“Create” Deals vs “Find” Deals

[Don Konipol]

A Lot has been written about how, with the massive amount of capital chasing deals, the negative real return on fixed income and money market securities, and the almost readily available information on the internet, it is very difficult, if not almost impossible to “find” good, let alone a great deal.

So, that leaves us with “creating” a good, or very rarely a “great” deal. I”m curious as to what others in the real estate debt face have found, and what you do, if anything, to try to “create” a deal. Included would be how you attempt to make a mediocre deal good, or a dood deal great. If you’re having success “finding” good loans to purchase, or originating loans with a better than average risk reward, I’d love to hear about it.

[Chris Seveney]

@Andy Mirza

Our models are similar - at this stage I am not looking to get creative on creating the deal but during the workouts on NPL’s this is where my creativity comes in and I try and be creative so it’s a win for the borrower but also enhance the value of the note significantly

One way that is easy to do this is on loans where they are significantly behind and started paying again. You can do a mod and increase the UPB to the total payoff but it also eliminates late fees for the borrower. They are no longer paying late fees and you increased the UPB (which increases the note value) so win win on both sides