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San Antonio Note Deal-A True Win, Win, Win!

Updated on October 7, 2011

San Antonio SFR

Getting Things Rocking in Texas

In my line of work, you never know where your next deal is going to lead you to. Most of my note deals are outside of Texas and so when I get a list of defaulted notes with anything in Texas, especially in Austin or San Antonio, I jump on it. So was the case when one of my students, Lucinda Chiles, called me with a list of three notes from a mortgage banker looking to move these NPN's in Myrtle Beach, Dallas, and San Antonio.

We found out that the lender was looking for around 70% of value, so I immediately had my realtor, Haley Odom Catletts, pull comps on the San Antonio note deal, along with my realtor in the Dallas area, Sheila Bonn, and friends in North Carolina pull values for the Myrtle Beach waterfront condo. The Harrington's have been looking for a condo on the water at Myrtle Beach and that's why I sent them the lead.

Well, we found out that based on current comps, the San Antonio property is worth around $100K and the outstanding balance is in the $120K range. We made an offer at just over $51K via a letter of intent on Friday afternoon at 4:30 pm. At 5:06 pm, we had an accepted and signed LOI. Let's just say we were stoked!

I immediately talked to several of my investors about funding the deal and I had three lined up who were ready to roll. Did I let that stop me from advertising such a great deal to find backup and other potential investors? No way. I took some pictures and filmed a video on the property, outlining the deal, and I wrote up an email and I emailed it to the local Meetup.com real estate investment clubs to find other investors. Within 24 hours, I had four more investors with over $260K in private money.

By the end of the week, we had the property under contract via a LSA (Loan Sale Agreement) from the lender, and multiple joint venture funding partners. Lucky for me and my backup plans, buy I ended up going with one of my new investors, Rudy Cortez, after the first three investors had to move on or flaked on the deal.

We had title pulled on the property through First American Title, Earl and Associates, and everything was clear to go with that. Our plan, is to offer the homeowners a deed in lieu or friendly foreclosure to let them go as they owe over $128k and hadn't made ontime payments for the last 90 days. This way, we create a win for the owners by letting them get out from under a bad asset or bad debt in their corner, knowing we can sell the property via REO, short sale or traditionally at $100K and make around $40K in profit after closing costs and commission. Since the property is in great condition, it should be a quick sale and should to around a 40% return on Rudy's money (even if it takes a year), or a 160% annualized return if we sell in 90 days. Yes, my numbers are right.

Rudy has the right to cash me out at any moment as well and hold onto the property and rent it out at $1,000 a month. He could also chose to keep the owners in the property and reset their loan. If they continued to make the same payments, this would equate to Rudy receiving a 16% return on him money. It's a win for Rudy and for me. Lucinda Chiles wins because she will receive half of what I make on the deal for being a student and member of www.weclosenotes.com. That equates to around a $10K profit on this one deal for 5 weeks of phone calls (not including the other two deals). That's a win there too! The bank also wins by getting rid of their bad debt!

Stay tuned to find out where the deal finally ends up!

The Deal Details

Rudy Cortez

Rudy Cortez, my JV partner
Rudy Cortez, my JV partner

Haley Catlett

Haley Odom Catlett, KW Realtor
Haley Odom Catlett, KW Realtor

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    • profile image

      Gary 

      6 years ago

      Does Haley have a sister? Ahem!... I digress.

      Talk about "short and sweet"... the deal, the DEAL!

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