Buying and selling notes.

12 Replies

I'm a real estate broker in Chicago with a large database of active investors that I've been working with for over 20 years. I'm looking to build another stream of revenue. This morning I sent out a blast text to my database looking for anyone who had a note they might be interested in selling. The response was good. I believe I can consistently generate a pool of note sellers. Now I want to develop as many resources as possible in order to facilitate these transactions:

Note Education

Note Buyers

Documents needed

Fees Charged

 Any information that you can share with me will be greatly appreciated.  

Hi Paul,

Sounds like you're ahead of the curve.  As far as education, Scott Carson, Martin Saenz, Paige Panzarello (Cashflow chick) and Eddie Speed are a few off the top of my head I can think of.  Scott Carson specializes in 1st position Non-performing notes and Martin Saenz is 2nd position Non-performing notes.  Ooh i just remembered Tom Henderson, who teaches partials, http://www.hpnotes.com/.

Here is a course that's online for free by Troy Fullwood but it's fairly old but the main content is still relevant.

https://mortgageinvestorpro.com/module-1/

I'm a note buyer, feel free to send me a tape (list) of notes that you're selling or brokering.  I reply to all messages to me on BP.  I'll send you a message with my email address.

The typical fee for brokers that I've seen is 3% of the "accepted bid" price.  I hope this helps!!  

Hi @Paul Quinones , fyi your target buyers will change depending on whether your notes are performing or non-performing, if they're notes or CFDs, etc. (eg I'd be interested in non-performing notes or CFD's).


In terms of due diligence docs needed to sell:  notes, deeds, allonges (if notes have been sold before), payment history, O&E report (title history), BPO/RPR

@Paul Quinones

Hi Paul. If you can secure a supply of notes to be sold at MARKET prices you will be able to establish that secondary income source. There is great demand for all types of notes right now. However, the vast majority of note holders, even those interested in selling, are not willing to sell at prices buyers are willing to pay. You’ve taken step one. Step two is determining if these note holders are interested at selling at prices that buyers will pay, which in many cases is significantly below unpaid balance.

Unfortunately that's the exact same dilemma I face with my property sellers. While I dont think all will be viable I'm certain some will be. Do you have some type of needs analysis work sheet I can use to gather more information on these notes?

@Paul Quinones

As mentioned, challenge is sellers typically do not like to discount a note and buyers always want a discount. Also check to confirm the notes are being serviced by a licensed servicer.

If they are owner serviced then your number of buyers will be drastically reduced and price for the asset will be drastically reduced. It’s like buying a car with a salvage title

@Paul Quinones

Paul, I can’t speak for residential notes as I completely left that field when Dodd Frank Act was implemented and the CFPB was formed.

As for commercial notes this is the minimum to qualify any interest

Original principal

Current principal balance

Original interest rate

Current interest rate

Loan origination date

Loan maturity date

Amortized, interest only, or amortized with balloon

Details on above

Are payments current, late, or in default

Value of collateral

Where is collateral located

Was note property purchase or refi

If purchase how much was borrower down payment

Owner occupied or rental

If rental, occupancy rate

Rental income amount

That’s step one

If the note is in our arena of interest we will want

History of ownership

Copy of note/mortgage/deed of trust

List of other liens

Payment history

Rent roll

Property expenses

If owner occupied, profitability and history of occupying business

Note: many note holders will consider selling their note, but don’t want to reveal all this information. My experience has been that sellers motivated enough to sell their note at market terms, are motivated enough to provide the above information. If a note holder is unwilling to provide the above information, or at least most of it, then the chances that he is motivated to sell at a price that I am interested in buying is considerably lowered, to the extent that the chance of successfully concluding a deal is too low for me to spend any more time pursuing. A hard truth for many new would be note brokers to fully comprehend is note holders with an interest in selling is in no way correlated to a real property owner interested in selling. The real property owner has likely searched public data bases and has arrived, via comps, at a price (although usually on the higher side ) that to a large degree reflect the market, although in some instances, he may just decide to test the market with a higher price. Note holders do not have readily Decker able databases from which to value their notes, therefore they assume their note is worth principal balance. Only a very small percentage will eventually accept market valuation and follow through with the sale.

Okay let me be as perfectly clear as I can be. I want to be as passive as I can be in this note arena. My primary focus right is in brokering real estate transactions, mostly commercial if I can. But what I'm discovering more everyday is that my investor database has legitimate notes to sell. Ideally what I'd like to do is partner with one or two entities that purchase notes here in the Chicagoland area. Sign a Broker/ C.A agreement, gather the preliminary data on the notes and collect a fee. If there is such a vehicle available I would love to hear about it. 

Originally posted by @Paul Quinones :

I'm a real estate broker in Chicago with a large database of active investors that I've been working with for over 20 years. I'm looking to build another stream of revenue. This morning I sent out a blast text to my database looking for anyone who had a note they might be interested in selling. The response was good. I believe I can consistently generate a pool of note sellers. Now I want to develop as many resources as possible in order to facilitate these transactions:

Note Education

Note Buyers

Documents needed

Fees Charged

 Any information that you can share with me will be greatly appreciated.  

Truthfully, if you have access to decent 'off the street' inventory there are plenty of buyers that would assist you with education as you provide them with opportunity.  I would simply jump in.  Fees charged is what you can get away with.  There is a need for inventory so name your price and you'll get some form of feedback whether it is no takers or someone wiring you money.