Want a “scholarship” to spend the day with me?

I’m hosting a Power Notes Workshop in San Francisco next month (on July 25th) that’s designed to “turbo-charge” your note buying business and give you access to a small, elite group of other deal-makers and entrepreneurs.

The cost of the program is $897, but I’m offering two full scholarships to attend the event. Here’s how it works…

Since the difference between success and failure is often the willingness to take action, I want to reward those who learned something from me and implemented it in some way–big or small. So, if you send in one of the best implementation stories, you’ll get a $897 ticket to this event.

>>>Here’s What To Do…

Tell me the story about a concept or technique you learned in one of my videos, articles, or other resources, how you implemented it, and the results that you achieved. This isn’t necessarily about who made the most money (although that’s not the worst thing that can happen).

It’s about who took what they learned, put it into action, and got results.

I will be judging the entries personally, and choosing the two winners myself… and announcing them in a few days .

As I said, I’m going to give away two tickets to the full-day Power Notes Workshop held in SF on July 25th, plus a special “surprise” bonus, a value of $897+ EACH.

The winners will be announced next Wednesday, July 8th… and hopefully you’ll be one of them!

So tell me your “Speed Of Implementation Success Story” – and good luck winning one of the two tickets to the Power Notes Workshop!

NOTE: Put your story in the “comments” box below, and only submit your story ONCE (it will be individually reviewed before being posted, and won’t show up immediately). If you need to leave out certain details for business or personal reasons, that’s okay.

So take action now–and get those implementation stories in!

Looking forward to reading these…

Dean

Here is an email I recently got from someone who’s landed a few meetings with some venture capital funds (kudos to him – there is a TON of interest in distressed debt funds right now!) on ‘how to raise money to buy notes/defaulted mortgages’:

“Dean, I watched the 84 minute video on raising money to buy notes and it was impressive. To me it seemed like you were modeling your current portfolio to prospective investors for funding.

My question now is: how can someone who has not bough his first not yet make use of the platinum raising money toolkit in order to present himself to prospective funding investors?
It’s a little confusing because a newbie will not have a done deal to show the investors.”

Here is my reply:

Owen,

Here’s my recommendation: the best way that I’ve found to demonstrate competence and understanding to venture funds is as follows:

a) walk them through the Basic How to Raise Money single page excel file with the 2 example deals – it’s easy to understand, easy to walk through, speaks to their need to understand yields in terms of return percentages and profits. (BTW, it’s included as a BONUS in the ‘A-Z Profiting from Defaulted Mortgages Business-in-a-Box’ Course!)

Keep in mind the following: I’ve had 2 investors in Oklahoma tell me that they used the Platinum Toolkit IN COMBINATION with the Basic Toolkit exactly as I’ve suggested here. They had NEVER bought a note or defaulted mortgage before and they used the Basic as an example of what they could do. “It opened doors to at least 6 different investors for us,” they told me.

b) After you’ve done that, then walk them through an OVERVIEW of the entire business – e.g. the Powerpoint presentation from the Advanced How-to-Raise-Money Toolkit – that you customize in order to define who your team is, what you see the current opportunity to be, and what your summary financials are.

c) then, when you get to the summary financials page, you turn to the Platinum How-to-Raise-Money Toolkit to give them a drilldown on the P&L, Balance Sheet and the Roll Rate Model for how YOU will be running your distressed debt fund with THEIR money – e.g. the Platinum Toolkit. It’s customizable, so what’s nice about it is that you can model it to YOUR needs (e.g. you want to present a $5million investment from the investor, rather than a $27million one, or you want to add or subtract employees based on how big or small you expect you’ll need to be, or your assumptions about what you’re buying don’t really include foreclosed on notes, but mostly delinquent notes, etc.)

Let me clarify something here – the Platinum Toolkit is a sophisticated model, yes. But what’s sophisticated is that it’s all been built already. Now you just need to customize it to the size you want it to be. It’s NOT that hard to do, and the beauty is that it’s all interlinked and it runs itself.

In terms of getting ready for this presentation (congratulations, by the way, no one will give you the time of day unless they believe in what YOU can bring them, so just getting a meeting scheduled is a very big step – GO FOR IT!), you’ll want someone on your team (you or someone else), who understands Excel well, in order to run through the financials with you and customize the Platinum Toolkit to your needs.

The reason for our hesitation in terms of doing customization of any models for you is that it’s in doing that YOURSELF that you REALLY understand how it works, and how your BUSINESS is – or needs to be – structured. It’s not that we don’t want to help you to get the Financial Model exactly to the way you need it (and that we wouldn’t want to charge you the hourly $495/hour consulting fees that I charge now!) but in order to demonstrate competency and understanding to your venture funders, YOU really need to get inside this model. If they feel that you’re not comfortable – REALLY COMFORTABLE – with your own numbers and your own financials, you will not inspire their confidence and trust.

That being said - the Financial Model in the Platinum toolkit has been used for $6million and $30million presentations to GREAT effect. It is simple, it is complete and it is TOTALLY geared towards a note-buying business.

You should take a look at the new 35-min FREE Video on how-to-raise-money that I did to walk you through each of the different component parts of the Platinum toolkit – it’s a 35-minute overview of the model itself that I think you’ll find really helpful.

If you get into it, learn it, study it, and customize it over the next two weeks, you will have a MUCH better shot at securing financing than if you don’t.

Be your success.

Dean

=================================

* Check out our NEW FORUM: www.NoteBuyingProfits.com/forum

* Ready to REALLY get down & dirty?
‘A-Z Profiting from Discounted Mortgages Business-in-a-Box‘.
-> 16 hours+ of Video Training, 23 pages of checklists, a complete 8-Week Roadmap, an extensive Table of Contents for quick reference, plus TONS of Bonuses.
[===> You can check out Hours of F.REE Training Videos of the actual Course Content HERE.]

* ‘PRIVATE ACCESS CLUB’ (PAC) – Test-Drive it for F.REE for 30 Days!
Get Your Questions Answered LIVE & get Ongoing Support & Training!
Conference Calls/Webinars, Interviews with Industry Insiders (Bank Reps, Top Note Brokers, etc.), Real-Life Case Studies, Role-Playing, Members-Only Forum, and ‘HOT SEATS’ to get coaching on Your Deals/Business Challenges, and more

What worried me was when he said: “Dean, I want to get into buying defaulted mortgages in order to keep people in their homes and get some good cash flow.”

Don’t get me wrong. I’ll be the first to admit that Humanity counts.

But …

Don’t lose sight of the forest for the tree.

In other words – don’t try to force your Note deals down one note buying exit strategy.

It just won’t work.

You see, you may WANT to pursue A SINGLE exit strategy for the defaulted mortgages you purchase (in this case, he was looking to re-perform all the notes he bought – possibly by modifying them all – and then to hold them for cash flow).

DON’T FALL INTO THE SAME TRAP.

In order to invest successfully in non-performing notes, you need to be like Rafael Nadal.

Nadal is a really well-balanced tennis star. He has an amazing serve, excellent grass court experience, plays solidly on clay, and can fire a wicked forehand.

Follow the same approach to your Note buying. Learn how to pursue MULTIPLE Note Buying Exit Strategies at once.

Below is a useful Video snippet (straight out of the ‘A-Z Profiting from Discounted Mortgages Business-in-a-Box) to really hammer this point home to you.

Be careful you don’t “stick yourself” with one strategy. For example, one useful tool to get a borrower to cooperate with you in getting a loan modified can often be to start a foreclosure action.

Why? Because for someone who has been missing payments regularly and hasn’t been current for a while, sometimes a wake-up call with a foreclosure notice (combined with a helping hand from you to help them with a loan modification) is what prompts them to get their act together, take control of their situation, and to work their way out of their delinquency.

Don’t fall into the same trap the investor I talked to did. Don’t think that 1 Exit Strategy to your Note Buying business is enough to make you successful.

You really need to be a jack of all 5 Exit Strategies to do well in this business.

(You can watch a full hour just on Exit Strategies for FREE  right HERE, straight out of my massive 16-hour course on how to profit from defaulted mortgages.)

(Currently, we are putting on a new LIVE ‘how to buy nonperforming notes’ webinar every Wednesday at 5pm PST/8pm EST – and you can check that and ALL THE REPLAYS of past webinars for 30 days for a FREE here…)

Anyway, here is another 12-min Video Segment from the 90-min Interview we had with Saprina on buying nonperforming notes.

‘How to buy Real Estate Notes‘ Topics covered in this segment:

- Did you ever ask a note buyer for Proof of Funds?
- On GIFTS  to bank reps…
- % Single Note Buyers vs. Portfolio Note Buyers she dealt with
- Would you tell the Defaulted Mortgage Investor in what RANGE his bid would need to be?
- Comp structure of Bank Reps
- Why Note Sales are MUCH easier than SHORT SALES…
- Which Position Name to ask for when trying to locate the Bank Rep in charge of selling Non-performing Notes within the Bank
- INSIDER TIP: find a (former?) Bank Rep YOURSELF to consult for you!
- The KEY TO SUCCESS when buying nonperforming notes from banks

And that’s only 12 minutes… We have the full 90-min Interview, LOADED with REAL-LIFE ‘how to buy nonperforming notes’ information, in the Private Access Club members area (as well as LOTS of other great Video/Call recordings in the PAC Archives)!

Hope you enjoy this no-nonsense info on how to buy Real Estate Notes.

I sent a $6,152 check to a contractor on a property I own in Hollister, California, and I’m wondering if it was a good investment.

“Why did you buy a property, Dean? I thought you were a Note buyer?”

Yes, I am.

I bought the 1^st Deed of Trust on this property 2 months ago – it had a face value of $500,000 when it was originated in 2005, the borrowers never made any payments on it, and I foreclosed on it last month.

And I just listed this house for $260,000.

So … where’s the “bad news” on this defaulted mortgage transaction?

Well … the Hollister market makes me nervous. This isn’t south Florida or Riverside County (the worst areas nationally in terms of price depreciation), but still … it’s California.

In fact, this is my only California investment right now.

What if it doesn’t sell?

What if I’m stuck holding onto it for a while?

Well …

Maybe I can afford to lower the price a little.

After all, I only paid $140,000 for the 1^st Deed of Trust.

* * * * * * * * * * * * * * * * * * * * * * * * * *

Would you like to have a view “behind the scenes” on this deal and learn how we juggled three different exit strategies all at the same time (note sale, refinance, foreclosure)?

Are you interested in finding out more about what the homeowner’s situation was?

About what happened to my attempt to refinance the homeowner?

About our $170,000 Note offer from a newbie investor?

And how you can find deals like this yourself, and turn lemons into lemonade? ***

You can find out all of that and more in our Private Access Club for Defaulted Mortgage Buyers.

I’ll walk you through two real-time Note investments, currently in my portfolio.

I’ll answer the top 10 most-asked questions about investing in defaulted mortgages.

And I’ll show you what’s available to members of our *** Private Access Club *** – the first membership site dedicated exclusively to helping defaulted mortgage investors.

Learn how to buy and profit from the mortgage meltdown.

Nothing ventured, nothing gained.

Hope you enjoyed this post on Defaulted Mortgages.

You know, it’s amazing how the little things sometimes add up to a big deal for your borrowers.

What do I mean?

Well, let me tell you two little stories about Judy and Natalie, both of them borrowers in our portfolio.

Natalie pays regularly and on-time (hers was a performing 1st mortgage that I bought in a pool of non-performing mortgages), and she owes us approximately $93,000. She pays $680 each month, like clockwork, but right around the 5th of the month – her payment is actually due on the 1st.

So, when I called Natalie for the first time, guess what her biggest request was? She asked me sheepishly if I might be able to push her payment due date back from the 1st of the month to the 7th of the month so that her paycheck had time to clear in her account!

Why is this important – or even relevant to making money as a note investor?

Because it points to one simple thing in today’s market, and in human relations – EVEN when it comes to people’s financial relations.

It’s sometimes the little things that matter the most.

So when Natalie popped the question: “Dean, would it be possible to somehow extend my payment date to a few days later to allow my check to clear?” I answered her: “Sure. What date would like to be your new due date?”

“You mean, you CAN do that for me?” She sounded incredulous.

“Just like that?!”

Wow. Eye-opener for me in this note buying business, I tell you. That something as simple as changing a due date could make such an impact.

Needless to say, when I asked Natalie if she’d be interested in refinancing her note and asked if she’d mind if I put her in touch with someone on my team who could help her explore a refinance, she provided all the information that was asked of her immediately.

How to Buy Notes Lesson learned: listen to what your borrower wants or needs, and then, to the extent that you can deliver on that, do it. You’ll build a sense of “I-owe-you-one” from your borrower that might get you out of a deal.

Natalie isn’t refinanced yet, but I thought I’d share this little insight into human affairs with you.

And here’s a second little story. This one just happened to me today.

Judy called from Tennessee – she has one of the thickest accents I’ve ever heard.

And it’s … well there’s only word for it it’s “delicious.” She has such a sweet drawl it’s amazing. I just smile whenever she calls.

Funny, but you know how it is – there are some voices that just click for you – well hers is one. Now she’s pushing 65 and has 3 grandkids and is happily married … so I’m not talking THAT kind of sweet, but you know what I mean.

Anyway, guess what the first words out of Judy’s mouth were?

“Dean, I owe you all a HUGE thank you for paying my taxes.”

I was at a loss. Taxes? I quickly searched for her file online in my database. Ah yes, two weeks ago we’d run a tax review update (we do this the last business day of the month, calling the tax assessor’s offices on all of our loans to confirm status and amounts), and decided that it’d be best if we paid her 2005, 2006 and 2007 taxes current.

We advanced it to her loan obviously (property taxes advanced by you can be charged to the principal of the loan), and since her note rate is pretty high, we get to accrue interest on that advance. So from my perspective, it was both protecting our interest as well as making a smart business decision that would make us money.

And from hers, it was the sweetest and nicest thing we could have done, because we were “looking out for her”. The actual words she used with me were: “Dean, I want to thank you for helping me keep my house. I’ve been here 20 years and now I’m finally caught up thanks to the patience you’ve had with me.”

I was floored. Absolutely amazed at how a simple decision to protect our note position, pay the taxes owing so they wouldn’t fall further delinquent and threaten a tax deed sale (Tennessee’s a tax deed state, not a tax lien state – more on that in a later post), could be perceived by the borrower as a generous move to protect her own interests.)

Wow again. It was wonderful to sit there and bask in the praise that she was heeping to me over the phone. And it really was touching, I have to admit. I felt wonderful the rest of the day today only because it’s not that often that I get such warm thanks from borrowers when buying notes.

And I also learned today how useful it would be to explain advances to pay taxes and insurance for any other borrower in terms of helping to “protect their home” and to “help them to protect their home”.

The old adage win-win-win isn’t that much of a cliche now, is it?

Not when you look at what Natalie and Judy taught me.

More soon,

Dean

PS: More posts to come on how to buy notes.

I thought I’d share them, along with my responses, since these seem to be recurring questions:

“Dean, I met you at the SVREI club last Thursday and enjoyed your presentation on buying non-performing bank notes. I’m interested in learning more about your note buying system and in buying the package you presented to SVREI. But I have some questions for you first:”

1. How many investors have you trained and how many investors do you currently have subscribing to your private access club?

The ‘Private Access Club‘ – our membership-based site that gives individual investors the opportunity to maintain an on-going dialogue with me – has not launched yet. We currently have a waiting list of just over 50 people.

As to “how many investors have I trained ?”  I am not a ‘seminar guru’. I am a professional note buyer. I’ve just finished creating these materials that you see on our main site, including the “watch-over-my-shoulder” videos where I pick apart individual case studies, to allow you to get an inside look at a professional note buyer’s business. As such, this is so ‘hot off the press’ that I can not refer you to my ‘500 successful students’ all over the US or the like… If you are interested in learning this business from a DOER, be my guest. I’ve literally broken down my current business for you, piece by piece. The many hours of free Videos on the main page at www.NoteBuyingProfits.com should give you a good idea of the materials and whether this is for you or not.

2. What percentages of your investors actually buy and sell their notes?

If you’re asking what type of numbers I’m seeing in terms of Selling Notes as the preferred exit strategy in my portfolio, then I’d have to say it’s around 10%. If you’re asking how many “students” actually get to the step of buying their own note, I would have to refer you to my reply above that this is so new right now that we don’t have an investor-track-record compiled as of yet. If I were to guess at the “Act / Learn” ratio of investors / students – e.g. those that go out and buy or broker notes vs. those that merely “learn” about it – the ratio would be similar to other training systems out there. For the three that study, only one goes out and takes ACTION. You see that in PhD programs, teacher-training programs, and real estate seminars. There’s a HUGE amount of interest – and always some LESSER amount of dedication.

So far, we’re blessed – a large proportion of investors that I’ve trained are actively pursuing note investments.

3. Of the students that eventually buy and sell their notes how long on the average before they buy their 1^st note?

This is really whatever you make out of it. For example, there’s an investor – Murphy – out of Virginia, who first contacted me in November of 2007, interested in buying his first note. At the end of December 2007, he bought his first note with a little coaching from me. By the end of March, he had negotiated a Deed-in-Lieu-of-Foreclosure with the borrower and walked into just over $200,000 worth of equity. All from an initial investment of $89,000 in a non-performing note! (Also see the Case Study I did with him when you exit our homepage at www.NoteBuyingProfits.com.)

I am sure there are others who NEVER take action, and NEVER buy their first note. One thing is for sure: if you give up at the first couple of roadblocks, this business is not for you.

4. Do you have any mentorship / support for buying non-performing notes for your investors (beyond your educational material)?

Yes, we are certainly looking to implement that! For starters we will shortly launch our ‘Private Access Club’. Cost will be $97 per month. Included will be a weekly call with me as well as a members-only forum. I will also bring in guests/industry insiders/bank reps on the calls at times. There will be special topic sessions, Q&A sessions, webinars and lots of opportunity to get ongoing support in a group setting – and in a very cost-effective way. Also: all calls/webinars will be recorded and available in the members area.

For those that want more individual attention, we are looking into starting some higher-level groups.  For example, a mastermind group that meets in person every 3 months for 2 days for a limited number of people only. This will be for very serious people only and will be a lot more expensive, obviously, as well as by application only. (You can send an email to info@notebuyingprofits.com if you are interested.)

5. What are some complimentary resources on buying non-performing notes?

There are a number of all-around note-buying resources available. I myself am looking forward to meeting John Behle in Utah later this month to learn more about the different ways to WRITE and STRUCTURE notes (as opposed to buying them).  John’s educational materials can be found at www.papergame.com/learnmore.htm.  Donna Bauer has what seems to be a good reputation on buying seller-carryback paper, and it looks like she’s offering training on buying defaulted paper from banks. You can find her on www.thenotebuyer.com.   Until recently, Troy Fullwood seemed to have a good set of resources and training seminars that he offered, though I haven’t had much luck with his site recently.  Try him on: www.troyfullwood.com.

6. How can I accelerate the learning to buy my 1^st note?

I just had a young guy who’s one of several family members in his family’s large real estate investment business ask me the same question yesterday over coffee. “Dean,” he said, “I’ve been chasing short sales and I have 3 I’ve been working on for the past 4 months but I’m not getting that far with them and I’m looking for something to sink my teeth into – can you help me figure that out?”

What I told him was this: I said “Spencer, there are probably at least TWO people in your network of acquaintances and of your family’s acquaintances who could provide you with a list of 10 notes available for purchase right now.”

You see, the key is to ACT like you’re a note investor, and to see what happens. If you were going into Short Sales, after all, what would you do? You’d develop a marketing system – send out postcards, create a radio ad, put up signs or mail letters or knock on doors – and you would tell homeowners “I can help you if you’d like to sell your home.”

Right?

Well, take the same approach to note buying. Except start at the Bank end of things. Mention to everyone you know that you buy notes and are looking for non-performing bank notes. And I guarantee you that - if you come across as someone who knows what he/she is doing and what he/she is looking for – that you will start to open doors and soon be seeing data tapes.

The one caveat I would add is – BE SURE TO LEARN SOME BASICS before you start spreading the word. Understand the basics about the different types of notes available, how you price them (”we need to see your BPO’s and give us a 10/20/30 fade on your bid”), how you close on them (”send me your stips along with your bid”), and what the basics are in managing notes (”so what’s your typical workout strategy?”). Do this BEFORE you start talking and you’ll be armed with the fundamentals to know what exactly to be looking for.

I’m not trying to sell my courses here, I’m just trying to maximize your effectiveness. If you’re going to Paris, OF COURSE you’re going to have an easier time getting around if you know some French. And … guess what?

If you’re fluent in French by the time you get to Paris, you may even get into the “local” hangouts and dives that only the French know about!

So educating yourself is a simple, basic, and fundamental step to maximizing ANY kind of experience, whether it be travel or investing.

7. Do you recommend pursuing the note buying business in collaboration with others who have gone through your material before, whom I may network or partner with?

One of the recommendations I make is to understand your strengths and weaknesses. If you’re lousy picking up the phone and cold-calling people, then pair up with someone who’s good at it. If you’re loaded with money but don’t have the patience to actually carry out steps on a deal, then find someone who can be your right-hand, COO.

But don’t go “pairing up” with someone just for the sake of pairing up. Have a reason for doing so. You’ll see, once you’ve reviewed the different facets to buying and managing notes, that there are a lot of really cool aspects to this business, and you can do them all (like I’ve done for most of my professional life in this field) or you can focus on one particular side to it.

One of the benefits of joining our Private Access Club (PAC) could be that you may find other investors in your town, or interested in the same types of notes as you are, and you could “hook up” with them in our members-only forum.

8. To turn this into a successful business what is your estimate of time commitment needed to buy the first two or three notes?

Now you’re talking! I like the word “business”. I like distinguishing between “business” and “deal”.

If you build a business, you’re looking to get out of the rat race, and you focus on building up a set of processes that you can do over-and-over again. In that, I’ve been heavily influenced by the likes of Robert Kiyosaki, Michael Gerber, David Allen and by the personal development I’ve experienced through Landmark Education.

If you chase deals, you’re more an adrenaline junkie (to put it nicely) or a chicken with your head cut off (to be more crass).

Short sales are really for deal junkies, like it or not. There’s typically very little that you can take from one short sale and apply to another.

Note sales are really for business builders. You invest in one note purchase and you can take practically EVERYTHING you’ve done for that one deal and apply it to your next.

In terms of time commitment … you’re going to hate me here because I won’t give you a clear answer.

Let me leave you with this – one of my favorite, most-often mis-quoted and mis-appropriated quotes of all time. It’s originally from Goethe:

“It is only when man truly commits to something that the whole world conspires to help him in his quest.”

You’ll know what the appropriate amount of time for you is. If you’re a master at balancing multiple pursuits, maybe 1 day a week is plenty of time for you to build relationships and source your first deal.

If you’re like me and a complete klutz at juggling anything more than 2 of anything (!) then you may need to buckle down and commit yourself seriously enough so that it REALLY means something to you to invest in notes.

9. What percentage of the notes that you or your partner buy for some reason cannot be sold or exited for profit?

I’ve had 2 notes out of 58 that I’ve lost money on. 1 was a 2^nd mortgage on a California home (it was originally a 20% 2^nd behind an 80% 1^st) and I wanted to see if I could help the borrower restructure their 1^st. I couldn’t. The 2^nd was an REO I bought (1 of only 2 to date), in which it turned out that the Seller screwed up their foreclosure and I inherited a lawsuit. I didn’t want to sue the Seller because they were providing me with some great quality notes at the time, so I let it slide. It cost me $12,000.

But let me say that that one deal taught me LOTS of lessons which have me made me lots of money since then. And I will dissect all the learnings that I got from that one transaction so that you avoid making the same mistakes I made!

10. What percentage of the notes that your trained investors buy for some reason cannot be sold or exited for profit?

Because investors don’t tell me about every note they’ve bought or about every deal they’re doing, I really don’t know that answer. But here’s the worst case that I’ve heard one of the investors I’ve helped train was faced with. He bought a $60,000 note on a California property worth $150,000. It was a 9% note that he bought almost at full face value. The borrower reinstated his loan a couple of days before the foreclosure sale and he’s holding onto a performing loan. So he’s sitting on just over a 9% yield.

That’s “bad” in my book.

Compared to anyone invested in the S&P, roughly down 20% from last year’s high, that’s “not bad” at all.

Everything is relative.

Remember, I’m not a seminar “guru”, I’m really just starting in the “training business”, and so I don’t have a long track record of students right now.

Have another question not covered here? Let me know HERE

So here’s the question that I’m getting more and more:

“I’m just small potatoes and could buy maybe 1 or 2 notes. How do I compete with the big boys out there, like Black Rock and Goldman Sachs and Morgan Stanley and PennyMac and others?” – Frustrated small potato investor (looking to get into note buying)

Dear Frustrated:

Let me tell you a little note buying story about WhiteStone Return-Hungry Guy.

So Return-Hungry Guy runs a big distressed debt fund called WhiteStone. And he’s just bought $100M of notes. And he’s doing the same thing everyone else is doing: pursuing his 5 exit strategies (yup, there are only 5 – the 6th strategy that used to exist was the securitization route - not that good an exit strategy right now). [I thoroughly covered (all) Exit Strategies in my 4-hour Course on 'Managing & Exiting Your Nonperforming Notes' and you can watch the first hour for FREE.]

And Return-Hungry Guy’s looking at his yields (for some meaty insight on yields, check my ‘Calculating-Returns Toolkit’).

Exit #1 – the note sale – great IRR’s on quick flips, but not doing much of that yet

Exit #2 – loan mods / reperformers - not much yield, unless he can resell the note at some mark-up once it’s re-performing

Exit #3 – refis – well, let’s say that FHA goes only so far nowadays, and the line to get one of those is like the line for an Indiana Jones world premiere launch

Exit #4 – short payoff – yup, working on those but it still takes a while to get these houses sold

Exit #5 – foreclose – oh yeah, know it well – not great on the yields because those damn Sheriffs in Ohio have an 8-month or more backlog on sales

So, says Return-Hungry Guy – what can I do to beef up my note buying returns? How can I either get more $ for my notes, or get out of my deals quicker?!

In comes Dean.

“Hey Return-Hungry Guy!”

“Hey Dean. What do you want?”

“I want to get you out of 5 of the 100 loans you just bought and get you a 5% cash-on-cash return. I think you just closed on them last week – I’ll close before end-of-month – that would give you … hold on …. let me see here …

That would give you better than a 75% IRR on your investment.

I’m not sure if you’d be interested in that or not.

I mean, I know I’m only offering on a few notes, but, you know, it’s a tough market out there, and you guys are new, and like, well, I thought you might want to hit some early homeruns for your new investors and ….

“Dean,” says Return-Hungry Guy, intrigued. “Send me your offers and I’ll have my guys review it.”

___________________

So do you see what I’m getting at here?

Cashing out of your investment in 30 days, even if it’s at a small margin, can be INCREDIBLE in terms of returns.

Every fund manager recognizes this. So does Return-Hungry Guy.

So instead of thinking that Blackrock and Goldman, and PennyMac and everyone else with big pockets jumping into the business are your competitors, think of them as NEW SOURCES OF NOTES!

I read those same articles and think – YEEEHAAA – more knuckleheads getting into the business. More opportunity for me.

And here’s a little lesson for you from the Bell Phone companies.

Remember them?

What was the lesson with them, you ask?

Well, they owned the Last Mile of copper wire to the actual homes.

And guess who made out like bandits in terms of profits?

They did.

Think of note buying as a similar business.

If you represent the “last mile” – e.g. you’re the rehabber/note investor who knows your 3 counties in northern Georgia – and you work directly with the homeowners … you will probably pay more for a note than Return-Hungry Guy will.

Why? Because you know the area, prices, the local market, and you’re on the ground.

So, Last Mile Guy, as I’m going to call you.

Whether your last mile is the state of Oklahoma, Gainsville North Georgia, Chesterfield Virginia, Irvine California or the DC Beltway, STEP INTO YOUR SHOES.

You CAN BE the Last Mile.

You CAN BE the GO TO note buying guy or woman for your area.

You CAN market directly to PennyMac and Goldman and Lehman and everyone else.

You can be KNOWN AS MR. OKLAHOMA.

And guess what?

Once you step into those shoes and assume that role (no PennyMac or Blackrock or Goldman will compete with you there, by the way – they’re not interested) – you will start seeing deals COME TO YOU.

When the Baby Bells owned the Last Mile of copper wire, everyone selling phone-related services (local/long-distance or other), cable-related services (could use the same cabling lines), internet-related services (ran through the phone’s copper wire), they became the Go-To Guys for a range of things.

Think outside the box.

I get asked all the time ‘But, Dean, how do I find non-performing notes?? Do banks really sell notes to individuals?”

One person just told me “hey, I walked into my local bank branch and asked if they had non-performing notes for sale and they told me “no, we don’t sell notes.”

Well, if you want to get serious about figuring this out – AND shortcut your learning curve dramatically: it’s all in my ‘How to Find Non-performing Notes Course (4 hours+ jam-packed information on exactly the subject of ‘how to find non-performing notes’).
You can watch the first 2 HOURS for absolutely FREE. Take a peek:

If the bank doesn’t have either of the first two departments, then make sure that you aim straight for the top of their loss mitigation department – you don’t want to get stuck in mid-level manager hell.

And then once you get that person on the phone – tell them that you buy non-performing notes, anything 90 days or more delinquent, tell them where you typically buy notes, and if they ask you for what your typical pricing is, tell them you can price up to, say, 85% of UPB (unpaid principal balance). (You don’t want to kick yourself out of contention for buying notes when you haven’t even gotten a foot in the door, and if the bank’s asking about price, make sure that you convey that you don’t skimp!)

As to the secret of how to get through to the right person – and what it REALLY takes to break through to that bank representative: it’s covered in detail starting at minute 11 of Part 3 (the third hour) of my ‘How to Find Non-performing Notes‘ Course.

I bid a pool of non-performing notes held by a trustee for a bankrupt mortgage company. Two loans were missing collateral files. One is a loan on a Florida property. Ouch – Florida judges are increasingly strict on lost note affidavits and missing notes in general. In some cases, they’ll throw out the foreclosure proceeding if you don’t have the original note, or appropriate documentation. 

Scurrying as fast as I could, I was able to track down a copy of the note that was in storage at the title company office that insured the note (this was a 2006 loan).  (One of the things that you’ll learn more and more about me is that I like to get my hands dirty on as many note buying deals as I can – it allows me to learn more and more about everything that can happen in our world of non-performing notes – I’m not a “hands-off” trainer in any way).

Fingers crossed … we’ll be able to sail through a foreclosure with a lost note affidavit, but without the original note.

How did I price? I took an extra 15% off my bid due to the missing note issue. Why 15% and not more? I needed to play it safe on the bid. But the home’s value supports a higher bid. I feel we have a better than even chance of being able to foreclose, and then use the foreclosure to help us negotiate a refi or a deed-in-lieu with the borrower.

If you want to learn more about the science part of pricing notes, take a look at our ‘Determining Price’ Note Buying Course. 4 hours+ just on this topic alone. And you get to watch the first hour for free…