That’s the average days a mortgage is delinquent, as of May 2024, for a mortgage in foreclosure. I’ve been dealing with a non-performing loan that’s only 261 days behind so I’m above average.
Thankfully it’s a smaller balance loan with 38% LTV.
Loan to value is the ratio of property value to current unpaid principal balance.
Having this kind of cushion is why I’m in the notes space. Only real risk I face right now is from delinquent property taxes. Those are watched carefully by my loan servicing company. They keep me up to date on the payback of all the loans in my portfolio.
Being an asset manager instead of a self-managing landlord is a way better lifestyle.
Cashflow is better despite not having depreciation like when I owned an investment property. But depreciation recapture penalties were a significant motivation to stay a landlord for way longer than I should have.
The pain of having to spend 10,000 bucks for a kitchen remodel after evicting a tenant was the last straw.
I paid more in depreciation recapture than I made in total monthly profit. The only thing that saved the deal was the property had appreciated enough to not loose money.
That experience was why I started looking for other ways to make money. I learned a lot about multi-family, hard money lending, buying with seller financing and holding on to performing notes.
Another issue I have is that I’m a small check writer. I don’t have a giant pile of cash to buy more notes. I started looking for ways to pool my money with other folks to see but it was only recently that I learned of how to structure such deals.
I’ve had some folks ask why I’m not building a note based special purpose vehicle for my first fund. My answer is, that’s what I intended to do. It just so happens that I found a partner to walk me through all the steps of running a fund correctly.
He’s an expert at a level that most folks dream about. He’s written 2 best sellers on how to pitch such deals and I’ve managed to spend an hour with him nearly every Friday since November of 2023.
While this means nothing about returns, it certainly reduces any counter party risk my fund faces by teaming up with Oren Klaff. Oren’s done over 200 multi-million dollar deals over the last 20 plus years.
I’ve read both of his books, but the one I like the best is his newest one titled, Flip The Script. I especially like the audio book and you can get it from Amazon https://amzn.to/3KUj4fO
See you tomorrow,
Kevin Stokes
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