All Forum Posts by: Vanessa Garcia

Based on the above post where you referenced $100k I'd actually go through learning about notes and then invest in notes versus flippers. BUT if you are looking for something super passive it may not be what you are looking for? 

How much have you looked into REITs? That may be more up your alley. 

I'm a very technical person so there were 2 books that really made me fall in love with notes. One was by Jimmy Napier (super technical) and the other by Lorelei Stevens (not technical). Lorelei's book isn't technical so to speak but told very nicely through stories.  I don't think they are very expensive but a nice companion to also trying to keep up with posts about notes. 

I hope my ramblings are somewhat helpful lol. 

If I recall correctly: on FCI exchange you can order a BPO. I'm not sure if that comes with any pictures or anything but at least with pictures you'd have a visual to know the current position of what you are dealing with. 

If currently the property is unoccupied (big "if" I know) then uncut grass seems like an easy fix but I don't know if that will remove the city lien or that's just something that has to be paid.  

Honestly it does seem like there is a lot going on with this note (pretty sure you can do a title search on FCI before buying & there are some remarkable things you can find on the Internet about properties btw) but I'd make a list and see if I'm willing to deal with the headaches one by one (and also cumulatively). 

Dion is always very informative and information is great. But regardless of where we learn (different people learn differently) it's not knowledge that's power but applied knowledge that's power.  There are too many examples of that to list or even draw on just one of them lol.  

I have never attended any sort of note school or anything but if I sat through a multi-day seminar about notes I'm not sure I'd retain much - although I'm sure I would feel like I learned a lot. With Biggerpockets I get to learn a lot and I feel like I'm retaining because a lot of information IS repeated and it's not all hitting me at once but in spurts (very concentrated spurts but still). This is not a slam on anyone or anything but just a comment on my own experiences learning. I find that regardless of how you learn that learning through experiences sticks with pretty much everybody.  

In other words: learning is awesome. Biggerpockets is awesome. Doing deals is awesome. Everyone should keep posting so we can all learn. :) 

The comment about money in a Roth IRA jogs my memory towards another way to sock away cash and invest - Self-Directed IRAs. Do some research about what you can do with those. While you are working through college and learning about everything else that may end up being a good way to invest for your future.

I also agree with what someone else said about building solid credit. It's hard to build and easy to wreck. If you have good credit then that can open a lot of doors for you in the future. 

Being very yound you are wealthy in time - use it to your advantage. Sounds like you have a good head on your shoulders, but don't grow up too fast. Time is something you'll never get back whereas with a good work ethic, smarts and sometimes a bit of luck you can find ways to generate money (and sometimes you don't need any 3 of those things lol, but those 3 have always worked for me). 

I can field a few of these :). 

OP = original poster 

UBP = unpaid principal balance 

Let's say you buy a house, make some payments. There was the original balance on the loan, let's say $100,000 to make the numbers nice and easy. Every payment you make will pay interest and bring that balance down a little so at any time you can find the unpaid principal balance (if the mortgagee paid on time) on an amortization table or if you are snazzy with a financial calculator OR I'm sure there are online calculators you could use or you can set up a spreadsheet. So there's the collateral (house) which hopefully retains value (stays at $100,000) or appreciates in value (maybe now worth $150,000 or more) and then there's the debt owed on the house (somewhere less than $100,000 after payments are made). The original amount owed or even the unpaid principal balance is hopefully less than the value of the collateral (in which case the mortgagee got a deal) but sometimes is not - this is where people will say a house is upside down. 

Another example, since loans are made on many things. Think of cars vs. houses. Car values go down once you've driven them off the lot (for new cars) whereas house values go up (not always, but it's generally believed they do). So the unpaid amount on either of those is almost always different then the value of the collatoral. Simply put, collatoral is what gets taken away from you if you don't make your payments lol. 

Not an expert and someone please correct me if I'm wrong. Also, I just took Dion's use of the word lacking to mean imperfect? But that's just me. 

Wow :). 

@Dion DePaoli entertaining and clear as always :). I do feel bad for Billy Borrower though lol. 

I do wonder though, because no one can predict the future (whether or not payments are made, a foreclosure can go through, a property can withstand a natural, or non, disaster) - aren't there assumptions made in every statistical model made for notes (any real estate investment)? 

One can certainly at least check that the loan amount is greater than the property value or that the remaining payments exceed the purchase price, etc. so *if* you were to take into account as many variables as possible couldn't you create a model to compare the total cost of the note (title search, etc.) versus profit to compare notes? Or is it preferable to just look for "good" notes regardless of pricing points in order to deal with less headaches? I mean, even purchasing at par you would get interest so there's still some profit. 

I do love your hierarchy of note categories though. It gives me more to chew on :). 

Disclaimer: I want to point out that I understand an extension of new credit is not something I am qualified to do all by myself. I just wanted to think about the possibility of that option with the appropriate parties writing up contracts, etc. 

Seriously the worst week ever for a teacher to find out their computer has a virus - spring break. The only time I really get off and have tons of time to read lots of BiggerPockets forum posts :). 

ALSO, the worst time to try to get court records online - let me tell you! But I'm trying to pull it up and we'll see if it gives me any more information than I don't already have. 

I will triple-check with him but I'm pretty sure he already did a title search. If something showed up there I believe he would tell me (he is my brother after all) but I'll check with him just to make sure (because... he is my brother after all). I don't think he'd get something without a clean title but I'm positive he did the title search before putting in the bid at the beginning. 

But yes, I will search court records and report back any findings :). 

An aside, do you just invest in HI or also live there? 

I hope that yours is a smooth transition back into your hands :). If it's not, if you don't mind providing some details about what you do have to do I would appreciate it. 

So although my brother and I are not brokers we have been bouncing around a few ideas of how we'd like for it potentially to be handled. 

This property IS occupied. The foreclosure process (in total from initial paperwork to auction) took 2 years. Although it appears unlikely that we can get the people who live there now to "rent" it from us I think that would be a nice way not to make them move but they haven't been paying for so long that I may just be fantasizing there. 

We are both pursuing notes as a long term investment BUT if it sold quickly after all the paperwork clears neither one of us would cry about it (we'd probably jump for joy). So 6 extra months is ok as long as all the paperwork has been filed correctly, etc. 

Although we both don't actually want for people to be foreclosed on and evict them, so work-arounds that allow people to live in their property and for us to get paid are our preference. But we don't have any emotional attachment to this property or these people yet and there is no such thing as a free lunch. It makes sense to me that if you live somewhere you should pay rent. 

But hypothetically, if the property is under 1 married spouses name could a new loan be drafted (by a broker) and issued under the other spouses name? I know they haven't been paying for a while, etc., but if they knew the house was underwater, etc., then maybe this has been their (property occupants/mortgagee) play all along? Assuming the other spouse meets underwriting guidelines, etc., of course. 

To be clear, at this point I'm just dealing in complete hypotheticals (although this property IS really occupied). 

He did purchase the note prior to auction. 

Not sure if the assignment is recorded - I'll ask him to check on that. 

It was a 1st. I didn't say it was a 2nd and "became" a 1st. Hypothetically, we thought it *may* have been older and the original 1st may have been paid off and there was still a 2nd but it doesn't even matter whether this note was an original 1st or a 2nd and the senior lien paid off because it's a 1st now. That was more a trip down a fantasy "maybe" land than reality. 

This note that he purchased, which is in 1st position, filed the foreclosure. 

Honestly I wanted my models to start without foreclosures and bankruptcies initially. I wanted to start with simplistic modeling. But as I've gone through I've found with serving costs a lot of "deals" just aren't deals. I continue to enter data from multiple sources and see if I can find situations where I'm comfortable with the risk. But he's willing to take more risk and has more time to research lol. Hence why he currently has more assets than I do. I'm gaining more confidence with the idea but waiting to take the plunge. 

So what I'm hearing so far - seller must quit claim deed to him. No issues because his timeline worked out for him. 

IF it didn't and he tried to purchase after the auction THEN he would have had to try to purchase or could they null the contract since it would have no longer been valid since he wouldn't have been purchasing a note but a title and thus not buying the finances but actual property (hence real estate sale taxes, etc.) but he would have gotten his original bid/purchase amount back - right? just checking to make sure I'm keeping all of these ideas straight.