2019 Note Goals For Buying

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2019 Note Goals For Buying

Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

What's your goal for acquisition in 2019 - whether it's based on quantity, dollar value (price paid) or UPB / FMV?

I am targeting 72 note deals for 2019 (6 per month).

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y

@Chris Seveney  thanks Chris the reason I ask. is this:

I often wonder what the allure to wholesaling is for all these beginners on BP.. when in fact me being in and around this business for 4 decades I know you could not pick something more difficult to do than wholesaling.. 

and some get on here and have significant budgets to throw at it. 5 to 10k a month and they are just starting out so My thought was instead of wasting that kind of marketing money.. they could be buying a note a month.. and you validated that by saying notes are 5k and up to 20k.. at least they get something that they can actually do something with ..and the seller is motivated to sell.. not trying to talk a burnt out landlord or older folks into giving away their home then trying to talk a sharp investor to paying more than its worth :)… 

plus most of these wanna be break into the business wholesalers at the end of the day just want cash flow at least that's what they say.. so why not do what your doing.. find the notes.. buy them work them out.. cant be any harder than talking some seller into taking a low ball offer.. then get the cash flow which is what they are after at the end of the day ?

So I know its a little off topic but that just dawned on me.. spend money on marketing that is super saturated and basically does not work.. or just buy a note and work it out.. ????

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  • Brit Hale
    Real Estate Agent · Joplin, MO · Member since 2018 · 112 posts · 96 votes
    7y
    Originally posted by @Chris Seveney:

    What's your goal for acquisition in 2019 - whether it's based on quantity, dollar value (price paid) or UPB / FMV?

    I am targeting 72 note deals for 2019 (6 per month).

    I'd be interested in knowing what type of notes you acquire. My goal is to get 24 units to Buy and Hold. No goal/limit/specific number of flip properties. That is more income driven for me, shooting for $150k in flip profits (just shy of $50k in 2018)

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y

    @Chris Seveney  I am curious if you care to share.. what will you spend about per deal to acquire those 72 notes. ?

    and what is the average purchase price of the notes your buying..  at say 100k that's 7.2 million in cash U need ?

    Again just trying to get some idea of what goes into being a successful NPN buyer ( and assuming your buying NPN).

    thanks. and hope you had a nice X mas day. !!!

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  • Bob E.
    Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
    7y

    $0.  I think prices are high on just about everything and with rates rising I am looking to pay down debt and stockpile cash.

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  • Account Closed
    Rental Property Investor · Atlanta, GA · Member since 2017 · 45 posts · 25 votes
    7y

    I'm a newbie with a goal of 5 SFR for buy and hold. It could be more if I incorporate creative financing for funding.

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  • Chris SeveneyBusiness Member
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    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    7y

    @Jay Hinrichs - average acquisition will be $20-$30k which is on $50k+ properties

    I will be more cautious on $100k properties in 2019 as with real estate softening that price range seems to get hit very hard compared to some of the lower priced housing. I do buy assets that are in that range but also have bought assets for $5k that have been grand slams. So $2M would be total and if I got 12% return on my portion it would be $240,000. Of course those are not all bought in day 1 and are bought throughout a year so many will not fully cash flow or be closed out in 2019 but I have a stable pool of 2018 notes that will provide cash flow and $ in 2019.

    I run a 3 year plan with my notes on acquisitions and use some historical figures for percentages of what will happen to anticipate and forecast future revenues. Like anything it’s a forecast - key part is to monitor it and adjust not only to the economy but also based on possible outcomes / results

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y

    @Chris Seveney  thanks Chris the reason I ask. is this:

    I often wonder what the allure to wholesaling is for all these beginners on BP.. when in fact me being in and around this business for 4 decades I know you could not pick something more difficult to do than wholesaling.. 

    and some get on here and have significant budgets to throw at it. 5 to 10k a month and they are just starting out so My thought was instead of wasting that kind of marketing money.. they could be buying a note a month.. and you validated that by saying notes are 5k and up to 20k.. at least they get something that they can actually do something with ..and the seller is motivated to sell.. not trying to talk a burnt out landlord or older folks into giving away their home then trying to talk a sharp investor to paying more than its worth :)… 

    plus most of these wanna be break into the business wholesalers at the end of the day just want cash flow at least that's what they say.. so why not do what your doing.. find the notes.. buy them work them out.. cant be any harder than talking some seller into taking a low ball offer.. then get the cash flow which is what they are after at the end of the day ?

    So I know its a little off topic but that just dawned on me.. spend money on marketing that is super saturated and basically does not work.. or just buy a note and work it out.. ????

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  • Chris SeveneyBusiness Member
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    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    7y

    @Jay Hinrichs

    I picked up two land contracts today that seller sent last second to close by year end for $5k a piece. Both are occupied but borrowers want to walk away and I had someone go by both today because I had people in both markets.

    Areas are a C area. House price as-is between 25-35k if I owner finance. Cash sale probably $20k since no financing but values are around the $35k mark

    I will have to get cancellation of land contracts and few other things done but will be in them for under $10k each. I will have an agreement in place with future buyer and eventually owner finance to them. Most are handy and can do the work.

    There are several steps to get there that I have done to protect both parties - which includes some low / deferred payments to fix the home and put it on a 7 year note at $500/month.

    Then keep the note or sell it after a year of payments.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Chris Seveney:

    @Jay Hinrichs

    I picked up two land contracts today that seller sent last second to close by year end for $5k a piece. Both are occupied but borrowers want to walk away and I had someone go by both today because I had people in both markets.

    Areas are a C area. House price as-is between 25-35k if I owner finance. Cash sale probably $20k since no financing but values are around the $35k mark

    I will have to get cancellation of land contracts and few other things done but will be in them for under $10k each. I will have an agreement in place with future buyer and eventually owner finance to them. Most are handy and can do the work.

    There are several steps to get there that I have done to protect both parties - which includes some low / deferred payments to fix the home and put it on a 7 year note at $500/month.

    Then keep the note or sell it after a year of payments.

     there ya go... instead of spending 5k on 5 thousand direct mail pieces that end up in the garbage 99% of the time you get an actual asset.

    so if you were taking on partners they could be feeding you 5 to 10k a month and getting some absolute results.. not hoping for results or having to learn what takes most years to learn to do well and that is sell and close deals.. 

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  • Chris SeveneyBusiness Member
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    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    7y

    @Jay Hinrichs - yes you can

    I can get very creative because I have to do it for my full time job- someone with low $ can buy a partial performing note which is much more stable in my mind than stock market as you have it backed by an asset.

    If you were in a JV deal (note in no way am I advertising or soliciting funds for deals) you can find lower dollar JV deals and be in the deal and also learn the business as well.

    Preaching to the choir with you since you have been in the business for a few years but as you know experience is the key to success - you don’t become successful in real estate or any business through books

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  • Angela Russo
    Specialist · Milwaukee, WI · Member since 2018 · 87 posts · 22 votes
    7y

    @Chris Seveney Which do you think is better (and why) for lower $ output per deal - buying partials or JV-ing on deals?

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  • Chris SeveneyBusiness Member
    Moderator
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    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    7y

    Angela

    It depends on your level of risk. Let's take an investment I am looking at right now that is $6500 (acquisition and est. workout costs - $4,250 acq. and $2,250 legal/reachout etc.). So all in is $6,500. In a perfect world (which could happen), lets say we get the borrower to make 12 consecutive payments at $204/month with his loan balance being $14,000. After 12 months you could sell this note for $10,000 (using rough numbers). So this deal you collected $10k from the sale and $2500 in payments. Costs were $6,500 so profit of $6,000. Split 50/50 you made $3,000 on a $6,500 investment over what would be approx. 18 months. Not too bad. But lets say there was some additional expenses of $2,000. All of a sudden $3,000 is cut in half. So now made $1500 and you kicked in the extra $2k so your in it for $8500. Still a great return but more of a roller coaster.

    Now lets take that $6,500 and say you want 10% return with that same $200 payment. That would equate to 38 payments . A Partial pays you principal and interest back at that desired rate. A lot less headache, more predictable. One thing people get lost on partials is your getting paid back principal and interest, so if you do not reinvest the $ your overall portfolio returns may be lower. As an example your initial principal is $6500 but after year 1 your principal left in the deal is $4500 because a good chunk of the $200 goes to principal - think about it also that interest of 10% is less than 1% per month which over $6500 is like $50 a month. 

    Partials have a much lower level of risk personally, so it depends on you. If someone was 65 years old and looking for cash flow and getting ready to retire, I would lean towards partials. If someone is 30 years old and working full time as well I would say do a lower cost note, but I do recommend a mix of both.

    Hope that answered your question, feel free to ping me offline as well.

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  • Natasha Hunter
    Investor · Raleigh, NC · Member since 2013 · 49 posts · 55 votes
    7y
    @Chris Seveney I am looking to inquire 12 notes to buy and hold for the year and resell in 2020. I also want to purchase two properties utilizing notes and the brrr method
    0Reply
  • Robert S.
    Contractor · Milltown, NJ · Member since 2016 · 297 posts · 213 votes
    7y

    @Natasha Hunter @Chris Seveney @Jay Hinrichs Good day, hope everyone is enjoying their holiday season. Given the initial investment required to purchase and rehab the note sizes discussed in this thread, what do you feel is a solid SDIRA starting balance for a beginner note investor with limited knowledge in this arena?

    0Reply
  • Brit Hale
    Real Estate Agent · Joplin, MO · Member since 2018 · 112 posts · 96 votes
    7y
    0Reply
  • Dan DeppenBusiness Member
    Erie, CO · Member since 2017 · 274 posts · 267 votes
    7y

    That's interesting Chris, I've been on a similar wavelength with respect to planning for 2019. My plan has been 60 notes (5 per month average) for ~$1.8M total.

    1Reply
  • Derek Scott
    Columbia, SC · Member since 2018 · 16 posts · 14 votes
    7y

    @Chris Seveney

    Where do you get most of your notes? FCIExchange? Other websites, tapes from banks, or brokers?

    Trying to learn the business and thanks

    0Reply
  • Tim S.
    Investor · California, CA · Member since 2016 · 367 posts · 375 votes
    7y

    @Robert S. I'd say you need at least $25k to start. That assumes you buy a note/CFD for around $15k, the rest you'll need for expenses.

    0Reply
  • Robert S.
    Contractor · Milltown, NJ · Member since 2016 · 297 posts · 213 votes
    7y

    @Tim Simmons Thank you for responding to my question. That amount seems quite reasonable.

    0Reply
  • Odie Ayaga
    Specialist · Delran, NJ · Member since 2016 · 2k+ posts · 951 votes
    7y
    Originally posted by @Robert S.:

    @Tim Simmons Thank you for responding to my question. That amount seems quite reasonable.

    Just keep in mind, that should be money invested in a passive investment, for example a performing note or a JV/Fund investment. You wouldn't want to be using that IRA money to work non-performing notes on your own.

    0Reply
  • Odie Ayaga
    Specialist · Delran, NJ · Member since 2016 · 2k+ posts · 951 votes
    7y
    Originally posted by @Jay Hinrichs:

    @Chris Seveney  thanks Chris the reason I ask. is this:

    I often wonder what the allure to wholesaling is for all these beginners on BP.. when in fact me being in and around this business for 4 decades I know you could not pick something more difficult to do than wholesaling.. 

    and some get on here and have significant budgets to throw at it. 5 to 10k a month and they are just starting out so My thought was instead of wasting that kind of marketing money.. they could be buying a note a month.. and you validated that by saying notes are 5k and up to 20k.. at least they get something that they can actually do something with ..and the seller is motivated to sell.. not trying to talk a burnt out landlord or older folks into giving away their home then trying to talk a sharp investor to paying more than its worth :)… 

    plus most of these wanna be break into the business wholesalers at the end of the day just want cash flow at least that's what they say.. so why not do what your doing.. find the notes.. buy them work them out.. cant be any harder than talking some seller into taking a low ball offer.. then get the cash flow which is what they are after at the end of the day ?

    So I know its a little off topic but that just dawned on me.. spend money on marketing that is super saturated and basically does not work.. or just buy a note and work it out.. ????

     I think there's a second aspect to what you're saying Jay. Beginners want cash flow AND ease, and there are a lot of people and seminars that make wholesaling sound easy. There is a learning curve to note investing and it's also less intuitive to people who understand brick and mortar because they've rented or bought houses, but they've never been on the other side of a lending transaction. I agree with you though, I cringe every time I see "newbie investor" and "starting out wholesaling" in the same sentence.

    2Reply
  • Logan Hassinger
    Specialist · Fort Worth, TX · Member since 2014 · 528 posts · 226 votes
    7y

    100 notes for 2019

    0Reply
  • Robert S.
    Contractor · Milltown, NJ · Member since 2016 · 297 posts · 213 votes
    7y

    @Odie Ayaga @Tim Simmons @Chris Seveney @Natasha Hunter @Jay Hinrichs

    Thank you for all of the info provided in this thread. When doing JV's with notes, what are the expected splits between the parties involved?

    Thank you all!!!

    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    OP
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    7y

    @Robert S.

    Funding partner contributes 100% of costs and return is typically split 50/50

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  • Chris SeveneyBusiness Member
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    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    7y

    @Derek Scott

    I have relationships with some hedge funds that I have bought notes from now for past 2 years

    I did a webinar on where you can find sources with some of the lower hanging fruit

    Feel free to send me a PM and I can share where it is so I am not considered self promoting

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  • Andy Mirza
    Lender · Ladera Ranch, CA · Member since 2014 · 1k+ posts · 1k+ votes
    7y

    Open 1 or 2 more Funds in 2019 and raise $5 M or more to purchase 1st position NPN's. Last year, we raised $2.2 M so I hope we can double it. Raising capital is a lot more difficult than I thought and we need to dedicate more time, money, and resources on doing it more effectively. We have our systems in place to acquire, manage, and liquidate the notes. We're missing the biggest piece, which is more capital (everybody else's problem, too, I think!)

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