Is there some kind of centralized online marketplace where investors can go to buy and sell real estate notes? I’m envisioning something like eBay or Craigslist, but only for notes.
There must be something like this out there, right?
@seanjean, yes, there are a few of these, like NotesDirect and Paperstac. FCI used to have a notes marketplace that I personally liked the structure of, because much like eBay it was third party sellers, and they had note listings with "Buy It Now" prices and the ability to make an offer to the seller for some lower price; but they abruptly shut it down a year or two ago.
I am by no means an expert on notes, but in my limited experience I have consistently found it very difficult to find deals with numbers that make sense to me on any of the public marketplaces that I've come across. To me, it feels very similar to trying to find good deals on properties on the MLS in a hot market. Sure, they probably come up from time to time, but you better know what you're looking for and be ready to jump on them fast when they do; and the truly successful investors are finding ways to generate off-market deals -- which in the case of notes can mean approaching lenders directly to buy their non-performing notes, or networking with the more experienced investors who do so, and picking through their leftovers. I've heard it said by others more experienced in notes than I am that the marketplaces are where the leftover notes end up after 3 or 4 iterations of investors have cherry picked all the good notes from a lender's list of assets. I imagine that's not universally true, but probably has some degree of validity to it.
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@seanjean, I was just looking at Paperstac for the first time in quite a while earlier this evening, and I see their listings are by third parties and some say "Or Best Offer" next to the pricing, like FCI used to do. Might be worth checking out for someone who's looking to find a great price from a motivated seller, but given that the sellers could be just about anybody on a platform like that, due diligence before closing a purchase would be as crucial as ever, I think.
It looks like our podcast interview with the co-founder of Paperstac came out just in time. :) Be sure to catch it here if you're looking for more insights on how the website works: REtipster.com/88
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@retipsterseth, I know! Just got done listening to that episode and laughed to myself, at the timing. I thought it was great that Brett came on the show, and like I posted yesterday, before I knew this podcast episode existed, Paperstac really does appear to have come a long way in the couple of years since I last looked at it.
And I don't remember if it was you or @Jarenb who might have said it on the show, but a platform like that could be really good for a land investor who wanted to cash out some of his owner-financing deals for whatever reason. It strikes me that, if and when we're at a point in the market cycle where buying notes might not be as attractive because the demand for relatively safe returns is so strong that people are paying top dollar, and driving the effective yield down, that would obviously be a great time for someone to sell a note. I imagine that the (presumably) relatively high rates that many land investors have on their owner-finance deals could make their notes worth a good amount in today's relatively low-yield environment.
Also, I haven't poked around on Paperstac enough to see if their platform deals with these, and I don't claim to fully understand all of the details on how they work yet myself either, but I know that buying/selling note partials is a thing that people will sometimes do, too. So for example, maybe someone would sell the next X months of payments on their note, but retain all of the remaining payments after X. I really am starting to think about what a handy tool in the box selling notes might be for an investor that's trying to manage their capital position.
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I sold a package of four vacant lot notes on Paperstac last year. Pretty painless and well choreographed.
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@seanjean I know I’m a year late on this but wanted to add to the conversation on where to buy notes, here are 20 sources (including a few that have already been mentioned here):
Private Sellers
US MORTGAGE RESOLUTION TRUST
FREDDIE MAC STANDARD POOL OFFERING
PPR NOTE CO
PAPER ASSETS CAPITAL
FUSION NOTES
EQUITY FIRST FUNDING
NOTEOLOGY
Note Brokers
MISSION CAPITAL ADVISORS
MOUNTAINVIEW FINANCIAL SERVICES (SITUSAMC)
FIRST FINANCIAL NETWORK
RINCON ADVISORY MORTGAGE SERVICES (RAMS MORTGAGE CAPITAL)
SN TRADING
Exchange Marketplaces
PAPERSTAC
DEBEXPERT
NOTES DIRECT
LOAN MLS
NOTE TRADER EXCHANGE
WATERMARK EXCHANGE
CREXI
TEN-X
Source (with links & additional details):
WHERE TO BUY MORTGAGE NOTES | FIXnotes
The link above also includes 5 strategies to develop your own sources of notes for sale - hope this helps if you’re still in the market to invest in real estate notes!
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@robbiemax Thanks Robbie - I’m also a year late but I appreciate the info you have provided. Sean (a different Sean)