Latest / Real Estate Note Investing / Episode 53: Proactive Portfolio Monitoring

Transcript

Episode 53: Proactive Portfolio Monitoring · Real Estate Note Investing

• 0:00
  SPEAKER_00: Welcome to the show, where you'll learn how to invest in mortgage notes, the savvy real estate investor's secret weapon to create cash flow without tenants and property acquisitions for pennies on the dollar.
• 0:12
  SPEAKER_00: My name is Robert Haitha, founder of Picknotes, and my mission is to make note investing ethical, profitable, and accessible for you.
• 0:20
  SPEAKER_00: In every episode, we're democratizing the industry to put these powerful Wall Street assets into the hands of mainstream investors like you.
• 0:29
  SPEAKER_00: So without further ado, let's get into this show where you're in good hands with my AI clone.
• 0:34
  SPEAKER_00: Let's go.
• 0:37
  SPEAKER_00: This program is for informational purposes only and should be independently verified before taking action.
• 0:43
  SPEAKER_00: Buying alone is the beginning of the work, not the end of it.
• 0:46
  SPEAKER_00: Once you own a note, your job shifts to monitoring, staying current on the status of each asset in your portfolio so that nothing deteriorates without your knowledge and nothing surprises you when it matters most.
• 0:58
  SPEAKER_00: Proactive portfolio monitoring is the habit that separates investors who manage risk from investors who discover it after the fact.
• 1:06
  SPEAKER_00: The single most important thing you can do before any monitoring even begins is to record your assignment of mortgage.
• 1:14
  SPEAKER_00: This is the step that puts your name on the public record as the lien holder.
• 1:17
  SPEAKER_00: Once your assignment is recorded at the county, every party with a legal obligation to notify you.
• 1:23
  SPEAKER_00: A senior lender filing foreclosure, a bankruptcy court sending notice, a county sheriff proceeding on taxes is required to do exactly that.
• 1:30
  SPEAKER_00: Your recorded assignment is your automatic early warning system.
• 1:33
  SPEAKER_00: Without it, you are invisible to those notification chains, and you will only find out about problems when someone else tells you, if they do at all.
• 1:42
  SPEAKER_00: With your assignment recorded, the four areas to monitor on a regular basis are property taxes, senior lien status, borrower bankruptcy, and property listings.
• 1:51
  SPEAKER_00: Property taxes should be reviewed at least every six months, and for first position loans, even more frequently.
• 1:58
  SPEAKER_00: In most counties, property taxes are billed and paid twice a year, so a twice annual check aligns with the payment cycle.
• 2:04
  SPEAKER_00: The county tax collector's website is your starting point.
• 2:07
  SPEAKER_00: Search the property by parcel number or address and confirm the current balance and payment status.
• 2:12
  SPEAKER_00: If you are a junior lien holder and the first mortgage is held by an institutional lender, there is a high likelihood that taxes are escrowed as part of that senior loan.
• 2:21
  SPEAKER_00: Meaning the first lien servicer is collecting a portion of the property tax with every monthly payment and remitting it directly to the county.
• 2:27
  SPEAKER_00: That is a meaningful protection for your position.
• 2:30
  SPEAKER_00: But do not assume.
• 2:31
  SPEAKER_00: Confirm.
• 2:32
  SPEAKER_00: If taxes are delinquent and you own the first position, you have the option to advance the tax payment yourself and add that amount to the borrower's loan balance.
• 2:41
  SPEAKER_00: It is not an ideal situation, but it protects your collateral and your secured position from a tax foreclosure that could otherwise wipe you out.
• 2:48
  SPEAKER_00: Senior lien status is the second area to monitor, and it is critical for junior lien holders.
• 2:54
  SPEAKER_00: The first mortgage in front of you going into default and foreclosure is one of the most serious threats to a second lien position.
• 3:00
  SPEAKER_00: If the senior lender forecloses and the property sells at auction for less than the first lien balance, your second lien is wiped out entirely.
• 3:07
  SPEAKER_00: Checking the senior lien status quarterly at minimum is the standard.
• 3:10
  SPEAKER_00: You do not always need to pull a new credit report to do this.
• 3:13
  SPEAKER_00: If you have an old credit report with the senior lien account number, you can call the servicer's automated phone line and navigate through the prompts to confirm the last payment made and the current balance.
• 3:22
  SPEAKER_00: If the automated system transfers you to a customer service representative, that is a signal the loan may no longer be performing.
• 3:30
  SPEAKER_00: Use that information to escalate your attention on that asset immediately.
• 3:34
  SPEAKER_00: Borrower bankruptcy monitoring is the third area.
• 3:37
  SPEAKER_00: As we covered in an earlier episode, a bankruptcy filing triggers an automatic stay that halts all your collection activity and requires a different set of actions.
• 3:45
  SPEAKER_00: The good news is that if your assignment is recorded, you will be named as a defendant in any bankruptcy proceeding and served with notice automatically.
• 3:53
  SPEAKER_00: But you can also be proactive.
• 3:55
  SPEAKER_00: PACER the federal court's electronic record system allows you to search by a borrower's social security number to check for any active or recent filings.
• 4:02
  SPEAKER_00: Running this check on your portfolio periodically, particularly on loans where the borrower has been unresponsive, gives you visibility before the formal notice arrives.
• 4:11
  SPEAKER_00: The fourth monitoring check is property listings.
• 4:15
  SPEAKER_00: Periodically searching your property addresses on real estate listing sites takes about 30 seconds per loan and can be genuinely revealing.
• 4:22
  SPEAKER_00: If a borrower has listed the property for sale without telling you, it might mean they are trying to sell and pay you off.
• 4:29
  SPEAKER_00: Which is good news.
• 4:31
  SPEAKER_00: It might also mean they are trying to sell the property without properly accounting for your lien, which requires immediate action on your part to make sure your payoff is included in the transaction.
• 4:43
  SPEAKER_00: Either way, seeing the listing before you hear about it puts you in a better position to respond.
• 4:48
  SPEAKER_00: Monitoring does not need to be a daily task.
• 4:51
  SPEAKER_00: Build it into a regular calendar cadence.
• 4:53
  SPEAKER_00: Monthly for senior lien status checks on your most at-risk junior liens.
• 4:57
  SPEAKER_00: Biannually for property taxes.
• 4:59
  SPEAKER_00: Quarterly for a full portfolio review that touches every asset.
• 5:03
  SPEAKER_00: The goal is a living, current picture of your portfolio so that when something requires action, you know about it early enough to act effectively.
• 5:11
  SPEAKER_00: Next time, we are going to cover building your vendor network.
• 5:14
  SPEAKER_00: The attorneys, servicers, title companies, and other counterparties that make a note investing business run.
• 5:21
  SPEAKER_00: Thanks for sticking around to the end, and thank you to my trusty Robot and the Fixed Notes team for putting together another episode.
• 5:28
  SPEAKER_00: If you want to learn more and hang out with the real, not AI version of me, join our free school community at school.com slash fixed notes.
• 5:37
  SPEAKER_00: That's s ko l dot com slash f I X N O T E S.
• 5:43
  SPEAKER_00: In the meantime, we'll see you in the next episode.