by Paige Panzarello | Jun 20, 2020 | blog, 2019, investing, real estate
When you look to invest in notes, you must first determine if the note is performing or non-performing. What is the difference between performing & non-performing notes?
Imagine a property purchased for $25,000 cash in Anytown, USA. That same property is sold on seller-financed terms for $50,000 with 10% down and monthly payments of $500 at a 10% interest rate. The seller carries the legal contract or note signed by the buyer. On a balance sheet, you would list the note as worth $45,000 ($50,000 – 10% or $5,000 = $45,000). Over time as the buyer makes payments, you can determine if the note is “Performing,” “Sub-Performing,” or “Non-Performing.”
What is the Difference Between Performing & Non-Performing Notes
A performing note is one where the payments are made on time by the homeowner to the note holder. The best way to keep track and prove that a note is performing is to keep a copy of the canceled checks, or a copy of the checks. You can sell a performing note on the secondary market for anywhere between 75%-100% of the current note value.
A step below a performing note is the sub-performing note. The note holder experiences receiving late payments often of 15 days to 60 days. The note holder has to prompt the homeowner frequently to stay within the guidelines of the contract. At times real estate attorneys have to get involved, but overall the contract gets paid down. A sub-performing note can fetch between 50% – 80% of the value on the secondary market.
The kind of note we are most interested in as a real estate investor is a non-performing note. This note is in default, and you can no longer expect repayment against the original terms of the note. What makes a non-performing note so attractive to a buyer is the opportunity to purchase the asset at a deep discount. That purchase at a discount allows you to re-work the note or take back the asset. You can say, as a note investor, you can help people stay in their homes after “life” happens to them. You can find non-performing notes for anywhere between 10% – 50% of the note value for residential properties on the secondary market.
Moving Forward a Year, Here are some Valuations of the Note.
If it’s a performing note, Hause01 at BiggerPockets writes, ”the balance after one year will be approximately $43,500. That means the note could have a sales price of roughly $32,625 (75% of its current value) on the secondary market.”
In Hause01’s second example, “Compare that same performing note to a non-performing note. Assume 6 of the 12 payments over that first year are successfully collected, leaving a current balance of $44,000. The note is currently uncollectible. You can sell for approximately 50% of the note value or $22,000 on the secondary market. When you combine the $3,000 in payments received for 12 months, plus the original down-payment of $5,000, plus the sales price of $22,000, you can sell the non-performing note and collect a total of $30,000 in one year for the property. That’s a 20% return on your original $25,000 investment.”
Paige Panzarello, the “Cashflow Chick”, Founder of The Tryllion Group, Investor/Entrepreneur having done $150 Million+ in real estate transactions; Specializing in Non-Performing Notes. She has been a regularly featured guest on “The Cashflow Guys” podcast, and you can also find her on many other Real Estate and Entrepreneurial podcasts, and in the Wall Street Journal as well. She also speaks at various Real Estate Investing clubs and conferences across the country. Paige teaches the “Building Wealth with Notes” Workshop that drills down into the details of how to successfully buy Non-Performing Notes, create passive income, and mitigate risk. www.CashflowChick.com/training
Surviving the crash of 2007, Paige knows how “life happens” every day. Her passion is to help people build wealth, secure their financial future, to enjoy life, and to be ready-not broken! Whether it is improving communities one house at a time, helping borrowers stay in their homes, or working with other investors to learn a new way to earn higher investment dollars for their retirement years potentially, Paige is dedicated to helping people improve their lives in every way. For more information got to www.CashflowChick.com
Photo by Daniel Korpai on Unsplash
by Paige Panzarello | Mar 4, 2020 | blog, 2019, investing, real estate
If you’re a real estate solutions company buying properties for cash, are you buying notes and deeds? You can add an arrow to your quiver by buying notes and deeds. They can be far more profitable and less stressful than stocks and real estate investment in physical property.
Since most people buy homes using mortgage financing, notes can be thought of as another name for mortgage agreements. After the home purchase closes, banks and other lenders usually sell them to government entities like Fannie Mae, Freddie Mac, and the Federal Housing Administration.
The housing market has improved since the bust but hasn’t healed fully. There were 296,458 U.S. properties with foreclosure filings in the first six months of 2019, down 18 percent from a year ago.
Are You Buying Notes and Deeds?
As the dust settles, government agencies sell delinquent notes to big institutional investors like Lone Star Funds, Goldman Sachs and Fortress Investments, as well as some community nonprofits, in bulk. The agencies have sold more than $28 billion in distressed loans since 2012, according to government data. The selling of delinquent notes and deeds presents an opportunity for knowledgable investors.
You can become the bank and service the notes and deeds yourself or hire a third-party servicing company that also deals with late pays.
First, let’s define some terms:
The Deed – The Deed is a legal document that gives rights to something. In real estate, a Deed transfers title of ownership and gives the new owner the right to use the property.
The Note – The Note (or Promissory Note) is a contract where a party makes a promise to pay a sum of money to another party under specific terms. In real estate, the Note is the legal document that binds the borrower to repay a mortgage loan. This agreement will contain important loan specifications, such as the loan amount, interest rate, due dates, late charges, and the terms of the mortgage.
Hard money lenders, individual investors, and community banks can auction-off or sell-off mortgage notes (the notes can be current or in various states of default).
Individuals can bid on and purchase these notes and start receiving payments from the borrowers
How to Buy and Sell Notes and Deeds
A recent example: A note on an Atlanta-area home was being sold for $24,360; according to estimates from Zillow and local agents, its market value was between $50,000 and $70,000.
Some back taxes were owed, and a payment history showed that while the homeowner was making erratic or partial payments on her $500 monthly mortgage, she hadn’t quit. She had some equity built up in the house, another sign of commitment.
For more information on How to Buy and Sell Notes and Deeds, attend one of Paige Panzarello’s classes on Building Wealth with Notes Workshop. You can register for her next class, go online for training. or listen to these powerful podcasts.
CashFlow Chick and Coal to Cash Homebuyers, Inc. are owned by Paige Panzarello. She has been in Real Estate as a Landlord, Builder, and Investor since 1996.
We buy as-is. An investor will estimate the repairs needed to restore your property, arrive at an offer, and will purchase the property as-is.
When we buy houses fast, there are no fees! We don’t charge you a real estate commission, and we may take care of any other nagging financial problems such as back taxes, code violations, or past due water and sewer bills.
Paige also helps to educate people on the importance of Passive Income, deal evaluation, money management, how to wisely interact with money, and what the heck does a profit and loss and balance sheet actually look like?
by Paige Panzarello | Dec 16, 2019 | blog, 2019, investing, real estate
Have you seen those signs that say, “We Buy Los Angeles Houses for Cash”? There are companies that buy houses because some homeowners need to sell fast. Coal to Cash Homebuyers, Inc is the premier company in Los Angeles that buys houses for cash.
We Buy Los Angeles Houses for Cash for Four Main Reasons
- Debt – Financial challenges are the primary motivators for deciding to sell a home quickly. If you have too many obligations and are facing a possible foreclosure or even bankruptcy, resolve the situation, so your credit rating doesn’t suffer more.
- Divorce – It is particularly stressful to go through a divorce. Once the property division is settled, you want to sell quickly and get on with your life.
- Death in the family – When families live in separate states, it is hard to take care of the family home from another city, and travel is expensive. We can help. We can make a cash offer for the house, even while in probate.
- Downsizing – The house is just too big for the two of you, now that the kids are gone. You decide that you need something smaller. Maybe, you have a travel bug and don’t want to worry about the big house in the States. We can pay cash for homes, and you can be on your way to a smaller house or a road trip around the U.S. in your RV.
- In addition, you may have aging parents that you want to move to an assisted living environment. With our busy lives, would you like to get them settled in their new home quickly?
Companies That Buy Houses
Coal to Cash Homebuyers, Inc. buys houses at slightly under market value, close in less than 30 days, make necessary repairs, and sell the property for a profit. We explain how we calculate the profit we need on our investment and then make an offer for your home.
How Does Our Process Work?
We know your neighborhood and the comparable house prices. We purposely examine your house, note any deficiencies, figure out what it would cost us to fix those items, and at what price we could sell the refurbished house.
We note that the house may need some work such as a garage instead of a carport and a kitchen that needs updating. We explain that today’s buyers want granite counters, double sinks, dishwasher, stainless appliances, modern lighting, and modern cabinets. You may not have the money to make those changes to compete with other sellers.
We will tell you, with us, you don’t have to adjust the sale price for the cost of the repairs pointed out by an inspector. We point out that there are no realtor commissions of five to six percent to pay out of your proceeds. In fact, there are no fees whatsoever. There are no open houses to live through and no fears that something goes wrong when it’s time to close.
Isn’t that what you want?
You want a clean sale. You want a fair offer, and you want to know how we arrived at our proposal. Then you want to sell your Los Angeles home for cash quickly, so you can pursue your new lifestyle.
CashFlow Chick and Coal to Cash Homebuyers, Inc. are owned by Paige Panzarello. She has been in Real Estate as a Landlord, Builder, and Investor since 1996.
We buy as-is. An investor will estimate the repairs needed to restore your property, arrive at an offer, and will purchase the property as-is.
When we buy houses fast, there are no fees! We don’t charge you a real estate commission, and we may take care of any other nagging financial problems such as back taxes, code violations, or past due water and sewer bills.
Paige also helps to educate people on the importance of Passive Income, deal evaluation, money management, how to wisely interact with money, and what the heck does a profit and loss and balance sheet actually look like?
by Paige Panzarello | Dec 2, 2019 | blog, 2019, investing, real estate
Before we talk about how do I invest in real estate, I think you need to catch the bug, which means reading a lot and finding out how others have done it. That means what mistakes did they make so you can avoid repeating their mistakes.
Kevin Perk in Bigger Pockets asks do you remember catching the real estate bug? “I do,” he said, “and I remember being really excited. I remember thinking that all of my worries would soon be over and all of my dreams would be fulfilled. The people I was listening to and the books I was reading were all telling me the cash would just roll in. It would be easy.” Nothing could go wrong in Los Angeles. “I saw the world through rose-colored lenses.”
“A lot of what I was told about real estate is true. It is a great way to invest and build wealth. But there is another side of the story that I had to learn from experience. I wish I had known then what I know now. So to help out those just catching the real estate bug, here are four things I know now that I wish I had known then.”
I Wish I Had Known:
- Upkeep is something you shouldn’t underestimate. All of the books I read said that you should put aside about 10 percent of your gross rents for maintenance. I am here to tell you that 10 percent of gross rent does not even come close. It just costs a lot more money to keep everything looking nice, repaired, and in good working order. How much? I would budget at least 20 percent for repairs and upkeep when examining properties to purchase.
- Tenants WILL drive you up the wall at some point. No matter how well you screen them, no matter how well you vet them, there will always be one or two tenants that will drive you nuts. And…if you rid yourself of one, another will come along to replace the one gone.
- Recapture probably isn’t what you think it is. One of the many things that is promoted about being a landlord is the income tax deduction of depreciation. Basically, recapture gives a lot of that money you saved with depreciation back to the IRS when you sell. Sure, you can avoid it with a 1031 exchange, but sometimes you really just want or need to cash out. If you do, you need to be aware of how big your tax bite is going to be because you may not get all that you thought you were going to be getting.
- Your retirement plan may not take everything into account. Have you thought about your exit strategy? How are you going to retire from being a landlord? How are you finally going to get rid of those pesky tenants and all of that upkeep?
How Do I Invest in Real Estate
Here’s a thought. If you want to be in real estate for the appreciation and the extra income, but want to avoid the four items above, why not consider investing in a partnership with a knowledgeable, experienced real estate investor. is such a real estate investor. You can also, invest in real estate through notes and deeds. We are experts in this area. We welcome your questions
We are also, seeking hard money lenders. We offer flexible terms and returns that are higher than typical banks offer for savings. If you would like specifics about projected returns to hard money lenders, please call us to discuss the kinds of deals we offer.
CashFlow Chick and Coal to Cash Homebuyers, Inc. are owned by Paige Panzarello. I have been in Real Estate as a Landlord, Builder, and Investor since 1996.
We buy as-is. An investor will estimate the repairs needed to restore your property, arrive at an offer, and will purchase the property as-is.
When we buy houses fast, there are no fees! We don’t charge you a real estate commission, and we may take care of any other nagging financial problems such as back taxes, code violations, or past due water and sewer bills.
Paige also helps to educate people on the importance of Passive Income, deal evaluation, money management, how to wisely interact with money, and what the heck does a profit and loss and balance sheet actually look like?
by Paige Panzarello | Nov 17, 2019 | blog, 2019, investing, real estate
If you want to work smarter and not harder, everyone knows the usual tricks: Manage your time, take strategic breaks, get enough sleep. And that’s all good advice, but you’ve probably asked yourself if there’s more you can be doing. After all, you’re already using those strategies, and you still find yourself with more work than you can possibly do in one day. With that in mind, let’s distill that to 7 ways to start working smarter, not harder.
7 Ways to Start Working Smarter, Not Harder
- Weigh Your Options
Have a million items on your to-do list? Stop thinking you need to finish all of them—instead focus on the things that are crucial to your job performance and your company’s success. Sure, it would be nice to get to Inbox Zero, but is that really more important than finishing up that critical investor report right now?
- Write a Bad First Draft
Half of the battle is getting started. So, instead of striving for perfection the first time around, aim to get something on paper, even if it’s not your best work. Whether it’s a presentation or an email, you’ll be surprised at how much easier the editing process is when you return to it later.
- Go Home When You’re Behind
As tempting as it is to buckle down and grind out all of that work, it’s really setting you up for burnout in the long run. Take a break, get adequate sleep, and figure out a plan for how you’re going to tackle things more effectively tomorrow.
- Use Parkinson’s Law to Your Advantage
Remember Parkinson’s Law: Tasks expand to the time allotted.
Mary Kathryn Johnson
By giving everything in your schedule—no matter how small—a deadline, you’re instantly freeing up time for other things. Not only is there beauty in compartmentalizing everything, but there’s something to be said for taking away your ability to procrastinate.
- Get Writing
It’s surprising how quickly you’re able to solve problems when you can visualize them. Step away from your computer screen and start drawing.
- Talk, Don’t Email
Communicate more by talking rather than over emails with clients, consultants, vendors.
Arif Nezami
Give your co-workers, clients, bosses, and, yes, yourself a break from the dreaded inbox by finding a way to talk instead of email. Whether that’s hopping on a quick Google Hangout or (gasp!) picking up the phone, your colleagues and fingers will thank you.
- Prepare the Night Before
To make the most of my morning, I make sure to prep myself the night before. As soon as I wake up, I know where I’m going to start, I know what project I’m diving into, I know which problem I’m going to be tackling first. If you can set these firmly in your mind before you go to bed, you’ll wake up with far more energy and drive to tackle them—because they’ve been marinating in your subconscious.
Working Smarter Not Harder – What Does it Truly mean?
As Yapstone advises, “Essentially, it means that there is no inherent glory in being the first one in the office and the last one out if you’re wasting your time in between. It’s better to be the person arriving at noon and leaving at 5 if you can make those hours more productive.”
CashFlow Chick and Coal to Cash Homebuyers, Inc. are owned by Paige Panzarello. She has been in Real Estate as a Landlord, Builder, and Investor since 1996.
We buy as-is. An investor will estimate the repairs needed to restore your property, arrive at an offer, and will purchase the property as-is.
When we buy houses fast, there are no fees! We don’t charge you a real estate commission, and we may take care of any other nagging financial problems such as back taxes, code violations, or past due water and sewer bills.
Paige also helps to educate people on the importance of Passive Income, deal evaluation, money management, how to wisely interact with money, and what the heck does a profit and loss and balance sheet actually look like?
by Paige Panzarello | Oct 30, 2019 | blog, 2019, investing, real estate
What can you learn when a deal falls through? When a buyer and seller agree to terms in a contract that it is not a done deal. In the majority of real estate transactions, there are many things that must happen between the contract date and closing date. It is essential to realize that not every real estate deal is going to stay together.
There are many reasons why a real estate deal falls through. The reasons why a deal falls through may be the fault of the real estate professionals, the mortgage professionals, the buyers, the sellers, or a combination of them all.
It happens! I’ve read there are 86 ways a deal can fall through just in closing. If it hasn’t happened before, you have been lucky. So find some humor in the deal falling apart and move on.
Be prepared for inspection issues. Have an inspection before the offer. Let the
inspection reveal any problems beforehand and deal with them. Or be prepared with cost estimates to minimize the inspection report.
Potential buyers get a mortgage rejected. Since there are many common reasons why a mortgage is denied, it’s essential that when buying and selling a home to keep in mind until the closing has occurred, a buyer isn’t guaranteed to receive the loan.
Bank appraisal issues. If a bank appraiser determines that the value of the subject property is thousands of dollars less than the sale price, this is typically when a real estate deal can fall through. The amount that a home under appraises often will determine whether a deal will fall through or not.
What Can You Learn When a Deal Falls Through?
Reframe your interpretation. For every deal that doesn’t quite pan out, you walk away with a better understanding of how to get it right next time. “Change your mindset so that every missed opportunity is a learning opportunity,” says Bryanne Lawless, owner of PR agency BLND Public Relations.
Know that the next big opportunity will come knocking soon. You had something to offer that made the deal viable in the first place. Give yourself a little credit for the steps you took to get that far.
DO take a realistic look at what soured the deal. All Business opines, “Maybe you do need to fix something so that this doesn’t happen again. This is especially important if several deals go south. Don’t be too quick to “blame the economy.” Economic factors may be relevant here, but maybe you overlooked something in the Exit Planning process that you need to go back and reconsider. Now is the time to look at your Exit Plan with clear eyes, so that you don’t spend even more time and energy trying to force an impossible sale.”
CashFlow Chick and Coal to Cash Homebuyers, Inc. are owned by Paige Panzarello. She has been in Real Estate as a Landlord, Builder, and Investor since 1996.
We buy as-is. An investor will estimate the repairs needed to restore your property, arrive at an offer, and will purchase the property as-is.
When we buy houses fast, there are no fees! We don’t charge you a real estate commission, and we may take care of any other nagging financial problems such as back taxes, code violations, or past due water and sewer bills.
Paige also helps to educate people on the importance of Passive Income, deal evaluation, money management, how to wisely interact with money, and what the heck does a profit and loss and balance sheet actually look like?
