All Forum Posts by: Dan Zitofsky

Great post. I have been at this a very long time. I see it from both sides as I acquire non performing debt, reo's, tax liens mostly direct from asset managers at the bank. For example, We just acquired 14 Single families in Dayton OH which is a great emerging market meeting all economics I love in Class B= to C+ neighborhoods. Some of my investor buyers want us to get the properties fully rehabbed for them and get them placed with a management company as we don't manage. I feel thats a conflict of interest myself and never want to be a property manager. The others want to do the work themselves to get the equity in the property doing their value add. I sell them either for cash or seller finance so if you set yourself up with options you can really grow your portfolio nicely. Wish you all the best. 

HI James. I see this post was a year ago. Wish I saw it earlier as I was out there speaking at a wealth event. I'd love to see how things are going and if there is anyway I can assist you in your journey. Wish you all the best. 

Dan Zitofsky

Great post Martin. You know how I work. I take most peoples worst exit strategy which is taking the house as an REO and work backwards. For me and my passive wealth strategy it works no matter what and can only get better should the borrower re-perform or anything else that comes through... Just best to work backwards. Thanks for sharing

Great post and question.  There are many ways to set this up but most importantly please make sure your working with investors with enough experience. Most newer investors in the game now a couple years are running around taking money as experts from other nesbys. This is how they are being taught and then doing deals without proper due diligence or exit strategy.

Ive sat back and watched investors who are presenting themselves as experts bringing money (JV partners) into a deal and buying notes in Illinois. They had no clue themselves they needed a license their and now put their JV partners money at risk. I've also seen issues like acquiring notes where the due diligence was barely or not done at all and then they call me to get them out of trouble.

It’s fine to be new and learn but I’ll always preach don’t do it on someone else’s dime. Be a steward to their money better then you would your own. 

My suggestion is to think about paying for coaching and also doing JV with someone so you can learn the deal from start to finish. That's how I've worked with people asking the same question. For me I wouldn't of been able to spend the time teaching each deal to my investors and be able to work effectively when I have others I teach as well as I'm sure you can imagine. If you really want to learn this the right way and more importantly work towards your exit strategy it's the best way but just do your due diligence on who you decide to work with or JV with.

I wish you the best of luck and am happy to answer any questions you may have. 

Dan Zitofsky 

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My whole business model is based around commercial notes and turning non performing assets (Notes, Tax Liens, REOS and Distressed seller deals) into performing notes with skin in the game and equity. It totally changed the game for me the past 8 years.

@Jay Hinrichs I love your comment and may be the only one out there playing in the same sand box as me. I cant keep preaching this to new investors as they see the light from a guru so much differently. I literally speak about this on stage all over the world now and on every interview Im on as well as my pages but most dont see it. Whats crazy is most in the business are in because they want true passive income and their actions dont speak the same way. As far as non owner occupied or occupied I do non owner occupied 99% of the time. Many reasons. I sell my assets with equity and skin in the game to the investor seeking passive income and wealth creation. I now have a note thats performing, where the property has been rehabbed, rented and managed with skin in the game. I used to sell tons of partials from here after 6-12 months and now pretty much hold on to all of them. With these notes so valuable I get offered PAR or extremely close to it each time. I also have to look at Dodd Frank and CFPB on the owner occupied seller financing which is another reason I focus on seller financing to investors. 

Thanks again for the comment so others understand how powerful what we do could be and how they should plan and set themselves up from the beginning. I literally just finished a coaching call with a student of a past GURU they worked with that had them buy 8 Class D assets in 7 markets because thats what they could afford to buy. Literally when I got involved we were able to sell 3 for a profit after tons of work and the others are a wreck. Why??? because they never estimated taking the properties back and the rehab costs. This comes up all the time and people new in the industry tell me if that happens they'll sell as REO to investors. Well, being they are my students I am willing to help them and will try to get them sold as is for them but I dont mess in these low end areas so its going to be tough and Im sure a loss for them. Reason I mention this is they didnt understand the worst exit strategy and it came to life and usually does. If it doesnt work with the worst exit strategy you need to stay away from the note @Zach Bollman 

@Zach Bollman without taking over this post and rambling on a ton of Info your seeing already, the one thing I preach at every event I speak at or anyone I try to educate is to understand your true goal for note investing. Why are you investing in notes? Why I ask and with that said it will back out on the note you acquire and your exit strategy. 

For example: I’ve been at real estate investing for 27 years and lending/notes for about 18 years. About 7 years ago I changed my vision. My vision now is to truly live passively off my model which I do I believe better than most. It’s not toninpres but to impress upon that I stay focused on my vision of true passive wealth. 

I have 8-9 exit strategies. Most people have 1-2 and neither will get them to their goals if they say they want what we do. The one box I MUST check every time or I don’t buy the note is that I must be willing to hold that house as a rental in my portfolio. Do you really want properties or CFDs worth 20-30k in class D neighborhoods in your so called “Passive” portfolio???? Is it really going to be passive???

When I ask this question to some potential students or attendees at events I'm a speaker at most are terrified and say no but then buy notes valued at 20-30k ARV should they need to take them back as an REO. I know many say I'm not in this to be a landlord. That's great but what happens when you have no choice. Being a landlord is great if done on the right asset in the right emerging market. Ask anyone who has purchased a turn key rental of mine. Yes I even said a turn key rental I sold for cash or on a "Seller Financed" note. So now you created your own note that's clean and you Keep For true passive wealth or feel free to sell as a performer or partial. Think long term first and back out from there and your business will flourish rather than buying a low end note that has vvery few long term strategies. With that I wish you all the best

what a great post and like @Gene Chandler stated we both did a video on who we would JV with. I am against doing JV deals with most investors as most don't understand what they are getting involved in. Like some others mentioned I am 100% against these new investors who go to a weekend course taking money from anyone when they haven't completed a deal or many deal since to success. It's way to risky. Don't care what you're guru tells you. You need to be servant to your imvestors and protect the theit money better than your own. I always say "Trust but Verify" when I'm on stage speaking and there's a reason. I'm a also not here to call anyone out. If you choose to invest your hard earned money without doing your own checks then you're accepted acceptiNg the risk. It is sickening what I've seen even I've over the past few years in is industry. You also need to understand all exit strategies yourself before asking for any money and most get Into a deal hoping for only the best. I always educate those in the business how to protect themselves In all cases.

Before you give that next newby a dollar make sure you ask them what their strategies are when they need to foreclose and rehab the house. If they don’t have an answer and numbers still don’t work then “run don’t walk”. 

Wish you the best. It’s an amazing businesses if you act as a servant to your investors money and worry about yourself last. You need to crawl, walk and then run. 

Dan Zitofsky

Zitofsky Capital Management 

Were ready to ramp up our Lead Get with sellers direct in New Castle County Delaware. Some of the biggest issues we had previously when ramping up is hiring quality Acquisition Managers here who are professional but also those who are ethical and not looking to steal your business or count your money. The team I had years ago is way past this so would love feedback on this topic for best training, practices and compensation. I stayed away but when I have an amazing lead source it doesn't pay to let them go due to my time constraints. Thank you

We've done plenty of these and if set up properly you shouldn't have any tax issues on it. We have done mods putting the debt at the end with an incentive so we didnt forgive the actual UPB at the time. I am not an accountant though so please go by what they say. Great post though Bob. Thanks for the info and I'd love to get a concrete answer as this has been up for debate.