0:07

Everyone it's and Dave welcome to

0:09

on the market today! I'm joined

0:11

by James Day nerd and James

0:13

Thank goodness you're here today because

0:15

we're getting into a part of

0:17

the real estate investing world that

0:19

I truly know nothing about. We're

0:21

going to be talking about receiverships

0:23

and you are really excited to

0:25

talk about this topic. Why do

0:27

you think this is important for

0:30

our audience to know right now?

0:32

There's deal flow is really hard

0:34

to find. And.

0:36

You know, as investors we have to

0:38

shake every branch right now to find

0:40

that deal and what we are seeing

0:42

or least what we've been seen. His

0:44

were buying a lot our product. It's

0:46

from investors that half. Stabilize.

0:49

Or half renovated or you know investment

0:51

dealer. what bad in the lenders are trying

0:53

to dump it off and so we've

0:55

been able defined quite a bit am

0:57

into a through receiverships. It's something that in

0:59

a lot of messages kind of bypass

1:01

in but you have to look at

1:03

all these deals because some of the best

1:06

deals we've ever done have been bought

1:08

out of receivership in. They've also been some

1:10

of the smooth this deals we've ever

1:12

buys. Well cool I'm excited to learn

1:14

about and obviously you know something about buying

1:16

and selling with receivers and James. From

1:18

your personal experience but to help

1:21

us understand that this topic we're

1:23

bringing in an attorney Jake Flow

1:25

he who is a receiver and

1:27

has really intricate knowledge of the

1:29

process side of receiverships. The legal

1:32

things that you need to consider

1:34

as an investor add has some

1:36

tips for you if you either

1:38

find yourself in a situation where

1:40

you need a receiver or as

1:43

a buyer if you want to

1:45

potentially buy a property in receivership

1:47

so that. Let's. Bring on Jake!

1:49

Fluffy. Jake

1:59

flu. Welcome to On the

2:01

Market. Want to get Jake As

2:03

you're going to quickly discover. I

2:06

know absolutely nothing about resistance. So

2:08

let's just start with the basics.

2:10

Hear what is a receivership? So

2:12

a receivership is a court process

2:15

where the receiver is a person.

2:18

To be an individual or legal

2:20

entity that is considered percent by

2:22

it is a person has appointed

2:24

by the court. To take

2:27

control of. The. Property of

2:29

somebody else and administer it typically

2:31

for the benefit of creditors. Sometimes.

2:34

For the benefit of see equity

2:36

honors I and the case of

2:39

apartments be okay so the court.

2:41

Dictates. That for some reason

2:43

a property needs to be

2:46

handled their handed over. The.

2:48

Sword like stewardship to a receiver

2:50

you just said at partnerships or

2:53

one example of when that might

2:55

happen at what are some other

2:58

examples of why a receiver my

3:00

get involved in a real estate

3:02

deal or transaction a large portion

3:05

of it on this federal predator

3:07

and senses. So when you have

3:10

a daughter that's not cool as

3:12

they agreed to or that collateral

3:14

is. Worth. Less than the debt and

3:16

that needs to be liquidated. Okay, got

3:19

it. Ah, and so is this

3:21

then, in lieu of a foreclosure,

3:23

how does this sort of fit

3:25

into the foreclosure world? That

3:28

so it's an alternative to foreclosure. Similar

3:30

to a trustee sale, You going to

3:32

sell it to receivership. And

3:35

wipe out subordinate that's quite different from

3:37

the from the trustee sale is that

3:39

we can actually in the properties marketed.

3:42

Arm and expose them to

3:44

the open market where people

3:46

can obtain financing. And.

3:49

conduct due diligence oh so they can

3:51

make an informed purchase and we can

3:54

get a higher better value than is

3:56

typically internet access to sell okay suggests

3:58

i understand and said sale, it

4:00

has to be sold sort of privately.

4:02

It's not listed on the open market.

4:04

People have to bring cash. But using

4:06

a receivership, it

4:08

sounds like you take that property and essentially you

4:11

can list it on an

4:13

MLS or you go to

4:15

private investors and that allows

4:17

potential buyers to seek traditional

4:19

financing. And I guess in

4:21

theory that would allow the seller or

4:25

the property owner to receive

4:28

more because there's more

4:30

competition for the property. Correct.

4:32

Yeah. And in addition

4:34

to that though, everything's overseen by the court.

4:37

So say we do market a property and we

4:39

get an offer that appears acceptable. We'd

4:42

file a motion with the court, give

4:44

notice to the creditors, to the equity

4:46

owners, to all parties in interest and

4:48

then have at least 30 days to

4:51

come to court and object or continue

4:53

the bidding process and get a higher offer approved

4:56

by the court. And as far as

4:58

an investor goes, a lot of times you're

5:00

getting the same result as you would many times

5:03

at the trustee sale. If they take it to

5:05

auction, it's a first position deed of trust, you

5:08

can bid on it and it's going to clear out

5:10

a lot of the other debts except for sometimes the

5:12

IRS lien can follow or a couple other

5:14

types of liens. But the

5:16

big benefit for investors to buy a

5:19

receivership over the notice trustee sales, you

5:21

get so much more due diligence on

5:23

those properties because you can go inside

5:25

them, you can run your fees abilities,

5:28

you can have an

5:30

elongated close rather than just a

5:32

quick bring your cash to

5:34

the auction and write a check. And

5:37

so for an investor standpoint, it's very

5:39

beneficial because you just have that little bit

5:42

more time to kind of massage the deal,

5:44

look at it and have some more time

5:46

to make adjustments on offers in

5:48

case the debtors come back. Whereas that trustee sale,

5:51

you're just bidding and you don't know what your

5:53

price is going to be when you go down

5:55

there to bid. And then you also don't

5:57

know what's going to happen with the possession,

5:59

which is a really big deal in today's

6:01

market, especially for those metro cities where you

6:04

have longer eviction laws. So, Jake,

6:06

when you are working with investors, a lot

6:09

of what the product is

6:11

that's inside that you're working with, they're

6:13

usually properties that are either over levered

6:15

or have some sort of symptom

6:18

of distress that put them into that

6:20

situation, whether it's repairs, it could be

6:22

an investment gone bad. On most

6:24

of the properties that you guys sell as receivers,

6:26

are most of them financeable or is this stuff

6:28

that typically needs to be closed in cash? I'd

6:31

say that most of them are financeable. There are

6:33

a lot of properties that are occupied, whether

6:35

it's by an owner or a tenant,

6:37

but we have a lot of habitable

6:40

buildings that are up to code. The market's

6:42

open to everybody. You know, it doesn't have

6:44

to be somebody coming to the courthouse mess

6:47

with the cash issues checked and a hard money

6:49

loan to buy it from the

6:51

trustee. And then you can get a traditional financing

6:54

and be

6:56

an owner occupant after that. Does that make sense?

6:58

Yeah, it makes sense because there's all

7:01

different types of financial situations that happen,

7:03

right? At the end of

7:05

the day, there's financial stress and

7:08

people need to clear off their debt and

7:10

then order them for them to do that.

7:12

They're selling their property or they're offsetting those

7:14

costs with trying to cover as much as

7:16

they can. And then essentially, you're doing a

7:18

short sale on the rest of the debts

7:20

and getting them to accept the payoff. But

7:23

it's going through more of the court process

7:25

rather than a traditional short sale. Like in

7:27

2008 and 10, we went through a lot

7:30

of different short sale processes where we'd work

7:32

directly with the lender, submitting their

7:34

offer, and then you'd be negotiating directly

7:36

with that lender, getting appraisals and the

7:38

way that they want to check the

7:40

value. Can you touch a little bit of how

7:43

it's different from the traditional short

7:45

sale to what you guys do?

7:48

Because as a buyer and an investor, I've

7:50

always felt like buying a receivership sale via

7:52

short sale is a lot cleaner than buying

7:54

through a lender. It gets done a lot

7:56

faster. It seems to move quicker. move

8:00

a lot faster when a receiver is involved.

8:02

That's right. It's a lot smoother. Back

8:05

in the early 20s, I was

8:07

involved with a number of short sales. It

8:09

was a slow and tedious process, getting

8:12

authorizations and continually talking to the

8:14

bank and negotiating. But with a

8:17

sale and the receivership, you

8:20

don't necessarily need the credit, the

8:22

secured creditors agreement or

8:24

acceptance of a lower offer

8:27

because the judge is the

8:29

one that decides whether or not an offer

8:31

is ultimately acceptable and will be

8:33

forced through. What we do

8:35

is when we market the property, we

8:37

work with trust brokers, we do our

8:39

own market analysis and determine

8:42

what a fair market value for the property is.

8:44

And typically creditors or

8:47

the creditors council are pretty savvy

8:49

to the receivership process. We just

8:51

get a lot smoother and quicker

8:53

cooperation and get deals closed

8:55

a lot faster than we had previously

8:58

with traditional short sales. You bet traditional

9:00

short sales can be a very long,

9:02

painful process. We have some that we

9:04

did in some years where

9:06

we've been negotiating a short sale for years

9:08

because once they hit that a lot

9:11

of states, they have a certain amount of time

9:13

to sell a property at

9:15

the auction and then they have to refile.

9:17

And it would be like this short sale

9:19

process that we'd be doing, going to the

9:21

refiling, updating the financials every month, getting

9:24

that over to the bank. And it could take

9:26

years. There was one I think we closed, it

9:28

took over three years to get it closed. And

9:31

it really didn't make a whole lot of sense

9:33

because the debt kept compiling on it, but it

9:35

was just that process with the bank and how

9:37

slow it was. And the appraisal was even off

9:39

by like 2%. They wanted to restart the process.

9:42

And as a buyer goes, an investor, we like

9:44

buying receivership sales a lot better because they're

9:46

smoother, they're quicker and you can kind of depend

9:48

more on your offer price or

9:51

at least you get your answer back a

9:53

lot faster. Right. And I'd

9:55

say that there are fewer variables because one of

9:57

the things that I recall from doing the short

9:59

sale. is that the

10:02

secured bank was always concerned

10:04

with the sellers, the seller

10:06

slash owner betters financial situation

10:09

and wanting bank statements and

10:13

wanting to know essentially what their assets

10:15

are. Whereas with the receivership, all

10:18

that's irrelevant. Once it goes into

10:20

receivership, all we look at is what the

10:22

fair market value for the property is. So

10:24

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back to the show. So

13:30

why would a creditor

13:33

choose a short sale instead of a

13:35

receivership? Is it worse? Can they do

13:37

a receivership, or is it just they

13:39

don't know that this is an option?

13:41

I think a lot of them might

13:43

not know that it's an option. I've

13:46

seen a lot of weird loans where

13:48

they're even with big

13:50

traditional servicers that

13:52

have just been in default with

13:55

no action on behalf

13:57

of the creditor for Years. And.

14:01

I didn't really make heads or tails of

14:03

why they would want the loan on their

14:05

books, but I'm just seen a lot of

14:07

inactivity from some creditors if I were in

14:10

the position of a predator and there were

14:12

subordinate debts on the property or the all

14:14

for it into receivership rather than short sales

14:16

figures. You. Don't have to negotiate with

14:18

the subordinate. lose. You don't have to negotiate

14:21

with those whereas with a short sale. You

14:23

have to get everybody on board to

14:26

accept it. He in release their dead

14:28

right? But with the receivership. Once.

14:30

You get the or court orders and

14:32

the properties being sold frontier for a

14:34

specific place. It's a done deal. And

14:36

then the deaths are paid in order.

14:39

I already saw first and time first

14:41

and right. And. You don't

14:43

have to worry about that a mechanic and

14:45

material mans leans on. that might be a

14:47

second or third position. What? Is a

14:49

typical transaction was quite big. comes across.

14:51

you guys are hired. What does that

14:53

process look like? Timelines? How's the deck

14:56

Weird. ah what of those loans look

14:58

like as a clear and asked argued

15:00

you've had a walker audience through that,

15:02

how that works and then how it's

15:04

a vow that sale kind was finalized.

15:07

with that The corner. So.

15:09

The process gets started by somebody

15:11

filing a petition to appoint the

15:13

receiver and so it could be

15:15

a predator. Their owls and

15:17

involuntary petition. It could be the debtor that

15:19

files. With. Columnists I met for

15:21

the benefit of creditors and you

15:24

get a general receiver appointed the

15:26

as power of sale. So once

15:28

the receivers appointed. We. Compile

15:30

a schedule of assets and

15:32

liabilities. So. That we can assess.

15:35

What? We're working with where there's a

15:37

single piece of real estate or

15:39

multiple and who are? The creditors are

15:41

both scared and unsecured, so once we

15:44

have that data, Then.

15:46

We set out notice to

15:48

all the predators that are

15:51

identified and with. Start. evaluating

15:53

properties we get them listed for

15:55

sale so we didn't offer that

15:57

comes in we analyze that offer

16:00

negotiate and do counter offers to try and

16:02

make sure that we get market values for

16:04

the property. Once an acceptable market

16:06

value offer is obtained, then we file

16:08

a motion with the court to approve

16:10

the sale at that price on those

16:12

terms. And we send

16:16

notice of the motion and

16:18

the contract out to all the creditors and

16:21

all the equity owners. And pursuant to the

16:23

statute, that's a 30-day process. Somebody

16:26

is entitled to 30 days notice before

16:28

receivership property is sold. Then on

16:31

the MLS, the

16:33

listing gets changed from active to

16:36

pending, back up offers requested,

16:38

and the bidding process remains open until

16:40

the judge is the one that slams

16:43

the gavel down and says sold

16:45

essentially. And on that bidding process,

16:47

you know, to kind of again

16:49

walk the investors through because, you know, right now

16:52

it's hard to find a deal or just trying

16:54

to find inventory. And, you know,

16:56

a lot of times finding a deal, you can

16:58

pay full market value for it. And

17:00

it's more about the condition of the property and you're

17:03

improving it with your plan rather than getting it on

17:05

a great, great price. What is

17:07

that process like? Because receivership fees can change.

17:09

As an investor, we're always kind of concerned

17:11

like what's our all-in number on this property.

17:14

And you'll see it listed on like

17:17

the MLS will be, you know, you can write it

17:19

up. And sometimes there's like a 10% fee

17:22

they get added on or 20% fee or

17:25

there's, you know, there's like

17:27

the beneficiary fees are added on top of the price.

17:30

Can you touch a little bit of why those fees

17:32

vary a little bit when you see it? Because you

17:34

have to kind of look at each deal differently. And

17:37

then where did those fees go? And how does that

17:39

affect that bottom line, whether the investor's deal is going

17:41

to go through or not, you

17:43

know, because sometimes it's the deal can

17:45

be make or break on that fee. If

17:47

it's an extra 10% might not quite work.

17:51

And, you know, for investors, we're just trying

17:53

to get through that motion. Can you

17:55

kind of explore those fees a little bit? Because I know a lot of

17:57

people run into those as they're looking at buying these. So,

18:00

With our company, Resource Transition

18:02

Consultants, our fees are set

18:05

pursuant to the court order. Similar

18:07

to real estate commissions, as they were a

18:09

couple of years ago, our

18:11

fees are paid out of the purchase price. So

18:14

it'd be really easy for you to calculate

18:16

what your all-in number is when you're looking

18:18

at the property. It's going to be whatever you're

18:20

offering to pay for the property. There

18:22

wouldn't be a hidden fee that's tacked on. Why

18:24

is there such a variance in the fees sometimes?

18:27

Also, as investors, we're trying to finance these deals. A

18:29

lot of times, it's hard money. Hard money

18:32

lenders, they want their 20% down. Then

18:34

sometimes, they won't even include those fees in. So you

18:36

have to come up with an extra cash to buy

18:39

that deal. Can receivers

18:41

charge it in any type of structured way? Or

18:43

is it... I know I've

18:45

been familiar with your guys' process. It's all

18:47

included in the price. But what's the big

18:49

delta on how they charge those fees? The

18:52

receivership process is a future... Now, it's a

18:54

future of statute. A long, long time ago,

18:57

it was a future of common law. Within

19:00

the legal field, there's... You

19:02

guys, I'm sure, experienced in

19:04

the real estate market, there's

19:06

just an open entrepreneurial spirit

19:09

and variation from professional to

19:12

professional. So I guess that's the best

19:14

answer I could give. Somebody's fee

19:16

structure might change just

19:18

because they think that they can make more money

19:20

that way or make their... Either

19:22

make more money on the transaction or

19:24

it makes the services that they're providing

19:27

more appealable. So it's just a marketing

19:29

and a personal preference. Jake,

19:31

I'd love to switch gears and just talk

19:33

about what's happening in the receivership market today.

19:35

How would you describe the state of the

19:37

industry? Changing. I'd say it's

19:40

ramping up. A few years back,

19:42

there were a lot of owner

19:44

occupants that were getting behind with

19:46

their traditional mortgages. And so they'd file

19:48

an assignment for the benefit of creditors as

19:51

an alternative to doing a bankruptcy

19:53

or trying the long and tedious

19:55

short sale process that we've discussed.

19:58

But lately, we're... what I've seen

20:00

a lot more of are investors.

20:03

So it'd be an individual that

20:05

has multiple properties, whether it's a

20:07

builder or a flipper that

20:09

just acquires multiple properties that

20:12

they're unable to complete or

20:14

unload at their previous target

20:16

price, then file a receivership

20:18

and we get those

20:20

properties liquidated for their creditors. And that's

20:22

where James jumps in. It's

20:25

those greedy performers. I mean, I think

20:27

the market was doing so well and

20:30

rates were so low that even

20:32

the lenders, right? Like we saw hard

20:34

money lenders and private lenders getting very

20:37

aggressive with leverage based

20:39

on pretty packed performance, on

20:41

rent increases, on value increases. And then

20:44

once those rates shot up, everything

20:46

kind of hit the brakes for a minute. And

20:50

because the debt, when we're talking

20:52

about more investment property, if it's

20:54

a residential homeowner, a lot of

20:56

them have debt that's 3.5% right now. And

20:58

that kind of adds up over time. But when

21:00

these investors are borrowing money at 10, 12%, and

21:04

it's not being paid and it's compounding

21:06

on itself, especially when

21:09

it's midstream on a project, right? Like

21:11

if the house is half stabilized, the

21:13

value has gone down, not gone up

21:15

many times. And then the

21:18

debt that was financed at a very aggressive

21:20

rate where lenders were maybe financing 90% on

21:22

these projects are

21:25

really exposed because the value has gone up,

21:27

the debt cost has gone up, or

21:31

the leverage of the LTV is a

21:33

lot lower, and then it's just compounding

21:35

on itself. And then

21:37

that's where really the opportunity is as far

21:39

as investors go too, because in today's market,

21:41

one thing we have seen is the market

21:43

is rebounded fairly well, but things that need

21:45

work are still not selling at the pricing

21:47

it was selling for. And

21:50

I know for us, for investors, we've

21:52

been targeting more half-built projects where

21:54

investors are kind of trying to get out than rather

21:56

than even targeting the homeowner that wants to sell, because

21:59

there's a lot of more inventory for us to

22:01

look for. And in addition to

22:03

working with those lenders and the debtors, they kind of

22:05

know what they've lent on and they want to get

22:07

a deal done. When you're negotiating with some of these

22:09

lenders because they're more short-term commercial debt, are they working

22:11

a lot more to kind of discount the notes because

22:14

they just want to get paid back in full? A

22:16

lot of times they're paying investors at

22:19

a higher rate too, so the more that compounds,

22:21

the riskier position they're in. Are you seeing lenders

22:23

just trying to move stuff forward and taking bigger

22:25

shorts just to get it off their books? Yeah, I'd say

22:28

so. And I'd say that there's a lot of willingness

22:30

to smudge the

22:32

default interest. Recouping

22:35

the principle is of an

22:37

utmost concern. And

22:39

when we're dealing with debts that can accumulate

22:41

default interest at 24%, there's quite

22:44

a bit of motivation I've seen on

22:46

behalf of the lenders to just get

22:48

a deal done because they've got the

22:50

same understanding that I think we all

22:52

do here that there is a point

22:54

of no return where you're

22:56

not going to recoup your principle plus all

22:59

the accrued interest. And

23:01

they just need to get the property sold, get the

23:03

cash back into their account so that they can disperse

23:05

it to their investors. So James,

23:07

I'm actually curious, does that mean that

23:09

when you work with the receiver, is

23:11

it less competitive than a

23:14

lot of the other deals

23:16

that you're looking to buy? I would say it's

23:18

not less competitive because they're getting listed on the

23:20

open market. I would say

23:23

many investors, they want

23:25

to buy on the now. They don't want to wait

23:27

for that process, even though it's not that

23:29

long half the time. And they

23:32

might just go past the deal. Where

23:34

I do see it's beneficial is right

23:36

now we're in a market that's kind of gradually

23:39

rebounding. And when you're getting in

23:41

contract, it can take 90 days to close this, 120 days

23:43

to close it. And

23:46

as the market conditions improve, the deal

23:48

can actually get a little bit better when

23:52

you're done stabilizing. And you

23:54

don't see a lot of competition. But what you do

23:56

have to watch out for are those nasty bump clauses

23:59

where you You get a deal, you

24:01

think you're locked in, you're going to close, and

24:03

then all of a sudden, there's a bump

24:06

where another buyer can bump you out of

24:08

position on your deal and you

24:10

either have to come back and match their

24:13

offer or resubmit at that point or even

24:15

how there's been many times

24:17

where we've been on

24:19

a deal, it's going to get to

24:21

court approval and another buyer shows up

24:23

out of nowhere with an offer at

24:25

the hearing. Can you

24:28

explain that to the

24:30

listeners a little bit? How does that work? What

24:33

happens when you get kicked off your deal

24:35

and how do you keep it under control

24:37

if you get those nasty bumps? Yeah, well,

24:40

those late notice bumps are

24:42

frustrating to everybody involved because we have

24:44

to keep the quarter prized

24:46

of what's going on and

24:49

we have a duty to try and get the

24:51

highest and best offer available, get the highest and

24:53

best price for the

24:55

benefit of the creditors and any equity holders.

24:57

That being said, it's a public

24:59

sale process and everybody's aware when

25:02

we're doing a transaction, we have

25:04

them find a specific

25:06

addendum that identifies that

25:09

their offer is contingent upon court approval

25:12

and it's subject to overbids up until the

25:14

court approves a final sale. That's

25:16

super interesting. That would really bum me out

25:18

if you thought you had something locked up

25:20

and then it's not how it

25:22

works at the regular market. That would be very

25:25

surprising. We used to have Bump Day

25:27

in our office where we would go through every

25:29

different bankruptcy because you can see them because this

25:31

is like backup requested, who the

25:34

broker is, the similar common, who the seller

25:36

is. Every 30 days,

25:38

we would underwrite every pending bankruptcy and just trying

25:40

to bump people out especially if they knew who

25:42

was on the deal. It was like a game

25:44

for us. You're like

25:47

framing this, James, and you're like, oh,

25:49

those nasty bumps. You were the one

25:51

bumping people. You know what? Because

25:53

you got to stay on top of the market. If

25:56

there's something pending that's right outside the box, recomp it.

25:59

There was a deal. pretty recently, we

26:01

had our initial offer and then the market

26:03

started rebounding and we ended up getting in

26:05

like a bumping war and we went to

26:07

our highest, it was like 100 grand higher.

26:09

And it definitely can turn into, once you

26:11

get in that bidding mindset, it kinda goes

26:14

like you're going to the auction. Cause

26:16

when you go to the auction with those cashiers checks, you

26:18

wanna buy that property, you get all caught up in the

26:20

moment and it can definitely happen.

26:22

Cause that's where the juices start getting turned up.

26:24

But yeah, you gotta watch out for the bump

26:27

clauses. We have one more break, but stay tuned

26:29

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See site for details. Welcome

30:04

back to the On the Market podcast. As

30:06

an analyst of the

30:08

housing market, one of the

30:11

defining features of the last few

30:13

years has been low foreclosures. A

30:16

lot of people were expecting

30:18

either due to COVID or

30:21

inflation, all these other things that

30:23

are going on that foreclosures might start

30:25

rising. And while they have come up

30:28

from pandemic levels, they're

30:30

still historically low. Is

30:32

one possible explanation for that the

30:35

fact that things are going to

30:37

receivership instead of going to foreclosure?

30:39

Yeah, I think so. I

30:41

think that's a likely contributing

30:43

factor. Receiverships have become a

30:45

lot more common lately within the past

30:47

five years or so. And

30:50

as they become more and more

30:52

common, bankruptcy filings actually have been

30:54

trending downward because it is

30:57

an alternative to a bankruptcy. Jake,

30:59

do you have any further advice

31:02

to any investors considering

31:04

working with receivers on

31:06

how they can get

31:08

into this type of

31:10

transaction? Well, I would say,

31:13

like with most things, talk to a

31:15

trusted professional. Seek out a broker

31:17

that you're familiar with,

31:19

either personally or by

31:21

reputation, that knows

31:24

about receiverships and has

31:26

been through the process because there is

31:28

a learning curve. I'd say

31:30

just like with most things, if somebody wants

31:32

to invest in property, you can't just

31:35

read a blog post and then go out and do

31:37

it on your own. Find

31:40

somebody who's done it to teach you how to do it. On

31:42

the other side of that, Jake, there has been

31:45

investors that have gotten themselves into trouble. They took

31:47

on a lot of expensive debt. They got a

31:49

little bit over their head. And the

31:51

investment at the end of the day is just going bad

31:53

because the market conditions change. They could be

31:55

great people. They could add great operations. But

31:57

maybe the performance is a little too packed and it just kind

31:59

of... changed. How is it beneficial to an

32:02

investor to work with the receiver to

32:04

kind of get themselves out of that

32:06

mess, right? Because a lot of those

32:08

loans are personally guaranteed. They're full recourse

32:10

loans and they don't want that debt

32:12

to follow them. What's the

32:14

benefit for them going through the receivership? And

32:16

then can you also touch on what that

32:18

does to their credit and how that is

32:20

going to affect them down the road? Primary

32:22

benefits of getting the receivership started is

32:24

once the receiver is appointed, the court

32:27

imposes a stay similar to a bankruptcy

32:29

stay to where it

32:31

stops all collection activities. And so it

32:33

gives a bit of a pause

32:35

so that everybody can assess

32:37

the situation and start

32:40

a dialogue on the

32:42

best way to resolve the

32:44

situation, whether it's given the

32:46

collateral to the creditor or getting

32:50

it sold and that hadn't agreed

32:52

upon price. But that kind of

32:54

pause and breathing room, it gives

32:56

the opportunity to analyze the situation

32:58

and plan a little bit more.

33:01

It could affect their credit, depending on

33:03

whether or not the creditor reports them.

33:05

If they report the loan as a

33:07

default. But the interesting thing about it

33:09

is that the process varies from state

33:11

to state. Every state has different receivership

33:14

laws. And because

33:17

it's different, instead of a uniform

33:19

system like a bankruptcy, credit

33:21

reporting agencies, they don't have a uniform way to

33:23

deal with it. So I'd

33:25

say by and large, it doesn't really

33:28

impact credit scores, because there's no

33:30

uniform way to report it and get it

33:32

out to the credit reporting agencies. So essentially,

33:34

an investor, if they get in over their

33:36

head, needs to hire you so they can

33:38

get themselves out of the mess and they

33:40

get a kind of get a new fresh

33:42

lease on life and go do

33:44

deals on another market or another type

33:46

of deal. So, yeah, and I'd agree

33:48

with the sentiment and the conclusion, but

33:51

with caveat or correction that they

33:54

wouldn't be hiring me. So the receiver is

33:56

an agent of the court and

33:58

not a fiduciary. or representative

34:01

of either the creditor or the

34:03

debtor. Got it. All right,

34:05

great. Well, Jake, thank you so much

34:07

for joining us and sharing what is,

34:09

I think, probably a new part of

34:12

the real estate investing world for most

34:14

of our audience, at least it was

34:16

for me. I really enjoyed learning about

34:18

it and thanks so much for your time. All right,

34:20

thanks a lot, James. Thanks a lot, James. Big

34:23

thanks to Jake for joining us today.

34:25

If you wanna connect with him or

34:27

learn more about his business, as usual,

34:29

we will put his contact information in

34:32

the show notes below. James,

34:34

hopefully you learned a couple tricks and tips

34:36

for your own work with receivers today. You

34:39

know what, I'm always looking for more tips

34:41

and tricks to get more deals done, but

34:43

as long as those nasty bump clauses don't

34:45

come at me, everything will be fine. All

34:48

right, great. Well, thanks for suggesting this show

34:50

topic and thank you all for listening. We'll

34:52

see you for the next episode soon

34:54

of On the Market. On

34:57

the Market was created by me, Dave

34:59

Meyer and Kalen Bennett. The show is

35:01

produced by Kalen Bennett with editing by

35:04

Exodus Media. Copywriting is by Calico Content

35:06

and we wanna extend a big thank

35:08

you to everyone at Bigger Pockets for

35:10

making this show possible. The

35:16

market is changing. Finding your way can

35:18

be tricky. Rate shift, headlines whirl, but

35:20

your goal hasn't changed. You want financial

35:22

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35:24

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35:26

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