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Steve Hodgdon
Pro Member
  • Investor
  • Novato, CA
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416
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What to go in 2018 and what I did this year. What about you?

Steve Hodgdon
Pro Member
  • Investor
  • Novato, CA
Posted Dec 1 2017, 11:30

Hello fellow note and real estate investors,

Where are you headed in 2018? What’s your spin on the tertiary mortgage market? Would love to hear your points of view.

Two RE friends were sharing their points of view on chasing high yields while looking for safety. I figured I’d share my experience. 

I’ve ridden the California wave up, down and up again. I exited CA right in 2009 just as the world was coming apart. That house is now worth $400,000 more than I sold for. That’s just to point out, I’M WRONG A LOT!

The subprime pool that Dion DePaoli guided me through has been a steady performer. Breaking $10k every month. The yield/effort/default balance is working out well. I like that I only have to bug the collector at Security National once a month.

Notes. Sold some, bought some. Portfolio is now about 30, mostly performing. Created 150 small balance medical finance loans in my “day job” as a licensed California lender.

Running a note portfolio, looking for plus 12% return, lending money in my day job and doing 8 real estate projects in Pensacola this year give me a decent view of the whole landscape.

Better returns? Rust Belt. With enough headaches to bring it down to the same as other markets. Poor economies and aging inventory point to the need for killer on the ground teams. Working on an Indiana foreclosure to flip right now. Looks good but not on market yet. Lost $16k on a blighted Cleveland NPN too.

Landlording. I didn’t think I’d ever do this again after running a 300 door single family property management business. Well, diving into corporate housing in 2018. Renting rooms to travelling medical workers, nurses, assisted living staff. That kind of thing. Not the margin like AirBnB, but much less turn over.

Retirees. I'm 61. So these are my peeps. We messed up. Didn't save enough money. We need a cheaper place with a yard. I like the BRRRR model and what we're accomplishing in Florida. Creating seller finance contracts on retail priced sales. But ask me in 10 years. Want to JV on the next house?

Jobs. I think it’s jobs. If there’s work, there’s money to pay the mortgage. Homeowners have been taught it’s ok not to pay your loan. The consequences of walking away from a “crap shack” (quote one of the tribe) is far less than us in CA think. It they have a good job, hope for the future, then they might think otherwise.

The links below talk about “18 hour Cities” and migration. I think I can improve my odds by following mega trends in where the whole country is going. Fighting a battle where population is declining isn’t working for me. I’m thinking I should get as many pluses as possible. So, I’d rather Florida than Alabama. 1.5% rent multiple vs. 2% but my renter/borrower can find another job if he’s laid off. What do you think?

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