Note Investing

27 Replies

Hello BP,

I am interested in getting into note investing. I wanted to know if you guys know where to start and what type of strategies you have experience with. Thank you guys.

I recommend you look up Eddie Speed, Texas. I have high respect for him. I have no affiliation at all with Eddie Speed.

http://papersourceonline.com/  ?  I just signed up, its free, and was recommended on a previous post.  I am interested in the other end, selling small notes, but I'm still in the research stage.

Thanks! I will check out these sources. How has you guys experience been with notes? What do you know?

Originally posted by @Bob E. :

I wold start on the Performing side, pricing on the NP side has gotten more challenging over the last year.

 @Bob E. 

Really enjoy your posts on here.  Out of curiosity can you expand on the challenges of NPNs?   Are prices going up?

@Arthur Mayer   Pricing is going up.  A lot of the guys I take to that have been doing this are shifting to the Performing side, you pay a little more for the note but it cashflows from day one, rather then being a monthly expense.

Challenges are 

-  Making sure the chain of assignments are all valid.

-  Verifying the value of the collateral. 

-  Rehabbing and getting PM in place long distance.

-  Paying back taxes and making sure title is clear.

Bob E. MBA, LD Funding, LLC | [email protected] | 909‑353‑3863 | http://www.LDFundingLLC.com

Your comments are VERY educational, especially from Dawn Young and Bob Estler (I voted for both of you guys !!), does anyone know a good source of NPN "fresh" tapes ?

Hey @Bob E.  do you use FCI at all to buy notes?  I've heard mixed reviews of the site, but from initial review, they do have some appealing notes.  

Hey Ryan,

Papersource is a great place to start. You're in Maryland, right? There will be a Noteworthy Conference in NJ/NY in April I think. Might be something to also look into.

Bob E. is totally on point with many of his assertions. I'm finding that people with the capital are looking a lot harder at the performing paper. But, pricing for NPNs, while not as attractive in the past, still isn't out of reach for many.

So times the workouts take more time than you'd like, but with the right team you're able to turn your money over at a decent clip, and you're not taking trips to Home Depot.

Really, I think its a great area to look at as another tool in your belt as an investor. Note investing is all I do, but that isn't for everyone. My partner is a note investor, but he also has 4 traditional rehabs deals going on right now.

I have not had good luck with FCI.  I have heard of different people that have had success there but I am not one of them.  They are a platform for individual sellers and a lot of times the sellers are looking to pass their problems to the next person, if they saw profit in it they would keep it and work it themselves.  

Bob E. MBA, LD Funding, LLC | [email protected] | 909‑353‑3863 | http://www.LDFundingLLC.com

I thank all of you for your responces.  Do you guys work with note brokers?  If so, what advice would you give someone on that side p the business?  

I personally like the NPN 2nds a lot. Easier to get into as far as funds requirement. Margins can be sky high, but realistically above average. It can be riskier than most other investments but if you learn to buy right and the tricks of the trade, you can mitigate much of the risk. Sometimes knowing the laws can help turn some risks to favor you.

I have bought from FCI. All the notes that I bought from them, except for one (still working on this), have been worked out with positive results. In fact, my very first workout was on a note bought from FCI and it is my best workout to date.

You can find sources for notes by attending trade shows and conventions. Great places to find and network with the vendors and other fellow investors, too.

Originally posted by @Joe C. :

I personally like the NPN 2nds a lot. Easier to get into as far as funds requirement. Margins can be sky high, but realistically above average. It can be riskier than most other investments but if you learn to buy right and the tricks of the trade, you can mitigate much of the risk. Sometimes knowing the laws can help turn some risks to favor you.

I have bought from FCI. All the notes that I bought from them, except for one (still working on this), have been worked out with positive results. In fact, my very first workout was on a note bought from FCI and it is my best workout to date.

You can find sources for notes by attending trade shows and conventions. Great places to find and network with the vendors and other fellow investors, too.

I'm glad to hear FCI is working out for you. For some reason a lot of people dog on FCI where I feel I find very good deals on there. 

I am just getting into this myself. I have bought some performing notes on FCI . Just about to close on a NPN first with full intention of foreclosing it. So far so good.

Be cautious with Watermark. You pay, get the actual note after deal closes and if the file is not complete when you get it you are out of luck. You have no leverage. They just ignore your requests.

FCI platform allows you to see copies of all documents before closing so you know what to expect. Had a situation last week where the seller was unable to produce allonges. Deal did not close. With Watermark I should have insisted on getting a copy of the file before closing. I did ok got exceptionally high return, but I was missing a allonge which I never got.

Due diligence is the key. I notice on BP a lot of people are not doing their due diligence before hand. No credit reports, BPO, copy of tax bill, title report. Is the first current? Reading the mortgage or Deed of Trust for both the first and second (wha I buy) to check  for terms of modification if one occurred. Does the first allow for a second to be placed on the property? Search for BK reports. These are just a few of the things you have to look for.

I have a legal service that allows me to talk to a attorney in every state. So if I am looking at a note in Seattle and I live in Texas then I ask questions to a Washington state licensed attorney.

Talk to your servicer ahead of time and find out if they are licensed in the state you are buying the note. What are their costs? Make an excel spread sheet of all the steps you need to follow in purchasing a note, and then check off as each is accomplished.

One very important item. If buying a note have written confirmation of when the last payment was made. Does the time limit fall inside or outside the statutes of limitation? A lot of notes being listed for sale where the time limit is outside the statutes of limitations. You have no leverage, if you have to collect or foreclose and the time limit is outside the statute of limitations. "Caveat Emptor." Each state has different time limits.

Boyd, thank you very much for this valuable information.  What is a allonge?  I want to start buying notes, but I have no education in this area of real estate.  What educational resources would you recommend.  I received an offer to buy a note, but don't know all the steps for proper due diligence. Are you familiar with the Note School ( Eddie Goodspeed)?  If so, would you recommend him?  Thanks in advance for your response.

I'm not sure I'm going to get this 100% correct but, basically an allonge is an endorsement from the previous lender that assigns the mortgage payments to the new lender/purchaser of the note.

Eddie Speed is a great educator. He has been in the business a long time and has excellent material. His company also sells notes so I can see how his program would be good to get involved with.

As for FCI, I've mostly had good luck with them. They are like most other vendors that you sometimes need to keep on top of and follow-up with to keep things on track. But, they will always get the job done and they are sticklers about following every letter of the law. That's good for you if they are your servicer. My only criticism about buying from their note exchange is that the smaller notes become very expensive since they charge $500 from the buyer and $500 from the seller. I believe this prices smaller notes out of the exchange and adds to much overhead to smallest notes that do make the site.

Medium logo wordoverwordNick Hawryluk, Venture Works LLC | (844) NOT‑BANK

Nick, thank you very much for responding to my questions.  I appreciate you taking time out of your schedule to answer my questions.  Eddie also offers different mentoring levels that start at about $20,000.  Have you heard anything feedback on this? 

@Debra Richard FCI is a great trading platform. I started buying in the site about 4 years ago and still utilize the site today. We are launching a trading platform in January that will have a lot of bells and whistles to go with just buying notes. Following the launch of the trading site, we will be adding a management side along with a trading simulator. The simulator will allow you to run through the course of buying a note, working the note, and then exiting the note. It should help out new folks in the business a lot.
With regards to Eddie Speed, if you can afford the course, do it. I was investing in notes for about 18 months prior to becoming a mentor student and doing so has changed my business. I made back what I spent in the first 60 days. You are going to pay for experience either by paying for a mentor, it by trial and error... Take your pick. You may get by without losing any money, but you will get down the road much after with the help of a mentor. For the record, I do not work for Eddie Speed or his group. Good luck

Medium paperstac socialRichard Allen, Paperstac/Note Force Academy | 407‑378‑6868 | http://www.paperstac.com

Thank you Richard Allen for your candid response.  I'm waiting to hear back from Eddie's office on the training schedule for 2016.  At some point after going through the courses and before making a decision to sign up for mentoring, I may want to speak with you directly to get more details about the mentoring program.  Thanks again for replying!

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I've been investing in performing notes (usually privately-held) for almost 20 years now, and I have to tell you that marketing and networking with financial professionals is really where the repeat business is at. I do have quite a few writings about this that you may find helpful. If you'd like, PM or email me and I'd be happy to send you what I have.

Medium noteinvestorsTim Fitzgerald, NoteInvestors.com | [email protected] | http://NoteInvestors.com/

Has anyone worked with JW Warr @ American Note Warehouse. If so what do you think