2019 Focus

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2019 Focus

32:29 · 2019

Episode 398

I’m excited about this episode. I’ve seen a lot of comments online about people frustrated with sellers and people frustrated with inventory. I saw a thread on BiggerPockets. I spent about 30 minutes in the late evenings before I head home looking at BiggerPockets and tracking that and commenting and seeing these posts on there as well. People are talking about, “What’s up with the market? What’s up with the note industry? Is everything overpriced?” Chad Urbshott, my buddy from Canada, talked about how he got on the phone with a hedge fund and they want to sell the assets at 70% of value, even though that’s way above what the unpaid balance is. When he called them out on it, they wanted full UPB which doesn’t make sense. What I wanted to talk about in this episode is about 2019 focus and how you got to change some things up. This is a little bit different than one of our previous episodes of talking about what you should focus on 2019 and where your business is going.

This is focused basically solely for those note investors out there. People who are focused on the nonperforming and the performing side of the business out there. I thought we would start first with that. I’ve seen this in our private Facebook group for our students that people are getting a little frustrated on some things. It’s funny because I see a lot of people who are frustrated with the lowest hanging fruit. The usual suspects, the usual people who are providing less on a regular basis. Those who are emailing out to the note database. What’s funny is Bill Bymel mentioned to me that I was one of the causes for the drive up in the industry. I laughed a little bit and I said, “I don’t think I’m the cause of it in our marketing and helping people finding deals. It’s just that we get a lot of people that come in within the note space because they’re not educated in what they should be paying.

You have a lot of funds that have bought assets or bought portfolios or bought a big chunk from another company and they think they’re selling it at REO pricing, which doesn’t make sense. You have this gap between what some of these new buyers and new sellers are looking at and then also the people that know what these assets are worth and know what the pricing should be. Of course, if you’re always buying premier assets of the pool, you’re going to pay above. If you see a tape of 500 and you’re buying the best two assets, you’re going to pay a premium for those. If you’re the buying bulk or you’re buying the best assets, you’re going to pay a premium. You have to remember that most sellers will price their portfolio for the top 25% at the highest and by the top 25%, it’s the top 25% to 30% of the assets. They’re the most valuable and the cleanest. The middle 50% is going to be something where you’re going to make the most amount of money and the bottom 25% is where they’re going to lose the money.

Anytime you can add in other assets that you can make something happen with, that low bottom of the barrel stuff, it’s going to help offset your pricing and also help you give a little more favorable aspect of things. When you’re looking at portfolios, keep that in mind. I know we often get bogged down with the OTSC season syndrome. That stands for “Oh that’s so cute. I love that asset.” We all run into that, “That’s a badass asset.” I’ve done that in the past, “That’s the waterfront Miami Beach condo. That’s a bachelor pad.” The thing I want to


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