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Note Investing Due Diligence Resources
The note investing due diligence process can feel like a daunting task when first looking at all the steps that should be performed. The first step is to break up your due diligence into two (2) phases known as initial due diligence and secondary due diligence. During initial due diligence you want to perform a high-level review of the note you are looking to purchase, with the intent of focusing on only the best notes and underlying collateral. Only after your initial bid is accepted by the note seller will you begin to perform your secondary due diligence, which is much more granular. During the secondary due diligence phase you are going to verify additional data points and confirm prior facts and potential assumptions that were made during the initial due diligence phase.
If you want to learn more about note investing due diligence, make sure to check out NoteVestment.com’s Ultimate Guide to Note Investing Due Diligence! This Ultimate Guide is a huge deep dive into note investing due diligence, which is jam-packed with detailed content to get you more knowledgeable about the note investing due diligence process.
Due Diligence Resources
The resources below are some of the websites and resources that can be utilized to perform your due diligence while note investing. We’ll continue to update this resource page as we continue on our real estate note investing journey.
Online Property Valuation
Shack Shout
Shack Shout is a great tool to use in real estate investing. It works like a website aggregator, where the site will pull up all of the main property websites you would be interested in using for a specified address. This list can include links to multiple sites (e.g. Zillow, Realtor.com, Trulia, school ratings websites, Bing Maps, Google Maps). It is an amazing tool to use when the address can be found and is pulling in the information correctly. Unfortunately, some addresses do not populate all of the aggregation sites on Shack Shout. That being said, it is still a great one-stop shop site to use to see many of the sites you need to review during your note investing due diligence.
Realtor.com
Realtor.com is one of the main online real estate websites that has listings throughout the country. While you are performing due diligence, you will find that some property addresses only come up on Realtor.com, while others appear only on Trulia or Zillow.
Trulia
Trulia is one of the main online real estate websites that has listings throughout the country. One of the great features of Trulia is that you can pull local crime data surrounding a subject property you are analyzing. This crime map is a great tool to use during due diligence.
Zillow
Like Realtor.com, Zillow is another one of the main online real estate websites that has listings throughout the country. While you are performing due diligence, you will find that some property addresses only come up on Realtor.com, while others appear only on Trulia or Zillow.
City/Market Data & Analysis
Census.gov
The Census Bureau has a wealth of available information, which can be accessed for FREE. In addition, they offer FREE tools to help you drill through data sets quickly and efficiently. Like USA.com, leverage the data available through the Census Bureau to hone your target investment markets.
Trulia
Pull local crime data surrounding a subject property you are analyzing. This crime map is a great tool to use during due diligence.
USA.com
With a simple interface and search feature, you can quickly pull up city data analytics across the United States for FREE. There are numerous data points to include: population, vacancy, growth, rental %, ownership %. Use the information available on this website to help narrow down your target investment markets.
Getting Eyes on the Property
Google Maps
Google Maps can be leveraged in a number of ways in order to get eyes on a property. Not only can you look at the satellite view of the local area surrounding the property, you can also go to the Google Street View and see what the property looks like from the street. Make sure to check when photos were last taken during your due diligence.
Bing Maps
Just like Google Maps, Bing Maps offers a great resource for the long distance to start initial due diligence and get eyes on a property. Leverage the satellite view, street view as well as a unique bird's eye view only provided on Bing Maps to get a great initial look at the exterior of a property. Like Google Maps, make sure you check when the photos were last taken.
Task Rabbit
Hire someone for a nominal fee to go and take photos of a property you are thinking about investing in. With a service like this, make sure to be as detailed as possible as to your job requirements to ensure that you get the best results.
WeGoLook
A competitor to Task Rabbit, you can hire someone from WeGoLook to drive-by a property, take photos and even record a video. Make sure to be as detailed as possible as to your job requirements to ensure that you get the best results when using WeGoLook.
Nationwide Title Review
ProTitle USA
ProTitleUSA is a nationwide Title Search and Analysis company, providing its customers with the highest level of Title services in all areas of the real estate market. One company, nationwide coverage, both commercial and residential title work, equals increased productivity. I have personally spoken with the founder, Alex Goldovsky, on several occasions and he has always been both professional and courteous.
Legal Research
PACER
The Public Access to Court Electronic Records (PACER) is an electronic public access service that allows users to obtain case and docket information online from federal appellate, district, and bankruptcy courts, and the PACER Case Locator. Specifically to be used to look for potential foreclosure and/or bankruptcy records of borrowers.
Judicial vs. Non-Judicial Foreclosure States
This FREE resource offered on NoteVestment.com is an interactive map that identifies the judicial and non-judicial foreclosure states across the United States, and provides each states respective foreclosure statutes. This map is a great resource to have when you are initially looking into a new potential market, or need to review specific state foreclosure statutes quickly.
Superior Lien States Interactive Map
A FREE resource offered on NoteVestment.com is our Superior Lien State Interactive Map. This map dynamically displays Superior Lien States, which can be utilized when performing your due diligence on a potential note. A great resource to have in your tool belt.
Process Automation
Process automation helps both new and full-time real estate note investors streamline and strengthen their businesses. Efficiencies from automation help to move your note investing business down the road of success, because of the fact that you free up hours to focus on key aspects of your business. Progress process automation helps you work on your business, not in your business. Full-time note investors can also realize large efficiency gains and growth in their businesses through automation, which facilitates the realization of a lean, predictive and responsive business.
Leverage Automation to Get Out of the Rat Race
We would challenge to say that automation is even more important for the part-time note investor than the full-time note investor. The vast majority of real estate note investors, especially those getting into note investing, are starting out pursuing their dreams on a part-time basis. It is these part-time investors, who are more than likely working their 9 to 5 jobs, and then working on their note businesses in the early morning or the late hours of the evening. Process automation presents a crucial piece of the puzzle for the part-time note investor that needs to be honed and fine-tuned. A piece that can be developed and increasingly leveraged to get him/her out of the rat race and into full-time note investing.
Process Automation Resources
Zapier
Introductory accounts are FREE and can be used to connect more than 1,000 applications together to create automatic processes called zaps. Build up your zaps between apps and start to see the power of process automation. Zapier has some unique automation that isn't offered by its competitors. Take a few minutes to browse the zaps and you'll just start to see the possibilities.
Automate.io
Like Zapier, introductory accounts are FREE with Automate.io, and can be used to setup a number of automation tasks called bots. A big benefit with Automate.io is you get more bots with their FREE account compared to Zapiers. Just like Zapier, there are process automation tasks that are exclusive to Automate.io. I would recommend browsing each website to see what they offer, and which automation offerings best compliment your current business.
IFTTT
IFTTT stands for If This Then That and is a great description for this FREE process automation website. Just like Zapier and Automate.io, IFTTT provides process automation solutions to the entrepreneur or real estate investor. Most recently, IFTTT.com has been moving into connecting smart devices such as smart light bulbs to applications such as Google Calendar or Uber.
Globiflow
Globiflow specifically pertains to Podio, a popular Customer Relationship Management software. Numerous automation tasks can be achieved in Podio through the use of Globiflow. Such as automatic text messaging or automatic e-mails based on an event occurring within Podio. If you are using Podio, definitely consider implementing Globiflow into your processes. Currently Globiflow is included as part of Podio Premium.
Financial Calculators
The financial calculator is a very important tool to use as a real estate note investor. Note investors should become familiar with the financial calculator, to be able to accurately calculate note investment returns. Many investors are intimidated by financial calculators like the HP-12C or the Texas Instruments BA II Plus. Here we will help you start to conquer the calculator and boost your financial calculator game.
Recommended Financial Calculators
Texas Instruments BA II Plus
The BA II Plus was my first financial calculator and always performed well throughout college. It is capable of solving all of the financial calculations required as a note investor, such as time-value-of-money, cash flow analysis, amortization schedule generation, Internal Rate of Return (IRR) and Net Present Value (NPV). The BA II Plus operates most closely to simple function calculators, so it should be easier to familiarize yourself.
HP-12C
My personal go to calculator is the HP-12C. Like the BA II Plus, it performs all necessary financial calculations that would be desired from a real estate note investor. Uniquely, the HP-12C computations are in Reverse Polish Notation (RPN), which may lead to some confusion when first using the calculator. Aesthetically the HP-12C feels premium and refined compared to the BA II Plus, which is reflected in the slightly higher price. For the higher price, I feel that it is justified the premium craftsmanship alone.
Top Book Picks
Here are the top book recommendations that have helped us build our real estate note investing knowledge, or have positively affected our lives. With over a million books published each year in the United States, there is an amazing amount of knowledge to be gained through reading.
Real Estate Note Investing
Real Estate Note Investing by Dave Van Horn
With over 30-years of real estate investing experience, and 10-years of real estate note investing experience. Dave goes into detail about his journey as a real estate investor and his path to note investing. Finally he speaks to his philosophy and some of the things he would have done differently if he started from scratch as a new note investor.
Bulletproof Title Due Diligence by Alex Goldovsky
Alex is the Founder and CEO of ProTitle USA, a leader in nationwide title search, analysis and due diligence on residential and commercial properties. I have personally spoken with Alex and he has a wealth of information to provide to note investors.
The Art of Investing in Distressed Second Mortgages by Sherman Arnowitz
Sherman has managed funds with Unpaid Principal Balances totaling over $100-million. Geared towards investing in second mortgages, this book covers sourcing of mortgage notes, due diligence steps, deal negotiation, funding, closing, bankruptcy, foreclosures and skip tracing.
Performance Anxiety by Gordon Moss
With over 25-years of real estate investing experience, Gordon shares his story about his path to success in the non-performing real estate backed note niche. Similarly to Sherman Arnowitz, Gordon Moss specifically focuses on the second mortgages, or the junior lien real estate backed note market. Uniquely, rather than going into specific detail about the due diligence process, Gordon Moss talks about more generalized points of consideration with note investing.
Turning Distress Into Success by Fuquan Bilal
For over 17-years, Fuquan has successfully managed three private mortgage note funds that primarily invest in single-family performing and non-performing mortgage notes. Fuquan talks about real estate note investing and the idea of creating the proper mindset to be successful. This book does not cover specific due diligence steps, but speaks to overarching principals of note investing such as: advantages of notes, types of notes, borrower management and acquisition.
Invest in Debt by Jimmy Napier
Jimmy was selected as Real Estate Exchangor of the Year for Florida, and Educator of the Year for the National Creative Real Estate Expo. Jimmy Napier has been a full-time real estate investor since 1971 when he quit his job and jumped into real estate investing. Uniquely, Jimmy Napier covers the use of the all-important financial calculator throughout this book. He also goes into detail about more advanced strategies of real estate note investing such as purchasing partials and the use of wrap-around mortgages.
Bailout Riches by Bill Bartmann
Bill created America's largest debt-buying and debt-collection company. Formerly a high-school dropout, he has been listed among Forbes magazine's 400 wealthiest Americans and has twice been named National Entrepreneur of the Year by USA Today, NASDAQ, Inc. magazine, Enrst & Young, and The Kauffman Foundation. Bill provides a very unique perspective and goes into pieces of the business like the best way to conduct meetings with direct bank contacts.
General Real Estate
Rich Dad Poor Dad by Robert Kiyosaki
One of the foundational books that many real estate investors first read, which turbo charged their motivation to get out of the rat race through investment in real estate. Many investors credit this book for helping them quit their day jobs, and pursue their dreams.
Cashflow Quadrant by Robert Kiyosaki
A book with the same critical acclaim to Rich Dad Poor Dad. Many real estate investors credit this book with helping them set the foundational principles by which they have invested throughout their entire lives. A great read to change your perspectives on the power of having money work for you.
The Wealthy Code by George Antone
A book that is sure to enlighten your perspectives on how the rich get richer through leverage, and how you can capitalize on those same wealth building strategies. A fellow note investor recommended me this book, and I feel like I found a lot of valuable nuggets from the author.
The Banker's Code by George Antone
Learn about the power of the bank and how to start lending your money to become the bank. This book sheds light on a different perspective of looking at money, which will be sure to help you in your real estate note investing business.
Professional Development
How to Win Friends & Influence People by Dale Carnegie
More than 75 years in print, Dale Carnegie's book has continues to hit home on foundational concepts of life that will help you achieve success in all aspect of your life. With over 15-million copies sold, this book is another foundational book to add to your library.
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