Paperstac Mid Year Marketing Report

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In case anyone missed this, hear is paperstac’s mid year marketing report. Some good info on hear about pricing of assets by type etc. while it is genetic and an overall state, I found it to be useful as it falls in line with a lot of what I have been seeing. There are those out there trying to sell non performing assets at 70-90% and I would recommend anyone make sure they analyze the deal and understand the economics of the deal.

https://paperstac.com/blog/2019-mid-year-market-report?utm_source=ActiveCampaign&utm_medium=email&utm_content=We+ve+gathered+some+stats+that+you+ll+want+to+see&utm_campaign=Mid+Year+Market+Report

I really like what Paperstac is doing, including putting together this report. 

One thing I will point out, though, is that some of the data is based on the seller’s claims. For example, I bought a note through Paperstac that was sold as a performer but was nowhere near a performer. The borrower hadn’t paid in many months. 

I knew it was a non-performer and priced it accordingly, but my point is that things like this throw off the numbers in the report. 

This seller had other notes for sale on there that were all labeled as performers and any reasonable person would label them NPNs. I’m taking like 1-2 payments in the last 12 months but somehow still a “performing” asset.

Maybe Paperstac can push back a bit in the initial screening process to add a little more integrity/consistency as to what a seller calls a performer? 

Again, I’m a huge fan of what Paperstac is doing. I love the platform overall. 

@Jamie Bateman thanks for the suggestion and the support. I'm going to have to run this by the team to learn more about how we can make that happen.

I'm assuming we're able to get that from pay history to really get full color on the status.

The only assets that have pay history imported as of now are assets from SNSC.

We do listen to all suggestions and I will bring this up on Thursday.

Originally posted by @Jamie Bateman :

I really like what Paperstac is doing, including putting together this report. 


I'll second this. I haven't completed a trade on their platform yet but I have one started and really like the way it works. 

 

Can't help but chime in and give credit to Paperstac for the great work they are doing, including this report. 

I would also add that their support is excellent, anytime I had an issue or a suggestion, I don't think two minutes passed before I got a reply. Also had a friendly chat with Brett last week, gave him some suggestions on what I think might improve things even more. Not sure how I didn't do any deal there yet, but this will probably be fixed in upcoming months.

We sold our first 2 notes through paperstac last week. The process flow took a little getting used to (post an offer, post a counter, etc) but once your through the negotiation part it was a piece of cake. I also posted their report on FB because I thought it was an excellent start.  Like @Jamie Bateman I think some of the data could be improved. For performing note sales, I'd like to see the average yield.

In general, an amazing platform that I expect will only get better as they incorporate feedback from users and more folks hear about the platform.

I tried selling a performing note recently through the traditional means via brokers, which has been commonplace in this industry for years. Even to a few institutional buyers. But I was getting lowball offers that were inline with NPN pricing at best even though this was a stellar note with perfect pay history and significant equity.

Once I listed it on Paperstac, I could not keep up with the offers, and were coming in at my ask price. In hindsight I should have maybe asked more but the fees for the transaction were so minimal, versus what you'd have to pay a broker that on a net basis was very worthwhile. 

And Brett and the team were very proactive to assist  and fixed a few minor little bugs encountered along the way almost instantly. I'll be using this platform to sell all my notes from now on.

Besides @Brett Burky streamlining the sales process, the data they publish is so valuable to new investors. Having them share numbers for the selling price of assets just like realtors have statistics for sales prices is HUGE. You see so many brokers saying they are getting 90% for NPN's or selling performers at a 5% yield and maybe they are (or maybe they are blowing smoke where the sun does not shine), but this data gives some insight for what is trading on the secondary market between investors which is performers around 12% and NPN's at 55% +/-. Of course, each deal needs to be evaluated in its entirety as the metrics change based on state, equity position, and other factors, but this type of data is so valuable in my mind.

Good to hear that Paperstac appears to be successful in implementing a functional secondary market in mortgage notes

We are not in the type of market, in either real property or the notes secured by real property, where an investor can "just pay market price" and expect a return significant to cover his risk.  "Deals" have to be "uncovered" or "worked".  As many know we are in the commercial mortgage note arena, both as an originator of hard money commercial loans and also as a purchaser of such notes from financial institutions (we do not originate or buy any mortgage notes secured by residential property, whether o/o or not).   We have found that as a matter of course banks wanting to sell their mortgages believe that they should be able to obtain a price equal to unpaid balance, whether the note is performing or not!  This is still below the amount owed on a npn as the sale price often is exclusive of the late fees, interest and legal fees the bank incurred.  As an example we recently purchased a note from a banking institution for $1,845,000 that had unpaid PRINCIPAL of $1,896.000, but an additional $300,000 in unpaid interest, lates charges, and legal fees.  There was also an SBA second with a total balance of $780,000 which we were able to buy (after informing the SBA that we were foreclosing and waiting the necessary 6 months as required by the deed of trust for SBA seconds) for $150,000.  So, having purchased about $3 million in secured liens for about $2million, we were able to restructure a new note with the borrower providing him a significant discount IF he performs without problems and providing ourselves with a note yielding us 15% based on our cash purchase, and if and when it pays off early a 25% equity kicker.  LOTS of work, a LOT of moving parts, but thats why we need to deal in somewhat larger notes, to cover our time and effort.  Was a lot easier 15 years ago when I just originated or bought notes to yield 15-16% straight up.

@Chris Seveney I'm surprised at how low the numbers are. $38k average sales price for 1st position NPNs out of 2100 users? $50k or so for performers? I'm not familiar with Paperstac and what types of notes are advertised for sale there. After seeing some of the comments here, I need to check them out.....

@Andy Mirza

There is a wide range of pricing. Some stuff I find overpriced. Since there are also a lot of newer investors they will buy some of the power priced assets to get a start.