Note Investing - to JV or take on debt?

Question

Curious if the note group leans more towards taking on debt or JV’ing when purchasing? I know the note industry is a long term game so it may deter the use of debt for some. Any thoughts?

Bob Malecki · Answer

Hi Account Closed not in some cases. Our fund is a 506(b) which allows for up to 35 sophisticated (non accredited) investors a 506(c) does not allow non accredited. Other exemptions allow all non accredited. Complicated stuff, which is what keep the securities attorneys earning their stripes.

Martin Saenz · Answer

Awesome.  Keep the train rolling:)

Ryan Cooper · Answer

The first ones I purchased were purchased as performing and am doing fine on those.  Have bids on some nonperformers of which one bid was just accepted.  Will have to check back in a few months to see how it turned out.

Bob Malecki · Answer

My company uses private equity via Reg D exemption and I personally use JV funding or my SDIRA funds.

Account Closed · Answer

Thank you Bob. Yes complicated but I’m fortunate that though not an attorney my wife does this for a living as a compliance consultant. However she’s an early bird and I’m a night owl so I figured I’d just ask.

Besides she always gives me these long winded official answer I don’t usually understand as a typical compliance person does but your answer was very clear. Thank you again Sir. Have a great night!

Martin Saenz · Answer

Hello @Ryan Cooper, that is very admirable.  Losing money for someone has to be one of the worst feelings.  How have you made out with the few acquisitions?

Ryan Cooper · Answer

Hello @Martin Saenz

I took on debt rather than using a JV because I wanted to experience the first few note acquistions and dispositions myself without a chance of losing someone else's money.  Now that I am building a portfolio I wouldn't hesitate to take on JV.

Bob Malecki · Answer

Both, we have our servicer FCI make their collection calls and one of our partners in our management llc also performs borrower outreach. Once we file foreclosure and after the notice of default letter is sent to the borrower, my partner will call the borrower to let them know that he wants to help her/him to avoid FC. So far he's been able to represent himself as a helpful resource with the borrower to move along the loss mit process. A bit of social engineering with good guy/bad guy calls helps to drive the borrower to a positive outcome.

Martin Saenz · Answer

You cover the board for sure.  Do you facilitate workouts or outsource to loss mit for handling?  I buy performing notes out of my SDIRA and NPN's out of my LLC.

Note Investing - to JV or take on debt?

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