Investing in non performing Loans

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Bill Gulley

Real Estate Investor from Springfield, Missouri

May 31 '13, 03:39 AM

Mark, good basic article, I'd suggest checking out other companies as well.

Another way, that avoids the forgiveness of debt issues in reducing the loan amount in a modification is to use a partitioned note. While you can still reduce amounts as an incentive to a borrower, it might be just a small amount. In your example of the 150k note reduced to 100k, it could have been say 130k with say 40k placed in a non-accrual status, not bearing interest without any payment required. The other 90k could then be amortized with payments required.

The issue as you pointed out is the market value. But additional amounts can be forgiven based on the future appraisal, so if it appraised at 120k, you could cut loose an additional 10k and refi it.

Or, hold it for a longer term and allow values to riase and refi at the future balance. :)

Mark Ferguson

Residential Real Estate Broker from Greeley, Colorado

May 31 '13, 05:53 AM

Thanks bill,
It is very basic advice as I am just learning about npl market. Any other info, suggestions or real world experience would be greatly appreciated. Have you bought any notes yourself?

Bill Gulley

Real Estate Investor from Springfield, Missouri

Jun 01 '13, 09:29 AM
4 votes

Yes Mark, I have purchased a few in my day (LOL), it's what I did for twenty + years, never counted, but probably modified over a thousand contracts/notes over the years, brokered more than that, held and refied hundreds, portfolio is still in trust. Notes and lending being the area of greater expertise you might say.

Still thinking about a book, many have asked so I guess it will be written when I get enough round-to-its.

NPNs are not for the faint of heart or one with limited RE knowledge, not really a beginner's best bet. You should do fine with your experience as a broker..... Good luck...... :)

Mark Ferguson

Residential Real Estate Broker from Greeley, Colorado

Jun 02 '13, 03:39 PM

Thanks Bill. Do you have any other companies that might be worth checking out? Or is that privileged information? I completely understand if you don't want to share since you have spent years working in the field.

Bill Gulley

Real Estate Investor from Springfield, Missouri

Jun 02 '13, 04:33 PM

Mark, no secrets, just that every deal is different, there are different problems, issues, different people, the collateral is not the same, some are residential, commercial, business only without RE and how you solve the problems, while the approaches mentioned are basically the path to take, or combinations, it's not the same. There are stories about the people and such, but there are so many instances I'd don't really have one that sticks out that is easy to explain. :)

Dave Van Horn

Real Estate Investor from Newtown Square, Pennsylvania

Jun 03 '13, 01:23 PM

@Mark Ferguson,

Jeff Merrick, Vice President of GLS has been a very reputable colleague of ours. Another company that sells notes beside us and GLS that you might want to check out is called Gemini Capital.

The biggest thing I can say about this business is that you learn as you go. I often tell the story about how we started, we bought 4 loans right out of the gate. One loan was a Grand Slam deal, one was a Home Run, and 2 we got wiped on. Those 2 we got wiped on may have hurt the most at the time, but we also learned a lot more than if we never bought them.

Best of luck,

Medium_ppr-no-taglineDave Van Horn, PPR
Telephone: 8773951290

Ted Akers

Private Money Lender from Denver, Colorado

Jun 03 '13, 09:36 PM

Hey Bill,
Write that book. Can you start tomorrow....:)?

Bill Gulley

Real Estate Investor from Springfield, Missouri

Jun 04 '13, 11:11 AM

Okay guys, and since this is your thread Mark, I thought that writing a book would be as easy as typing it out in Word Doc or something, well, I found out differently. It needs to be formatted to fit some computer stuff requirements I know nothing about.

Next, I was offering at first to make it free, I spoke to an attorney friend and he convinced me that I should not spend my time, effort and money to give away years of know-how and experience. Well, okay, but I don't need the money off some book that pulls in some pitance, but covers costs and the pain and I would do what Rich did, donate the profits, a non-profit housing organization that I have no affiliation with. Next queestion, I don't know what the costs are, but I am looking into it. I can also assure you anything like that would never be $99.95, it would be as cheap as I could make it as the whole idea is to make it affordable for everyone.

The other issue, being personal to me, is that everyone knows my opinion of most gurus, selling books and tapes, I can hear them now, oh look, Bill turned into a guru selling books! Don't really want to go there but I think too that if I don't enter the arena of some method, program, system and I'm not in the business of guruing, I can live with that.

I have talked with a few folks about writing on some RE topics, I also appreciate the support and requests. So, @Mark Ferguson and @Ted Akers, your opinions, as well as others are most welcomed! :)

Ted Akers

Private Money Lender from Denver, Colorado

Jun 04 '13, 12:37 PM
4 votes

@Bill Gulley, Your experience and insight would be most appreciated. AND, you would not be thrown into that GURU category until you have an add-on price for the real details, have two or three up-sales, a not to be missed $997 boot-camp, a price-reduction if they do not buy at the offered price, and a$25-30K coaching program. I think you are safe with not being hung with that

Wayne Brooks

West Palm Beach, Florida

Jun 04 '13, 12:50 PM

Then again....we could have the first BP-Certified RE Guru!
No other Guru can claim that.
And the TV show spin offs...Winning Wealth With William the Wiley Note Wrangler!

Mark Ferguson

Residential Real Estate Broker from Greeley, Colorado

Jun 04 '13, 01:16 PM

I personally see nothing wrong with people making money off their knowledge and experience. If someone has done it and made a lot of money doing it, then they should be able to make some money teaching others as well.

The guru's who have never done a thing themselves and make false claims I have a problem with.

David Beard

Real Estate Investor from Cincinnati, Ohio

Jun 04 '13, 01:40 PM
1 vote

For a trainer/coach to have any legitimacy, they need to be successfully executing their techniques in the current market. Times change rapidly (to state the obvious!). It doesn't mean they have to do everything personally, that's what teams and delegation is all about, but they certainly need to be overseeing an operation that is currently successful. The once-successful (reputedly) investor who has completely morphed into full-time coach/trainer/purveyor of courses should have limited credibility.

For example, most highly successful wholesalers eventually develop a team with an acquisitions manager or two, other reps that deal with buyers, and somebody doing the marketing. They give strategic oversight and develop their staff. There are companies like this in virtually every metro area, most are under the radar because the owners have no desire to get into training/coaching (which can be pretty restrictive to the "time freedom" that RE investors covet).

E-Mail: [email protected]
Telephone: 502-321-6328

Mark Ferguson

Residential Real Estate Broker from Greeley, Colorado

Jun 04 '13, 01:48 PM

@David Beard, Good points. In my mind the most successful business people are able to delegate almost all of their tasks to someone else so they can concentrate on the big picture and creating new business.

There are still a ton of people out there who are very successful doing most of the work themselves but I know my ultimate goal is to create a team that can eventually take over almost everything and I can sit on a beach someone with my family and a margarita.

I'm not saying they have to be a full time coach or hands on trainer, but more along the line of book writing or online systems that don't take a lot of man hours after they are complete.

Bill Gulley

Real Estate Investor from Springfield, Missouri

Jun 04 '13, 02:20 PM

Ted, I can assure you that would never be the case, my boot camp would be much more than that, that doesn't even cover the suite at the Hilton! LOL, Really, no, never going there!

Wayne, BP Certified? I think Josh would have something to say about that....LOL

Mark, I agree! I have no problem at all with qualified instructors or teachers being compensated. I have no problem with someone leading someone leading a new person by the hand basically and giving proper instruction and being paid or working with them in some split fee arrangement. What I have a problem with is when that mentor teaches bad habits, lacks ethics, devises some off-shoot program for the sake of having some product, decevies with false get the picture.

David posted during my writing this, some good points, depends on what area of RE you're talking about, I can really see that applying to rehabs. Not so much in notes, while there are new legal issues, the basics haven't really changed. Institutional buying has changed, brokerage hasn't nor has the individual side. Besides, I'm still active in advising a local brokerage.

I'd have to say, notes are pretty borring, a dry subject. There are some tricks to make notes dance, there are ways to devise a note to accomplish various goals, but most of the contractual side and due diligence is dry stuff. Underwritting only gets interesting at times. It only gets sexy and creative after you have the basics, in fact a better understanding of requirements as you attempt to solve problems within set perameters. Guess I could talk about the woman who applied for private financing to open a strip joint!

There are some marketing aspects, acquiring notes off the street and how to build relationships that feed the beast so to speak.

Anyway, my efforts would be more similar to a text book than a whiz-bang super secret guru how-to!

I'll stop, thanks for the thoughts. feel like I'm hijacking Mark's thread.
Doubt the issue is worth an off-topic thread, but today had someone else suggest a basic RE class to happy to do it, if others really felt it would be worth while. :)

Edited Jun 4 2013, 14:37 by Bill Gulley

Mark Ferguson

Residential Real Estate Broker from Greeley, Colorado

Jun 04 '13, 02:23 PM

No worries about hijacking. Most my threads don't get any replies. :)

Rick Bradd

SFR Investor from Pt Hueneme, California

Jun 04 '13, 02:50 PM

I will be first in line to buy the textbook version! Go for it Bill, really would be an awesome to learn from the master, then to also be able to ask questions of the author here on BP too.

Joshua Dorkin Verified Donor

BiggerPockets Founder from Denver, Colorado

Jun 04 '13, 03:20 PM

@Mark Ferguson - I just looked to see if your statement below was true or if you were just kidding.

Most my threads don't get any replies

It looks like you've got 283 posts, and 2 of those posts were in threads that you started that didn't get a response. Both of those threads were ads placed in the Marketplace.

One of the things we pride ourselves on is the interaction here, and you had me worried for a second. I'm glad that you were just messing around.

Medium_bp-squareJoshua Dorkin, BiggerPockets
E-Mail: [email protected]
Telephone: 877-831-4704
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