Performance Anxiety PDF
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Performance Anxiety Creating A Fortune Investing in Non-‐Performing Real Estate Loans Gordon Moss Copyright © 2014 Gordon Moss All rights reserved. Gordon Moss ii Performance Anxiety Dedication To my father, Gordon Sr. iii Gordon Moss iv Performance Anxiety Contents 1 -‐ The Best And Safest “High-‐Return” Investment I Know Of -‐ AND The Important Questions (and Answers) 2 -‐ Why Non-‐Performing JUNIOR Liens? 3 -‐ Opportunities and the Current Market 4 -‐ How and Why it Works 5 -‐ Finding and Purchasing the Notes 6 -‐ The Borrower Wake-‐Up 7 -‐ The Borrower Work-‐out 8 -‐ Bankruptcy and the Junior Lien 9 – Foreclosure and the Junior Lien 10 -‐ Loan Servicing for Non-‐Performing and Re-‐ Performing Junior Liens 11 – Taxes and the Re-‐Performing Junior Lien v Gordon Moss vi About the Author: Gordon Moss began his real estate career in 1985 as a commercial real estate broker in Orange County, California. He has been an avid student of the masters of all facets of the real estate and investing business for over 25 years. Gordon now owns and manages a portfolio of properties and notes full-‐time, and is very passionate and active in what he believes is the best real estate and note investment opportunity we will see in our lifetimes. These 25 years of experience and focus give a unique perspective, and Gordon takes great pride in the fact that he has a unique ability to make money in any real estate market. Over the last several years he has studied, developed, refined, and mastered several creative techniques that have allowed him to prosper and grow while avoiding the land mines in a very challenging and risky declining marketplace. Additionally, he has dusted off a few time tested methods of building a fortune that work now better than they ever did – but are overlooked or not understood by the real estate and note investing community. He enjoys writing, speaking, and mentoring serious investors as a way for him to give back, as his mentors did for him. He is a published author in several key industry publications and frequent speaker and panelist at real estate, note, and investment clubs and meetings. Visit RealEstateAndNoteInvesting.com for a special message from Gordon Acknowledgement There have been so many that have inspired and motivated me -‐ I want to thank all of them. They gave me the courage and confidence to take the game of life and my real estate and note investment endeavors to the next level. Performance Anxiety Chapter One: The Best and Safest “High-‐Return” Investment I Know Of I've traveled all over the country and almost everyone I've met has shared a similar desire…No matter who you are, or how much money you make, you probably want to make more and ultimately achieve financial independence. Everyone, from the kid flipping burgers at the local fast food joint to the guy sitting at the top of a fortune 500 company, wants to make enough money to live their dreams. I suppose this is why investing has always been such a popular topic. Investing fills this need in a unique way. If done well, It gives the ability to “replace one’s self”. Instead of working day after day, you can invest a little bit of money and have it earn you even more and maybe even begin to compound the profits. With enough patience and good investments, you can generate a healthy stream of income to replace your income from your job or profession. The Quest In the early years of the last decade we experienced a cyclical housing boom. Property values were incredibly high and housing development was going on all over the country. People were taking out loans, buying up houses, and reducing available inventory. All of this, however, eventually came crashing down and everyone who had participated in this speculative real estate bubble received a rather rude awakening. We were suddenly faced with a situation where housing prices were dropping precipitously. Many people had purchased a house which was now rapidly depreciating only a few years later. 9 Gordon Moss The loans they had taken out were much higher than what they could afford. Since the houses were now worth less than the loan balances, there was very little these borrowers could do. These borrowers stopped paying back their mortgages, which caused banks to stop creating new mortgages. The pool of available real estate buyers began to shrink, and property values dropped even farther. We were in the midst of a crisis and the entire economy was feeling the effect. People lost their jobs, businesses downsized, and paychecks were cut. This made the problem even worse and there was soon a glut of delinquent mortgages. This caused the banks to do the only thing they knew how – foreclose. Foreclosures began flooding the market. The banks were repossessing the collateral used on these loans and were liquidating the properties at incredibly drastic discounts. What we were seeing was a huge abundance of these foreclosed properties. The prices for these properties were so much lower than their original fair market value that many investors couldn't resist. They started buying up the foreclosed properties. As a 25 year real estate investor, I felt the allure myself. Some of these were very nice properties… houses for which at a different time, I would have paid many times more than the bank was asking. Something held me back, however, and it took me some time to figure out what it was. More importantly, there was no clear way to make a short term profit from them. People were buying these houses in the hope that property values would go back up. While we may be seeing some economic recovery, many times, there is no way to know when you will be able to make a quick profit from a 10
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