All Forum Posts by: Tom Meade

Thanks @Dion DePaoli , I was hoping you would weigh in! I have some experience in small balance commercial NPN, and my suggested approach is really based on that experience. I have no personal experience with short sales on the residential side, have only heard the nightmares about how long it can take to get one approved. Your points on DIL are well made, and I've used a variety of methods to paper the file when trying to obtain DIL's, including extremely well written (pro-lender) Pre-negotiation letters. Borrower must sign that before we even start any type of conversation regarding the default(s) at hand.

As to DPO, this is a term used often on the commercial side, and for some reason many lenders will not do a DPO with the borrower, but would rather sell the note instead.

In any event, it sounds like you're saying on the residential side, short sale is probably the way to go. So I'll pose the question(s) in a different way:

Does anyone have any experience negotiating a short sale with Nationstar? How would I get in touch with the asset manager or individual with the authority to negotiate a short sale?

Thanks!

To me the wildcard in your deal is the larger looming foreclosure. Is the neighborhood set up such that you could build your house or two and sell them before the rest of the lots are developed? Realize that the bank foreclosure/new developer process could take a while... If I were considering an investment in a deal like this, I'd want to see at least a 25-30% return based on very conservative numbers. First I'd have to be comfortable that I could sell the house(s) without the rest of the lots being developed (assume the worst case, foreclosure takes forever)...this is a threshold issue. If I'm ok there, then I'd get very conservative with my construction and carry cost assumptions, as well as my end value. If I can get thing to pencil out a 25% return, and I believe I have a good chance of doing better than that, I'd take a good hard look at it.

Full disclosure, I've never actually executed on a raw land development, but have crunched the numbers on a bunch of them and taken negotiations deep on a couple. A while back we worked with a guy who specialized in entitlement deals - he'd buy raw land, then sell the permitted lots. He always said developers could buy permitted lots on the 1/3rd rule. 1/3rd land cost, 1/3 construction cost, 1/3 profit. This is definitely one of those "rules of thumb" that can be debated ad nauseam (see posts on the 50% rule and 1% or 2% rule), but if you're asking for generalities, there's one!

@Drew MacDermott

- There are a million different ways to structure the beneficial ownership, but I can start with an example of a deal I'm doing right now with a total of 3 partners. Two money partners put up all the cash ($100k, $50k each), and as General Partner (managing member) I will sign for the Hard Money Loan for the rest needed to do the rehab. I do the job for cost, and we effectively split the upside 50/50. (technically, they get an 8% preferred return and I get a 6% developer fee if all goes to plan, then we split any upside after that).

In your situation, if you and your two buddies all put in cash, and all have some sort of management/decision making roles, you could divide the ownership and upside according to your capital contributions. So if you put up $50k and your buddies each put up $25k, you would own 50%, they would each own 25%.

If someone is bringing more experience or higher level of involvement (say one of you is a General Contractor, or a Realtor), they may get compensation for doing that job, or they may get more ownership than strictly dividing up per the capital contribution schedule. All to be worked out in a very detailed operating agreement.

Hope that helps, best of luck!

Hello all. I'm not a residential NPN investor, but trying to help a buddy out. My buddy is a developer, and a next door neighbor of one of his buildings has not made a mortgage payment in over a year, and Bank of America recently sold the note and/or transferred servicing to Nationstar. Does anyone have a contact or any experience with purchasing NPN from Nationstar?

I can't imagine they do one-off note sales, but could potentially consider a DPO? I advised the developer that the cleanest way would be to purchase the note and get the neighbor to sign a deed-in-lieu. However the neighbor is at least somewhat communicative with the developer, so there may be a way to negotiate the DPO on his behalf and still come away with the property.

Any leads on a contact or experience with Nationstar would be appreciated. Thanks!

Hi David - add me to your buyers list for anything in Boston or the South Shore. My longer term goal is to accumulate multifamily rental units but will also look at SF flips or condo conversions as well. The more distressed the better. Definitely surf around the site, there's a TON of great info and knowledgable members on here. Best of luck and I look forward to connecting.

I quickly viewed the thread and was surprised not to see mention of Fair Housing rules/regs. Probably it's in the Section 8 bible that was mentioned, but definitely make sure you have a very clear understanding of the types of questions and "screening" procedures you can use!

Hi Bryan,

My initial reaction is to say, I run into the same issues up here in the Greater Boston market - especially smaller multifamily deals seem to be way overpriced.

But if you believe the numbers you linked to on loopnet, this deal isn't actually bad at all. They're claiming a $35k actual NOI...so at the $375k asking price, 9.33% cap rate, it looks reasonable. The big question will be proving that NOI, and asking what (if any) vacancy and CapEx assumptions are in there.

C'mon, can't believe there haven't been any "Sopranos" references?!

Hi John- you mention East Coast with a " NJ-FL" qualifier... Any interest in the Boston/Massachusetts market?