in the note investing forum, but you're going to need to provide a lot more information to get any help.   

Sounds like you don't know much about notes, it would be very dangerous to buy them without knowing what you are doing.  There are lots of things that can go wrong with notes.  Far more than can be explained in a BP post. 

Don't ignore tax implications, all cash means more income you will be taxed on. 

@Rhonda McDaniel I see Will hasn't responded yet, but he's been asked this before.  I think we would give the same answer.  Charge one rent, they are all equally responsible for the rent.  In my case I use a property manager, they pay the PM separately, but they are all still responsible for the total amount.  If one of them doesn't pay the others will need to cover it.  Let peer pressure be your friend.  They find their own room mates, they come to me as a group and apply together, all sign the same single lease agreement. 

Will advocates NOT having the parents co-sign, as they can be a lot of hassle.  If they don't co-sign, you don't have to talk to them.  I'm going to do this next cycle, one parent this year is an attorney, and has been a PItA. 

I use Jake Greco, Farmers agent in Blue Springs

As many have said, fly there, drive around get feel for the areas.  Things can look very different in person than they do on Google streetview.  Make sure you know what kind of investor you want to be; long term buy and hold, Improve and hold for short term, turnkey, etc.

I'd caution against getting overly fixated on % return, those numbers are theoretical.  They usually lead you to the lower end homes, which usually means more maintenance and tenants with more drama.

I'm focused on B or greater properties, in decent/good school districts, $120-$150k homes, a little below the median home values. I give up a little in ROI, but less drama, I'm in it for the long term.

I use Farmers for student rentals, I told them it is student housing, it didn't matter to them, no difference in the policy. 

Ask for a copy of the lease and lease applications from the current owner.  You can also figure out a lot by searching social media.  

@Jim Goebel

For example, the balance on the loan is $100,000,  you paid $50,000 for the note.  If it sells at auction for $120k, you will get $100k, $20k would go to jr lien holders, if there are none then it goes to the borrower.  The most you can get is the unpaid balance of the loan.  When you buy a note, you are buying the right to collect the payments, and the unpaid balance.  You do not have rights to the home equity that may have accrued, the borrower gets that.  

You also have the right to the "legally collectible" balance, but don't count on ever getting it.  For example if the borrower does not have property insurance, you buy the insurance, that expense can be added to the loan balance and becomes legally collectible.  Legal fees for foreclosure also can end up there.

As far as getting wiped out, if you are buying a 2nd position note, then yes you can get wiped out.  Usually through BK7 if there is no equity.  Or, the first note holder forecloses, say the house is worth $100k, they owe $120k on the first and $20k on the 2nd. It sells at auction for $90k, that would go to the first, nothing left over for the 2nd.

For 1st position notes it's much harder to get wiped out.  But there are scenarios where it could happen, pretty rare.