Lots of Junk Out There

[Chris Seveney]

The past several weeks I have received over 1,000 assets for sale. For those newer to the space make sure to do plenty of die diligence on assets as over the past several months there has been an above average amount of assets out there that have a lot of hair which I would not recommend and some even hold negative value.

There are still decent assets out there as well, but make sure you pick through the bad to find the good.

[Don Konipol]

@Chris Seveney

When demand is high and supply low........

Sometimes, the best deal is the one you pass on.

That being said, utilizing creativity, which depends on many aspects, such as knowledge, experience, ability, etc., can lead to returns far above the risk related thresh hold.

Since we are unable to find a satisfactory number of commercial notes we can buy at a large discount and restructure, we have done some creative type investments. In one instance a developer wanted to purchase a tract of land to build SFR that abuts to a heavily developing commercial/recreational area. The seller, who is developing and in control of the entire retail/commercial/entertainment/residential development needed the proceeds of the proposed purchase now. Besides the property, he has Municipal Utility District bonds that will close in 7 months, proceeds to be used to pay off a loan if the SFR developer is unable to lose. Due to restrictive covenants placed by lenders on other parcels, he's unable to pay interest in excess of 9.99%

We purchased the said parcel (valued at $4.6million for $2.5million, with the seller having a 7 month option to repurchase the tract for $2.975 million. We have a lien on both the property and the MUD receivables, There is a 3 month extension period with a buy back penalty of 1% per month and an equity kicker for us in the development LLC. Our return will be annualized at a minimum of 34%. If we end up with the parcel we have two parties on standby willing to pay $3.5 million, or let us partner with them with them paying all development cost.