Note Newbie looking for Investment Opportunities.

Investor · Coral Springs, FL · Member since 2024 · 5 posts · 0 votes

Hi Everyone!

Note Newbie here. After completing a Note class, I have come to realize, in 2 seconds flat, that I have a lot to learn. I am glad to be here and I am looking forward to making new friends, and business connections.

I am looking to buy 2nd position, non-performing notes. If anyone have a Tape list I can join, please add me. Or point me in the right direction. Thanks

0 Reply

13 views

Most Popular Reply

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

Quote from @Sylvia Spallinger:

I took a class called Mortgage Note Investing: Distressed Second Mortgages

I was educated that: It was a great way to create passive income without the risk that comes with investing in the 1st position. The UPB is usually lower which make it more affordable to the average person.

I chose non-performing 2nd position mainly because that what was presented to me at the time. I looked into it. There seemed to be more pros than cons. The mentor seemed to be doing well, so I dived it.

Now that I am in the water, things appear a little different than stated, however, I have three years before retirement and is welling to give it a try

if you want to learn 2nds - @Robert Hytha would be who to go to btw

7e investments53 Reviews

Website View Page

1 Reply

See this reply in the discussion

12 Replies

Jump to latestLatest

Sort by

Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
@Sylvia Spallinger
Curious where you learned?
Also why non performing seconds - biggest risk to take in notes
7e investments53 Reviews
Website View Page
0 Reply
Sylvia Spallinger
OP
Investor · Coral Springs, FL · Member since 2024 · 5 posts · 0 votes
2y
I took a class called Mortgage Note Investing: Distressed Second Mortgages
I was educated that: It was a great way to create passive income without the risk that comes with investing in the 1st position. The UPB is usually lower which make it more affordable to the average person.
I chose non-performing 2nd position mainly because that what was presented to me at the time. I looked into it. There seemed to be more pros than cons. The mentor seemed to be doing well, so I dived it.
Now that I am in the water, things appear a little different than stated, however, I have three years before retirement and is welling to give it a try
0 Reply
Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Sylvia Spallinger:

I took a class called Mortgage Note Investing: Distressed Second Mortgages
I was educated that: It was a great way to create passive income without the risk that comes with investing in the 1st position. The UPB is usually lower which make it more affordable to the average person.
I chose non-performing 2nd position mainly because that what was presented to me at the time. I looked into it. There seemed to be more pros than cons. The mentor seemed to be doing well, so I dived it.
Now that I am in the water, things appear a little different than stated, however, I have three years before retirement and is welling to give it a try

Sylvia
Whoever is teaching that investing in non performing 2nds without the risk that comes with investing in firsts is really trying to sell someone something I will say. While the UPB is lower, in our current economic environment of inflated home prices and more debt, your chances of losing your entire investment are significantly higher.
Non performing seconds are extremely risky (especially compared to firsts). I personally would not trust anyone who says investing in notes is not risky. Been doing it for a long time and there is significant risk in this space - of course there are ways to mitigate it but i would not be putting money into non performing seconds if I was getting ready to retire as your returns will be up and down.
I know one investor who just bought 3 seconds and two of them went to zero, lost tens of thousands on those two. Will make money on the third but will not end up doing well at all.
If you want a good class on notes, check out fred and tracy rewey - they do performing but have great content.
7e investments53 Reviews
Website View Page
0 Reply
Lauren Sanford
Investor · Member since 2024 · 181 posts · 63 votes
2y
@Sylvia Spallinger we will agree with concerns with investing in seconds. When we first got started in notes in 2010, 2nds were 5-8 cents while 1sts were 30-40 cents. By 2017 the prices for 2nds got to 50% but you could still shelf the 2nd and wait for the equity to increase. Now that pricing for seconds are so high along with the questionable equity there is increased risk in 2nd position. While we focus on 1st liens we would suggest talking with Rob Hytha about 2nds. The seasoned investors who use to focused on seconds have moved towards first or are buying 2nds with seller finance notes who created 70/20/10 Notes.
0 Reply
Robert Hytha
Real Estate Investor · Philadelphia, PA · Member since 2011 · 41 posts · 34 votes
2y
Thanks for the shout-out @Lauren Sanford!

I agree with @Chris Seveney, anyone who says that investing in notes is risk-free isn't being honest with you. Of course there are risks with any investment. However, in my opinion - most of those risks can be mitigated with proper due diligence.
We like 2nd liens better than 1sts for a few reasons:
- more diversification potential (lower cost / lower UPB)
- 1st lien-holder helps protect all subsequent lien-holders by ensuring taxes are current
- typically secured by higher value collateral (in my experience)
But Chris is right, as equity is threatened by falling home values - 2nd liens are the first to go from a high-value full equity deal to partial equity or underwater.

If links aren't allowed by the mods - please advise, but I put together the results of our last ~18 months of NPL sales (both 1st & 2nd liens) here: https://docs.google.com/spreadsheets/d/e/2PACX-1vQehoJeqJrWs...
As you can see on the google sheet above, the average NPL sale price has been 52.89% of the UPB over the last 277 assets sold.
1 Reply
Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Sylvia Spallinger:

I took a class called Mortgage Note Investing: Distressed Second Mortgages
I was educated that: It was a great way to create passive income without the risk that comes with investing in the 1st position. The UPB is usually lower which make it more affordable to the average person.
I chose non-performing 2nd position mainly because that what was presented to me at the time. I looked into it. There seemed to be more pros than cons. The mentor seemed to be doing well, so I dived it.
Now that I am in the water, things appear a little different than stated, however, I have three years before retirement and is welling to give it a try

if you want to learn 2nds - @Robert Hytha would be who to go to btw
7e investments53 Reviews
Website View Page
1 Reply
Robert Hytha
Real Estate Investor · Philadelphia, PA · Member since 2011 · 41 posts · 34 votes
2y

Thank you Chris! We're putting out a lot of YouTube videos lately, just search "FIXnotes"
0 Reply
Sylvia Spallinger
OP
Investor · Coral Springs, FL · Member since 2024 · 5 posts · 0 votes
2y
Quote from @Chris Seveney:

Quote from @Sylvia Spallinger:

I took a class called Mortgage Note Investing: Distressed Second Mortgages
I was educated that: It was a great way to create passive income without the risk that comes with investing in the 1st position. The UPB is usually lower which make it more affordable to the average person.
I chose non-performing 2nd position mainly because that what was presented to me at the time. I looked into it. There seemed to be more pros than cons. The mentor seemed to be doing well, so I dived it.
Now that I am in the water, things appear a little different than stated, however, I have three years before retirement and is welling to give it a try

Sylvia
Whoever is teaching that investing in non performing 2nds without the risk that comes with investing in firsts is really trying to sell someone something I will say. While the UPB is lower, in our current economic environment of inflated home prices and more debt, your chances of losing your entire investment are significantly higher.
Non performing seconds are extremely risky (especially compared to firsts). I personally would not trust anyone who says investing in notes is not risky. Been doing it for a long time and there is significant risk in this space - of course there are ways to mitigate it but i would not be putting money into non performing seconds if I was getting ready to retire as your returns will be up and down.
I know one investor who just bought 3 seconds and two of them went to zero, lost tens of thousands on those two. Will make money on the third but will not end up doing well at all.
If you want a good class on notes, check out fred and tracy rewey - they do performing but have great content.

0 Reply
Lauren Sanford
Investor · Member since 2024 · 181 posts · 63 votes
2y
Quote from @Robert Hytha:

Thanks for the shout-out @Lauren Sanford!

I agree with @Chris Seveney, anyone who says that investing in notes is risk-free isn't being honest with you. Of course there are risks with any investment. However, in my opinion - most of those risks can be mitigated with proper due diligence.
We like 2nd liens better than 1sts for a few reasons:
- more diversification potential (lower cost / lower UPB)
- 1st lien-holder helps protect all subsequent lien-holders by ensuring taxes are current
- typically secured by higher value collateral (in my experience)
But Chris is right, as equity is threatened by falling home values - 2nd liens are the first to go from a high-value full equity deal to partial equity or underwater.

If links aren't allowed by the mods - please advise, but I put together the results of our last ~18 months of NPL sales (both 1st & 2nd liens) here: https://docs.google.com/spreadsheets/d/e/2PACX-1vQehoJeqJrWs...
As you can see on the google sheet above, the average NPL sale price has been 52.89% of the UPB over the last 277 assets sold.

Not a problem. Yes we put out a ton of YouTube and podcasts on the topic. Real Estate Notes Show. Just look up JKP Holdings
1 Reply
Sylvia Spallinger
OP
Investor · Coral Springs, FL · Member since 2024 · 5 posts · 0 votes
2y
Hi Chris.
I am sorry, I did not give you enough information. I was told that the biggest risk with buying in the 2nd position was Chapter 13 and Chapter 7 foreclosures, and the risk could be lessen by Due Diligences.
You do bring up some points that wasn't mentioned. Thank you for the recommendation
0 Reply
Sylvia Spallinger
OP
Investor · Coral Springs, FL · Member since 2024 · 5 posts · 0 votes
2y
Thank you @Lauren Sanford for the recommendation, @Robert Hytha. The last thing I want to do is risk my retirement due to a lack of information and understand.
0 Reply
Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Sylvia Spallinger:

Hi Chris.
I am sorry, I did not give you enough information. I was told that the biggest risk with buying in the 2nd position was Chapter 13 and Chapter 7 foreclosures, and the risk could be lessen by Due Diligences.
You do bring up some points that wasn't mentioned. Thank you for the recommendation

Due Diligence can have you review the loan, but you do not control the borrower - you are at the mercy of the borrower. If that borrower loses their job (whcih you have no control over), and they cannot pay and file BK. You could get wiped.
In first, all of the above can happen and you still have the property to secure it by.
7e investments53 Reviews
Website View Page
1 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.