- Non-Performing Notes Pt 3 + Teleseminar
Published: Tue, 07/30/13
August 14, 2013
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IN THIS ISSUE: Non-Performing Notes: The Interview With
Jack Krupey, Part III
Free Note Teleseminar This Saturday
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Hi ,
You're invited to a free teleseminar this Sat. I'll be interviewed
by real estate expert Jean Norton (www.jeannorton.com). We'll
talk about investing in and brokering non-performing and
performing notes and take your questions live. It's THIS
Sat., Aug. 17 at 2 p.m. Pacific Time // 3 p.m. Mountain //
4 p.m. Central // 5 p.m. Eastern. Go to
http://jeannorton.com/jeanscalls
to register for the teleseminar and you'll get a reminder an
hour before it starts.
Now here's part 3 of my interview with Jack Krupey, one of the
few true experts on investing in and brokering non-performing
first lien real estate notes. There are a lot of people
teaching non-performing notes, but very few have his experience.
Jack will teach for a full day at our training in Las Vegas
next month, Sept. 27-28: "Profits In Non-Performing Notes:
Turning NPNs Into Cash Cows." Gordon Moss, the #1 expert in
junior lien NPNs, will also teach for a full day. Plus you
can get personal consultations with each of them at no charge!
See www.PaperSourceSeminars.com for details and to register. The
signups are pouring in, and the networking will be incredible.
If you sign up now you'll get $100.00 off -- but that discount
won't last much longer.
Cheers,
Bill
W. J. Mencarow
The Paper Source, Inc.
www.PaperSourceOnline.com
www.PaperSourceUniversity.com
P.S. Don't worry that if you go to next month's training on
non-performing notes that you'll sit through a bunch of sales
pitches for boot camps, home study courses, yadda yadda yadda.
We don't allow that and don't invite people who do it.
Our training is by and for people SERIOUS about the business,
taught by people who do what they teach. The cash flow note
industry doesn't need sideshows with carnival barkers who think
discounted paper means the grocery store has a sale on Charmin.
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Non-Performing Notes: The Interview With Jack Krupey
Part III
Parts I and II are posted at
http://papersourceseminars.com/jack-krupey-on-non-performing-notes/
Jack Krupey is a partner and portfolio manager for Gemini
Capital Managers LLC (http://geminicapitaladvisors.com), a
multi-million dollar fund focused on buying non-performing and
re-performing residential mortgages. Previously Jack worked as an
asset manager and trader for a Wall Street fund buying large
portfolios of distressed debt. He currently oversees a growing
portfolio of over 100 non-performing and re-performing notes and is
actively buying, selling, and brokering such notes.
Jack was interviewed by Bill Mencarow.
Bill: What are the steps for an investor or broker to start in
non-performing notes?
Jack: First you've got to understand the business -- the
product, the lingo, the basic price points to know what a
reasonable deal is. You've got to know how to do basic underwriting
yourself, as if you were a buying a note. On the non-performing
side probably the two simplest things are 1) what is the value of
the property, and 2) doing a quick review of title for back taxes
and municipal liens just to understand how much money is left in
the deal.
Those are the two things, and then 3) developing the right
relationship with buyers and sellers.
On the seller side it's finding control of the product, whether
it's working with a fund like us that you know we're the direct
seller or we're working with a fund exclusively that we're selling
our notes. We're not the only ones. I think I'd like to say we're
one of the best, but there are a few other funds like us that sell.
You've got to be careful with the funds that do a lot of
their own marketing. Condor Capital, for example, is a huge fund.
They do sell notes/loans but they've got a pretty big database. If
you try to bring a note from Condor to a fund like us, there's a 95%
chance we've already seen it. Be wary of what notes have been
marketed, what have been blasted all over the place and what
notes are from a source that's a little more under the radar.
Bill: What are normal broker points, and who pays?
Jack: That varies as well. The larger the deal, the less the
points. If you're fortunate enough to broker a one or two
million-dollar deal, to get a point, point and a half is a decent
fee for that kind of a larger trade. On smaller deals, expect 1%
to 5%.
When you're starting out it's much more likely the buyer's
going to pay. As you develop relationships it's not out of the
question at all that the seller will pay. We have no problem paying
a broker or seller as long as, again, there's no broker chain. We're
not going to pay five different people. If you bring us a referral
or buyer, we're happy to pay.
If it's a $20,000 deal we try to at least pay $1,000 even
though that is 5% of the deal. We try to set a floor just because
if you work at RE/MAX and sell a house for 20,000, usually there's
a minimum commission. You're not going to do it for $200.
If you're going to put up your own money and buy the deal
off of us, I don't care what you make. If I sell you a note for 20K
and you want to turn around and sell it tomorrow for 25K, I could
care less. If you put your money on the table you can make whatever
you want.
The numbers on these notes don't have to be large.
There's a lot of money be made buying and selling $10,000, $20,000
$30,000 value notes. You can certainly make a significant amount of
income buying, brokering or flipping, or just working these
out yourself.
Bill: What percentage of your deals do you foreclose on?
Jack: We only foreclose on maybe 25% of our deals. Some of those
are properties that are vacant, that we knew we would foreclose
before we bought the note.
A lot of them are able to be modified or something else can
be worked out with a borrower, whether it's giving them cash for
keys or doing a deed in lieu of foreclosure -- which is relatively
similar, but the reason I list the two differently, cash for keys
versus a deed in lieu, is that title is not always clean. We've had
deals where people have handed us the keys and we have controlled
the property, we put a tenant in it and rent it, but we don't
actually forgive and release the mortgage because there's a second
mortgage or other judgments.
In those cases we're essentially foreclosing on ourselves.
We have control of the deed but we are still the mortgage company.
This way we're able to make some income while we're foreclosing.
We're essentially foreclosing just a clean title and wipe out any
second mortgages or third mortgages or judgments that are on title
behind us.
This is something I will cover in more depth at the
training in Las Vegas. I'm going to go through a presentation
driven off of actual deals from 2012 and so far in 2013. I'm going
to cover some of the basics of why you would buy non-performing
notes. As I'm doing that I'm going to show examples. When I talk
about borrowers that want to stay and pay, I'm going to show you a
number of deals -- what we paid for them, how we get them
reperforming and what our cash flow is, based on buying a note at a
deep discount and getting payments collected. I'm going to show some
foreclosures, loans we bought, we foreclosed, we sold.
I'm not going to just show all the pretty deals that went
perfectly. I'm going to show a couple deals that were a little more
challenging, how we worked through them and how we made money.
We expect a strong turnout of real estate and note
investors and brokers, hard money lenders and others who want to
learn how to buy discounted loans from banks and hedge funds. This
will be a tremendous learning and networking opportunity!
Among the topics we will cover in this intensive class are:
- The Big Picture Strategy
- Why Notes? Why Now? Why Firsts? Why Seconds?
- The Terminology Defined
- Where To Find NPNs
- How to Quickly Analyze A Deal
- Due Diligence Checklist
- Invest or Broker?
- The Buying or Brokering Process
- The Paperwork
- Waking Up The Borrower
- Biggest Challenges & How To Overcome Them
- The Workout Process
- The "Art of the Deal"
- Exit Strategies
- More Profit Possibilities
- Re-performing Notes
- Cash Flow or Cash Out?
- Loan Servicing
- Advanced Strategies & Tactics
What you will NOT get:
- Sales pitches
- Speakers with no hands-on experience
In addition, Gordon Moss and I will show you, step-by-step,
actual deals we completed in the past 12 months from initial
purchase, borrower contact, and exit strategies employed including
foreclosure, loan modification, loan sale, and cash for keys.
And you will learn how to buy performing loans that have
already been modified by hedge funds to earn double-digit returns
just by collecting payments.
Plus, you will learn cutting-edge techniques of dealing with
defaulted debtors and turning the notes into re-performers.
This is the only seminar of its kind and will only be offered
once in 2013, if ever again. For additional details and to
register, see www.PaperSourceSeminars.com You can save $100 if you
register now.