Note investors with at least 10 years of experience in the note business on this forum?

33 Replies

I'm curious what note investors that are on this forum have been buying, selling and holding notes for at least 10 years and have bought, sold, and held at least 50 notes successfully?

Just curious, because in my limited travels I seem to meet a lot of new note investors that have been doing about 1-3 years.  But I rarely come across a note investor that has been doing it 10 years (and through at least one downturn).  It's easy to find rental property investors, flippers, etc... that have 10, 20, 30+ years experience, yet it seems the highly experienced note investors are much harder to find.

Been doing notes since 1996. Have done 100's. Did approx. $175M between 2000-2007 alone. Currently trading performing and working NPN. What are you trying to figure out?

@Tiger M. I was just curious who posts on the forum that has that level of experience and who doesn't. I seem to meet a lot of note investors with 1-3 years of experience (and many of them first introduced to notes though Eddie Speed speaking at their local REIA). But I rarely meet veteran note investors. I think @Ellis San Jose has been doing it for over 10 years too?

@Rob Cee

Are you buying notes yet? I have paid gurus to learn a niche thats outside my box. I hate it, but always look for the gold nugget of wisdom. I didn't pay Eddie and think its a bit expensive, but at least it gets people started.

@Tiger M. I am not buying notes right now. I used to buy and hold rentals for over 10 years, and I have been doing hard money lending for 3 years. I have not fully dived into the education on buying notes yet, I have only kind of casually looked into it. If I did look for notes one way I wouldn't mind starting would be somehow JV-ing with someone with 10 yrs+ success to learn the ropes. I think that is the best way.... learn by doing. Vs. learning the hard way by book education and trial and error.

Hard money is a natural start in notes in my opinion, some class time is a good idea too, I really learned a lot from Gary Johnston, Clyde Wilson and Jimmy Napier seminars. I do JV's.

Let's see, how long ago was that since '82, hmmm, 33 years if my fingers are correct. Now, if we just say the paper game, buying a secured note, I think that was about '74. Gosh, I'm getting old! Owned my mortgage company and capital company around 25 years.

Give me a reason to count the dollar volume pushed across my desk over the years, you do realize that such amounts are from the same dollar recycled over and over. 

Another is @Ken Rishel , @Dion DePaoli  has been around, Dave Horn as well. Lots of old guys on BP. 

I can tell you, just because some note guy has done things for more than ten years doesn't mean are doing things properly. It's easy too to get caught up in a note niche, specialize in one area and become unaware of the big picture in many ways. 

As to learning, search for a recent post on an old thread concerning work shops and seminars, you really won't learn notes or finance there, you learn to feed a broker, LOL.

Coming soon, at a computer near you, will be Notes, by yours truly and other BPers in a blog, so say tuned! You won't need to go to any speedy seminars. I'll have stuff on BP. :) 

Originally posted by @Bill Gulley :

I can tell you, just because some note guy has done things for more than ten years doesn't mean are doing things properly. It's easy too to get caught up in a note niche, specialize in one area and become unaware of the big picture in many ways. 

Yes but usually someone who has been doing anything at a high level for long enough has run into many of the landmines out there and knows much better how to spot them in advance.  I also find more wisdom from investors that have been investing in a particular asset through multiple downturns, vs. only having a few years and all those years an up trending market.  

Originally posted by @Tiger M. :

Hard money is a natural start in notes in my opinion, some class time is a good idea too, I really learned a lot from Gary Johnston, Clyde Wilson and Jimmy Napier seminars. I do JV's.

 I like all those guys you mention a lot Tiger.  Peter Fortunado, John Schuab and Dykes Boddiford I would add to that list.  All these guys have REALLY been around the block for many, many years, know their stuff, and pick up the phone when you call them.  

Originally posted by @Bill Gulley :

Let's see, how long ago was that since '82, hmmm, 33 years if my fingers are correct. Now, if we just say the paper game, buying a secured note, I think that was about '74. Gosh, I'm getting old! Owned my mortgage company and capital company around 25 years.

Give me a reason to count the dollar volume pushed across my desk over the years, you do realize that such amounts are from the same dollar recycled over and over. 

Another is @Ken Rishel , @Dion DePaoli  has been around, Dave Horn as well. Lots of old guys on BP. 

I can tell you, just because some note guy has done things for more than ten years doesn't mean are doing things properly. It's easy too to get caught up in a note niche, specialize in one area and become unaware of the big picture in many ways. 

As to learning, search for a recent post on an old thread concerning work shops and seminars, you really won't learn notes or finance there, you learn to feed a broker, LOL.

Coming soon, at a computer near you, will be Notes, by yours truly and other BPers in a blog, so say tuned! You won't need to go to any speedy seminars. I'll have stuff on BP. :) 

 So Bill can you tell us what you did in your note investing career in particular.  Not the owning a mortgage company part.  But how did you profit in buying notes as an investor?  Where did you find them?  Tells us what strategies you used to profit from them?  Did you make a lot of money?  Were they all in your local market?  Did you keep some for long term cash flow?  

@Rob Cee

LOL, How do I put over a 1,000+ note deals in a forum post? 

Profits come from discounts, servicing and guarantees along with obtaining deeds in lieu of foreclosure. 

About 40% were local, the rest were dispersed from a concentrated center out that touched in 7 states, which were under servicing, I guaranteed payments, advanced payments and charged fees similar to PMI. I wasn't just the only game in town, I was the only one in the country, or so I've been told servicing with payment guarantees. And no, I won't go into note guarantees in the forums, way too involved.

Commercial and residential notes.

Yes, yes and yes. 

Notice my signature line below, no, I'm not being egotistical although it may look that way, "great" is an acronym and I don't advertise in the forums. :)

Often times when this line of questioning occurs I am disappointed by the number of folks who don't get it while staring right at it.  It could perhaps be that all of the hype and guru marketing has devolved the conversation into something that everyone thinks is relative but unfortunately is not.  

Asking Bill to separate his mortgage company from his note business really doesn't even make sense.  The question itself implies a misunderstanding of what the business is.  Make loans.  Buy loans.  Get paid back.  Repeat.  

It seems that the distressed loan segment of the market has created it's own conversation and narrative about what it means to be in the business.  That doesn't mean it is right.  You will struggle to find investors who solely operated in distressed loans ten years ago.  The market as it is today did not exist.  The closest thing you will find would be bumping into a few folks who did some work with S&L's in the 1980's.  But even back then, the market landscape was different do to the RTC.  If you do not know what event I am mentioning feel free to google and read up on it.  

So to be clear, I think the line of questions here is seeking something that does not even exist in the form it believes it is searching for. Distressed loan investing prior to 2007 did not look like it does today. Investing in loans prior to 2007 meant making loans more often through capitalizing them in origination or being the originating firm/entity. Defaulted loans were not 'gems' like is represented in today's market they were bad things, often meaning lots of work and decent risk of loss. Now we pass around defaulted loans like tic tacs claiming there is a flavor for everyone and risk is well mitigated. (well except for some of us pessimists who run around with warnings on multiple topics within)

When I see questions that have the word "strategy" talking about investing in loans it usually has more of a root of today's market climate than that of the past. The strategy in investing in loans is to get paid back. Recover as much of the principal as possible. Deed in lieu of foreclosure is not an investment strategy it is a disposition alternative. Modification is not an investment strategy it is a disposition alternative. These ideas are talked about as if they are some specialty niche within the asset class and they are not.  Asking the question expecting an answer short of "all of them" is an example of how the casual conversation has created its own narrative.  Sort of like asking a carpenter which single hand tool he used to build a house.  (I don't want the house where he only used one)

So innately today's conversations approaches the idea of note investing somewhat improperly to begin with. IMO anyway. That is, they include ideas which really are not stand alone ideas onto themselves. To that degree this has created an idea where many look for something that need not be looked for. When you invest in loans you profit from the interest. That is why you invest in loans. That is why loans have been an investment for a millennium or two or three. Bill and a couple others have repeatedly corrected the ideas that flow with this misconception - what is a mortgagee entitled to? The recovery of the principal and the interest accrued. If what we seek as an answer is not rooted in those ideas then what is being sought doesn't exist but in marketing gimics and bar stool conversation.

Further, the talk of strategy itself over complicates the collection process. There is no new strategy in loans. Let's say that again. There is nothing new nor magical about investing in loans. To that regard, loans can be somewhat boring to some folks, which is why I guess we must jazz up the collection process to be this exciting and glamorous idea. A loan which pays as agreed does exactly that and that is all there is to do. A loan which does not pay as agreed then becomes a process of recovering and that process of recovery will be influenced by the amounts needing to be recovered, the current and on-going credit of the borrower and the value/condition of the collateral.

Often times you will not run quickly down a path of foreclosure with limited equity in the property. That exaggerates your loss. You will not simply reinstate or modify or forebear for bragging rights. That can delay the inevitable and exaggerate your loss. A mortgagee can not cause a prepayment to occur by their own desire even if the prepayment is desirable. That right is held by the borrower and reserved in a right to accelerate by the mortgagee only in certain circumstances.  So attempting to isolate those 'strategies' really doesn't even make sense since by isolation the strategy you limit you capability of recovery.

So if we change the person/entity to which we asked the question "what strategy did you use" to say a bank the question becomes a bit absurd. The bank's strategy was to lend money to a borrower who can and will pay it back with interest on or before the agreed maturity date. Often times the casual conversation about loan investing does not like to contrast with banking because that notion limits the upside potential that needs to be implied to attract investors. A loan paying 7% interest is worth 7%. It has always been as simple as that.

To that degree the casual conversation has evolved discounts into something that they really are not. Discounts have not always been a resource for profit like they are viewed in today's casual conversation. Through most of time a defaulted loan had no real market value. Who would want a loan that wasn't paying? That is the irony of today, we have created a desire for something that ultimately comes from an asset designed for almost the exact opposite of what many think they are looking for. The point of making a loan is getting paid back. The point of investing in a loan is to earn the interest from that loan. While we have experienced some evolution to that concept we must gaurd our desire to want to make these assets something they are not. If you start with the right approach you will fish in the right pond. If you don't, you will find your line in a bucket of water hoping a fish will jump in. 

Originally posted by @Dion DePaoli DePaoli:

Asking Bill to separate his mortgage company from his note business really doesn't even make sense.  The question itself implies a misunderstanding of what the business is.  Make loans.  Buy loans.  Get paid back.  Repeat.  

I love that Dion! I will say Rob, that I don't think time always plays a role in this. I know several investors that are doing notes that have completed upwards of 100 notes in the past two years. They were completely new to notes and some even to real estate before receiving education from some of the gurus. I believe if you want to find a JV partner as a part of the learning process and are looking for someone with experience it doesn't necessarily mean the number of years they have been doing it but their deal experience and how their personality and business plan mesh with you and your goals.

I love paper. Been doing it since 1989. Started foreclosure in 1978 but didn't have any dough and my training was backwards. 

@Rob Cee Do you want to hear about successes or failures? The successes have given me a great life but the failures taught me what you can't learn from a book or a course.

I actively work notes today and own half a hedge fund, part of another, four of my own portfolios, and some old paper that I pull out and work when my Dealflow or other activities get slow (or I need to stir up trouble for myself, it eould seems). 

I wish we could get Bill Tan, Ellis San Jose and Mike Morongiello to chine in. 

Originally posted by @Dion DePaoli :

Asking Bill to separate his mortgage company from his note business really doesn't even make sense.  The question itself implies a misunderstanding of what the business is.  Make loans.  Buy loans.  Get paid back.  Repeat.  

I don't agree with this.  I spent 13 years as as a mortgage broker and mortgage banker and being on the origination side is nothing at all like being a note investor.  Hardly any similarities.  Personally investing in notes for profit is a totally different business then doing the front end origination of mortgages.  Yeah you learn underwriting, appraisals, credit, etc...  But if I asked someone how long they have been a "note investor" I would not count time they spent as a mortgage broker at all, I would definitely separate it out.  

Also I disagree that there aren't "strategies" to investing in notes.  Some focus on NP 2nds with the plan to get them re-performing and sell them, some NP 1sts to do the same, some buy PN to keep in their portfolio, some focus only on seller financed notes, some focus on bank originated notes.  To me those are all "strategies".

Originally posted by @Liz Brumer :
Originally posted by @Dion DePaoli DePaoli:  


I love that Dion! I will say Rob, that I don't think time always plays a role in this. I know several investors that are doing notes that have completed upwards of 100 notes in the past two years. They were completely new to notes and some even to real estate before receiving education from some of the gurus. I believe if you want to find a JV partner as a part of the learning process and are looking for someone with experience it doesn't necessarily mean the number of years they have been doing it but their deal experience and how their personality and business plan mesh with you and your goals.

I don't really agree with you either on this.  Yeah if you do a lot of deals in a short amount of time you can learn a lot.  But  2 years is not enough to go through a market cycle.  Everybody can be a genius in a upward trending market.  Investors gain a lot of wisdom going though market cycles.  I know a lot of people that thought they were geniuses and flipped tons of homes for 2 years from 2004-2006 and then got crushed in the downturn.  Now they are wiser.  I generally trust the judgement of investors who have invested through multiple downturns, it brings a lot of wisdom.  And that takes more than 2 years.  Also over time doing something you just gain more wisdom, I know I have myself in everything I have done.  If you were having brain surgery would you rather have a Dr. with 2 years of experience  or 20 years?

@Rob Cee


I guess the answer here is stop trying to find differences instead of similarities. If you banked, you banked for an investor. What is it you think they were looking for?

Putting money out in the first place is a precursor to even enter the distressed side of the market. You have to lend the money out in order for it to go into distress. When lending money the probability of default vs repayment is certainly at the forefront of making the loan. Like I said, it is sort of the point of the exercise.

I do agree brokering would provide less exposure to this type of vantage point to the market but I didn't bring up brokering you did. What a mortgagee is entitled to doesn't change from beginning to end in any loan. "Once a mortgagee, always a mortgagee."

As a banker you would have had concerns over buybacks or scratch and dent loans. Welcome to waive 1 of distress. The S&D defect causes a discount. The discount is present because the defect creates a concern over collect-ability and recovery of the loan. If you banked with the agencies - who bought your buy backs? An investor who buys defective loans.

Additionally, what do call Fannie/Freddie/Ginnie? Those are all mortgage investors. They are simply investors who buy loans (none of them "make" loans). They gave us a standard to use by which we can describe or identify the defects to begin with. They risk adjust loan rates by adding to the rate and spread which they will receive based on the underwriting which is a review and assessment of the probability and recoverable of the principal being lent out.

That is precisely the same reason a NPN get's discounted - collect-ability and recovery. Nothing new is added to the loan nor should be expected from the loan - it is always only ever principal and interest. The method or path of recovery are the remedies provided for in the documents and by law. They are present in underwriting as that is what you underwrite your risk to, as well as through origination and onto active account prior to full repayment.

Perhaps the real rub there now the capital at risk or the entity for whom the underwriting matters is you and not a third party but that doesn't change the reality of it being still the same. The mortgagee (you) are only ever entitled to the principal outstanding and the interest earned. Point to all that is, when you go looking for a loan investor do not confuse yourself with trying to find a concept born by these casual conversations and guru marketing. There are lots of loan investors and always have been. They all care about delinquency and default. Any investor who has ever made a loan has experience with default and distressed loans.

I understand why the similarities are blurred and the differences are highlighted and it is mainly do to trying to relate being a mortgage investor to being a real property investor. Shoot, all you have to do is look around BP boards and see how real property terms leech into mortgage investment topics. A mortgage investor who is a "buy and hold" guy? You mean the bank who makes long term loans? A mortgage investor who is a "fix and flip" guy? You mean the hard money lender who makes short term loans? I am hoping you are starting to see the point. Those terms leech in and distort what things really are. Add in a bunch of newbies who use those same terms and we have an epidemic of misunderstandings on many fronts.

As to the rebuttal on the idea of "strategies", your response perfectly encapsulates the influence of guru marketing and bar stool conversation trends. You mention specifically, "Some focus on NP 2nds with the plan to get them re-performing and sell them..."

The strategy, or better said...the overall aim, is to get paid [back] when investing in loans. What is strategic about purchasing a pool of loans where some may and some may not reinstate? That is no more of a strategy than rolling dice. The borrower is who actually determines performance, not the investor. The narrative here actually promotes a misguided idea of what really happens. The borrower can either pay or they can not. Mind you, the word "paid" there is not limited to periodic payment. A borrower pays you in a refinance. They also pay you when they sell their property. What good is a "strategy" which ignores routine and customary paths to get paid? Answer = no much.

In addition, that line of "strategy" conversation begets the question..."what did you do with all the other loans which your 'strategy' doesn't apply?"

As an aside, and you didn't mention it but it is certainly out there in form is the idea that "modification" is an "exit" strategy.  If you modify the loan as a mortgagee you will still be a mortgagee - ergo - you exit nothing.  Judging by your paragraph, you have heard that one too, many times.  Do you see the absurdity in the use of those words like?  They do not even go together.

That is the slippery slope that many fall victim to. The statements themselves are half baked ideas.  The statement takes on an improperly implied definition.  The reality of it is, no seasoned investor talks that way. You will never hear me or Bill or anyone else with real experience limit the real "strategy" of getting paid back to one or two particular paths or tool concepts. We will use every and all tools at our disposal.

Deed in Lieu is not a strategy it is a tool to be used in the strategy of getting paid back.  A DIL in fact doesn't even mean "to get paid back".  A DIL, a modification, forbearance, shorts and foreclosure are all tools we use not stand along strategies.  These tools get talked about and passed around as if they are stand along strategies and they are not.  That promotes misunderstanding for those who are trying to understand them better.  So, the first step in correcting that all is starting to understand what these are and what they are not, contrary to the bar stool conversation.

What we can do is look to this description of desired assets and dispositions as niches in a market. It is a niche to buy second liens as much as it is a niche to make hard money loans. It is a niche to work with NPN first liens as it is to make seller financed loans. To label these dispositions as strategies ultimately deflects the real strategy which is to recover the principal and interest from the loan by the most effective means required. As I said before, the "strategy" is to simply get paid back.

FIRE IN THE HOLE!

Actually, those that purchase in brokerage circles, or directly from the holder,  NPNs or PNs that don't understand how and why a loan was originated and how it was underwritten and who can't underwrite it under it's current condition isn't an educated investor, but a gambler. I can see a strategy difference there, but Dion is correct.

As Dion pointed out, my "strategy" was to be repaid. 

Now, if you get lucky enough to have a portfolio of a 1,200 notes, you do get into strategies, cash flow management, pre-payment and default forecasting, risk management, all have very little to do with economic markets, other than interest rate changes that effect the management and forecasting, but those markets don't effect the weighted maturities, capital at risk so much and that also is dependent on the asset class. 

Now, if you'd like to call this a "strategy" buy a discounted note that is performing, underwrite it and see if it can be refinanced, you can accomplish much of this during due diligence before you buy it.

Then give the borrower a nice opportunity to refinance it, you can even pay some or all costs and get them a lower rate. Nice thing about being on the origination side is that you get paid for the origination. 

Go to closing and get the current balance owing that was due!  

Now, if you have any finance and basic concepts of economics, you'll understand the velocity of money and timing of shorter returns. Since yields are an annualized formula, now find that return you made in 45 days to an annual yield. Fire in the hole, it explodes!

While I have seen slow markets and hot markets due to interest rate changes, nothing has happened since 1939 that stopped the market, non of us lived through that as investors!

Dion, you're spot on!  :) 

@Rob Cee  

Seems you already have a good foundation(brokering, origination, private hard money, development), so are well educated and know what your looking for. I applaud your thesis. It does make a difference when someone has been through the cycles, as opposed to those that are new just focused on whats working now.  I wouldn't invest with out a strategy. Call it whatever you like, its a plan with an exit door. I know @Rick H. would be a good person to chat with. He has edge like a razor.

I guess I could try and type 20 paragraphs or I could simply say, "no reward without risk". Fear of the unknown in the note market almost prevented me from moving forward and buying. Eat the elephant in small bites (start slow). Its a great niche to be in. Especially when you have all the doom and gloom telling folks its illegal or your a fool. That info will keep many out of the game.

Originally posted by @Tiger M. :

Been doing notes since 1996. Have done 100's. Did approx. $175M between 2000-2007 alone. Currently trading performing and working NPN. What are you trying to figure out?

 I have never bought, held, or sold a note.  I currently own sfr rentals and flip homes in Southern California.  A business associate asked me to help them with a 3rd mortgage of $50,000 @ 12% they gave to and home owner in california.  Her friends also hold the 2nd of $75,000 @ 8%.  Both of these loans were done in Nov. of 2006 and the owner has never made the agreed payments.  The homeowner owes 1.45 million on a 3800 Sq ft hill top ocean view home worth 1.75 million.  

I was thinking of purchasing the 2nd at a discount and going to war with the homeowner who has been in and out of NOD and NTS for years. Or buying the second and selling it to a pro like you.

Any thoughts 

Originally posted by @Dion DePaoli :

@Rob Cee

I guess the answer here is stop trying to find differences instead of similarities. If you banked, you banked for an investor. What is it you think they were looking for?

Putting money out in the first place is a precursor to even enter the distressed side of the market. You have to lend the money out in order for it to go into distress. When lending money the probability of default vs repayment is certainly at the forefront of making the loan. Like I said, it is sort of the point of the exercise.

I do agree brokering would provide less exposure to this type of vantage point to the market but I didn't bring up brokering you did. What a mortgagee is entitled to doesn't change from beginning to end in any loan. "Once a mortgagee, always a mortgagee."

As a banker you would have had concerns over buybacks or scratch and dent loans. Welcome to waive 1 of distress. The S&D defect causes a discount. The discount is present because the defect creates a concern over collect-ability and recovery of the loan. If you banked with the agencies - who bought your buy backs? An investor who buys defective loans.

Additionally, what do call Fannie/Freddie/Ginnie? Those are all mortgage investors. They are simply investors who buy loans (none of them "make" loans). They gave us a standard to use by which we can describe or identify the defects to begin with. They risk adjust loan rates by adding to the rate and spread which they will receive based on the underwriting which is a review and assessment of the probability and recoverable of the principal being lent out.

That is precisely the same reason a NPN get's discounted - collect-ability and recovery. Nothing new is added to the loan nor should be expected from the loan - it is always only ever principal and interest. The method or path of recovery are the remedies provided for in the documents and by law. They are present in underwriting as that is what you underwrite your risk to, as well as through origination and onto active account prior to full repayment.

Perhaps the real rub there now the capital at risk or the entity for whom the underwriting matters is you and not a third party but that doesn't change the reality of it being still the same. The mortgagee (you) are only ever entitled to the principal outstanding and the interest earned. Point to all that is, when you go looking for a loan investor do not confuse yourself with trying to find a concept born by these casual conversations and guru marketing. There are lots of loan investors and always have been. They all care about delinquency and default. Any investor who has ever made a loan has experience with default and distressed loans.

I understand why the similarities are blurred and the differences are highlighted and it is mainly do to trying to relate being a mortgage investor to being a real property investor. Shoot, all you have to do is look around BP boards and see how real property terms leech into mortgage investment topics. A mortgage investor who is a "buy and hold" guy? You mean the bank who makes long term loans? A mortgage investor who is a "fix and flip" guy? You mean the hard money lender who makes short term loans? I am hoping you are starting to see the point. Those terms leech in and distort what things really are. Add in a bunch of newbies who use those same terms and we have an epidemic of misunderstandings on many fronts.

As to the rebuttal on the idea of "strategies", your response perfectly encapsulates the influence of guru marketing and bar stool conversation trends. You mention specifically, "Some focus on NP 2nds with the plan to get them re-performing and sell them..."

The strategy, or better said...the overall aim, is to get paid [back] when investing in loans. What is strategic about purchasing a pool of loans where some may and some may not reinstate? That is no more of a strategy than rolling dice. The borrower is who actually determines performance, not the investor. The narrative here actually promotes a misguided idea of what really happens. The borrower can either pay or they can not. Mind you, the word "paid" there is not limited to periodic payment. A borrower pays you in a refinance. They also pay you when they sell their property. What good is a "strategy" which ignores routine and customary paths to get paid? Answer = no much.

In addition, that line of "strategy" conversation begets the question..."what did you do with all the other loans which your 'strategy' doesn't apply?"

As an aside, and you didn't mention it but it is certainly out there in form is the idea that "modification" is an "exit" strategy.  If you modify the loan as a mortgagee you will still be a mortgagee - ergo - you exit nothing.  Judging by your paragraph, you have heard that one too, many times.  Do you see the absurdity in the use of those words like?  They do not even go together.

That is the slippery slope that many fall victim to. The statements themselves are half baked ideas.  The statement takes on an improperly implied definition.  The reality of it is, no seasoned investor talks that way. You will never hear me or Bill or anyone else with real experience limit the real "strategy" of getting paid back to one or two particular paths or tool concepts. We will use every and all tools at our disposal.

Deed in Lieu is not a strategy it is a tool to be used in the strategy of getting paid back.  A DIL in fact doesn't even mean "to get paid back".  A DIL, a modification, forbearance, shorts and foreclosure are all tools we use not stand along strategies.  These tools get talked about and passed around as if they are stand along strategies and they are not.  That promotes misunderstanding for those who are trying to understand them better.  So, the first step in correcting that all is starting to understand what these are and what they are not, contrary to the bar stool conversation.

What we can do is look to this description of desired assets and dispositions as niches in a market. It is a niche to buy second liens as much as it is a niche to make hard money loans. It is a niche to work with NPN first liens as it is to make seller financed loans. To label these dispositions as strategies ultimately deflects the real strategy which is to recover the principal and interest from the loan by the most effective means required. As I said before, the "strategy" is to simply get paid back.

 Still totally disagree with you.  Time as a mortgage originator, mortgage broker, mortgage banker, loan officer do not count as time as a "note investor".   Not even close.  Totally different objectives and skill sets.  Most people in conventional mortgage origination would not have a clue how to be a note investor.  This is like saying Realtor's who have never flipped a property or bought a rental, qualify as real estate investors just because they have been Realtors.  When most Realtors don't have the slightest clue about real estate investing.  

...

Originally posted by @Bill Gulley :

Now, if you'd like to call this a "strategy" buy a discounted note that is performing, underwrite it and see if it can be refinanced, you can accomplish much of this during due diligence before you buy it.

This is a good nugget Bill.  Possibilities of smoking your calculator with a quick refi.

@Jim Keller Suggest you start a new thread and post your query. 

@Rob Cee I'm still not clear what you seek. Are you attempting to get guidance and direction from seasoned paper people? Or are you trying to make a certain decision?

Long rants aside, I love paper, as I stated before. I understand the collateral and own a number of rentals, but they're not my true pleasure. 

If your tolerance for risk is low, buy 1st TD's at very low LTV. If you have a taste for higher, perhaps scratch and dent or NPN 2nds.

If you understand title well and can fix problems efficiently, you might venture into defective paper. If you're really feeling confident, go for BK or brownfield paper. 

I believe there are two factors to consider; 1) How to learn to work deals, and 2) How to generate leads. Solving #1 will bring you more of #2.

If you get good at the paper business and know how to fix problems, go to places where your peers go. Hang with them. Go to the same conferences. 

Join or start a mastermind group. I started one many years ago whose members' combined net worth are now well over $1B. Not bad for a bunch of Bottomfeeders. 

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