With over 3000 members, LoanMLS is having a significant impact on our members’ businesses – helping them to find qualified buyers more quickly than they thought possible.   Here’s an interview with LoanMLS member, Mychal Dobbins, an Asset Manager and Partner at Earn Investments Corp, who has experienced this strong response first-hand.   

Q;  What types of notes are you posting on LoanMLS?

 I am selling performing and non-performing commercial and residential notes – all real-estate secured. 

 Q:  Have you found that certain notes receive better response than others?

 There seems to be a large appetite for distressed assets.  One thing that has been exciting about the LoanMLS platform is that it allows investors/institutions, who maybe don’t have the credentials to bid directly on FDIC-insured assets, to conduct their own due diligence without having to go through the formal bidding process.

 Q:  How do you screen potential buyers/investors who contact you?

 I created a list of qualifying questions that LoanMLS includes directly in the inquiry form that potential buyers complete and is then sent to me.  With these questions, I’ve been able to eliminate the “tire kickers” and the broker chains.  For example, my first question is “Are you buying for yourself or are you acting as a broker?”

 I have been very surprised at the heavy response that I’ve received on my listings, and the inquiries are all from very high quality, knowledgeable investors. 

 Q:  Before you started using LoanMLS, how would you typically find buyers for your notes?

 It was based on my personal relationships or sphere of influence – people that I had done business with in the past, so limited. 

 Q:  How has LoanMLS impacted your business?

 I have never had such a strong response so quickly.  I posted a listing for a $60million pool and had 8 inquiries in the first week.  I can’t say enough about the response – it’s been a very positive experience and a huge benefit time-wise.  The quality and integrity of the buyers has been very high – they are principals of their companies and all of them were able to validate their credentials.

 I’ve created new relationships through LoanMLS that are going to be long-term.  I’ve even acquired other assets through these relationships and have really been able to maximize the contacts that I’ve made with LoanMLS.

 Q:  Do you have any tips that you’d like to share with other LoanMLS users?

 I’d recommend creating your own qualifying questions, as I’ve done, to help qualify potential buyers upfront, which saves a lot of time. 

I’d also recommend keeping your listing information up-to-date.  I’ve got working pools and each time I’ve gone in to update them, adding assets or adjusting the price, it’s led to new inquiries.  So keep your listing current to continue to generate responses. 

 Finally, it’s really important to follow-up with people who make inquiries quickly while their interest level is high.  You get better results by following up quickly.

With over 2200 members and hundreds of loan listings, LoanMLS is really starting to create a new, more efficient marketplace for buying and selling loans.  Here’s an interview with one of LoanMLS’s sellers, Mr. Ingallinera who shares some helpful information about how LoanMLS has impacted his business and how he effectively reaches and qualifies potential investors.

Q:  Tell me a little bit about your business/company.

For the past 30 years, I have been in the private lending and placement business, and for the past 18 years in the hard money/loan origination business. When the real estate market experienced a downturn in value and sales; I shifted to selling real estate notes. For the past two years, I’ve been selling individual bank notes (that were purchased in bulk) at a discount to private individuals. My business is to sell performing notes that have a high probability of continuous payments and offer non-performing notes that are capable of being modified and returned to paying status.

Q:  What types of notes are you posting on LoanMLS?

I am selling performing, re-performing, sub-performing and non-performing notes, primarily at a discount of the Unpaid Principal Balance (UPB). These are not private seller carry back notes used in a sales transaction but rather refinancing Bank notes.  In terms of class differences, a re-performing is where the borrower has fully reinstated the loan (paid all the delinquent payments); and sub-performing is when there has been modifications to the original terms. In my listings, I prefer not to list a price or a value of the property. The investor (buyer) needs to complete his own due diligence to determine those two items.  

Q:  Have you found that certain notes receive better response than others?

When I first started listing notes, I found that I was getting a lot of inquiries from investors who really weren’t interested in the types of notes that I was selling.  I also got a lot of inquiries from brokers looking to re-sell my loans and people who were “weekend” investors looking for a fast way to make money in notes. 

The way I solved that problem was by adding a disclosure statement to all of my listings that clearly states the type of note I’m selling and that I only sell to people who are buying for themselves, not a broker network.  When you have several people in a transaction, it becomes deluged and sometimes creates miscommunication.

The overall number of inquiries has decreased, but now I’m getting much better qualified investors.

Q:  How do you screen potential buyers/investors who contact you?

I first require that any potential investor sign a Non-Disclosure Agreement.  This scares away any “wanna-be” investors – any legitimate investor will be willing to sign an NDA.

After they sign the NDA, I follow up with a phone call to learn more about their investment criteria – the types of notes, geography, performing vs. non-performing, what they usually purchase, etc., and most importantly,what information they need so that they can make a decision.

Q:  Before you started using LoanMLS, how would you typically find buyers for your notes?

I tried other online sites and would post ads that said “Looking for investors” but I wasn’t able to qualify note investors specifically. I also bought some mailing lists and sent out some general inquiries, but I had to limit my geographical reach due to cost.  LoanMLS has allowed me to attract only investors who are looking for specific real estate notes and eliminates the waste of time of dealing with the general investor.

Q:  How has LoanMLS impacted your business? 

LoanMLS has been a great vehicle for advertising my notes in a confidential manner.  Instead of having to reach out and try to find investors, now they come to me. Because it’s not limited geographically it’s helped me to find new investors that I would never have found otherwise.  It’s been a great way to spend my advertising dollars to attract new investors.

The best way to see how it’s impacted my business is to look at the numbers.  Since I started using LoanMLS back in November 2009, I’ve had a total of 17 listings, and of those, 8 have sold directly as a result of LoanMLS.

Q:  Do you have any tips that you’d like to share with other LoanMLS users?

One important thing that I’ve learned is that it’s important to clearly state upfront what type of note you are selling and what type of information/documentation is available. On the other side, I also clearly state what I’m not selling and the documents that I don’t have.

You should also make sure the title for your listing is clear.  My title line typically includes three things: (1) the condition of the note (performing or non-performing); (2) the location; and (3) the type of property.

I find that by listing those three items, any potential investor can make a quick decision as to whether they would like to request more information about my note.

For investors/buyers, I’d recommend including contact information in your inquiries so that it’s easier to follow up with you.

Q:  Mr. Ingallinera, I appreciate that you have taken the time to share some of your thoughts about LoanMLS. Is there anything else you’d like to share?

LoanMLS has been a profitable way for me to present my notes for sale.  What most investors sometimes forget is that we’re both individual investors, one buying and the other selling.   If either of the parties does not want to have an open dialogue about the offering, then they should refrain from responding or offering the note for sale.  This, like any business, is based on open dialogue communications.

In closing, I always tell people that even with over 30 years of experience in the private lending and placement business, I learn something every day from other investors.  LoanMLS has introduced me to a nationwide audience of diverse investors who may have different opinions of the note business.  I welcome that opportunity.

Mr. Ingallinera is a seasoned thirty-year veteran of the loan origination and private placement business and has been a guest lecturer on private placement to many civil groups and trade organizations. He has written articles on loan originations and marketing which have appeared in various industry publications. He is currently completing his latest book entitled “a layman guide to real estate notes” due out this fall.   If you want to contact him via email, his address is al@pb4notes.com.