BiggerPockets

Hey there Guide, how are you doing today!!

wow lets see to answer your question from your other post, no that's not a realistic number for your investors to pick up the package at that amount. If their only investing $25 Million to $65 Million then there LTV range is going to be more like .70 to .55 cents on the dollar and the higher one being the one more likely to be offered!

Now that i answer your question here is a few questions to you, first what exactly is the compiler asking from your buyers and has he sent you an LOA verifiying that he is infact direct to the bank and that he is authorized to market their inventory? And secondly if he has shown you an LOA is it possible for you to introduce me to your contact, in where you would be the middle man? thank you for your time and have a nice day!!

Hey there I hope all is going well with that deal,

now to answer your qestion about LTV, that would have to be from a personal experience due to the fact with all of the previous orders that we were requesting! For example: if i had an order for $50 Million dollar package the " compiler" would come back to me and tell me the package can be picked up for .67 to .72 cents on the dollar or somewhere around there. Now if i came to them with an order for $500 Million dollar package they would caome back to me .50 to .60 cents on the dollar or somwhere around there. You see the bigger the package the lower the LTV can be discounted from the banks. However i have had a lot of experiences where the so called " compiler" wasn't who he/she said they were and it turned out to be a waste of time.

Another thing you have to worry about is the " compiler" , that he/she doesn't add on a huge side fee to the portfolio itself! Sometimes they can get the package from the bank at lets say .40 cents and they will sell it to at .45 cents and still be expected to get compensated on your buyers end!
So i guess what i'm trying to say is if you truly don't know anyone in the bank and your dealing with a " compiler" , be on your toes at all times. Thanks for taking the time to read my post i look forward from hearing from you again, se ya soon!!

Hey there Guide,

long time no see (lol), you get back to like nobodys business, but now that that is out of the way let me answer your question! Now as for the banks only being able to sell the properties at or around default price, i'm not too sure about that when it comes to bulk Packages, but i do know (from previous experience) if you track an Reo property listed on the MLS you will notice a change in price! The change is this: i tracked a proerty the bank took back for $389,000 and relisted after several months for $345,000. The property wasn't in a desirable area and it needed a lot of work so after several more gureling months one of my small investors picked it up for $279,900 and the property was worth $489,000 all day long! well the way i look at it is this he spent $30,000 fixing it up and it took only one month (we time it right so that his first payment wouldn't be for 45 days), and he only made one payment be for reselling the propety! So it works on the small end and i know it works on the big end too, sorry to make a long story endless (lol), thank you for your time and have a nice day!!!

hello there justin, how are you doing today??

that is true enough that the default amount will not show up, but by pulling title it's very easy to tell how much they defaulted on and in most cases if there is a second they probably defaulted on that one too. If you have authorization to use a title search and you know how to read a title report it will not be hard to figure it out, thanks and hope to hear from you soon laters.....

Hello there Justin!

well true enough but the truth of the matter is the banks take losses all the time if you take a look at one of my posting on another topic you will see what i mean! I once followed a property for months on in and my close friend and investor picked it up for .45 cents on the dollar. And after all the numbers were taken into account the bank took a loss on the property for 25%. So do the banks want to get what their in it for? Yes. Do they get it all the time? no. There are deals everywhere and are open to most people, but if your not looking hard enough or if your not looking at all then you will never find what you desire the most!

Oh and i didn't mean that you don't have authorization to all these searches, all i meant was if you could figure out all these equations and do simple math then you will truly be able to answer if the banks want what there in it for! In short, if the banks all ways got what they were in it for this would be bad for business, cause there are all ways people who profit and people that take a loss! However you decide to do business will dertermine the outcome of you taking a loss or porfiting off of someone else's loss! Thanks for the reply Justin hope to hear form you soon and take life one step at a time!

Hey there there Justin, sorry your taking it the wrong way but please explain cause evidently im missing something!

REO's are sold at a cost on value and that's all there is to it. If the bank has a problem with loosing to much money on the " note" at 60-65% of the value (usually determined by a BPO in the due diligence period), then I would imagine, that the property just wont make it into the REO pool at all.

So if the bank has a problem with loosing money Justin, then why did you say that they take losses as i said in my previous posting?? Please explain as i said before " evidently im missing something" , im not trying to pick a fight with you im just trying to understand your point of view! that is what i value you the most because in this world they can take anything from you but you opinion.

Once again thank you for your time and have a nice evening!!
Best whishes looki005

Hello ther Justin,

well lets see your right when you say that the packages are not take from the default amount, so hence the default amount is not important! However if you take a look at properties sold individually they do take a loss on the properties... These are the properties that sell on the MLS cause the bank list them one at a time to try to get as close as they can to the default amount (so that is probably what happens to those that don't make it to the pool)! And yes when you think about it the LTV is what they determine the package should be sold at. But when you take a look at it one way or the other, one property's defalut amount and three hundred are the same thing!

If your still thinking about it look at it this way they determine the value of the pack off of all the defaulted amount added together! Hence a property worth $100,000 and the default amount is $70,000 the package value can be .60 LTV. As appose to 10 properties worth $100,000 a piece and default amounts equal $700,000 then they package it off at .60 cents on the dollar! so in a simple answer the default amount doesn't matter and your right, but it does matter!

Im sorry if you thought i was arguing with you in any way and i didn't mean to make you take such language as that " :badwords: " , but thank you for your time and have a wonderful day!!

P.S. i do hope The Guide has more input and i am sorry for taking your topic in circles, so what im trying to say is lets get more input and put this topic back on track!!

Hey Loki,

I believe we are pretty much on the same page. I'm not upset at all and I never was (I mostly just like using the " Emotions" when ever I get a chance, LOL)!

I was trying to give Dwayne some insight though. Where are you Dwayne? Come back!

You take it easy Loki!

Kindest regards,

Hello there James,

I wanted you to see a post I left on a different thread....

" And as for you Scot, very well spoken. It's nice to see people with their head on their shoulders. I am in the REO game just like many others. One thing I can tell you is that at least 90% of the people out there are wasting their time.

I'm fortunate enough to have been partnered with a gentleman (for several years now) who was doing REO's back in the late 1980's when I was only 3-5 years old. We already had The " Direct Contacts" when this recent REO thing started, and from what I can see there are a lot of misconseptions out there....

First of all, If, and I repeat, if, you could get your hands on a $200,000,000.00 pool, the fees would most likely be 1% and not 3%, which is still plenty of money. However, as Scot pointed out, Some guy who was most likely doing SFR properties one at a time just 3-months ago, and has a yahoo.com email, isn't going to have that buyer or seller!

We bust our :badwords: to do these deals and we are very happy to close 1-3 deals a month for anywhere between $10 - $50MM total. That's the real situation; and that's a lot of money, even at 1-2%. Furthermore.... People that have $200MM+ to spend or have a $200MM+ pool to sell aren't going to be on any type of forum trying to do so.

Also, all of these $200MM, $500MM, and up into the $Billion dollar pools (maybe) aren't going to be handed out to people as if it were candy to a 5-year old on Halloween. Remember, $1-Billion = (1,000 x 1,000,000); not exactly chicken scratch! If people would just use their common sense it's very easy to see why most are getting jerked around in this " REO GAME" .

That being said, I wish all the best at success in their endeavors, but I will give one last piece of advice.... If you're working on aquiring and closing that $200,000,000.00 pool, you'd better get a second job."

- Justin Davis, August 20, 2007

As you can see I'm 100% with you on your opinion!

I want to thank those who have posted to my original questions and tried to help in answering. I didnt intend to ruffle any feathers. I would like to say that I have read all of what has been said here and on many other posts about this bulk REO issue and I have learned alot in a small amount of time. The reason why I posted that question is because, I am a solid wholesaler who earns a good living and like most of us, I want to take it to the next level. A man heard me speaking and asked me if I could give his group some help in finding what they needed. They are working with $25 Mil to $60 Mil or so in their pool and they are also trying to take their business to the next level.

I hope to be able to help them and I am not discouraged. I want everyone to know why I wont be. For years I worked in the auto industry in finance departments and I worked for some of the richest dealers in the Illinois and Indiana areas, the highest being about $600 million in 2000, and hes still going strong. During that time, the one thing that I learned that stuck the most is that none of them were any smarter than I was. They had problems and issues and often needed the help of staffers to show them the way. They relied on the alliances of people to support them.

I am not one who believes that just because a man has 200-300mil in his account, that he is some all-seeing eye. This man needs help from the guy on my level who is hungry enough to see it and help him to get it. Its concieveable to me that a man could have such money and not know where to find something that is not advertised on tv etc, or is not the product of the people in his circle. If the guy with the yahoo.com email is working his buns off, he may be able to get that buyer. If he believes it and works at it, he can do it, and then he will have a him.com email address and infomercial etc.

I seek Biggerpockets, and so when a man comes to me with a request that goes outside my normal arena, I came here to seek answers and do a little community research. He also knows that I have never done this and he is encouraged by the info that I have gathered during this short time. One way or another I am going to get him what he wants even if its a reality check on the facts of this bulk reo" ghost" .

I just want to say also that in my experiences in seeing the faults of wealthy men, I also have seen the faults in lawyers, bankers, doctors etc. These people are not perfect or omniscient even in their chosen sciences and professions. Investors and others make big mistakes in thinking that these people are infallable. A rich man once told me that the biggest mistake a poor person can make is to believe that a rich man knows it all. I'll know for sure once I get there.

Thanks for the input of the community,