The Craziest Investment Ever? Pt. II
Published: Thu, 11/06/14
THE CASH FLOW EXPRESS
A Service Of The Paper Source, Inc.
November 6, 2014
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IN THIS ISSUE: Is This The Craziest Investment Ever? Pt. II
Final Conference Discount Expires Next Fri.
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Hi ,
Part II of Gordon Moss' article Is This The Craziest Investment Ever? is below.
We're adding expert teachers, topics and trade show exhibitors to our conference on non-performing notes almost every day! See the latest line-up at http://papersourceseminars.com/non-performing-notes-seminar-2014
Cheers,
Bill
W. J. Mencarow
President, The Paper Source, Inc.
P.S. If you're planning to join us in Las Vegas Nov. 20-22 and haven't reserved your seat, time's running out for the final discount. The price goes up at midnight next Friday. Remember, this is note industry continuing education, never sales pitches.
Is This The Craziest Investment Ever?
(Or One Of The Smartest?)
by Gordon Moss
Part II
Gordon Moss is president of Quixote Ventures, Inc., San Diego, CA.
He is THE most experienced buyer of non-performing 2nd liens. He'll be teaching and available for complimentary private consultations at the Paper Source Las Vegas conference Nov. 20-22.
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 note payors:
(note owner to payor): "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 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 payor in the past he knew personally over the years call and say
"I have a situation and will not be able to make the $300 monthly payments
for awhile."
He said, "Thank you for calling. Tell me what's happening."
"Well, I have a medical issue coming up and will be off work for the next 3
months."
"Let me ask you this - can you pay $75 a month for the next 4 months?"
(This note owner understands how important it is to keep his payors 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 Real Magic
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 seminar on non-performing
notes later this month (Nov. 20-22) I'll show you some actual deals we've done
-- I'll put the numbers in, what we paid, the monthly cash flow, and
multiple exit strategies.
I'll also show you how we create cash cows by turning non-performers
into re-performers for high returns.
The other teachers (that's teachers, not pitchmen) and I will also be
available for private consultations 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, brokers,
hard money lenders, servicers, hedge fund managers and others. This
will be a tremendous learning and networking opportunity!
This is the only seminar of its kind and may never be offered again.
For the teacher lineup, a video and to register, see
Or call 1-800-542-2270.