No matter how long you have been in the note investing game, there will always be deals that come with unexpected twists that will blow up your mind. In this episode, Dan Deppen goes through a case study on a non-performing note that turned into a seller finance deal. He follows the deal through several twists and turns including a failed forbearance agreement, a cash for keys deal, a borrower who doesn’t leave when he is supposed to, becoming a renter, and finally selling the property and creating a new mortgage. In the end, Dan made a sizeable profit with this deal, but he had to go through a lot of challenges, learning valuable lessons along the way. Grab a seat, listen, and learn from his experience.
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Seller Finance Case Study
I’ve got a case study on a deal on a nonperforming note that turned into a seller finance deal. This is one that had a lot of twists and turns. It’s not over yet but you’ll find it interesting. There were a lot of things that came up as this one went along. There are a lot of things that I learned along the way that you’ll like. Before I get into that, it’d be good to talk about the state of the note market. As we know, there’s a lot of craziness going on in the world and the market as we go along. I am seeing more assets go on sale. The number of notes up for sale has increased seeing a lot more tapes over the last couple of weeks. In some cases, the pricing hasn’t necessarily adjusted that much. In other cases, it has. There are lots more available.
There was some good economic news. The unemployment rate came out and it was a lot lower than expected. There were a few other things. I get emails from The Wall Street Journal every morning that I go through. Some of the news was surprisingly good. I take all that with a little bit of a grain of salt because we’re not out of the woods yet economically. While a lot of things are reopening, Las Vegas is open now, a lot of cities are reopening to various degrees. There are going to have spectators at the PGA Tour event. There are long ways to go but the news was better than I would have expected given everywhere we’ve been. That’s a positive sign but take it with a grain of salt.
I did a webinar where I went a little more in-depth on this. I didn’t turn that into a podcast, but if you’re interested in checking that out, you can find that on the YouTube Channel. If you go to YouTube.com/fusionnotes, you can find that. One of the things I talked about on the webinar is where my focus has been in this environment. It has been on performing notes and specifically contracts for deed, which has become a little bit of a specialty for me. Ones that have good performance histories and then equity with them as well. That provides a decent margin of safety right now.
If you look at a note that has a good performance history if it’s a year-plus and I’ve seen a bunch lately that are 3, 4 years of performing. Even if the borrower has a job loss due to COVID, which right now any borrower could have a job loss due to COVID. More than likely they will get that figured out or straightened out. You might miss a few months of payments, but if they’ve been paying that long, they’re probably not going to let it go. If there’s equity there as well, those two things, it’s given the borrower an extra incentive to get it back on track so they don’t lose any of that equity.
It also gives the note buyer a margin of safety because if a performing note does go completely bad and you have to foreclose, then that gives you room to make yourself whole. The other thing that I’ve been doing increasingly, and I’ve got a couple of these in work, is converting these contracts for deeds or land contracts over to mortgages. For many note investors, mortgages are more desirable. You can generally sell those for a bigger premium. All the borrowers I’ve reached out to and asked about this have jumped at the opportunity. It also gets you off the title, which can be nice if the code enforcement people come knocking or you went into water bills or other sorts of things. That might be a good deep dive for a future episode. I don’t want to go too far down that rabbit hole though.
I am in the middle of completing an acquisition. It’s my first acquisition in a couple of months. I had been laying low there for a while, but now I’ve started to put out some bids and picking some new ones up, which is great. I mentioned I’ve seen more assets. I’m starting to see some large pools of contracts for deeds at some attractive prices. I’m not quite ready to pull the trigger on one of those yet. Coming up here over the next few months, there are going to be some great opportunities to take down pools, which I would probably do within the 10% funds. If you’re an accredited investor and something like the 10% fund is something of interest, you can go to FusionNotes.com or drop me an email at Dan@FusionNotes.com. I can get some more information on that. I think there will be some good opportunities coming up over the next few months out to a year or so on that.
The Property
That’s the state of the market for now but getting back to our seller finance case study. This was a duplex in Ohio. I’m not giving out all the address information and all of that because I still have the seller finance note on this. I don’t want any yahoos pestering my borrower or anything like that. This was a nonperforming contract for deed that I bought in August of 2019. The unpaid balance was a little over $44,000. I paid under $16,500 for it, but there were over $4,000 in delinquent taxes. My net price was around $20,000 overall. The seller had a BPO of $85,000. My BPO came back at $86,000 for the 30-day quick sell price. There’s quite a bit of equity there. The status was nonperforming. It was thirteen months behind, but the borrower had made 8 out of 12 payments and had paid in the most recent month.
This is the kind of loan that’s right in my wheelhouse. I have a good track record of getting loans like this where they’re behind, but they’re making a fair number of payments. I can usually get those borrowers flipped around, work out some a deal, turn it into a performing loan, season it, and then resell it. This one didn’t go that way. What I like when I do these case studies is I always save the data on my ROI estimates upfront. I can always compare that to what happened. I’m continuously adjusting my financial model. There are some things in here I’ll point out that I would have treated differently had I been doing this now.
My actual purchase price of $16,480 was 37% of the unpaid balance. There were $4,200 in delinquent taxes. I paid 47% of the unpaid balance, which I was still happy with for a note that looked like it had a lot of equity and had a lot of payments in the last twelve months. I bought this in August of 2019. At the time of purchase, I was estimating if I was able to get this modified and reperforming, and then sell it at 70% of the UPB. I would end up with a whopping 60% ROI, which would be 30% of the joint venture partner after the split. This was a contract for deed that is in Ohio. Ohio has some special rules on contract for deeds. If the borrower’s made a certain number of payments under certain conditions, you have to go through a judicial foreclosure instead of being able to do the forfeiture. This is one I would have had to foreclose on.
When doing nonperforming note deals, assess things not in terms of what is “right.” Make the best decision based on your alternatives. Click To TweetI estimated my expenses in that worst case of about $14,000. That would have about $5,000 to $6,000 for the foreclosure and $2,000 to do a cleanout. I seem to always get stuck with the expensive cleanouts, servicing, and the delinquent taxes of the $4,000 and some other things. I was assuming I would sell it for $75,000 and net about $67,000. I took my $86,000 30-day quick sale BPO and knock it down by about 13%. I would have knocked that down by a lot more. If you’ve read the episode where I talked about how I went through the data of my REOs and comparing the price that I sold them for to my BPO price going into the deal. Those are averaging around 60%. Since then, I made some posts on some of the various note investing Facebook groups to ask other people what they were seeing. A lot of other experienced investors have seen a similar type of phenomenon.
Loss Mitigation
That estimate was high. Using that high estimate, I was still coming up with a 56% ROI or 28% to the JV partner. That was my estimate going in that was off. We started the loss mitigation. I completed the closing on the note and got it transferred over. I use Polaris counselors for borrower outreach. Polaris is no longer in business. They were a nonprofit credit counselor that I used to like to use for borrower outreach. They moved on to another completely unrelated startup. I can’t use them anymore. We were able to get a forbearance agreement in place with the borrower. The borrower had had a forbearance agreement with the seller of the note, which they didn’t follow through on, but Polaris talked to them. We worked some things out.
We put another one in place and go, “Do you understand that if you don’t follow through on this, we’re going to foreclose right away?” Lo and behold, the borrower made one payment and then didn’t follow through on the agreement. Not following the agreement is not a huge shock because they had not done that before. This forbearance agreement did not have a good-faith down payment. It’s a part of the component which I always recommend and is a good thing to do, but I couldn’t get the borrower to agree to it. I decided we’ll put this agreement in place with a certain number of payments. If they follow through great. If not, we’re foreclosing anyway. I did get one payment out of them but then they stopped paying again.
The borrower ultimately ended up agreeing to do Cash for Keys. This borrower is a tough person to understand. I ultimately ended up speaking with him several times. He was always very friendly with me on the phone, but Polaris had said that they would have one conversation and he’d be very friendly. In the next conversation, they’d be getting upset and dropping F-bombs all over the place. I never had him get upset with me on the phone. He was always very nice on the phone, but I did have times where I would talk to him on the phone. Later in the day, he’d be sending me text messages with expletives.
He has a girlfriend who Polaris had talked to and I had talked to her as well later on. She had mentioned that he “in the past” had problems with drugs. He had been in jail for drugs. I don’t know what was going on with his brain chemistry. Every time I spoke with him, he was a nice enough guy, but he’s all over the map and hard to follow. I found this with other borrowers as well. Sometimes they’re a challenge. Not that they’re being combative or disagreeable, but you can’t keep them on a topic. You’re talking about one thing and then they’re over here and then they’re over there. You can never quite get him pinned down. He did ultimately agree to a Cash for Keys deal.
The way the Cash for Keys agreement was structured, we agreed to a $2,500 Cash for Keys. Normally, I wouldn’t go that high, but there’s a lot of equity in that property. He said he needed money for moving expenses. Normally, that’s higher. A lot of times, I’ll start Cash for Keys offers at $500. In this case, I went higher because of the equity in the property and I wanted to get him out. When you’re evaluating these deals, you always want to look at your next best alternative. While $2,500 is more than I would normally like to do, it’s a lot better than spending $5,000 or $6,000 on a foreclosure that’s going to take maybe 6 to 9 months. I might have to do an eviction after that. If he takes this, that’s pretty good.
Pay attention to this because this is very important. The way I structured this is I set up the Cash for Keys in two steps. I set it up to where he would get $1,000 for signing the cancellation of the land contract and the surrender of possession, which is the agreement to move out. There are two documents, the cancellation of the land contract and the surrender of possession, and then $1,500 later when he leaves the property and has it cleaned out. There are a lot of things I’m trying to accomplish here. With $1,000, once he signs the cancellation of a land contract, that land contract is dead. That means I don’t have to foreclose and spend the $5,000 or $6,000.
Even if I gave him $1,000 and he signs the papers and he then doesn’t move out and holds up, I don’t have to go through the foreclosure. I still might have to do an eviction, but that’s not nearly as big a deal as having to do that. Getting that cancellation of a land contract is like gold because once he gets that he can get squirrelly and I’m in a much better position. The other thing I’m doing is making the cash contingent on having it cleaned out and broom swept. That means I don’t have to pay for a cleanout. When I have evicted borrowers or had borrowers bailed, I have often ended up with some very expensive cleanouts that can cost several thousand dollars.
By paying this $2,500, the alternative could be $5,000 to $6,000 in legal fees, plus $2,000 to $5,000 even for cleanout, depending on how big of piggy is and what’s left inside. It’s a good deal for me, especially for that $1,000. I’ve got the cancellation of the land contract and I’m in a good position. What ended up happening was he didn’t leave on time. It took him a couple of weeks longer to get out than what he said. He did have his former girlfriend who was still living in one unit. I mentioned in passing that this was a duplex. This was one of the things I liked about the deal. It has an upstairs unit and a downstairs unit. He was renting out the upstairs unit, which I didn’t realize until later in the deal. He was rent skimming. It begs the question of if you’re collecting $450 in rent from the people upstairs, why can’t you make a sub $400 payment on the mortgage? He couldn’t and it’s hard to explain, but that’s what was going on.
His former girlfriend stayed in the downstairs unit. Even after he was gone, I had to coax her out. I didn’t pay him the second part of the money because she was still there. He was helping me try to get her out. At one point, he had the power turned off to that unit. She was able to call the power company and get the power turned back on. She eventually left. I had conversations with her too. She said she was working on finding another place and it wasn’t ready. Things drag on. We finally got her out there. I should have looked up the dates. By the time everybody was out, it was 6 to 8 weeks after what was originally agreed to. However, it was cleaned out, which was good and was in reasonable condition.
There was also a water bill. One of the big things on contract for deeds, because you’re on the title in certain areas, they want the water bill in your name. If the borrower is not performing on the loan, they’re typically not paying the taxes and insurance either and they’re often not paying the utilities. It ended up having this large water bill. It was over $1,000. The exact total might have been $1,200 until it was all said and done. I had a conversation with the borrower. At the time when we had the discussion, it was $800 something owed for the water. I need to net that out. He acted like he was caught because he knew this water bill was there. He thought I knew it wasn’t there. I ended up paying him $620 for the second installment instead of the $1,500, but I did have all these water bills later.
Sizing Up Your Alternatives
It was interesting too because at first, he was fine with this. Later on, he wasn’t and that led to some of his expletive-laden texts. That’s where we ended up. He was a volatile character but I was happy with how all this worked out in the end. I’ve told some people about this and they get appalled. They’re like, “Why did you pay him a penny? He broke the deal. He was supposed to be out by this date and then he wasn’t.” The key is always to look at your alternatives. One is if I have to evict them, that’s time-consuming and cost money as well. You don’t know that he’s going to leave it in good condition like he would need to, to get the money. He could leave junk and cause damage. You don’t know.
At one point when this was going on, my former assistant was suggesting taking a much harder line with him. The guy from Polaris said, “He’s volatile. He’s nice and cooperative one second and flying off the handle, the next. He’s liable to burn the place to the ground. You want to get him the heck out of there.” That was the deal. As you’re doing these note deals, assess these things, not in terms of what’s “right,” but are you making the best decision based on your alternatives available. Don’t get hung up on the principle of, “This guy didn’t follow the letter of the deal, so I’m going to stick it to him.” That can end up costing you money. It’s a very important point that sometimes people who are new to the game don’t quite take to heart. Overall, I was very pleased with how this turned out.
I mentioned there were renters upstairs. He was rent skimming. I got in touch with them and the borrower was able to give me the original lease that they signed. These borrowers had been there since 2016. It’s about four years by the time we were doing all of this. It’s a family from Nepal. They had six people in the place. They had been paying reliably for those four years. I created a new lease. I wanted to keep them there because there was no benefit to kicking them out. I could be stuck with another cleanout. They’re going to have to find somewhere else to go and they’re paying rent. That’s a nice bonus when you have to take a property back and you find a renter there.
They had been paying the former borrower $475 a month. I increased that to $550 but agreed to make some repairs as well. I ended up doing $700 on repairs especially like broken windows and things in the toilet. This borrower was collecting rent and he wasn’t doing anything up there. He was not treating them well. I don’t know a lot of the background on these people, but sometimes people who were immigrants, they put up with a lot and take what they can get. The borrower had been abusive towards them. I made some of those repairs that were critical.
By the time I ended up selling the property, I collected three months in rent so that was terrific. I ended up not charging them a security deposit because the borrower stole their deposit. That’s another one where if you have a new rental agreement, you’re supposed to collect the deposit, but these borrowers had been there for four years. They had been reliable up to that point. They communicated well. Only the wife spoke good English so I spoke to her. I had a realtor in that area who was good at helping out with this. He went there, talked to them, put her on speaker and we negotiated this lease over the phone and got it in place. Ultimately collecting a few months in rental income, which was more than what the original land contract was paying was super nice.
Once I did get that in place, I needed a property manager. The realtor that I used was from another area ways away. I had a hard time finding a property manager and I’m not entirely sure why. Some of it is the neighborhood was maybe not the best. It wasn’t a ghetto or anything like that, but some of the property management companies either didn’t cover that area or they only covered units that had higher amounts of rent. They wanted the rent to be like $800, $900, $1,000 a month, not the $550 that I was charging, but I did ultimately find one. They were able to get the locks changed to get the property secured after they got everybody out of the downstairs unit.
The best way to structure notes to maximize your resale value is to follow the 10-10-10 rule: 10% down, 10 years financing, at 10% interest. Click To TweetThey did send me some nice walk-through videos. There were two videos, one was ten minutes and one was fifteen minutes going through everything. I had a good understanding of the condition. Overall, this property manager was a bad communicator. You email her and it might be a couple of days that you hear back. She usually wouldn’t pick up the phone. She would get back to me eventually, but it would be a long time. That whole process of getting this done was slower and rougher than it should have been. I realized vendors have a lot going on. They’re not going to respond to an email instantaneously. When communication is poor and you have to repeat things, things that should take a day or so ended up dragging out over a week, it’s a bad sign. I didn’t have a lot of faith in this particular property manager, but I wasn’t worried about it.
The Rental Agreement
My intent was to get the rental agreement in place with the renters who are already there and then get the property sold. They did give me their estimate of some of the repairs needed. There were a lot of repairs needed to the property. There’s a lot of deferred maintenance. There were some potential roof issues. The siding was bad. It hadn’t been maintained at all. They estimated about $30,000 to address everything and fix it up. I’m not a professional rehabber, but that estimate seemed like it made sense. You need about $30,000 in repair, which I was not interested in doing myself. I wanted to get it sold to someone else who would take that on especially in this area I didn’t have other vendors. If this was an area where I had good vendors on the ground and I had a partner who was interested in putting more money into it, then maybe I could have considered it, but not in this case. I just wanted to do the essentials that the renters upstairs needed.
In selling the property, in Ohio, property managers also have to be licensed realtors. In theory, this property manager could have been my realtor, but I didn’t want to use her because the whole way through wasn’t inspiring in terms of confidence. I did ask her for an estimate of the sale price. She came back and said, “Probably somewhere in the $20,000.” That left me scratching my head because my BPO was $86,000. I realize it needs work, but below $30,000 doesn’t make any sense to me. It’s already cashflowing $550 a month. I know a lot of people who were buying rentals use the 1% rule where they like the rent to be 1% of the purchase price. This would be bordering on the 2% rule and it’s already rented, which doesn’t make a lot of sense to me.
I didn’t have a lot of faith in her. I always worry about some of these cases too, especially if you’re selling to a cash buyer, which is what that sale price would be for. If they come along and say, “Here’s a buyer, they’ll pay you $28,000 cash.” I don’t know that it’s not a friend of theirs or somewhere else where they have another connection and they’re artificially setting it low so they can get a deal. I try not to be too much of a conspiracy theorist in general. I’m not too worried about that. I was a little concerned about it in this case because the property manager had been so unreliable up to then. The story she was telling me didn’t make sense compared to everything else.
I used to play a lot of pokers back in the day. When you’re trying to figure out if someone’s bluffing or not, you look at how the hand is developed and the overall story. Does the story add up? Does everything make sense? If there are things in the story that don’t make sense and don’t add up, then that means there’s more of a probability that they might be bluffing. I wasn’t going to roll with that price because if I sold this in the $20,000, especially with the commissions and the closing costs and everything, I was going to end up upside down on this deal. I wasn’t about to accept going upside down when collecting $550 a month in rent. That doesn’t make any sense.
What I was thinking about though, I could see where some cash buyers could get into that territory. A lot of them, if they’re going to buy to do a fix and flip, they’ll use the standard formula of 70% of ARV minus expenses. If I took my $86,000 BPO value as the ARV, which synched a little bit with what Zillow and some other online things were showing. If you took that and said that there were $30,000 in expenses and you said, “70% times $86,000 minus $30,000, that equals $30,200. If I was going to sell this to a cash buyer, I might get $30,000. I would assume if it’s already bringing in rents that would have to factor, but maybe that’s where she was getting her numbers from. I’m not sure. I didn’t want to do that. That was not a good option.
What I did was I listed it on Craigslist and Facebook Marketplace. I offered it for $50,000. I was figuring, “If the ARV is in the $80,000 and it needs $30,000 in work, $50,000 makes sense especially if I’m offering the seller finance and I’m carrying the note. That becomes a reasonable deal. What I offered was a $50,000 sale price with $5,000 down. I’ll carry a mortgage for $45,000 at an 8% rate for 120 months. The P&I ends up being under $546. The reason I structured it this way was when I talked to First National Acceptance Company, which was the company that buys a lot of notes. I had a discussion with them around what’s the best way to structure notes to maximize your resale value. They told me they like the 10-10-10 Rule. That’s 10% down, financed over ten years at a 10% interest rate. I did 10% down, ten years. I didn’t want to do the 10% interest rate because I know some areas consider that usury, so I moved it to 8%. That landed me on a payment that was about $545, which is right about exactly what it was already cashflowing in rent.
I did stipulate that the buyer would cover closing costs. I didn’t want to add on cost to that. When I advertise it on Craigslist and Facebook Marketplace, I advertised it as a house hacking opportunity because it’s a duplex. It’s perfect if you want to follow the BiggerPockets house hacking template. Someone can move into the downstairs, which it needed work, but it was livable. People had been living there up to them and it didn’t look too bad. They can live in there, collect rent from the upstairs people, and fix it up over time. You’re not going to live entirely rent-free because you are going to have taxes, insurance expenses, and other things. Being it pretty close, you can fix it up over time and do well.
I also included in the ad line, “Owner financing available for a deserving buyer with a large down payment.” That was something I got from Bob Repass, who’s a former guest on the show. I got a big response. I ended up finding a buyer pretty quickly for the full asking price. As things were going on over the next few weeks and as we were getting this deal closed, I left the ads up in case the deal fell through for any reason. Almost every day, I would get pinged by people, “Is this available? I’m interested.” This has me itching to sell more REOs as seller finance.
Selling The Property
I should mention too that a lot of this structure was inspired by the conversation I had with Tracy Rewey, who was a guest on the show where she does a lot of this. If you go back to the episode with Tracy Rewey, we talked about seller finance and how to put these together. One lesson learned that jumped out of this and I had run into this one before in Indiana. In some counties you might pay your property tax, say the property taxes you pay in 2020, you’re paying them to cover the year previously. You pay a tax bill in 2020 that’s technically for the 2019 taxes. What happens is when you sell the property, they want you to get the taxes all the way to shoot up. It was an extra year of taxes in there that I had to pay. Not only did I pay the $4,200 in delinquent taxes when I bought it, but there was an extra $1,500 in a change in taxes that I had to pay in closing that I had anticipated. That’s something to keep an eye on to make sure you’re factoring in. At the end of the day, it’s not a big deal but stung a little bit.
The process of creating a new mortgage, this is something I talked with Tracy a lot. I used Russ O’Donnell from CallTheUnderwriter.com, who Tracy had recommended. He did the underwriting, use the loan application from Fannie Mae, collected some other documentation from the borrower. I sent that over to Russ. He did his underwriting and I got a certificate verifying that it is Dodd-Frank compliant. It’s a fully compliant mortgage and meets all of the ability to pay requirements for the borrower. I use Franco Barile to prepare the document. He created the note mortgage and then previously too, he had created the surrender of possession agreement and cancellation of the land contract and some other things.
I’m pretty happy with the borrower I had. He was buying this as an investment property. His plan is to take on this rehab work and have both units fully rented out. There’s even the potential to turn it into three units. There was a third set of utilities. It looked like the unit-one could potentially be turned into a unit into two units, but from the photos, it wasn’t quite clear. It looks like there may be a little bit upside for him if he could reconfigure this to do it to three units. As it is, you can’t do it but if he did some work, he might be able to. It’s an investment property for him. The guy owned multiple businesses close by in the area. He lived in that area. It’s a pretty solid buyer overall. From my understanding, this was his first foray into real estate but has own various businesses. I think he’ll do alright with it.
From the buyer perspective too, when you look at these deals, you always want to look at them from everyone’s perspective. Originally, I was thinking looking at it from the perspective of a buyer who’s a house hacker, from the perspective of a buyer who wants to buy this and put some money into it and turn it into a rental. Let’s say he does $30,000 in rehab. Maybe he can do it for less if he has friends in the area who do this kind of thing. He would have his $5,000 down payment to buy it. If you did $30,000 in rehab, he’d be into it for $35,000, and then he’s paying $545 a month out. That’s the P&I, and then there are taxes and insurance on top of that.
If you look at what both units would rent for, I had some discussions with people who were saying that if they’re fully rehabbed, they could potentially rent for $800 or $900 each. Even if you rent those both out at $700 a month, he’s going to have $1,400 in income, $545 for the P&I. Even with a lot of other expenses, he’s probably going to be doing far better than you would be able to do on a rental here in Colorado where I live or many other places. He got a pretty good deal on this.
I originated this note not that long ago. I haven’t seasoned it all the way yet, but if you look at where it stands so far. I bought the note for about $16,500. I’ve had about $12,000 in expenses. That’s $4,200 for delinquent taxes, legal fee servicing, some of the closing costs, and other things. There were still transfer taxes. The borrower paid the closing costs, but they still had other expenses related to the sale. I had that other tax bill for $1,500 that I had to true-up. I’m into it for about $28,500 so far. There was the one payment that the borrower made for about $350. I ended up collecting three months in rent from the renters that were $1,650 and then I ended up netting around $1,850 at the closing.
There was the $5,000 minus the taxes, minus the water bill, which got trued up there and some other things. The total income is about $23,550. I’m into the deal total net for about a little over $26,000 overall. What have I got so far for the $26,000? I’ve got a performing note that’s paying $545 a month. If you look at that alone compared to the $26,000 or so that I’m into it, it’s about a 25% yield on the investment, so that’s good. I could hold this note and be pretty fat, dumb, and happy. The borrower is pretty solid and has other assets.
I don’t expect him to default on this. If he did, there’s plenty of room to go through the foreclosure process and even get deficiency judgment or other things if I needed to later on. It’s a pretty high yield at around 25% and a lot of protection and the ability to recover if things get sideways. That note is a little smaller now because you started paying on it, but an unpaid balance of around $45,000. Once you get this note fully seasoned and the market adjusts, right now everybody’s in this hunkered down scared mode. Especially if you season this note for twelve months or so, we’re going to be in a different environment. We should be able to do pretty well selling that.
Note deals are fun. For every one you do, new things always come up. Click To TweetThere will be an additional profit bump as well. I’m not going to try to predict the final ROI, but it should be a healthy deal overall. I’m very happy with this one. I thought this was a good one to share because it had so many crazy twists and turns. I have a feeling there were some other twists and turns I’ve probably forgotten to talk about. This was an interesting borrower overall. I didn’t even get into his inability to cash checks and how I had to resend payments and all the wrangling, getting him to meet up with the mobile notary and all those other kinds of things. It was quite time-consuming overall, but pretty worthwhile so far.
I hope you find this instructive. I learned a lot in the process of working this deal. Note deals are fun. It seems like in everyone I do, there are new things that come up. I hope you enjoyed that. If you ever have other questions on note investing, ideas for the show or things you want to hear about, or if you just want to chat, you can always feel free to reach out to me at Dan@FusionNotes.com or go to my website at FusionNotes.com. You can get a lot more information. That’s what I’ve got for you for now. Take care, see you next time.
Important Links:
- Dan@FusionNotes.com
- First National Acceptance Company
- Bob Repass – past episode
- Tracy Rewey – past episode
- Franco Barile
- CallTheUnderwriter.com
- www.SystematicDueDiligence.com
- www.YouTube.com/fusionnotes
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