Can finding notes to purchase be automated?

3 Replies

As a direct private lender (hard money commercial property) we are able to turn a profitable investment into a VERY profitable investment a couple of time a year by purchasing the existing note form the current lien holder at a substantial discount, rather than pay if off when we originate a refinanced loan.

As our most recent example, we purchased a note with a $3.3 million principal balance for $1,775,000., restructured the note providing the borrower a discount to $2,600,000, with a two year balloon, and now are collecting monthly payments on the restructured note.

Obviously, we’d much prefer to expand this side of our business. Almost all of our “deals” are brought to us by mortgage brokers, attorneys, or other third party intermediaries. We have attempted, so far without any identifiable success, to establish relationships with banks, SBA, other financial institutions, asset dispossession managers, etc. When we do receive offers of notes for sale, either these notes are priced way too high for the risk, or the properties are residential (we do commercial real estate only), or we receive a bulk offering with a financial commitment requirement above our capacity.

Since I am not inclined at this stage of my life to engage personally in a cold calling, cold emailing, or any type of intensive personal sales campaign, I was wondering if anybody had any success utilizing contractors or employees to hunt for these notes that institutions may be interested in selling?

ONe Idea Don and I did this with some modicum of success back in the early 2000s..  I did have a pipeline into a few thrifts here in Oregon and they would sell me the loans that were actually in foreclosure.. AS they did not want the risk of no buyer at the courthouse and having to stack up OREO>

WE would do an assignment and substitution of trustee usually within 30 days of the sale.  My risk of course was having them reinstate ,  my actual goal was to own the assets or get paid at Trustee sale.

So long winded reply maybe you have Va's just start following your NOD's in the markets your interested in and then make offers to the beneficiaries of those defaulted notes.. A decent size title companies customer service should provide you with the lists.. Or there are list source companies out there..  Property Radar comes to mind Sean O'toole has built a very robust platform we use it here in Oregon to find those really narley deals that 99% of investors wont or cant dig for.. But where you have some serious paydays.

I would answer this with a sort of. As you know the key in this business in having relationships with types of individuals who sell loans.

Once you have built relationships then yes you can automate it - what I do is every quarter I send out an email to people who I have bought from or who have noted they sell assets on occasion and let them know if they have inventory then let me know

I would say that is probably the best way to automate without having an employee on staff to do it. I don’t trust outsourcing to people not in the space as they don’t know a lot of the lingo etc.