All Forum Posts by: Tim S.

@Account Closed  As a newbie I think the hardest part of note investing is finding sources.  There are a few on-line sellers, mentioned already, the product there tends to be less than desirable (not always though).  

People that have been in the business a while develop sources, but aren't likely to tell you what those sources are, since it takes work to develop those relationships.  So newbies are often left with the not-so-great stuff that others have passed on. 

@Jim Goebel Yes there is fraud, see the recent revelations with Scott Carson. In addition to investing in funds, JV deals are common. An investor like yourself, puts up all the money for an asset, the experienced note person does all the work and the profits are split 50/50. As Chris mentioned you need to do a background check on people you give your money to. You're more likely to better learn about note investing this way, with the right person, but higher risk since all your eggs are in one note basket vs. a fund. I've been on both sides of the JV relationship, I don't want to be responsible for other people's money so I don't do it anymore. I find it too stressful, investing with my money is fine.

Fight, yes they can stall the process significantly.  You'd have to pay legal fees to get things moving, could be several thousand dollars $4-8k is pretty standard.  Timeline, 6 months best case, 12-16 months is the middle of the range, some states are well over 2 years.  

They could file BK 13, which stops the foreclosure process.  If they fail to complete the BK plan, you can continue with foreclosure again. It's possible they can file for BK again, depends on the jurisdiction to some extent.  They could stall for a year or 3 with some payments coming in.

Pretty tough to find a lender if they are significantly behind on payments, who's going to give them a loan?  It is possible though. 

Getting them paying again is usually the most profitable, not always.  

What to avoid, people have different criteria, common ones are: long foreclosure states like NY, NJ.  Very low monthly payments.  War zones, very rural areas. 

In terms of geography, to some extent you have to take what's available. It's not like properties where you can find them everywhere on the MLS. The "good areas" are often purchased by the big players in large pools. What trickles down to us small fish are the dregs. Money can still be made, but usually you aren't going to have access to notes in desirable areas. Desirable being very relative. You have to re-calibrate what desirable means based on what assets you have a shot at bidding on.

I see Logan was typing his answer at the same time, his is better, but I'll leave this here anyway. 

@Jim Goebel  Can't say how many note investors buy notes with the intent to take the house back. I'd guess most would prefer to NOT get the house back.  It's usually more profitable to just get the note performing again, and collect the payments, and/or sell the note after it becomes reperforming, and is seasoned at least 12 months.  It's expensive and time consuming to go through the foreclosure process.  FYI - Note owners (the bank or investor) set the minimum auction price, if no bids over that price then ownership reverts to the note holder.  This may vary by jurisdiction.  

Some do look to get the house and sell it with owner financing.  This gets them out of the landlord role, and become a note holder again.  Note investors usually don't want to be responsible for the house, its maintenance, taxes, renters, etc.  Rather just deal with paper and collect an income stream. 

As Logan said, If your goal is to get the house back then it would be better if the borrower had no equity.  At that point they don't have skin in the game, and are more willing to leave without a fight.  A guy with lots of equity isn't likely to let the house go, they will fight to keep their equity.  

No, because it has negative population and job growth.  There are better mid-west markets. Population and job growth are more important than having family in the area.  Find a great property manager in a growing market. 

It didn't sell at FC sale, and it's been on the MLS for >120, then it is not a good deal at that price. There are no bad properties, just bad prices. The "insiders" have had many chances to buy the property, but they have not, there has to be a reason for this. Don't be the sucker they are waiting for. I'm not saying you shouldn't buy, you just need to know the price at which you can turn a profit on it. Which means you need to know how much it will cost to improve it to salable condition.

How good are your rehab cost estimating skills?

https://www.biggerpockets.com/forums/52/topics/491641-nearing-1-000-college-student-tenants-heres-what-ive-learned

@Ryan Larsen  Quickbooks,  I have a property manager that handles the rest. 

I can see in some situations where that would be the case. In my situation it's a SFH, they come to me as a group, they self select their own room mates. I don't put the groups together, I can see how that could be trouble.

 One unfortunate side effect, is this situation will give some people the impression that out of state investing is always a mistake, and all turnkey providers are crooks.  Both are wrong.  There are plenty of good TK providers, and it can be safe and profitable to invest out of state.  Some fairly basic, common sense precautions will keep you out of trouble.  I am not affiliated with any TK providers BTW. I do invest OOS, and have purchased from a TK provider on one property.   

Why? They are adults, you shouldn't need to get in the middle.