Strategies for your Note Investing business for 2020

Investor · Fredericksburg, VA · Member since 2017 · 377 posts · 230 votes

Curious, what if any, changes everyone is making for 2020 given the ever changing note climate? I.E. Are you staffing up, committing more resources to dealflow, raising additional capital, selling off your RPL's, etc.

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Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

@Martin Saenz

Our loans, both the ones we buy as well as the notes we originate, come about 98% from brokers. We have more $ than good buying/originating opportunities. We have just begun a program to (hopefully) generate deal flow directly from borrowers and institutions wanting to sell their notes.

Part of our issue with deal flow is that we won't settle for returns that are below our risk adjusted return model, or risks that are higher. When everyone is accepting lower ROI and higher risk, they are preparing to get killed in the next recession. Preservation of capital is our number one priority.

Private Mortgage Financing Partners, LLC

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Jamie Bateman
Investor · Baltimore County, MD · Member since 2014 · 466 posts · 439 votes
6y
Good topic, @Martin Saenz. I am looking to work more on my business rather than in it. I am in the process of hiring a part-time assistant and we just switched bookkeepers. Essentially focused on making sure we have the right people and systems in place to continue to grow our business at a solid pace. We are taking on more capital partners as well.
All of this has more to do with our growth as a small business as opposed to market conditions, though. I want to be well-positioned for when the market does turn, likely presenting more opportunities. How about you, Martin?
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Dan DeppenBusiness Member
Erie, CO · Member since 2017 · 274 posts · 267 votes
6y
I'm going to be focused mostly on improving my processes so my business is less time consuming. At the moment I'm working on standard operating documents for loss mitigation.
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Ken Hobbick
Investor · Parker, CO · Member since 2014 · 42 posts · 44 votes
6y
Plans to continue to refine and scale management systems having just finished up getting bookkeeping in order for the year, which will allow opportunity to grow. Will be concentrating on working out the loans purchased this year and improve the loss mitigation steps along the way.
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Andy Mirza
Lender · Ladera Ranch, CA · Member since 2014 · 1k+ posts · 1k+ votes
6y
Number One Goal: Raise More Capital
Our biggest issue has always been not having enough money to buy the loans that we have access to. Raising capital is a whole other full time job and there's been a learning curve. As we create, manage, and liquidate more funds to create a track record and continue to provide information of value through content based marketing, I believe that our efforts will snowball to the point where raising capital won't be a future problem.
Increasing efficiencies is an ongoing process and is handled on an ad hoc basis depending on demand, cost, and discovery. We'll consider hiring additional people once we get bigger after raising more capital. For now, we leverage our servicers, attorneys, real estate agents, and accounts for additional labor needs.
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Martin Saenz
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Investor · Fredericksburg, VA · Member since 2017 · 377 posts · 230 votes
6y
Originally posted by @Jamie Bateman:
Good topic, @Martin Saenz. I am looking to work more on my business rather than in it. I am in the process of hiring a part-time assistant and we just switched bookkeepers. Essentially focused on making sure we have the right people and systems in place to continue to grow our business at a solid pace. We are taking on more capital partners as well.
All of this has more to do with our growth as a small business as opposed to market conditions, though. I want to be well-positioned for when the market does turn, likely presenting more opportunities. How about you, Martin?

Thank you,Jamie. Hiring an assistant was one of the best decisions I made in 2019. It forced my hand to load her up with all the activities that don't drive direct income to my business. I'm sure you'll find that too. I'm hiring another person next month to help manage all my performing notes, basic admin tasks, and reporting. That will allow my assistant to work out more loan mods.

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Chad U.
Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes
6y
Ramp up the marketing machine to contact more note sellers directly.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
6y
2020 will be focused on reducing the cost of investment money. Two ways to make wider spreads - buy for less or borrower for less.
In 2020 buying for less will be unrealistic as I see pricing still rising or holding flat. Once the stock market flatlines come June timeframe due to the election, people may start to get nervous and look to diversify.
I see returns continuing to be depressed in notes as we move forward as pricing is not going down anytime soon.
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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
6y
@Martin Saenz
Our loans, both the ones we buy as well as the notes we originate, come about 98% from brokers. We have more $ than good buying/originating opportunities. We have just begun a program to (hopefully) generate deal flow directly from borrowers and institutions wanting to sell their notes.
Part of our issue with deal flow is that we won't settle for returns that are below our risk adjusted return model, or risks that are higher. When everyone is accepting lower ROI and higher risk, they are preparing to get killed in the next recession. Preservation of capital is our number one priority.
Private Mortgage Financing Partners, LLC
Website View Page
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
6y
@Don Konipol - Just did a podcast episode that about quality of paper is getting worse that is available on the market, quantity is down and cost is up which all equates to lower ROI and higher risk. you are correct that it may get ugly for some.
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Andy Mirza
Lender · Ladera Ranch, CA · Member since 2014 · 1k+ posts · 1k+ votes
6y
@Chris Seveney What do you mean exactly by the "quality of paper" getting worse? Thinner collateral files? More title issues? Worse collateral? Just curious :)
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
6y
yes the quality of paper. Seeing a lot more paper with missing allonges, title defects, or other issues

Originally posted by @Andy Mirza:
@Chris Seveney What do you mean exactly by the "quality of paper" getting worse? Thinner collateral files? More title issues? Worse collateral? Just curious :)

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Martin Saenz
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Investor · Fredericksburg, VA · Member since 2017 · 377 posts · 230 votes
6y
Originally posted by @Chad U.:
Ramp up the marketing machine to contact more note sellers directly.

Is outreach a strength of yours or you just feel nobody will care as much as you do?

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Martin Saenz
OP
Investor · Fredericksburg, VA · Member since 2017 · 377 posts · 230 votes
6y
Originally posted by @Chris Seveney:
2020 will be focused on reducing the cost of investment money. Two ways to make wider spreads - buy for less or borrower for less.
In 2020 buying for less will be unrealistic as I see pricing still rising or holding flat. Once the stock market flatlines come June timeframe due to the election, people may start to get nervous and look to diversify.
I see returns continuing to be depressed in notes as we move forward as pricing is not going down anytime soon.

To borrower or to JV. I shifted my model to borrowing a few years back and will not turn back. I'm also looking to borrower for less. One of my biggest objectives is to staff up and do more efficient workouts. Time is that other factor I'm focused on.

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