Current Pricing for Note Investors | Real Estate Notes Show

Episode: Note Market Watch: Current Pricing for Note Investors with David Pollio Note Investing Full Dave's Goals and Plans: - Participated in one-day webinar training to benefit the Seller Finance Coalition - Conducted 67 different webinars in 2023 covering seller finance notes and wrap notes - Planning to reflect on the year and determine direction for next year's content - Celebrating 22-year wedding anniversary on the day of recording Nathan's Goals and Plans: - Starting advanced intermediate-level note class in January 2023, beginning January 9th as a five-week course - Class includes homework and two dedicated sessions building a custom bid calculator - Offering private classes for originators on creating sellable valuable notes - Targeting both beginner and experienced investors with accessible content across all note space areas Key Recommendations: - Don't focus solely on performing notes - build risk assessment into bid calculators to account for potential defaults - Build your own bid calculator and understand how and why it works so you can modify it when market conditions change - Make intelligent bids based on market conditions and note performance, not just seller desires - ensure win-win scenarios - Support the Seller Finance Coalition efforts to change regulations and make notes more available to investors - Diversify investments - don't put entire life savings into one basket or company Topics Discussed: - Current pricing and market conditions for notes - Performing versus non-performing portfolio trends - Seller Finance Coalition advocacy and regulatory changes - Advanced note investing education and bid calculator development - Risk assessment for notes regardless of current performance status - Portfolio acquisition strategies and market dynamics Guest Insights: - David Pollio has analyzed, negotiated and purchased approximately 3-4 billion dollars of residential and commercial portfolios - Started trading desk 8 years ago and now services portfolios for hedge funds and other buyers - Currently acquiring around 25 million per year using 2-3 direct sellers - Large institutional buyers dominate Fannie Mae pool acquisitions, making competition difficult for smaller investors - Market has shifted from primarily non-performing portfolios to mix as property equity and values have risen over past two years [Music] hey everyone Dave puts from jkp Holdings as always alongside me Mr Nathan Turner hello hello hello sorry for a little bit of technical difficulty hopefully everyone can hear us okay and everything else so uh so what are you been up to man stuff so you know what I need to uh I need to let people know if you didn't know already um yesterday I was part of a one-day webinar uh training for that was going to benefit the seller finance Coalition so if you if you missed it uh you can still go get the recordings uh all the money is going towards supporting the seller finance Coalition anybody who's creating notes anybody who's buying seller finance notes this is important to you and and it it's behooves all of us to to help support this movement we're trying to uh change some of the rules surrounding seller finance and and make all of our jobs easier and make more notes available for all of us so that's a that's a big deal awesome awesome so that's a really crazy situation it finalized for those who didn't know us this last year 2023 we've really focused on on our webinars on seller finance notes rap notes and that we've done a ton of different webinars on that topic with some great experts but what we found out was I think we've done 67 different webinars wow which I'm shocked by yeah amazed um we've hit so many different topics over the last couple years I don't know where to start where to begin um but I hope that we've gotten better I've hoping that we've done some really good stuff and we've helped a lot of people beginners experts and everyone in between um yeah you know we've done a lot of stuff in this space in notes in general and we've made a lot of really really awesome connections so uh we first want to thank everyone who's been watching us listening to us tuning in good for us yeah than five dude I know I I've really enjoyed it it's been really fun so I think for me understanding what we're doing now is where are we going next year yeah right what are we what are we G to do with our next level of information yeah we are getting to the end of this year and it's one of those times where you take some time to reflect and see what has gone on and what what we see coming up and you know you can do that in the middle of April but here we are it's just kind of a good time to to see that but it's been really good and like you say we've done a bunch of shows now and talked to a whole bunch of different people I feel like I've learned a lot and it's been really good so looking forward to next year and learning more and talking to more people seeing what we can do yeah and we appreciate any feedback you guys can offer us um we appreciate anything you guys can really kind of give to us that's been helpful right um we really kind of want to keep pushing on and moving forward where you know we provide every kind of area of the note space to you from our point of view yeah um and provide that in a way that is easy to understand yeah absolutely and that and I think that's something that we've done pretty well like kind of looking back is that we're trying to not just Target one specific group like we're trying to make this available for everybody uh where somebody who's brand new can learn something and somebody that's been around for years and years can learn something as well yeah we have a lot of people tuning in today um and I think what we have pushed forth coming forward to us Nathan can you want to share about what we got going on in January for those who were looking to get to the next level man so we started doing this last this year 2023 and going forward again so we are doing an advanced uh intermediate to advanced level note class so we've we run across a lot of people who have taken kind of a beginner course and have learned a bunch of stuff but don't feel like they have the necessary tools to kind of take the next step so we're starting up uh again in January our next iteration of our advanced class uh January 9th is scheduled to be your first class and it's a five-week course you're G to get homework you're GNA get tons of information uh more advanced than you probably got in your beginner class we're GNA talk we spend a lot of time actually two classes uh going through and working together to build your own bid calculator which is a huge deal uh you can use somebody else's and that's fine but you need to understand how it works and why it works and so we go through that with you on how to build your own so that you know how to modify it if and when the market changes yeah and I hope that we um can help you build out what you're looking for because this space is not all about performing notes right even though we've really done a great job of getting to a point where a lot of notes are performing they're not always going to perform right um this misbelief that performing notes we buy only performing notes or that's your target those even will default eventually they will not all of them but they will eventually default so we want to make sure that we can help out and create that calculator that really kind of get you the the Leading Edge on making sure you make an offer that makes sense to yourself yeah not focus on what the seller always wants make sure it's a win-win duration yeah making sure you make an intelligent bid on today's you know market and and performance of that note but what happens if what happens if the market goes down what happens if the value of the property goes down what happens if they stop paying what if and so we're trying to build that in for you to help you understand how it works and why it works and how you can deal with it going forward absolutely um for those Originators please reach out we have a special class for people who are ring debt um that's some private classes that teach you how to create sellable valuable notes that you can really get the most money for so we really encourage you to check that out as well so yeah yeah well and I really excited we're talking about the fact that we have not done um a webinar with this gentleman in two years it's almost two years to day and I think it's one of the most watched re-watched relistened to and one we look forward to doing so when uh we are excitedly joined by Mr polio it is awesome and always a pleasure to have him yeah what's up David how are you I'm doing great guys I hope you're both doing well and as always I appreciate the invite and yes since I see you both there you must completely you both must be done with Christmas shopping and all the GI so because otherwise you should be out getting finishing up that right now yeah you know what after after our show today my wife and I are heading out but not for Christmas shopping we're actually done Christmas shopping today is our anniversary whoa annary 22 years today holy so we've been married a little while now so we're going to go out hang out for the rest of the day go out this evening go for dinner and things so it's not for Christmas 22 the Mercedes year yeah something like that yeah yeah I think so I thought it was paper airplanes but I don't know up well congratulations that's awesome yeah thank you pretty fun so I I hope that we can you guys have a great great night and uh great weekend for each other so David for those who are not familiar who you are give a quick kind of background how did you come across getting into notes what have you done since and what's your role now yeah um so I actually got into this whole industry uh because of a failed Bank um right after uh grad school I worked in the uh Bond Department um in um for Bank of New England in uh Boston and four months after I started um that one Friday night The Regulators came in and took over the bank um and the the one thing that I learned that grad school never taught me was um not to put your entire life savings 401K into the company that you're working for because I witnessed people that were there for 30 plus years and realized that their complete 401K was basically zero because the bank failure it was very I mean it was a a true education right there so um I tell my I tell my boys I say you know I tell them the story the whole time about that just to kind of let them understand not to put everything in one in one basket uh so that was in um uh from 88 to 95 and so um I was very fortunate to uh know what was going on and started with the Asset Marketing Group and our our task was to liquidate the bad bank which for then for back then it was eight billion of Bad Assets so the bank that bought the entire Bank of New England portfolios said we'll come in here and do the transaction but we're not going to buy the billion of bad loans we want the FDIC to take them on and use us as an Asset Marketing Group to liquidate the entire portfolio so um it took us uh six years to um and we had to back then we had to actually create um the interest level through the Wall Street Journal letting people know that we're going to put out you know 50 pools next month you know a hundred of multifamilies 200 ships um movie theaters everything that they had in the portfolio which took as I said about five years and it took us an extra year because for the first year uh there was Congressional hearings uh for an entire year that stopped our process um which is very interesting um as soon as that was over one of the the major buyers from our portfolios uh back in Bank England was um SN uh through Rob arkley so he just said listen when you're done there since you were analyzing and getting us to buy these portfolios can you come over and start um our Acquisitions group so I started that in 95 and um I'm still here so it's it's been a long time um throughout that process we've I've been able to analyze um negotiate and purchase uh probably over about three to four billion of uh residential portfolios and Commercial um started up the um the trading desk which you guys know very familiar with uh about eight years ago um at the same time started um kind of working on relationships where we could now service for other hedge funds or buyers like yourselves um we had we had never done that uh eight years ago we only we only serviced our own portfolio because we had we had plenty to service um and you know I really do enjoy the the trading desk and the acquisition side we're acquiring portfolios but nowhere near uh what we were doing in the past I I would say we're probably good for purchasing around 25 million um a year and we just we kind of use like two or three just direct uh sellers so they're not any of the clients that we put on the trading desk gotcha interesting so are you guys ever buying any of the Fanny May pools anything like that um we're looking at a few of them but they're they're they're at a process where if they put out four pools and one pool I can get very aggressive on someone's going to swoop right in and buy the entire portfolio yeah for less than what my my bid would be so um we're kind of at that point where the big guys are still going to rule the the rule rule the nest there yeah interesting so we we're keep we're going to keep reviewing and bidding them but it's it's going to be hard for us to buy a large chunk yeah so we've seen a lot of changes over the last years of doing this and one of the things we always wanted curiosity is where are the sellers at right now and before we go there overall what have you seen more of Performing nonperforming our borrowers paying bills and the big scheme what is the typical portfolio look like nowadays in regards to non-performing performing well it's definitely changed since our last our last uh Zoom call you know two years ago and you know clearly the market has driven that um you know back then um it was purely non-performing portfolios we saw a ton of uh first Lan npl deals uh quite a bit and then it kind of started to turn into where the equity and the properties were starting to rise where we we were now seeing a lot more um RPL deals loans that went through the system to reperform because the values have gone up higher um we started to see an asset that we hadn't seen in years uh second leans um they started to pop up because of the equity um and so you know the the market started to turn into first lean npls um first first lean rpls and then uh gotch that's interesting i' I've I've thought over the last couple of years especially because like you say Equity was coming in I didn't see equity on a on a note I was buying until 2018 I think that's the first time I ever saw Equity right but and it's continued to grow since then and that's been my hunch is that a lot more of the second leans are being created because of all that Equity spread so that kind of confirms right now they are I'll say the end of the third quarter it was quite slow on the trading side and the beginning of the fourth quarter was slow and all of a sudden in the last uh last two months it started to um pick up again interesting so I'm hoping that's G to follow um flow through to next year yeah I I think you guys did see the at the deals that I just put out recently so it's starting to pick up once again yeah what have you seen for sellers in the ideas of what is are expectations right now where do you think sellers are at and is there a gap between where sellers are at and where buyers are at well you know or is it grown or shrunk I guess the better question I don't think it has changed I think it's only changed the perception as the buyer feels that the seller is not coming down to their level of purchase price so of course they're going to feel that everything is overpaid for um the the block is going to be where the pricing is going to be higher because for the example I gave you where these guys are coming in and paying aggressive numbers just to get the funds out so oh yeah you know there they have no problem with we we you know which a lot of people don't understand is paying against legal balance due compared to paid principal balance so if they're paying aggressive on a legal balance due the the odds of them trying to go out and sell those assets to someone else you know to the to the medium and smaller guys it's a hard it's it's a transaction that just can't get done um unless that next buyer is saying to themselves all right well you know my return my return hurle back then was 20% right now I'm going to be happy with 12% and so there's there's there's deals get done but there's no deals if you're still pricing and trying to trying to I guess grab that uh return that you expected last year gotcha so what are some of the big mistakes sellers do or expect or if if someone wants to list assets with you guys what are some of the big mistakes that they make currently or you've seen on the seller side yes on the seller side do is there mistakes that you commonly see yeah on the seller side um some of the mistakes are um they're they're listing non-performing loans uh as a classification but they're they're actually assets that are uh could be making payments to a bankruptcy plan or a restructure or um a modification and so what that does is it takes that loan out of the hands of someone that thinks that they're buying off the tape a non-performing loan because that when they see that the payments are actually coming in they may not be to the term but the payments are coming in they don't want to be they're not in this to buy a loan just to C just to just to collect the cash payments so that seems to be an understanding on the seller side where they're saying where where they could probably do a better job in classifying the assets not as a true non-performing asset where someone may get control of the property to someone that says you know what I'm gonna have to work with the borrower and collect payments for the next three to five years gotcha um and then documentation you know a lot of times that they just don't take the time to go through the portfolio and say all right do I have original notes original mortgages um because that'll that'll stop a deal for a lot of the an i someone is B for the direct ra account um that probably will stop a deal because they have to have certain hurdles that they must hit before they can fund on the transaction uh are they are they being priced at non-performing prices yeah they are actually yeah interesting I I think I think the sellers expectations are fairly in line where the market is okay because I just don't I don't see them selling assets or asking me to list stuff on the desk anywhere near par and above unless it's a a special asset that once I send you the tape um you can clearly see that you know it's going to be like a rate if someone has a rate of 15 and a half percent and the equity is an LTV of 30% it's obvious that they're looking for a par yeah so so we have some few questions coming in um I'm going to Define par quick pars the amount of the balance of the loan that's due that would be considered par um another question from Rich was a nonperforming a nonperforming note um it say nonperforming would be a property and pre-foreclosure count is nonperforming yes it could be right that's a kind of a parameter but number foring means that the borrower is 90 days delayed that haven't paid 90 days and you can start legal so that's technically they can be you know they're two months delay they're technically nonperforming but you can't do any kind of legal action until it's 90 days past due and that's when they considered in our world nonperforming asset there are some there rolling 60s and whatnot and they call them sub performers but yeah unless you can file any kind of Lo legal suit and understand that when you're buying these notes um these are all pre- forclosures these are these are borrowers debts on books so those who are looking for reos or pre- forclosures you may never see these assets ever because the legal process hasn't begun yet so hopefully that makes sense Rich thanks for the question and that also someone would take a look at a tape and if they're looking for an Oro they should be looking at the tape occupancy rate the occupancy should be vacant a non-performing vacant property will get you an REO sooner than an occupied wood yes most of the time but even then sometimes I've had it where I thought it was vacant and then I bought the note and then all of a sudden somebody shows up and I was like oh somebody is there oh oh okay okay and and then we it just changes the strategy and you know information that you didn't have previously but that can throw a wrench sometimes yeah so let's switch gears here I know everyone wants to know these questions what are some of the big mistakes the buyer side of the space is and what are some of the things that those who either in the space already or want to get into it should make sure that they don't do when making offers and looking at assets yeah um it's presentation of professionalism you know you've got to present yourself um in a way that um you're looking to um you're looking to do what you say you're going to do you know what you're doing um you feel comfortable in what you're doing um and it's not just a Spur the moment where hey I'm just going to try to go buy notes tomorrow because sounds fun um and that's why you know I do believe in like your group and others that the mentorship is important because I because I I feel I'm comfort from my side I'm going to feel a lot more comfortable knowing that someone spent the time and money to work with a group to understand the entire process yeah um because in the past I've just I've kind of opened it up to really everyone the beginning and that was more of a function of just to allow them to see what this Market's all about um and hopefully they would have asked more questions of me before they would just you know throw in an offer um that they did not want to stand behind it was just more of a hey I made an offer on a note um yeah going dark right right that's another thing phrase we use a lot where a borrow buyer will make an offer seller will counter and then at one point or another the buyer goes dark and I would think that most buyers who go dark they don't agree with the numbers but at least communicate that back and the other thing I see often I'm sure you see as well is I've want to make an offer of 50,000 and tomorrow I say o make it 40,000 and they change their offer without any kind of jusic a what are some of the common justifications you can fade quote unquote fade a bid on that a seller and professionalism respects yeah so when you're when you're when you get that that notification that you've been awarded of a loan awarded a loan your next task is to perform your own due diligence to verify what the tape said is what is what what you're getting back so we use the Val the BP valuation and they tax in title report so you're running the BP to verify that when I gave you the indicative bid you said the property was worth 100,000 I'm coming back with the current BP of 70,000 so instead of like you just said someone's saying oh gosh I'm 30,000 less than the tape I'm not gonna I'm not gonna let them know I'm not going to answer the phone I'm gonna hide you know all that's necessary is to come forward and say you know what our valuation came back at 70 based on the new value I'm going to have to be at a price which would be the same percentage really what what against the 100 was so if you were if you were 70% of 100,000 you're really going to be 70% of now 70,000 and it's my job or our jobs now to present that to the client and say Here's the actual B they ran it's a real number if you ran yourself you're going to get the same Bo here's why their bid now has gone down from 70,000 to 60,000 and as I tell them you know nine out of tenen times they're going to look at that and say you know what I can accept that we can still or say you know what no I don't accept it and that's justifiable no home no foul or no I can't accept it and here's another BP you know what I can I can come down maybe five but I can't come down 10 grand then the person on the other side you know what I I think I actually can come up five so there is a transaction there yeah and same thing with the tax en tile you come back with some past due taxes they all know that it comes off the purchase price if you come back with an issue that says that you know wait a minute there's a loan ahead of this that was never um released or subordinated through my findings you know what's going on a lot of times the client will have that somewhere in a vault or whatever and they'll they'll show you that oh look we didn't give it to you by accident here here is the subordination so a lot of things can be answered but they can't be answered if you just don't bring them up yeah a couple things and I know I know David doesn't like this but I'm always amazed how many times I get emails without a phone number to call yeah yeah just I need a phone number to call someone deals get done over the phone absolutely so we need to unpack a couple of things there first of all I think we need to bust them in why did the seller have that value at 100 if you're got a BP that now says it's 70 where did they come up with that 100 they are they just inflating that trying to screw me over o good question um first they're probably gonna go to their uh their BP that they used when they bought the loan right so depending on the age of it you might have one that's from 22 from 21 from 20 it could even been older than that yeah um if they have the assets in their systems they may not not order um bpos every six months and they'll go right to a Zillow value or or any other type of Internet value yeah yeah and if they're using that the Zillow or Internet they know that the likelihood of the BP coming in lower is very strong for sure and having been on the seller side no they're not trying to screw you over no of course not no they they're trying to get a deal done but this is the information that they had and it's probably two or three years old sometime when they bought the loan so it's it's not somebody trying to pull the wool over your eyes or anything like that it's just it's old information they don't want to spend the money to update it either you know B's 100 bucks maybe they don't want to spend $100 on all their assets to get a brand new updated BP yeah some of the questions let me add this one here so um sometimes they don't order a BP because the equity could be so far above the legal balance there thinking why do I need to order a Bo that's true doesn't matter and on the other side of that sometimes if the the old BPO is let's say 200,000 above the legal and the new BP comes back where there's only now a 100,000 above the legal yeah the buyer wants to get a lower price where realistically yeah there is no discount there because you're still well above you figure to collect in the first place yeah so then the other one I wanteded to say just talk about for a second here is the taxes so again my experience and and Dave and Dave you guys can both chime in on this but my experience is um I will go and run a title search and I'll find out that there's taxes that maybe the seller didn't have on the spreadsheet if it's ,000 different if it means that I'm gonna have to pay an extra thousand bucks I am not even gonna mention it to the seller true I am not even gonna bring it up I'm not gonna try to you know cause any waves here I can get the deal done it's going to cost me an extra thousand bucks if a$ th000 dollar is gonna hold you back from doing that deal I man yeah but then again if you come back and you see $20,000 in back taxes you have all the ability to come back and counter that back and get dollar for Dollar on the taxes because you're gonna have to pay that tax bill for sure two or three or 5,000 extra dollars so that's different but a thousand bucks or or you know $750 or something like that yeah I would show that to the client and say listen here's what I found on my report what should I do with it yeah let openend let them tell you you're not you're not saying you're not telling them you're gonna go lower but they may say oh that's great you know what we'll take it off the we'll take it off the funding yeah let them negotiate themselves I like that although that's good can't do that now with you you just gave it away I tend to just say you know what for the sake of the deal for the sake of the Rel relationship I'll eat the thousand bucks yeah because I would rather be known as the guy that closes than the guy that keeps bringing back all these little piddly problems that are going to get in the way of the deal getting done relationship you're creating relationship some quick questions we had online and I'll answer really quickly uh Ola asked what states the best to buy a nonperforming note that is a very big open broad question um there is no quote unquote bad states there are states with laws with debt licenses you have to make sure you're careful of um it's the pricing you're paying we've bought deals where in States I don't like for really good pricing and it made it a great deal so it's hard to answer that Rich asked a question if the property is free and clear and you present the offer uh how do you determine the value on what you present the seller to create a note with them so rich we're not really talking about creating a note we're talking about buying the note that's already existed right that's a little bit different from the creative Finance which we'll get into in a little bit we're on the side of buying the Note versus creating the note now if we foreclose on them and take an REO back we can create a note but we're not looking to push the borrow out we're looking to actually buy from the bank the debt that's on the books and transfer to our name and own the debt and collect the mortgage payment from them or debt payment from them right so we're not in the idea of creating that work with the borrower we're working with the borrower after we buy the debt after we own it from the bank and we use a servicer like SN servicing with polios from to manage it like like a property manager in the landlord space World hopefully that makes sense to you guys on the state question the state question you can always look up non-judicial States yes and and also they will show you the timeline it takes uh and even a cost uh timeline for each of those States and foreclosure so if you could find states that are three-month foreclosure periods and it's only 2500 to foreclose um that's that's what I use when I start to model out my pricing yeah each state has different rules and laws and time frames if you really want to get grle like that I would suggest January 9th join us on Tuesdays as we start our advanced class we're g to talk about building out that bid calculator because I think if what we're seeing David is a lot of people even we're at the conference last month who are saying we only buy performing notes and when we ask the question what happens if it default their answer is well I only buy performing so I'm not worried about nonperforming so it's really crucial you know how a nonperforming calculator Works what happens in different states the timeline for each state the cost for every state and generality so if you're interested learning more about that join us on January 9th uh or send us an email we uh hook you up so one of the things we're going to we're going to transition here here what we're seeing a lot of and I'm sure you have too is the non-traditional residential notes for sale that we've all been customed to for over a decade now and we're seeing raw land vacant land we're seeing rap notes we seeing partials talk a little bit about what you're been seeing in the inventory are you seeing more of these land vacant land raw land notes and rap notes have you seen more of that and what's your opinion on them and what do you think by or sellers are looking for on those yeah I'm definitely seeing a mix of uh product these days um and um you know right now um we are seeing the consistent uh pools of firstly non-performers so we do have I'm going to say we probably have about a 200 loan steady flow every month of that um and we're seeing specialty um uh portfolios like right now we've got a pool of um 88 um land loans which you know I guess the real term should be raw land loans um and you know it's it's a product for someone that is looking really to collect cash flow because they're they're performing um and they're uh a certain product that you'd have to understand it's a zero interest rate but you're buying them in a uh low 60 uh purchase price so there is a yield there yeah now depending on the timing of the the terms of the assets what that yield would be uh so we're seeing that type of product uh we're seeing the same type of product that might have a 14 15% um interest rate um that of course would trade for a for a for a higher number um we are seeing seller finance notes which the ones that I called right now to me are the ones that we have listed are business purpose loans so it's almost it's a sense where people are not there there's money on the there's there's cash on the sideline instead of going out and maybe buying the npls looking for those deals they're now moving the cash into the seller finance business purpose loans um which are attractive term for short term yeah yeah short term um which are attractive loans because um if someone is only getting a low teen or you know a nine or a 10 return these type of um loans um can get you close to um a 14 15% yield so um those are nice yeah I'm seeing I'm still seeing a few few deals here and there of second leans okay um you know we don't put it on the trading desk but we do see a lot of the scratch and dent product um and so non qm and scratch and dents yeah that's a big field right now um because all these seller finance notes are non-qm right because the fact of the structure the way they are so non qm just means that there's a a non Bank originated kind of asset that there may be one little cfet maybe something just that Fanny won't buy for certain reasons that kind of stuff so um there's a bunch of parameters are you guys seeing things like reverse mortgages and rap notes but I don't think rap notes are you guys are get involved with but reverse mortgages right where the bar may have to ceased and they're selling those nonperforming rap notes reverse notes ju just started seeing that so the last two portfolios I had probably had about maybe five or uh 10% of the pool was reverse mortgage ages um I just put out one today where um if you look at the tape it's pretty obvious when you see a dollar is the p&i payment that that's the way that they denote it's a reverse mortgage um I don't think I'm going to see much of that to be honest with you um and we don't really kind of look for it or buy it ourselves uh just because we don't service it um it's just not an asset that we've ever been comfortable with servicing and there is a good market for it the guy the big guys like the gits that are buying these type of portfolios they're doing really well really well with them so I wish I wish that we could we could be you know somehow intrigued to get on that side too but we we've kind of stayed away from it we've tried having them come on our show they're not allowed to we try your camera come on he's a dupe sure just curious how come you guys don't service those we we talked about reverse mortgages a few weeks ago and and we talked about some servicers do some servicers don't so how come you guys don't we could only speculate so yeah I think it's a little bit different for us um the cfp because of our size we are looked at by the cfpb quite a bit um so we really do have to follow a lot of rules and regulations and timelines and procedures that a lot of other servicers don't have to because they just they're not they're not big enough that they're being followed um so there's a lot of legality um in the estate part of that that we kind of that we really want to stay away from okay okay interesting interesting so one thing we mentioned in the quote unquote green room before we got live was partials you guys are servicing or bringing partials to the availability in the servicing world are you guys seeing any kind of inventory about buying or selling partials haven't seen any of it yet I've had the questions would we list partials on the trading desk so that's kind of what spurred when we at the uh the um the note Expo uh the group kind of got together and said you know we really should look further into this so I'll I'll say uh probably by the end of January we'll have a good direction where we want to go with it I know we definitely want to service and we are servicing some right now on the partial side but I think there's a couple of uh rules um the the type of partial that is that we have to follow right now um yeah so but I'll have a better idea at the end of January we're going to have a executive meeting in Baton Rouge and so we'll kind of pin down what we want to do with the partial side because I I know there's buyers and I know there sellers so and I think well seconds have decreased the partial world has increased to make up for that because some people don't have the cash or they have a raw Ira of 6500 and they want to park it somewhere and you know it's a low cost to get into a lot of partials sometimes um and it's attractive right especially a second lean partial even cheaper kind of idea and partials are for those who don't know it's just you're buying a string of payments out of a whole so you may buy you know 12 months of payments out of 360 those kind of parameters um I would definitely go back we've had a webinar on partials versus hyp opcs to learn about what partials are and there's different ways to structure a partial as a buyer and a seller it's not just a clean cut you know questions like what happens when the partial default how is it handled and that's typically a conversation between the buyer and the seller that come in terms of what the exit strategy would be that's a great way for those who want to begin you kind of get helpful hand from the the seller because they typically will jump in if and note defaults but yeah that that seems like a very good product for someone that is on the sideline hesitant to jump in because I would expect the person that you bought the partial from is probably there to educate you on what's going on with the with the entire note itself and how they got it how they priced it and how it goes through the the servicing side too absolutely that's awesome so in in this world you know what we talk about notes and stuff like that there are so many different notes out there right there's so many are you guys starting to entertain the large area of seller finance notes where these people are creating notes like some people on to call who are creating notes from an asset they own are you guys servicing and are you guys seeing an inventory influx of were Finance notes we are seeing an increase in the inquiries to service them um I'm not sure what our position has been on um because I think it comes down to loan count so we do get a lot of inquiries where one person has one loan to a family member or someone they know and they just need a they need someone just to service the asset um we tend to push those off to other servicers out there sure um and we really haven't had a large I guess a a large originator of just seller finance ass notes to come to us to service and I you know I I think for us and I explained to them listen you know we are very Hands-On serer and so you're paying for you know an extra you're paying an extra $15 a month because we're we're we're Hands-On we're we are on the we are on that borrower if they go any day a couple days delinquent whatever so it's just we're touching the asset a lot more than truly if it's if it's just clipping coupons yeah you could send it somewhere else so one of the cool thing about creative financing in the seller finance world and those who are listening to it they'll tell you most of the notes they create the borrower pay servicing fees so that fee they incurs by us lenders is no longer needed which is amazing so those who are buying notes seller finance notes majority majority of them have the feature where the borrower pays whatever the servicing Fe is now if the noto's non performing you're obviously going to be on the hook for that but just be aware that the borrower pays the Performing Note price which is awesome it helps with reducing the costs on the lender side are there is awesome but I think that's that that could be an issue for us because who's our client right the borrower who's paying the servicing fee right be tricky besides besides number of loans are there any other kind of qualifications on a seller finance note like specific things within the note that you need to be able to say yes we can service this note be honest with you I I haven't looked into that um I'm um I I I haven't looked into that so I couldn't give you a good answer that be honest with you okay I'm curious and part that comes from some of the notes that Dave and I have seen where people have given us the note and and you know it's a two-page document and oh boy you know like it just there's a lot of missing information and maybe the paperwork's not done correctly or something like that um so I'm just wondering how that would affect the servicing if at all I don't know yeah yeah curious interesting yeah it's amazing because the pricing has changed the inventory has changed and we just have to adjust with the times um I know that you guys are very large Servicing Company and and I think I I would be I'm trying to think of anyone else probably the largest broker of notes in scale at our level um there are people who do non-qm loans all stuff like that but I think in overall you guys are the largest broker so we encourage those who who have experience or have some kind of training either by us or by someone that's experience that would like to look at assets that polio puts out now understand that polio doesn't own these These are broker notes but the legitimate sellers so these are people he repped and did background check usually repeat sellers that he can provide you in a tape list asset and you're going to make an offer um and you're going to get time for due diligence all that stuff so you'll see in the pin post or the link to get his information his data stuff but I would like you to make sure that you are professional what you do and make sure when you make an offer you're respectful you understand you respond to them um he's a very busy guy yeah yeah and Dave uh we actually just emailed back and forth last this week or last week uh so Dave and his team are GNA be at DME as well y great time to come and just meet face to face that's a big deal yeah be great so those who don't know what DME is Nathan Diversified mortgage Expo we are pumped it's gonna be a lot of fun um I we're six and a half months out and we're already just like so excited we we nville nma make sure you get your tickets now I'm waiting to be buy my ticket probably in June for my plane flight down there um so I'm looking forward to getting down there it was awesome event last year um it's not inexpensive it's not four or $5,000 tickets and you'll be there with two days so if you're on either side of the fence of originating or buying notes you have to go so no better place to be just to come and meet socialize talk with other people that are doing this I cannot tell you how much that has built my business just going to conferences and talking people yeah one of the one of the other things I wanted to say was that you know use our trading desk also as an educational tool because I as I've always said if you are telling me that you know you might be telling me that this is the first time you bid you're not comfortable but if I was going to bid here's what my offer would be if I know that I could use that and then guide you after all the bids come in and say okay here's where the high bid came in here's why your bid was here and here's the difference and you know maybe he looked at it this way and you can look at it this way so it's just a way to keep testing your model you you need you need something to keep testing and testing your pricing model otherwise if you don't put a bid in and if you don't put a bid without letting me know that you're just testing it you know you're never going to know where your model is because you do need to tweak it every once in a while you got to tweak that model to keep up with the market and again if you're bidding 10 assets and you can only buy one if you let me know and if I have five that I think you're the high bid on I'll come back to you and say listen I know you can only buy one here the five which which one do you want to buy yeah I'm not gonna award you five when you said you can only bid one yeah and with that caveat if you only have X dollars how should someone who has I have 10 grand to spend on notes I have five notes Here I see each one of her $10,000 should I only bid on one note then you can bid on all five as long as you tell me because I as I just same example if you tell me that you can only spend $200,000 or $10,000 if I know that before I even go back to the the the selling client I'm going to go back to you first and say listen here's what you were awarded what would you like to do knowing that you can only buy one or only spend 200,000 yeah yeah yeah absolutely because there's there's I'm guaranteed that there's going to be someone right behind his bid on the other four then I would go back to say listen this guy was at 10 you were at 850 can you get to 10 yeah right yeah and that's how it's done talk talk talk talk talk I see uh Wendy asked a question regarding um the the uh DME please uh fill it polio information Nathan will actually get that email as well if we get confused whatever you we reach out to you we'll share the information you can go right to the DME site and buy buy your tickets and fly down to National and shake hands with all of us and say hello and introduce yourself um I think for beginners the biggest thing is getting started but being educated at the same time it's a really big balance because I'm sure you've run into people where they've been at five conferences but never bought a note because they got scared and I think there are people who've never been to a conference had watched one hour of YouTube and makes offers and in between is crazy right um you know don't be scared to make an offer right that's how you learn believe me we've made a million mistakes yeah and I will b a million more but just getting like you say though it's just because you've done real estate does not mean you can do notes it's not the same thing you have to learn the rules it's a different game yeah and so make sure you're educating yourself at the same time yeah don't be knocking the borrowers door saying I'm buying your notes don't do that right don't tell anyone this is not again and please for polio sake and or sake if you have a list of assets please don't send it out to everyone anyone and post on social media you're Sig a non-disclosure which means you're not disclosing it to anyone else that NDA says you're not disclosing it why you why can you send an a property address out there that's for sale versus a note that note is not yours to give out it's private data that borrows information that borrows private debt they don't know notes being sold that's private information if you publicly send it out there you're violating your non-disclosure and you can be sued so please please please please when you sign the non disclosure don't broker notes if you want to broker notes you can definitely do this but I would price it out make the offer and then work it out with them but you're not sending a list of addresses to somebody blindly and call that broker in right H okay off my off my uh pedestal so it's on awesome um this year's been a great year we're looking forward to next year we're going to be focused more and more on the seller finance and reason for that is the bank loans at 3 4% are really hard to buy right these notes at 3 four five% we can't get you know capital is more expensive Now notes are you know when we're buying when we got first started in 2010 and we're buying at 30 cents 25 cents that was easy right now notes are more expensive and the clost of capital up so we get all that just make sure that when you make these offers you kind of learn what it is um if you have your own Capital you can go get 8% all day long that's awesome but most people don't have the kind of cost capital of eight% so all right Dave so you've been around a long time you've seen Market Cycles you've you've been through the ringer a little bit so based on based on on your experience and everything that you've seen and everything that you've been through what do you see coming up in 2024 what's uh what's the market looking like for notes I I feel it's G to kind of mimic 23 and 23 I would have been you know I don't see the market exploding I don't see um any major any major change that's gonna get people to jump in or jump out I think it's just going to be um the same battle you got to pick pick your lane pick your Niche um there's money there's there's money to be made on these assets there really is you just got to pick your Niche and what you're going to what you're trying to accomplish um you know the valuations are still High um if if the valuations had dropped by 40% like they had done in the last couple of Cycles um and the interest rates were starting to um to back back down um the only other pressure that's not there is um Force you know there's no force of these Banks anymore to look at their ratios and say oh gosh I better start moving these assets because the FDIC is going to come in and take over the bank if my ratios above six or seven um there's zero fear with these Banks uh of having Bad Assets and so and why is that why is it what's changed in that world is it because the fact there's not a lot of non-performers out there um I think it's the I think it's the it I think it's the equity position of it gotta I think the equity is so strong that there's no threat on that ratio again it's when it's when you have that event where valuations start to decline to a point you know 30 or 40% where that ratio is a big warning are people leveraging the same way probably not but are like if they are taking out a second I guess there's still those ratios in place I'm trying to just gauge like how closer they you would expect that second leans should be a product in the next 12 to 18 months because yeah you would definitely expect that those second leans and helocs uh Home Improvement loans were done on the properties from last year that were yes you know that were extremely high yeah I would expect that same thing that LTV that CLTV Now is really going to get well above 100% that's what I'm thinking that's crazy but yeah you're right we're back to those times where when there's a ton of equity people are G to take loans out for yeah reasons they need to reasons they don't need to for all kinds of reasons and that's when the cycle of seconds will grow and I think for those who love seconds it's a great time um the only downfall again is you know well I guess interest rates will be high for the seconds created I'd be curious to see what the rates are in the seconds I mean if the second rates at 6% when it was a 3% it's hard to buy a six even a six% note and move it to a 10 it's it's hard right it's still hard to do so I'll be curious how that kind of trickles out but it's just another cycle you know but it's awesome well polio it was a pleasure man hang out for the after hours um for everyone else please feel free to jump out if you are originator feel free to reach out to us we have a great situation coming up for you privately next Friday if you are note buyer looking to learn about nonperforming and calculations and really advanced stuff take a look at our January 9th uh beginning class for advanced work for note buyers and then from there we start 2024 all over again with a brand new kind of series of stuff our Focus next year is going to be really about SAR goals AI silver FL and whatnot so we're looking forward to it but polio it was a pleasure thank you so much for joining us and we uh we'll disconnect from here thank you guys and enjoy the holiday [Music] hey everyone Dave puts from jkp Holdings as always alongside me Mr Nathan Turner hello hello hello sorry for a little bit of technical difficulty hopefully everyone can hear us okay and everything else so uh so what are you been up to man stuff so you know what I need to uh I need to let people know if you didn't know already um yesterday I was part of a one-day webinar uh training for that was going to benefit the seller finance Coalition so if you if you missed it uh you can still go get the recordings uh all the money is going towards supporting the seller finance Coalition anybody who's creating notes anybody who's buying seller finance notes this is important to you and and it it's behooves all of us to to help support this movement we're trying to uh change some of the rules surrounding seller finance and and make all of our jobs easier and make more notes available for all of us so that's a that's a big deal awesome awesome so that's a really crazy situation it finalized for those who didn't know us this last year 2023 we've really focused on on our webinars on seller finance notes rap notes and that we've done a ton of different webinars on that topic with some great experts but what we found out was I think we've done 67 different webinars wow which I'm shocked by yeah amazed um we've hit so many different topics over the last couple years I don't know where to start where to begin um but I hope that we've gotten better I've hoping that we've done some really good stuff and we've helped a lot of people beginners experts and everyone in between um yeah you know we've done a lot of stuff in this space in notes in general and we've made a lot of really really awesome connections so uh we first want to thank everyone who's been watching us listening to us tuning in good for us yeah than five dude I know I I've really enjoyed it it's been really fun so I think for me understanding what we're doing now is where are we going next year yeah right what are we what are we G to do with our next level of information yeah we are getting to the end of this year and it's one of those times where you take some time to reflect and see what has gone on and what what we see coming up and you know you can do that in the middle of April but here we are it's just kind of a good time to to see that but it's been really good and like you say we've done a bunch of shows now and talked to a whole bunch of different people I feel like I've learned a lot and it's been really good so looking forward to next year and learning more and talking to more people seeing what we can do yeah and we appreciate any feedback you guys can offer us um we appreciate anything you guys can really kind of give to us that's been helpful right um we really kind of want to keep pushing on and moving forward where you know we provide every kind of area of the note space to you from our point of view yeah um and provide that in a way that is easy to understand yeah absolutely and that and I think that's something that we've done pretty well like kind of looking back is that we're trying to not just Target one specific group like we're trying to make this available for everybody uh where somebody who's brand new can learn something and somebody that's been around for years and years can learn something as well yeah we have a lot of people tuning in today um and I think what we have pushed forth coming forward to us Nathan can you want to share about what we got going on in January for those who were looking to get to the next level man so we started doing this last this year 2023 and going forward again so we are doing an advanced uh intermediate to advanced level note class so we've we run across a lot of people who have taken kind of a beginner course and have learned a bunch of stuff but don't feel like they have the necessary tools to kind of take the next step so we're starting up uh again in January our next iteration of our advanced class uh January 9th is scheduled to be your first class and it's a five-week course you're G to get homework you're GNA get tons of information uh more advanced than you probably got in your beginner class we're GNA talk we spend a lot of time actually two classes uh going through and working together to build your own bid calculator which is a huge deal uh you can use somebody else's and that's fine but you need to understand how it works and why it works and so we go through that with you on how to build your own so that you know how to modify it if and when the market changes yeah and I hope that we um can help you build out what you're looking for because this space is not all about performing notes right even though we've really done a great job of getting to a point where a lot of notes are performing they're not always going to perform right um this misbelief that performing notes we buy only performing notes or that's your target those even will default eventually they will not all of them but they will eventually default so we want to make sure that we can help out and create that calculator that really kind of get you the the Leading Edge on making sure you make an offer that makes sense to yourself yeah not focus on what the seller always wants make sure it's a win-win duration yeah making sure you make an intelligent bid on today's you know market and and performance of that note but what happens if what happens if the market goes down what happens if the value of the property goes down what happens if they stop paying what if and so we're trying to build that in for you to help you understand how it works and why it works and how you can deal with it going forward absolutely um for those Originators please reach out we have a special class for people who are ring debt um that's some private classes that teach you how to create sellable valuable notes that you can really get the most money for so we really encourage you to check that out as well so yeah yeah well and I really excited we're talking about the fact that we have not done um a webinar with this gentleman in two years it's almost two years to day and I think it's one of the most watched re-watched relistened to and one we look forward to doing so when uh we are excitedly joined by Mr polio it is awesome and always a pleasure to have him yeah what's up David how are you I'm doing great guys I hope you're both doing well and as always I appreciate the invite and yes since I see you both there you must completely you both must be done with Christmas shopping and all the GI so because otherwise you should be out getting finishing up that right now yeah you know what after after our show today my wife and I are heading out but not for Christmas shopping we're actually done Christmas shopping today is our anniversary whoa annary 22 years today holy so we've been married a little while now so we're going to go out hang out for the rest of the day go out this evening go for dinner and things so it's not for Christmas 22 the Mercedes year yeah something like that yeah yeah I think so I thought it was paper airplanes but I don't know up well congratulations that's awesome yeah thank you pretty fun so I I hope that we can you guys have a great great night and uh great weekend for each other so David for those who are not familiar who you are give a quick kind of background how did you come across getting into notes what have you done since and what's your role now yeah um so I actually got into this whole industry uh because of a failed Bank um right after uh grad school I worked in the uh Bond Department um in um for Bank of New England in uh Boston and four months after I started um that one Friday night The Regulators came in and took over the bank um and the the one thing that I learned that grad school never taught me was um not to put your entire life savings 401K into the company that you're working for because I witnessed people that were there for 30 plus years and realized that their complete 401K was basically zero because the bank failure it was very I mean it was a a true education right there so um I tell my I tell my boys I say you know I tell them the story the whole time about that just to kind of let them understand not to put everything in one in one basket uh so that was in um uh from 88 to 95 and so um I was very fortunate to uh know what was going on and started with the Asset Marketing Group and our our task was to liquidate the bad bank which for then for back then it was eight billion of Bad Assets so the bank that bought the entire Bank of New England portfolios said we'll come in here and do the transaction but we're not going to buy the billion of bad loans we want the FDIC to take them on and use us as an Asset Marketing Group to liquidate the entire portfolio so um it took us uh six years to um and we had to back then we had to actually create um the interest level through the Wall Street Journal letting people know that we're going to put out you know 50 pools next month you know a hundred of multifamilies 200 ships um movie theaters everything that they had in the portfolio which took as I said about five years and it took us an extra year because for the first year uh there was Congressional hearings uh for an entire year that stopped our process um which is very interesting um as soon as that was over one of the the major buyers from our portfolios uh back in Bank England was um SN uh through Rob arkley so he just said listen when you're done there since you were analyzing and getting us to buy these portfolios can you come over and start um our Acquisitions group so I started that in 95 and um I'm still here so it's it's been a long time um throughout that process we've I've been able to analyze um negotiate and purchase uh probably over about three to four billion of uh residential portfolios and Commercial um started up the um the trading desk which you guys know very familiar with uh about eight years ago um at the same time started um kind of working on relationships where we could now service for other hedge funds or buyers like yourselves um we had we had never done that uh eight years ago we only we only serviced our own portfolio because we had we had plenty to service um and you know I really do enjoy the the trading desk and the acquisition side we're acquiring portfolios but nowhere near uh what we were doing in the past I I would say we're probably good for purchasing around 25 million um a year and we just we kind of use like two or three just direct uh sellers so they're not any of the clients that we put on the trading desk gotcha interesting so are you guys ever buying any of the Fanny May pools anything like that um we're looking at a few of them but they're they're they're at a process where if they put out four pools and one pool I can get very aggressive on someone's going to swoop right in and buy the entire portfolio yeah for less than what my my bid would be so um we're kind of at that point where the big guys are still going to rule the the rule rule the nest there yeah interesting so we we're keep we're going to keep reviewing and bidding them but it's it's going to be hard for us to buy a large chunk yeah so we've seen a lot of changes over the last years of doing this and one of the things we always wanted curiosity is where are the sellers at right now and before we go there overall what have you seen more of Performing nonperforming our borrowers paying bills and the big scheme what is the typical portfolio look like nowadays in regards to non-performing performing well it's definitely changed since our last our last uh Zoom call you know two years ago and you know clearly the market has driven that um you know back then um it was purely non-performing portfolios we saw a ton of uh first Lan npl deals uh quite a bit and then it kind of started to turn into where the equity and the properties were starting to rise where we we were now seeing a lot more um RPL deals loans that went through the system to reperform because the values have gone up higher um we started to see an asset that we hadn't seen in years uh second leans um they started to pop up because of the equity um and so you know the the market started to turn into first lean npls um first first lean rpls and then uh gotch that's interesting i' I've I've thought over the last couple of years especially because like you say Equity was coming in I didn't see equity on a on a note I was buying until 2018 I think that's the first time I ever saw Equity right but and it's continued to grow since then and that's been my hunch is that a lot more of the second leans are being created because of all that Equity spread so that kind of confirms right now they are I'll say the end of the third quarter it was quite slow on the trading side and the beginning of the fourth quarter was slow and all of a sudden in the last uh last two months it started to um pick up again interesting so I'm hoping that's G to follow um flow through to next year yeah I I think you guys did see the at the deals that I just put out recently so it's starting to pick up once again yeah what have you seen for sellers in the ideas of what is are expectations right now where do you think sellers are at and is there a gap between where sellers are at and where buyers are at well you know or is it grown or shrunk I guess the better question I don't think it has changed I think it's only changed the perception as the buyer feels that the seller is not coming down to their level of purchase price so of course they're going to feel that everything is overpaid for um the the block is going to be where the pricing is going to be higher because for the example I gave you where these guys are coming in and paying aggressive numbers just to get the funds out so oh yeah you know there they have no problem with we we you know which a lot of people don't understand is paying against legal balance due compared to paid principal balance so if they're paying aggressive on a legal balance due the the odds of them trying to go out and sell those assets to someone else you know to the to the medium and smaller guys it's a hard it's it's a transaction that just can't get done um unless that next buyer is saying to themselves all right well you know my return my return hurle back then was 20% right now I'm going to be happy with 12% and so there's there's there's deals get done but there's no deals if you're still pricing and trying to trying to I guess grab that uh return that you expected last year gotcha so what are some of the big mistakes sellers do or expect or if if someone wants to list assets with you guys what are some of the big mistakes that they make currently or you've seen on the seller side yes on the seller side do is there mistakes that you commonly see yeah on the seller side um some of the mistakes are um they're they're listing non-performing loans uh as a classification but they're they're actually assets that are uh could be making payments to a bankruptcy plan or a restructure or um a modification and so what that does is it takes that loan out of the hands of someone that thinks that they're buying off the tape a non-performing loan because that when they see that the payments are actually coming in they may not be to the term but the payments are coming in they don't want to be they're not in this to buy a loan just to C just to just to collect the cash payments so that seems to be an understanding on the seller side where they're saying where where they could probably do a better job in classifying the assets not as a true non-performing asset where someone may get control of the property to someone that says you know what I'm gonna have to work with the borrower and collect payments for the next three to five years gotcha um and then documentation you know a lot of times that they just don't take the time to go through the portfolio and say all right do I have original notes original mortgages um because that'll that'll stop a deal for a lot of the an i someone is B for the direct ra account um that probably will stop a deal because they have to have certain hurdles that they must hit before they can fund on the transaction uh are they are they being priced at non-performing prices yeah they are actually yeah interesting I I think I think the sellers expectations are fairly in line where the market is okay because I just don't I don't see them selling assets or asking me to list stuff on the desk anywhere near par and above unless it's a a special asset that once I send you the tape um you can clearly see that you know it's going to be like a rate if someone has a rate of 15 and a half percent and the equity is an LTV of 30% it's obvious that they're looking for a par yeah so so we have some few questions coming in um I'm going to Define par quick pars the amount of the balance of the loan that's due that would be considered par um another question from Rich was a nonperforming a nonperforming note um it say nonperforming would be a property and pre-foreclosure count is nonperforming yes it could be right that's a kind of a parameter but number foring means that the borrower is 90 days delayed that haven't paid 90 days and you can start legal so that's technically they can be you know they're two months delay they're technically nonperforming but you can't do any kind of legal action until it's 90 days past due and that's when they considered in our world nonperforming asset there are some there rolling 60s and whatnot and they call them sub performers but yeah unless you can file any kind of Lo legal suit and understand that when you're buying these notes um these are all pre- forclosures these are these are borrowers debts on books so those who are looking for reos or pre- forclosures you may never see these assets ever because the legal process hasn't begun yet so hopefully that makes sense Rich thanks for the question and that also someone would take a look at a tape and if they're looking for an Oro they should be looking at the tape occupancy rate the occupancy should be vacant a non-performing vacant property will get you an REO sooner than an occupied wood yes most of the time but even then sometimes I've had it where I thought it was vacant and then I bought the note and then all of a sudden somebody shows up and I was like oh somebody is there oh oh okay okay and and then we it just changes the strategy and you know information that you didn't have previously but that can throw a wrench sometimes yeah so let's switch gears here I know everyone wants to know these questions what are some of the big mistakes the buyer side of the space is and what are some of the things that those who either in the space already or want to get into it should make sure that they don't do when making offers and looking at assets yeah um it's presentation of professionalism you know you've got to present yourself um in a way that um you're looking to um you're looking to do what you say you're going to do you know what you're doing um you feel comfortable in what you're doing um and it's not just a Spur the moment where hey I'm just going to try to go buy notes tomorrow because sounds fun um and that's why you know I do believe in like your group and others that the mentorship is important because I because I I feel I'm comfort from my side I'm going to feel a lot more comfortable knowing that someone spent the time and money to work with a group to understand the entire process yeah um because in the past I've just I've kind of opened it up to really everyone the beginning and that was more of a function of just to allow them to see what this Market's all about um and hopefully they would have asked more questions of me before they would just you know throw in an offer um that they did not want to stand behind it was just more of a hey I made an offer on a note um yeah going dark right right that's another thing phrase we use a lot where a borrow buyer will make an offer seller will counter and then at one point or another the buyer goes dark and I would think that most buyers who go dark they don't agree with the numbers but at least communicate that back and the other thing I see often I'm sure you see as well is I've want to make an offer of 50,000 and tomorrow I say o make it 40,000 and they change their offer without any kind of jusic a what are some of the common justifications you can fade quote unquote fade a bid on that a seller and professionalism respects yeah so when you're when you're when you get that that notification that you've been awarded of a loan awarded a loan your next task is to perform your own due diligence to verify what the tape said is what is what what you're getting back so we use the Val the BP valuation and they tax in title report so you're running the BP to verify that when I gave you the indicative bid you said the property was worth 100,000 I'm coming back with the current BP of 70,000 so instead of like you just said someone's saying oh gosh I'm 30,000 less than the tape I'm not gonna I'm not gonna let them know I'm not going to answer the phone I'm gonna hide you know all that's necessary is to come forward and say you know what our valuation came back at 70 based on the new value I'm going to have to be at a price which would be the same percentage really what what against the 100 was so if you were if you were 70% of 100,000 you're really going to be 70% of now 70,000 and it's my job or our jobs now to present that to the client and say Here's the actual B they ran it's a real number if you ran yourself you're going to get the same Bo here's why their bid now has gone down from 70,000 to 60,000 and as I tell them you know nine out of tenen times they're going to look at that and say you know what I can accept that we can still or say you know what no I don't accept it and that's justifiable no home no foul or no I can't accept it and here's another BP you know what I can I can come down maybe five but I can't come down 10 grand then the person on the other side you know what I I think I actually can come up five so there is a transaction there yeah and same thing with the tax en tile you come back with some past due taxes they all know that it comes off the purchase price if you come back with an issue that says that you know wait a minute there's a loan ahead of this that was never um released or subordinated through my findings you know what's going on a lot of times the client will have that somewhere in a vault or whatever and they'll they'll show you that oh look we didn't give it to you by accident here here is the subordination so a lot of things can be answered but they can't be answered if you just don't bring them up yeah a couple things and I know I know David doesn't like this but I'm always amazed how many times I get emails without a phone number to call yeah yeah just I need a phone number to call someone deals get done over the phone absolutely so we need to unpack a couple of things there first of all I think we need to bust them in why did the seller have that value at 100 if you're got a BP that now says it's 70 where did they come up with that 100 they are they just inflating that trying to screw me over o good question um first they're probably gonna go to their uh their BP that they used when they bought the loan right so depending on the age of it you might have one that's from 22 from 21 from 20 it could even been older than that yeah um if they have the assets in their systems they may not not order um bpos every six months and they'll go right to a Zillow value or or any other type of Internet value yeah yeah and if they're using that the Zillow or Internet they know that the likelihood of the BP coming in lower is very strong for sure and having been on the seller side no they're not trying to screw you over no of course not no they they're trying to get a deal done but this is the information that they had and it's probably two or three years old sometime when they bought the loan so it's it's not somebody trying to pull the wool over your eyes or anything like that it's just it's old information they don't want to spend the money to update it either you know B's 100 bucks maybe they don't want to spend $100 on all their assets to get a brand new updated BP yeah some of the questions let me add this one here so um sometimes they don't order a BP because the equity could be so far above the legal balance there thinking why do I need to order a Bo that's true doesn't matter and on the other side of that sometimes if the the old BPO is let's say 200,000 above the legal and the new BP comes back where there's only now a 100,000 above the legal yeah the buyer wants to get a lower price where realistically yeah there is no discount there because you're still well above you figure to collect in the first place yeah so then the other one I wanteded to say just talk about for a second here is the taxes so again my experience and and Dave and Dave you guys can both chime in on this but my experience is um I will go and run a title search and I'll find out that there's taxes that maybe the seller didn't have on the spreadsheet if it's ,000 different if it means that I'm gonna have to pay an extra thousand bucks I am not even gonna mention it to the seller true I am not even gonna bring it up I'm not gonna try to you know cause any waves here I can get the deal done it's going to cost me an extra thousand bucks if a$ th000 dollar is gonna hold you back from doing that deal I man yeah but then again if you come back and you see $20,000 in back taxes you have all the ability to come back and counter that back and get dollar for Dollar on the taxes because you're gonna have to pay that tax bill for sure two or three or 5,000 extra dollars so that's different but a thousand bucks or or you know $750 or something like that yeah I would show that to the client and say listen here's what I found on my report what should I do with it yeah let openend let them tell you you're not you're not saying you're not telling t....