All Forum Posts by: Dave Van Horn

Joel Owens I and my company both buy and sell notes, and buy and hold notes. There are pros/cons to both, which is why I do both.

As far as 2nds go, I thought the same thing about equity for almost half my note investing career but I've found it to be a misconception. Now my model's not for everyone but I'll tell you this - I work in the 2nd space because of the higher yield and to mitigate my risk, not to lose money haha. I also invest in 1st mortgages and other types of debt as well, and there's nothing wrong with diversification.

If you want to learn more about notes and how to get started (no matter what type of notes you're looking to get into) message me and maybe we can set up a call so I could help point in the right direction.........same goes for John Thedford and Ryan M.

Dion DePaoli I agree to disagree with you on Granite, especially because my main point in mentioning GLS was to suggest a trade desk platform because it's MUCH simpler than calling courthouses, accountants, etc. I also should have clarified that Matt should probably not be making a trade of a pool of assets when first buying, but he could cherry pick one or two loans from a servicer or fund and learn from there.

No matter where you buy from, whether it's from a broker or a trade desk it's still a "Buyer Beware" industry to an extent and it's always best to have some knowledge of how to buy before purchasing. Just keep in mind though, it's a learn by doing business. We bought 4 loans when we started out years ago: 2 loans we lost money on, 1 was a homerun, and 1 was a grand-slam. Even though we were wiped on half the loans, we still learned a hell of a lot more than if we never bought at all. So my suggestion would be do your due diligence as best as you can, but don't be afraid to take that leap and buy something.

Best,
Dave

Matt Devincenzo I agree with Dion, keep us posted!

Just want to clear a few things up, in reference to Bill Gulley's previous comment: You can buy from brokers but you're most likely going to be paying more. I was suggesting that you should buy from servicers or funds that take title and own the notes. A great one for residential 1st mortgages is Granite Loan Solutions (http://granitels.com/mortgagenotes.html)

Also just wanted to clarify that from our experience when buying 2nds you do NOT always have to "take out the first to protect your interest," we buy and work thousands of notes and very rarely do we payoff a first or even make a payment to a first for that matter. At most, we occasionally will reinstate a first. It's a common misconception about 2nds that I just wanted to clear up.

Best of luck,
Dave

Matt Devincenzo Instead of cold calling people, why not just by from servicing companies or funds? You're still buying at a discount and you're saving yourself a hell of a lot of legwork.

What type of notes are you looking for? 1st or 2nds? Residential or commercial?

I could give you some clarity of who to contact with more info.

Best,
Dave

If it's an old place with plaster walls try a "tiger claw" and hot water (maybe with a little vinegar) You could also try a steamer. Once you remove it, wash walls & sand them after drying. You may need oil primer on the walls to seal any remaining paste, then you're ready for any spackling & then painting. Good luck it can be quite a bit of work. I know, I had a painting co. for 22 yrs.

Curt Smith My company has 100's of loans that are serviced with FCI, and I use them for my personal notes as well, so they have my recommendation.

Hope this helps,
Dave

Hi Kathleen, personally I love notes as well for passive investing.
Some of my staff have started out with Lending Club until they had more $$ to invest in secured notes. Min. investment is $25

Hi Sean, any secured junior lien can FC and take over the property "subject to" the more senior lien(s) if no one bought it at the sale for your opening bid. That's not so bad since you got your payoff amount that was purchased on a loan at a steep discount (although that rarely happens). Now, it's usually just a matter of time before the more senior lien could FC against you if they are not reinstated or receiving some form of payments. But Bill does have a point that you are just the lender up until the time you FC (take title through sheriff's deed) and the borrower has the right to reinstate and/or redeem that once accepted changes your assumed strategy of just "FC for title".

Good question Collin.

Like Bill said, depending on the types of notes and exit strategies (holding, flipping, etc), it could differ. For example, I technically started out in the note business by originating 1st mortgage rehab loans for real estate investors, and that I basically did by myself without a team.

Now with institutional notes, my experience has been different. I started out with and still have two other partners in my note company - one for acquisitions, one for borrower management, and I raise money and manage the investor relations department. Now years and years ago when we started out (with just 4 loans! LOL) we didn't know what roles would fit us best so we tried multiple different things with moderate success, but we all eventually found our niche within our partnership. Then we started to expand once we began to recapitalize on the notes we purchased. We then raised more private money (which became easier and easier) and began to hire more employees - first a secretary, then an accountant, then an IT guy, assistants for the partners, asset managers to work more loans, then their assistants, marketing, etc. Which one of those do I consider essential to me now? All of them, that's why I hired them! But the important thing is you build the team as you go, and speaking from experience you usually will realize who you need when you need them.

But I do know many a note investor who starts out solo, but the ones that seem to want to really grow tend to form partnerships somewhere down the line. But it all depends on how you want to work. That's the beauty of notes, it can be a one-man operation or a large organization. If you enjoy working alone you certainly can, you could also have an admin to help you with paperwork and/or accounting and it can it always stay that simple. With institutional notes (especially 2nds) it's not difficult to work nationwide with a good network of attorneys as well (that IS essential).

So it really depends on you, how do you want to work notes? Do you want to become a large fund or do you want work by yourself?

Hung, reperforming & performing assets with equity still trade at pretty significant discounts. Your $10k note may only fetch $8k for example. The "sweet spot" really has to do with your own risk tolerance. Also, reperforming junior liens even trade for less & that's why I buy a couple every month, it's my "sweet spot" !