All Forum Posts by: Andy Mirza

@Chris Seveney In my opinion, once the forbearance deadline approaches, the government will most likely extend it or switch emphasis to loan mods where they tack the arrearages on as deferred principal to the end of the loan. That strategy worked last time and I expect that the government and big lenders will go back to it to prevent defaults.

One of my sources is saying that they didn't receive as many forbearance and loan mod requests as they expected over the last 6 months. I wonder how things really are with GSE backed loans.

@Ian Jaeger Whatever you do with the garage the same principles apply. Are your garage upgrades what's generally expected in that neighborhood. If so, the appraiser may give you some value for it. If it's not a widespread expectation in the community, he won't.

Just found out that Cook County, IL will start processing foreclosures on vacant houses. Since we've got a note on an occupied duplex, we're out of luck. We can't even get the judgment of foreclosure until further notice.

Will County, IL still not issuing sale dates.

We had a sale confirmed a couple of months ago in WI and are working on the eviction. Judge wants us to sign an affidavit.

Delays with evictions in Sacramento County, CA.

Proceeding to get judgments in OH & LA

We got a sheriff's sale date in December for Terrebonne Parish, LA

No sale dates in Warren County, NJ until at least Jan

@Yael Maroko We absolutely take the moratoria into consideration when bidding on loans. In the states with restrictions, we'll require a greater discount. 

@Ian Jaeger I've talked to appraisers about situations similar to this. They've told me that they'll give value to something (like an unpermitted room addition), if it's acceptable as normal in that market. They appraise what's actually, physically, in front of them. If it's something common to that market that buyers will pay more money for, then they'll include it in their opinion of value.

Another example is a pool. In some areas, pools are essential and expected. In other areas, it might be a luxury and add value. In other areas, a pool might make absolutely no difference and won't add a penny to the property value.

Although your garage conversion might add value to what you're trying to do, it might not necessarily translate to added property value.

@Sarah B. For note funds, look at the profiles of the frequent posters on this forum category. For funds involved in different aspects of real estate, find the frequent posters in the forum categories of the real estate classes that you're interested in. For example, if you're interested in multifamily real estate, find that forum and you will find active operators. Also, do a search for "syndication." Good luck!

@Alecia Bolton Yup. Not only do you need it to protect yourself and your write off, it only seems fair that the recipient needs to show this as income. (This comes from the experience of having paid severely delinquent borrowers thousands of dollars to vacate homes that they hadn't paid anything towards in years.)

@Sarah Brown You can also find and vet funds that invest in notes and real estate. It allows you to be the passive investor while others do all of the work and allows you to invest in assets that interest you such as non-performing notes, performing notes, mulitfamily real estate, or other types of commercial real estate that you might already be familiar with. One of the keys to this type of investing is to do the due diligence and research on the operators of the investment fund.

@Tim Henderson You've hit upon an interesting subject: Compliance.

The SEC provides guidelines, some of which are open to a wide range of interpretations. All of us (including our attorneys) are doing our best to interpret what these guidelines mean and how they affect our business operations. Some operators will take more risks than others and I've seen or heard of a lot of situations where I thought the individuals were doing things that were clearly out of compliance without any consequences.

In my opinion, at the end of the day, the SEC will come after a sponsor when they do something blatant that catches their attention or when a disgruntled investor complains (usually because of poor communication or not getting paid on their investment like they expected to). In my experience, the SEC is not trolling to find Funds that are out of compliance.

In my experience, most investors choose the third party verification test to prove accredited status. It's my favorite because it really puts the risk onto the third party. If a CPA, attorney, RIA, or broker dealer signs an accreditation letter (including their licensing info), then I've got my safe harbor exemption and I'm ok to accept that investor.

I agree with Chris in having that conversation with your attorney to determine the structure. We set our Funds up as LLCs and it's worked out for us. 

Also, spot on with the "close ended" vs "open fund" advice. Our Funds include profit splits with our Preferred Members so they're close ended (The Funds have an offering period for investment. At a certain point, we close the Fund to new investment and then proceed to buy NPNs. That way, all of the investors are involved in the same pool of assets.)

We plan to create open ended funds in the future where the investor gets a Preferred Return but no profit split. Everybody gets the same return so there's no issue with people entering or leaving the Fund.

For #2, consider using some sort of investor management software. It's pricey but well worth the money since it does so much for you. Your Fund will have to be big enough to absorb this cost. We use IMS (now part of Real Page). Their biggest competitor is Juniper Square, which I've heard other syndicators and operators use but I don't have any personal experience with them.