So this has been playing in my mind this week, so I apologize in advance if this sounds like a rant. I've seen posted all this past week memes that say "Winners Never Quit" or "Quitters Never Win" and a few other "inspirational" quotes that are supposed to push you through some adversity. I call hogwash!!
I think real winners know when to quit. I think real winners have the vision to see when the path they are on leads to nowhere. I think they know when the project they are on is going to cost way too much money and not prove fruitful; the expected end isn't going to happen. Winners are wise enough to pull on the reins and change direction. They are brave enough to see the inevitable and adjust accordingly. I see no honor in trudging down a road when you can clearly see something is not going to work, simply because one might not want to be labeled a loser. Here's to the real winners that have the vision to quit before disaster strikes.
Such is the case as I continue my due diligence on this 22 asset pool purchase I am working on. If you recall, we submitted indicative bids a couple of weeks back on 55 assets. Of those, we were awarded 9 and received a counteroffer on 27 others. We passed on about 14 of those, and finally settled on 22 total assets on which to proceed.
You may recall a couple of weeks ago I wrote about going big. This is my largest pool of assets I've bid on. This is definitely going big. Here is a link to that article should you want to re-read.
So we've spent the better part of the last week going through final due diligence. Where there are many very good assets in this lot, it is apparent that some of these won't fit my investment criteria. At this point, I am passing on 9 of the original 22. I quit. They just aren't going to work. The writing is on the wall. It's okay to quit. For every asset, the goal is to create a win-win-win for all parties involved. These 9 have no winners. And there might be a few more. We are still waiting for 3rd party information on another 5 assets. The likely scenario is we will close on 10, broker out 3 -4, and pass on all the others.
Everybody likes a good success story. So that house in the lead picture above. We purchased that asset on January 10, 2018. The value of this home in Detroit exceeds $100,000. The borrower had not made a payment since 2014. The total amount owed exceeds $121,000. This borrower fully believed the home was owned free & clear and could not understand why there were people contacting them about their mortgage. The borrower was thoroughly convinced the loan was canceled as part of the National Mortgage Settlement that occurred with the big-5 lenders in 2014. Hearing the loan was "charged off", that was interpreted to mean paid off, or canceled. We were able to prove the loan was still in place and was severely delinquent. See more about the National Mortgage Settlement at this link:
We offered 3 options to the borrower. First, for every dollar that was paid towards the past due amount, we would match that dollar for dollar up to $30,000. The second option was to engage in a temporary payment plan, where we would eventually permanently modify the loan and forgive the arrears, or thirdly, accept a significantly discounted payoff.
I received a call on Thursday morning from a title company in Detroit, Michigan. Seems the borrower had put together enough funds to pursue the discounted payoff. All in all, this is a win-win-win for all parties involved. The borrower will have eliminated a significant amount of debt, perhaps owning her home outright. Second, the investor that funded this transaction receives a great return on the investment. Third, I get a return, of course, but I am making America great again, one home at a time. The borrower gets to retain the house, one with a high level of emotional attachment. Oh, lest I forget, the annualized ROI, on a 4-month hold, is roughly about 150%.
Thanks for reading. I always appreciate being able to share a story or a thought that might interest you. Perhaps soon, one of these stories will ring true, as you say to yourself, "that was me." Let me know if you want to be one of my stories.