All Forum Posts by: Andy Mirza

@Bill McCafferty @Chris Seveney  I was thinking just to put down business goals but I loved that you guys added more personal stuff! I'll add some of mine, too:

I'm turning 50 this year so my "theme" is completing unfinished business.

1. Complete a local roundtrip hike totaling 19 miles.

2. Summit Mount Whitney, CA.

3. Complete an Exterra Triathlon

@Hannah Reichert No, you don't have to be an accredited investor to buy whole loans from banks. All that matters is the relationships you have with the loan traders and their perceived ability that you'll close on time. Be sure you have your funds ready and available to deploy for anything you place bids on.

Accredited investor status is important when dealing with Reg D, 506(b) and 506 (c) private placement offerings. In the 506(b) offering an investor/subscriber needs to self identify as accredited or non-accredited. For 506(c) offerings, all investors/subscribers need to be accredited and have the documentation to prove it.

We raised $2.85 Million for our Funds in 2020. Given the turbulent nature of this year, I'm happy about that!

For 2021, I want to get to the $10 Million mark. All the business goals I set and tasks that I give myself will be towards fulfilling that goal.

What goals are you setting for yourself? What do you need to get there?

What were the biggest lessons you learned from your note investing in 2020?

For us, these were the two biggest:

1. The structure of our funds led to our ability to withstand the extreme volatility and effects of the pandemic in March. Our funds are structured where payouts only occur upon liquidations. Since we didn't have the pressure to sell, we stood on the sidelines to wait as the NPN market recovered.

Lesson: Make sure that the structure of your fund, JV, or arrangements with financing are in line with your business model so that you can withstand or deal with extreme events or market downturns.

2. Limit your risk by spreading capital among a lot of different notes. This is very basic but it can be more complicated to implement. You are limited to buying NPNs depending on what's available from your sellers. At times, you will have to make the decisions on risk/reward depending on the deals available to you. Even though a deal looks great, what the borrower does and your ability to accurately assess the complete interior and exterior property condition is limited. 

We bought a note backed by a gorgeous looking residence outside of Dallas, TX. The borrower filed a BK that delayed us by 8 months, which led to increased carrying costs. It turned out that the REO had lots of problems that weren't easily identifiable but added a lot of money to fix.

Although the reward would have been great, the downside was not worth it to us because of how large a part of the portfolio it represented. Far better to have purchased 2 or 3 notes instead of just one. 

Lesson: Limit your risk by spreading capital among a lot of different notes. Maybe have some rules that you won't go over a certain amount or buy any notes that exceed a certain percentage of your portfolio.

@David Putz A little bit late on this reply since the thread has changed direction....

Yes, that's a huge difference between 2008 and what we're seeing now. When people talk about a future "tidal wave of foreclosures" because of COVID, one of the things I think is "even if we do see a tidal wave, most investors won't see the benefits of it the way they think they will." There are a lot of established players that were handling the remnants of 2008. If we see more foreclosures (either in a tsunami or a surge that plays out over several years), there are already established players with capital and systems in place, ready and waiting.

One of our sellers who buys the really big pools said that there was absolutely nothing put out for about 6 months after COVID started. In the fall a few big players started putting out big pools again but he says it wasn't as much as a year ago. Another trading partner mentioned how there was a lack of inventory for NPNs that was causing prices to go to stupid levels.

I believe that in 2021 we'll see more NPNs available because the market will continue to re-stabilize. I think we'll also see the problems with defaults start to emerge from the damage that's been done to the economy this year. I don't believe that anybody has any firm idea on how bad or good it will be.

@Chris Seveney Thanks! I'll message you if I need the contact info....

@Adam Walter Thanks for providing the buyer's perspective!

As a lender, I would prefer to sell a property at foreclosure sale for $96k instead of $91k, if the selling costs were less than the $5k difference. I also like hearing you say that you avoid the PSO houses because it sounds like they attract too much demand. Sorry that it's bad for you, though!

My partner looked into using Auction.com but they are charging fees that are too high. We're looking for smaller outfits that aren't focusing on the megabanks.

We have two OH NPNs and are looking into using a Private Selling Officer (PSO) instead of going the traditional route of Sheriff's Sale.

It appears that it's better, quicker, and will net us more if we use an online auction platform as opposed to doing a sheriff's sale. Does anyone have info or experiences that they are willing to share?

@Ben Lake I would contact my title rep to get me a list of recorded deeds of trusts or mortgages from the areas that you're targeting. Lenders will be the grantees, mortgagees, or beneficiaries. Find the ones that are individuals, trusts, or a company name that isn't a bank. The other alternative is to go to the county recorder and dig that info up manually.