All Forum Posts by: Patrick Desjardins

The only time this really comes into play is when there is a lot of equity. Let's say it's a first mortgage with a UPB of 40k, 20k arrears and the house is worth 80k. The seller has no reason to give it away for 20k if he can foreclose and collect 60k, so it warrants a higher sales price.

The BK example above doesn't seem to fit this description and is most likely a pass. 

 Jay you're entitled to your opinion but what is this made up stat that people will foreclose on 50% of reperformers?

Can anyone on this forum say they've even come close to this number?

Having a LLC or other entity also adds a degree of professionalism and distance when dealing with borrowers. I would rather have them google XYZ LLC over stalking David Piquera.

Not only that but it gives you a 3rd party to blame, which is an important negotiating tool. We can't do that because it doesn't meet the company's guidelines. I'll have to ask the manager if we can do this. But if you don't have an entity, the borrowers know you're the decision maker.

I don't know I'm sure you can be wildly successful without but for me it's a no brainer.

It's not really for portfolio management per say, but to quickly calculate values, IRR, payments, returns etc I use an app called Financial Calculators (then the TVM calculator). Nothing fancy but it's very quick, easy and don't need to carry your calculator with you. It's great when you want to input different values to see what the return would be at XYZ coupon payment, or to backtrack into a price based on a 12% return, etc.

I was skeptical about Pipedrive but after reading Adam's comments on it and some other people, I started using it a few months ago and it's excellent. It's not a stand alone tool you can use by itself, but it lets you track things and combined with other products it does a good job.

 It's a case by case basis. I usually look for them before actually buying the note, so I don't feel comfortable promising them a listing based on a note I might not buy. But most of them are willing to pull some comps for you and take a look, and give you info on the area. When I do have a note under contract then I ask them if they do BPOs/how much they charge, and we go from there.

You're touching on a great topic for discussion. My goal when I do due diligence is to find a value that's within 10% of what it would sell as-is. So if the house is "worth" 60k, if I can be confident in a value in the 55-65k range I'm satisfied because it's so difficult finding an exact value.

With that said, BPO providers suck, just as most service providers in general suck. It's sad and a pessimistic way of seeing things but the fact is the vast majority of real estate agents (who do BPOs) are bad. I became an agent for a while and I can tell you that the education provided on finding appropriate comps and finding an accurate value is very minimal. Simply put, agents aren't appraisers. Not even close.

The only real reason to get a BPO is to get eyes on the property and get pictures so that you can determine what your as-is looks like when YOU search for comps. So in the 60k house example above, let's say that the agent sends you his BPO and the value sounds in the ballpark, and you look at the pictures and the house looks beat up, I'd lean toward looking for comps at the bottom of the range. If it looks good and clean, I'd look for comps at the top of the range but not renovated.

Summary: don't trust agents unless it's from a well known, active agent in the community. Your best bet is to find comps yourself and do your own CMA, or find a local agent. What I do is find listings / past listings that sold in the area and contact those agents. Since they have/ have had listings then you know they're active.

Bob explained it pretty well. If there is little equity on the note and you bought it cheap, you could just rent it and pocket the money every month. It wouldn't make a ton of sense to pay off a 100k first on a 105k house, otherwise we would just buy a similar house on MLS.

Obviously these are backup scenarios and not your preferred exit strategy, but it's good to know so you can turn bad notes into break evens or slight winners.

 Who told you this? You don't have to pay off the first any more or less than someone who buys rentals subject-to.

You didn't take the loan. The loan is attached to the house. You might want to pay it if you get foreclosed on, but you're never responsible for it.

Search a little..

https://www.biggerpockets.com/forums/70/topics/291046-ppr-note-fund