Rental Property Investor · Gainesville, FL · Member since 2015 · 1k+ posts · 432 votes
9y
@Peter Lipschutz You can find out about the states using Google and can find a good list. I put together a spreadsheet that I copied information from a site this morning that has which states are judicial and which are not. It also has whether they are hardest hit funds state that I put in.
A lot of people don't like NJ, NY, LA for their lengthy foreclosure process and some do since they know what to expect.
Criteria varies so much it depends on what the end goal is.
I think for the most part the due diligence is the same. I'm just delving deeper into this myself. Have you been to Mahir Allan site - MJSThinkTank dot com. He has some good videos describing what you ask.
Another site is Czarina Harris. She is a Note investor who also has some good podcasts.
Note Investor · Wilsonville, OR · Member since 2010 · 149 posts · 113 votes
9y
When I look at various states of which to purchase non-performing notes, in addition to judicial vs. non-judicial, I also look at length of process time, if the state has redemption rights back to the borrower, and the length that borrower has to exercise their redemption rights, costs of foreclosure, whether the state participates in Hardest Hit Funds, and where the state requires any special debt collectors registration.
You can look at HHF funds at the US Treasury HHF website. Also, RealtyTrac.com and MadisonManagment.com have listed charts that show times, judicial vs. non-judicial, redemption rights and time period.
Should you be a newer note investor, I would suggest you target 3 - 4 states when you start out. Then expand as you gain more experience. You also will need to develop a "team" in your target markets: attorneys, real estate agents, etc.
Londonderry NH & Miami, FL · Member since 2014 · 174 posts · 238 votes
9y
@Peter Lipschutz feel free to review my webinar (no charge - I just wanted to pay it forward). I discuss those questions at length. If interested message me privately
Investor · Kingston, WA · Member since 2008 · 1k+ posts · 1k+ votes
9y
We look for states/MSA's where there is stable market appreciation, positive employment trends, decent population density and lower risk of climatic volatility (hurricanes, tornados, etc). Basically a market with positive home appreciation and one where our borrowers have the ability to stay employed to keep their debt service payments are factors that I value when looking at assets to acquire. This is not a "hard and fast" rule, but characteristics I seek. For instance we will not buy an asset in an area with less than 20,000 population since the ability to liquidate the home in foreclosure would have a longer timeline than a more densely populated area with more buyers, and the likelihood of our buyer to get a new job if laid off/fired is lower in smaller communities.
Real Estate Investor · Amherst, VA · Member since 2015 · 386 posts · 400 votes
9y
Bob, Wayne and others gave great answers. In the end though it depends on what your strategy is and which kind of notes you're buying.
My state criterias when looking at second mortgages are completely different from when I look at first mortgages. The state doesn't matter to me nearly as much with 2nds because the desired goal is rarely foreclosure. I'm not super concerned about the weather conditions or if I know a property management/contractors there, etc.
On the other hand if I'm looking at a first mortgage, I'm more concerned about whether it's a judicial or non-judicial state as the original poster mentioned, but also if it's -50 in the winter and the house is vacant, if it's a state where I know people, whether I can reasonably expect some appreciation, whether the rents in that city/state are decent..
Another important consideration is the inventory you have access to. There are some states I would love to buy notes in but I rarely ever see notes for sale in those states.
My best advice is pick a strategy and drill down from there. "The best state for notes" in a vacuum, without a context, isn't super helpful.