Maybe not.

Transactional funding is short term money that you can use to get your deals done. The money isn’t dependent on your credit score or credit history. You can get 100% of what you need to facilitate a deal.

Read on.

Let’s say, for example, that you have a database of buyers for a certain assets and you know more or less what they’re willing to pay. When you source the deals your presenting to these buyers, you have a couple of options about how you can get paid. You could get the buyer to sign an agreement and pay you (no doubt the least desirable approach). You can get a listing agreement from the seller (OK that’s a little better). But in both of these cases there are a few limitations or drawbacks.

The first limitation is that in a lot of situations you’re going to need licensing for sure. Secondly, you’re going to have to have one or the other party agree to how much money you can make — after all, they are paying you. Finally, you are potentially limiting the number of transactions you’re going to be able to do between these two parties. How many times are they going to leave you in the middle after you’ve laid all your cards on the table?

Well, what if you just bought the deal as low as you could and sold it for as much as you could? Offer the seller all cash and minimize your contingencies and you could put yourself in a strong negotiating position.

If you can find the lowest price that seller is willing to take as well as the highest price that a buyer is willing to pay, AND there’s a larger than usual spread for you — what’s wrong with that? Nothing I say. Oh wait, you don’t have the cash to close? Balance sheet ain’t all it could be?

Welcome to transactional funding.

What is Transactional Funding?

Transactional funding is very short term money that you can use to get your deals done. It bridges the brief gap between when you take possession and when you sell.

Transactional funding costs more than traditional financing because it’s easy to get and because the lender is taking all the risk. You can use it for things you could never do with traditional funding, and it is designed for doing deals.

If you haven’t heard of this before and your B.S. meter is going off the charts, then just follow with me for another minute, because this is the real deal.

Duane Ortega is the man behind the business that I’m talking about, and in this recording you’re about to listen to him spill the beans about:

• what transactional funding is
• how he got started in it
• how you can use transactional funding
• what it will cost you
• case studies to show you what some of his past clients have done

If you’re a hustler (in a good way) but you need cash to get your deals done, I recorded this for you.

Brief Bio from Duane Ortega:
Duane Ortega has been a conventional real estate investor since the year 2000. Since 2007, he has been involved in short sales and subsequently, transactional funding. Our mission is to help all investors close deals by supplying the best transaction funding for back-to-back closings or extended back-to-back closings while EXCEEDING investors’ expectations and DELIGHTING them with our service. www.BestTransactionFunding.com

Agenda of Transactional Funding Podcast

Looking for money to close on your short sale or REO deals? Come learn about transactional funding.

Topics:
What is transactional funding?
Transactional Funding is used most-commonly for the first transaction of a back-to-back transaction or extended back-to-back closings. Also known as a One Day Bridge Loan – close on your end buyer on the same day! 100% funding (known as “wet funds” or “good funds”) for A-B-C transactions where an investor (Party B) has negotiated a short sale (from Party A) , and needs to close in their name, in order to immediately, profitably, sell to another party (Party C) on the same day.

• What is a back-to-back transaction or extended back-to-back closing?
• What are the qualifications to receive funding?
• What are the terms and conditions?
• Is it really that easy?
• What’s the catch?

Get Transactional Funding

Find out the details and more in this interview.

When you buy a note that’s performing, you’re looking for cash-flow. If you’re buying non-performing notes, you might be looking for cash-flow, assuming you can work it out and you bought it right, or you might be looking to take ownership of the property where a workout isn’t possible.

In either case your ability to evaluate the components that contribute to the success of each individual deal will make or break you. Mistakes in real estate are expensive. My mission with this site is to bring you the information that you need to succeed.  That information includes data, like BankProspector, but with today’s post we’re talking about your process.

In this podcast from the Distressedpro.com Professional Podcast Series I’m visiting again with Troy Fullwood. This time we spent some time  talking very specifically about the basics of how he sizes up deals when his group is evaluating performing residential notes and we covered the three keys that he uses to drive his acquisition process for performing residential notes.

This is free to access for now, but soon we’ll put it in the vault, so listen in today. Paid subscribers will have access to the transcript as soon as it’s available.

Free Webinar: Making Money with Mortgages

Join us for a free webinar this week if you want to learn more about growing a business with a repeatable process for sourcing and profiting from performing residential notes. Submit your information in the form below.

Follow up webinar scheduled: The first webinar has already happened. We’re scheduling a second for tomorrow where Troy is going to get into more details. He’s going to show us how he evaluates deals including the spreadsheet that he’s built that lets him rapidly qualify a deal and he’s going to go more in depth on a number of topics around ‘bread and butter’ deals.

BONUS: I know from talking to Troy this morning that he talked about sourcing privately held mortgages. When you register for this webinar I’ll send you a video I just made that will show you how you can get privately held note leads delivered to your inbox every day.

Questions ranged from

“How do I get an REO asset manager to talk to me?”

to

“When liquidating a CRE portfolio (120+ days past due): What can FDIC expect as a general recovery in this market (%)? How does this compare to a return (%) on assets serviced and worked to liquidation/foreclosure?”

Obviously these are very different types of questions and we had a range of questions in between.

What we’ve decided to do is address these over a series of calls and or webinars as a sort of Master Class for professionals who work with banks servicing, liquidating, or acquiring notes or REO.

We are still talking about what the format will look like going forward but what I’m really excited about is talking more about the bank data and what we can learn about the pressures, motivations, opportunities, and fears that exist inside a bank that is struggling to dispose of troubled assets.

Having a solid understanding of who your prospect is will separate you from the throngs of opportunists who sound more like late night infomercial product buyers than real estate professionals.

Nobody knows how long the current window will be open. There are already some saying that the crisis is nearly over. I don’t know if I agree with that assessment but I think we can all agree that any window of opportunity closes and if you want to make the most this one then you need the tools and information that are going to make you successful. Without these you’re just another yahoo trying to make a buck.

For our first call we decided to take on a block of questions that have mainly to do with getting someone at the bank to talk to you.

Frank is not a guru or a broker or a note investor. He is not a salesman or a hustler. He is a tremendously experienced real estate professional who has deep understanding of how this business works and a guy who has seen it from the other side.

If you didn’t get your question in already you can still ask them at the previous post and we’ll try to answer it in a future talk.

Transcript: [Download not found]

There are a few challenges with borrowing money to do speculative deals, including note deals. The first obvious and probably most significant challenge is even finding a lender who will put debt on paper (as colateral) for you. Unless you have a line of credit, like a business line or a warehouse line (or similar) already you’re probably going to have a tough time.

Maybe you’ll find a private lender who will will loan you money against the paper you’re buying but my experience is those guys are few and far between and I’m willing to bet that today you’re looking at a bunch of points and north of 16%, and the truth is probably much more, not to mention the term will be painfully short.

If you’re someone who is able to earn whatever you need, on-demand, to satisfy your investment goals then stop reading this right now and please call me to discuss….

In reality what you’re probably going to have to do is put some money together, capital, EQUITY. If you’re not doing this then you’re finding someone else who already has money or who has already put together other people’s money, a fund. Enter… ‘Private Equity’.

I must warn you, if you have no track record of success then the interview I’m about to share with you is some good information that you should keep in the back of your mind and maybe even work into your grand plan but it’s not something you’re going to be able to act on today.

If, on the other hand, you are someone who has documentable success with all of the resources that you’ve had available up to now, and your major limiting factor is capital, this podcast is for you.

There are rules and regulations that will apply to you when you decide that you’re going to take other people’s money and help them get rich. I don’t know about you but the first person I seek out before I do anything in business like this is good counsel.

So that’s what I’ve done.

I called my good friend Warren Kirshenbaum who is a successful attorney and who has been helping investors assemble successful offerings for some time. I grilled Warren about every capital raising questions I could think of, related to assembling a mid-7 figure fund, over an hour’s time and I recorded it all and had it transcribed for you.

Some of the things we cover include:

• What type of legal structure do I have to have to invest with other people’s money?
• What are my options for compensation for myself from the fund?
• What sort of equity should/can I retain?
• What rules or regs do I need to be aware of before I start soliciting investors for funds?
• Who can (or should!) invest with me?
• How do I determine what I should set for a minimum level of participation?
• What are some acceptable ways to find investors? Who can help me with that?
• What happens if an investor wants out?
• What does it cost to put this all together?

Capital is capital, it doesn’t matter if you’re looking to raise it to buy real estate, notes or other assets, what we talk about in this podcast likely applies.

It’s important to note that we are not providing legal advice. You should seek out personal advice form Warren or someone like him before you attempt any of the things we talk about in this podcast.

Get a free transcript sent to your email inbox with the form below as well as an outline with frequently asked questions and the most important highlight we covered

Over the next few weeks we’re going to hear about how to do better research and prospecting with LinkedIn, all about how to setup your own note buying private equity fund including what you need to know about finding and raising money, and we’ll have our Q&A session with an ex-FDIC real estate liquidator which will amount to a master class in understanding the underlying financial motivations banks and the FDIC have to sell.

In this podcast however we talk about How to Get Started In the Note Business.

As you know if you read my articles I’ve been looking for an expert in the note business who is the real deal. Over the last couple of months I’ve had the pleasure of getting to know Troy Fullwood. Troy is the real deal.

Troy has been full time in the note business since 1997. He’s been involved in more than 11,000 note transactions both with individual notes and with pools of notes. He ran a private equity fund that produced a 92.6% IRR. He sold that business in 2008. Troy invests in and trades notes nationally on a full time basis. He’s written over 75 articles on real estate investing, spoken at 50 industry conventions as well as participated in ten radio talk shows about real estate note investing.

In our podcast Troy talks about:

• ‘Why notes’ and what attracted him to the note business and why it’s a great choice if one of your goals is lifestyle
• Why now is the right time to go for it
• How he got started in the business with NO money
• Seller financing as a vehicle for passive income
• 1 Tactic you can start with TODAY to find notes
• His primary profit strategy
• How he holds and when he exits notes and what he gets for returns

If you’re already a seasoned professional you’ll hear some good perspective on the market and you might just pick up a tip or two on another way to source notes.

If you are just starting out then I hope this gives you some real practical things you can start doing today and the courage to do them as well as an education on what the note business looks like once you’ve started to make it.

Listen to the How to Get Started in the Note Business

Download transcript:

How to Get Started in the Note Business - This is the transcript from the How to Get Started in the Note Business podcast.

I’m working on scheduling a follow up free webinar with Troy for this Friday. If you’d like to be notified about it drop your email in the form right below.

Update: I got a ton of response to this post and called Troy and he’s going to do a webinar. Unfortunately (or fortunately) I’m going to be on the road selling properties at auction all day but it’s the only time Troy had so he is going to go ahead and do it without me. To get a link to the webinar enter your name and email and then go check your email. If you don’t see it, check your Junk folder, we’ll definitely send it immediately.

UPDATE! – We had a webinar on Friday the 17th at 2PM and attendance and feedback were both very good. I’ve received literally dozens of emails from people saying ‘I missed it, is there a replay?’, or ‘that was good but I still have questions…’. I’m working on scheduling another one right now. To keep up with this enter your info in the box below and I’ll make sure you hear about our new date and time. Please note that Troy runs his own investment company and is independent of distressedpro.com

Sorry you missed us. If you like, enter your information below and we’ll let you know when the next webinar is scheduled.

Although the colateral for the note is the same the asset you’d buy in a more common real estate transaction the deals are sourced differently, sources for inventory are fewer and further between and are qualified differently, the approach and the transaction are more sophisticated, and the exits options are completely different from “fee simple” transactions.

Investing in notes, however, can be hugely profitable and in some respects a lot less work than “traditional real estate investing”.

More of our subscribers lately are non performing note investors or note brokers and I’ve been fortunate to have a lot of conversations with many of you who are trying to figure out a business plan and perhaps more importantly who are trying to find deals (business plan doesn’t matter much if you don’t have product). I’ve heard a lot about the challenges in getting started and where I’m not a note investor myself I decided I should find some experts who can speak on the topic.

Over the last few months I’ve been looking for the aforementioned expert but the big problem with a lot of what I found out there is that it didn’t smell like the real thing… a lot of talk, no transactions that I could see … big hat, no cattle. I’m pleased to say that about a month ago I found Doug Grimm from Northern Value Group. Doug and I have spoken a few times but I knew within the first few minutes of chatting about the bank data, qualifying target banks etc., that he knew what he was talking about.

In this episode I talk with Doug Grimm about his note buying business. Over the past couple of years Doug has been involved in more than $60MM in note purchases. Doug Grimm and Chris Gleize together manage Northern Value Group and also run Note Buying Mastery, a training company. Their main focus is investing in residential notes.

This episode is meant as a primer or a “Note Buying 101″ if you like.

In this podcast Doug and I discuss:

• What does it mean to “buy a note”.
• The 3 main differences between buying notes vs traditional distressed real estate investing.
• Note buying business plans and exit strategies – including a brand new FHA program that provides a fast exit.
• How and why to approach regional and community banks for non performing notes
• How they decide which banks to target
• Their top-down approach to prospecting banks, who to ask for, what to say

I’m talking with Chris and Doug after this podcast about conducting a more detailed interview and hopefully a webinar. If that’s something you’d like to hear about when it happens put your email in the form below and we’ll let you know.

I sit in a very privileged seat. What I mean by that is that I’m very fortunate to be connected to a great many high level real estate deal makers across the country. In any given week I’ll talk to a dozen or more serious players in the industry about what they’re seeing in the market, what kind of deals they’re doing and what challenges they’re facing.

Over the past 60 days I’ve had an unusual number of subscribers ask me about the new FASB rules which address the classification of certain loan workouts as “Troubled Debt Restructurings”. Well, it is said that “with great privilege comes great responsibility“, and so in that spirit I’ve reached out to my network to answer your questions in this podcast.

If you are interested strictly in residential deals go ahead and tune this out, this post is not for you. If you are involved in commercial real estate, multifamily, or C&I (non-real estate business loans) then you want to pay attention. Listen to this podcast and know that I’ll have the transcript available shortly.

If you don’t have all the bank relationships that you need or that you want right now go get busy or very soon you are going to wish that you had. If you’ve been discouraged by the distressed deal volume that you’ve seen in the market this could be your light at the end of the tunnel.

In this episode Sean Egan, CPA, senior level veteran of KPMG, and an expert on the topic of financial services accounting, takes time out from building his financial services industry consulting practice to educate you about FASB 2011-02 and how this will directly affect your business in the coming year.

In addition to Sean’s consulting practice Mr Egan is on the Investment Committee of ArchStreet Real Estate Partners. He can be reached by phone at (860) 558-3294 or you can email him.

This is a short podcast at under 15 minutes. I welcome your comments or questions below.

John is a former Wall St banker and is currently an SVP at REDC (auction.com), his clients are top tier banks and he sells non-performing notes and REO for his bank clients.

There are two keys to John’s calculation the first is knowing the banks Allowance for Loan and Lease Losses (ALLL), or Loan Loss Provisions for short. The second is knowing the approximate percentage of Unpaid Principal Balance (UBP) that the market will pay, or if you’re the buyer what you will pay. This method is most effective with the smaller local and regional banks.

Listen to this short podcast episode to learn how to estimate potential non-performing note deal size.

If you have questions about this or other podcasts in the professional podcast series please leave a comment in the box below. If you’re an expert and you’d like to share some of your expertise with other professionals in the distressed asset community please contact us and let us know what you have to offer. This website gets very highly targeted traffic and is visited by thousands of professionals looking for distressed assets, REO, non performing notes, data, and expertise.

In this episode John (a former Wall St banker and mortgage backed securities trader and investor) talks with me about the FDIC Loss Sharing Agreements and how these agreements will affect the flow and sale of distressed assets to the market. We discuss:

• The ins-and-outs of what the loss share agreements say
• How loss sharing agreements will affect the flow of distressed assets to the market
• Some tips on how to satisfy the FDIC and get assets covered under Loss Share’s sold

This episode runs for about 20 minutes.

As I mentioned in a previous post there are new reporting requirements that demand that banks with loss sharing agreements report in detail on the assets covered. We’re anticipating having all of that ‘loss share’ data available in BankProspector within the next 7-10 days.

If you’re an expert in your field we’d like to hear from you. If you have opinions or information about loss sharing agreements in particular please leave a comment below. If you work with banks in some capacity servicing, selling, or buying their distressed assets and you feel you have something to offer the distressed real estate community contact us about being featured on our site.

Thousands of distressed property professionals and bankers visit this site every month.

For this series I interviewed John McCaffrey. John knows so much about the business that we actually talked for about an hour and forty minutes and probably could have talked a lot longer. John works with Auction.com in, 2010 they did more than $2 billion dollars and 42,000 units in distressed asset transactions. John is a 3rd generation mortgage banker who has worked on all sides of the mortgage business you can find his

Rather than subject you to a 1:40 long recording I broke it up into 3 chapters’ or sections, they are:

1. The Loan Sales Process: John walks us through exactly what he and his firm do to package, present, market, and close loan sales for, primarily, bank sellers.
2. FDIC Loss Share Agreements: How they impact distressed asset sales at a bank, what it means for this business going forward, and some tips on what you need to do when you’re working with banks that have assets covered under loss share agreements.
3. Loan Loss Provisions: John walks us through this important FDIC call report item tells us what it is, why we care, and how we can use loan loss reserve figures to form a simple ‘back of the envelope’ calculation to determine potential deal volume at with any bank.

I’m lining up other experts to talk about the different aspects of the distressed real estate business. If you think you have something to offer, if you have some success behind you, and if you know what you’re talking about I’d love to hear from you (especially if you’re a paying member! though you don’t have to be). In exchange for your time and sharing your expertise you’ll expose your business and brand to hundreds and often thousands of readers and subscribers in a very, very narrow niche.