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IMN: NPL Notes & Servicing Forum (East)

About the IMN NPL, Notes, Servicing Forum

We are excited to announce we will be sponsoring the upcoming IMN: NPL, Notes & Default Servicing Forum (East) in Fort Lauderdale, Florida on February 10 & 11, 2020.

“IMN is excited to return to Fort Lauderdale, Florida on February 10-11, for our next NPLs, Notes & Default Servicing Forum. Now in its fourth year on the East coast, we look forward to welcoming back large institutional buyers, mid-sized funds and smaller private note buyers to discuss market trends, with new sessions addressing RPL securitization and REO to rental property strategy.

In addition, we welcome a new crop of servicers and default professionals to discuss topics surrounding foreclosures and default servicing.  These fresh supplements to the program and delegation promise valuable opportunities for information sharing and networking. “

Who Should Attend

  • Accounting
  • Bankers
  • Brokers
  • Econometric Services
  • Insurance
  • Law
  • Lenders
  • Mom & Pops/Fix & Flippers
  • Property Analytics
  • Property Auction
  • Property Broker
  • Property Management/Property Management Services
  • Rating Agencies
  • Single Family Investors
  • Single Family Owners/Operators
  • Service Providers/Vendors

To purchase your tickets, please visit the IMN’s registration page by clicking here.

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Note Investment Opportunities: 2010 vs 2020

A lot has changed in the last decade when it comes to acquiring distressed notes. The problems that plagued the distressed note arena in the aftermath of the last financial recession of 2008 have now been cleaned up – tempting those who flirted with the industry in years gone by to take another serious look at note investment opportunities.

But what were the issues? How have they been rectified to make this market attractive once again?

 

Ghost Tapes Used to Plague the Industry

Perhaps the biggest issue a decade ago was ghost tapes. Distressed notes are sold in pools, therefore always a good idea to look at the loan-level data (tape) to ensure you are getting a good deal in exchange for your investment.

However, in the late 2000s and early 2010s there were issues with batches of distressed notes being shopped around investors with incorrect tape data – so-called “ghost” tapes. Without genuine data, investors were left unable to accurately track the lifecycle of the loan, killing a huge number of potential deals.   

So what were the underlying causes of ghost tapes back in 2010?

 

Too Many Hands in The Same Pie

Amidst the backwater of aftershocks emanating from the 2008 mortgage crisis, there were clearly a lot of distressed notes to go around, particularly after the moratorium of foreclosures in 2010. Tapes held by institutions were passed out to several middle-men looking for quick income from the commission paid on successful note sales.

However, one tape could be passed through six or seven intermediaries before being presented to the end investor. In several instances, intermediaries were selling pools that did not belong to them, or were no longer available. It wasn’t unusual for investors to be speaking to someone more than 7 times removed from the owner of the distressed notes.

Investors had to spend such an extraordinary amount of time tracking down genuine deals that they decided to leave note investment opportunities to those who had the time to deal with all of the obstacles to due diligence. Speak to investors involved in the industry 10 years ago and they’ll tell you how chaotic it was, and how repeated killed deals left a bitter taste in their mouth.

However, the industry has changed for the better.

 

Better Reporting Smartens Up the Industry

Luckily for today’s investors, Revolve Capital Group has measures in place to ensure each individual note has an easily traceable history. The note investment opportunities today are similar to opportunities available to an individual purchasing a second hand car.

Think about buying a used car today. How would you do the due diligence? Naturally you would turn to a provider such as CarFax to run a check on any reports of damage, outstanding finance payments, or issues surrounding the car title (e.g. car title loan). Today, you can do the same for distressed mortgages.

Investors can simply look up the chain of title, tracking where changes of assignment have been made from lender to lender. You can trace how many times the note has changed hands and accurately assess its value. These changes are part of the reason why real estate investors are coming back around to the idea of picking up distressed real estate notes, thanks to the many advantages over traditional investments.

 

Where Revolve Capital Group Differs

The clue is in the title. We go directly to the source. No middlemen passing off the notes to even more middlemen. We only buy bank-direct assets to sell to our investors. Which means – for example – instead of talking to a company seven times removed from the bank, our investments have been acquired directly from the bank which the mortgage was acquired.

We operate under an ethos of utter transparency. You can use these records to verify the history of the note, and use due diligence documentation to make sure you are getting great value for your investment.

If you want to get hold of real, tangible distressed notes that can provide ROIs of up to 50%, then make sure to speak to a member of the team today to discuss your requirements.      

The Science of Social Media: How to Market Your Real Estate Investments Online

One of the most rewarding moments in the world of real estate investing is when our clients sell their investments and finally see their capital grow. In the past, investors often belonged to groups that met on a regular basis and allowed members to announce their investment opportunities. There were also fax lists that allowed investors to fax deals out to potential buyers who then contacted them back if interested. While each of these tools (and many others) still exist in some iteration today, announcing an investment opportunity for sale has never been easier than now thanks to the wonderful world of social media.

By utilizing various social media platforms such as Facebook, Linked In, Twitter and Instagram, real estate investors can speak to a huge audience of interested buyers simply by typing a few words and hitting publish. While any real estate investor can sell properties, the distressed mortgage note industry is a perfect opportunity to utilize social media accounts in order to sell quickly. Note investing offers opportunities to continually revolve your capital for larger ROI than traditional real estate investing.

If you are an investor looking to market your real estate investments online, here are some tips you may find useful:

How to Market Your Real Estate Investments Online

  1. Create separate accounts for your real estate investment business – While you can certainly post your notes for sale on your personal social media accounts, to increase exposure with serious potential purchasers we recommend creating separate accounts specifically for your note/real estate investment business. Include your business name and logo branded onto each account and secure the business equivalent account for each social media platform. In this way, you will establish the professional look/feel you want for your business and all info posted will pertain to real estate investments.
  2. Network with other note investors to build a large following – Once you establish your accounts, you will want to network with as many other real estate note investors as possible. The larger your following, the more exposure to potential clientele. Conferences, events, and seminars are places where experts and investors come together to connect and network. We frequently sponsor and speak at seminars, and if you are interested in attending an industry leading conference make sure to visit https://www.imn.org/real-estate/conference/NPL-Notes-Default-Servicing-East/ for the NPL Notes & Default Servicing Forum event in Fort Lauderdale, FL. B2B (Business to business) marketing is a mutually beneficial way to expand your reach to the clients of a business partner. By offering to market their business on your platform and visa-versa you can easily connect with potential clients in your specific industry. The larger the group of hungry investors you have following your accounts, the easier and more profitable your sales will be.
  3. Hire a marketing firm – Those looking to really take their social media marketing game to the next level may wish to hire a marketing firm to manage the accounts. A marketing firm can help with creating social media accounts, growing a targeting following of real estate note investors, posting regularly to engage followers, and even creating high quality graphics. This will allow the investor more time to focus on securing profitable investments.
  4. Utilize video/photo technology to your advantage – One major positive of using social media to market real estate investment notes is the ability to post quality video and photography. Photo and video are resourceful ways to create a “human” element to your properties. For example, when purchasing a note we provide our clients with the BPO which includes a photo of the property and neighborhood. By seeing a photo you can assess the condition of the home, no matter where the property is located.

Whether you are a new distressed real estate investor or a seasoned entrepreneur, you can easily market your real estate investments online. Utilizing the tips above can be the perfect way for you connect with new and willing buyers, increase exposure, and market your properties.
If you are a real estate investor and would like to receive information on how to receive assets for around 40-60% off market value, contact our trade desk to learn about distressed mortgage notes.

The Important Role of a Note Servicer

On our blog we are consistently discussing the importance of a strong network of vendors.

Over the last decade we have created a national vendor database that allows our clients to scale their businesses, increase profit margins, and become more passive investors (learn more here).

It is beneficial to familiarize yourself with what roll the servicer plays in managing your assets, so you can feel comfortable focusing on other aspects of your investments.

Daily Calls

The daily calls can put a huge burden on your daily workload. A servicer can handle the day-to-day administrative tasks of your loan

Payment Management

They also handle all payments that come in, then remit them to whatever account you have on file. For example, if the borrower pays today, which is the 14th, and if you had 10 borrowers make a payment of  $500 each (equaling $5,000), on the 15th your $5,000 will be wired into your accounts and that money would be available to you right away.

Foreclosure Network

At your instruction, the servicing company will take care of the foreclosure process for you from start to finish.

Bankruptcy Oversight / Management

If you chose to foreclose, and the borrower filed bankruptcy to potentially stop a foreclosure, you would now need to navigate your way through that. If you do not have previous experience with bankruptcy this would be a good opportunity to lean on the servicer for the heavy lifting.

Maintain All Licensing Needs / Collection Needs

Unless you are educated on licensing and collection requirements, you can delegate these tasks to someone with more experience to ensure proper compliance.

The above are just a handful of services provided by a portfolio management company. By utilizing a servicer, you’re ensuring you are compliant with RESPA, compliant with the housing industry, and compliant with banking requirements. The fee is usually nominal and provides you the opportunity to focus on growing your portfolio.

IMN Opportunity Zones Forum (West)

IMN Opportunity Zones Forums (West)

In September, Revolve Capital Group sponsored and spoke on a panel for the IMN Chicago Opportunity Zones regarding topics surrounding the Tax Cuts and Jobs Act of 2017.

To learn more specifically about what are opportunity zones, who can invest in these areas, how investors can benefit from diversifying their portfolios, and the drawbacks that are important to know before pursuing these investments, visit our Opportunity Zones blog post.

In a couple weeks IMN is taking their conference to the West Coast, offering another chance for investors to come together and learn these new investment opportunities.

“IMN is pleased to announce our Opportunity Zones Forum (West), November 12, 2019 in Los Angeles, CA.

Following our sold out inaugural event earlier this year in New York City, and leaning into our longstanding expertise in providing best-in-class learning and networking conferences for the real estate community, we’re excited to bring this event to senior developers, investors, and tax & accounting specialists across the West Coast.

The one day conference features a keynote address from Director of Economic Policy in the Los Angeles Mayors’ Office, Ron Frierson, and will provide a critical update on IRS guidance, demystify investment operations and processes, delve into optimal fund structures and partnership models, and much more. It will also provide a platform for attendees to develop and strengthen relationships, discuss new investment opportunities and share stories of success from opportunity zones across the country.”

What You Can Expect to Learn

  • Commercial Real Estate Developers
  • Real Estate Private Equity Firms
  • Institutional Investors
  • Family Offices & High Net Worth Individuals
  • Registered Investment Advisers (RIAs)
  • Fund Administrators
  • Law/Accounting/Consulting Firms
  • Federal, State and Local Government Entities

To purchase your tickets, please visit the IMN’s registration page by clicking here.

Recent Federal Rate Cuts, and What This Means for the Housing Industry

Recent Federal Rate Cuts

After interest rates rose a total of 9 times since December of 2015, the Federal Reserve made the decision to cut rates 25 basis points again in September. This represents a downward trend as the last Federal rate was cut a quarter of one percent in July, just two months ago.

Climbing interest rates are a positive for the banking industry and those with money invested tied to interest-bearing accounts; however, as the rates fall anxious investors can look to the distressed real estate market for some active investment opportunities.

While back-to-back quarter pointcuts in themselves do not indicate a true economic recession, the signs are currently in place for an economic slowdown and a possible recession if the trends continue. Many traditional real estate investors still have the bad taste of 2008 in their portfolios when the housing market and economy went crashing downward. Many homes went into foreclosure, workers were laid off and wages were reduced. Few sectors were left standing where savvy investors could still actively see profits steadily increase, one such market was the distressed note industry when 2008 was one of the most profitable years for most note investors.

Housing Industry Trends

If the economy slows and wages become stagnant or even decrease, delinquency rates on mortgage loans will inevitably increase. It is likely that financial institutions, ranging anywhere from smaller credit unions to large Top-Tier banks, will look to increase the quality of their holding by getting rid of some of these underperforming notes. With the writing on the wall of another Federal rate cut, some estimate that over the course of the next 12-18 months, many financial institutions will look to sell off these lesser performing notes.

Recession Investment Opportunities in Distressed Real Estate Industry

In the downturn of the housing market in 2007-2008, the investors that took advantage of distressed real estate investment opportunities often did well, while traditional real estate investing took the biggest hit. By holding onto distressed notes, investors can typically expect neither time nor financial investment in the upkeep of physical property by taking a less hands-on involvement. If a recession occurs, supply is expected to increase. Following the recession, during an economic expansion the value of notes (even lower-value notes) are expected to increase in value.

While every investment opportunity incurs some level of risk, the acquisition/management/sale of underperforming loans is generally a less-risky opportunity, especially in the event of a recession. By purchasing a real estate note and choosing to work with the homeowner, you can even assist the borrower with staying in their home by renegotiating their terms, which will avoid displacing families and ultimately help those same families avoid foreclosure.

As we see fluctuations in the housing industry and the continued Federal rate cuts, there is a likelihood of subsequent increases in delinquent loans. Investors who focus on purchasing underperforming bank notes historically can strategize by “riding out” the wave of the changing economy and expand their investment portfolios. Continue to look for distressed inventory releasing from banks and credit unions to forecast a possible upcoming recession.

Housing Trends and the Possibility of a 2020 Recession

Are Housing Trends Showing Signs of Upcoming 2020 Recession?

Real estate professionals everywhere are warning of our economy heading towards a recession in 2020. Now there might be some housing trends to back up the claims.

 

Delinquent Mortgages

An area that has not received enough attention, according to Keith Jurow, is the “growing problem of re-defaults on (US home mortgage) modifications.” While 8.7 million permanent modifications were made since 2007, there is a reported 17 million temporary modifications made (according to the non-profit Hope Now consortium).

Even with the modifications, slightly more than half of the borrowers either re-defaulted or continued to remain delinquent according to the OCC.

The Market Watch also shows a graph provided by the Fitch report showing the Cumulative Default Rate by Number of Modifications. The housing trends show that two or even three plus modifications provide a spike in re-default rates.

Miami Housing Trends

Shifting focus to specific cities, the recent housing trends in Miami are also showing evidence of a possible collapse. Harris Kupperman (Moguldom.com) claims the prices South Beach are down 20-35% from peak prices. He continues explaining that the turn a profit on a rental is “mathematically impossible”, and “the only way owning is viable, is if prices go up and allow you to extract capital to fund the carrying costs – though debt service then makes the monthly cash flow much worse.” Kupperman warns that Miami has traditionally been a leader in the national market trends, meaning the national real estate market may be headed towards a similar pattern in the next year. We can compare patterns of the 2008 recession vs a possible 2020 recession.

 

Manhattan Housing Trends

A new report claims the “prices in Manhattan real estate took their biggest plunge since the 2008 financial crisis (Robert Frank, cnbc.com). The Douglas Elliman Q3 Report found average sales prices decreased 14.1%. Houses are still being sold, however the prices homebuyers will most likely receive at this time fall short of what the prices once were when they got their home for in 2014. There is an increasing number of luxury listings on the market, but a decreasing number of property values.

 

Foreseeing Economic Activity

Analyzing market trends in the housing industry can traditionally foresee economic activity. When times are good housing demand is high and prices rise, but when times are bad there is a surplus in property listings followed by low-bid offers on homes. What are your thoughts on a the timeline on when/if our country will enter a 2020 recession?

 

Opportunity Zones | What You Need to Know

Last week Revolve Capital attended the IMN Opportunity Zones (Midwest) in Chicago.

The conference discussed Opportunity Zones surrounding the Tax Cuts and Jobs Act of 2017. Opportunistic zone areas include neighborhoods infected by factors such as distressed mortgages, lost jobs or boarded up neighborhoods. By building in these areas, investors can actually retain their capital gains tax instead of paying it to the government. What exactly are opportunity zones, who can invest in them and how can you benefit from these incentives?

What are opportunity zones?

According to the IRS, the Tax Cuts and Jobs Act (TCJA) is a “Major tax legislation that will affect individuals, businesses, tax exempt and government entities”. The Act added the IRS Code of 1986, which essentially effects multiple major taxed sectors: individuals, estates, business taxation, corporate tax, churches and nonprofit organizations, distressed communities, and more.

Opportunity Zones are defined as “economically-distressed communities where new investments, under certain conditions, may be eligible for preferential tax treatment”. These qualified zones were “created by the 2017 Tax Cuts and Jobs Act. Designed to spur economic development and job creation in distressed communities throughout the countries, they provide tax benefits to investors who invest eligible capital into these communities.”

Who can invest into these zones?

These opportunity zones are open to every private investor that has the sophistication and wherewithal, who knows how to structure their fund based on the rules and limitations of the Jobs Act, and who would like to tap into the opportunity zone revenue dollars and concurrently defer capital gains taxes. Historically, these types of opportunities were sometimes available only to accredited investors (typically requiring a net worth of $250-500K+) to invest in these projects. The Qualified Opportunity Zones program can be utilized by investors on any end of the spectrum… whether you are a private investor, a small investor, a new investor or a larger seasoned investor, you can benefit from the advantages of building in these areas.

Note, there are special reporting requirements. Reporting ensures the restabilization of the distressed area is being pursued.

How can investors benefit from these types of investing opportunities?

If you are interested in diversification into other asset classes or are already diversified, then investing in opportunity zones might be a revenue stream you should explore. Sectors such as commercial, strip malls, communities, hotels, gas stations, land, homes, etc. can take part in building in the distressed zones. By looking for ways to invest dollars to A) avoid capital gains taxing and interest from the IRS to be retained into your projects; and B) seeking to find a way to help revitalize these opportunities (by purchasing acres for housing development, revamping strip malls, creating gas stations and hospitals, etc.) you can play a part in this economic development tool. Revolve Capital Group has product (both non-performing and re-performing loans) located across the nation, many assets being directly located in these areas of opportunity.

By utilizing alternative asset class diversification, our investors can segue way into putting single-family home investments into the fund. Meanwhile, making these areas livable, appealing and fundamentally opportunistic. In return, we can expect an influx of first time home buyers, renters, borrowers, and families. When you create charming up-and-coming neighborhoods filled with Walmarts and Targets then people will be incentivized to move there, filling the demand of customers.

There is a big crossover between building in opportunity zones that lasts between 7-10 years and economic growth of communities that have been boarded up, people have moved out, building has been condemned. Communities that might have previously been more attractive, had a larger population, and where investors and developers were once putting their investment dollars. That is the crux of the message… that these opportunity zones create a number of different ways to invest into single-family homes, commercial properties, land, etc. in terms of both long-term and short-term benefits. Now that we are 11 years removed from one of the biggest crisis since 1929, you can tell banks, lenders, communities, developers, builders are not interested in those areas. The government is creating an opportunity to go back to these areas and develop.

Revolve Capital Group has continued to be at the forefront of revamping communities. Our firm and many of our investors purchase homes that are pre-foreclosure all the while helping families avoid foreclosure altogether.

What are the disadvantages?

While anyone can benefit from investing in these areas, the only way to qualify for the tax incentives is by purchasing the investment through a qualified opportunity fund. EIG.com released information explaining “You cannot simply purchase real estate in an opportunity zone, there has to be improvement to the property to ensure it meets the qualifications of the investment and providing economic stimulation. Additionally, the Fund must invest at least 90% of their assets in a qualified Opportunity Zone.”

According to the Economic Innovation Group, Opportunity Zones incentives are “tied to the longevity of an investor’s stake in a qualified Opportunity Fund”. They continue on explaining…

“There are three core tax incentives:

Temporary deferral: A temporary deferral of inclusion in taxable income for capital gains reinvested into an Opportunity Fund. The deferred gain must be recognized on the earlier of the date on which the Opportunity Zone investment is disposed of or December 31, 2026.

Step-up in basis: A step-up in basis for the deferred capital gains reinvested in an Opportunity Fund. The basis is increased by 10% if the investment in the Opportunity Fund is held by the taxpayer for at least 5 years and by an additional 5% if held for at least 7 years, thereby excluding up to 15% of the original deferred gain from taxation.

Permanent exclusion: A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in an Opportunity Fund if the investment is held for at least 10 years. This exclusion only applies to gains accrued on investments made through an Opportunity Fund. There is no permanent exclusion possible for the initially deferred gain.”

Essentially, if you choose to invest in qualifying opportunity zones your capital could be tied up for 7-10 reducing additional opportunities to invest in a variety of other asset classes.

The Opportunity Zones is a step in the right direction for the government to stimulate economic growth in underserved areas; however, our company firmly believes it is more advantageous for investors to focus on preforeclosed assets. There is not a requirement to hold a distressed note investment for an extended period of time if it is not providing the expected return, you have the option of investing in any nationally located area, and most importantly you can still revamp communities by choosing to keep families in their homes

For a more passive income stream that provides economic stimulation, potential growth for lower income distressed neighborhoods and multiple exit strategies we suggest considering notes for your future investments. Contact us today to learn more information on how we can help you grow your portfolio.

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Sources:

Economic Innovation Group (2019), Opportunity Zones FAQs
Retrieved from: https://eig.org/opportunityzones/faq

IRS (2019), Tax Reform
Retrieved from: https://www.irs.gov/tax-reform

IRS (2019), Opportunity Zones Frequently Asked Questions
Retrieved from: https://www.irs.gov/newsroom/opportunity-zones-frequently-asked-questions

Everyone Focuses on Being a Landlord, When You Can Be a Lienlord

The definition of landlord is “a person who owns a building or an area of land and is paid by other people for use of it”.

When a person chooses to invest in the real estate market, a common income stream is to become a landlord. Generally, the real estate market is a stable and profitable income source. When the economy is on an incline, the profit margin can produce 10-15% ROI. You can usually expect to receive both passive income on a monthly basis with renters while acquiring equity in the home. On paper, this sounds like a win-win scenario.

However, as a landlord you have a lot of responsibility.

You are legally bound to providing a healthy living environment for your renters, you are required to have your property insured, you take the late-night phone calls that the water heater is broken, you communicate with the tenant as to why they were unable to pay utilities that month, etc.

What if we told you, you don’t have to be a landlord to receive the benefits of a landlord?

Let us explain.

The term “lienlord” refers to a person who owns a mortgage note and that debt is paid by the borrower (or homeowner). When a homeowner doesn’t make their payment for a duration of time, the mortgage gets sold from the bank to an investment company, such as Revolve Capital Group. We receive our assets directly from Top Tier 1 banks. When an investor (like yourself) purchases the note from us, the investor now becomes the “leinlord” (or the “bank”).

As the lienlord, you can benefit from owning the mortgages via the bank without having to be responsible for property repairs/maintenance, property taxes, legal-renter responsibilities, property taxes or renter issues that come into fruition with traditional real estate investment routes like buying rentals or buying fix-and-flips.

Property Repairs/Maintenance

Put yourself in the position of a homeowner. You take a mortgage out from Wells Fargo, for example, and you go purchase a house. Hypothetically, if your water heater breaks in the middle of the night would you call Wells Fargo to fix the water heater? Typically, no. The reason for that is the responsiblity of taking care of your home lies on you as the homeowner.

Let’s apply that same principle to being a lienlord vs a landlord. As a landlord, it is your responsibility to fix the water heater. As a lienlord, you are acting as the “Wells Fargo” and you don’t take those calls. Essentially, the lienlord is the bank -and- when you purchase the housing note, you become the bank. You would become the “Wells Fargo” and you (similar to the “landlord”) can continue receiving passive income coming in from the homeowner every month, and when you’re ready you can still sell the note to another note buyer. As a note owner, you also have the option to do other types of exit strategies or creative financing options.

Legal Responsibilities

With being a landlord comes endless levels of responsibility to accommodate renters. There is an implied warranty of habitability, which ensures the renters live in a safe, healthy and clean environment. Health and building codes must be followed, safety features need to be maintained regularly. The responsibilities trickle down even to proper handling of abandoned property. In the event the tenant must vacate the property, if they leave items in the rental they have to be properly stored, the tenants must be notified of where to pick up their belongings. Your main focus needs to be how to recoup and refill that vacant rental if you haven’t received rent for that property in a number of months and instead you are having to worry about the abandoned property from the previous tenant. Similar to property repairs/maintenance, when you’re the leinlord you are now the bank. Chase Bank, Wells Fargo, Bank of America, the bank that owns the mortgage to your home is not legally responsible for traditional landlord-tenant laws. When you “become the bank”, you collect the monthly payment while removing yourself from being legally obligated to maintaining a habitable environment, health/building codes, safety features, abandoned property, etc.

Property Taxes

You are also financially responsible for property taxes. If you have 10 or 15 rentals, you have to pay taxes on all those properties even if the renter stops paying. According to SmartAsset.com, “the national average property taxes are 1.211% of Assessed Home Value, averaging at $3,028”. If the condition of the rental property is average or below average, you are potentially using your profits to make repairs on the home, then to add yet another financial responsibility, such as property taxes, can reduce your profit margin even further.

Control of Terms and Interest Rates

As a leinlord, if you feel the terms of your agreement with the homeowner (the borrower) are unfavorable, you can control the terms and change them as you see fit.

If the homeowner was originally financed at (for example) 4.5%, and they stop paying on their home for 12 months, and the bank then sells the now non-performing note off to a company, like Revolve Capital Group. We will then sell that note to an investor (like yourself), and let’s say you turn that note into a re-performer. Because you own the note, and because you are now the leinlord (you are now “the bank”), you have the power to renegotiate the deal. You have the power to renegotiate any part of the contract you would like.

For example, you can change…
– The term
– The duration, how long the loan is going to be valid for
– The interest rate
– The monthly payments
– Is it going to be a potential balloon payment?
– Will you advertise the payments over a 15-year time frame, then after 15 years require the rest of the balance be paid at once?

So long as you are within the legal limits and not conducting unethical practices like predatory lending, you have the power to do so. If you plan on changing terms, make sure to research usury laws so you know the maximum amount of interest that can be levied.

There is not only 1 term that can change when you take ownership of a note, but you can also change anything you deem necessary because you are now the bank.

Emotional Investment

To remove another layer of responsibility, you can choose to completely remove yourself from the decision making process. If you’re used to this type of real estate investing, you understand what it’s like being in the position of the landlord receiving a call from the tenants that the wife got sick and the husband lost his job. Now you are in the position to decide if you will let them continue to not pay for the next 3 or 4 months rent. There is a huge emotional tie to being a landlord. However, working with a vendor/servicer, you have the benefit of choosing to remove yourself from personally having to deal with these issues when they arise.

Vendors / Servicer Utilization

We have a network of nationwide vendors who can be as involved or as uninvolved as you direct them. The vendor will go through a process we call KYC (know-your-customer), which is a “know your client” type of process where they will find out what you’re looking for in a vendor and what expectations you have for your assets. For example, if you own a non-performing note and the homeowner starts paying, the non-performing note would turn into a re-performing note. These vendors will handle that entire process with your instruction. Another example would be if the homeowner is asking for a reduction in their interest rate, let’s say there were paying 8% and now they’re wanting 4%. The vendor will come back to you as the leinlord, request your approval or denial, and continue according to your instruction. You are able to take a step back, allow the vendors/servicers to take over some or all of the management, and you can focus your energy, time, and resources on other aspects such as growing your investments. The secret to the buying notes and which investment company you choose to utilize is within their network of vendors.

The traditional real estate world generally pushes one of two exit strategies:

1. You purchase a run-down property, rehab that home, decorate it high end, and sell for a large markup.

2. You maneuver into a long-term cashflow by purchasing a decent property, find occupants, and you will become the landlord.

By taking the alternative approach to investing you can become the actual lienholder to that same property. Ultimately, you can make the decision if you don’t want to take the late-night “landlord” phone call, because you prefer to take calls during business hours. Being a leinlord allows you to take on investments that you can own for the next 30 years while the homeowner continually makes payments, but all the property condition concerns fall on the shoulders of the homeowner.

There are many downfalls to becoming a traditional landlord. Choosing to become a landlord comes with a lot of responsibility… this includes general property repairs/maintenance, legal responsibilities, property taxes and emotional investments. When you make the decision to become a lienlord you reap the benefits of being a landlord without the same negative drawbacks. Because you are now “the bank” you can control the terms and interest rates, and by utilizing our national list of vendors/servicers you can remove yourself from the majority of those responsibilities and you can focus on your monthly passive income.

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4 Reasons for Choosing Revolve Capital for Your Next Note Portfolio Purchase

At Revolve Capital, we are proud to have long-standing relationships with our clients. While ensuring transparency is key, we feel every aspect of the business is important. Each stage of the process, from product selection through post-close, we work with you every step of the way.

We separate ourselves from the competition by not only helping with the purchase but also helping our clients grow their portfolios. By creating a long-term relationship, we ensure success for you and us both.

How does Revolve Capital assist the client in growing their portfolio? Visit our new blog post now:

Consistency of Product

We are aware of how important regularly available inventory is. If you are in the process of talking to your investors and raising capital, you need to be purchasing your assets from a company you know will continue pumping out assets on a consistent basis.

We regularly update our website with general criteria of our available inventory (contact our Trade Desk for a more detailed list of assets.)

Safe Purchases

The assets we purchase and we sell to investors have been put through a heavy vetting process. We always vet, qualify and disqualify deals before we even purchase them. Therefore, we know the deals we eventually bring to market have been tried and true amongst many different vendors and eyes (other than our own). We utilize many third-party companies to vet our product.

Clean Collateral (Recycle Your Money)

Our collateral will always represent a clean product. We will always notify you when you are purchasing (for example) a single-family house, that is secured by real estate, you are in the first-lien position, and anything else that we say we are selling you that is included in the file is accurate. If you find the product is not as represented, you can always come back and recycle your money -or- get your money refunded back based on the reps and warranties given.

Post-Close Asset Management

The post-close management process is one of the most important aspects. Our clients see their money enter the real estate market and truly be worked to the hill so that it comes back to them. If you put out a dollar, then a dollar-quarter comes back to you**, and you can rinse and repeat and surely grow a business.

**These numbers are estimated based on past client purchases. Not guaranteed

We assist our clients in growing businesses, -and not just their business but also growing their investment profiles. If you are ready to purchase a note portfolio with Revolve Capital Group, contact us today and we will help with growing your investments.

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Business is Booming

Business is Booming at Revolve

One of the benefits that our clients have when choosing Revolve Capital is we purchase bank direct delinquent loans directly from Top Tier 1 banks and sell these same loans to our investors. By purchasing these delinquent loans from Revolve Capital, you have the opportunity to become the bank. This creates a passive income investment play with many more exit strategies available vs traditional real estate investing.

Revolve Capital Group is committed to providing a simplified purchasing experience to our investors. For more information, get signed up with us today by CLICKING HERE and learn how we can assist you in growing your investment portfolio.

The Secret to Buying Notes and Who You Choose to Invest With

One of the more common problems that we repeatedly see in the real estate industry, whether it be traditional real estate investing or investing in the distressed note industry, is that investors are hesitant to purchase outside of their own backyard. Sure, investing in your own city has the benefit of driving to the property, seeing the condition of the home, looking at the neighborhood or seeing the crime area. Even these seemingly “beneficial advantages” have drawbacks. Ultimately, you are still using your valuable time and resources to complete these tasks. There are ways that you can work smarter instead of working harder, and the many benefits extend farther than simply “living within driving proximity to your investment property”.

The secret to buying notes and which investment company you choose to utilize is within their network of vendors.

Over the last ten years of our experience, we have cut our teeth on utilizing many different companies on exercising the day-to-day needs of the business. National vendors that can run title, national vendors that have access to 65,000 real estate agents across all 50 states that within a 3 day period can get you back pictures (exteriors or interiors depending on the occupancy) within 3-5 days. Simply put, having an extended nationwide network of vendors allows you to scale your business, increase your profit margin and become a more passive investor. If you’re wondering how you have come to the right place.

Increase Opportunity

Using national vendor databases will increase the opportunity to invest outside of your own backyard. For example, if you’re in California then the discounts that the banks are selling distressed loans are much less than either Michigan or Ohio.

If you have the right ecosystem in place, which we give to you here at Revolve Capital Group, to help you turn a profit quicker…. investing outside of your own backyard almost feels normal. We’re located in Anaheim, CA and most of our product is in the mid-west and the East coast. That is not just by design, it’s because the discounts are far greater in that part of our country and our national vendors give us the ability to expand our investment portfolio to areas that provide steeper investment discounts.

Decrease Responsibility

National vendors assist with big tasks such as making the cold-calls, taking the property photos or even construction needs for home rehabilitation and renovation. Simultaneously, the same thing goes for smaller tasks such as documentation. At the end of the day, most investors do not want to house the documents in their personal files that their children, wives, or even a potential natural disaster can effect. Having those documents at a company that can take on the responsibility of storing those and inventory those. By allowing them to file your documents you will decrease personal responsibility… and ultimately you can free up your resources and focus in other areas, such as growing your investments.

Defer Accountability 

Allowing the vendor to be the direct contact for the homeowner will defer accountability. What is your plan regarding who will communicate with the homeowner? Who will make the cold calls? Who will adjust the interest rates? By using a vendor you can take the pressure off yourself and defer these tasks to a servicer.

These vendors, as a part of the on vetting process of bringing you aboard, will determine your needs by going through a KYC (know-your-customer) evaluation. To use an analogy, comparing a landlord to a renter is the same thing that could happen from a lien lord (or note holder) to an occupant/homeowner. If the loan goes from non-performing to re-performing then these vendors will handle that entire process at your instruction. At times, you may not want to give too low an interest rate. They may have been asking 8% interest rate and they’re asking for a 4% interest rate and the vendor will come back to you (the owner of that deal) and ask your approval and proceed per your requests. In this example, you may consider that 4% is far too low, even lower than today’s 30-year fixed interest rate. Therefore you might deny the interest reduction. The KYC evaluation allows you to get to know the vendor, and the vendor to get to know you and your wishes for your investments.

Allow Scalability

The price point to utilize a servicer is nominal in the swing of things, and using outside sources can allow scalability for your investments. Ultimately, it’s less a function of finance and more a function of time. We believe if you have a full-time job and you invested in real estate on the side, you absolutely need to be accessing vendors because that’s a scalable way to do business. It’s a scalable way for you to have a side investment vehicle. If you would prefer to do this full-time, then you could still quarterback the vendor to carry out the decisions that you’re making but they’ll come from your instruction. Otherwise, if you do it as an alternate business (or as a side business) the vendors will take your instruction, but they will be working nine-to-five every single day. The vendor could be working your files with or without your instruction essentially.

Facilitate Functionality

Vendors have experience, knowledge, and resources available to facilitate functionality. By becoming a more passive investor and taking a step back to allow the vendors to take care of the process start-to-finish you are essentially allowing the backend duties to function optimally. Your work-flow will be streamlined and with everything being directed by the vendor, you can focus your attention to other aspects of your business. However, if you would prefer to learn, roll up your sleeves, and do it all yourself then you also have the opportunity as well and the vendor will allow you to do that. Depending on how “fast you want to dive the boat” is how fast the captain will give you the wheel to take over.

We believe one of the single most important factors you need to take into consideration when choosing the right company for you to invest with lies within their network of vendors. By utilizing outside resources, you can benefit from increasing opportunity, decreasing personal responsibility, deferring accountability, allowing scalability, and facilitating functionality.

 

Our vendor network is something that we give our clients that is a tried and true test over the last 10 years of companies that carry out the infrastructure of this business. Unfortunately, there are not too many firms, companies or note sellers that will instruct you on who to use as a vendor to operate this business. They expect you to already have that handled. The mindset of “you’re already coming to us for product so you should already have your ducks in a row”. There is not an “educational book” out there that teaches everybody A-Z. This is why we tried to separate ourselves by offering this network of vendors/servicers for free.

Now you can play a part in the exact systems we have put in place to create Revolve Capital Group. So you can feel comfortable expanding your investments using our established national vendor network.

Smart Investing | Where to Buy Distressed Notes -and- What is Your ROI?

What is Your ROI?

We always hear terms like ROI or what is your “standard ROI”…. “Return-on-Investment”

If you watch shows like Million Dollar Listing or Flip or Flop, you might notice investors paying .80 or .90 cents on the dollar for their investment properties, which comes with all the glitz and the glamour.

Instead, you could learn to purchase deals we are selling nationwide on a consistent basis for .50 or .60 cents on the dollar. For example, we just had a deal worth $140,000 and it’s on the market now for $90,000. That’s .60 cents on the dollar. Why would you go out and pay $120,000 or $130,000 for that exact same property?

My question is… What is your ROI?

Learn more now by visiting our Getting Started to see how you can obtain these deals and our available inventory.

Keep the Ball Rolling with 6 Creative Exit Strategies

When our clients purchase a distressed mortgage note, they generally have an idea of what they plan to do with the note. However, like with any plan, sometimes things do not pan out as expected. You may not be able to get ahold of the homeowner, you may not be able to come to a financial agreement or you may want to foreclose but after hearing the story of the family you decide to work with them to keep them in their home because you choose the ethical investing route. If you purchase a distressed mortgage note that does not align with your original game plan, there are multiple exit strategies available to keep the ball rolling. After all, you are now the bank and the ball is in your court.

One key benefit when investing in the note industry is you are not “married” to any note. If it is not working you have options…

Keep Circulating Your Investments

If you purchase a portfolio of loans, you might have (for example), 8 non-performing and 8 re-performing loans. Your original plan was to renegotiate the terms with the homeowner, however, you could not come to an agreement with 4 of those loans to start paying again. Now that you have 4 loans that do not align with your initial investment strategy, did you know you actually have the option to put those loans back on the market? You can either sell the loans privately or find a broker to sell the deals for you. When purchasing one of our bank direct assets, it is not uncommon to receive 20-40% ROI. Meaning, you are still potentially able to turn a profit. Whichever you choose, if you play the game right you can grow capital while circulating your investments.

Utilize a Creative Exit Strategy Approach

Before deciding to continue circulating your investments by selling off your loan, you can also choose to take an alternative or unconventional approach.

If you keep up with our educational blog posts, we tend to compare the traditional real estate industry vs. the distressed real estate industry. Typically, a traditional single-family home real estate investor has two main exit strategies. You are either going to decide 1) Am I going to put money into this property and dump a bunch of money with my contractors/construction crew, then renovate this as low as possible so I can eventually re-flip it and turn a little profit, then rinse and repeat and do this over and over again -or- 2) Am I going to clean this property up a little bit and create a rental play as a landlord.

By putting a new spin on the way you invest, you are talking about buying distressed notes (the mortgage debt). Generally, you have about 5 or 6 exit strategies to start with, then there could potentially be more depending on if you are a short-term investor looking for capital growth, or are you a long-term investor looking for consistent passive income.

What creative exit strategies are available to you?

  1. You can try to avoid foreclosure altogether
  2. You can convince the homeowner that foreclosure will affect their credit for the next 7 years, and to avoid it you will rid the debt entirely if they sign the deed over to you. You could even offer the homeowner a first and last months rent at a new place, this is called a deed-in-lieu or cash for keys
  3. You can convince the homeowner that we can do a short sale on the home and approve it within 48 hours
  4. You can give the homeowner a modification that allows them to stay in the home and continue to pay
  5. You can work a deal with the homeowners friends/family members to purchase the home at a reduced payoff, and the homeowner will make subsequent payments to the friend/family member which they will then be off the hook with you
  6. You can work with the homeowner if they went ahead and filed bankruptcy
The Ball is in Your Court When You are the Bank

When you purchase these bank direct assets, you can make these kinds of decisions. The ball is in your court when you are the bank. Furthermore, these are the same offerings that the bank can offer its customers but because they have not set up an infrastructure to carry out loss mitigation and debt collection loans that they originated, it is not in their business model to offer creative financing. The quarterback doesn’t run down the field and catch it. The functionalities are separate. At this point, a firm like Revolve Capital would come in and alleviate the bank’s issue by not being able to collect on a debt that is not paying them. We offer the bank a bump above 0, which clearly is an incentive for them to sell it.

There are a handful of different ways that we can look at buying a mortgage for a steep discount. Depending on which route we want to take, all of those routes mentioned to you are profitable and if you bought that loan for $50K, but it is worth $100K, all of the routes we just walked through would sell that deal for much higher than the $50K price you bought it for.

When you are “the bank”, the sky is the limit because you do not have traditional or expected rules to follow, you can utilize a creative exit strategies… and if you decide the deal you purchased from us is not panning out how you expected there is the option to sell the whole loan (private party or with the use of a broker) and keep circulating your investments, then move on to the next portfolio of assets.

Keep the ball rolling by expanding your note investments. If you’re interested in expanding your note portfolio and utilizing creative exit strategies, get started now by clicking here.

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Put a New Spin on the Way You Invest – Transition Into Notes

Buying the Debt to the Property

When you think of traditional real estate investing what benefits come to mind? Some might say cash flow, long-term financial security, and gradual appreciation to name a few. Depending on your own experiences you may think traditional real estate is a gamble. Although traditional real estate investing has become a mainstream method of capital growth there may be drawbacks and limitations. Most likely there will be an increase in liability and duties as well as unforeseen expenses. While you do have the benefit of being your own boss, your schedule may become more demanding than a typical 40-hour work week depending on the particulars of the property. Not to mention that no two investment properties are the same, there will always be new surprises.

Transition Into Notes

In our opinion, buying the debt to the property (notes) vs. purchasing the property is a more profitable and scalable play. When you purchase the debt, you become the bank. This spin on investing allows you to decrease liability while increasing the amount of exit strategies available to you. It’s important to remember that a national note portfolio can be managed from the comfort of your home or office. Should an issue arise, our network of nationwide vendors are available to assist you.

Another key reason to transition into notes are the substantial discounts and their obtainability. On average distressed mortgage notes can be purchased at 40-50% discount off market value. Also, the distressed note industry is not dependent on a thriving economy. If our country were to have another recession there would actually be more inventory for you to choose from.

In conclusion, converting your assets from traditional property investments to distressed mortgages is beneficial for many reasons. You will have less hands-on work with the ability to utilize our nationwide vendors. This allows you to work from the comfort of your home or office. Liability will decrease and your ROI will increase. Note investing will increase your exit strategies (long and short term options). Becoming the bank and acquiring the property with 40-50% discount off market value. Notes are not dependent on a thriving economy, there are pros to an up and down market. We strongly believe if you transition into notes you will find positive results with your investment assets.

If you are a traditional real estate investor, put a new spin on the way you invest. Give us a call and let us help you transition into notes, CLICK HERE.

Auction or Judge gavel on a laptop

Buying Homes at Auction VS Buying Notes

Learn to Purchase Home Prior to Auction

Traditionally, when an investor wants to purchase a foreclosed home they would typically go to the courthouse where homes and assets are auctioned off at discounted prices. Is buying homes at an auction the best method in obtaining an investment property, and more importantly what is the best way to use your resources when it comes to buying homes at auction vs the note?

The all-out craze in buying homes at auction has dramatically decreased since the height of the 2008 residential mortgage crash. The main reason(s), competition from newer buyers and less inventory. Since the foreclosure moratorium of 2010, foreclosures were halted by many lenders so that a less expensive route could be sought after, loan modification. We would recommend learning to purchase the home prior to going up for auction. You can purchase the same piece of real estate for roughly 30-40% cheaper than at auction. By purchasing the actual mortgage note from the foreclosing bank, you could save yourself thousands of dollars by learning to acquire the actual debt vs. the property itself.

Buying Homes at Auction

Buying homes at auction can typically turn a seemingly “smart” investment into a nightmare. How may an investor know the interior condition of the home, prior to auction? He can’t, he must wait until the offer is placed and the bid is accepted to take ownership of the property to eventually get inside. You must fully understand the scope of work the property will need to bring to market, to sell quickly. Therefore, we recommend learning how to buy the same property at auction well before it’s listed.

For example, instead of purchasing a $100k property for $90k at auction, you could learn to purchase the same house for $55-60K buying notes.

Buying Notes

Purchasing a distressed mortgage note enables the investors (like yourself) to purchase homes for a fraction of the price you would at auction, and getting it before it heads to auction. This gives you a greater return on investment with less room for error. Buying notes give steeper discounts and usually provide larger profit margins.  Our sales team has national portfolios ready so you can take the guesswork out of purchasing real estate at auctions, and start buying notes and purchase custom-tailored distressed real estate tapes. Our management team and sales floor are standing by. Please contact us to see what options are available to you.

Delinquent Loans May Still Be Distressing Housing Industry

Since the 2007 recession, most of America has believed our economy is on a steady incline and we are free and clear of another recession. According to Keith Jurow, in his article written “Why bubble-era home mortgages are a disaster waiting to happen” this is actually not the case.

“The truth is these mortgages are still dangerous and could soon undermine the housing recovery.”

KEITH JUROW

The below chart shows the drastic increase in loans delinquent more than 5 years… Hawaii (for example) once only had 4% delinquency rate went up to 67% in 2018.

His explanation points to factors such as homeowners who stop paying their mortgages without consequences…

Jurow’s claims are strengthened by the actions of Fannie Mae and Black Knight Financial Services. These companies regularly provide delinquency rate statistics, but for the past 2 years, the data has not been provided. The last available stats showed the re-default rates were nearly 40%.

To find out more about why Jurow believes we are only 6-12 months away from another housing bubble, visit his article HERE

Freddie Mac Mortgage Rates Raising for Four Consecutive Weeks

According to the HousingWire… “Mortgage rates inched forward for the fourth consecutive week, according to Freddie Mac’s latest Primary Mortgage Market survey. Freddie Mac Chief Economist Sam Khater said the 30-year fixed-rate mortgage increased once again to its highest level since May.”

“Amidst this four-week climb in mortgage rates, the welcoming news is that purchase applications have risen on an annual basis for five consecutive weeks; however, given the widespread damage caused by Hurricane Florence in the Carolinas, the next few months of housing activity will likely be somewhat volatile.”

SAM KHATER

Please click HERE to read the original article.

How to Manage a Successful Out-of-State Investment Property

When our new investors begin learning the many benefits of investing in the distressed mortgage note space, they frequently ask us an important question…

How do I invest outside of my own backyard?

Ethan Roberts has addressed some of the pros about investing out-of-state, and ways to ensure your property is a successful investment decision.

 

Read more now by visiting his blog post HERE.