The August 7th Note Investors Forum Meetup focus on:
TOPICS: Several New Case Studies
Where Does a New Note Investor Begin
Bring your questions, This will be an interactive meeting.
Real Estate Note Buyers and Seller Carry Consultants
The August 7th Note Investors Forum Meetup focus on:
TOPICS: Several New Case Studies
Where Does a New Note Investor Begin
Bring your questions, This will be an interactive meeting.
As discussed in my prior blog, Note workouts are not rocket science. It is a matter of treating every party fairly.
CASE STUDY 2
This 2nd case study happened on a 2nd Mishawaka, IN property. My
partner & I bought a non-performing note(NPN) in October, 2014. The payor had become functionally unable to do anything due to a debilitating disease and had been out of the house for 2 years. We tried a workout which was not viable but did get a deed in lieu of foreclosure with cash for keys.
After fixing the place up, we found a recently divorced lady. She was happy with a probtionary rent-to-own for 12 months a and Seller-carry to follow with 10% down. She was also qualified by an RMLO oer Dodd-Frank. We sold the 1st note to a partial note investor and kept the second.
Fast forward, the payor stopped paying due to illness. Again we developed a good working relationship with her. After a series of discussions, she confirmed that she really did want to stay and agreed to a loan modification. The “we” was the partial note buyer.
The end result is after consulting with our legal counsel and her daughter, the payor signed a Quit Claim deed to be held in escrow and agreed to a payoff schedule for her to get caught up on the back payments. If she falls behind on any payment for more than 15 days we can record the Quit Claim deed. My company will own the house. We have avoided the the foreclosure process to boot. The bottom line: the payor is happy and agreed to bring the loan current, the partial buyer is happy as she is geting paid, my partner is happy as we are both collecting on our second and have avoided a negative situation –the long forfeiture process.. This was/is a total win-win.
Potentially, we may have to record the deed and rehab, but for now it is all good.
Note Due Diligence 201
buying
selling
seller carry
partials
one offs or a pool of assets.
Expect standing room only. The room is maxed out @ 50 attendees.
Buffet lunch served.
Click on the link below to reserve your spot.
$16.83 includes networking, information, food, tax and tip.
$20 at the door.
The following article appeared in DSNEWS.
House prices are rising.
There is a shortage of housing.
There is a shortage of rentals.
There is a shortage of well priced notes & REO’s.
“Prices are growing more quickly in some places than in others, and in MSAs where recovery has been most robust (and even in surrounding metros), price growth is probably not the best metric to use for rental investors seeking a new property to buy and hold.
So………….which MSAs have the best rate of return on rental investments?
The following article was from CNBC.
Having lived and felt the pain of the subprime crisis, the return to subprime is a recipe for disaster. No different than the movie The Big Short or the book Fools Gold!!
They were blamed for the biggest financial disaster in a century. Subprime mortgages – home loans to borrowers with sketchy credit who put little to no skin in the game. Following the epic housing crash, they disappeared, due to strong, new regulation, and zero demand from investors who were badly burned. Barely a decade later, they’re coming back with a new name — nonprime — and, so far, some new standards.
California-based Carrington Mortgage Services, a midsized lender, just announced an expansion into the space, offering loans to borrowers, “with less-than-perfect credit.” Carrington will originate and service the loans, but it will also securitize them for sale to investors.
“We believe there is actually a market today in the secondary market for people who want to buy nonprime loans that have been properly underwritten,” said Rick Sharga, executive vice president of Carrington Mortgage Holdings. “We’re not going back to the bad old days of ninja lending, when people with no jobs, no income, and no assets were getting loans.”
Sharga said Carrington will manually underwrite each loan, assessing the individual risks. But it will allow its borrowers to have FICO credit scores as low as 500. The current average for agency-backed mortgages is in the mid-700s. Borrowers can take out loans of up to $1.5 million on single-family homes, townhomes and condominiums. They can also do cash-out refinances, where borrowers tap extra equity in their homes, up to $500,000. Recent credit events, like a foreclosure, bankruptcy or a history of late payments are acceptable.
All loans, however, will not be the same for all borrowers. If a borrower is higher risk, a higher down payment will be required, and the interest rate will likely be higher.
“What we’re talking about is underwriting that goes back to common sense sort of practices. If you have risk, you offset risk somewhere else,” added Sharga, while touting, “We probably are going to have the widest range of products for people with challenging credit in the marketplace.”
Carrington is not alone in the space. Angel Oak began offering and securitizing nonprime mortgages two years ago and has done six nonprime securitizations so far. It recently finalized its biggest securitization yet — $329 million, comprising 905 mortgages with an average amount of about $363,000. Just more than 80 percent of the loans are nonprime.
Investors in Angel Oak’s nonprime securitizations are, “a who’s who of Wall Street,” according to company representatives, citing hedge funds and insurance companies. Angel Oak’s securitizations now total $1.3 billion in mortgage debt.
Angel Oak, along with Caliber Home Loans, have been the main players in the space, securitizing relatively few loans. That is clearly about to change in a big way, as demand is rising.
As a real estate note professional, the buyer of performing and non-performing notes & REO, the following article confirms/addresses what has been shared from many venues.
The nation has a staggering shortage of 7.2 million affordable and available rental homes for extremely low-income (ELI) renter households, reports MFE sister brand Affordable Housing Finance. Deputy editor Donna Kimura examines a new study from the National Low Income Housing Coalition (NLIHC), The Gap: A Shortage of Affordable Homes, which finds that for every 100 of the lowest-income renters, or those earning 30% of their area median income, there are just 35 homes affordable and available to them.
“This leaves over 8 million of the lowest-income people [spending] more than half of their limited income on rent each month, leaving very little for healthy food, for savings, or to cover an unexpected financial emergency,” says Diane Yentel, NLIHC president and CEO. “The report highlights the urgent need for an increased national investment in more homes affordable to the lowest-income people.”
Yental also noted that federal housing programs serve about 5 million low-income households, but the needs of many more families go unmet. Only one out of every four eligible families receives the help they need. As a result of the housing shortage, low-income unassisted households are often severely cost burdened and pay more than half of their limited income on rent.
The severe shortage of rental homes affordable and available to the lowest-income households predates the Great Recession but has worsened in recent years, according to the study. In 2007, 40 affordable and available rental homes existed for every 100 ELI renter households and 67 existed for every 100 renter households with incomes at or below 50% of the area median income (AMI). A small surplus of affordable and available rental homes existed at 80% and 100% of the AMI in 2007. Since then, the supply of affordable and available rental homes (relative to demand) has declined even at these higher-income levels. Renter households at 100% of the AMI, however, still enjoy a surplus nationally and in most markets.
I was recently interviewed by Eddie Speed, the Founder of Note School of which I have been a Mentoring Student since 2013 and Case Study winner at Note Expo 2017.
We discussed how my successful real estate career kept me so busy it crowded out spending time with my family. As a successful Phoenix REO agent between 2008 and 2014, the REO business dominated my life even more as demonstrated in 2010 when I closed 296 houses. By 2012, I realized the industry was changing. The inventory of houses was declining, which meant my potential to make money was declining.
Changing from being a prolific REO agent to note investing gradually changed my life for the better. I can now enjoy my Grandson and not be worried about being constantly accountable to the asset managers.
I went from being a business owner to a portfolio owner. Plus, I can do deals from anywhere. I’m loving every minute of time I get to spend hiking in the mountains around Phoenix –many times with my daughter and grandson.
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This interview focuses on a Partial Note sale completed in September, 2017. My IRA bought the note, then recouped almost all it’s original investment by selling the first 125 payments as a partial to a passive investor, but kept the next 154 payments. This property is near Detroit and my passive investor lives in Hawaii. I completed this deal from my Phoenix office
Best of all, The ROTH IRA’s profit is 100% tax-free!