Buy Notes – Hitting a Put Shot with a 9-Iron…

Buy notes:

I just got off the phone with the Sr. Vice President
of a California bank in charge of note sales, and a note broker friend of mine who
set up the call.

The SVP has 3 non-performing loans – they’re
commercial loans in the LA area – but ignore the fact
that they’re commercial right now.

———————————————-
* * * A Buy Notes Lesson about Golf Clubs and why to
Communicate with Your Borrower * * *
———————————————-

Stay with me here

So the SVP told me that one of the loans has a
foreclosure sale scheduled 2 weeks from now.

And that she hasn’t spoken to the borrower (a
builder/developer) in several months.

I asked her if she was concerned about the loans or
not, and if she was worried about whether she would
have any problems taking over the properties through
the foreclosure.

She answered: “No, because we feel the value of the
properties is sufficient to pay off our loan.”

====> I was concerned about this buy notes situation.

Why?

Because if there’s one thing I’ve learned in this buying notes
business:

—————————————-
* * * Buying Notes: Managing the Relationship with Your Borrower is
KEY in 60% of all Cases * * *
—————————————-

And if you don’t work with your borrower, then you’re
really hurting your chances of getting out of a note deal.

Let me explain the 60% of all cases claim.

There are essentially 5 Buying Notes Exit Strategies for all Loans:

* Reperformance

* Refinance

* Short sale or deed-in-lieu

* Note sale

* Foreclosure

=> Only 2 of those plays, foreclosure and note sale,
can succeed without any communication at all with the
borrower.

But the risk that the foreclosure runs – and
foreclosure is the path that the banker is taking in
this example – is that the borrower may file for
bankruptcy and postpone the time when you recover the
property.

Take this buying notes advice from me:

—————————————-
Make Fantastic Returns when Buying Notes
without having to foreclose or
to sell the note on to someone else
—————————————–

If that’s true, then losing contact with your
borrower essentially kills 60% of your note buying exits (3 of the
5).

Would a professional golfer get onto a course with
only 5 of 12 clubs?

Would that be somewhat limiting to their game?

Probably.

But boy would it look funny hitting a putt with a 9-
iron.

So my note buying advice to you is:

————————————-
* * * Note Buying Exit Strategies: Don’t ever limit yourself if
you can avoid it * * *
————————————-

Much as it can be painful or unappealing to some of
you – working WITH your borrower is essential when you buy notes.

That was the advice I gave to the SVP at the LA bank
today.

We’ll see if she takes my advice – we’ll be tracking
her nonperforming notes to see if any of them end up in bankruptcy.

And if those notes do – there’s a good chance that she’ll
regret not having kept in touch with her borrower.

Dean

PS: Did you enjoy this information? If so, my note
buying course is full of no-fluff info like it.
16 hours to be exact.

And 4 hours just on the 5 Exit Strategies alone.

(Already own the course? Did you really extract all
the info you could out of it yet?
I am confident that, if you didn’t go through it at least
TWICE, you are not getting all your value out of it…

Hope you enjoyed this post on how to buy notes.