Posted by James Strange on November 07, 2002 at 21:34:42:
I bought a convenince store. I did make some money at it but I will never do that again!
Good lead on note- need some ideas/comments - Posted by Aaron C
Posted by Aaron C on November 03, 2002 at 14:09:18:
I got a call from a woman in her 70s who has a mortgage for sale. The property is a 3 bedroom, 1 bathroom house on 10 acres of land. Rough comps on the property come to $55-60,000. Most research is leading me to believe it will go higher, but I figured I’d stick with the low numbers for safety. Here’s the facts and figures-
Mortgage is in first position. No other mortgages.
Mortgage originated by seller in 12/91
9.5% interest
$40,594.25 still owed.
Original mortgage amount $45,000
Payments are $378.38
30 year amoritization
Payment history of payor has been shaky, with some missed payments, late payments, etc. While they are still making regular payments, the entire mortgage is technically 1 year behind.
Mortgage holder asking $30,000 for the mortgage.
I have the seller’s permission to contact the payor and was going to talk to them about refinancing if I offered them a discounted payoff. Of course, I don’t know what their credit looks like, but there appears to be some good equity in the house to support a refinance if I can interest them in something like a $5,000 discount. I have not made a formal offer to the seller yet, but she is flexible and just wants to get rid of her headache.
I was also thinking about tying this up with an option and selling to another note investor, but the few that advertise turn out to be wannabe brokers who don’t seem to know anything and certainly don’t have funds to buy.
Any ideas/input?
Move quickly or lose… - Posted by Michael Morrongiello
Posted by Michael Morrongiello on November 04, 2002 at 19:23:19:
Aaron:
There are a lot of suggestions and clearly a lot of options available to you here.
We will consider the purchase of this sub performing Note as a principal buyer. We have the necessary expertise and finanical resources to close and more importantly FUND quickly.
IF we have to foreclose we may possibly even consider working with you to resell the collateral after fix up.
Michael Morrongiello
www.sunvestinc.com
Re: Good lead on note- need some ideas/comments - Posted by Shawn J. Dostie
Posted by Shawn J. Dostie on November 04, 2002 at 19:12:25:
Have you considered listing the note for sale and making $$$ on the between w/ none of your “missing” cash?
Good Luck,
Shawn(OH)
Here’s what I would do - Posted by Josh
Posted by Josh on November 04, 2002 at 13:57:24:
Call the payor. Try and talk through their issues. See if they realize the danger of foreclosure. Find out what they’re able to do. The actual balance could be slightly higher, due to the missed payments. You’ve got two decent outcomes if you can buy the mortgage:
a) foreclose, and sell, making someone a 20K profit
b) a nice note, if they start paying on time…of course, given the track record you’d have a hard time persuading anyone of the value of the note… so you’d probably need to find a private investor, who’s willing to take a chance for a payoff down the road…
speaking of which, where are you located?
Re: Good lead on note- need some ideas/comments - Posted by James Strange
Posted by James Strange on November 03, 2002 at 19:33:29:
Why not buy at the discount offered. After the note is yours you could tell them rifi or I will fourclose. If they are one year behind you should be able to. When they refinance you would get the full payoff.
Good lead on note- need some ideas/comments - Posted by Jon Richards
Posted by Jon Richards on November 03, 2002 at 15:03:16:
Aaron
You can go directly to the corporate note buyers if:
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You know the deal is “doable” i.e. their is good equity, the payor has decent credit (sounds like they do), and the seller is motivated to sell.
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Find out how much chas they need, because the institutional note buyer can buy a part of the cash flow. This keeps their loan to value low, and covers up a discount.
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Call Stewart Maxson at Metropolitan Mortgage 800 268 9184 and Laurie Ward at 281-360-4551 and ask for a broker package.
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Purchase our book Calculator Power on this site for $39.95 to understand how partials work, and go to our web site to learn more about discounted notes.
Hope that helps
Jon Richards
NoteWorthy Newsletter
800 487 1864
Re: Here’s what I would do - Posted by Aaron C
Posted by Aaron C on November 04, 2002 at 18:13:17:
These are exactly the things that I am presently doing. By the way, I tried to send you a private e-mail with the location and your e-mail address is not valid. Were you asking the location because you are interested in buying the note?
Re: Good lead on note- need some ideas/comments - Posted by Aaron C
Posted by Aaron C on November 03, 2002 at 20:45:47:
Excellent idea. If I had $30,000 to do this, I would. Since I don’t, I need other options. Actually, I would make a lower offer since this is just the seller’s opening offer. I am trying to work out something that doesn’t require me to produce money I don’t have but still be able to profit from this deal. Any other ideas?
Re: Good lead on note- need some ideas/comments - Posted by Aaron C
Posted by Aaron C on November 03, 2002 at 16:04:25:
Actually, I do know a decent amount about discounted mortgages. I have studied both John Behle’s and Terry Vaughan’s courses. I have some ideas on what to do, but was looking for more direct suggestions as to specifics or other ideas that I am missing. I have done plenty of other types of real estate deals, but notes are fairly new to me.
As I’ve said, I have been studying, so at this point I do not need additional educational materials, just some clarification on the general principles and other suggestions if someone sees another option that I don’t.
I will investigate Metropolitan Mortgage, but when I have dealt with large institutional buyers in the past, their EXTREMELY slow snail’s pace when processing the deal has always killed the deal for me. I will look into it though. They may work for this situation and I am going to investigate every avenue of working this deal. I would appreciate any other ideas that come to mind as well.
Re: Here’s what I would do - Posted by Josh
Posted by Josh on November 05, 2002 at 11:10:20:
Yes, that is why I was asking. This email should work better.
Re: Good lead on note- need some ideas/comments - Posted by James Strange
Posted by James Strange on November 03, 2002 at 22:11:56:
“wannabe brokers who don’t seem to know anything and certainly don’t have funds to buy.”
You make this comment about other brokers but you can not come up with 30K? What does this make you?
I don’t mean to be harsh but if you can not beg or borrow 30K then you have no room to talk about wannabe brokers.
Re: Good lead on note- need some ideas/comments - Posted by Aaron C
Posted by Aaron C on November 04, 2002 at 04:21:38:
This doesn’t exactly help. I am making no misrepresentation of myself as having the ability to buy this note as these “brokers” have. This woman called me on my “we buy houses” sign. I am trying to find a way to close the deal, but don’t lie and tell people that I will buy the note when I do not have funds to do so. Any ideas on how to beg or borrow the money if that is your only suggestion?
Re: Good lead on note- need some ideas/comments - Posted by James Strange
Posted by James Strange on November 04, 2002 at 19:46:44:
I do have one idea, a few years ago when I was still in California, I had an older lady offer me a similar deal. She knew me from the coffee shop, she knew that I invested in foreclosures. She also knew that I used OPM.
This what she proposed to me (the numbers are as close as I could remember) I would buy the note from her at a small discount. Note was just under 120k with a 12% yield. FMV 130k. I would buy from her for 110K. She would loan me the money at 8% which was the going rate for a mortgage but higher than CD rates. So for me collecting I would get a 4% spread. And a 10K discount.
But I planed to leave California within the next 6 months. But she was a very nice lady and I wanted to see if I could help. I asked what time they came home from work. She told me they came home at 5. So shortly before they were due to come home I was there inspecting the house. The man comes home and wanted to what I was doing. I introduced my self as the person who had rehabbed the house a few streets over. I then told him that I was inspecting the house that I was going to buy.
He asked how I was going to buy his house. I told him that in 30 days I was going to buy his note and since he was behind I would be able to foreclose on his house, buy it cheap and sue him for the difference. He did not know what to say but asked me to leave which I did.
The note holder received a call the next day form a mortgage broker asking what the payoff was. She received a payoff three weeks latter.
So for the next few months between her and friends it was for me to buy a cup of coffee and I did a good thing.
Re: Good lead on note- need some ideas/comments - Posted by Jim - FL
Posted by Jim - FL on November 07, 2002 at 21:03:39:
Sweet - Nice job!
Ok - so based on the fact that “no good deed goes unpunished” what was your punishment? 