Bulk packages from Institutions and private sources

14 Replies

I have a couple certified sources that I can get bulk packages from. How much success have you guys had with buyers for large packages?

As an example I have a package with 78 properties in Canton OH for $4.5mil

I can get performing and non performing notes as well. I would love to JV these with someone who has experience with Bulk portfolios or who has a verified buyer. Look forward to hearing from everyone!

Ahh, the mythical bulk package.  In my experience, it isn't success with buyers that is the issue, it is success with sellers.

The bulk arena has been full of fly by night " seller reps" for several years who claim to have a source for bulk packages.  They simply never turn out to be real.

@David Roberts  Hi Dave,  Check a few of these out and see who has recorded the Lien, is it the person who has the package?  If so they may be legit.  There are plenty of places you can shop a large package if you have the capital to take it on.

PS.  What are they asking as a % of UPB / BPO?  Do they include recent BPO and title or do you have to pull that yourself?

Do they have words like NCND, +3, "direct to seller", and POF? If so, mostly likely yet another daisy chain of forward e-mails that go nowhere.

Thanks for the input guys. One source does ask for POF and an NCND, but I don't think that is cause to dismiss the source. The other source just wants a soft POF and light LOI. I have worked with the second source for a few years and know they are legit. I'm just looking for buyers. I haven't seen a true POF come across my inbox :-D

It has been a while since one of these posts came up.  

Loan pools are not unicorns.  Loans trade in pools every day from distressed to prime.  Loans pools range in size from one loan to many.  Generally pools solicited for private consumption are smaller in size not exceeding $20 Million and even then those pools generally allow investors to bid and buy smaller portions of the pool.  The better sized pools are around $1 to $3 Million depending on the assets inside.  Institutional pools can grow up into the $100 Million range but those are few and far between since there simply are not enough investors in the market who can capitalize such a trade and qualify as a counter-party to the seller.  Often institutional pools will target around $50 to $75. There are NO Billion dollar pools trading of whole loans in the market.  Those losses can not be sustained and the idea of one is just silly. 

The problem with some pools is they tend to get into the hands of brokers.  98% of the brokers who touch them have no idea what they are doing.  Have never owned or traded a loan.  They do not understand the asset class in general. 

What they do see is a large dollar amount, which they assume they can go earn X% to broker a pool.  Enter dreams of becoming millionaires overnight.  The dubious methods of some brokers in the market are amazingly deceitful.  Brokers brokering Brokers.  It is dubbed the Broker Joker Circus.  The brokers try and create rules to put on top of other brokers and potential investors to help them filter out folks they believe will be successful.  I suppose in some comedic irony, they all end up using each other's same ideas and nobody ever gets anything done.
  
The conversations usually deal more with how they will get paid and less about how to execute the trade and the loans within the pool.  In other words, completely off track. I will be happy to tell every broker trying to broker a pool in the US, if you think you sending an email is worth 3.0% of anything, you are sadly mistaken.  

My firm acts in broker capacity from time to time.  When we do, we do A LOT of work. We do not earn the level of fees that I often get asked for or have seen being requested and we know what we are doing quite well.  As such, I guess I crush a lot of broker dreams.  This is not some learn overnight thing.  It takes time and experience to learn such things.  So then the next big issue is, the joker/broker sends the pool out in blasts and that frankly diminishes the desire to get involved with the pool by legitimate folks.  

I will disagree with Bob's reference to be able to trade a pool, once you buy it, for profit.  This is how you loose a lot of money really fast.  Loans do not carry innate value increases.  This has been a very common theme amongst new note investors who want to try and step into this type of model of investing.  Sometimes called Velocity.  Where the loans are not intended to be dispositioned only to be resold.  If you are going to buy a pool of loans, buy them to work them out.  As a function of working them out, you will sell some because that is how you manage portfolios.  Managing time and expenses.  Short term capital demands does not match well with long term asset disposition.  Ergo, sales.

Neither of the two firms mentioned asking for any of these are worth talking to. There is no such thing as a "Soft POF". Why the heck would I want to know how much money you have in some generic fashion? That is broker talk.

How on earth can anyone write a LOI, Letter of Interest or Letter of Intent for something they have not seen? Again, broker joker talk. It really cracks me up when they expect some pricing level included in these LOI.

NCND....for the love of holy things.... As a principal, no Broker owns my firm or my assets.  They do not get exclusivity, no real principal is going to do such a thing.  If I did feel like I needed a broker to help sell something, then the broker and I will make our deal and it will be clear, he will not own the buyer that comes forward either.  These dumb things started when brokers thought they could find one buyer and one seller and the principals would go on auto-pilot to sell billions and billions of loans to each other (doing all the work) while the broker drinks pina colada on the beach somewhere.  Utter none sense.  

There are good brokers in the business that are out there.  You will never see an NCND from them.  They will never ask you for an LOI.  In most cases, they will talk to you and figure out if you have $100 or $1.0 Million.  They will not be cavalier about capital, it doesn't grow on trees.  They will use the word transparent 57 times in a sentence.  They will not refer to a "mandate" or a "seller/buyer rep".  They will know what they are doing.   When you know what you are doing, these things are the unicorns not the assets.  

I really have no idea what a "certified source" is or means.  No such thing. 

If one source for the OP is legit, then why the heck are they asking for these things (LOI/POF).  I point this and say, see how quickly the slope slips.  When I call someone I know to trade or broker, I don't need a LOI or POF or fairly dust.  That is just a waste of time and energy.  They know I am looking, I know they have or vice versa and we talk about the assets and trade execution.  Not all these other things which are not loans.  You may know the second source, but that doesn't mean they know loans.  From my vantage point, it seems to point to the fact they don't know loans or loan trading at all.

I like Bigger Pockets (A LOT), there are real folks in the business here.  Many still new to it and many trying to get started.  There is no place here for broker joker ideologies to take hold.  I am not saying the OP is one of them.  I am saying I am more than happy to provide commentary to ensure they don't spout here.  

Well, I will admit. After my tirade there. I realize Bob and I seem to have ran off thinking this was dealing with loans. The forum is REO. Sorry but still semi-relative.

Same things apply.  Different asset class.  An REO pool should not be being sold by anyone who is not a licensed real estate agent if they wish to collect a fee.  All the assets are real property and real property commissions can only be paid to real estate agents in most states.  

To that degree.  All the same broker joker stuff makes these trades impossible to get done.  The last REO pools I bought were in 2009.  Directly from the bank.  The only person a bank can give such a job to is a licensed agent.  A licensed agent would NEVER need an NCND since they would essentially be the listing agent contracted with the Seller.

Do not let the idea of many properties being sold at once cloud the judgement of how real property is bought and sold.  Nothing changes except the amount of assets.

That is the reason I buy 1st non performing notes direct from banks no broker chains.

Joe Gore

Dion's post made me giggle. I get all unhinged too when it comes to daisy-chainers. He's totally dead on, so I can't add much to it. There are only a tiny percentage of brokers that I would even remotely consider for selling our assets. If we sell, it's usually going to be direct and it's going to be to someone we have a comfort level with. Keep in mind that, unlike real estate, a prospective buyer gets to see a lot of really personal information about our borrowers. They get to see the original application that contains income, ss#s, etc. I still remember the story where I had a few assets to sell, so I shared it with only 3 sources, 2 guys that I knew well and one guy that had been hounding me because he saw my profile on a business networking site. Within a couple of hours, one of the 2 other guys I had shared it with informed me that the third guy had already bombed it all over the internet...including to my 2 other guys. I also had another instance where a broker sent me a tape with assets that I had purchased 4 months earlier from a fund. They had simply recycled an old tape and claimed to own all the assets. I had fun with that one as the guy swore up and down he owned the assets. Bottom line: most brokers are worthless, dishonest piles of goo (with a few exceptions, sorry to some of my good broker friends).

When brokers say they have a tape, I get a good laugh because I doubt any brokers have the funds to purchase a tape or the contacts at the banks to do so. I agree with Dion about brokers but there are some good brokers and when my banker friends, and I am playing golf. We all get a good laugh when the bankers start to talk about the brokers or real estate agent wants to buy a pool and don't have a pot to piss in and a window to throw it out of. The one that made me laugh the most when the banker said that a real estate agent call and said you are only allowed to sell your REOs to a licensed agent, and then the banker ask him was he a broker joker.


Joe Gore

One source does ask for POF and an NCND, but I don't think that is cause to dismiss the source.

If you choose to pursue this, you will soon learn that this gobbledegook is indeed a warning flag you're just dealing with some "broker joker" as @Dion DePaoli describes them.

If you're really thinking you're going to get in the middle of one of these deals and collect a 3% commission off a $10 million package you're just wasting time that could be spent doing something that might actually make money.

I do know of at least one group who really does buy small REO packages. They are the buyer. They've formed a syndicate and have the money to make the purchase. They deal directly with local banks who are selling the package. There are no middlemen involved.

other than the banks I do have connections to large private owned packages. I guess that makes me the "broker joker". Again, thanks again for the input

Yes, in some case the bulk package are not deliverable. That is why i ask to conference call with the source selling the assets (seller's or seller's rep) . Wholesalers, Buyer's Rep's should invite their buyer to conference with the direct source. Know where your package came from and when it was released. And yes, sometimes there are a couple of people in the middle with a 3% commission. That doesn't change the commission %. There is always a commission, no matter who you buy it from. wholesaler's , keep your number reasonable. Nothing is for free! And each party needs to make a living. So stop beating up Wholesaler, Broker's and Buyer's Rep's, they work hard for the buyer's and deserve to be paid. 

Buyer's always say YES send me the tape! Why is it they want the tape if they don't believe they can be delivered??? 

I believe when the buyer is asked for a POF & LOI , they think the middle guy will use their private info. Or the buyer will circumvent.  Well in the case of the POF you can provide a soft POF that is a letter from your bank stating you are qualified to purchase X amount of dollars for the assets you want. No info to worry about in that letter! Bank statement's, you can black out your account number and anything you don't want to show. The seller selling the assets want to see qualification to know that their assets are going in the right hands and not being passed around , like a candy bowl. 

Buyer's when you go to a car dealer to buy a car or any other place to purchase on credit. They will always ask to see your qualifications.  So why should it be any different with the Real Estate. 

So Buyer's and Seller's Rep can work together as long as they want to make it work! 

Have A Great Day! :)

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