Note investing from abroad?

14 Replies

Hi all, if I want to get into the small world of NPN investing, do you think I'm at a disadvantage living in Thailand? My family is split between here and the US so I am mostly up during US EST hours. My main concern is potential trust issues, and also perhaps legal hurdles (with wet signatures, etc. I do have an address in the US though)

Thanks

could not think of anything that would be more risky... your already buying into a bad situation that takes a bunch of work to unravel.. what ahppens when you have to foreclsoe and take the asset.. and your trying to find a PM or contractor etc etc.. I can see you having some real logistics issues here.  not to mention capital risk

Jay

Have you ever invested or dealt with NPL's? Almost all of it is hands off after you buy the note. If you have to FC, an atty handles that as in most any FC. If you wind up with a property WHY would a note investor want or need a contractor much less a property manager? You buy on a spread that allows you to sell either at FC auction or after if need be if you do wind up with the property. You can have your servicer handle everything if you want/need to.

If you wind up with a property, you put it out to investors or list it. How is that hard? 

I buy notes all over the country since 1987. Ive never seen any of underlying properties, why would I?

You get a real, hands on BPO or 2, title search, file exam, FC review if relevant, etc... and offer accordingly.

I can think of many more risky RE ventures, like fix and flip, rentals, etc.

And since you get to see the file ahead of time, allot of the "bad situations" are created by the lender/bank and or their attys. Most of the time the borrower is willing and sometimes desperate to solve the situation, and its the lender, due to stupid rules that govern them that prevents it from being solved. And whats to unravel? You either reinstate, mod, short sale, cash for keys, DIL, FC, etc.....  repeat.

Originally posted by @Cliff Durrett :

Jay

Have you ever invested or dealt with NPL's? Almost all of it is hands off after you buy the note. If you have to FC, an atty handles that as in most any FC. If you wind up with a property WHY would a note investor want or need a contractor much less a property manager? You buy on a spread that allows you to sell either at FC auction or after if need be if you do wind up with the property. You can have your servicer handle everything if you want/need to.

If you wind up with a property, you put it out to investors or list it. How is that hard? 

I buy notes all over the country since 1987. Ive never seen any of underlying properties, why would I?

You get a real, hands on BPO or 2, title search, file exam, FC review if relevant, etc... and offer accordingly.

I can think of many more risky RE ventures, like fix and flip, rentals, etc.

And since you get to see the file ahead of time, allot of the "bad situations" are created by the lender/bank and or their attys. Most of the time the borrower is willing and sometimes desperate to solve the situation, and its the lender, due to stupid rules that govern them that prevents it from being solved. And whats to unravel? You either reinstate, mod, short sale, cash for keys, DIL, FC, etc.....  repeat.

yes i have bought bad paper but it is not my day job no... I have funded a lot of deals for those that have bought from those that paid far to much for a NPN and now are taking a big loss. but that happens everywhere..

I just think trying to do this if you are not versed in it.. which this person probably is not and is on the other side of the world.. takes on more risk than they probably know.. 

Although when i do buy bad paper and i do occasionally as I stated its for one purpose and that is to foreclose and reposition the asset.

and like you i have been doing this for decades so whats easy for us is not always easy for the BP beginner..

Hi Jay,

I agree education is imperative, but starting out with :

could not think of anything that would be more risky..

Is really only from your POV, not if done correctly.

What you are doing by buying bad paper to FC is not what 90% or more of note investors want or ever do. Most I know treat a FC as a desperate last resort to be avoided like the plague. They would rather resell the paper than take the time and expense to do that, and unless its vacant, many feel its bad karma to not help the borrower if at all possible. They want cash flow, not real estate.

Now I do buy late stage FC's, where the FC is done, final summary judgement (in judicial states) is done and the sale date is even set. I just substitute my co as the plaintiff. I prefer those that werent OOC and are vacant, but either way I am backing into a "pre foreclosure" asset. Since I started in the REO/distressed asset world, I dont mind taking a property, especially via DIL, but thats not what most note investors want or will do. If trying to get the asset, that is the best way to "skip the line". You pay more, but still offer only what works. Its a numbers game just like buying anything.

A note is no different than a property, the numbers have to work. I see sooooo many people buying RE at crazy prices that I think its 2005 all over again. But that will end up with bad paper, and create more opportunity.

There is about 400 Billion in non performing 1st mtgs right now with the banks. Thats just residential. Not commercial, not 2nds, not Fannie./Freddie/HUD.. so probably a trillion in NPN exist for SFR

And IMHO is exactly why I think it was all done on purpose to prop up (falsely) the RE market. Almost no foreclosures on the market but a trillion in bad debt? Its not uncommon to see a DOLP (date of last pay) of 10 years ago! The banks got bailed out, held onto bad debt, waited for the market to come around and then start working or selling them. I could go on, but if they had FC'd the debt in the past 5 years it would have been MUCH worse than the bubble we last went through... and will again.

Gary Clisele
I do not see an issue with it as I could be investing right now from anywhere.

If you are overseas here are a few recommendations:

1. Have someone abroad have power of attorney for you. If you have to foreclose there will be documents you need to sign. Also if you are ever sued as a countersuit you will need someone to potentially represent you as I doubt you would want to fly back

Also I assume your using all your own funds. If you were also looking to raise capital I would find it more difficult to raise capital if your not in the US as I would be very skeptical to do a deal with someone outside the country. Just my 2 cents

@Gary Clisele From what Inunderstand about note investing is that performing notes tend to be much more passive than non-performing notes. Although you need to have some education with either type of note investing model, one model takes much more work to turn a profit. Are you looking to be a passive investor or an active investor. By passive I am talking about less than a few hours a month to manage and by active I’m talking about more than 10 hours a week to manage.

Hi @Gary Clisele as long as you have a U.S. domestic presence, like a LLC I don't see any problems with NPN investing. You may need a domestic agent or family member to handle any notarizations on certain documents, but in general you can invest from any location as long as you have internet/phone/fax.

Bob

Originally posted by @Shiloh Lundahl :

@Gary Clisele From what Inunderstand about note investing is that performing notes tend to be much more passive than non-performing notes. Although you need to have some education with either type of note investing model, one model takes much more work to turn a profit. Are you looking to be a passive investor or an active investor. By passive I am talking about less than a few hours a month to manage and by active I’m talking about more than 10 hours a week to manage.

Hi Shiloh, about 10 hours a week is my target. And as mentioned, going through foreclosure would be a non-preferred route for me due to the expense and hassle, though I'll probably price everything assuming that last option scenario. I hope to do as many loan modifications as the homeowners will accept.

@Gary Clisele I've been investing in the US abroad from between Canada and Florida for about 5 years, and in notes for over a year now. There are a few logistical issues to be aware of such as having to get certain legal docs notarized, being setup to wire funds from anywhere and having a trusted boots on the ground team in your markets. Once you have this setup then you can virtually invest from anywhere. But as Jay mentions above, this is a VERY risky business and not for a beginner to jump into right off the bat. But with some education and doing a small deal to get your feet wet, or JV'ing with an experience Note investor is the best way to learn.

Originally posted by @Chad U. :

@Gary Clisele I've been investing in the US abroad from between Canada and Florida for about 5 years, and in notes for over a year now. There are a few logistical issues to be aware of such as having to get certain legal docs notarized, being setup to wire funds from anywhere and having a trusted boots on the ground team in your markets. Once you have this setup then you can virtually invest from anywhere. But as Jay mentions above, this is a VERY risky business and not for a beginner to jump into right off the bat. But with some education and doing a small deal to get your feet wet, or JV'ing with an experience Note investor is the best way to learn.

Chad plus the expectation of getting the notes performing.. as a preferred route.. most folks except me that is the preferred route.. but no way can you expect it.. you have to expect to own the asset at some point and if they pay great.. kind of like those that say cash flow is where its at and appreciation is gambling.. same thing here thinking your going to buy NPN notes and they are mainly going to perform just because you now own them.. that is wishful thinking at best.. and dangerous at worse

Originally posted by @Jay Hinrichs :
Originally posted by @Chad Urbshott:

@Gary Clisele I've been investing in the US abroad from between Canada and Florida for about 5 years, and in notes for over a year now. There are a few logistical issues to be aware of such as having to get certain legal docs notarized, being setup to wire funds from anywhere and having a trusted boots on the ground team in your markets. Once you have this setup then you can virtually invest from anywhere. But as Jay mentions above, this is a VERY risky business and not for a beginner to jump into right off the bat. But with some education and doing a small deal to get your feet wet, or JV'ing with an experience Note investor is the best way to learn.

Chad plus the expectation of getting the notes performing.. as a preferred route.. most folks except me that is the preferred route.. but no way can you expect it.. you have to expect to own the asset at some point and if they pay great.. kind of like those that say cash flow is where its at and appreciation is gambling.. same thing here thinking your going to buy NPN notes and they are mainly going to perform just because you now own them.. that is wishful thinking at best.. and dangerous at worse

 I completely 100% wholeheartedly agree.  I have several where the borrowers indicated they wanted to stay in the home, so we put them on some sort of payment plan whether it be forebearance, partial reinstatement, Trial Pay Plan or they filed BK13 and pay into the trustee.  So I'd think great, these people are reperforming!  Well likely over 50% of them started to miss  payments again.  But since they were bought properly, there is tons of buffer built in now that we have to foreclose them out.  

Originally posted by @Chad U. :
Originally posted by @Jay Hinrichs:
Originally posted by @Chad Urbshott:

@Gary Clisele I've been investing in the US abroad from between Canada and Florida for about 5 years, and in notes for over a year now. There are a few logistical issues to be aware of such as having to get certain legal docs notarized, being setup to wire funds from anywhere and having a trusted boots on the ground team in your markets. Once you have this setup then you can virtually invest from anywhere. But as Jay mentions above, this is a VERY risky business and not for a beginner to jump into right off the bat. But with some education and doing a small deal to get your feet wet, or JV'ing with an experience Note investor is the best way to learn.

Chad plus the expectation of getting the notes performing.. as a preferred route.. most folks except me that is the preferred route.. but no way can you expect it.. you have to expect to own the asset at some point and if they pay great.. kind of like those that say cash flow is where its at and appreciation is gambling.. same thing here thinking your going to buy NPN notes and they are mainly going to perform just because you now own them.. that is wishful thinking at best.. and dangerous at worse

 I completely 100% wholeheartedly agree.  I have several where the borrowers indicated they wanted to stay in the home, so we put them on some sort of payment plan whether it be forebearance, partial reinstatement, Trial Pay Plan or they filed BK13 and pay into the trustee.  So I'd think great, these people are reperforming!  Well likely over 50% of them started to miss  payments again.  But since they were bought properly, there is tons of buffer built in now that we have to foreclose them out.  

Exactly that's why when on the few occasions a year I will buy a NPN its strictly to foreclose.. if they pay me off great .. but no work outs as my experience over the last 2 decades of dealing with that kind of paper is your at some point of time going to have to foreclose.. and the quicker they are out of the house the quicker you turn your dollars and make money plus the damage they can do can eat away your buffer.

@Gary Clisele I agree more with @Jay Hinrichs and @Chad U. . In addition to what they've brought up, it can be a lot more problematic working NPN's from abroad. I speak from experience as my day job used to be in the Middle East and I would spend 6-8 months a year managing NPN's from abroad. I was lucky and had a good partner back home who could take care of anything I couldn't do.

There's only so much you can do through e-mail and inevitably there are times where you just have to pick up the phone and call someone to explain what you want or need. How good is the quality of your phone or Skype calls and what's the reliability like? Can you receive incoming calls easily? That's also when the time zone can hurt you. Some vendors are only available Mon through Fri, 9 - 5, so you have a limited window when you can reach someone, especially if you're busy with whatever you're doing.

From my experience, you can only do so much from abroad and what you can do, generally, takes more effort than if you were in the States. From Jay's first reply, I agree that there's a lot of risk especially when you think about the NPN's that go wrong. Even if you never set foot on a property tied to a note, to be on top of vendors, attorneys, contractors is difficult and frustrating in a crisis. Having a trusted partner back home made all the difference for me.

Gary Clisele I am a NPN investor from Canada and I buy notes all the time not being in the country or ever seeing the properties in person. Just to reiterate some previous comments it is possible as long as you’re educated on how to do it properly and effectively. I can’t stress enough how important it is to do your due diligence PROPERLY and make sure your numbers add up on the bottom line. Always take into account the worst/most costly possible outcome for the note and see if the bottom line makes sense. Happy investing!!