Investors can buy directly from the bank, they just have to know which people to call. Banks have asset managers who work in specialized departments to help investors. Make your calls short, polite and full of positive energy so that you can get back positivity. Put yourself in the shoes of these asset managers and learn the importance of sending the right email at the right time.
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Calling Asset Managers
I’m really excited because I’m already starting to implement 2018 goals and stuff today. Stuff that we probably should have implemented in 2017 with some things. I’ve got Nicole doing some postcard marketing out to investors or workshops. We’ve got some other marketing for raising capital for some bigger trades. We’re working on our last note funding link tape for the year actually. Greg is working on knocking out some assets so we can get sold some REO also some of these contract for deeds that we bought that are vacant. It is a very, very productive week. We are rock and rolling out to San Diego for the Magnify Your Wealth Summit with our good buddy, Aaron Young. I’m excited to see Michelle Young who’s emceeing the event, which will be great because just the two of them are just a great couple and they’re really, really good friend of ours.
Today’s topic is something that keeps popping up and something that we reiterate. I think we’re probably the only people in the actual true note industry that teach this aspect as far as I know. A lot of other gurus or note educators will tell you that you can’t buy direct from banks. We all know that is a crock of lies, you can buy directly from the bank. We had our episode with Adam Adams, Joe Bayarena and Jamie Kubiak who just took down a list of assets from a San Antonio bank. I’ve been buying bank direct notes for years from the likes of Wells Fargo on commercial deals and Capital One, just to name a few of those out there that we do buy from on a, I won’t say regular basis because banks, their inventory of non-performing notes fluctuates throughout the year. If you are doing the right things in reaching out on a regular basis, you can definitely find some good assets that nobody else is seeing. That’s what today’s episode is all about. The do’s and don’ts, the ’what do you say, what don’t you say’ when it comes to buying notes. For those of you that are listening to the podcast, thank you. Make sure to leave a review or what you like, questions or comments.
Why call banks? This episode not only started with questions after the episode with Adam, Jamie and Joe. It also spawned expand itself from this last weekend when I was in Cincinnati speaking at Ohio REIA. When I’m speaking in front of 100 people, I try to make eye contact with as many people as possible to make them feel comfortable. I’ve stories I tell and we’d laughed quite a bit throughout my presentation. I find myself, I’m not afraid to be my silly but very serious self. What’s funny is I often get a lot of realtors into the thing when they hear about opportunities for REOs and things like that. I have one gentleman, I won’t say his age but he’s a little bit grayer in the season. A little bit more snow on the mountain. I’m watching this guy as I’m talking nod off, literally. Halfway through my hour-fifteen presentation, he nods off literally. If he had been sitting closer, I would have probably chunked something at him, “Hey, wake up,” slap his hands but I don’t want to scare someone and give them heart attack.
Getting to the end of the presentation, he wakes back up and says, “You can’t call banks. I tried doing this a couple of years.” Knowing he probably didn’t know that I saw that he dozed off. I’m like, “What do you mean?” He goes, “I used to call for REOs.” This just drives me bonkers when people say, “I want to buy REOs and notes.” I’m like, “You were sleeping through when I told you, you don’t call banks and ask for notes and REOs.” That’s the first rule. If you’re looking for REOs, just stick to the REO game. Don’t try bothering calling banks, you’re not going to find any.
The reason is if you’re looking for REOs, the banks have already foreclosed. They already have listed. They’re not going to take the time so you’re stuffing a large pool. You call on banks in REO department, they’re going to say, “Leave a message or call the listing agent to sell it.” We’re not going to talk about REOs. If you’re looking for REOs, this is not the podcast or the episode for you. The internal department inside the banks that handle the note sales aren’t customer service. It’s not loss mitigation. If you’re a short sale negotiator, if you’ve dealt with short sales in the past, stop thinking that you know where to go because you don’t. The internal departments of the banks are known by basically two or three titles. First one is secondary marketing. You’re looking for secondary marketing managers.
The second title is special assets department or special assets managers. Those are the two titles. You also have chief credit risk officer, that’s the third one. Those three will encompass probably 90% to 95% of the asset managers that handle note sales. When you call a bank, importantly don’t call the 1-800 customer service line. They’re going to run you around. You have to call the bank’s main corporate office. How do you find the main corporate office? First of all, you don’t Google it. What you want to do is drop a little bit of money, like $150 to sign up for the Lane Guide. LaneGuide.com is about $150 a year. Once you become a member of it, you can do a banking type, which is all sorts of search engine to help you identify true banking relationships. It’s not going to tell you about hedge fund. Lane Guide keeps track of what bank is still in business and who bought and other things like that. It’s a good tracking system if you’ve seen a deed with an older bank that’s no longer in business, finding out who bought that asset, who’s the actual final lender on it. Lane Guide publishes the main corporate office numbers for most of these.
Also, what’s really great about Lane Guide that I love it even though it’s not the most up to date search engine, but it will often on a large institutions, will give you the special assets department and sometimes the special asset managers’ names and emails. The reason I don’t talk about addresses and stuff like that, is you’re not going to send a postcard or a yellow letter or something to a bank asset manager. That philosophy of marketing, no offenses in the 20th century and I’m going to piss some people off that way. You’re at the 21st.You can use a computer and email for the most part, and the phone to follow up with this people. You’re not going to send postcards out to asset managers. The only direct mail maker we’re going to do is for raising capital to IRA investors. What I’m trying to get at here is you’re going to call the main corporate office, main switchboard operator and try to get a hold of the secondary marketing managers or the special assets department or the chief credit risk. You never, never, never, ever want to say REO. You don’t want to say that anywhere in you discussion with these people. What if you mention REO? They’re going to instantly send you to the REO department and it’s a waste of time.
What are you asking for? That’s always a good question. What do I ask when I actually call? You’re asking for the special asset managers, and then if they transfer you or if they don’t know what you’re looking for, “I’m looking for your bad loans. I’m looking for your loans that aren’t paying. I’m looking for your portfolio manager, your warehouse line managers.” Those are some nice buzz words that work well. If a bank has a warehouse line, you can transfer to the warehouse line manager or the business development side of that aspect and it will often lead to helping you find some notes of these banks on the portfolios. Or, they’ll know of some mortgage bankers that have given warehouse lines to that have defaulted loans and then you’ll get off the book.
Asking for non-performing notes, this is where you’re going to try to have your 32nd elevator pitch on the phone if you get a hold of somebody or leaving a voicemail. You want to speak clearly and slowly and you want to do it with a smile. Speaking with a smile is not the easiest thing but nobody wants to listen to, “This is Scott Carson. I wanted to see if you have any notes for sale. Please call me. I need to buy some stuff now.” I’ve heard people do that. You want to be energetic on the phone so people pay attention to you. If you do talk to somebody having a bad day, energy is contagious across the phone. Try to be in a good mood. Don’t be in a bad mood because nobody wants to do business with a Debbie Downer. Avoid the Debbie Downers out there. Say, “Hi, my name is Scott Carson. My company is called WeCloseNotes.com. I was wanting to see if you were the correct person at your bank that handles your distressed loans sales or your non-performing loan sales or your toxic loan sale. If you are, I’d love to visit with you. I can be reached back directly at 512-585-3810 or send me a direct email at Scott@WeCloseNotes.com.”
One of thing that’s important, always mention your phone number twice because people can’t write down very fast, say it slow. Also, your email that you leave, you want to try to leave an email that’s very easy. You don’t want something, “My name is Scott Johnson@ blank, blank, blank.” You want to keep it easy, sweet, best if you can do that really, really short. If you have a long and difficult email or if you have a letter replacing something, that makes it more difficult. The biggest thing to keep in mind calling banks is that’s something you have to do over and over and over again. Don’t get me wrong, I’ve had people that have called banks and have gotten the right person right off the bat. First phone call, they got something. It also took me 54 phone calls to get my first yes. The key to this is setting up a spreadsheet. It’s usually the easiest thing for you to track who you called, when you called, what number you called and emails and people’s names. Especially you’re going to get probably a lot of gatekeepers like assistants or secretaries and their job is to filter you from talking to their boss.
This is what I say if I get somebody on the phone and they’re like, “So and so is busy.” “Can I get their phone number, direct line or email? I know they may be busy, I just want to drop them an email and it might be easier and faster that way.” Sometimes they’ll give you the email address. Sometimes they’re like, “Can I get your email?” “You’re a great assistant, you’re a great executive or whatever your job title is. I’m reaching out to John over there and would you be willing to forward that to me, we go back and forth?” That often solves. If they won’t give you the person’s direct email address but they give you theirs, let’s say it’s nicoleherman@abcunited, “Is that Nicole.Herman?” “Yes,” “And your boss’ name is what?” “John Davis.” “I guess John’s email is probably John.Davis@blank.” Little tricks. You have to realize to have any type of success, you need to be making probably 50 to 100 phone calls in a week. I say that in a week because a lot of people are working and they don’t have batches and they’re not used to doing this. Maybe 100 phone calls or 50 calls in a day is daunting work. I used to knock out 50 phone calls three times a week: Tuesday, Wednesday, Thursday and by the end come Thursday, Friday I was getting bombarded with phone calls and emails back.
Important thing, call in a secondary marketing or special assets department. Be short and sweet. Also, have an idea to tell them what you’re looking for, “I’m looking for non-performing first mortgages. We buy in most major metroplex cities or most major markets. We’d like the residential homes under half a million. We will go down to $50,000 depending on what works out.” Then, they’re going to ask you your pricing expectations. “It depends on where the assets at. If it’s in foreclosure, what kind of condition it’s in but we will go up to 60% to 65% of fair market value if it’s in really good shape in near foreclosure.” It’s not saying I’m going to pay $.25 or $.30 on the balance but it’s also saying I’ve got to pay $.65 to $.70 on the dollar every time either. It all depends on the situation and the assets. Your biggest goal is to get the tape. Get the list of assets if you can. Just literally get the tape sent to you. You don’t want to be picky, “I only buy this one zip code of Phoenix or this one zip code of Vegas.” If you start doing that, go do something else. Don’t waste your time, don’t waste the asset manager’s time and be getting harder on those that are actually calling to get stuff in. Calling the asset managers is great but you want to be a little broader on a special occasion.
If you’re talking to a bank who’s never sold before, which this happens occasionally. We’ve had two people reach out to me in the last couple of weeks, “Do you have a spreadsheet?” I sent them over a spreadsheet. “Here’s what we need them to fill out.” They should be able, if they’ve got any type of servicing or payment software, to do a direct export to it. The biggest thing that you’re going to definitely need is the borrower’s name, full address, all the specifics of the note, when was it originated the last payment, the next payment due, interest rate, P&I payment, what’s the code and all the good stuff. Other specifics like the payment streams, sometimes you get the Social Security number or the FICO scores of the borrower, property values, what the loan is originally written for or the original value. It’s important to keep in mind your goals to get the spreadsheet and get in front of them. Get a tape back and do a lot of stuff with it. If you try to be very specific in the frontend, don’t get me wrong, some banks will talk to you, “We only lend in Ohio.” “Great. What do you have in Ohio? How often do you sell? Do you sell on a monthly basis or sell on a quarterly basis?”
A really great tool to help you filter through some things is Distressed Pro. The one caveat about Distressed Pro is it will give you a lot of information and you just spend a lot of time reading information and not making phone calls. That’s one of the biggest things you want to do. I’m a big believer of if you pull a list off of Lane Guide, 50 to 100, and you’re making phone calls and emails out to these asset managers, is the shot going to work. Somebody is going to say something or somebody is going to respond if you do it. I think the most effective way is a couple of ways to do it. You could just start calling right off the bat like I used to, like the whole financial advisor. We’re making 50 to 100 phone calls. Out of the 50 phone calls, you probably talk to 14 people on average. Some of the times it’s probably less. You’ll probably get three to four non-disclosures sent to you in roughly one tape whether it’s one asset or a thousand assets sent to you. The thing to keep in mind, you may go over 50, but then you may go 26 for 50. It’s all in the follow-up, the average. 80% of sales are made after the fifth follow-up. How do you expedite that fifth contact quickly versus taking you five weeks of phone calls?
What I like to do is if I can make phone calls, that’s number two for me, unless of course I have everybody’s direct email address. When we pull the list of asset managers, what we do is send an email out to the asset manager list. We’d get about a 12% to 20% open rate off of those. I can see literally everybody who touched the email, who have opened it or clicked on it one, two, three or four times. If they’re in my database already, then I can just pick up the phone and call those people who have opened it.
The effective thing is when you send an email out to asset managers, the best time to send them out is like you would normally to anybody else; usually at 11:00, right before lunch or right before the end of the day, 3:00 or 4:00 in the afternoon. Those are very helpful times to do it. What you don’t want to do is send it out on a Saturday or Friday after 3:00. It’s worthless sending an email on Friday at 3:00 because what’s going to happen? They’re not going to read it probably because they’re out of the office and then when they get back in on Monday, it’s buried with other stuff. Don’t send an email out on Friday at 3:00 to the asset managers. I just don’t like to send almost the follow-up email from phone calls or correspondents on a Thursday. Best time to call asset managers? Tuesday, Wednesday and Thursday between 10:00 and noon their time, and 2:00 and 5:00 PM their time in the afternoons.
One of the great things about our Virtual Note Buying for Dummies workshop is we’re going to actually be making some phone calls to asset managers this time around. Our next class is December 15th, 16th and 17th. We spend the first full day of that workshop literally going through how to track down asset managers, what to say, what not to say, some of the scripts, also some of the follow-up emails that we do. I’m literally giving you basically what we do on a regular basis around here with some things. If you want to get signed up for that, you can go to WeCloseNotes.com to RSVP your spot to that class before the end of the year.
Like I said, best time to email, best time to call is 10:00 to 12:00, 2:00 to 5:00. Another time that’s interesting to call is after 5:00 PM on a Thursday night at the third Thursday of the month. Why? Because usually, they’re working on month-end or quarterly-end reports for the higher ups and their administrator or their assistant has left for the day after 5:00. They’re in the office, so sometimes you can catch them directly by just calling them after hours. Sometimes it works for the third Saturday of the month too. They may be in on a Saturday between 10:00 and 1:00 or 10:00 and 2:00, trying to knock stuff out so they can have a fun week. That’s something to keep in mind. Literally, a lot of these guys are taking off Friday afternoons where they go and play golf or doing other things, like we would normally do. That’s something to keep in mind.
We have a question, “How quickly do you follow-up? I called yesterday and the gatekeeper said I would get a callback in a few hours. Do you call daily? In other words, what point do you become a pain in the ass?”
I don’t mind being a pain in the ass. I’ll give you an example. One of my favorite movies is Wall Street. There’s this scene in Wall Street where Bud Fox, after 50 days straight, finally gets a meeting with Gordon Gekko. Gordon Gekko says, “They should put your face in the dictionary under consistent.” If they told you they’d have a phone call a couple of hours, it’s okay, pick up the phone and call him, “I just want to follow up. I know you’ve got a busy Tuesday. It’s Wednesday, I just want to follow up.” If you leave a voicemail, great. I say give it 24 to 48 hours. Give them that to get the stuff done. Beyond that, they’re going to be pretty slammed. You’ve got to realize, these asset managers are often busy and they don’t care. If you talk to the assistant, it’s okay, “I just want to follow up. I didn’t get that call back you mentioned and I just wanted to do a friendly reminder call and touch base with you.” It’s normal business operations. If you’re running inside a business, you appreciate the people that follow up because it shows that they’re diligent. What you don’t want to do is be the person that calls once and then never follows back up ever again. There’s enough of those people out there. I would say give them 24 to 48 hours. If you called on a Tuesday afternoon and make contact and they promised you something like 24 to 48 hours, follow up with an email. Before you hang up say, “Just in case I don’t hear, can I get your email address so I can follow up with you and send you a friendly reminder?” or anything like that. A lot of times these people are better via email. If they sent you the email and you follow up and they didn’t respond to the email, then I’d pick up the phone and give them a phone call.
If you’re cold calling out of the blue too, a nice thing to do as well is to see if that person, whether it’s the asset manager, the gatekeeper, whoever it may be has a LinkedIn profile. You only go in and type a person’s name or if you’re looking for secondary marketing at ABC Wholesale Mortgage, whatever. Type a name, specializes and see if that person pops up or one of the people pops. Then you can maybe contact them directly via LinkedIn or the direct mail or connection or that kind of stuff. That works really well too because we’ve done that before, especially when I was working initially as a mortgage banker at night. I would go home, send an email via InMail or LinkedIn connection to asset managers. I got 150 connections and I end up getting three tapes off of it. It makes it easier because I was just literally watching a movie and I’ve got to literally copy-paste, copy-paste, copy-paste for the most part. That’s the thing to keep in mind. This is something that’s building business long-term for you. It may not be instant gratification. If you get a hold of somebody, great, and they say they don’t have anything right now, “What’s the best way to contact you in the future? Email, phone number? I’ll drop you an email once a month just to touch base with you. Do you mind if I do that?” Most of the time, they don’t care. If they say, “I don’t want anything.” That’s fine. I will still go ahead and do it. If you can get their email address, still go and drop them an email or pick up the phone, call and leave them a friendly reminder. I don’t want to say you’re annoying them but you want them to know that you’re due diligent or diligent in following up on a regular basis with them so they’ll be like, “This person is different than the 30 or 40 people we’ve gotten.”
The thing to keep in mind too is if they ask you how much you’re looking to buy, “I’ve got a quarter million or I got a half million I’m looking to invest before the quarter is up, or a million plus.” If they ask you how you’re funded, “I have plenty of private investors behind me.” It’s very, very, very rarely will the asset managers ask you to proof up on the frontend. It doesn’t happen. This is what’s so great about the note business. When I got started, I didn’t have any money. The market had a downturn as I was clearly calling dollar for dollars. People would send me a list; it was a list that nobody else saw. Most banks don’t make you put under contract with Escrow money or earnest money. I could literally go out and try to market these tapes and find an investor to get things done. “I’ve got a deal I’m working for you.” I’d ask pricing. One of the biggest things you have to have to ask if you do get a list, “What are your pricing expectations on this? What’s the color that you’re looking to sell these assets for? What’s the discount? Where are you looking?” If they say, “I want par, don’t waste your time sending me an email,” or they want par for this or if it’s a performing note, not worth your time. Scratch and dent, not really worth your time if it’s less than 90 days in default. You want the ugly assets. You want something that’s a little hairy. What does that mean? It means something has been default for six months or greater. That would be something that, “Do you have anything on your book that’s been default six months or greater that you’re looking to get rid of?”
When Steph started off actually, she was one of the ones that was calling asset managers on a regular basis. This goes back a few years. Steph could not come out. We did one Mastermind years ago, and you’re going to love this. We took the Mastermind members and split them into teams. This was when we used to have the Mastermind five days long. One day, we had everybody call asset managers. Steph killed it. She blew everybody else in the water. She made 60 secondary marketing contacts. It may be over two days, I don’t remember exactly but I knew it was at least one day. Her group slaughtered everybody else because she wasn’t scare to do that. The ladies that are listening out there, you actually have an easier time at this than the guys do. Why? Because this is a male dominated job basically in the secondary marketing or special assets side. Not saying there’s no women there. Not being sexist, it’s just it is what it is. Guys, we’re going to always call back the ladies first on our voicemails versus calling back the guys. It’s just the case of what it is. It’s human nature. It’s not sexist or anything. It’s just it is what it is. You might as well embrace it and realize it. Ladies, calling and knowing what you’re doing can put you a step above your male competition when it comes to this. I know plenty of bank asset managers that would gladly send the list to the ladies that they wouldn’t send the list to me, “I won’t bother sending to you. All our Colorado stuff goes to such and such.” Why? Is that sexist? I don’t care.
Ladies, this is something you can do at home. When you’re sitting in between whatever you’re working on. If you’ve got breaks or you’re a stay-at-home mom and you’re kids are off a nap and you’re knocking out 100 to 200 phone calls in a day over a couple of hours, it can be something that works well with what you do. The biggest thing I can tell you this is to track your phone calls. If you call them on Tuesday and you leave a voicemail on Tuesday, follow up on a Wednesday or Thursday to that same person until you actually get a hold of somebody. Follow up and you may want to do it, let’s say if you call in 11:00 in the morning, maybe you call in the afternoon on Thursday. The same thing goes for when you send an email out to your database. If you send it at 11:00 on a Tuesday, follow up by sending an email to those that didn’t open up at 2:00 or 3:00 in the afternoon on a Thursday to those who didn’t open it. You’ll see your open rate scale up when you combine the two together instead of 12% or 14%, maybe you’ll have 20%, 21%, 22%.
The biggest thing is just creating a list. Build a list, build a list, names, phone numbers, email addresses. It helps to see obviously knowing what bank they work at is great. Keep track of that in your spreadsheet. If you send an email out, you can do a mail merge relatively easy and say, “Steve, I want to touch base with you and talk with you if you were the correct person that ABC Wholesale Mortgage to handle the distressed asset sales.” One of the big things too if you’re brand new to real estate investing, you’ve bought a house before and they ask you how long you’ve been an investor, tell them, “I bought my first house back in 2001.” Maybe you weren’t a true real estate investor, but for most people, their primary residence is going to be their main house, their house they own. Honestly, one thing that you should all keep in mind if you’re a real estate investor and you’re calling asset managers, don’t be embarrassed of starting somewhere new.
The biggest thing you can keep in mind is that you are actually putting your huevos out there to make these phone calls to build your business when all the people you are talking to on the phone are employees. They don’t own the bank. They’ve got a cushy salary and things like that but they still work for the man. If you’re reaching out and calling asset managers, you are taking steps towards your dreams versus letting somebody dictate your dreams to you. Keep that in mind. That should keep you smiling. Trust me, you may get some rude people occasionally on the phone because they’re having a bad day. Don’t take it personally. Just hang up and move on and go on.
Another thing too, if you goof up on the phone, you’re going to get tongue-tied sometimes, just hang up and call them back in two days because they’re not going to remember you for the most part. Calling asset managers can be a very, very fruitful thing if you do it on a regular basis. My biggest struggles when I started off on a regular basis, doing it regularly. I set a challenge for myself to have 100 direct asset manager contacts. I set it within the first year. I got those in the first month. That’s something to keep in mind especially when you’re doing our Banking Blitzkrieg which we’re certainly doing in the late part of January and February for a few people. We now sit on one of our Monday Note calls that we’re bringing out twenty people to make bank phone calls and literally calling on a regular basis. I’m going to be calling from their house. They’re not going to be here in the office because that would be a little bit crazy. They’ll be combining a list together at the end of the four weeks to make it.
I think we got one or two spots available. If you’re interested, drop me an email at Scott@WeCloseNotes.com talking about the Banking Blitzkrieg. There is a cost to it. It’s a $500 fee for that, to be a part of that. If you do survive all four weeks and you provide your list and do everything we tell you to do, great, you get your deposit back. If you don’t, you miss out or you can’t make phone calls this week, you void it. Sorry, it’s just it is what it is. It takes time for me to pull a list and get them out and put the list together. It’s not for everybody. If you’re working full time, it’s not for you. I will tell you that right now because we’re looking for people who can make phone calls during the time zones, during the timelines that we’ve talked about doing so that we can maximize the phone calls and the opportunities. Then any list that we get come in, the twenty people will basically split in profits from anything that’s sold off of that.
We did this a while back, a couple of years as we’ve done it. I am a big believer that 2018 is a year of the bank asset sale versus the hedge fund sale. I think as you have a competition air in the market, that low hanging fruit gets bought up and gets over crowded with buyers, you’ve got to separate yourself and take it a little bit higher. Go a little bit further, build the actual business out of what we’re doing.
One big thing you’ve got to keep in mind too, these asset managers don’t have time to talk for 30 to 40 minutes. That’s directed to a lot of people. Some people are very good about taking a five-minute conversation and dragging into fifteen. You want to be very direct, specific and things like you’re rock and rolling. You have to value their time. These asset managers are busy. They don’t have time to go all the way around take left turns and being in a NASCAR race to get things done. Be specific, “This is what we’re looking for. This is what we’re doing.” You’re rock and rolling. Like I said, if you’re brand new and have never been to one of our workshops, this is not for you. If you’re very brand new, it’s not something you want to do because you would burn bridges more so than actually create them by building asset managers and stuff like that. We’re looking for lean, mean, bank calling machines.
Pricing expectations, people asking for pricing expectations, we covered that a little bit earlier. What do you want to ask? What the asset managers are looking for in this? The last thing you want to do is get something and they ask you, “We want $.75 on the dollar for this. Is it almost an REO? No, you’ve got to foreclose on it and it’s in Florida. It will take a year. No, it doesn’t make any sense.” Another thing you don’t want to do, avoid the one-off crazy deals. We get these sometimes, “I’ve got 600 ranch equestrian farm down the middle of the swamp land.” It doesn’t make any sense. Stick to your bread and butter assets. “We’re looking for single-family homes, half a million or less. We’re also looking for small balance commercial stuff.” Don’t ask for apartments, it doesn’t make any sense. Just get a list looking for small balance commercial stuff usually $2 million or less on UPB. Values will vary depending on what you pull comps. Always go off with UPB because it’s where the banks are linking up. They’re looking at UPB. It’s up to us as investors to reevaluate those and find out the true value of those assets and then making our bid off of that.
Making a bid back to asset managers is very simple. It’s usually just an email or a spreadsheet. Sometimes they’ll ask for a letter of intent, a two-page document basically talking about what you need and other things like that so then you take to the loan committees. Usually, it’s a longer process. The assets close from banks and asset managers. They’ve got to in front of the committee, which that loan committee may meet once a month or once every two weeks before they can make a decision. That’s what they want your email or your letter of intent, what you’re looking for, what you need to get things closed. Oftentimes, you can get longer than three to seven days. You can get seven days or you can get up to 30 days if you could get a deal closed direct from banks. Especially the bigger that asset or the more that you’re buying, the easier it is to get that longer timeframe to get things closed. They don’t care where the cash is coming from. All they care is that you can close. All they care about is that your stuff shows up on time and you can rock and roll these things. Sometimes you can drag stuff out and ask for the longer timeframes too on the holidays and other things that happen. Joe and Jamie said that they drag it out on a two weeks because they told the bank their funder was in Houston during the Harvey flood, which is not actually accurate but it worked.
Normal sales contract on a loan sale is going to be 21 plus pages and maybe even longer, it depends. You want to make sure to read it. The beautiful thing is most of these banks have started foreclosures in a lot of their stuff so can take over. You step right in the bank’s shoes, you may not have to pay a retainer. There have been several times we bought commercial assets and it hasn’t paid the attorneys because they weren’t even paid in full for the foreclosure process and still we have to say thank you to the previous seller.
Calling your asset managers, it’s effective. It’s still the phone call then email. Email can come first, if not, do a phone call and then an email follow-up and then rotate to get that fifth contact. First, maybe a phone call, then an email, then maybe a LinkedIn, then maybe a follow-up phone call and a follow-up email. Trust me, if you do five follow-ups to at least 100 asset managers on a regular basis, you don’t need a thousand deal sources. Five to ten will feed you enough on a regular basis that you don’t have to do a lot of work. A lot of times you can buy and be done with it and just have stuff on a regular basis that comes to you. A lot of these asset managers, you’ve got to realize, banks are very secure about their email. They don’t have lists that they send out on a regular basis. Some do, but for the most part, a lot of them, they’ve got their sources and often it’s in front of them when stuff hits their desk.
Another thing to keep in mind too is banks have multiple asset managers most of the time, especially depending on how big the institution is. They’ll have a residential and a commercial, they may have multiple of each. Keep that in mind. If you’re talking to one asset manager, ask him questions, “Are you the only asset manager? Can you handle this as a portion of the portfolio? Do you know if any of your colleagues and you’re saying job titles would have anything? Could you put me in touch with them?” Not difficult to do. We did a phone call on one of our virtual workshops back where the person we’re talking was just like, “Yes, we’ve got several. We’ve got eight of them. Who would you like to speak to first?” I just follow him back up, “Let me get that person’s name, email and I would like to follow up with him and go from there.” This is just a rinse and repeat, rinse and repeat aspect of it. It’s not the glorified thing of sitting next to a hedge fund manager and they send you a list and you got to run through it and compete with everybody else. Very rarely will you have a bank that once you get a contract, where they have a bank pull an asset from you unless something weird has happened.
The only time I had assets pulled from the bank is if the borrower did a full payoff or did a modification while we were in the process of due diligence and stuff like that. Then the banks says, “We’re pulling the asset. It’s no longer for sale because it’s no longer a non-performing.” It’s something to keep in mind with that. Most of the time, the banks will have it with their servicing company whether it’s them, service or they may have it with a sub-servicer, SPS or something like that that you would have to have transferred over to. You might also want to reach out to business development managers at servicing companies as they work with a lot of investors like you and me and those out there that have 20-year 2,000 notes with them and they may know somebody who’s looking to sell stuff on a regular basis. In that case, “I need to speak to your business development manager. Do you know anybody or you guys deal with it may be looking to sell assets, I would like to keep them with you? I like for you to retain the servicing rights to those assets.” That’s the magic word. We want to retain servicing with you guys. The last thing is you want to call and say, “Do you know anybody selling and we can move them to my asset management and take them off your way? Take them off your hands and take away business from you?” That’s not effective. Always talk about retaining servicing. I don’t care if you plan on transferring after 90 days to somebody but don’t transfer right off the bat. Trust me, no business development guy is ever going to call you back on that.
Hopefully this is helpful. Hopefully it helps you guys get rock and rolling. The thing to keep in mind, not much stuff happening the next five or ten days. Why? Because of Thanksgiving. You have to realize if you did want to call banks and try to find some stuff before the end of the year, I would not be calling this week. I’d be calling starting the 6th because a lot of times the banks and the asset managers want to get stuff removed or sold by the end of the year hence, the tape that we’re working through. Asset managers wants to move those 100 assets plus as much as they can before the last business day of the year, which in this case would be the 29th of December. Keep that in mind, knock on it. Knock on the walls, knock on the doors, knock on the phones to reach out to asset managers.
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