How to buy Mortgages from Banks – The 4 Buckets in the Note Buying Industry

On How to buy Mortgages from Banks

Here is a question I got asked recently:

“My understanding is the federal government is going
to be offering financing to private equity and hedge
funds to buy up the bad debt.

If anything it would seem this would at the very
least invite a whole heck of a lot of competition.

What are your thoughts on this?”

Well, here are my thoughts:

I’ll address your concern in detail on 3/25 in
our Private Access Club live webinar.

* * * The “Competition” merely adds to the
Deal Source for buying mortgages from banks * * *

====> There are 4 “buckets” in the note industry:

a) Big boys – buying $100M and above

b) Mid boys – buying $20-100M

c) Small boys – buying $1-20M

d) Mom and pops – buying <$1M

The majority of the shuffling is happening, in my
opinion, at the big and mid-boy stage, in terms of raw
dollars.

Now, think about their financials for a sec: these
are investors, not originators.

=> They’re hungry for yield.

If you’re a Mom and Pop or a Small boy, the Mid and
Big boys are now Deal Sources to buy Notes for You!

They’re looking for a big IRR (e.g. quick flip) and
they’re buying more competitively than the Small boys
and the mom and pops.

VIEW THEM AS NOTE BUYING DEAL SOURCES, partner up with
them, come up with some transparent “Cost plus 5″ type of
approach where you give them 5 points in exchange for
cherry-picking their portfolio and piggy-backing off
their due diligence, and why wouldn’t they be
interested in selling notes to you?

Trickle-down. (I will talk much more in detail on that on
tomorrow’s Private Access Club webinar.)

So if you’re worried about the drip from the water
fountain (or the firehose!) being intercepted in some
way, just shift yourself a little so that you catch
the drips from the guy who just got in front of you.

And you can always go look for another water fountain
to buy mortgages aka nonperforming notes.

I assure you that the Mid and Big boys are NOT out
there building relationships with the 8,000+ FDIC
insured banks.

And last time I checked, those 8,000 have a few non-
performing notes in their portfolios!

Hope this was useful (and inspirational) information for you.

Talk to you on the Private Access Club webinar?

It’s time to TAKE MASSIVE ACTION.

It’s all out there, for those that choose to see the buying notes
opportunity (and ignore the naysayers &’recession whiners’).

Dean

PS: BTW, this was originally a post in our forum.
To see some responses by some of your peers,
check out the original thread here.

Or, you know what…

Some of the other comments were so valuable, I want to
make sure you read them.

See what Will had to add to this:

“Yes, there is pretty healthy window, an “area” where
the mom and pop and small operations can work with the
mid boys and Big boys.

Where you can either profit by
purchasing directly from these big boy investors, or
develop the right relationships by getting the word
out there that you are a direct source for obtaining
defaulted assets.

If one of these mid size to big boys
know you can bring them pools of 10-50M (residential
or commercial) and they don’t have to go take the time
to find and form those relationships with the right
people themselves …then you become VERY valuable.

At that level, the big boys are looking for convenience
and efficiency in order to simply “stay on course” of
investing and exiting.

I believe the more well rounded
you become, the more you master this industry, whether
that is by brokering or being a principal bidder, the
more opportunities will be presented to you.

All I have seen in the few months since I’ve been involved
has been an enormous need and really, a desire for
people to connect with others…to work with each
other.

There are so many more bridges to be formed.

“I assure you that the Mid and Big boys are NOT out
there building relationships with the 8,000+ FDIC
insured banks.”

In that one statement, if truly recognized, lies HUGE
opportunity.