Sometimes ignorance is not bliss, and here I show that I don’t know everything.
In my career I haven’t focused much on real estate finance. I didn’t even consider the loan market until 2008. It became apparent however that it was a good time to buy some non-performing loans at a steep discount. The banks were foreclosing on properties (banks had to get rid of many of their non-performing loans or be taken over by the FDIC). If the loan performed, great. If the loan defaulted, also great. We would end up with the property and hold onto it until the market improved. Either way, we end up a winner.
It seemed a very good idea until I realized: the few million dollars that I might be able to raise was not nearly enough to compete with the big boys who were buying up all the loans in pools of hundreds of millions or billions of dollars.
I caught up with Brock Cannon, Director of HFF at the IMN Borrower’s Forum on Non-Bank Real Estate Finance & Subordinate Debt in Santa Monica, and he describes how the buyers of those loans in 2008-2009 are now beginning to reap the profits as the market improves. It looks like there will always be a market for loan sales, just like there will always be a market for dirt.
For more, listen to our show How to Buy & Sell Notes Secured by Commercial Property with Eric Paulsen, President – Commercial Division of CEO of Auction.com.