New to Notes.... off to the races!

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New to Notes.... off to the races!

Zachary Taylor
Investor · Little Rock, AR · Member since 2017 · 44 posts · 14 votes

Hello Fellow Notes Folks!

New here and thought I would introduce myself. I am 33, worked in finance for past 10+ years in various roles including private equity, LBOs, M&A, credit, etc. However, I have not had professional experience originating, buying and managing my own notes, which is why I am here.

I'll get right to it. I want to get started by buying one institutional NPN. Looking to spend less than $45k for my first go at this. Open to ideas here!

Buying the note: I have signed up for Loan MLS, PPR and FCI. Are there other online resources to find notes you all can recommend? How does the borrower know to pay you now? or is that handled automatically?

Due Diligence: I have done a lot of it in my day. What are key numbers based factors you all look for on NPNs? Number of recent payments? % of UPB? Do any of you use third-parties to help with diligence and reviewing collateral files? If so, which providers?

Service Providers: What services do you all use to manage a note after the purchase? Lawyers, services, appraisal companies, agents, etc? Who do I need to line up prior to a note purchase?

Loan Mod: I hear a lot of talk about Loan Modifications to get the loan performing again which is my goal. I hope to never have to foreclose. How does the loan modification process work? Is it me who is calling the borrower to work something out? I'm fine with that just trying to mentally prepare for everything. I assume a lawyer drafts the loan mod and gets everything documented?

General Questions:

Range of legal fees, service fees, due diligence fees, etc? How much is third party service fees does one NPN go through? What is the cost to foreclose (ballpark / high level numbers are great)?

Typical time from purchase to loan mod and getting it back on track?

Historical loss rates on NPN's? Any data out there?

Education: Are there any case studies out there I can read? Generally I'm looking for educational info on how people find NPNs (I know I know, networking blah blah. But I just want to do one to start), what diligence they do prior to buying, how they are managed and process for how they are modified and sold. Anything you all you think would help me get up the curve would be AWESOME!

Please PM me any time.

That is all!

Zack

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y

wow I got tired reading all that has to happen to buy one 45k note.. seems like there has to be a better way.. :) good luck on it.. there are plenty of NPN guys on this site.. who have little funds and some that have larger funds.. I am sure they will chime in

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  • Account Closed
    Investor · Hollywood, FL · Member since 2016 · 123 posts · 17 votes
    9y

    This maybe the best and most entertaining thread on Bigger-pockets. I have to say that some of the people here have been privately very helpful to me. I definitely think that there are very few good points made by everyone here but I don't think it needs to get personal. People use this website and forums so they can be "vulnerable" if you will. You cant ask these question or share these concerns with other people within your direct market because it will make you...well vulnerable and people will question your knowledge, etc. This is website that allows people to ask, get educated and eventually profit from the knowledge they learn (while in turn developing a larger network. I can tell you that I posted about Bank Notes not too long ago and the people I private message have messaged me back and have been extremely helpful. There are so many guru scams and promises not kept out there. Its very difficult to filter who is and who isnt legit. Most aren't. I will however say that a lot of people on the website have said nothing but great thinks about Scott Carson and im considering taking is virtual class. With all this being said, I still have a lot to learn, but like in typical real estate, its very difficult these deals to find a steadily stream of good deals. It is so competitive now that its become very hard to establish real relationships with brokers, lawyers, asset managers, etc. Everyone is sending crap deals. So if someone is keeping this information close to the chest, I don't blame them. But I would say that perhaps if you offered to pay "matchmaker fee" then perhaps they will be ok with it. I actually did this with my group when we bought 2 ALF (Assisted Living Facilities). The person who would otherwise invest does not have the capital and gets fed terrific deals. He gave us the number to his source and every time we close on something he gets a fee. He has gotten paid twice. With that being said im open to doing the same for bank notes.

    3Reply
  • Zachary Taylor
    OP
    Investor · Little Rock, AR · Member since 2017 · 44 posts · 14 votes
    9y
    Jonathan Chames Agree with everything you said. I'm also willing to pay "matchmaker" fees and seeking a JV for my first NPN. I'll likely post a few specific questions as new threads soon but those will likely not be as entertaining as this one!
    0Reply
  • Ryan L.
    Investor · Washington Township, NJ · Member since 2011 · 34 posts · 23 votes
    9y

    @Zachary Taylor We are very very new, however, maybe a little further along having just purchased our first NP 2nd.  The knowledge is out there and we found it in a variety places starting with these forums.  Check out the NoteMBA podcasts, sign up for conference calls with PPR, get access to the note vault at NNG Fund, all of which are free along with other online note meetups.  We started this way to get an overall idea of how things work.  After awhile you start to pickup the same themes and basics and some good tidbits to look into further.  However, what got us that much further along was going to Papersource and networking plus the education there which was great.  All that said if I think I know 2% about this business I'm probably overstating it, but I felt I knew enough to buy a very low dollar asset to work through in order to learn and build on that.   Lastly, putting together a list of vendors and resources to go back to and review later I find really helpful.  Knowing what the various types of vendors do, kind of puts a framework to the overall picture of how things work from due diligence to loan servicing and everything in between.

    1Reply
  • Scott Carson
    Note Investor · Austin, TX · Member since 2012 · 602 posts · 357 votes
    9y

    Thanks for all the kind words everyone....for anyone interested in links to our FREE videos...just drop me a PM.  

    2Reply
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