Investing in non performing Loans
I am by no means an expert on NPLs, but I was at a conference a couple weeks ago and learned a ton from Granite Loan Solutions. Here's my article on NPLshttp://investfourmore.wordpress.com/2013/05/29/investing-in-non-performing-loans/
Bill Gulley,
I think many people are going to jump into the deep end no matter what an expert advises. They are going to look for the fastest way possible to make big money no matter what people tell them. I think the only thing you can do in those situations is give them as much basic information as possible and hope that some of it sinks in to help them understand what they are getting into to.
Ultimately it is up to the person making the investment choices how they start investing. The more information and advice you can provide, the more you will help them succeed. Not everyone will listen to that advice and if they had not read your particular advanced theories they would have found info on it somewhere that is probably less accurate.
Most of those people that read investment books looking for quick money may not make it through the whole book. If you start with the basics those people will want to jump right in and start investing before they even read the advanced stuff in the back of the book.
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Yes, can't fight human nature, desperate people do desperate things. :)
Dave Van Horn, Thank you, I have signed up with your company and Gemini.
have you or Bill Gulley heard of these companies?
LoanMLS
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Dave may, I don't know of them, sorry. :)
New information I just learned. If anyone read my blog and saw RIO charges $2,000 to get vetted. I just talked to Granite Loan Solutions and if you sign up with them directly they charge nothing to be vetted and they have the same loans as RIO. I will update the info on my article.
Never heard of RIO. That said, but you really should not pay to be vetted for any seller. If a firm is charging to decide whether or not you are a counterparty risk there business is not really trading it is charging that fee.
Loan MLS and FCI Exchange are loan sale website/platforms. They are similar to FSBO websites whereas the owner of the asset lists the asset on the site in hopes investors will shop for notes there.
Granite actually purchases the notes and resells them. Same with Kondaur and some other firms.
Not all firms are equal and not all trading environments are the same. Some of the process is different which puts different steps of due diligence in front of other steps in the process. I would be inclined to say this is what I view as the distinction amongst sellers. In more open market type trading environments where the assets can be reviewed and bid on by masses of people there is risk that dollars spent on initial due diligence may be spent in vain as by the time you make the offer the asset could be sold or you simply do not have an acceptable price. This is a little easier to get by with one off loan trades. A seller can demand a buyer only bring a final offer and not an offer subject to due diligence or certain restrictions on due diligence re-pricing. A bit more impractical on larger trades as the dollars to conduct due diligence on a 50, 100 or 500 unit pool can be fairly costly.
I don't mean to infer that one way is 'right' and one way is 'wrong' only that you should understand how you are trading and how you will clear the trade and perform your due diligence and ultimately practice capital preservation. Trying to buy something that is already sold is no fun and working on a trade that you are pretty far apart in price is not productive.
Loans come with lots of moving pieces and things to understand. You don't learn that overnight or in a class of a couple hours or days. There are many beasts here. One is an understanding of the asset and another is an understanding of the market, perhaps even both primary and secondary but for sure secondary.
Dion DePaoli, Great Info! Thank you for all of that. Granite mentioned a lot of what you did about bidding wars and companies not actually having the rights to notes they are trying to sell.
I should be vested with Granite by tomorrow and able to view their inventory. I think I am a long way off from buying anything but it will be interesting to see everything they have.