All Forum Posts by: Doug Smith

@Dale G. Why not go to the county recorder's website and pull up the mortgage information and, if applicable, the filed assignments for the mortgage. You may have to pull the MERS number on line to find the actual servicer. You may be able to buy the loan docs from the lender through the servicer for less than what the property is worth. Wisconsin is a State that does take some time for foreclosure, but you may be able to fast-track it since the property is vacant. You'll be able to use that process to wipe out subordinate liens (save, of course, taxes, etc). The lender will spend a lot of time and money going through the foreclosure process, so you should be able to get it at a significant discount. I would have to know more about the loan balance and property value to be sure, but that might be a route to take. Become the lender...take over the property...you are the new owner.

@Ann Bellamy Thanks so much for the post. Great share!

Hello Neighbor Sean,

I'm in Tampa and my wife is from New Port Richey. @Matthew B. is dead on when he says to stick with it. Buying non-performing mortgages (what we do) is similar to buying real estate with yellow letters. You need a big shovel to dig through all of the crud to get to the deals you end up doing. As you do more, your closing ratio will go up. You'll figure out what works and what doesn't. We calculate that we only end up doing 0.25% of the deals we look at. That is one in 400. Of course, the note business is a bit different, but conceptually there are a lot of similarities. The bottom line is to not give up and hang in there. As a Bucs fan, remember the phrase "pound that rock." It fits real estate investing as well.

@Sean Rand , what are you having trouble with and perhaps we can help you. You mention a "hump" that you can't get over. Can you be more specific about what you struggle with? Perhaps we can give you advice.

Given we don't invest directly in real estate, but in non-performing 1st mortgage notes, we've had a great deal of luck investing in areas outside of our home MSA. We convert the NPNs to REO and take it from there. The hardest part is finding great "boots on the ground". In some areas it's been pretty easy. In others, it's been tough. Someone in the restaurant industry told me one "no one watches your money like you do." I was really, really reluctant to buy anything that I couldn't watch like a hawk, but I did find that I could build a team that made the venture profitable. Good luck with your endeavor.

@Rebeca Farias santos Welcome! We're in Tampa and we work with quite a few great people in the Orlando MSA. Let us all know exactly what your business model is, what your strengths are, and what sorts of people you need to fill in the holes in your plan.

We've had a lot of luck in Northern Indiana, but not that much in the Gary area. For some reason we've had trouble getting the spreads that we want there. In all fairness, we don't invest directly in real estate, but we do buy the delinquent mortgages on the properties, collect the deals through until we get the property back, and then sell off the real estate to investors. What we have found in Will County is that the discounts we were getting were much less than what we were getting in towns like South Bend. Since we're managing the portfolio on a National level, its sometimes hard to get the best spreads from lover 1000 miles away. I am interested to read this thread and we love doing business in IN, but in many areas, we don't have to resources to maximize returns for our portfolios.

@Rising Tide I think we need more information in order to help with advice. What State is the property in? I will assume you have a personal guaranty? Depending upon the bank, they typically won't write down the mortgage as much as you would think. They are heavily regulated and, on a quarterly basis, they must file what's called a "Call Report." That report is public and shows the financial status of a bank. For a smaller bank, taking a write-down of $210,000 ($300K-$90K) would make a huge impact on the perception of the bank's health. The bank leadership may realize that it might be the correct business decision to settle out your loan, but they may not be able to take the hit on paper. Keep in mind their perspective. If, however, they agree to take $90K or $100K as a settlement, they still have a duty to report to the credit bureaus (private guys don't have that same duty). If they agree to settle, ask about buying the note from them for that same amount rather than paying them a settlement. The net result to the bank is the same, but if you can purchase your own loan in a trust or LLC, there should be no duty to report. Just some ideas for your negotiation. Give us more info and we'll try to help.

@Samuel Hoston Most of the time, sellers will not provide you with a price. They expect you to "bid" for it. There are only a few of us sellers that quote the note price up front, but the bidding process is the most common in today's world. You need to be careful as I assume you are under an NDA with the tape. If you share it with other people to review, other than your attorney, then you are probably in violation of the NDA. Unfortunately, so many people have signed an NDA with a seller and then blasted the tape all over the planet trying to flip the deals that we sellers have really gotten careful with who we deal with. The quickest way to not do business with a seller again is to share info with others outside of your group. Keep in mind we sellers are sharing personal information of borrowers with you with the purpose of letting you do your due diligence, so be careful with it. By asking if someone would entertain anything on the list, the NDA is being violated. Please be careful.

I was reading some of the posts in BP about buying notes and it occurred to me that many think that there has to be a winner and a loser in a note transaction between a buyer and a seller. In baseball, good trading partners are made when both sides win. Sometimes a team has strong pitching but then need a right handed hitting outfielder. Another team might have that in abundance, but are missing pitching. A good trade can be made in that instance. I've found that the same is true in note investing. Larger hedge funds will buy huge traunches of notes. Their model may be to only keep certain types of notes, but there will be notes that do not fit what they do, so they will sell them. It doesn't mean that something is wrong with them...it just isn't what they do. We see the same thing. We'll buy smaller traunches, but we'll sell the notes in areas where we don't have resources. I'm often asked "why don't you simply fix up the properties when you get the REO back.". The answer..."It's not what we do." We're not good at it, but we are great at buying small pools of notes and collecting on them. As we work through the collection process and near the REO stage, we're often willing sell to the note because we don't really swing hammers. Many on here are experts at rehab...we aren't...it's not what we do. Many sellers will sell smaller notes that are below their minimum property value. As @Ellis San Jose , said, start by cutting your teeth on these smaller notes and go from there. It will help you build capital as well as experience and you can choose where you go from there. Don't be discouraged. As my fellow Tampa Bay area native Tony Little, the Gazelle exercise machine guy says, "You can do it!"