6 REO Questions Final

1 TAX LIEN ARBITRAGE UNCOVERED

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KEY QUESTIONS

Every Seller Of Bulk Assets

MUST BE ABLE TO ANSWER If They Are The Actual Owners

To Save Your Valuable Time And Ensure You Close Quickly

6

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2 6 KEY QUESTIONS EVERY SELLER OF BULK ASSETS MUST BE ABLE TO ANSWER

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COPYRIGHT AND TRADEMARK INFORMATION THIS PRODUCT, THE NAME OF THIS PRODUCT, AND ASSOCIATED MATERIALS (COLLECTIVELY REFERRED TO IN THIS AGREEMENT AS “PRODUCT”) IS COPYRIGHTED BY DANDREW MEDIA, LLC AND DANDREW PARTNERS, LLC. ALL RIGHTS RESERVED.

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THIS PRODUCT IS PROTECTED BY TITLE 17, UNITED STATES CODE, INCLUDING BUT NOT LIMITED TO, SECTIONS 501, 504, AND 506, “FUNDING LIFECYCLE OF A COMMERCIAL REAL ESTATE DEAL”, THE NAME OF THIS PRODUCT, THE STYLIZED VERSIONS OF THESE, AND ”DANDREW MEDIA”, “DANDREW PARTNERS” LOGO ARE ALL TRADEMARKS OF DANDREW MEDIA, LLC AND DANDREW PARTNERS, LLC, RESPECTIVELY.

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Table of Contents

Introduction ..................................................................................................................... 4

Question #1: Are You the Owner of These Assets? ........................................................ 7

Question #2: What Are Your Pricing Expectations? ........................................................ 7

Question #3: Are You Selling These “Servicing or Servicing-Released”? ...................... 9

Question #4: What Is The Average UPB (Unpaid Principal Balance)? ............................ 9

Question #5: How Do You Want Us To Bid? ................................................................. 12

The “Mail Order Russian Bride” Scenario .................................................................. 13

The “Packing The Deal” Scheme ............................................................................... 14

You Probably Aren’t Direct With The Seller If…. ........................................................ 15

“Do You Trust This Person With Your Wallet?” .......................................................... 21

Daisy Chains Don’t Close! ......................................................................................... 23

How It Really Works .................................................................................................. 25

Who To Target ........................................................................................................... 26

The Owner Carry Back Mortgage Myth ...................................................................... 28

Question #6: Where Can I Access Copies Of The Collateral? ...................................... 30

Author Biography .......................................................................................................... 32

About Dandrew Media ................................................................................................... 33



http://www.tradereos.com/


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The 6 Key Questions Every Bulk REO Seller

Must Be Able to Answer To Ensure You Will

Close The Trade And Get Paid!

Introduction

Attention Real Estate Investor: Dealing with people who represent themselves as

sellers and aren’t actually the owners of bulk REO and non-performing loan

assets will waste your precious time and will only discourage you from really

making money.

It is very uncommon for a professional fund manager such as me to write this kind of

report. Why would I give away my secrets for other folks to rip-off? Many folks will be

pitching you products and courses, with “services” to help you make money in this

business. But at the end of the day, it all comes back to me and I’m telling you the

secret here. Please take the time to read it carefully. In fact, if you are – as I hope – very

interested in making sure you’re dealing with credible sellers of commercial and

residential REOs, then

I urge you to make yourself comfortable, ask not to be disturbed,

and study this report – it is that important. It reveals vital

information that you need to know.





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This is a book that is not for the light hearted. In fact, it will not make me many friends. I

don’t care. That’s what “Facebook” is for. Right?

But I’ve seen more than enough crap out there in this business lately that I simply have

to chime in. And it all comes back to me one way or another.

The real estate gurus are now coming out in droves and selling you the hottest products

you will find anywhere on the planet, along with false promises that you will become

independently wealthy before Christmas. Almost all of them have to do with Brokering

Notes and Bulk REO Pools from banks.

While the sizzle from the bacon they are frying smells and sounds sinfully alluring, what

they lack is depth.

What does this mean? It means that although the concept is solid, banks are looking to

rid themselves of hot-potato mortgages now that the “ForeclosureGate” settlements

have been finished and everyone was paid off.

Through the funds that I’ve managed or currently manage, I’ve paid hundreds of

thousands of dollars in fees. I have a friend in NYC whose fund paid one guy just over

$1 million dollars in fees… for one stinkin’ trade!

What you have to understand is where these opportunities exist. So let’s start out first

by talking about where they don’t exist.

By and large, these opportunities are not found on the Internet. It is a relationship-based

business. Sure, you can buy one-off REOs from banks online. But you know that

already and that is not what this book is about.

How do I know so much about this? You can read my Bio at the end. For now, I’m going

to just tell you how to cut through the clutter and actually make some money from this.

Actually, if you really get through this there may be a surprise at the end.





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So if you want to cut through the clutter, here are 6 questions that you must ask every

seller of Bulk REO and Non-Performing Loans (“NPL’s”). This will save you heartache,

frustration, and most importantly, your time.

You can never get your lost and wasted time back.

These questions are asked in a sequence, some of them are intuitive (meaning, you’ll

think to yourself “I don’t need to read this book to know this already!”); however, each

one leads into another. You’ll see what I mean.

I’ve also written this book with certain trading or “cocktail terms” sprinkled throughout. I

do this so you’ll walk away smarter knowing some of the lingo that will make you much

more credible in this business.





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Question #1: Are You the Owner of These Assets?

I know what you’re thinking here. But hold on. This is the same vein of question that a

parent would ask of a child they already know has done something bad and is actually

giving that child a chance to come clean.

“Yes, I know someone gave your sister a haircut with my gardening sheers, but was that

you?” In that kind of way.

Naturally, they will say yes or some other convoluted answer. If they say yes, then we’ll

proceed to Question #2.

Question #2: What Are Your Pricing Expectations?

Back in 2007, when I was managing a $30,000,000 fund that purchased non-performing

assets, I would deal all day with folks who said they were sellers. Soon, I developed

what you are reading here as the blueprint that our sales desk would use to really figure

out what was real and what wasn’t. And I’ll tell you this - until I hammered it out, I was

on many wild goose chases.

Any seller should know beyond the shadow of a doubt what their asking price is for a

pool of assets. They have a minimum bid that they will take. Folks who aren’t in control

of these assets or don’t really own them will say “just make an offer”.





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No, Boobie.

That’s not going to work. When a trader puts together a bid, they “hang a number” on

each asset. It requires a lot of work and if the seller doesn’t quote them their pricing

expectations in a range (for example, 60-65% of current market value), then that trader

isn’t going to want to deal with it.

Why is this so important? Well, at the end of the quarter and almost always at the end of

the fiscal year (which for most banks and financial institutions is the end of November),

banks will want to mark their books, which means they will want to just see what the

market would offer for their assets without committing to selling them.

This is no different than you placing your house on the market with a Realtor just to get

offers, so that you can find out how much your house is worth without intending to

actually sell it.

So, in essence, your buyer is working for free. Would you work for free? I didn’t think so;

otherwise, you wouldn’t be reading this report.

If ever someone tells you a range, and you know it’s from an

institution, get that in writing.

Because if their asking bid is “hit” by your buyer, then you’ll

have something to fall back on if they renege.

And some institutions will renege. That is the power of email.





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Question #3: Are You Selling These “Servicing or Servicing-Released”?

Let me let you in on a dirty, filthy little secret. Servicing companies make a lot of money

servicing loans. A lot.

How about a 4% servicing fee for defaulted loans alone? This is also why most short

sales never have a chance of going through to closing without the bank or servicing

company reneging on it.

Can you see why it doesn’t make sense for a servicing company (in the case of

defaulted note servicers, “special servicers”) or banks with their own servicing

companies, to accept your short sale offers or counter at some ridiculous amount that

results in most real estate investors just walking away?

However, for the guy or gal on the other side of the phone with a Gmail.com email

address or who found you on Facebook or LinkedIn, they’re not going to be likely to

know what servicing means and they will stumble. Any bank or institutional seller will tell

you that they know whether they will sell these assets with or without servicing.

If you made it this far and they’ve not hit all the high notes, then it’s time to cut the bait.

If you’re interested in getting more experience, then perhaps you can still keep them on

the line and ask the next slew of questions.

Folks will only tell you what they

want you to hear.





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Question #4: What Is The Average UPB (Unpaid Principal Balance)?

You’re not going to buy something without knowing exactly what you’re getting with it,

right? Do you think that an institutional or experienced buyer is going to blindly bid on

something without knowing what the contents are?

Ever walk into an Apple store? If you go to the one near my apartment in Manhattan

(the very same store on 5th Avenue that they affectionately call the “Church of Mac”

because of its large glass panes that create those daunting heightened aesthetics),

every person in that store knows every Apple product inside and out.

But you’re not Apple, you say?

I say, “You’re right!” You’ve got to step up your game here and know what you’re trying

to sell. Merely hitting the forward button to anyone and everyone you know who may be

a buyer is not going to get you anywhere. The buyer holds the gold and makes all the

rules. He’s not going to pay you 1-2% on a trade merely for hitting the forward button.

Same goes for your seller. Ask him if he knows what the average unpaid principal

balance (“UPB”) is for this pool. That’s principal spelled with “pal”, as in “Sal is your

Pal!”

Know your deal. It’s a reflection of how credible

you are and your intelligence.





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Not only is this question a litmus test to determine if they are the owner or not, but not

all buyers are interested in all things.

Just a little FYI here: You need to be smart and, actually, if you’re a seasoned pro like

me, provide “pricing improvement” to your buyer. For example, “Bank of Topeka stated

that they’re looking for a range of between 60-63% of the UPB, but I told them that the

market is paying between 58-61% on these assets so they may be a seller in this range.

Now that’s rich!

Would that fit better under question # 2?

Some guys like blondes; some prefer brunettes, others prefer redheads.

If the average unpaid principal balance (“UPB”) on these loans is, say, $50,000, then

that is really “rough product” and most of your buyers won’t want to bid on that type of

junker house.

If the average UPB is too high, well, some of your buyers might not want the deal.

Luxury homes, despite what many other gurus will tell you, don’t move fast because

there’s only a finite amount of folks that can afford them and qualify for the financing.

And these luxury home buyers are incredibly picky, too.

These homes often are behind big gates with very demanding and Draconian HOAs

that prohibit any sort of mass selling events such as an auction or herds of people

bidding on the house.

Now you’re getting it…





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Question #5: How Do You Want Us To Bid?

For this question, let me tell you how bids are managed between legitimate buyers and

sellers. They are almost always institutional - meaning a private equity fund like

Dandrew Partners, perhaps a smaller pension fund with less than $3 million in assets

under management, a family office, or even some hard money lenders who buy

defaulted notes (this is a big hint if you’re looking to build a real, bona-fide buyers list

that I’m giving away for free here, pal).

Usually, bids for residential REOs and NPLs follow these similar methods:

First, a seller and a buyer will agree that the seller’s pricing expectations are “in-line”

with what the buyer thinks he would bid for this portfolio. The buyer then prepares what

is called an indicative bid, which means that his bid is going to just be done from a

desktop analysis using Zillow estimates and perhaps another tool called an Automatic

Valuation Model (“AVM”).

An AVM is nothing more than a service that uses mathematical modeling to value

properties. Wall Street firms use this type of model to value residential properties. While

these models are quick and cheap, they do not factor in the condition of the property to

determine its value. That is why we call this an indicative bid.

Next, if the values that came back from the AVM or desktop analysis didn’t “fade”, then

the buyer goes on to prepare the final bid. The final bid is where the buyer will start

their own due diligence that will take money out of their pocket upfront. These hard

costs will be used to get Broker Price Opinions (“BPOs”) done on each property, do title

searches and such.

Then, and only then, will a closing occur and funds will be transferred upon receipt of

the collateral or original documentation for each loan. The original documents will be





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the ones with the blue ink on them signed by the borrower. Servicing records will be

given to the buyer and then the trade has settled.

The time it takes to do this? Well, we’ve closed a pool of loans under a tight timeframe

in about 3 weeks. So when you hear this line of bull: “Seller needs to close by a week

from today!!!”, you’ll know who you’re dealing with right away.

So now that we’ve gotten this out of the way, let’s proceed to tell you how these are or

are not done. There are many, but I’ll speak to the most common.

The “Mail Order Russian Bride” Scenario

We all know how this works. We’ve all seen it on television shows like 20/20 or Dateline.

Some desperate sucker from Nowhere, America finds a young and attractive beauty

online.

They chat and he exposes his most intimate and deepest heartfelt desires. Before you

know it, the blonde, blue-eyed Moldovan beauty arrives with her bags packed and she’s

not going back. It’s love at first sight…

They get a marriage license. He doesn’t know anything about her or her history. She

could care less about him. They’re at the Justice of the Peace within hours of her

landing into his hometown, and he has no idea what he’s getting into.

What does this sappy story have to do with trading Bulk REOs and NPLs? Everything.

You didn’t marry your spouse after the first date; why should a buyer be expected to

commit to a deal blindly by lifting up their skirt?

Put it another way. If anyone asks you for a Letter of Intent (“LOI”) and a Proof of Funds

(“POF”) before anything is even shown to them, you’re dealing with someone who either

is just looking to see who your funding source is and will then go around you, or they





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are just being told by someone in their Daisy Chain that this is what the seller needs -

which is the proverbial blind leading the blind.

The Mail Order Russian Bride Technique will almost always lead to dead-ends,

frustration and emptied wallets. Just like on Dateline…

Cue Ann Curry to bring the Kleenex to this segment in the making.

The “Packing The Deal” Scheme

No doubt, you will have seen this already. Someone comes to you. They are looking to

broker the deal to you and you ask them what they are looking for. Their answer?

“54 + 4%”

No. Sorry, Boobie. That’s not how it works. No one is going to pay 4 points on a deal on

top of what the asking bid is. That’s assuming that the portfolio is even worth what they

are asking.

Sometimes this will be disguised as “58”. Then, in order to find out who the real owner

is, these folks will make you sign a Non-Disclosure Agreement (“NDA”) that is littered

with landmines in the form of small print obligating you to pay fees just because you

breathed on this pool and surrendered your life away through personal

guarantees…you name it.

Get direct to the seller

or get the door.





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Here are some ways you can easily identify if you’re working with the seller or not.

If you’ve ever heard the shtick that Jeff Foxworthy has been doing for the past 10 years,

you’ll understand what I’m trying to say here.

And I’m sure you’ll see this copied during a webinar or a sales pitch at some point...

You Probably Aren’t Direct With The Seller If….

When You Call, You Hear Babies Crying and Dogs Barking in the Background.

Think about the last time you called a bank or another financial institution and heard

these very sounds in the background. Nope, I can’t recall that either.

Their E-mail Address is Cheap and Cheesy.

Examples: [email protected]; [email protected]; [email protected]

These are the most obvious, but they’re also the most pathetic. In my opinion, these

folks aren’t interested in building a credible “storefront” and are even insulting your

intelligence by emailing you assets that they are stating they own or control.

Hint: if you really want a done-for-you website with an offline or online presence

written in the same tone and voice that a true legitimate seller would want to see and

gives you instant credibility, then go here to this link. Now.




mailto:[email protected]

https://secure.inetusa.com/secure/form/index.cfm?id=96619&siteid=33487&pid=0&pointerid=0&winpop=0


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Their e-mail signature has a picture of them.

Headshots are for Realtors and Realtors cater to the retail investor crowd. Sorry. Save it

for Match.com.

They have quotes of dead persons on the signature line.

I don’t think I really need to tell you how unprofessional this is. I once worked with a

broker who used quotes from Jimmy Buffet and the Grateful Dead on his yahoo.com

email address.

Only made me think that when he wasn’t responsive to my bids he was too busy

burning one down in his basement...

They use emoticons.

Silly. Stupid. Not professional.

They have more misspellings than a 2nd Grader in their emails.

Example: Principal

One of the principle reasons why Bill Gates is able to give away $1 million dollars via

email to the next 100 people you forward this to (or there will be an immediate mass

execution of newborn puppies) is because Bill provided a solution to what embarrasses

millions of Americans today.

They are lousy spellers. And nothing better than bad spelling makes you look broke

and ignorant. No one wants to look broke or ignorant. Am I being snotty? Perhaps. But

keep up with me here.





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Today, spell check has been successfully integrated into every word processing

program and email client. There simply isn’t any excuse for misspelling words except for

being lazy. Use it or lose the bid. And the same goes with your credibility.

They call you on weekends or text and e-mail you every day looking to find out

when the deal is going to close.

Wall Street culture, especially on Friday’s during the summer, is that the workday ends

(unofficially) at 2pm. Nothing is going to get priced or done on a Friday at 5pm Eastern.

No.

When I was running my $30 million fund, brokers would call up and say they needed a

bid and a LOI and a POF by 5pm that Friday (mind you, this was a Thursday and I was

already en route out “east” for the weekend) and had to close the following Tuesday.

That Monday also happened to be Memorial Day.

Now, if I was green (and I hope you’re paying attention here), I probably would have

worked all weekend to get this broker his demands but, being the playmaker, I told him

that nothing in this business couldn’t wait until next week. Nobody was going to go to jail

or get hurt. It was OK.

By the way, he wasn’t direct and was simply being led on by another broker. The deal

was a dud and once I proved this to him, I never heard from him again.

Their e-mail signatures are 10 lines long with links and advertisements for:

Pre-Paid Legal Services

ACAI Berry Health Juices

Or any other multi-level marketing business





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Nothing screams desperation more than one person putting multiple affiliate links to

products that have nothing to do with the Real Estate business in his or her email

signature.

It’s pathetic and it instantly makes you look desperate and foolish.

If you do participate, use a separate email address and be sure to keep these mutual

businesses “church and state”.

All assets are “performing”; however, the last paid-thru date was 6 months ago.

I’m not going to go into detail here as I discuss this on various blogs and courses that I

teach; however, this is the equivalent of having the cashier tell you that the bottle of milk

is still good for you to buy - never mind the expiration date shows it’s one month past its

sell-by date when you’re at the register.

If you look on the asset tape, there should be a “Paid Thru” column on the Excel

spreadsheet that states when each of these loans has been paid through to. So if this is

October, there should be a date of “October 1”, “October 2” on there stating this is when

the last payment was received.

If you see “August 15”, or “July 1”, then you know this is a non-performing note.

Regardless of what I am told, without an updated tape, I will, and so will other bidders,

assume that these are non-performing and will price these assets accordingly.

Why is this important? Easy. If I buy an asset I was told was performing and I give a

performing bid on it, I am paying a fair price for this.

If it is really non-performing, then investors such as I will scorch the earth - going back

to Moses - suing everyone who was involved in the trade for malfeasance and

misleading the facts. Ask me how I know this.

Never ever change the “Paid Thru” dates on an Asset Tape. Never. OK?





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They send an e-mail blast not using BCC.

Novice move. Don’t ever do this as it makes you look like you’re older than dirt and

don’t know how to use “the computers” very well.

They want to do a conference call with you and their “partner” or “mentor” at the

drop of a hat.

The only folks who want conference calls are other brokers in the Daisy Chain.

While we’re on the subject, let me explain to you what a partner means in the grown up

world.

A partner is someone who you are bound legally together with either by marriage,

domestic partnership or, in the business sense, with an Operating Agreement.

An Operating Agreement (or sometimes called a Partnership Agreement) is the “doc”

that states what each partner’s responsibilities are, who gets paid what and when, and

details how a divorce should happen and who will get what. I’m in deals with partners

that would make most Hollywood prenup agreements look like a local supermarket

coupon book. Hundreds of pages. And if you’re me or my partner on these deals, you

know every nook and cranny in these docs.

They are more binding than eating a wheel of Swiss cheese… on a bagel.

In case you’re wondering if these docs come with the LLC you just bought on

LegalZoom or Pre-Paid, the answer is “No way, Jose.”

This is the up-sell where most attorneys make their boat or Porsche payments. A good

“doc” will cost anywhere between $20,000 to (as high as I’ve seen) $60,000 to create.

It’s not just that boilerplate. It involves what you can do and what you can’t do.





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(If you’re a Dandrew Alumni and you’re reading this, I urge you to review the Continuing

Ed of yore where I go into what you need in a “doc”.)

For example, do you want your partner’s 4th wife (I said fourth) to be the day-to-day

decision-maker if your partner should get suddenly hit by a bus? Ask me how I know

this…

They want a fee agreement before sending you anything.

Fee agreements don’t come into the picture at any time before the indicative bids are

made. Period. Anyone asking for a fee agreement to be signed prior to sending

information is looking to hoodwink you into something that; a) probably won’t close

because it’s not a deal anyway, and; b) will put you into harm’s way if the deal does or

doesn’t close.

Yes. These fee agreements make the Terms of Service on Facebook look innocent by

comparison.

If you share a bed or a checking account, or both, then you

are true partners.

Other than that, you are just one person who knows a guy or

gal with a deal who is looking to place a deal.





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“Do You Trust This Person With Your Wallet?”

It all comes down to your gut.

Or, if you don’t have a gut, borrow your spouse’s!

I’m biased. I think women have a better gut instinct and, if I’d listened to my wife when

she warned me about hiring or doing business with certain folks, I’d be hundreds of

thousands of dollars richer. That is the truth.

Where does this question come from? Let me digress for a moment and tell you a story.

When I was working on Wall Street, I started out as an Analyst. Analysts are like high

school freshman on the school bus. They’ve been hazed, beaten and abused.

But sooner or later, all Analysts (if they are good, strong performers) are promoted to

Associate. This means that the newly minted sophomore is now in the enviable position

to interview new Analysts (if you ever want to know what this lifestyle is like, read the

book “Monkey Business”, you will be thoroughly entertained).

After doing a bunch of round robin interviews on a Thursday afternoon for recent or

soon to be grads of Ivy League colleges and universities, the Associates would be

responsible for providing their thoughts on each one of the candidates.

This was a very competitive and sought after job; after all, and at least at the firm where

I was, they made sure that each candidate that was being considered would actually fit

the firm’s culture and would work well with others.

I vividly remember my boss at the time challenging me on one candidate.

This young man looked perfect on paper. Straight A’s from Wharton. Some professional

experience at a smaller brokerage in Philadelphia.




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And even the “token” volunteer experience in a third world country helping the

unfortunate.

Looking back, I was quite green at the time. I thought he would be a good fit. He would

learn easily and was driven to excel. My peers thought there was something there they

couldn’t place. One colleague called the guy “slippery” and “more like a politician”.

During this time, my boss looked at me deadpan and asked:

“So Sal, would you trust this person with your wallet?”

And that was the question that I never forgot.

I was forced to dig deep into my gut and to answer “no.” Sure enough, this was one of

the better experiences I would never forget and has proven time and again to have

been very helpful for me to make tough decisions.

It doesn’t matter how much you offer or how fast you close, if

the client doesn’t trust you, they won’t deal with you.





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Daisy Chains Don’t Close!

“I am direct with the person who has the seller’s mandate”. This is crap. This

means you’re in a daisy chain and it’s the proverbial blind leading the blind.

A daisy chain is when one Bulk REO broker takes a pool of loans to another broker,

who then tries to take that pool of loans to a legitimate buyer.

There are a number of reasons why daisy chains don’t close:

1. The loan fees quickly get excessive. The first broker tries to charge a point. Then

the second broker adds two more points. (Often a third broker tries to add another point

or two.) The seller will allow for 1 or 2 points to be paid. Pretty soon you’re trying to sell

the buyer on paying six to seven points.

Folks, in real life, sellers of bulk assets never sit still for packing (a pool that gets packed

with excessive fees).

2. Communication gets garbled. Do you remember that game we used to play in the

first grade? Seven people stand in a line.

The first kid whispers a phrase into the ear of the second kid: “Eddie kissed Lucy as she

sat on a stool.” The second kid whispers the message into the ear of the third kid … and

so on.

By the time the message reaches the seventh person in line, the message has been

grossly distorted: “Eddie and Lucy both got loose stools from kissing.”

Buyers can tell when a deal is involved in a daisy chain. They quickly get irritated and

turn the deal down.





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3. Most daisy chains involve the blind leading the blind. One of the first lessons

that everyone learns in this business is that daisy chains don’t close.

This means that if another broker is willing to let you stay in the loop and add a

point or two to the deal, then that second broker is obviously a complete rookie

too! (In other words, this so-called “placement expert” upon whom you're relying is a

rookie himself and an idiot.)

Rookies don’t have special, four-year relationships with some special assets manager

at a major bank like Bank of America - the type of relationship it often takes to actually

close Bulk REO and NPL trades.

If you're involved in a daisy chain right now, you may still be in denial. Don’t worry about

it. You’ll eventually discover for yourself that daisy chains don’t close. We all learn that

lesson.

This brings me to my next topic….

The Networking Myth

You can find a lot of individual residential deals to rehab and flip at REIAs and real

estate seminars. In fact, Dandrew Intermediaries and Alumni who have gone off to start

their own funds still leverage these resources all the time.

However, when it comes to all things Bulk REO and NPL related, these conferences are

full of no one but blind mice.

These are rookies and novices who will tell you they have access to someone who is

the head of Bank of America, Wells Fargo, or (insert the name of any lender or bank

that advertises during halftime at the Super Bowl)… and can deliver hundreds of

millions, no… wait for it… billions of dollars’ worth of Bulk REO and NPLs.





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Then you get the NDA, Fee Agreement and LOI and all that nonsense and foolishness

that will get you nowhere. The good news is that if you’ve read this book, you’re now

smarter than the rest and won’t get

tied up into this mess. Make me

proud, please!

Let me ask you a question: Why do

these banks need you or your

investor friend who is a part-time real

estate investor to move a $30 million

dollar Bulk REO portfolio?

Do they think that no one else is capable but a housewife in suburban Ohio sitting in her

basement next to her hot water heater using her [email protected] email address to

move this?

How It Really Works

If you have a direct contact with institutional buyers or wealthy guys that buy this stuff

and you know that they do have the money and the experience to buy these, then that’s

all you need. As much as I hate to say it, most of these folks are either in Manhattan or

Southern California.

Topeka, Kansas isn’t the financial epicenter of the world. New Orleans is the Bachelor

Party Capital of the United States. Are you catching my drift?

Also, networking is fine as long as you go to what I call the “Grownup Conferences”.

These are not your seminar “pitch fests” with many speakers hawking their home study

CDs and Tapes. No.

… if you’ve read this book,

you’re now smarter than

the rest and won’t get tied

up into this mess…





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These are industry conferences that the real movers and shakers go to; all the lenders

and banks that specialize in this business. I personally have gone to many and I just

loiter in the bar area of the hotel exchanging business cards and using my elevator

pitch. My goal out of every event is to get a 1 and ½ inch thick stack of business cards

from the other folks and so should yours.

You’d be surprised how many people want to talk to you and network if they hear that

you are talking their language. (And if you’re still reading, then you’re pretty fluent).

I pre-arrange to meet with folks for breakfast, lunch and dinner and go to the after

parties with them. It’s an incredible blast and a lot of fun.

And most of them can be found going to the Mortgage Bankers Association website.

This business is too big to really deal with folks who are clueless. You can make a lot of

money as I’ve stated before by just rubbing elbows and drinking martini’s with the right

people.

Who To Target

I know you’re thinking, “Great, you’ve showed me how to find buyers and you told me

who I shouldn’t be working with. But what about the sellers? Where are the sellers,

Sal?”

Tell me if you agree that you’d much rather be LinkedIn to three or four real guys and

gals rather than 4,000 flakes who don’t know what they are doing?

Well, perhaps it’s time for you to do what AJ here is doing. He’s “networked” with over

4,000 “blind mice” on LinkedIn at seminars and now he’s trimming the herd.




http://mbaa.org/ConferencesEvents/ConferenceEvents.aspx


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The folks he is focusing on and networking with are those individuals who work in the

loan departments of smaller, regional community banks. The types that don’t advertise

during half time during the Super Bowl…

These are the ones that are neglected and need your help. Provided you know what

you’re doing. Where do you find these? By going to the FDIC.gov website.

Hint: Focus on the smaller banks with less than $1 billion in assets.




http://fdic.gov/


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The Owner Carry Back Mortgage Myth

It is true you’ll hear a lot of speak about how you can buy notes from individual note

sellers. These are ma’-n-pa’ investors who have sold a property and have decided to

take a note back.

In the old days, usually the only way agricultural land such as farms would trade would

be via the seller carrying back a note with principal and interest not being paid to the

bank, but to the seller.

The seller, in essence, would become the bank. (Gosh, I love that concept!!!)

Fast forward to today, and more and more sellers are opting to sell their property and

take back a note. The reasons are simple: banks aren’t lending anymore and aren’t

likely to anytime soon unless your buyer has credit better than most other humans on

Earth. It’s also because they realize that they can make more interest income selling a

property and taking back a note than they can putting that cash into a bank savings

account.

After all, look at the alternatives. There really aren’t many out there.

Now I want you to think about what I’m going to say. In my last book, “The Death of

Real Estate Investing”, I spoke about what created this mortgage meltdown. If you want

a copy, go to http://www.theendofrei.com.

Since the horrific events of September 11, 2001, interest rates have been artificially held

at around 1%. This effectively screws savers and turns them into losers. Again, you

don’t need me to point out the obvious here.




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http://deadinvestor.com/?utm_source=MK&utm_campaign=endrei&utm_medium=pc&utm_content=

http://www.theendofrei.com/


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What should be obvious to you is why would any note holder who has taken a note back

at 6%, 7%, maybe even 11%, ever want to sell this note to you at all, much less at a

discount? Does this make sense? Do you think that a seller will look at the alternatives

in (what I believe to be) an artificially inflated stock market or dirt low interest rates for

savings accounts that pay close to nothing?

If someone sold a property for $200,000 to a shaky credit buyer and took back a note at

7.5% interest for 30 years, why the hell would that seller want to sell the note to you at a

discount?

Using interest only here, that 7.5% interest rate equates to $1,250 per month.

If that same person were to invest that $200,000 in a bank, assuming that he took it all

in cash, at the rate Ally is offering at 0.95%, then that seller, who is now a loser because

he’s losing money, and a lot of it, is only making $158 per month.

That’s about a month’s supply of dog food and I hope he or she likes kibble because

that is all they are going to be able to afford to eat.

Welcome to retirement, folks! You’re all invited! Everyone ‘round the world!

If the house burns down, it is insured.

If the bank goes belly up, (a la MF Global), he is now wiped out. He is not secured.

This is Finance 101. This is common sense.

Unless the seller of that carry back note is forced to sell that note via a divorce decree

or has had something else that is really bad happen to him, you’re going to have to pry

that note away from most sellers’ cold, dead hands.

Again, this is based on my 15 years of experience trading these things, so what do I

know?





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Question #6: Where Can I Access Copies Of The Collateral?

This question will make even the hardest working rookie stumble and stutter: “What is

collateral?”

Banks and lenders store their collateral, and any buyer that enters into an agreement to

purchase assets is allowed to review the collateral. This includes all of the original

documentation and, if the lender knew what they were doing, is usually as thick as the

Yellow Pages in a small town.

(Most private lenders don’t, and that is a whole other opportunity called “Document

Deficiency” that we won’t get into here.)

Digital images of these documents are usually kept behind a password protected site or

can be mailed usually via FedEx to the buyer on a CD-ROM.

If you really think that your seller is the owner or has control of this and you ask him this

question, it’s sort of like asking any parent where their young child is…

They all know.





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Question #7: How Can I Trade With Dandrew Partners?

If you’ve made to it this part of the book and you’re interested in working with us, I’ve

got some great news for you.

We’ve put together a free training series for you that contains the following:

1. A Three-Part Video Training Series Over 2 (two) hours of pure content broken up over 3 videos. Watch these over and over again so you familiarize yourself with these closely guarded Wall Street concepts. 2. The 68 Page Manual That Accompanies The Three-Part Video Series Because we took notes for you so you don’t have to… Simply follow along with a highlighter. 3. A Very Secret Infographic: How To Identify and Target Smaller Banks Loaded

With REOs and Non-Performing Loans This supplement to the videos shows you step-by-step how to identify smaller banks that have less than $1 billion in assets. These are the ones you will want to target! This infographic is also delivered to you electronically for easy reference on your iPad, or any other tablets that can open PDF documents. To access this training, go to www.TradeREOs.com It’s a very special program and others have paid close to $10,000 just to hear us speak about this business and get access to qualified institutional buyers who can trade your deals. Again, you’ll want to go to www.TradeREOs.com Thank you for reading this book, and we look forward to working with you in the future!







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Author Biography

About The Author

Salvatore M. Buscemi is a Managing Director of Dandrew Partners LLC in New York

City, a commercial real estate advisory boutique firm that focuses on placing capital from

prominent institutional investors into middle market distressed commercial real estate

investments.

Mr. Buscemi is also the Co-Founder and CFO of Las Vegas-based Oasis Fractionalized

Real Estate Equity (“OFREE”), a $15 million fund oriented solely towards the low basis

acquisition, management and redemption of broken fractionalized hard money mortgage

assets with a focus towards corrective development-oriented solutions to capture equity

opportunities that are traditionally unavailable in a traditional receivership or liquidation

environment.

Mr. Buscemi also co-founded Dandrew Strategies LLC, a $30 million real estate

solutions provider in the secondary mortgage market, specializing in non-performing

residential mortgage portfolios.

Mr. Buscemi started his career and spent five years as an investment banker with

Goldman Sachs, working with clients across a broad spectrum of industries. While at

Goldman Sachs, Mr. Buscemi also collaborated closely with the firm’s divisional

leadership during the transition from a partnership to a publicly held company. A

graduate of Fordham University in New York City, Mr. Buscemi has held leadership

positions on several non-profit boards.

As the co-chair for the YMCA of Greater New York's Face-to-Face Capital Campaign in

2002 and 2003, he successfully co-led a $9 million capital campaign to create a new YMCA

for Lower Manhattan. He is a frequent speaker and guest lecturer on real estate finance

at professional symposia and has written numerous articles on the topic of residential

and commercial real estate finance in various publications including the Investor’s

Business Daily. Mr. Buscemi resides with his wife in New York City and Las Vegas.





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About Dandrew Media

Dandrew Media offers many strategies for real estate investors to grow their businesses

and careers through fundraising, capital formation and capital placement strategies.

You’ll discover closely held institutional secrets how to participate in larger bigger ticket

deal that you probably wouldn’t be able to get into by yourself. These strategies are

revealed every month to our AskDandrew Members and through offline and online

resources so you can get started immediately.

For many real estate investors that have been shut out of the market due to their

inability to get bank financing, we offer the opportunity to get the strategies you need to

have the real estate portfolio and / or financing businesses you dream of.

If you value every dollar you spend accountable for multiplying itself then Dandrew

Media is the place for you.

Leverage our intellectual and capital resources

Learn how to raise capital thoughtfully, meaningfully, and credibly.

Build a seven-figure portfolio from zero by thinking like a bank, not like a landlord

Properly source and qualify meaningful deal flow

Create extreme competitive advantages that will attract institutional, established

investors to co-invest alongside you and build a large portfolio

Cross real estate trades with qualified institutional buyers that will put money in your

pocket now

Leverage your new intellectual capital to gain notoriety in your niche or market and

participate in more deals as a sponsor

Discover how to remove all obstacles to meaningful and sustainable wealth creation




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6 REO Questions Final