Joint Ventures and Non Performing Notes

The importance of Joint Venture in Note Investing and how it can make you rich

When you first begin investing in real estate or notes you may be thinking, how do I get the money to buy my first deal. That is exactly what my brother and I thought when we started nearly six years ago. Being new to this business we thought we should use our own funds because we didn’t dare to ask family or friends for money

So about a year passed, looking at deals, and we found our first note we wanted to pursue. It was only twelve thousand dollars so we both put up six thousand to buy the note from the hedge fund. We later found out that there is something called servicing, its a servicing kind of like a property management company. The note servicer, at the time it was FCI Trust, cost three hundred fifty dollars to board the loan, and forty five dollars a month to service it. We were spent! I looked at Mitch and said I’m broke!

So, a year passed or so and we still weren’t able to do anything with the borrower. Normally, the right way to go about it is to put the note into special servicing and let them take care of the borrower contact. Knowing that this note was located in FL were foreclosure could take up to eighteen months, we knew we needed to hire an attorney. If you haven’t foreclosed yet, you don’t know who much it costs! It was almost $4,500.00!

Mitch and I met up at a coffee shop later that week to discuss how to get our money right, or lack of it. We were getting coached by Scott Carson out of Austin, TX, and he had mentioned to always use other people’s money and he explained the benefits of it. He stress that there is less risk and you will have more deal flow coming your way. That you won’t be strapped down to just one deal at one time and limiting the money that was coming your way.

Needless to say we started raising private money. At first it wasn’t so simple. We needed to gain credibility in the industry. As we started to talk about what we did for a living, people wanted to know how they could get in with us. We said we raise money to buy non performing mortgage notes. And if that doesn’t draw your curiosity enough, then I don’t know what would!

We asked other investors if we could talk about their deals on a white board (on their behalf) and how the deal was being worked out. We explained the kind of ROI was in store, the Fair Market value and gross profits to be made. We also told the story of how we were helping the homeowner out by giving them a loan modification.

In summary, go out and raise the money you need to buy deals. You will get more deals coming your way and make more money because of it.

Thanks for taking the time to read / watch this information regarding real estate non performing notes.

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Talk soon,

Matthew Hell

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