| Posted by david on June 8, 2010 |
What costs a bank more: Take back a property as an REO? Seek out the short-sale? Or simply sell the note ? Let’s do an analysis of a real life transaction, the paperwork of which is sitting on my desk, where I’ve been crunching the numbers to try and find the reasoning behind this bank’s decision.
There’s a property here in Colorado that was originally sold for $540,000. In a perfect situation, and based on the bank’s estimate of it’s worth, this property would have netted around $580K on the note. Today, the remaining balance on this note is above $470K and, unfortunately, this property has underperformed. Now, the bank has decided to go for a short sale, netting only $346,470 based on their best estimate. Given the remaining principle, that’s a real discount of about 26%. On a non-performing property, if a bank can get anything above 60-70% on the note, that might be an acceptable deal. But it has taken an astounding nine months to get to this point and, to-date, the deal is still ongoing. What if they let it fall into an REO situation? That discount would grow further after considering attorney fees, holding costs, property taxes, and the countless hours of manpower they would continue to throw at it. Either way, we’re looking at a deal where the bank is losing thousands by righting these assets off at crazy discounts.
It’s time for banks to realize that the faster, less risky, and more profitable way to release these troubled assets from their financial statements is to sell the note. A note broker can get higher offers, in a much more efficient manner, and from an increasingly large pool of buyers. These investors are as hungry to buy at a discount as the banks are to rid themselves of underperformers.
| Posted by david on April 13, 2010 |
You may be asking yourself if buying a commercial note is a good investment these days. And the answer is, shockingly: it depends. It depends on a variety of factors. Below are some ideas to think about before you endeavor into the investment of commercial paper.
1. Is the note performing or non performing? Buying a performing commercial note will most likely provide the note holder a steady stream of income and those notes, typically fetch a higher price than a non-performing note. Some things to watch out for with a performing note is the status of the loan, when it was originated, balloon payment in the near future, industry of tenant. If the note is non performing, the new lender may foreclose on the property or work with the borrower to workout the loan to make more affordable monthly payments for the borrower – hence making the note performing.
2. Commercial or residential note? If you’re thinking of buying a real estate note, you should consider the pros/cons of a residential or commercial note. There have been new laws enacted by the government protecting the residential borrower. You should speak to an attorney or your note broker before you consider delving into the residential note game. Residential loans may sometimes be a safer bet but you should familiarize yourself with any caveats before such an investment. I personally prefer the commercial note.
3. Buy a commercial note and you’ll help your community bank. Many banks are suffering now – especially the community banks with their non and under-performing commercial loans. Banks are willing to work with buyers to help unload some of their bad debt at a discount. Don’t get wide-eyed right away about the discount – notes are going for more than what they were a few years ago. The discounts can be decent but don’t expect $0.15 on the dollar anymore – especially for a single note.
| Posted by stuart on February 18, 2010 |
Commercial Note Brokers Receives $23 million in non performing notes for sale
Commercial Note Brokers, a distressed debt brokerage for banks looking to sell and investors looking purchase non performing notes, is proud to announce the acquisition of approximately $23 million in non performing notes for sale. These non performing commercial real estate secured bank notes are primarily secured by first deeds of trust and valued between $200k and $4 million on individual notes. Some of the notes will be bundled in cases where there are related borrowers and/or projects.
The commercial real estate securing the non performing notes ranges from raw land, office condos, multi-family developments, to office buildings, etc.
Specializing in Individual notes, representing both buyers and sellers
At Commercial Note Brokers we specialize in marketing individual commercial real estate backed notes that are either performing or non performing. We represent both note buyers and note sellers on a contractual agreement basis. Our team is unsurpassed in online marketing utilizing both SEO and Social Media in addition to matching our database of potential buyers and sellers.
Bank note sellers
If your bank is considering selling some real estate secured loans and you are just getting started learning about the process or wondering how it all works, please give us a call, we’ll be happy to help.
Bank note buyers
Due to the sensitive information about the participants in the note buying and selling market. All buyers will need to register on our site, sign our confidentiality agreement, and provide information that we deem, in our sole discretion, to be sufficient before we allow access to
notes for sale.
Many notes, buyer and potential notes for sale cannot be advertised on this site even with buyer viewing restrictions due to bank sensitivity. In these cases, if you are seeking specific types of notes to purchase, please register and contact us directly so that as private situations arise we can directly cross match new opportunities to potential buyers.
thank you,
Stuart
Commercial Note Brokers
| Posted by david on February 7, 2010 |
I’m sure you’ve seen those commercials on TV or read some article online or in a newspaper about how terrible the real estate market is right now and how it’s the best time to invest. And you know what – those ads have been right.
I have a theory that part of the hype of the whole residential real estate bubble and even the stock market bubble were largely due to the media. In 2000, you were hearing stories of people becoming millionaires overnight. Penny stocks that shot through the roof were happening every day. Just buy low and sell high. Then, pop – the bubble burst and the people who were not in the know, suffered greatly – some losing their entire portfolio. Then this ride started again…the residential real estate market started to gain some steam in the local media and again, you were hearing about people making hundreds of thousands of dollars every day. I met some guy at a bar one day when I was in Florida who told me he was on his way to a TRIPLE closing. He was buying a plot of land from someone and he sold it to another person and that person sold it to the end buyer – this all happening in two hours! A lot of money swapped hands that day and everyone but the end buyer got lucky. This is one example – there are thousands of stories just like this one. But again, this rollercoaster of a ride wouldn’t last long. Soon, the bubble burst and when it did, the media started running those horror stories. You saw the headlines – “Family is evicted after they can’t pay the mortgage”, “Bank forecloses on homes” and etc.
It’s almost as if the media tells you when you should buy and when you should not buy based on the stories they run. And it’s still going on to this day. Well, the moment you start to hear those sob stories, you should think of the amazing investments out there for you to make. You can buy commercial notes or residential notes and make some serious cash. You could get great deals on foreclosures and even short sales.
Ever wonder how all those sharks on Wall Street made so much money? How hedge funds always seemed to make a great return on investment (ROI)? They bought and buy well below market rates -thus, giving them an instant return on their investment. They were able to do this because banks needed to get these loans of their books quickly or they would be answering to the FDIC.
Individual investors can now get in on these opportunities – especially in the commercial note market. If you could buy a commercial note for $100,000 and the assessed value of the collateral was $175,000, you would probably do it, right? Not a bad day at the office if you get my drift. If you think this sort of deal is not likely, you haven’t registered on our site to see what we have in store for you – we have a commercial note for sale that meets this scenario. Come check it!
| Posted by stuart on January 31, 2010 |
Looking to purchase $8 to $10 million of Performing but soon to be distressed CRE Notes
Commercial Note Brokers (CNB) has a buyer who is specifically looking for $8 to $10 million of currently performing commercial real estate backed notes. The exact specifications of the notes need to meet the following critieria:
Performing but distressed notes criteria
- One single note or multiple notes.
- Currently performing.
- Soon to be distressed due to inability to ‘roll over’ the loan.
- Preferably the seller is a bank.
The buyer in this case is a bank. The bank is looking at a range of discounts on the notes, but expects between 5% to 20%. The loans can have a variety of maturities and current appraisal problems/issues are expected. Commercial Note Brokers intends to act as a workout facilitator for the businesses and loans and to assist the distressed businesses in returning to full profitability and in securing new permanent financing for their loans.
This situation is ideal for a bank that has too much distressed debt classified as investment or who wants to prune certain borrowers or loans from their portfolio with a minimal impact to the banks capital. The purchasing bank is overcapitalized and can offer permanent workout financing to the distressed borrowers.
If your bank is in trouble with too much commercial real estate debt and is looking to assist the borrowers who may be unable to prevent going into default as their balloon loan matures, our bank buyer will purchase the notes and help your bank align its real estate loan classifications with what the FDIC is demanding.
Please contact:
Stuart Dobson
Stuart@CommercialNoteBrokers.com
303.919.0309 direct
Jason Pavlovic
Jason@CommercialNoteBrokers.com
303.667.1622 direct
