- Teleseminar Thurs. / The Craziest Investment??
Published: Tue, 03/18/14
* Is this the craziest investment ever?
* Free note teleseminar this Thurs.
* Just a few days left to save $$$ on the Las Vegas Note Symposium
THE CASH FLOW EXPRESS
A Service of The Paper Source, Inc.
March 18, 2014
Hi ,
In this issue Gordon Moss tells us why non-performing 2nd
mortgages not only aren't a crazy investment -- they might
be the LEAST risky and most profitable strategy available. See his
article below.
BREAKING NEWS: Gordon will teach you non-performing 2nds at our Las
Vegas Note Symposium next month! He, Sandor Lau (also an expert in
non-performing 2nds and one of Gordon's most successful students)
and Wall Street investor Jack Krupey, who is an expert in buying
and brokering non-performing 1st mortgages, are just 3 of the
all-star lineup of teachers who will spend two and a half solid
days getting you fully prepared to profit.
Plus you can get one-on-one consultations with the teachers at no
charge! More info: http://tinyurl.com/2014notesymposium or
call 800-542-2270.
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TELESEMINAR THIS THURSDAY
Mark your calendar for a live teleseminar this Thursday,
March 20 with Caleb Preston of Alaska Financial Co. He buys
seller carryback notes nationwide. We'll talk about and take your
questions on a wide variety of notes.
Caleb will also be teaching at the Note Symposium next month on the
unique topic: "I Opened My Roth At Age 12 (And Made Over $600 A
Month From My Notes At Age 16): How To Get Your Teenagers Excited
About Wealth Creation." I'll get him to give us a preview of
that intriguing talk on the call as well.
The free teleseminar starts this Thursday, March 20, at:
6 p.m. Pacific Time
7 p.m. Mountain
8 p.m. Central
9 p.m. Eastern
When it starts in your time zone, call (559) 726-1300 and when
prompted enter the access code: 794728# (That's the number
794728 followed by the # key).
WILL NOT WORK WITH MAGIC JACK OR OTHER VOIP SYSTEMS. It will
work on your cell or land line.
Cheers,
Bill
W. J. Mencarow
President, The Paper Source, Inc.
www.PaperSourceOnline.com
P.S. You have just a few days left to save $$$ on your
registration for the Las Vegas Note Symposium. The early special
discount ends this Monday, March 24 at midnight. More info:
http://tinyurl.com/2014notesymposium
or call 800-542-2270.
You'll meet note investors, brokers, note sellers, lenders, hedge
fund managers, self-directed IRA administrators, note
servicers...the list goes on and on...this will be a TREMENDOUS
networking and learning opportunity!
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IS THIS THE CRAZIEST INVESTMENT EVER?
by Gordon Moss
(Gordon Moss is president of Quixote Ventures, Inc., San Diego, CA.
He is THE most experienced buyer of non-performing 2nd
liens. His website is www.realestateandnoteinvesting.com)
Why would an investor in his right mind consider the purchase of a
non-performing 2nd (junior) lien?
Maybe they haven't dedicated the time, energy, and resources to
fully understand this unique niche, evaluated the risk/reward ratio
and come to the conclusion that it might be the LEAST risky
and most profitable strategy available in today's marketplace.
How can that possibly be?
Let me give you a bird's eye view of this niche, exactly why we
came to that conclusion years ago and why we have dedicated
ourselves to understanding the current non-performing 2nd lien
marketplace and the many strategies and tactics we have
learned and developed.
The current market (in California, at least) is paying 50, 60, or
70 cents-plus for a quality non-performing 1st lien, and that is
just too much money in my opinion; margins are too slim,
add foreclosure costs with a large potential for bankruptcy and
other related delays, and you can have your investment dollars tied
up for many more years than originally planned.
"Wait a minute here," you might say, "I can buy non-performing
first liens at 30, 20, or even less than 10 cents on the dollar
from my local hedge fund!" At this point I strongly urge
you to read my blog on "THE BULK REO GAME"
http://realestateandnoteinvesting.com/2011/10/the-bulk-reo-game/
Cheap non-performing first liens could lead you on a very short
path to disaster. These will be notes on the wrong properties, in
the wrong areas, in the wrong parts of the country. Some local pros
might be successful at this niche, but I don't know any of them.
Consider the possibilities when paying 15 to 20 cents on the dollar
for a non-performing 2nd lien on a better quality borrower and
stronger quality collateral: What if you could buy a $100,000
non-performing 2nd lien for $15,000 and re-perform it at
$700 a month for 30 years (tax-deferred or tax-free in your own
self-directed retirement account) and/or season and resell it
for $60,000?
You might have most of your investment back in a short time frame
and an excellent rate of return. Even a fraction of those numbers
might be a profit margin worth chasing.
Evaluating First Position Non-Performing Liens
The old cliché is that real estate valuation comes down to three
factors: "location, location, location." When evaluating a
non-performing first lien the three most important factors
might be "collateral, collateral, collateral"...The chances of
owning the property are very strong, and your risk needs to be
evaluated this way.
Evaluating a non-performing 2nd lien is a bit unique - it might
be the "borrower, borrower, borrower." The most important factors
in evaluating a junior lien come down to your ability to analyze a
borrower's "emotional equity" and his ability and willingness to
work with you to keep his home and create a "win/win" solution that
benefits all parties.
How might you do that?
Clues can be found in the "pride of ownership" (or lack of) in the
condition of the house - Is the lawn mowed and are the rose bushes
planted? The study of credit reports is an art that once mastered
can greatly increase your chances of success. They are by far the
most important indicator even on notes with little or negative
equity. Statistics show that the "Emotional Equity" and credit
history and potential of the borrower are what really tell you the
story.
The Borrower Wakeup and Workout
Once you have purchased your non-performing junior lien you need to
show your borrower that there "is a new sheriff in town" and that
you are very serious, professional, and determined to "wake them
up" and provide a workout solution through win/win options that
benefit both parties. I often tell them that "today is a good day
for you - a human now owns your loan and we can accomplish positive
outcomes that a bank cannot - if we can work together to solve your
problem".
It is a relationship you must develop with these borrowers to prove
to them that you are not the faceless, soulless bank that treated
them like a number. Do this, and your chances of getting paid over
the long term will increase dramatically.
A long time expert tells the story that he tells his borrowers. "My
attorney collects these payments directly and if they are late he
will immediately file a foreclosure proceeding which will
ultimately end up costing you the borrower thousands of dollars.
ALWAYs call me directly if there is a problem (I am your advocate)
and we will work something out". He has had a borrower in the past
he knew personally over the years call and say "I have a medical
issue and will not be able to pay the $300 loan". He said thank you
for calling as we discussed. "Tell me what's happening. - Well I
have a medical issue coming up and will be off work for the next 3
months". He replied "Let me ask you this - can you pay $75 a month
for the next 4 months? (this lender understands how important it is
to keep his borrowers in a rhythm of paying monthly). "Absolutely I
could do that". "Then that is what we will do". "This will keep
you current on your payments until you are back at work, and we
will add the remaining balance to the end of your loan".
Would or could a bank provide this type of solution? I very much
doubt it. A human being can bring solutions that a bank cannot.
Asset Management vs. Loan Servicing of Junior Liens
Let's talk about loan servicing - years of experience in this field
have taught me that no one cares more about your money and
investments than you. I had hoped that my real job was to acquire
these "broken" loans and that I could turn the loans over to the
loan servicing pros and they would solve all of my problems and
make me rich. It doesn't work that way. Let me say that again. It
doesn't work that way
A loan servicer can be used to collect payments once the loan is
re-performing. I know several pros that get their loans to a
re-performing status and then turn them over to a loan servicer.
They quickly take them back at the first sign of a problem and
leverage the relationship they have established with the borrower
to get them back on track.
Asset managers are the people that have the experience and
expertise to fix a broken and non-paying loan. This skill is one
that is very hard to find and I would recommend that you plan on
mastering this skill yourself if you plan to be successful in this
business.
The asset management of turning a non-performing broken loan into a
re-performer is the real magic of this business. It starts with a
diplomatic and professional approach to making contact with a
borrower who in many cases has written you off as a distant bad
memory. It is an unsettling shock to say the least for these
borrowers to be reminded that a foreign entity has purchased their
old loan (it says "charged off" on my credit statement)" and is
taking very aggressive action including threatening foreclosure on
their home to settle this outstanding debt obligation.
The real art of this is to build a relationship with these people.
I tell them my goals are to have them write me a letter at the end
of the process telling me this was the most professional,
respectful and mutually beneficial transaction they have
experienced. Many of them were surprised to hear this at the
beginning of our conversations but have written these letters at
the end. You really can help people in this business achieve a
positive win/win solution and build a mutually beneficial long term
and profitable relationship.
At the Paper Source Las Vegas Note Symposium next month I'll
be showing you some actual deals I've done.
I'll will also be available for private consultations for those in
attendance at no charge. So bring your questions! If you have
documents and spreadsheets, etc., bring them also.
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 notes from individuals, banks and hedge funds. I hope to
meet you there! http://tinyurl.com/2014notesymposium or
call 800-542-2270.
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BIBLES UNBOUND
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Visit Bibles Unbound, a ministry of Voice of the Martyrs,
and see how you can become a Bible Mailing Missionary:
www.BiblesUnbound.com
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