Posted by Terry Vaughan on May 02, 2006 at 19:25:33:
Great stuff, John! Look forward to seeing you at the convention.
Don Tauscher. The kind of banker we all need.
A name from the past. I have a copy of the “Million Dollar Paper Caper” somewhere. Don Tauscher, one of the great people I learned to trade paper from.
See the big picture of paper at the convention. - Posted by John Behle
Posted by John Behle on May 02, 2006 at 13:02:01:
Personally, I believe the most important thing you can do at the convention is to learn more about “Paper” or “Discounted Mortgage” investment.
There will be some great opportunities to learn more about Cash Flow investing and Real Estate Paper at the convention.
You’ll have a chance to listen to Michael Morrongiello discuss paper investing and how it relates to real estate investing and can make both more profitable. I highly recommend you listen to him. I’ll also be talking about similar subjects at my roundtable. In preparation for the convention and roundtables, you might want to read the following two articles posted here.
Real Estate Paper: Your Most Valuable Tool
By John D. Behle
found at: http://www.creonline.com/articles/art-237.html
Four Tips to Be a Real Estate Paper Pro
By John D. Behle
found at: http://www.creonline.com/articles/art-236.html
Those articles are directed towards investors and real estate agents on how to close more deals and invest - or sell - more profitably.
Listen to Terry Vaughan’s presentation at the convention. Terry is a paper pro and a creative mind. You won’t regret a minute.
To see an overview of paper investment contrasting it to real estate, read the article I just posted here titled “A Loanlord’s Lament” at: http://www.creonline.com/cashflow/wwwboard3/messages/20710.html
There are also some presentations related to “short sales” which is a very popular subject right now. A knowledge of paper can be very helpful and open up other options when it relates to Short Sales. Two options in particular using paper can be profitable.
SHORT SALE ALTERNATIVE ONE - BUY THE NOTE
There are some large advantages to buying the loan from the bank instead of just discounting it. Some individuals and institutions can also be more open to selling the note than discounting it back to the payor. Not all will be interested, but it gives you another tool. In many cases, we start talking “Short Sale” and then move the lender towards a discounted sale of the note.
I have seen lenders that will not even consider doing a short sale that will sell the note at a discount - achieving the same purpose. It can also bypass problems with lenders not wanting to give any advantage to their borrower by a short sale. In other cases, it is the best option if there are other loans or liens that are un-cooperative that may need to be wiped out. You can buy the note and control the sale.
SHORT SALE ALTERNATIVE TWO - SUBSTITUTION OF COLLATERAL
Some lenders or individuals holding a note will not consider a discount for any reason. Yet, they may be open to a substitution of collateral. So, instead of them taking a discount, you buy a similar note at a discount and then use it as collateral. This is a twist on the classic “Paper Trade” technique. Many lenders are open to the idea of substitution of a good, current, paying note as collateral instead of the note they hold that is in default. They can either trade note for note or release the property as collateral and accept the new note as collateral (which is also secured by a good property).
A short sale just gets a lender to take a loss and move on. Many are interested and happy with the idea that they don’t have to take a loss and can better their position. Once you do one deal with a banker, they are very open to any deals you can offer. You can even approach other defaulted loans in their portfolio and arrange to buy the property using the same scenario or to arrange a bailout of the buyer using the paper trade technique. A lender may be reluctant to give you information on borrowers that are behind, but once they are officially in default, it is public knowledge and they can. Even with borrowers that are not in default yet, they could give them your number as a resource.
I’m not sure what parts if any of this Terry, Michael or David talk about in their courses, but if not, try to locate a used copy of any of Don Tauscher’s courses. In particular look for the “Million Dollar Paper Caper”. To get a little bit of a feel for the “Paper Trade” scenario, you can read my article at: Paper Game - Information Article
Some people go to the convention with the idea of “which strategy should I use?” When the best approach might be to see it all as one big strategy and one big picture.