Best and Worst Note Deals of 2020 | Real Estate Notes Show

Episode: Best and Worst Deals Note Deals of 2020 Dave's Goals and Plans: - Planning to invite the most active group members to appear on the show at the end of each month for live conversations - Had a worst deal in Michigan (Pontiac) - a contract for deed that resulted in approximately $18,000 loss after legal fees, repairs, and city liens - Decided to walk away from the Michigan property rather than sell at a loss when county initiated tax foreclosure - 2020 was his best year overall for note investing despite pandemic challenges Nathan's Goals and Plans: - Experienced multiple loans defaulting after bankruptcy proceedings with repeated court hearing postponements - Had loans sit without cash flow collection due to bankruptcy trustee delays and deferrals - Avoids purchasing notes with previous bankruptcy history as indicator of future default risk - Stays away from bankruptcy deals due to additional 2-3 months required for motions before foreclosure can start - Passes on contract for deed deals due to complications and extended timelines Key Recommendations: - Evaluate bankruptcy deals carefully - avoid borrowers with previous bankruptcy filings as they have higher likelihood of future default - Consider what else is on borrower's books in bankruptcy - overextended borrowers are higher risk - Understand that bankruptcy borrowers typically pay current mortgage plus arrears separately, which can be beneficial if they continue performing - Use partner specialization strategy - some investors avoid certain deal types (BKs, CFDs) while others focus on them to avoid direct competition Topics Discussed: - Impact of COVID-19 pandemic on note investments and foreclosure timelines - Foreclosure delays and service of process challenges in different states - Property deterioration and additional liens complicating exit strategies - Bankruptcy complications and trustee-related delays in loan performance - Contract for deed (CFD) challenges versus traditional note deals - Government-mandated loan modifications during pandemic - Distinguishing between good and bad bankruptcy deals - 2020 performance overview and lessons learned Episode: Best and Worst Deals Note Deals of 2020 Guest: Nathan Turner Summary: Dave Putz and Nathan Turner discuss their best and worst note deals from 2020, analyzing how pandemic-related foreclosure delays, property deterioration, and bankruptcy complications affected their investment returns.

Main Topics: Best and worst note deals in 2020, Impact of COVID-19 on real estate note investing, Foreclosure delays and moratoriums, Loss management in note investing, Contract for deed deals in Michigan Key Takeaways: Even experienced investors lose money on deals; losses are part of the business | 2020 was a strong year overall for note investing despite pandemic challenges | Foreclosure delays caused by moratoriums and service issues can significantly impact deal profitability | Property condition deterioration and accumulated liens can turn profitable-looking deals into losses | Bankruptcy proceedings can create extended holding periods and additional losses on notes | Walking away from a bad deal may be better than losing more capital through forced sale Keywords: note investing, foreclosure, contract for deed, Michigan real estate, deal analysis, loss mitigation, moratoriums, bankruptcy, property liens, equity we'll talk soon sounds good good talking all right thank you everyone hey everybody dave putz here from jkp holdings alongside me nathan turner nathan how are you doing man i'm doing very well how about you good man hopefully things are going well in canada uh us with the soul corona virus is getting a little nuts uh to say at least how is canada been treating you interesting we uh just this week they just announced for for the province of quebec uh starting tomorrow uh they're they're instituting a curfew whoa nobody's allowed out between 8 p.m and 5 a.m unless you're going to work or coming home from work or walking oh wow but yeah they're they're i personally it doesn't affect me i don't go anywhere anyway but sure i can understand how some people are a little upset yeah um that's tough man yeah so interesting enough um down here we're getting more cases more things are going crazy for us but i think that um it's winter time these kind of things happen yeah um nothing really changes every winter things get nasty but it is what it is so yeah this this goes into i think that for us our whole world with all this growth viruses affects our business as well and we're gonna get into that in a short while um but you know because things are shut down and unknown i think people get lost and stuff but before we get jump in here i wanted to share with everyone i talked to nathan what we're going to do is anyone who gets active in the group we want to bring on somebody that's newer or a little experienced and to jump in with us on the side for part of our conversation at the end of the month and uh join us and have a live conversation with us to uh discuss things so whoever uh is the most active in the group we're things done and we did our best to get this sold finally had somebody that was willing to buy it but at the end of the day i had enough into it with expenses with the attorneys and then we had done some repairs on it that just got ripped apart again so by the day by the time everything was all said and done to sell it with the city liens and the realtor and the closing costs and everything else involved i would have lost more money than i already had invested in it so at the end of the day i just said you know what we're just going to walk away from the deal we're not going to sell it after all and just today i got to the notice saying that the county is foreclosing for the taxes [Laughter] oh yeah your your situation not mine that's so that that's that's actually my worst deal ever that that one was just a killer and what do you think you're going to lose on it at the end of the day we'll lose something like 18 grand okay so it's it's not fun it's not happy but what are you gonna do you know losing money is the worst kind of loss um luckily we haven't faced that but i think it's because the fact that 220 lobbying got frozen so we haven't got there yet yeah um i think once we get there we may lose money on some of the deals but luckily we've been okay um so our worst deal uh this year um is based around the fact that we've had multiple loans go through the process and we didn't start foreclosure they just flipped over to a bk and the b cage is sitting and sitting and they finally process the bk and then they default on it and then you go through the trustee will file for hearing and then the trustee will have the hearing and it gets postponed and to jump in with us on the side for part of our conversation at the end of the month and uh join us and have a live conversation with us to uh discuss things so whoever uh is the most active in the group we're gonna invite on the show at the end of the month with that said um you know what we're jumping into today is our best and worst case deals in gem 20.

um no investors sorry to say this but even the best lose money some of the best make it killing some of the worst can make a killing um sometimes it's out of our control nathan how would you what's your thoughts on that whole thought that i for the first few years i was i was real proud of myself because i hadn't lost any money uh and then of course you do enough drills and it's just gonna happen so so i'll talk about one of the ones i did uh this past year that it was actually it it completed last year but i was carrying it for like three years so it was you know a time bomb waiting to happen but yeah so i in our experience we've bought many many loans been involved on loans shared experiences with each other on loans um and i've heard some horror stories thankfully some of the worst case scenarios i never went through personally which is great um we've i've had my worst notes in the past and my home runs i'm gonna say that neither one of those situations happened john 20.

um would you agree with your situation was your best and worst note not in children 20 um i think my best actually probably was in 2020 i know 2020 actually was was my best year overall great um which is kind of interesting and worth studying out a little bit and how does that happen yeah but it was actually my best year ever um i think maybe the one i'm going to share i'd have to look back but if it's not my best it's close to it so for me honestly all things considered it was pretty much a normal year for me not not a whole lot changed i had some delays and i'm still experiencing some delays with some foreclosures and stuff with moratoriums going on but overall it was a pretty good year it wasn't too too bad yeah i i think my best deal just happened to be a few years back where the the seller just mispriced an asset uh okay yeah at the end of the foreclosure period thought the property worth like 50 it was enough being 180 000 value and scored that one very nicely oddly enough that was probably one of my past jb deals my future life um and the first deal with that person did with me um and now a partner of ours but yeah that was a nice situation where you bought it for 30 grand and sold it for 80.

so part of the challenge of the deal like that is i've got one investor where she's she's just killing it and it's just by luck like just it happens to be the one she's involved in or just killing it and i'm like okay i'm just gonna let you know it's not necessarily normal you're above average i just want you to know and she's like okay let me know yeah like i don't believe you but sure so let's let's start with the negatives i guess um and rise up to the positives she what was your worst situation in 2020 what what happened to 20 what deal was the worst give us the numbers too because everyone loves numbers sure you bet so i bought this one let's see i originally bought it i think it was 2017.

i don't see the date here real quick but anyhow at the time a house was worth about 45 000 we paid 18 for it um unpaid balance was 41 000 so it was you know had a little bit of equity hardly any uh it looked decent you know eighteen thousand for a forty five thousand dollar property with your 41 000 unpaid balance was those are pretty good numbers so we went with that and for a while it was okay and i was able to contact the borrower uh she made some payments she ended up actually getting help from her church uh which paid uh paid up a bunch of arrears and got her caught up for a little while yeah she she the church paid and then she never followed up with it and you know the church had every confidence she was going to but she just never did so then and then after that it was just delay after delay trying to get this foreclosure going there was something we she had disappeared so we couldn't serve her and there was some reason we couldn't do service by publication so it was just months and months and months just trying to deal with trying to find her and get service done just so he could complete the foreclosure so i finally get that done and by the time it all comes together i get back to property and it was just ripped apart it was just a mess and it was uh ugly enough there's a bunch of city liens on it and everything else what state was this what state this is in michigan this is a contract for deed in michigan which tells you a lot right there tell you the city it was in pontiac michigan it's a little you know not totally unexpected in that regard um oh i finally i've got a really good agent in in michigan and he's very creative in in how we can get right um we just had one postponed for the third time for february 2nd because now um there's default they're just postponing every chance they have so these loans are sitting there not collecting any kind of cash flow yeah um i could try selling it but i to me the deal still the numbers are still really good on it we bought a bunch of loans in a pool that was awesome situation um and we think eventually this will perform and this is just trying to get rid of stuff um i just that's what we're stuck at we didn't luckily have to do any kind of reos this year um we didn't deal with that stuff so i know in past years we had and we did definitely had a bad 2019 with those um but yeah we don't know what the interior is like that's the tough part so do you deal with a lot of bks we have more recently um i like them for the most part generally speaking um because usually it's a help um it usually gets dead off the books for the borrower and they continue paying us which is great yeah however it doesn't translate a lot of times um this year because the fact that if you want to get out of it it's hard to get out of them um yes i mean i could file for emotional relief but i don't know if that's going to be heard and contracted in i don't know yeah and then it's i i as much as possible i stay away from bks just for the time factor because if and when it does default then you've got to do a motion for summary judgment or motion for relief and then you know that whole process has to take place before you can even start a foreclosure yes so it adds a good two three months just just in that portion alone and i just oh drives me nuts yeah yeah so interesting enough you know these bk deals can be a slam dunk most people don't know is that typically they're paying their normal payment and their rears separately and sometimes it's bolted trustee sometimes they're not um we have a deal where they've been paying the the mortgage payment since forever and they stopped paying their rears in april uh the the bk part of it um and that's one of the loans that we've been sitting on trying to get action on since april luckily it's not the big part of the p i it's just the icing on the cake for us um which is why bk most parts good because you get the p9 time plus the rears yeah over time so so let me ask you how do you how do you evaluate a good bk versus a bad one so usually typically is i look for a bk that's been in bk before that's one of the trigger points for me it's like okay has this borrowed file before i've been just you know discharged for a reason and moved back on and got back onto it those who go to file you know a 13 and move into a seven that kind of scares me because his lack of income um and for also for me i think that bk has to do with what else is on the books for that person so if they're overloaded with stuff does it really defaulting but if they're trying to make payments and everything and their income doesn't support it um i just worry about that how about yourself what you don't buy a lot of bks because just don't like them but i don't because i'll i'll look at that and i'll say well if they've became in the past there's a higher likelihood they will in the future so then i don't even look at it yeah if i see any bk in the past then i i pass and i go on to something else it's similar to me for cfds i just don't like them because i just they just talk right yeah and so much of that's part of you know why we can hang out and we can not compete with each other is because a lot of it is just preference yeah yes i don't like bks you don't like cfds right yeah yeah we can just wash each other's hands on deals and we have shared pools and stuff like that together yeah so you know did you have any kind of modifications forced by the government any kind of those kind of where you had to modify them uh nothing that was forced i had i think two borrowers that uh requested covid relief earlier this year um and the one was like in march or april uh i think it was april and may and then sure enough he picked back up in june uh he was back to work construction guy and uh he's back in and he's fine i actually just recently sold the loan as a performer awesome he was a good guy i knew he was the kind of guy that he's going to pull through just because of past performance and conversations i'd had with him you know i get a feeling he's not the guy that's just going to walk away because yeah but he owned up to it and took it like a man and did we needed to do so that's cool and then i had one other um they had covid relief because both of the the husband and wife had both been off of work for a little while because they were exposed to somebody who had covid and so they had to walk away from the job for it was just a few weeks but it was enough that they weren't going to be able to make that month's payment so we delayed it for a month and no problem took care of it we didn't have any force upon us um we had a few that were already a mod uh for baron for about a year um but you know we didn't have anything that came out to us it was a force to be a modification situation um but the ones that were in mod actually ended up being a really good situation for us so let's try this into that what was your best deal to m20 what give us some numbers so here's some numbers um so this one took just a little over a year and in fact it was it was scheduled to close months earlier and the reason it didn't is because along with kovid and before kobe had even started were at record low interest rates so payoffs has been a new side of the business that was like once in a blue moon before and now it's becoming much more common which is great i like i love getting paid off and so for those who are not sure what he's talking about refinancing is such an option right now that people are refining to get a lower interest rate i'm getting paid off yeah interest rate with me was seven and a half percent and then they refined at i think it was like three percent or something like that so they saved themselves a ton of money that paid me off which makes me happy as a clam and you know everybody's happy so wow that's fantastic this was actually another one where the seller had actually undervalued it a little bit uh so that was a bit luck in there as well um so where was what state was it in was it cfd this was a cfd in illinois in fact okay which is not something i'd normally look at but it looked good so and then i yeah i knew this was going to be a good one so they they the seller had it valued at only 50 000 but the unpaid balance was 75.

wow okay and then in my own research i figured uh closer to that 75 even up to 100 if it's in good condition seemed like a better value on it so i thought i could take a chance and sure enough i was right so that's great wow um but yeah they they actually at my suggestion started looking for financing i said like listen here's the situation you're paying seven and a half percent with me i can't change that but if you're able to qualify they had good credit i said if you're able to qualify you can get a really good deal right now and wow and save a whole bunch of money and so they they did they went out looking found a local bank um and it took it was it was delayed because so many applications are going through this time so it got delayed a couple of months and finally paid off we got paid out 69 000 we had hardly any expenses in it because they were making payments the whole time so that we had you know our diligent that says 400 bucks that's it uh so the profit on that was about 40 thousand dollars so that's yeah 12 return yeah what when did you buy it sell at what time frame we bought let's see here we bought in june of 2019 and sold uh if it went through finally the refi on september 2nd wow so just over a year a little over a year just over a year and it without the delays it would have been a year or even a little bit less but that's awesome i'll deal with it 112 roi that works but that's a calculator i like that yeah i'm sure the seller is happy about that and similar to what liz did a couple years ago with uh the one we had situation but our situation was a little different we had a deal um that the borrower owed i'm looking at my numbers here uh we were in a position where it was a second lien and we bought the loan for just over 12 uh 12 yeah twelve five okay and the upb was uh 45 000.

that's good uh yeah um it was performing at the time um was the property value on that it was the second position it was uh [Music] 225 yeah okay yeah so it was a great situation it was a package deal we had to buy a bunch of people uh but weirdly enough they had fallen behind and reached out for barons agreement almost immediately okay and on the purchase amount they started paying us um i think it was close to little over 700 a month wow so yeah we were making ridiculous returns on um the payment amount coming into it and i think what what what happened was that they had settled with that because they had no choice of course restoration and we're trying to get them caught up so i'm actually bringing up the the payment history on it here um what we found was that they the husband had lost a job for a period of time guys got a new job and was ready to make payments so we made a deal with them um yeah they're paying 600 a month here for a while so yeah sorry 600 hours a month with payment so then we got in the situation where they so we bought again for 12.5 yeah we'll make it yeah 7200 hours the first year um killer returns and after a year they they we asked for a new mod we put the mod in place they put a ton of money down and i think our base is uh we're positive sorry 115 bases right now okay and we bought this loan um it was tail end of children 19 i believe it was well so it's been an awesome situation yeah um sorry kellen did a whole year for bans agreement at 6 000 a month so we're basically going positive we're infinity return within a period of time uh fantastic um and now we're back in a situation where they're gonna they're gonna make 575 payments a month for the next 15 years oh smokes yeah 536 a month payment for the next 15 years at 9.9 um we're hoping to refine out yeah what's the best point uh well we actually we were nice to them um this alone we are the upbeat was like 50 or so when we went into it yeah because of back feeding stuff that their legal balance is 76 000.

oh so what we did is we cut off the legal balance we took out 20 grand we told them match their down posit um so we actually they put down six thousand or so oh three thousand sorry we matched with those six so we did three and three plus twenty thousand so they're back to like fifty thousand dollars uh we just signed at the end of december and they're making a 536 payment for the next whatever top period time and as of this month's payment which i'm sure we'll get shortly will be an infinity return and yeah um it's one of the loans we're holding on to it's a great second yeah i mean our irrs can't be calculated anymore right but the roi right now is ridiculous right now oh that's great where is this one located ah let's see where it's actually at it's in birmingham oh yeah okay yep yeah um birmingham alabama um we bought this in a package of three this one was okay um that we bought alongside of winona um and for those who are watching um i was telling nathan offline we bought a loan in pa uh actually packages this one and i lost the assignment um hopefully seller's not listening in on this but we actually went back to actually my custodial uh provider lost the assignment the first time said email to this county never found it i got another one written up i had lost it oh no yeah luckily in filing papers this year i thought i shredded it last year with my kids yeah luckily found it got it got it recorded and good to do that one's we only bought for twenty two hundred dollars um so we're already in the positive that whenever the performing one but the balanced uvb is almost nothing now i think it's like there's eleven thousand star with i think we're down uh 20 uh 2200 hours uh okay or so uh yeah upbeat i don't have it on this scene here but we're down pretty far on the current upbeat on it probably eight or so and change so we'll be collecting that for a good period of time uh which is nice so yeah oh that's cool great returns 30 40 50 and then the ones that stand still it's just kind of accumulating yeah um sucks when they're stand still because they're not good or bad returns just what they are and it's hard to sell with stand still alone just someone sees some action um but i do think that from our point of view people are selling loans in standstill because they're just tired of waiting yep yeah and so if you can wait then yeah what a great opportunity but in a lot of cases i i like in a lot of my review um over the last few years just looking at the difference time makes for my model just the way that i do things because i'm always reselling whatever i'm buying so either i take it back as an reo and sell it or i get it performing and then sell it but in either case the the time is a huge huge factor so the faster i can do anything the bigger my return is going to be the irr is yeah significantly better yeah and we've had some questions recently about someone brought up why jersey loans you know hitting and i think it comes to this racing what's your thoughts on why like new jersey loans or ohio loans are selling there's so many people selling them uh back we got started ohio was everywhere because of so many ohio loans it was yeah what would be a good reason why someone would be selling new jersey loans right now what do you think i think um i think it goes back that they're stand still and they're either stand still or there's a long road ahead uh same with new york loans there's just it's a long road so if you can hunker down and settle in then great but and for most people they're kind of restarting it you know that's one thing i think people don't realize that if i'm gonna start over now um i'm in a good situation where i will be able to wait another six months because my i just started up i just started right right um and i think most people don't realize that is that just because your stand still the person buying it is not start at all right right yeah and then and then on top of that the other thing to factor in and all that is your cost of capital so if it's your own money and it's not costing you anything just to hold on to it sure opportunity costs all your yeah you know the only downside or whatever your whatever your cost of capital at that time is you know this time cost of holding it for everything else but it's also that cost of you know if you have a cost of capital that you're borrowing money or if you're using opm um that cost comes into play we're just dealing with a loan with another investor we're trying to buy and the paper was really bad um okay they it was a flaw restoration and there was some issues with it um and we went back to him honestly told me what's going on and it would probably a two-year foreclosure if the judgment doesn't work and at that point our cost capitals what the matters and time is there's servicing fees there's there are property tax it could go through because there is a judgemental file but it's you just don't know yeah yeah so tough yeah with 2021 coming about um in lolly standstills are you reaching out to your borrowers directly that often um i i actually do a lot of my own last minute so i'm usually in contact with my borrowers anyway so there's no no real additional communication not not any more than usual but i i stay in pretty close contact with all of them i've got one actually i sold the loan here just last month and he called me earlier and i think he's just wanted to make sure he's set up correctly with the new servicer which is fine and i don't mind spending a few minutes with him yeah um how often do you call these borrowers uh well it depends uh if they're paying well not often yeah um less than once a month maybe once every other month or something like that the ones that uh there's other ones where um you know i i get it they're in paycheck to paycheck kind of a situation so i'll call them you know the end of the month and and say so what day do you want me to take out your payment next month and and we'll set it up right then and there and they'll say okay well the second friday is when i get paid or whatever it happens to be and we'll set it up for them so it depends when that happens how are you organized now with the servicer to get the payment directed out at that certain date and time um that's a different one too because there i've got a couple of uh rentals i've got a couple of lease options so those ones i'm just collecting myself uh if it's with the servicer on then i'll just i'll make the servicer aware and say okay so they're making a payment on the 27th of this month just fyi keep your eyes peeled kind of thing and you ach in them are you making direct payments yeah ach yeah and for me that's probably i love ach um borrowers sometimes hate it um but i think that's the best way for us to go so moving forward in the first quarter of children 21 are you reaching out to the sellers and saying hey what do you got for sale or what are your what are you seeing right now i actually just got a couple of tapes here uh this week uh that looked pretty decent um all in all i think there's some that's for sale and then i think there's a lot that's kind of on the sidelines for the time being uh but i certainly expect to see bunch coming down the pipe it it's the covid related loans i don't think we're gonna see till the end of this year at the earliest okay um and then you know moving into next year just the the four variances are just getting stretched out and stretched out and stretched out so the longer that happens then the longer it's going to take for those to get around to us i'm hoping that with all these stills the sellers are starting to push the numbers around and say listen i get i can't hold this any longer you know they don't want to the waiting game we're going to make our our rounds um our phone calls more of our sellers as tape's kind of dwindled off we're gonna try revamping back up and say listen what do you got on your plate that's in standstill let us bring some energy into it and uh we have some good connection with some good attorneys we're gonna probably reject out and say listen you have another angle here uh do we have a creative method of doing this um when we have some non-traditional attorneys who are uh that can do nationwide analysis and say listen we could try this or we could go federal we can do this angle which it was helpful um but we're gonna be reaching out to a lot of our sellers in the coming about a week or two and just prepping them hey listen beginning of the year we're ready to rock and roll here's what's gonna go on uh but that's what we're doing i mean we're hoping that we're going to get more activity we're also going to explore seller finance a little bit this year um we're going to do hopefully a webinar on that to see what people who are buying seller finance which is a different world than we're in and see how they're going about finding them what the conversion rate is are they buying from lists or not we're probably doing a webinar eventually that because that's another angle to play right now that these people who are not traditional investors who are in the seller plans for a standstill could be an opportunity for us so yeah for sure and then actually later this month there's a iman conference for non-qm loans uh which is not intended so non-qualified mortgages so these are um the new and updated version of uh the bad loans that were being created back in 2009 or you know even previous to that but and they swear up and down that they're not the same thing and in large part i think that's true uh however they're non-qualified meaning that that borrower was not able to get traditional financing through a regular bank so these are kind of uh private lenders that offer mortgage financing so that i actually uh attended their their inaugural conference with imn in november of 2019 before everything started going nuts yeah and it was interesting there was me and mike solis we were the only two non-performing lone people there and and everyone was saying how this is so different and everything is going to be great and and sure enough the non-qm is is some of the things we're seeing coming available right now so we've seen a lot of those that are um maybe insurance couldn't cover or qualify them their payment um and from our experience you know we haven't dope into it yet as much as we want to because it's a new brand it's a new kind of field and what happened if they can't prove income in our world we don't care like if they can make their payment who cares and said they they can't qualify for whatever program they're in so they have to sell it or they didn't tell the truth on a loan application what's your knowledge about that what's your experience on these non-qm's danger is not as dangerous for us as it is for someone who may be a non-qm originator yeah i think even the non-qm originators they're still for the most part there's still large enough organizations that that everything has to fit in a box yeah um and for us you know we can be extremely flexible and our box is just if if nothing else our box is a lot bigger and uh we can we can finagle and massage and make it work yeah and that's huge because we can do what we want to do and if they're you know if they don't make a payment we're still foreclosing on them right we're still yeah yeah it's just that we're not the big bank right at the end of the day that's that's kind of the backup plan which we hope we don't have to get to but but it's there if we need it but a lot of these not um loans are like self-employed people so i mean i can certainly appreciate that and identify with that yeah they're not bad people they're not it's not like they don't have income they don't have the traditional kind of income that a bank wants to see so yeah and then goes back to the whole no docs loans that were due in back 2005 to six that same id is there but there is documents right um it's just not the typical document so maybe we'll we'll set up a time to bring those kind of people on and just have some questionnaire of what are the fears on it what are not fears on them um for them they think these loans with problems are crap right and we could buy them um yeah and the papers identical um it's just written up and the terms weren't matched right you know um and whatnot so sounds good well nathan i appreciate man we're gonna set up another time uh we'll see what's going on next week whatever and uh we'll we'll connect again hopefully uh we'll bring on some new people in the month and uh if you guys have any questions or concerns or some topics you want to talk about feel free to jump in and let us know yeah and if you're brand new and you're intimidated by getting on the line with us oh my goodness don't worry about it everyone's got something to contribute we're happy to take your awareness you wouldn't believe what when new people get on it and some of the stuff they ask or if they they have experience and um help us i mean there's sometimes where uh cody's a great example he thumbed up before he has a great experience on because he works in oregon in some of the notes that come on with the whole what happened to nate he was involved in a lot of origami property and his knowledge that was such an uplifting factor that he can contribute a lot of his day job features into our space so yeah yeah cool well nathan again i appreciate man keep warm keep safe yeah don't get locked down for too long and uh enjoy we're not getting snow yet so we're we're okay so far but we're expecting it soon we've got snow we had one kind of pretty good dump and then nothing since it's actually been sunny and not too cold it's it's just a little below freezing which is nice so it's nice and things and sunny and beautiful and the kids a lot a kid's still home or i kids start back in school elementary school next week high school the week after that okay yeah ours are minor in school right now so i've made peace and quiet right now so yeah lock down everything up and go so yeah they're in school right now they're just in their bedrooms on the computer my kids are back and forth they're every other day in school so they're in school today and the other class is watching yeah other part of class watching it so yeah cool well nathan i appreciate man we'll reconnect and uh we'll hit up next week gonna invite on the show at the end of the month with that said um you know what we're jumping into today is our best and worst case deals in gem 20.

um no investors sorry to say this but even the best lose money some of the best make it killing some of the worst can make a killing um sometimes it's out of our control nathan how would you what's your thoughts on that whole thought that i for the first few years i was i was real proud of myself because i hadn't lost any money uh and then of course you do enough drills and it's just gonna happen so so i'll talk about one of the ones i did uh this past year that it was actually it it completed last year but i was carrying it for like three years so it was you know a time bomb waiting to happen but yeah so i in our experience we've bought many many loans been involved on loans shared experiences with each other on loans um and i've heard some horror stories thankfully some of the worst case scenarios i never went through personally which is great um we've i've had my worst notes in the past and my home runs i'm gonna say that neither one of those situations happened john 20.

um would you agree with your situation was your best and worst note not in children 20 um i think my best actually probably was in 2020 i know 2020 actually was was my best year overall great um which is kind of interesting and worth studying out a little bit and how does that happen yeah but it was actually my best year ever um i think maybe the one i'm going to share i'd have to look back but if it's not my best it's close to it so for me honestly all things considered it was pretty much a normal year for me not not a whole lot changed i had some delays and i'm still experiencing some delays with some foreclosures and stuff with moratoriums going on but overall it was a pretty good year it wasn't too too bad yeah i i think my best deal just happened to be a few years back where the the seller just mispriced an asset uh okay yeah at the end of the foreclosure period thought the property worth like 50 it was enough being 180 000 value and scored that one very nicely oddly enough that was probably one of my past jb deals my future life um and the first deal with that person did with me um and now a partner of ours but yeah that was a nice situation where you bought it for 30 grand and sold it for 80.

so part of the challenge of the deal like that is i've got one investor where she's she's just killing it and it's just by luck like just it happens to be the one she's involved in or just killing it and i'm like okay i'm just gonna let you know it's not necessarily normal you're above average i just want you to know and she's like okay let me know yeah like i don't believe you but sure so let's let's start with the negatives i guess um and rise up to the positives she what was your worst situation in 2020 what what happened to 20 what deal was the worst give us the numbers too because everyone loves numbers sure you bet so i bought this one let's see i originally bought it i think it was 2017.

i don't see the date here real quick but anyhow at the time a house was worth about 45 000 we paid 18 for it um unpaid balance was 41 000 so it was you know had a little bit of equity hardly any uh it looked decent you know eighteen thousand for a forty five thousand dollar property with your 41 000 unpaid balance was those are pretty good numbers so we went with that and for a while it was okay and i was able to contact the borrower uh she made some payments she ended up actually getting help from her church uh which paid uh paid up a bunch of arrears and got her caught up for a little while yeah she she the church paid and then she never followed up with it and you know the church had every confidence she was going to but she just never did so then and then after that it was just delay after delay trying to get this foreclosure going there was something we she had disappeared so we couldn't serve her and there was some reason we couldn't do service by publication so it was just months and months and months just trying to deal with trying to find her and get service done just so he could complete the foreclosure so i finally get that done and by the time it all comes together i get back to property and it was just ripped apart it was just a mess and it was uh ugly enough there's a bunch of city liens on it and everything else what state was this what state this is in michigan this is a contract for deed in michigan which tells you a lot right there tell you the city it was in pontiac michigan it's a little you know not totally unexpected in that regard um oh i finally i've got a really good agent in in michigan and he's very creative in in how we can get things done and we did our best to get this sold finally had somebody that was willing to buy it but at the end of the day i had enough into it with expenses with the attorneys and then we had done some repairs on it that just got ripped apart again so by the day by the time everything was all said and done to sell it with the city liens and the realtor and the closing costs and everything else involved i would have lost more money than i already had invested in it so at the end of the day i just said you know what we're just going to walk away from the deal we're not going to sell it after all and just today i got to the notice saying that the county is foreclosing for the taxes [Laughter] oh yeah your your situation not mine that's so that that's that's actually my worst deal ever that that one was just a killer and what do you think you're going to lose on it at the end of the day we'll lose something like 18 grand okay so it's it's not fun it's not happy but what are you gonna do you know losing money is the worst kind of loss um luckily we haven't faced that but i think it's because the fact that 220 lobbying got frozen so we haven't got there yet yeah um i think once we get there we may lose money on some of the deals but luckily we've been okay um so our worst deal uh this year um is based around the fact that we've had multiple loans go through the process and we didn't start foreclosure they just flipped over to a bk and the b cage is sitting and sitting and they finally process the bk and then they default on it and then you go through the trustee will file for hearing and then the trustee will have the hearing and it gets postponed right um we just had one postponed for the third time for february 2nd because now um there's default they're just postponing every chance they have so these loans are sitting there not collecting any kind of cash flow yeah um i could try selling it but i to me the deal still the numbers are still really good on it we bought a bunch of loans in a pool that was awesome situation um and we think eventually this will perform and this is just trying to get rid of stuff um i just that's what we're stuck at we didn't luckily have to do any kind of reos this year um we didn't deal with that stuff so i know in past years we had and we did definitely had a bad 2019 with those um but yeah we don't know what the interior is like that's the tough part so do you deal with a lot of bks we have more recently um i like them for the most part generally speaking um because usually it's a help um it usually gets dead off the books for the borrower and they continue paying us which is great yeah however it doesn't translate a lot of times um this year because the fact that if you want to get out of it it's hard to get out of them um yes i mean i could file for emotional relief but i don't know if that's going to be heard and contracted in i don't know yeah and then it's i i as much as possible i stay away from bks just for the time factor because if and when it does default then you've got to do a motion for summary judgment or motion for relief and then you know that whole process has to take place before you can even start a foreclosure yes so it adds a good two three months just just in that portion alone and i just oh drives me nuts yeah yeah so interesting enough you know these bk deals can be a slam dunk most people don't know is that typically they're paying their normal payment and their rears separately and sometimes it's bolted trustee sometimes they're not um we have a deal where they've been paying the the mortgage payment since forever and they stopped paying their rears in april uh the the bk part of it um and that's one of the loans that we've been sitting on trying to get action on since april luckily it's not the big part of the p i it's just the icing on the cake for us um which is why bk most parts good because you get the p9 time plus the rears yeah over time so so let me ask you how do you how do you evaluate a good bk versus a bad one so usually typically is i look for a bk that's been in bk before that's one of the trigger points for me it's like okay has this borrowed file before i've been just you know discharged for a reason and moved back on and got back onto it those who go to file you know a 13 and move into a seven that kind of scares me because his lack of income um and for also for me i think that bk has to do with what else is on the books for that person so if they're overloaded with stuff does it really defaulting but if they're trying to make payments and everything and their income doesn't support it um i just worry about that how about yourself what you don't buy a lot of bks because just don't like them but i don't because i'll i'll look at that and i'll say well if they've became in the past there's a higher likelihood they will in the future so then i don't even look at it yeah if i see any bk in the past then i i pass and i go on to something else it's similar to me for cfds i just don't like them because i just they just talk right yeah and so much of that's part of you know why we can hang out and we can not compete with each other is because a lot of it is just preference yeah yes i don't like bks you don't like cfds right yeah yeah we can just wash each other's hands on deals and we have shared pools and stuff like that together yeah so you know did you have any kind of modifications forced by the government any kind of those kind of where you had to modify them uh nothing that was forced i had i think two borrowers that uh requested covid relief earlier this year um and the one was like in march or april uh i think it was april and may and then sure enough he picked back up in june uh he was back to work construction guy and uh he's back in and he's fine i actually just recently sold the loan as a performer awesome he was a good guy i knew he was the kind of guy that he's going to pull through just because of past performance and conversations i'd had with him you know i get a feeling he's not the guy that's just going to walk away because yeah but he owned up to it and took it like a man and did we needed to do so that's cool and then i had one other um they had covid relief because both of the the husband and wife had both been off of work for a little while because they were exposed to somebody who had covid and so they had to walk away from the job for it was just a few weeks but it was enough that they weren't going to be able to make that month's payment so we delayed it for a month and no problem took care of it we didn't have any force upon us um we had a few that were already a mod uh for baron for about a year um but you know we didn't have anything that came out to us it was a force to be a modification situation um but the ones that were in mod actually ended up being a really good situation for us so let's try this into that what was your best deal to m20 what give us some numbers so here's some numbers um so this one took just a little over a year and in fact it was it was scheduled to close months earlier and the reason it didn't is because along with kovid and before kobe had even started were at record low interest rates so payoffs has been a new side of the business that was like once in a blue moon before and now it's becoming much more common which is great i like i love getting paid off and so for those who are not sure what he's talking about refinancing is such an option right now that people are refining to get a lower interest rate i'm getting paid off yeah interest rate with me was seven and a half percent and then they refined at i think it was like three percent or something like that so they saved themselves a ton of money that paid me off which makes me happy as a clam and you know everybody's happy so wow that's fantastic this was actually another one where the seller had actually undervalued it a little bit uh so that was a bit luck in there as well um so where was what state was it in was it cfd this was a cfd in illinois in fact okay which is not something i'd normally look at but it looked good so and then i yeah i knew this was going to be a good one so they they the seller had it valued at only 50 000 but the unpaid balance was 75.

wow okay and then in my own research i figured uh closer to that 75 even up to 100 if it's in good condition seemed like a better value on it so i thought i could take a chance and sure enough i was right so that's great wow um but yeah they they actually at my suggestion started looking for financing i said like listen here's the situation you're paying seven and a half percent with me i can't change that but if you're able to qualify they had good credit i said if you're able to qualify you can get a really good deal right now and wow and save a whole bunch of money and so they they did they went out looking found a local bank um and it took it was it was delayed because so many applications are going through this time so it got delayed a couple of months and finally paid off we got paid out 69 000 we had hardly any expenses in it because they were making payments the whole time so that we had you know our diligent that says 400 bucks that's it uh so the profit on that was about 40 thousand dollars so that's yeah 12 return yeah what when did you buy it sell at what time frame we bought let's see here we bought in june of 2019 and sold uh if it went through finally the refi on september 2nd wow so just over a year a little over a year just over a year and it without the delays it would have been a year or even a little bit less but that's awesome i'll deal with it 112 roi that works but that's a calculator i like that yeah i'm sure the seller is happy about that and similar to what liz did a couple years ago with uh the one we had situation but our situation was a little different we had a deal um that the borrower owed i'm looking at my numbers here uh we were in a position where it was a second lien and we bought the loan for just over 12 uh 12 yeah twelve five okay and the upb was uh 45 000.

that's good uh yeah um it was performing at the time um was the property value on that it was the second position it was uh [Music] 225 yeah okay yeah so it was a great situation it was a package deal we had to buy a bunch of people uh but weirdly enough they had fallen behind and reached out for barons agreement almost immediately okay and on the purchase amount they started paying us um i think it was close to little over 700 a month wow so yeah we were making ridiculous returns on um the payment amount coming into it and i think what what what happened was that they had settled with that because they had no choice of course restoration and we're trying to get them caught up so i'm actually bringing up the the payment history on it here um what we found was that they the husband had lost a job for a period of time guys got a new job and was ready to make payments so we made a deal with them um yeah they're paying 600 a month here for a while so yeah sorry 600 hours a month with payment so then we got in the situation where they so we bought again for 12.5 yeah we'll make it yeah 7200 hours the first year um killer returns and after a year they they we asked for a new mod we put the mod in place they put a ton of money down and i think our base is uh we're positive sorry 115 bases right now okay and we bought this loan um it was tail end of children 19 i believe it was well so it's been an awesome situation yeah um sorry kellen did a whole year for bans agreement at 6 000 a month so we're basically going positive we're infinity return within a period of time uh fantastic um and now we're back in a situation where they're gonna they're gonna make 575 payments a month for the next 15 years oh smokes yeah 536 a month payment for the next 15 years at 9.9 um we're hoping to refine out yeah what's the best point uh well we actually we were nice to them um this alone we are the upbeat was like 50 or so when we went into it yeah because of back feeding stuff that their legal balance is 76 000.

oh so what we did is we cut off the legal balance we took out 20 grand we told them match their down posit um so we actually they put down six thousand or so oh three thousand sorry we matched with those six so we did three and three plus twenty thousand so they're back to like fifty thousand dollars uh we just signed at the end of december and they're making a 536 payment for the next whatever top period time and as of this month's payment which i'm sure we'll get shortly will be an infinity return and yeah um it's one of the loans we're holding on to it's a great second yeah i mean our irrs can't be calculated anymore right but the roi right now is ridiculous right now oh that's great where is this one located ah let's see where it's actually at it's in birmingham oh yeah okay yep yeah um birmingham alabama um we bought this in a package of three this one was okay um that we bought alongside of winona um and for those who are watching um i was telling nathan offline we bought a loan in pa uh actually packages this one and i lost the assignment um hopefully seller's not listening in on this but we actually went back to actually my custodial uh provider lost the assignment the first time said email to this county never found it i got another one written up i had lost it oh no yeah luckily in filing papers this year i thought i shredded it last year with my kids yeah luckily found it got it got it recorded and good to do that one's we only bought for twenty two hundred dollars um so we're already in the positive that whenever the performing one but the balanced uvb is almost nothing now i think it's like there's eleven thousand star with i think we're down uh 20 uh 2200 hours uh okay or so uh yeah upbeat i don't have it on this scene here but we're down pretty far on the current upbeat on it probably eight or so and change so we'll be collecting that for a good period of time uh which is nice so yeah oh that's cool great returns 30 40 50 and then the ones that stand still it's just kind of accumulating yeah um sucks when they're stand still because they're not good or bad returns just what they are and it's hard to sell with stand still alone just someone sees some action um but i do think that from our point of view people are selling loans in standstill because they're just tired of waiting yep yeah and so if you can wait then yeah what a great opportunity but in a lot of cases i i like in a lot of my review um over the last few years just looking at the difference time makes for my model just the way that i do things because i'm always reselling whatever i'm buying so either i take it back as an reo and sell it or i get it performing and then sell it but in either case the the time is a huge huge factor so the faster i can do anything the bigger my return is going to be the irr is yeah significantly better yeah and we've had some questions recently about someone brought up why jersey loans you know hitting and i think it comes to this racing what's your thoughts on why like new jersey loans or ohio loans are selling there's so many people selling them uh back we got started ohio was everywhere because of so many ohio loans it was yeah what would be a good reason why someone would be selling new jersey loans right now what do you think i think um i think it goes back that they're stand still and they're either stand still or there's a long road ahead uh same with new york loans there's just it's a long road so if you can hunker down and settle in then great but and for most people they're kind of restarting it you know that's one thing i think people don't realize that if i'm gonna start over now um i'm in a good situation where i will be able to wait another six months because my i just started up i just started right right um and i think most people don't realize that is that just because your stand still the person buying it is not start at all right right yeah and then and then on top of that the other thing to factor in and all that is your cost of capital so if it's your own money and it's not costing you anything just to hold on to it sure opportunity costs all your yeah you know the only downside or whatever your whatever your cost of capital at that time is you know this time cost of holding it for everything else but it's also that cost of you know if you have a cost of capital that you're borrowing money or if you're using opm um that cost comes into play we're just dealing with a loan with another investor we're trying to buy and the paper was really bad um okay they it was a flaw restoration and there was some issues with it um and we went back to him honestly told me what's going on and it would probably a two-year foreclosure if the judgment doesn't work and at that point our cost capitals what the matters and time is there's servicing fees there's there are property tax it could go through because there is a judgemental file but it's you just don't know yeah yeah so tough yeah with 2021 coming about um in lolly standstills are you reaching out to your borrowers directly that often um i i actually do a lot of my own last minute so i'm usually in contact with my borrowers anyway so there's no no real additional communication not not any more than usual but i i stay in pretty close contact with all of them i've got one actually i sold the loan here just last month and he called me earlier and i think he's just wanted to make sure he's set up correctly with the new servicer which is fine and i don't mind spending a few minutes with him yeah um how often do you call these borrowers uh well it depends uh if they're paying well not often yeah um less than once a month maybe once every other month or something like that the ones that uh there's other ones where um you know i i get it they're in paycheck to paycheck kind of a situation so i'll call them you know the end of the month and and say so what day do you want me to take out your payment next month and and we'll set it up right then and there and they'll say okay well the second friday is when i get paid or whatever it happens to be and we'll set it up for them so it depends when that happens how are you organized now with the servicer to get the payment directed out at that certain date and time um that's a different one too because there i've got a couple of uh rentals i've got a couple of lease options so those ones i'm just collecting myself uh if it's with the servicer on then i'll just i'll make the servicer aware and say okay so they're making a payment on the 27th of this month just fyi keep your eyes peeled kind of thing and you ach in them are you making direct payments yeah ach yeah and for me that's probably i love ach um borrowers sometimes hate it um but i think that's the best way for us to go so moving forward in the first quarter of children 21 are you reaching out to the sellers and saying hey what do you got for sale or what are your what are you seeing right now i actually just got a couple of tapes here uh this week uh that looked pretty decent um all in all i think there's some that's for sale and then i think there's a lot that's kind of on the sidelines for the time being uh but i certainly expect to see bunch coming down the pipe it it's the covid related loans i don't think we're gonna see till the end of this year at the earliest okay um and then you know moving into next year just the the four variances are just getting stretched out and stretched out and stretched out so the longer that happens then the longer it's going to take for those to get around to us i'm hoping that with all these stills the sellers are starting to push the numbers around and say listen i get i can't hold this any longer you know they don't want to the waiting game we're going to make our our rounds um our phone calls more of our sellers as tape's kind of dwindled off we're gonna try revamping back up and say listen what do you got on your plate that's in standstill let us bring some energy into it and uh we have some good connection with some good attorneys we're gonna probably reject out and say listen you have another angle here uh do we have a creative method of doing this um when we have some non-traditional attorneys who are uh that can do nationwide analysis and say listen we could try this or we could go federal we can do this angle which it was helpful um but we're gonna be reaching out to a lot of our sellers in the coming about a week or two and just prepping them hey listen beginning of the year we're ready to rock and roll here's what's gonna go on uh but that's what we're doing i mean we're hoping that we're going to get more activity we're also going to explore seller finance a little bit this year um we're going to do hopefully a webinar on that to see what people who are buying seller finance which is a different world than we're in and see how they're going about finding them what the conversion rate is are they buying from lists or not we're probably doing a webinar eventually that because that's another angle to play right now that these people who are not traditional investors who are in the seller plans for a standstill could be an opportunity for us so yeah for sure and then actually later this month there's a iman conference for non-qm loans uh which is not intended so non-qualified mortgages so these are um the new and updated version of uh the bad loans that were being created back in 2009 or you know even previous to that but and they swear up and down that they're not the same thing and in large part i think that's true uh however they're non-qualified meaning that that borrower was not able to get traditional financing through a regular bank so these are kind of uh private lenders that offer mortgage financing so that i actually uh attended their their inaugural conference with imn in november of 2019 before everything started going nuts yeah and it was interesting there was me and mike solis we were the only two non-performing lone people there and and everyone was saying how this is so different and everything is going to be great and and sure enough the non-qm is is some of the things we're seeing coming available right now so we've seen a lot of those that are um maybe insurance couldn't cover or qualify them their payment um and from our experience you know we haven't dope into it yet as much as we want to because it's a new brand it's a new kind of field and what happened if they can't prove income in our world we don't care like if they can make their payment who cares and said they they can't qualify for whatever program they're in so they have to sell it or they didn't tell the truth on a loan application what's your knowledge about that what's your experience on these non-qm's danger is not as dangerous for us as it is for someone who may be a non-qm originator yeah i think even the non-qm originators they're still for the most part there's still large enough organizations that that everything has to fit in a box yeah um and for us you know we can be extremely flexible and our box is just if if nothing else our box is a lot bigger and uh we can we can finagle and massage and make it work yeah and that's huge because we can do what we want to do and if they're you know if they don't make a payment we're still foreclosing on them right we're still yeah yeah it's just that we're not the big bank right at the end of the day that's that's kind of the backup plan which we hope we don't have to get to but but it's there if we need it but a lot of these not um loans are like self-employed people so i mean i can certainly appreciate that and identify with that yeah they're not bad people they're not it's not like they don't have income they don't have the traditional kind of income that a bank wants to see so yeah and then goes back to the whole no docs loans that were due in back 2005 to six that same id is there but there is documents right um it's just not the typical document so maybe we'll we'll set up a time to bring those kind of people on and just have some questionnaire of what are the fears on it what are not fears on them um for them they think these loans with problems are crap right and we could buy them um yeah and the papers identical um it's just written up and the terms weren't matched right you know um and whatnot so sounds good well nathan i appreciate man we're gonna set up another time uh we'll see what's going on next week whatever and uh we'll we'll connect again hopefully uh we'll bring on some new people in the month and uh if you guys have any questions or concerns or some topics you want to talk about feel free to jump in and let us know yeah and if you're brand new and you're intimidated by getting on the line with us oh my goodness don't worry about it everyone's got something to contribute we're happy to take your awareness you wouldn't believe what when new people get on it and some of the stuff they ask or if they they have experience and um help us i mean there's sometimes where uh cody's a great example he thumbed up before he has a great experience on because he works in oregon in some of the notes that come on with the whole what happened to nate he was involved in a lot of origami property and his knowledge that was such an uplifting factor that he can contribute a lot of his day job features into our space so yeah yeah cool well nathan again i appreciate man keep warm keep safe yeah don't get locked down for too long and uh enjoy we're not getting snow yet so we're we're okay so far but we're expecting it soon we've got snow we had one kind of pretty good dump and then nothing since it's actually been sunny and not too cold it's it's just a little below freezing which is nice so it's nice and things and sunny and beautiful and the kids a lot a kid's still home or i kids start back in school elementary school next week high school the week after that okay yeah ours are minor in school right now so i've made peace and quiet right now so yeah lock down everything up and go so yeah they're in school right now they're just in their bedrooms on the computer my kids are back and forth they're every other day in school so they're in school today and the other class is watching yeah other part of class watching it so yeah cool well nathan i appreciate man we'll reconnect and uh we'll hit up next week we'll talk soon sounds good good talking all right thank you everyone hey everybody dave putz here from jkp holdings alongside me nathan turner nathan how are you doing man i'm doing very well how about you good man hopefully things are going well in canada uh us with the soul corona virus is getting a little nuts uh to say at least how is canada been treating you interesting we uh just this week they just announced for for the province of quebec uh starting tomorrow uh they're they're instituting a curfew whoa nobody's allowed out between 8 p.m and 5 a.m unless you're going to work or coming home from work or walking oh wow but yeah they're they're i personally it doesn't affect me i don't go anywhere anyway but sure i can understand how some people are a little upset yeah um that's tough man yeah so interesting enough um down here we're getting more cases more things are going crazy for us but i think that um it's winter time these kind of things happen yeah um nothing really changes every winter things get nasty but it is what it is so yeah this this goes into i think that for us our whole world with all this growth viruses affects our business as well and we're gonna get into that in a short while um but you know because things are shut down and unknown i think people get lost and stuff but before we get jump in here i wanted to share with everyone i talked to nathan what we're going to do is anyone who gets active in the group we want to bring on somebody that's newer or a little experienced and to jump in with us on the side for part of our conversation at the end of the month and uh join us and have a live conversation with us to uh discuss things so whoever uh is the most active in the group we're gonna invite on the show at the end of the month with that said um you know what we're jumping into today is our best and worst case deals in gem 20.

um no investors sorry to say this but even the best lose money some of the best make it killing some of the worst can make a killing um sometimes it's out of our control nathan how would you what's your thoughts on that whole thought that i for the first few years i was i was real proud of myself because i hadn't lost any money uh and then of course you do enough drills and it's just gonna happen so so i'll talk about one of the ones i did uh this past year that it was actually it it completed last year but i was carrying it for like three years so it was you know a time bomb waiting to happen but yeah so i in our experience we've bought many many loans been involved on loans shared experiences with each other on loans um and i've heard some horror stories thankfully some of the worst case scenarios i never went through personally which is great um we've i've had my worst notes in the past and my home runs i'm gonna say that neither one of those situations happened john 20.

um would you agree with your situation was your best and worst note not in children 20 um i think my best actually probably was in 2020 i know 2020 actually was was my best year overall great um which is kind of interesting and worth studying out a little bit and how does that happen yeah but it was actually my best year ever um i think maybe the one i'm going to share i'd have to look back but if it's not my best it's close to it so for me honestly all things considered it was pretty much a normal year for me not not a whole lot changed i had some delays and i'm still experiencing some delays with some foreclosures and stuff with moratoriums going on but overall it was a pretty good year it wasn't too too bad yeah i i think my best deal just happened to be a few years back where the the seller just mispriced an asset uh okay yeah at the end of the foreclosure period thought the property worth like 50 it was enough being 180 000 value and scored that one very nicely oddly enough that was probably one of my past jb deals my future life um and the first deal with that person did with me um and now a partner of ours but yeah that was a nice situation where you bought it for 30 grand and sold it for 80.

so part of the challenge of the deal like that is i've got one investor where she's she's just killing it and it's just by luck like just it happens to be the one she's involved in or just killing it and i'm like okay i'm just gonna let you know it's not necessarily normal you're above average i just want you to know and she's like okay let me know yeah like i don't believe you but sure so let's let's start with the negatives i guess um and rise up to the positives she what was your worst situation in 2020 what what happened to 20 what deal was the worst give us the numbers too because everyone loves numbers sure you bet so i bought this one let's see i originally bought it i think it was 2017.

i don't see the date here real quick but anyhow at the time a house was worth about 45 000 we paid 18 for it um unpaid balance was 41 000 so it was you know had a little bit of equity hardly any uh it looked decent you know eighteen thousand for a forty five thousand dollar property with your 41 000 unpaid balance was those are pretty good numbers so we went with that and for a while it was okay and i was able to contact the borrower uh she made some payments she ended up actually getting help from her church uh which paid uh paid up a bunch of arrears and got her caught up for a little while yeah she she the church paid and then she never followed up with it and you know the church had every confidence she was going to but she just never did so then and then after that it was just delay after delay trying to get this foreclosure going there was something we she had disappeared so we couldn't serve her and there was some reason we couldn't do service by publication so it was just months and months and months just trying to deal with trying to find her and get service done just so he could complete the foreclosure so i finally get that done and by the time it all comes together i get back to property and it was just ripped apart it was just a mess and it was uh ugly enough there's a bunch of city liens on it and everything else what state was this what state this is in michigan this is a contract for deed in michigan which tells you a lot right there tell you the city it was in pontiac michigan it's a little you know not totally unexpected in that regard um oh i finally i've got a really good agent in in michigan and he's very creative in in how we can get things done and we did our best to get this sold finally had somebody that was willing to buy it but at the end of the day i had enough into it with expenses with the attorneys and then we had done some repairs on it that just got ripped apart again so by the day by the time everything was all said and done to sell it with the city liens and the realtor and the closing costs and everything else involved i would have lost more money than i already had invested in it so at the end of the day i just said you know what we're just going to walk away from the deal we're not going to sell it after all and just today i got to the notice saying that the county is foreclosing for the taxes [Laughter] oh yeah your your situation not mine that's so that that's that's actually my worst deal ever that that one was just a killer and what do you think you're going to lose on it at the end of the day we'll lose something like 18 grand okay so it's it's not fun it's not happy but what are you gonna do you know losing money is the worst kind of loss um luckily we haven't faced that but i think it's because the fact that 220 lobbying got frozen so we haven't got there yet yeah um i think once we get there we may lose money on some of the deals but luckily we've been okay um so our worst deal uh this year um is based around the fact that we've had multiple loans go through the process and we didn't start foreclosure they just flipped over to a bk and the b cage is sitting and sitting and they finally process the bk and then they default on it and then you go through the trustee will file for hearing and then the trustee will have the hearing and it gets postponed right um we just had one postponed for the third time for february 2nd because now um there's default they're just postponing every chance they have so these loans are sitting there not collecting any kind of cash flow yeah um i could try selling it but i to me the deal still the numbers are still really good on it we bought a bunch of loans in a pool that was awesome situation um and we think eventually this will perform and this is just trying to get rid of stuff um i just that's what we're stuck at we didn't luckily have to do any kind of reos this year um we didn't deal with that stuff so i know in past years we had and we did definitely had a bad 2019 with those um but yeah we don't know what the interior is like that's the tough part so do you deal with a lot of bks we have more recently um i like them for the most part generally speaking um because usually it's a help um it usually gets dead off the books for the borrower and they continue paying us which is great yeah however it doesn't translate a lot of times um this year because the fact that if you want to get out of it it's hard to get out of them um yes i mean i could file for emotional relief but i don't know if that's going to be heard and contracted in i don't know yeah and then it's i i as much as possible i stay away from bks just for the time factor because if and when it does default then you've got to do a motion for summary judgment or motion for relief and then you know that whole process has to take place before you can even start a foreclosure yes so it adds a good two three months just just in that portion alone and i just oh drives me nuts yeah yeah so interesting enough you know these bk deals can be a slam dunk most people don't know is that typically they're paying their normal payment and their rears separately and sometimes it's bolted trustee sometimes they're not um we have a deal where they've been paying the the mortgage payment since forever and they stopped paying their rears in april uh the the bk part of it um and that's one of the loans that we've been sitting on trying to get action on since april luckily it's not the big part of the p i it's just the icing on the cake for us um which is why bk most parts good because you get the p9 time plus the rears yeah over time so so let me ask you how do you how do you evaluate a good bk versus a bad one so usually typically is i look for a bk that's been in bk before that's one of the trigger points for me it's like okay has this borrowed file before i've been just you know discharged for a reason and moved back on and got back onto it those who go to file you know a 13 and move into a seven that kind of scares me because his lack of income um and for also for me i think that bk has to do with what else is on the books for that person so if they're overloaded with stuff does it really defaulting but if they're trying to make payments and everything and their income doesn't support it um i just worry about that how about yourself what you don't buy a lot of bks because just don't like them but i don't because i'll i'll look at that and i'll say well if they've became in the past there's a higher likelihood they will in the future so then i don't even look at it yeah if i see any bk in the past then i i pass and i go on to something else it's similar to me for cfds i just don't like them because i just they just talk right yeah and so much of that's part of you know why we can hang out and we can not compete with each other is because a lot of it is just preference yeah yes i don't like bks you don't like cfds right yeah yeah we can just wash each other's hands on deals and we have shared pools and stuff like that together yeah so you know did you have any kind of modifications forced by the government any kind of those kind of where you had to modify them uh nothing that was forced i had i think two borrowers that uh requested covid relief earlier this year um and the one was like in march or april uh i think it was april and may and then sure enough he picked back up in june uh he was back to work construction guy and uh he's back in and he's fine i actually just recently sold the loan as a performer awesome he was a good guy i knew he was the kind of guy that he's going to pull through just because of past performance and conversations i'd had with him you know i get a feeling he's not the guy that's just going to walk away because yeah but he owned up to it and took it like a man and did we needed to do so that's cool and then i had one other um they had covid relief because both of the the husband and wife had both been off of work for a little while because they were exposed to somebody who had covid and so they had to walk away from the job for it was just a few weeks but it was enough that they weren't going to be able to make that month's payment so we delayed it for a month and no problem took care of it we didn't have any force upon us um we had a few that were already a mod uh for baron for about a year um but you know we didn't have anything that came out to us it was a force to be a modification situation um but the ones that were in mod actually ended up being a really good situation for us so let's try this into that what was your best deal to m20 what give us some numbers so here's some numbers um so this one took just a little over a year and in fact it was it was scheduled to close months earlier and the reason it didn't is because along with kovid and before kobe had even started were at record low interest rates so payoffs has been a new side of the business that was like once in a blue moon before and now it's becoming much more common which is great i like i love getting paid off and so for those who are not sure what he's talking about refinancing is such an option right now that people are refining to get a lower interest rate i'm getting paid off yeah interest rate with me was seven and a half percent and then they refined at i think it was like three percent or something like that so they saved themselves a ton of money that paid me off which makes me happy as a clam and you know everybody's happy so wow that's fantastic this was actually another one where the seller had actually undervalued it a little bit uh so that was a bit luck in there as well um so where was what state was it in was it cfd this was a cfd in illinois in fact okay which is not something i'd normally look at but it looked good so and then i yeah i knew this was going to be a good one so they they the seller had it valued at only 50 000 but the unpaid balance was 75.

wow okay and then in my own research i figured uh closer to that 75 even up to 100 if it's in good condition seemed like a better value on it so i thought i could take a chance and sure enough i was right so that's great wow um but yeah they they actually at my suggestion started looking for financing i said like listen here's the situation you're paying seven and a half percent with me i can't change that but if you're able to qualify they had good credit i said if you're able to qualify you can get a really good deal right now and wow and save a whole bunch of money and so they they did they went out looking found a local bank um and it took it was it was delayed because so many applications are going through this time so it got delayed a couple of months and finally paid off we got paid out 69 000 we had hardly any expenses in it because they were making payments the whole time so that we had you know our diligent that says 400 bucks that's it uh so the profit on that was about 40 thousand dollars so that's yeah 12 return yeah what when did you buy it sell at what time frame we bought let's see here we bought in june of 2019 and sold uh if it went through finally the refi on september 2nd wow so just over a year a little over a year just over a year and it without the delays it would have been a year or even a little bit less but that's awesome i'll deal with it 112 roi that works but that's a calculator i like that yeah i'm sure the seller is happy about that and similar to what liz did a couple years ago with uh the one we had situation but our situation was a little different we had a deal um that the borrower owed i'm looking at my numbers here uh we were in a position where it was a second lien and we bought the loan for just over 12 uh 12 yeah twelve five okay and the upb was uh 45 000.

that's good uh yeah um it was performing at the time um was the property value on that it was the second position it was uh [Music] 225 yeah okay yeah so it was a great situation it was a package deal we had to buy a bunch of people uh but weirdly enough they had fallen behind and reached out for barons agreement almost immediately okay and on the purchase amount they started paying us um i think it was close to little over 700 a month wow so yeah we were making ridiculous returns on um the payment amount coming into it and i think what what what happened was that they had settled with that because they had no choice of course restoration and we're trying to get them caught up so i'm actually bringing up the the payment history on it here um what we found was that they the husband had lost a job for a period of time guys got a new job and was ready to make payments so we made a deal with them um yeah they're paying 600 a month here for a while so yeah sorry 600 hours a month with payment so then we got in the situation where they so we bought again for 12.5 yeah we'll make it yeah 7200 hours the first year um killer returns and after a year they they we asked for a new mod we put the mod in place they put a ton of money down and i think our base is uh we're positive sorry 115 bases right now okay and we bought this loan um it was tail end of children 19 i believe it was well so it's been an awesome situation yeah um sorry kellen did a whole year for bans agreement at 6 000 a month so we're basically going positive we're infinity return within a period of time uh fantastic um and now we're back in a situation where they're gonna they're gonna make 575 payments a month for the next 15 years oh smokes yeah 536 a month payment for the next 15 years at 9.9 um we're hoping to refine out yeah what's the best point uh well we actually we were nice to them um this alone we are the upbeat was like 50 or so when we went into it yeah because of back feeding stuff that their legal balance is 76 000.

oh so what we did is we cut off the legal balance we took out 20 grand we told them match their down posit um so we actually they put down six thousand or so oh three thousand sorry we matched with those six so we did three and three plus twenty thousand so they're back to like fifty thousand dollars uh we just signed at the end of december and they're making a 536 payment for the next whatever top period time and as of this month's payment which i'm sure we'll get shortly will be an infinity return and yeah um it's one of the loans we're holding on to it's a great second yeah i mean our irrs can't be calculated anymore right but the roi right now is ridiculous right now oh that's great where is this one located ah let's see where it's actually at it's in birmingham oh yeah okay yep yeah um birmingham alabama um we bought this in a package of three this one was okay um that we bought alongside of winona um and for those who are watching um i was telling nathan offline we bought a loan in pa uh actually packages this one and i lost the assignment um hopefully seller's not listening in on this but we actually went back to actually my custodial uh provider lost the assignment the first time said email to this county never found it i got another one written up i had lost it oh no yeah luckily in filing papers this year i thought i shredded it last year with my kids yeah luckily found it got it got it recorded and good to do that one's we only bought for twenty two hundred dollars um so we're already in the positive that whenever the performing one but the balanced uvb is almost nothing now i think it's like there's eleven thousand star with i think we're down uh 20 uh 2200 hours uh okay or so uh yeah upbeat i don't have it on this scene here but we're down pretty far on the current upbeat on it probably eight or so and change so we'll be collecting that for a good period of time uh which is nice so yeah oh that's cool great returns 30 40 50 and then the ones that stand still it's just kind of accumulating yeah um sucks when they're stand still because they're not good or bad returns just what they are and it's hard to sell with stand still alone just someone sees some action um but i do think that from our point of view people are selling loans in standstill because they're just tired of waiting yep yeah and so if you can wait then yeah what a great opportunity but in a lot of cases i i like in a lot of my review um over the last few years just looking at the difference time makes for my model just the way that i do things because i'm always reselling whatever i'm buying so either i take it back as an reo and sell it or i get it performing and then sell it but in either case the the time is a huge huge factor so the faster i can do anything the bigger my return is going to be the irr is yeah significantly better yeah and we've had some questions recently about someone brought up why jersey loans you know hitting and i think it comes to this racing what's your thoughts on why like new jersey loans or ohio loans are selling there's so many people selling them uh back we got started ohio was everywhere because of so many ohio loans it was yeah what would be a good reason why someone would be selling new jersey loans right now what do you think i think um i think it goes back that they're stand still and they're either stand still or there's a long road ahead uh same with new york loans there's just it's a long road so if you can hunker down and settle in then great but and for most people they're kind of restarting it you know that's one thing i think people don't realize that if i'm gonna start over now um i'm in a good situation where i will be able to wait another six months because my i just started up i just started right right um and i think most people don't realize that is that just because your stand still the person buying it is not start at all right right yeah and then and then on top of that the other thing to factor in and all that is your cost of capital so if it's your own money and it's not costing you anything just to hold on to it sure opportunity costs all your yeah you know the only downside or whatever your whatever your cost of capital at that time is you know this time cost of holding it for everything else but it's also that cost of you know if you have a cost of capital that you're borrowing money or if you're using opm um that cost comes into play we're just dealing with a loan with another investor we're trying to buy and the paper was really bad um okay they it was a flaw restoration and there was some issues with it um and we went back to him honestly told me what's going on and it would probably a two-year foreclosure if the judgment doesn't work and at that point our cost capitals what the matters and time is there's servicing fees there's there are property tax it could go through because there is a judgemental file but it's you just don't know yeah yeah so tough yeah with 2021 coming about um in lolly standstills are you reaching out to your borrowers directly that often um i i actually do a lot of my own last minute so i'm usually in contact with my borrowers anyway so there's no no real additional communication not not any more than usual but i i stay in pretty close contact with all of them i've got one actually i sold the loan here just last month and he called me earlier and i think he's just wanted to make sure he's set up correctly with the new servicer which is fine and i don't mind spending a few minutes with him yeah um how often do you call these borrowers uh well it depends uh if they're paying well not often yeah um less than once a month maybe once every other month or something like that the ones that uh there's other ones where um you know i i get it they're in paycheck to paycheck kind of a situation so i'll call them you know the end of the month and and say so what day do you want me to take out your payment next month and and we'll set it up right then and there and they'll say okay well the second friday is when i get paid or whatever it happens to be and we'll set it up for them so it depends when that happens how are you organized now with the servicer to get the payment directed out at that certain date and time um that's a different one too because there i've got a couple of uh rentals i've got a couple of lease options so those ones i'm just collecting myself uh if it's with the servicer on then i'll just i'll make the servicer aware and say okay so they're making a payment on the 27th of this month just fyi keep your eyes peeled kind of thing and you ach in them are you making direct payments yeah ach yeah and for me that's probably i love ach um borrowers sometimes hate it um but i think that's the best way for us to go so moving forward in the first quarter of children 21 are you reaching out to the sellers and saying hey what do you got for sale or what are your what are you seeing right now i actually just got a couple of tapes here uh this week uh that looked pretty decent um all in all i think there's some that's for sale and then i think there's a lot that's kind of on the sidelines for the time being uh but i certainly expect to see bunch coming down the pipe it it's the covid related loans i don't think we're gonna see till the end of this year at the earliest okay um and then you know moving into next year just the the four variances are just getting stretched out and stretched out and stretched out so the longer that happens then the longer it's going to take for those to get around to us i'm hoping that with all these stills the sellers are starting to push the numbers around and say listen i get i can't hold this any longer you know they don't want to the waiting game we're going to make our our rounds um our phone calls more of our sellers as tape's kind of dwindled off we're gonna try revamping back up and say listen what do you got on your plate that's in standstill let us bring some energy into it and uh we have some good connection with some good attorneys we're gonna probably reject out and say listen you have another angle here uh do we have a creative method of doing this um when we have some non-traditional attorneys who are uh that can do nationwide analysis and say listen we could try this or we could go federal we can do this angle which it was helpful um but we're gonna be reaching out to a lot of our sellers in the coming about a week or two and just prepping them hey listen beginning of the year we're ready to rock and roll here's what's gonna go on uh but that's what we're doing i mean we're hoping that we're going to get more activity we're also going to explore seller finance a little bit this year um we're going to do hopefully a webinar on that to see what people who are buying seller finance which is a different world than we're in and see how they're going about finding them what the conversion rate is are they buying from lists or not we're probably doing a webinar eventually that because that's another angle to play right now that these people who are not traditional investors who are in the seller plans for a standstill could be an opportunity for us so yeah for sure and then actually later this month there's a iman conference for non-qm loans uh which is not intended so non-qualified mortgages so these are um the new and updated version of uh the bad loans that were being created back in 2009 or you know even previous to that but and they swear up and down that they're not the same thing and in large part i think that's true uh however they're non-qualified meaning that that borrower was not able to get traditional financing through a regular bank so these are kind of uh private lenders that offer mortgage financing so that i actually uh attended their their inaugural conference with imn in november of 2019 before everything started going nuts yeah and it was interesting there was me and mike solis we were the only two non-performing lone people there and and everyone was saying how this is so different and everything is going to be great and and sure enough the non-qm is is some of the things we're seeing coming available right now so we've seen a lot of those that are um m....