This was definitely one of my more interesting weeks as a note investor. I had bids on a total of 5 non-performing CFD’s get accepted, and had made several other bids that didn’t come in. A good, bad and ugly theme seems like an appropriate way to describe everything that happened, but I’ll cover these in reverse order.
The Ugly
4 of the bids I won came from one seller. I spent a lot of time on due diligence and some issues came up on one of the 4 notes. There was nothing that couldn’t be worked out, but the seller was very difficult to work with. I became uncomfortable with the deal and the with seller personally, so unfortunately I had to walk away from all 4 notes. Eating a couple hundred dollars in BPO and O&E expenses stinks, but it’s a price of doing business sometimes. Life is too short to work with assholes, even if there may be some money in it. The vast majority of people I have encountered in the notes business have been terrific, but things like this are going to happen from time to time. (and no, I’m not going to say who the seller was)
The Bad
Several bids weren’t accepted. There were some great assets but these unfortunately didn’t work out. In some cases I received counters up to 50% higher than my bid price. Its amazing to me what some investors are willing to pay. This isn’t actually a bad result because you should be winning only around 10% of your bids if you are doing it right. But its always disappointing to miss out on good assets.
The Good
But the deal for the other CFD (from a different seller) is looking great so far. Everything is checking out in due diligence and I’ve learned there are some aspects of the deal that are even better than I thought when I bid. The more I look at this one the more excited I get! Plus the seller has been great to work with.I received current photos of the asset on Friday night and those are looking good as well.
Dan’s tip of the week: To get quick photos of an asset just post a gig on Craigslist. I had 10 people respond within an hour and for $40 had high quality photos later that evening. They even went into the back yard.
There is a lot of upside on this one and its a good deal to bring on a JV partner. If you are interested in this deal and / or want to stay in the loop when future deals come up, you can sign up for the Preferred Investor list here:
