To receive the largest ROI, we tell our customers time and time again that you need to get out of your comfort zone and start investing outside of your own backyard. For example, Fannie Mae and Freddie Mac sold $22.2 billion in Non Peforming Notes during the first half of 2019. Nearly half of these loans were located in New Jersey, New York, and Florida. If you live in any of the other 47 states right now there is ample opportunity for investing nationally.
When investigating note investment opportunities, it’s important that investors take the necessary time to understand the foreclosure process. Should a homeowner leave you with no option but to foreclose after failing to follow through with the agreed upon terms, you might decide it is necessary to begin the process of acquiring the deed.
The timescale to get that deed varies greatly between states. This is because there are principally two different methods for foreclosing on a homeowner; judicial and non-judicial. Each method has their own respective advantages and disadvantages, so let’s cover judicial vs. non-judicial states in a little more detail.
Judicial Foreclosure States
As the name suggests, foreclosures in judicial states have to proceed through the court system. The owner of the loan files a foreclosure lawsuit in court after which the homeowner receives a summons to court and a copy of the official complaint. At this point, the homeowner has two options; they can either let the foreclosure happen, or they can contest it in court.
If they contest the foreclosure there can be a lengthy wait to set up a court date for the hearing, at which point a judge will make a ruling, and if they agree to a sale, they’ll also set the date. If the foreclosure is uncontested, a default judgement will be made and a date set for the sale of the property. The property then goes up for auction and if no bid meets the asking price, then it is returned as a Real Estate Owned (REO) property back to the lender. Learn more about purchasing pre-auction homes here.
In non-judicial states, the process is slightly different.
Non-Judicial Foreclosure States
In non-judicial states, foreclosures are initiated by “trustees” (those who hold the deed of trust) in the event of a homeowner defaulting on their loan. Each individual state law determines each milestone in the foreclosure process, and stipulates how much notice the trustee must give the homeowner and in which manner the property can be sold.
Even after the lender issues a notice of default, the homeowner may still have up to three or four months to make up payments under the protection of state law. After that period, if the payments haven’t been made up, or a new payment plan fails to materialize, homeowners will receive a notice indicating the intention to sell the property. This notice will also usually specify the intended date of the sale.
A non-judicidal property auction does not have to be undertaken by an officer of the court, and so third-party sales agents are often enlisted to do so. Once again, if no one meets the minimum bid the property is returned back to the deed-holder (lender) and becomes a so-called “bank-owned” property.
Which Method is Better for Owners of Distressed Notes?
First and foremost, there is a clear time advantage for targeting notes in states that operate a non-judicial foreclosure process. Lenders who foreclosure in states such as Texas, Georgia or Tennessee can have the keys to a family-sized property for 40-50% of its market value in just 60 – 75 days. Therefore, as a dollars-in, dollars-out, investment non-judicial foreclosures are clearly preferable.
However, it’s not quite as simple as that. Lenders know this fact, and therefore may charge a premium on notes in non-judicial states. That same knowledge is reflected when it comes to notes sold in judicial states. Because proceeding through the court system can take several months, investors can pick up houses for as little as 30% of their market value to reflect the extra hoops that have to be jumped through.
But some judicial states are notoriously tough for lenders. For instance, in New York, it’s not uncommon for the foreclosure process to take upwards of two years. So whilst a $100,000 house sounds amazing for a sale price of $30,000, can you really afford to tie up your investment for at least two years? The answer will depend on your particular financial situation.
Achieve over 40% Returns with Distressed Notes Direct from The Banks
Whether you opt to focus on much higher returns achieved over a longer period, or prefer to achieve lower returns at a more frequent rate, we can offer you expert advice so that you maximize the potential of each and every distressed note you obtain from us. Our team has intimate knowledge of each state’s processes, making them ideally positioned to give you realistic timelines to deed acquisition.
Here at Revolve Capital Group, we cut out the middlemen. We take notes straight from the banks and present them directly to you, the investor. Our note investment opportunities are 100% transparent and we even provide you with the due diligence documents to make sure you are getting great value for your investment.
When it comes to judicial vs non-judicial states, it is a case of each to his own. But with our expertise and advice we can help you to align your financial goals with our product offerings. So if you are ready to achieve market-beating returns on your investments, don’t hesitate to contact a member of our team today to discuss note investment opportunities.
On behalf of Revolve Capital Group, we would like to thank our clients, friends, and colleagues in the industry for your continued support. This week marks the one year anniversary since the start of our company.
We are anticipating the ability to continue scaling our business with one another heading into our second year. We could not be here without each of our investors. Thank you for consistently choosing to invest with us.
Check out some of our first year totals and highlights below…
Revolve Capital Group: Year 1 Highlights
- $42.1M Annual Cumulative Revenue
- $27M Homes Under Management
- Nearly 400 homes purchased
- Projected to purchase 1000 total homes by 2020
- Helped over 500 people avoid foreclosure
- National sponsor of main corporate events
- Re-stabilizing depreciating neighborhoods all over the country
We are excited and continue to be encouraged with our business together as we cross from year one into year two of Revolve Capital.
Are you a current client? If not, please Contact Us today to begin the easy process to become a trusted investor.
One of the most frequently asked questions we receive is “How do I get started working with Revolve Capital?”
The answer, it’s simple.
To ensure our clients know what to expect, we have laid out the Easy Steps for you.. Our hands-on approach to investing allows us to work alongside our clients every step of the way.
6 Steps to Get Started
- Complete Our Buyer / Investor Application – Allowing our staff to properly understand your experience level, and tailor portfolios best to fit your overall objective. Click here to fill out the buyer/investor application.
- Reviewing the portfolio/Conducting Preliminary Due Diligence – We allow each party a few days to review the portfolio and conduct introductory due diligence. Desktop values, review of borrower intention, verification of all collateral is intact. View our available inventory by clicking here.
- Make an Offer – The offer needs to be supported with an LOI (Letter of Intent) to purchase along with a proof of funds to demonstrate the financial ability to close the trade.
- Conducting Due Diligence – Verification of all collateral documents, market values, title, and tax review.
- Finalize Offer / Prepare for Funding – Once diligence is complete, our staff will finalize the population with you and wrap up the trade inside an agreeable purchase and sale agreement. Funding will take place within 7 days from finalizing diligence, and funds will be wired directly to Revolve’s account without the use of an escrow or 3rd party.
- Closing / Document and Service Transfer – You will receive the original collateral file, assignment, and allonges (within 45 days of the purchase, if not sooner). You have the choice to keep servicing in place or transfer to the servicer of your choosing.
Getting Started is Simple. Contact us today to begin building your custom note portfolio with Revolve Capital Group.