Turn-Key Mortgage Note Management Companies

Tax Liens & Mortgage Notes
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Turn-Key Mortgage Note Management Companies

Michael Terry
Member since 2020 · 17 posts · 7 votes

Morning all, 

I am working to become a mortgage note investor presently (performing only). While I enjoy the education, I am looking for a company that will handle all details for me and allow me to collect passive income with an almost hands-off approach from start to finish.

This need extends past servicing, and includes:

- Selection of performing mortgage properties based on my specs and resources (either through Paperstac or some other broker)
- Due diligence
- Servicing
- Potential legal representation should the need arise in the case of non-payments to the note agreement.
- Possible Mortage Note Mentorship

Is this something that exists out there?

I dont mind doing the work, and I have all of these individual resources lined up for myself. I also understand all the benefits of learning the business and making mistakes and creating my own path to financial independence. But as a busy father with a full-time job, what I am really looking for is to invest the tens of thousands of dollars I have saved right now, pay someone handle all of it, and then be on the look out for that golden passive mailbox money.

If anyone knows of companies like that, shoot me a message or post a comment below. 

Cheers. 

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Marco Bario
Specialist · Frederick, MD · Member since 2017 · 474 posts · 454 votes
5y

@Michael Terry - I was thinking fund as well. 

Due to how they are structured, some only allow accredited investors, and others are open to all investors. By investing in an entity that holds multiple assets you can minimize risk through diversification. You also have the advantage of fund managers with years of experience and access to inventory and resources not available to smaller investors. 

I don't invest in note funds because I'm active in the space, but I do invest in syndications (another name for the same type of structure) which invest in commercial real estate and other asset classes. These investments also benefit from what I noted above (access to deals, experienced operators, etc.). 

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  • Terrence Evans
    Investor · Lomita, CA · Member since 2015 · 145 posts · 71 votes
    5y

    If you invest in a fund you don't worry about anything except returns. But that doesn't exactly sound like what you want either. More sounds like a JV.

    1Reply
  • Marco Bario
    Specialist · Frederick, MD · Member since 2017 · 474 posts · 454 votes
    5y

    @Michael Terry - I was thinking fund as well. 

    Due to how they are structured, some only allow accredited investors, and others are open to all investors. By investing in an entity that holds multiple assets you can minimize risk through diversification. You also have the advantage of fund managers with years of experience and access to inventory and resources not available to smaller investors. 

    I don't invest in note funds because I'm active in the space, but I do invest in syndications (another name for the same type of structure) which invest in commercial real estate and other asset classes. These investments also benefit from what I noted above (access to deals, experienced operators, etc.). 

    3Reply
  • David Putz
    Investor · Jackson, NJ · Member since 2010 · 167 posts · 55 votes
    5y

    We have been in a note buyer since 2010.  If you are not interested in investing in a fund, I recommend automation systems.  I do recommend AVOIDING  Jv's as you can get yourself into a SEC violation situation (Howey Test).  Regarding the automation systems, we use these within our business all the time.  We are able to, within 15 minutes, run 20+ deals through our system and calculate if we want to bid and then we are reaching out agents local to the property area to get local knowledge.  Reach out if you have any additional questions.  JKP Holdings

    We also have assets that we sell off. 

    2Reply
  • Tracy Z. Rewey
    Investor · Orlando, FL · Member since 2013 · 837 posts · 316 votes
    5y

    @Michael Terry  The challenge is the level of control you will need to give up and the cost (decrease in yield/profit) to have someone handle all those aspects.  You might be able to buy a partial where a seasoned investor keeps the future payments or possibly be part of a note hypothecation.  That gives you a level of control and also a seasoned investor as part of the deal with a level of financial commitment to see the deal through.  In addition to servicing companies and attorneys (which take care of 2 of the 5 you mentioned), you can also hire a seasoned note processor to help with the due diligence and closing portion for a flat fee.  I've been doing this since 1988 and encourage you to avoid being too "hands-off".  Nobody minds your money like you. 

    3Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    5y

    @Michael Terry

    My entity manages notes, provides mentor ship and has a fund for accredited investors

    The one thing we do not do as part of mentorship or Management is select the note - in order to do that we would need to have the proper FINRA license since we would be recommending an investment.

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  • Michael Terry
    OP
    Member since 2020 · 17 posts · 7 votes
    5y

    @Tracy Z. Rewey, 

    Youre absolutely right. Giving up layers of direct control and effort subtracts from not only the payout, but also the wisdom I would gain if I managed it myself. 

    However, I did find a fund yesterday that invests in performing notes for unaccredited investors. It is run by the lads at Paperstac (popular notes broker, im sure you know them), and returns are historically very good at about 10%, annually.

    That might be the utterly passive route I am looking for, and it might not. There are many investments out there that could make that return - real estate crowdfunding comes to mind.   

    Do you have any thoughts, direct note purchase and management vs. fund? I'd love to hear the expertise of people who have done either or both before I make my move. 

    Cheers.  

    0Reply
  • Terrence Evans
    Investor · Lomita, CA · Member since 2015 · 145 posts · 71 votes
    5y

    If investing passively is #1 on your list of priorities, then you can't buy directly and manage yourself. Notes are not 100% passive... even performing notes.  Anyone who tells you that is a liar. 


    But at the same time if you can afford to spend up to a few hours a week then buying performing notes will probably work for you.  NPNs are crazy expensive now due to alot of factors so PNs make more sense price wise.  You said you had resources lined up so even if PNs go delinquent you should have the bandwidth to work with your vendors to correct that. It all depends on what you want to do, what your risk tolerance is, and what yields are desired.

    2Reply
  • Tracy Z. Rewey
    Investor · Orlando, FL · Member since 2013 · 837 posts · 316 votes
    5y

    @Michael Terry I have "control issues" so like to go the note ownership route over a fund.  That's a personal choice of course.  @Terrence Evans makes great points on the Performing notes making more sense from a pricing and time commitment perspective.  I've bought performers for better discounts than I see some of the NPNs going for. I prefer the performing notes but that's also a personal choice :)

    1Reply
  • Bob E.
    Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
    5y

    I would suggest that you might want to just find a few investors that you trust and work with them directly.   In my opinion vetting the investor is more important then the property since a good investor will rarely buy a bad property.  

    As an investor I prefer private loans, I have great cashflow but no W2 and am not "bankable". I work with three different investors, mostly lending out of their IRA's. They get a 10% rate with a low LTV and I get a hassle free loan for 7-10 years.

    Once you figure out the formula that works for you it's rinse and repeat.

    1Reply
  • Mark Hegenbart
    Specialist · Guaynabo, Puerto Rico · Member since 2021 · 10 posts · 3 votes
    5y

    @David Putz what automation systems particularly do you find the most appealing. We are actually developing (beta launches in 3 weeks) our own BPMN system that includes, General Automation, RPA, full rest-API, modular BPD scaling, and some very basic AI components after not being totally content with other offerings. I would be very interested to know what systems you have found value in if your open to sharing that information. 

    0Reply
  • David Putz
    Investor · Jackson, NJ · Member since 2010 · 167 posts · 55 votes
    5y

    @Mark Hegenbart We automate the values and property scraping, capturing Local REO experienced Agents name/email, Full Note Bid Calculator with return driven data (XIRR mostly). I like to be able to be efficient and reduce human error. You can see more on our website. jkp Holdings.

    1Reply
  • Mark Hegenbart
    Specialist · Guaynabo, Puerto Rico · Member since 2021 · 10 posts · 3 votes
    5y

    @David Putz - Got it! I took a quick look. Looks like you offer some nice resources particularly for newer note investors. Thanks. Going to DM you for follow up on NPL notes

    0Reply
  • Michael Terry
    OP
    Member since 2020 · 17 posts · 7 votes
    5y

    This is all excellent information to review from the beginning of the year. My thoughts on this matter havent changed all that much, except for the fact that I know now that even performing notes are not passive and there will be some management necessary on my part. In doing the research, I really dont mind what is in store. 

    I have also decided to work with the ACI Legacy Group, Desi Arnaz and his team in San Diego, CA. Their mentorship courses so far has been stellar, they include due diligence in their note offers, and can guide me on my journey through the space.

    Has anyone worked with them before? Heard positive things? I have an introductory phone call this afternoon. 

    Thanks for all your help everyone. It's great to have you all as resources. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Michael Terry:

    This is all excellent information to review from the beginning of the year. My thoughts on this matter havent changed all that much, except for the fact that I know now that even performing notes are not passive and there will be some management necessary on my part. In doing the research, I really dont mind what is in store. 

    I have also decided to work with the ACI Legacy Group, Desi Arnaz and his team in San Diego, CA. Their mentorship courses so far has been stellar, they include due diligence in their note offers, and can guide me on my journey through the space.

    Has anyone worked with them before? Heard positive things? I have an introductory phone call this afternoon. 

    Thanks for all your help everyone. It's great to have you all as resources. 

     do they have a website ?/ i could not find it.. just curious is all..  is the mentorship something you pay for ?

    or just included when you actually buy a note from/through them ?  and is it their own notes they own they are selling you or 

    are you direct to the note seller ?

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  • Michael Terry
    OP
    Member since 2020 · 17 posts · 7 votes
    5y

    @Jay Hinrichs, 

    Hi Jay. Their website is Invest Brilliantly Dot Com. They have a coaching program. It seems right. I just had my first call with them. It was eye opening to what they are trying to do. I'll keep you all posted.  

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Michael Terry:

    @Jay Hinrichs, 

    Hi Jay. Their website is Invest Brilliantly Dot Com. They have a coaching program. It seems right. I just had my first call with them. It was eye opening to what they are trying to do. I'll keep you all posted.  

    OK pay to play then  .. thanks  is that Desi Arnaz as in Lucy's hubby ?

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  • Michael Terry
    OP
    Member since 2020 · 17 posts · 7 votes
    5y
    Yeah, they do require a monthly fee for their services. I see some value in it. 

    As far as his name, yup. The same. lol

    Originally posted by @Jay Hinrichs:
    Originally posted by @Michael Terry:

    @Jay Hinrichs, 

    Hi Jay. Their website is Invest Brilliantly Dot Com. They have a coaching program. It seems right. I just had my first call with them. It was eye opening to what they are trying to do. I'll keep you all posted.  

    OK pay to play then  .. thanks  is that Desi Arnaz as in Lucy's hubby ?

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Michael Terry:
    Yeah, they do require a monthly fee for their services. I see some value in it. 

    As far as his name, yup. The same. lol

    Originally posted by @Jay Hinrichs:
    Originally posted by @Michael Terry:

    @Jay Hinrichs, 

    Hi Jay. Their website is Invest Brilliantly Dot Com. They have a coaching program. It seems right. I just had my first call with them. It was eye opening to what they are trying to do. I'll keep you all posted.  

    OK pay to play then  .. thanks  is that Desi Arnaz as in Lucy's hubby ?

    maybe a relative ??   well good luck with it.. you probably read about Scott Carsons' training. 

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    1Reply
  • Steve HodgdonPro Member
    Investor · Novato, CA · Member since 2015 · 432 posts · 321 votes
    5y

    I do both individual and REIT style fund investing. Track record of the fund is key for me. I've been disappointed with new limited partnerships compared to larger more experienced funds. But still can get caught in a Madoff style scheme. A fund may not start off as a Ponzi scheme but when the market turns...

    1Reply
  • Bob E.
    Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
    5y

    @Michael Terry  I am curious what king of yields you are seeing on their performing notes?  Also, when calculating the yield make sure to factor in the cost of servicing.  Who did you pick for a servicer?

    1Reply
  • Michael Terry
    OP
    Member since 2020 · 17 posts · 7 votes
    5y

    @Bob E. Afternoon Bob, 

    Higher than banks (which is everyone) for sure. But I was aiming for double digit returns over the life of the repayment. From what I have seen, this looks like the vehicle.

    I chose SN Servicing Corporation out of Eureka, CA. They've been in the business since '87, I was told.

    Cheers.

    1Reply
  • Bob E.
    Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
    5y

    @Michael Terry  Sounds like you are on your way.  We have used Allied Servicing, $18.50 a month.  One of the things I found when I started is that if you factor in servicing fees you can loose 1-2% of your yield.  When were borrow on private loans we pay the servicing fee, if you can get a note where the borrower is paying the servicing costs it can add a lot to your yield.

    1Reply
  • Michael Terry
    OP
    Member since 2020 · 17 posts · 7 votes
    5y

    @Bob E.
    Wow! That's not bad at all.

    Did you create your own LLC to protect you against any unforeseen liability? I spoke to the Manager of Acquisitions over at SN and he said he has seen it both ways from customers. I am interested to know if this is a standard practice as you get deeper into notes.

    Cheers. 

    0Reply
  • Alecia Bolton
    Investor · Seatac, WA · Member since 2017 · 134 posts · 121 votes
    5y

    I would absolutely set up an LLC and hold all your notes there. It will at a minimum give you some anonymity with the borrower.

    2Reply
  • Bob E.
    Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
    5y

    @Michael Terry We set up an LLC. Did it ourselves through the Arizona Secretary of State. Cost a few hundred dollars and took a few weeks. Not all that hard to do in the end.

    0Reply
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