Thoughts from the desk of Bob Repass…
Welcome to the inaugural edition of The Buyline.
The Buyline will serve as our monthly communication vehicle to bring you cutting-edge content on what is going on with our family of companies as well as the latest industry news. Our goal in creating this newsletter is to keep you informed as to what is going on in the note business and to help you grow your real estate note portfolio.
Let me share some background on our family of companies to help paint the picture. Our core business verticals can be summed up in three easy words:
LEARN – TRADE – INVEST.
Trade: Work with Colonial Funding Group’s Loan Trading Desk and purchase assets for your own portfolio.
Invest: Reach out to your network and become capital partners in funds with Colonial Capital Management.
It is our hope that through The Buyline we will continue to strengthen the connection we have with each of you as we make our way through our ever-changing market. We hope you find this newsletter interesting and enjoyable, and most importantly… profitable!
The Trading Corner
Where to Invest in 2014
Bloomberg interviewed the world’s top 8 money managers for an article recently. These 8 investors outperformed 90% of their peers in 2013. Dan Ivascyn, Fund Manager for Pacific Investment Management Company, said “we expect mortgage-backed securities to be a solid performer in 2014. Many are still trading at a significant discount”.
We are in total agreement with his assessment. The inventory of these investment assets is at historic levels as are the discounts. The ability to get double digit long-term returns, secured by collateral, is the best possible investment.
2014 is setting up to be one of the best buying opportunities in mortgage-backed notes that we have ever seen in our 34 years as an investor.
Case Study – Buy or Not?
Consider this scenario (one based on an actual deal)…
The property secured by the note is in a neighborhood where 98% of the occupants are owners. Sales range from $50,000-$70,000. The BPO on this one came in at $57,000. It’s a well-maintained 3/2, 1200 square foot home that conforms to the property types in the area. It may have had some renovations done in the last year and appears rent-ready.
It is across the street from a large Christian School consisting of several buildings, playgrounds and a Church, which runs the entire length of the street. Immediately in front of this property is a 3-story square brick building. The street ends in a cul-de-sac turn around.
The property is in Florida where the foreclosure might take 18 months. The average days on market in this area are 240. Average rent is $1100 per month.
There are two liens on the property from the FL Dept. of Revenue totaling $1200. Property taxes appear to be paid. The current owners have been divorced but both remain on the title.
So, what are the redeeming and un-redeeming qualities of this deal? Would you make an offer on the note? If so, how much?
What Would We Do?
Our response was, yes it looks like a very solid deal. The offer on this note was $15,000 (26.3% of BPO value). There are so many exit strategies in this one. The only thing it will take is a little patience, as you will probably have to go the foreclosure route.
The “Top Ten” with Susan DeLaGarza
There are many people behind the scenes that drive the engine to make our companies successful. Each month in this section we will turn the spotlight on one of these people so you can get to know them better. First up is Susan DeLaGarza, our Vice President of Operations.
How long have you been with Colonial Funding Group/NoteSchool?
A long time… since March 21, 1993.
What is your role at Colonial Funding Group/NoteSchool?
Everything from office management to Processing, Closing, and Redelivery for Colonial Funding Group to fulfillment, working with students, customer service, event planning, and a lot more for NoteSchool.
Favorite TV Show
Sons of Anarchy & Army Wives
Favorite Movie of all-time?
Sound of Music
Last Book You Read: Happy, Happy, Happy?
My Life and Legacy as the Duck Commander
Favorite Sports Team?
Rangers, Stars and Cowboys
The 3 people you would like to have dinner with (dead or alive)?
Warren Buffet, William Duffield (his unbiased, nonjudgmental way of telling me how life was for an American Indian in the early 1900s impacted my journey in life), My Parents (I don’t see them nearly often enough)
What do you like best about working at Colonial Funding Group/NoteSchool?
The diversity of my job. There is never a dull moment!
Quote of the Month
“Don’t ever promise more than you can deliver, but always deliver more than you promise.” – Lou Holtz
Connect With Us
A recent sign of the power of social media and twitter; online insurance company Esurance was the most-tweeted brand of Super Bowl night, with a total of 1.9 million posts on Twitter, according to Nielsen Co., despite the fact that it didn’t buy an ad during the game broadcast.