All Forum Posts by: Tim S.

+1 for @Bob Malecki fund.  I looked into it, looks really good.   Since you have low 7 figures, that makes you an accredited investor. 

Great topic Dion, I'm looking forward to the responses. I haven't taken any paid training yet, but I plan to. I've done a lot of self study, videos, books, conferences I think I have a basic understanding of all the topics you list. I'm not saying I'm knowledgeable in all these topics, I'm just saying I know what the topic is and some of the basics of it, and where I can go to learn more about it. I couldn't say that 4-5 months ago. back then, JV meant Junior Varsity, and a "tape" was just used to stick things together :-)

I recently paid for some training information (not a course, but some videos and printed material) from a well known trainer.  Frankly I was pretty disappointed with it, all the content was the same or similar to stuff I already found before, for free.  I didn't complain or ask for my money back (a money back guarantee was offered).  Two reasons, this person offers a lot of great free information, so It's my way of compensating him for that, it's wan't much money anyway.  And secondly I don't want to make an enemy out of this person, we may do business together at some point.  And to be fair, I've done a lot of self study already, someone who hasn't probably got their money's worth. 

I mention all of this because I don't want to take the training and come away with the same feeling, "That's it?  I knew that stuff already".  

For non-performing: Performance Anxiety by Gordon Moss

For understanding value calculations: Invest in Debt, by Jimmy Napier

old, but still has some useful info: Smart Trust Deed Investment by George Coats

Scott Carson (WeCloseNotes) just put out an e-book for $1, I haven't read it yet

Thanks guys.  Yes, I understand spreading risk over multiple loans.  So to answer my question directly, it sounds like, yes.  People buy underwater seconds and can have some success with them, but they are hit or miss. Does that sum it up?

Hi Note People,

I'm trying to learn more about NPN 2nds, and wondering about this scenario: (assume 1st is performing)

If I have a 2nd position Non-performing note, without enough equity to even cover the first, or just barely cover the first, is there any way to make a profit?  Has anyone here made a profit in this situation? 

 I understand that you can still foreclose from 2nd position, but it seems like a bluff at that point. If the borrower calls your bluff and refuses to pay anything, then there is really nowhere to go with it is there? You can still foreclose, but how do you make any money if the sale of the property won't even pay off the 1st?

Are you banking on the fact that the borrower doesn't want to take the chance that you may foreclose on them, and will agree to some payments? I could see this could work sometimes if they are ignorant of how this process works, and they are just scared, and pay up. But if they figure out you really don't have any leverage without equity, why would they pay up?  I expect that most people probably are ignorant of the process, but I wouldn't want to count on that as my only way to profit.

Seems like a longshot to make this work, am I wrong?

https://www.biggerpockets.com/forums/70/topics/343010-note-investing?page=1#p2194790

The price is based on risk, how likely is it that the investment will pay off as expected? The higher the risk (based on many factors) the less you should pay for the note, as a percentage of the UPB. There are no standard "rules", just market forces at work. The numbers given above are based on the norms given the current market conditions.

Some Risk factors: Has the borrower been paying on time, how long have they been paying on time? What is the likleyhood the borrower will keep paying on time? How much equity? (value of the property vs. the loan balance (UPB)) more is less risky. Is the property in a desireable area? Will you be able to sell it or rent it for a good price, if you have to foreclose? How long does foreclosure take in that state (how much will it cost you)? Do they owe any taxes? Are there any other liens on the property?

Read, Jimmy Napier's "Invest in Debt" to understand how to calculate the value of discounted revenue streams. You will learn how to answer this question: If the UPB is $30,000, and the interest rate is 10% for 20 years, what would your rate of return be if you could buy that note for $20,000? (answer is 16.75%)

Buy it for $15,000 and your return becomes 22.9%.  This is where the risk/reward of the price of the note comes into play.  If you are going to take bigger risks, then the payoff better be big enough to make it worth while.   

That's a broad subject.  These will get you started.

https://www.biggerpockets.com/blogs/5359/38939-not...

https://www.biggerpockets.com/renewsblog/2016/07/0...

http://www.nuviewira.com/8-steps-to-trust-deed-inv...

https://www.biggerpockets.com/forums/70/topics/182523-new-to-note-investing-heres-where-we-started

In addition to checking out the collateral property, the same way you would when buying an individual note, you also need to investigate the company running the fund.  You will usually need to sign over all control to the fund manager, as opposed to owning the note individually where you hold all the cards.  As long as they are reputable, like PPR, I wouldn't be overly concerned.   I'm invested in a couple funds. 

In some ways your risk is lower, as your investment dollars are spread across many notes.  But there can be a little added risk since the fund manager is in control, not you.  You usually have to be an accredited investor to invest in those funds.  

I'd highly recommend:

by Mat Sorensen (Author)