All Forum Posts by: Bill B.

Well, I guess I'll be the first "real" newbie to post here.   (when you've been in RE for decades, or do fix and flips that net seven figures, that (from my seat) is FAR from anything that I'd call "newbie".)  

:-) 

What is attracting you to this asset class opposed to others? 

• I'm too old to do decades in RE in prep for notes. 
• I have one deal under my belt.....and thankfully did it when the market was still rising quickly as that is the only thing that minimized the loss; the list of mistakes is long and too familiar here on BP to waste space here. But, once burned twice shy. That, for me, translates into limiting risk on any one deal to $20,000 to $25,000, $50,000 if it is a screaming buy.
• I live in SoCal where starting out in RE is very intimidating. e.g. I live in a working class area where 1960s 3/2 fixers are selling for $475,000.....and that is down from six months ago. The down payment on a fixer here is a cash purchase of an A List property in several areas of the MidWest. A NPN on such a property brings investments down into my world.
• I have family members with special needs for whom I am the primary caregiver, so "working nights" with notes is appealing.  I fully understand that there will be "daytime" work involved, but doing online due diligence, reading packages, etc can be done while everyone else sleeps.  Also, being the caregiver makes driving to the Inland Empire or Lancaster/Palmdale difficult.
• related to the previous point, but standing ALL on its' own is "no tenants/no toilets".  :-)
• I've met an individual who lives locally at our local REI who has successfully invested in several NPNs; he's agreed to mentor me.

What are the expectations that you have, think you have or may have heard in regards to the amount or level of return one can expect? 

• my immediate goal starting out is to not lose money. 
• my near term/intermediate (six-nine months) goal is to build relationships with small/regional banks and help them with their NPN (my question back to BP Nation: is that realistic or pie in the sky???) That hopefully will bring returns a bit higher than 20%, (just a bit, not unrealistic) and a volume that I can use to earn referral fees to grow my capital base. @Bill Gulley, while keeping my arms and legs inside the car at all times; i.e. doing it with the proper structure, terms or conditions so as to be in compliance with the choke chains provided by the "best and brightest" in D.C. and Sac.  If it means becoming licensed/a broker, I'll look into the time/cost to earn those credentials. If I can't do it legally, and ethically, I won't.
• My long term goal (four or five years?) is to begin mentoring my daughter, niece and nephews so that they don't wake up in their late fifties in the situation that I am in.   

What is the amount of time a single investment will take or do you plan for? Or your general investment horizon per asset. Perhaps why that is your target as well.

• If I've heard my mentor properly, minimum six months, more likely nine to twelve (and sometimes more) for any individual note.

What is the target amount of capital you believe you need or plan to work with or do work with?

• Far more than I have.   :-)
• More seriously, we have about fifty thousand liquid and nearly two hundred thousand in self directed IRAs that will be deployed AFTER I do a couple without screwing up. After that, my parents will miraculously and instantaneously "know" how to start investing a portion of their IRA's in performing notes and a smaller portion in NPN, keeping diversified into stocks as well. They have a couple hundred thousand as well. So, all told enough to keep me busy.

How do you believe you will exit your asset investment specifically? Perhaps a better way to say this is what is your most hopeful exist, highest best, as you know it.

• One of the things that appeals to me about NPN is that I can potentially help people in need.
• My sincere hope is to help people work out loans in a way that helps them, and me. (using qualified service companies ONLY, of course....and all the other things that I'm learning about here on BP and from my mentor.)
• I fully understand that FC is in the mix and is unavoidable.  At some wholly illogical and unbusiness like thinking level, I think it fitting that the returns I've been told about are normally less for FC than for working out a loan.  What I mean is that it just seems "right" that helping someone keep their home should pay more.  I fully understand the economics that drive the facts, I just think it is great that it works out that way.  

How does that exit affect your return in your opinion?

• Well, the "exit" is somewhat dictated by events out of my control, right?  If the owner wants to stay, hopefully we work things out and I have an asset that (after seasoning) that I can sell, or I just keep it.  If not, a DIL, or FC (if I must) and then resale, hopefully to a fix a flip expert.

Dion, I don't know if this is what you had in mind.  I hope it is a useful contribution to the thread.  

Finally, I made an offer yesterday on my first NPN; don't know if it is accepted yet.

Wish me luck!!!

@Mike Hartzog 

@Dion DePaoli 

Thank you both for your responses.  Learning more all the time.  Sooner or later, I'll pull the trigger on a note.  But, I'm reading a LOT about the potential pitfalls and I'm trying to be very careful as our capital base is not "all that".  Also, I'm very worried about the general economy.  The huge distortions in global markets MUST correct.  Timing is the only difficult thing to see.  

@Mike Hartzog 

 Hi,

If I may, I want to be sure I understand.  Even if your servicer is registered in the state (Ohio was the example) my entity must also register if I am to pursue a FC? 

If my understanding is correct, may I ask where/how you learned this information?  I have no problem with reading and researching, but state laws and regulations are SO fragmented and voluminous, that I'd REALLY appreciate a "go look in the south forty; and then have a peak at the two acres just south of the barn" to narrow the search just a bit.

Your time and assistance is most appreciated.

Bill

Hi,

First, I do not own any rentals.

Why would you want to replace zero percent interest with anything higher? Immediately after refinancing, you'll be paying interest on the entire amount loaned. I'm no CPA, but the payments should still be deductible as a business expense, even if you are paying zero interest.

So, I'd pay the maximum you can against the debt as it is with zero interest. Then, about April or May of 2015, I'd look to pay off the remaining balance by getting a loan.

This minimizes interest expense and maximizes the pay down with 100% of the payments through May 2015 reducing principle. This also minimizes the interest that you pay over all on the debt.

Also, this gives you another full year of seasoning on the property. That should help when the time to get a loan to cover the remaining balance on your credit cards. (If there is any balance left.)

I hope this is helpful.

Bill

Hi,

First, I do not own any rentals. 

Why would you want to replace zero percent interest with anything higher?  Immediately after refinancing, you'll be paying interest on the entire amount loaned.  I'm no CPA, but the payments should still be deductible as a business expense, even if you are paying zero interest. 

So, I'd pay the maximum you can against the debt as it is with zero interest.  Then, about April or May of 2015, I'd look to pay off the remaining balance by getting a loan. 

This minimizes interest expense and maximizes the pay down with 100% of the payments through May 2015 reducing principle.  This also minimizes the interest that you pay over all on the debt.

Also, this gives you another full year of seasoning on the property.  That should help when the time to get a loan to cover the remaining balance on your credit cards.  (If there is any balance left.)

I hope this is helpful.

Bill

@Christian Carson 

Thanks, Christian!

All great ideas.  Thanks to all  @Robert Macklyn @Benjamin Timmins 

@Manny Cirino @Christian Carson for the ideas and suggestions.  The smart phone/cloud solutions are especially interesting.  Christian, do you keep the cards or toss them after the scan?

@Manny Cirino 

Thanks!!!  I appreciate your time and help!

@Karen Margrave

@Karen Margrave do you keep the hard copy or toss it?

@Ray Corkran is it bigger than a bread box??  Just kidding.  Is there an order to the box, or just tossed in like Manny's giant pile?  :-)

@Manny Cirino do you manually enter into all three?  (outlook, gmail and excel) or do you perform imports and exports? 

Hi,

I'm wondering how people manage the business cards they collect.   I have a BUNCH of them.....and I'm the one who started the "The Introvert Thread!!!" 

DO you keep them?  How do you manage the ones you keep? 

Thanks!!!

Bill