All Forum Posts by: Wade Wisner

Thanks to all of you for your response to my post.  That gives me some ideas of how to proceed with my note investing.  Wade

That is good news.  Thanks for the info.  Wade

I lived in north Florida from 2003 to 2008 and did a number of residential and commercial fix-n-flips during that time.  I am considering moving back as I have family there and if so would plan to look for fix-n-flips to invest in.  A lot of Jacksonville always seems kind of down and dirty then, but alot of that has probably changed over the last few years with the influx of buyers from elsewhere.  I will be looking for an "investor" oriented realtor to bird dog properties and areas to invest.  Any out there?  I have been in construction/rehab/renovation most all of my life so I have that covered.  

Since leaving FL I have been doing fix-n-flips in TN, CA, GA, NC and VA. I did the NC property out of state and was not happy about the returns so future ones will be in my backyard only.

To respond to your questions:  

Doing more would mean purchasing performing or non-performing notes at a discounted value.

I wouldn't be investing in your $$ range, but am looking to build equity or cash flow,

The returns that I get in fix-n-flip deals range from over 20% to 50% or more cash on cash so notes would be competing with those returns. The CA notes were 12% with not much risk so at least that amount. My other SFR notes have interest rates determined by the borrower's cash, credit score and income - so market rates or higher.

I understand the difference in performing vs non-performing notes and that performing can become non-performing pretty easily.  The underwriting would be the key and some luck as well.  As a real estate appraiser, I am always looking at the value of the underlying collateral in the event that I might own it.

What do you do with the notes that you purchase?  Are they portfolio investments, or resold, or what? Commercial or residential property?  What geographic market areas? Performing or non-preforming? 

Thanks for responding. Wade

Hey Jay,  Thanks for responding to my post.  Do you know where I could find/access lists of seller carry back notes?  

I am hoping to get some feedback/direction from investors who have been long-term in the Note investing space. I am a smaller Main Street Type investor and have created/manufactured SFR notes as part of my fix-n-flip program for many years. They have been great – deal after the deal – investments where I continue to reap long term returns from properties I have rehabbed and flipped. What investor does not love compound interest? And even though a few borrowers have had bankruptcies, and I had to foreclose on another when the balloon was not paid these were really no risk and just delays of payment. I love the fact that I don't have to manage the property as with rentals and can invest from anywhere. The laws mostly protect me the lender and I have always gotten paid even if there are occasional borrower problems. Since about 2015 I have owned a number of Notes in northern CA through a lender/broker there who has done hundreds of these notes. These were mostly pot farm loans that traditional lenders wouldn't touch. Typically the LTV was 50% and the term of 2-3 years and interest only payments of 12%. I would roll one into another as each paid off. As a mostly retired investor I loved owning them for the cash flow. It was a great niche for many years, but that market has mostly disappeared with legalization of pot in CA, which has pot prices crash.

I have also used seller financing in purchasing REO and other real estate purchases and these have worked out really well for all parties. Although I have owned a number of commercial properties, I have not done much with notes in this property type, but that would be an area I would consider. Maybe mobile home parks? They seem to do seller financing a lot.

I would like to do more in the Note space and want to know if anyone has ideas of how to grow note investing? I am a smaller Main Street type real estate investor and looking for more one-off type investments. I have spent time on the PaperStac site, but they seem like mostly “dog” notes and not ones that I would want to own or trust to buy. Eddie Speed and NoteSchool say they have access to thousands of notes through mutual fund purchases by Colonial Funding, but I seriously question that they actually do, or that members get to purchase them. Also the cost of membership is exorbitant and I don’t think worth the money.

I would like to purchase quality mortgage notes – either performing or non-performing – as investments. Any ideas of how to find them, or niche markets like the pot farms that might be conducive for them? Worse case I just continue to manufacture them through my fix-n-flip business and buy with seller financing where available.

Also, is tax lien investing really viable today?  Thanks for reading.

What Don says captures most deals that ultimately looked to have been undervalued by the market, or current owners, but really were not.  Many of my deals were priced properly, but often the seller or market can't for various reasons see the potential in the property.  Well put Don.

I have owned a number of residential and commercial rental properties out of state and they have generally been good investments. Although management has always been the key to success or failure. I have been doing fix-n-flips throughout COVID, but I have always been in the market area to manage them. I was not finding viable local fix-n-flip candidates in my area and I had read a book from BiggerPockets on out of state property fix-n-flips. In that situation I purchased a SF property 4 hours away from me this year as a fix-n-flip and to test the hypothesis that long distance fix-n-flips could be viable investments. The property was a VA foreclosure of a 1970's brick rancher. The house was on a crawl space, which will become important later. Prior to losing the home in foreclosure the previous owner had retaliated against the lender by cutting out most of the exposed electrical wiring and removing the heat and air units from the property. I found a contractor through the listing realtor and he bid all of the work except the HVAC, which I located another subcontractor. The problems with the project mostly stemmed from the crawl space work, which required shoring, replacing structural members, leveling floors and insulation. Other problems resulted when the contractor did not identify in his bidding the missing wiring in the attic space (only the crawl space). Costs ran significantly over on both of these items and not being in the area it was not possible for me to add my experience in renovations to lowering them. I think that the biggest take-away for me in the project is to avoid crawl spaces - I am claustrophobic and hate to enter crawl spaces anymore. Otherwise, the work went OK, but the construction time ran significantly over. Most of my fix-n-flips are financially at least second base hits, or home runs, but this one was barely a base hit. I might do one again, but NO CRAWL SPACES ever.

Radhika.  Congratulations on wanting to start out in RE investing.  Rental property investing is a great way to begin a a real estate investor, but can have lots of pitfalls.  However, no one will watch out for your investment like you will so choosing, or even having a property manager is a major decision.  I have had varied experiences with property managers.  Having owned many residential and commercial properties I can tell you that having a rental property is like raising kids.  No one is going to do the job that you the parent will do.  Just like raising children, rental properties do best when watched closely.  Drive bys, Stop ins can tell you what is really going on in your property and staying close to home is usually best.  Have a good lease with "teeth" - late fees for late rent, occupancy rules, pet rules and etc. - and do not violate your own lease by being too easy, or very quickly you will not have any lease at all and your tenant(s) will do whatever they want at your expense.  Rental property management is business, not personal so always keep a business relationship with your tenant(s) - no friends or family wanted.  Take care of any reasonable property related issues quickly and expect your tenant(s) to take care of their responsibilities quickly also.  Remember the only thing that the landlord gets from rental property is RENT, so make sure that you get it!!  Also, some places like CA and MD have very tenant "friendly" laws (against the landlord in some cases) so make sure that you know the laws and if possible, have an attorney or service to collect overdue rent and/or eviction as needed.  Be flexible to your tenant's needs, but do not make the mistake of buying their BS.  Good luck.  

If you are looking for education on creating, buying, selling notes I think that you can get this mostly for free on other online platforms. They do offer a lot of training about notes, but again you can get this info. much cheaper elsewhere. If you are joining NS to get access to existing notes - performing, non-performing or REO - from my experience I am not at all sure that they actually have them to sell. Let the buyer be aware.