Posted by Michael Morrongiello on February 14, 2001 at 22:31:05:
The proverbial buy low, sell high… - sounds like you may have heard this statement from one of the “Dream Merchants” who are trying to lure you into one of their high priced business opportunity boot camps.
Can you buy a Privately held mortgage from a seller for .50 cents on the dollar? Sure, but it would be under unique circumstances. The note may be non performing, it might be a high risk “throw away” 2nd lien, or it might even be secured by some desert scrub brush as collateral, etc. - the point is that in todays secondary mortgage marketplace for private seller financed real estate secured mortgages it would be RARE, very rare indeed to be able to buy a good well performing 1st lien mortgage at that type of discount unless you were doing some type of creative partial purchase with the seller, or the seller was facing Extreme motivation (a pending IRS lien, jail time, Death, etc.)or there were something inherrently wrong with the loan. It would be the exception rather than the rule.
As for selling to large note buyers, that has its advantages and disadvantages. First off, if you are brokering notes, regardless of who you sell them to, you “may” need a license of some sorts in your particular state to conduct business.
I know a lot of note brokers who perfer to deal with smaller regional, or “pseduo” institutuional buyers,(perhaps like us) as opposed to some of the large mega outfits because of better service, often better rates, flexibilty, and a real “can do” approach to getting their deals done as oppose to the bureaucratic largess that is typical of corporate America.
When you find a note funder that your comfortable with, has a certain degree of expertise, performs, has competitive pricing, and can purchase a wide array of your product, it often becomes infinitely more productive to continue to work with that outfit than spending countless hours trying to “shop” product all over the place.
Just my .02 cents…
To your success,