Thread: Investing in RE notes

Yes we have been purchasing notes for years. What do you want to know

Man, where do I start?

I'd be interested in hearing your thoughts on the following questions:

1. how are you finding the opportunities?
2. are you originating the note, purchasing an existing note, or doing both? and, do you have a preference of one over the other?
3. for you personally, what type of return do you look for in order to make the risk worth it?
4. when analyzing a note, are there any aspects that would immediately disqualify it from further consideration? (I guess this would go into a quick, back of the envelope type analysis...)

I've got plenty more, but I'd be happy if you would touch on any of the above...

thanks!

1. how are you finding the opportunities?

We buy notes 2 ways. 1) we have relationships with banks that send us lists. We buy only non-performing notes as we can get them at the biggest discount. 2) we follow notice of defaults and buy loans that way also.

1. are you originating the note, purchasing an existing note, or doing both? and, do you have a preference of one over the other?

We stricly buy notes. We have orginated a few notes, but for the most part we only buy.

1. for you personally, what type of return do you look for in order to make the risk worth it?

We look more at the LTV than the return. Most of our deals can return 20% on the low side to several hundred % on the high side. We also only but notes secured by real estate

1. when analyzing a note, are there any aspects that would immediately disqualify it from further consideration? (I guess this would go into a quick, back of the envelope type analysis...)

Yes the LTV if we are not getting in at 65% or less we are not interested.

Hope this helps!

For starters, thanks for the above!

Originally Posted by reipro

1) we have relationships with banks that send us lists. We buy only non-performing notes as we can get them at the biggest discount.

If you are buying non-performing notes, is your goal to adjust the terms and bring the borrower back into good standing or are you planning to foreclose and take control of the property? (to be honest, I have no idea what the expenses would look like to follow through with a foreclosure, so I'm not sure if this is a viable strategy)

How big of a discount are you talking about? 50 cents on the dollar? More? Less? I would assume that when I start, since I won't have the cash to buy more than one or two, I'll be less likely to negotiate to the same degree that you are able to right now.

Originally Posted by reipro

We look more at the LTV than the return. Most of our deals can return 20% on the low side to several hundred % on the high side. We also only but notes secured by real estate

Are you also limiting these purchases to notes in first position?

there was a thread where reipro answered all these questions already. Do a search and you can read a wealth of information from somebody that makes a living out of this.