All Forum Posts by: Patrick Desjardins

 Hey Daniel,

Getting forced placed insurance is standard when you buy a first mortgage.

I'm not an expert on this process but afaik your servicer will request proof of insurance from your borrower and if they can't produce it, you will get the forced placed insurance.

You know, the insurance will be at your own expense if it's a non performing note. It's part of the expenses you need to account for.

I can't speak for others but I'm after the low hanging fruit that's ripe for the picking. Maybe it sounds bad, I don't know, but my goal with investing is not to spend all day "pounding" the phone calling, but rather to develop a steady source of passive income so I can do what I enjoy such as playing golf with buddies on a Wednesday. (Will be at Lakeview in Harrisonburg tomorrow)

In that regards note inventory isn't dead but it's much less accessible and low hanging fruity than it used to be.

PS: In the several years that I've been participating on this forum, there is like 1 guy that asked me if I had notes for sale. People really aren't looking very hard.

 Just because they want to do a short sale doesn't mean it will be accepted. If they're current and have income then it's frivolous and the 1st mortgage owner doesn't necessarily have an incentive to take a loss on it.

 Some of them aren't real BPOs but AVMs, which is even worse.

To the original poster's question yes, you're entirely right, a lot of these values are bogus. I submit offers based on my number but I do write a note on why my number is lower. For example a recent one, there hadn't actually been a comp in the area in 3 years. Their BPO guy used ONE house that had been completely rehabbed 3 years ago to establish a 75k value when the house in as-is value was likely worth in the low 50s.

Honestly at this point, with notes, I'd rather be ultra selective and get no deals than buy into the frenzy and overpay for crappy notes.

 If it's a recorded document then yes, you can get an official copy from the clerk. But notes themselves are typically not recorded.

My wife was skeptical until we started getting ACH payments every month. People will always be skeptical until you have proof of concept. Just be smart, be careful, and push on.

Don's model is basically what I'm trying to do as well. I personally heard this strategy from Gordon Moss but I'm sure it's been around for a long time.

They both complement each other. Notes are higher cash flow / less demanding, but are finite (at some point they run out) and their value diminishes over time. Real estate's cash flow is typically lower and more demanding, but in theory it should last forever and accrue in value. And even in areas with stagnating prices, rent rates have still gone up.

You can also get some of the rentals at a discount through the note, so even if you're not an expert landlord you get the houses cheap enough that you can't really mess up.

I think it's undeniable that pricing has gone up and some price expectations are ridiculous. That and sellers basing their price expectation on outlandish BPOs. I'm not interested in gambling where if anything goes wrong (and with notes there's almost always something going unexpected) you break even or lose money.

The fact that most small-buyer-friendly companies closed or aren't selling is hurting, too. It used to be easy to purchase one-off notes but it's getting increasingly difficult.

Joe,

It sounds like you already have expertise in the rental game, so why are you looking to go into a different field you know very little about? Looking to diversify or struggling to add to your portfolio?

What you could do is start originating your own notes - by seller financing some of the rentals you don't want anymore.

Hey Toan,

No clue who these guys are but 6-9% isn't too good to be true, in fact it's kind of low. You should have no problem lending to local investors in your area for more than that, or you can purchase a reperforming note in the 12% range.

I know it doesn't answer your specific question but if you tell us a bit more about your goals and what you're trying to do, we might be able to guide you in the right direction.