GI289: Mortgage Note Investing with Bill Bymel

GI289: Mortgage Note Investing with Bill Bymel

Bill Bymel has been a real estate investor and broker for over 20 years and is currently the CEO of First Lien Capital, a distressed mortgage platform he founded in 2021. They focus on resolving sub-performing and non-performing mortgage loans on residential and commercial real estate and have purchased over 1,000 residential mortgages and REOs in 30+ states since their inception.

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Transcript:

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host, Charles Carillo. Today, we have Bill Bymel. He has been a real estate investor and broker for over 20 years and is currently the CEO of First Lien Capital, a distressed mortgage platform he founded in 2021. They focus on resolving sub-performing and non-performing mortgage loans on residential and commercial real estate and have purchased over 1,000 residential mortgages and REOs in 30+ states since their inception. Thank you so much for being on the show!

Bill:
Charles, it’s a pleasure to be with you. Thanks for having me.

Charles:
Yeah, no problem. So you, you’ve been in real estate for, for decades now. Can you tell us a little bit about yourself, both personally and professionally prior to getting involved with what you’re doing with mortgage notes?

Bill:
Well before real estate, I grew up having a father that was a real estate broker, mostly working for developers of new construction in the South Florida area. And that was the seventies and eighties, and I had no interest in real estate. I just had to listen to my father talk about it all the time. The little did I know he was planting the seeds of what Malcolm Gladwell would come later come to say was my 10,000 hours of experience in the industry. But I wanted to be a filmmaker and I, I actually am a filmmaker. I shouldn’t say that in the past tense because I always feel that there’s another movie and another story in me someday. I went to NYU Film School in the nineties. I had a production, a produced film production concentration. I produced several short films won the 1999 NYU Film Festival with one of our thesis films which kind of propelled us into, we had already been propelled into Hollywood at that point because the film had kind of been done 18 months before that.

Bill:
And we were, we had already gotten a movie, a new line. It, it’s starred some young actors at the time that we called names that you would know today, Jake Gien Hall, Jared Leto, John c McGinley, Jeremy Vin, all folks that were early on in their careers. And, and we were kind of, I had this like budding film career, got into the Hollywood business aspect in my, and had a, a cushy job on a studio lot, was living in LA and thought that I had it all figured out, but got very disillusioned with the business of Hollywood very quickly. And so by 2002, I was ready to leave LA go back to New York where I still had an apartment on the Lower East Side. But I stopped in Florida to see my parents and my father, who still had a general real estate practice at that point, convince me to stick around for what he said, yeah, just stick around a a few months and, and come work, you know, in the, in the business and, and what do you got to lose?

Bill:
I also happened to meet my wife at that time. That was the summer fall of 2002. And real estate did really come naturally for me. The, you know, just stepping into it, having been in another business field, having grown up around it, it was just a natural fit. So I jumped right in and I told my dad as gay author, if I do this I wanna practice what you’ve always preached, which is not just that, you know, is that real estate is the greatest investment and the, and the real opportunity to it has created the most self-made millionaires of and billionaires of any profession out there. And so I started buying and fixing and flipping residential houses. I eventually got into some, some commercial development and that led me into mortgage notes in the summer of 2008, right. As the great financial crisis was, was getting started.

Bill:
Well, yes, I think that, I don’t think there is a investor in residential real estate that could say that they timed it all perfectly. And I don’t think in any historical context, any of the, even the most successful guys in this field will tell you they’re would or should’ve coulda stories, you know, and we all, and, and if anything, my one scathing experience in 2008 was really the impetus and the motivation for why I got into buying mortgage notes and the paradigm that I created in managing those notes, you know, post GFC. And to, just to take that a step further, you know, I got out pretty clean. I saw that the writing was on the wall. I was lucky enough to have mentors in the business who by 2005, 2006 said, there’s a storm coming, get out now. And most of us were still scratching our heads, but I definitely felt something changing in residential real estate when the wholesale flippers were making more than the actual guys that were doing the work and selling the properties.

Bill:
The, when the you know, when there was just a starting, you starting to see a, a slowdown in pacing, a lot of which we are starting to see in certain markets today. And, but I got left with one property that was an investment property. It was I had gotten my money out through a refinance and I was renting the property, but it was in an outskirts of South Florida in a, what they called a green growing market. And in 2007, early 2008, when I had refinanced and put a tenant in this property I had $180,000 mortgage on it. And by a about 18 months later, that house was worth less than a hundred thousand dollars. So you had seen such a dramatic drop in values and a reversal in values in certain markets that no one in this in the in real estate could really get away unscathed.

Bill:
I think there was something like 40% of mortgages that were underwater, you know, in that, from those early, and it could have been even more than that. I mean, when you think about the size of the residential real estate market, that means more volume of mortgages underwater, that it, that is more than the entire commercial loan market that exists. So just to give you some perspective on what 2008 was. So yeah, I was, I had that experience of an upside down mortgage, and then I try and, and I had such an, and trying to deal with my mortgage company as someone who was a professional in the business, stuck in a situation I was upside down and not wanting to ever miss a payment. I was calling my servicer and couldn’t get anyone on the phone. I literally was a case. I had the experience that you may have heard of where servicers were actually telling investors and borrowers the only way they would be considered for a a mitigation or a modification was if you intentionally stopped paying your mortgage. I mean, the things like that was what brought about the CFPB actually. And, and so that’s why that experience in and of itself really set me on my path to do what I do today.

Charles:
Yeah, that’s a, i I mean, when I went through, I just bought my first multifamily property in oh six, and I was lucky enough on the first few properties I bought to have longer term debt on it, so I was able to kind of wait it out and had renters in there in the cash flow. But I mean, the lucky thing about real estate back then versus, you know, stocks is, I can’t check what it is. You know what I mean? It would’ve been a whole different story if you check it and you’re like, oh, I just went down 75% from where I bought this a few months ago. So luckily you don’t see that. You see mortgage payment 1500 and, you know, rent coming in 2,500 or whatever it is, and you live another month. But yeah, that’s, that’s very interesting how you’re saying it.

Charles:
And it’s, it’s, it’s crazy how that works. I never understood that. I remember calling in, I’ve never had any issues with not paying mortgages during covid, but I remember calling in and waiting on hold, and they’re like, can you not pay? I’m like, we can pay fine, but like, what happens if we don’t? And they’re like, you know, it was nothing. It was just, you know what I mean? And you’re like, well, what happens if like, there’s an issue? Like, you know, people stop paying rent, you know what I mean? Like, we don’t know what’s gonna happen. And it was the same thing, you know what I mean? People were just like, well, if you stop paying, then you do this. And I’m like, that’s the craziest thing I’ve ever heard in my life. You know what I mean? But

Bill:
It was a wild west, they didn’t know what to do. There was being, there was a bad advice being given. And, you know, so, so, but that’s when you see those kind of inefficiencies in a market, that’s an opportunity. And, and I, and so when we, I bought my first, that was a life. So what happened that got me into mortgage notes was I was, I was out of, basically out of resi fix and flip. By 2006, I had been working in my commercial, in the commercial field, had bought a couple commercial projects, done some tenant rep work for restaurants and retail. I’m still a partner in that firm today. My partner, I have a very small group of brokers that work there in Southeast Florida, but I was, it was the summer of 2008, and somehow I got a random phone call from a fund manager in SoCal, and he was, he said he was looking at a pool of 2000 construction to perm loans in Port St.

Bill:
Lucie, Florida, which was the north end of Southeast Florida or North End, or just north of Palm Beach County, the green and growing market at the time. And he said the bank that, I think it was an, I don’t know if it was National City, about to be bought by PNC, or it may have been one other bank before that, but they were like, the bank’s going outta business. We can name our price, we just don’t know what this real estate was worth. And these were all new construction loans. So the average loan was $300,000. And that was basically what it cost, 150 bucks a foot to build a brand new 2000 square foot house. And, and you had these brand new 2000 square foot house, many of which had never been lived in first payment defaults. I mean, it was prime real estate. And we went to work that summer to figure out, you know, what it was that things would finally sell at the bottom was falling out in the market.

Bill:
We needed to know where the bottom was. And we found that about a hundred grand, about 50 bucks to 60 bucks a square foot, you would have cash buyers all day long. So we went out and paid 35 a foot to the bank, or to the FDIC, whoever it was at the time. We, we started doing that. So we were all of a sudden in this really accretive position, we were paying 30 cents on the dollar, people were upside down, and a lot of people just wanted to walk away. So it was really a developing a program around listening to borrowers needs, knowing that the majority of the folks in this situation were not by no means of their own. And, and, you know, really working with people to create a way out. And that in the early days, that included a lot of modifications. So I’d buy a loan that was $300,000, let’s say.

Bill:
I, I did have someone living in the home and and there was a $300,000 mortgage on a house that’s now worth 200,000, which was a very common occurrence. I would pay, you know, maybe 1, 1 20 for that loan. So I could then go to that borrower and say, listen, you give me, you show me you are serious about keeping this, we’re gonna reset this. We say, the property is now worth 200, even though it was worth three 50 when you bought it, and you owe us 300, we’re gonna reset the number to 1 95. We’re gonna put you in, in an, in an equity position. All you gotta do is make six months of payments at that 1 95 level, prove that you can make payments at that, that level. And then after six months, you get a permanent modification, a waiver of the 105 negative equity that I’m, I’m I, I’m just giving it, you know, write it off.

Bill:
And at the time, the IRS was not charging debt cancellation, so it was a great thing. And that right there put kept people in their homes. And we did that thousands and thousands of times across America. And I wrote a book about it called Win-Win Revolution. It was a huge win for us and my investors because we got to actually help people and keep a majority. We kept a, when I say a majority, I would say on average, about 35 to 40% of the non-performing loans that we bought over the last 15 years have been modified. And we’ve kept the borrowers in the property or owning the property, which is a startling, staggering statistic if you compare it to the industry, which wouldn’t, would barely ever hit double digits, you know, in, you know, nine, 10% modifications during that time. Nowadays, the modification’s different because, you know, post covid, anyone with the government guaranteed mortgage can basically call their servicer up and, and, and, and there’s a mandate amongst the GSEs to work with people. It’s a different story today. But that’s what we did. I wrote this book in 2017 about it called Win-Win Revolution. And since then, I’ve had a lot of my competitors kind of follow suit with teaching the guys in the private equity space, realizing that there’s a better way to do it and that you can still make money, but you know, kind of follow your own guidelines that are even as bad, good as the CFPB. Do

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Bill:
Bill, can you give us a little bit about what your

Charles:
Company does now for Lean Capital and kind of your whole overall investment strategy?

Bill:
We are a private investment management firm. We take on two types of investors. We take on mostly a lot, a lot of limited partners. So anyone who is a qualified accredited investor can, can subscribe to one of our funds. We have one fund that is open for subscription, now, it’s closing to new investments at the end of this year, and that becomes our major vehicle to go buy these non-performing loans, both residential and commercial. And we buy it, what we call, what, what they say is, is that we, we were buying it on the secondary markets. That’s kind of an opaque term because, you know, that’s not like there’s a corner store that you can go to, but it’s, it’s the reference to the loosely connected group of companies, brokers, bankers, and investment funds that, that network to sell large swaths of debt or other assets.

Bill:
And, and so historically, you know, post GFC in 2008, you had, you saw a lot of banks that were required to sell. You had a lot of failures, you had a lot of sales through the FDIC, Fannie Freddie, there was just tons of liquidation. There was a ton of product. So it was that, you know, by 2016, the market had RH turned, had a lot of bigger money in the space, a lot of consolidation. And when I started first lean, it was kind of seeing the writing on the wall, 20 19, 20 20 that maybe we had hit a we were starting to come near another cycle. Now, what obviously happened in 2020 was covid, and the, the magic of that was that there was a huge amount of government intervention, all this money printing. So I think it kind of pushed the, it kicked the can down the road a little bit.

Bill:
What my fund was set up to do was to really take advantage of whatever distress exists in the market. Like right now, last year we were, this fund was an approved investor, one of two dozen in the nation, approved to be a joint venture partner with the FDIC to bid, the signature bank failure, you know, the por the portfolio when signature closed, you know, down a few years ago. And then they, they, they auctioned all that off about a year ago today to November of last year. We didn’t win the pool. Maybe that’s a blessing in disguise. But we are an, we are a partner with the FDIC. We’ve bought over 103 properties from HUD in the last 18 months. Some of these are vacant single family homes out of the reverse mortgage program where the borrowers have deceased, the heirs don’t want the property, and we can pay like 58, 60 cents on what’s owed.

Bill:
And, and then we turn that into a fix and flip trade. We also do that in con in, in conjunction with a nonprofit of its own that we are actually helping, you know, housing based missions as well. So that’s what we’re doing and we’re, so that’s the main, main way that people get involved with us that are, you know, an accredited investor that likes the strategy. We’ll take subscriptions of 500,000. We have a family offices that invest a couple million bucks with us. We do do some syndications in joint ventures with larger institutional funds, but anybody who invests in our fund is a partner in all of that as am mi. And so we’ve got a couple of sovereign wealths and a couple of of national private equity groups that are lined up because the writing is on the wall, especially in commercial real estate right now. I think in the near term, you can expect to see, I I, I know we probably have this podcast coming out early 2025. By then, I would be surprised if you didn’t start to see some cracks in the structure and a couple of bank failures or even maybe a private equity firm that, that, that starts to, to, to show stress.

Charles:
So getting, kind of digging more into note investing, we usually talk about equity investing on the share, so getting in more into debt investing, letting people know. Can you let us know kind of broadly what definitions are of kind of, what, when does a mortgage note become sub performing, non performing? And you know, and what is your due diligence process when you’re reviewing these notes to purchase?

Bill:
It’s a fantastic question. And the industry generally, 90 days is the turning point for a non-performing loan, assuming a loan that pays on a monthly basis, that would be a free, free missed payments. So it’s at, it’s in that first 30, after the 30, 60, 90 days of non-payment that the servicer is checking in with the borrower, trying to work out, trying to get him on the phone just to make sure. And actually, the reason for 90 days historically there’s a stat actually that is, is the, the, the chance of a borrower catching up on any type of a loan payment dramatically decreases like by like down to like 10% or 15% if they’ve missed three payments or more. And so that’s kind of where the industry goes. And then and it, what was the second part of that question? Was that yeah, sub performing, what is that?

Bill:
They missed one or two. Yeah, summit performing is exactly that. It’s in that first 90 days, and then you get borrowers, which we’ve seen a ton of sub performing, it still exists, and the industry is almost mandating that the sub performing market will continue because of the way the GSEs treat these, this issue. So in other words, this is, this is probably, if I would have to say the biggest wild card right now there are a ton of sub performing loans that by all intents are considered fully performing. And I’m gonna tell, I’m gonna let you in on a little dark, dirty, dark secret in two regard. Two dirty, dark secrets about our industry, if you have a big enough audience that could maybe change the world. One is if on the residential side, on the residential side, if you have a government backed mortgage, Fannie Mae, Freddie Mac, Ginnie, Mae V, you know, that’s a va, an FHA, but most people, 70% of mortgages are government backed, even if they’re with a bank.

Bill:
So you may not even think that you’ve got a government backed loan, but you probably do, if you have a conventional mortgage, if you were to call your servicer up and tell them you have covid today, they would say, okay, you don’t have to make your payment. When would you like to make your next payment? And you could do that over and over and over again and basically kick the can down the road. Now, the reason obviously logically not to do this is you, you will have to pay that money back. You are, it does accrue, but it just gets kicked back to the back of the, the, that’s a program that still exists. That’s kind of like under the radar hush hush. Because if, if people, if enough people really understood how easy it was to not pay your mortgage, you probably have a lot more people calling out.

Bill:
The second aspect of the dark, dark, dark secret about not sub performing debt in this country is in commercial, there is something called t the, the Federal Reserve. The feds have changed the rules of the game quietly in the last few years. And it, I mean, there’s two two, two two terms. One is TDR, troubled debt resolution, or troubled Debt Relief, I think that is what they call it. And then there’s Cecil, which is a reference to the way accounting for debt and, and, and stuff is done by the banks. It’s a, it’s a reporting, I’m not gonna get into Cecil, but basically the longest story short of TDR and the concept of TDR is if you owe me a hundred thousand dollars or a million dollars on a commercial property, your payment’s 10,000 or 15,000 a month. And I call you up and say, I dropped in vacancy. I’m only got 5,000 a month of income, which is obviously way below my payment. The banks can rewrite that mortgage today to a $5,000 a month payment, even though that’s now gonna create a negative equity position. And as long as you make that payment, the banks don’t have to consider it non-performing or even sub perform. And that’s run on big tile.

Bill:
It’s, it, it’s, they’re not all do they try to avoid the NA. So what they’ll do is, is they’ll re we’ll reconstitute the back debt, they’ll lower the interest rate down, you know, to an a number that’s reasonable, or they’ll split it into an A and b note, which is even more tricky. I’ve even seen the FDIC testing this as something they may have to do if there’s a major crisis in commercial LO loans the next few years where you would take the portion of the debt that the interest could cover with whatever the payment the borrower can make, then you take the rest of the debt, put it into a BNOT at 0%, that just sits on the in second position, so the bank can still call the whole thing accruing under a new, under this new terms. And that’s what TDR allows. So you have, so, so even though you’ve only seen maybe a one or 2% increase in actual defaults through the bank reg data that’s come out, you know, the core, the call reports, if you dig deeper and you add in the TDR, then we’ve probably seen in three, four, 5% increase in, in troubled debt just in the last year.

Charles:
Yeah, no, that’s, that’s definitely true because when I work in, mainly what we work here with, with you know, multifamily properties, commercial multifamily, and when I talk to the operators, we haven’t had any capital calls or anything like that. But when I talk to other operators that have had capital calls or issues, and if they’ve had good properties and they’re performing, if they’ve gone back and it’s, it’s workout, you know what I mean? They’ve had their workouts and this sounds like a typical thing for them of how they can keep it clean on their books, how, you know, they’re just waiting out some market correction or something to happen where this borrower, I, I imagine can sell this in the next 36 months or so and everybody can come out, hopefully not losing any money. And I get that. I, I remember seeing, I had a contractor of mine that was behind on a mortgage back in like 2010 or something and or 2009, and the bank brought to him, they just said, this is what your mortgage is.

Charles:
We’re gonna give you a new mortgage right now. And obviously interest rates were lower than when he had originally got this in 2005 or six and it’s 40 years. And you’re like, okay. And you’re like, I get that too. And I mean, that’s a smart way of doing it to avoid foreclosure, I think, you know what I mean? Because you’re just betting, you know, we’re betting we’re this person’s not holding this for 40 years, let’s be honest, right? Maybe seven years is average, right Up until you know, COVID, we saw that people staying in their house, they’re keeping the mortgage for seven years, and so they’re just like kicking the can down the road, being like, okay, in the next 48 months, we’re gonna put our money on, this person’s gonna sell this property to someone, right? And we’re gonna be out of this and we didn’t lose any money. And you know, it’s a, a win-win. But I mean, it’s, it’s a risky thing. ’cause You’re, you’re with a sub performing borrower kind of.

Bill:
Yeah. And that worked for the last 15 years because interest rates were in a downward direction, right? It worked to kick the can down the road when money was cheap and interest rates were low. And you’re right, all there was, and even today you could, that same program of conventional, when you go and say you have covid on the resi side, you can have a conversation right there and then about switching to a 40 year mortgage. If you’re upside down, you’re just turning into a rent payment. But there is that slight possibility it worked for GFC because pro the, the market reset, which by the way I believe needs to happen, the market reset and people were were allowed. Some folks that I never thought would ever get out of it were ha got into the money eventually. And, and I think that, but the problem is, is it’s a much different world now.

Bill:
We’re not gonna sit, we, prices are an all time high. We need prices to reset in order for the strengthening of the dollar in order to allow Americans to live and survive and infor in order for the economy to work. Again, that’s just the nature of market cycles and the free market system. We would want, we want that to happen. And you know, the, the <laugh> and the reality is, is that interest rates are not gonna start going down again anytime soon because the Fed knows it needs to break something in order to strengthen the dollar. And so, so it’s just, it’s in a, it’s a much different position nowadays. Those folks that are hanging on hoping for some sort of bailout. Eventually the chickens I think will come home to roost and we’re just well positioned for all of that, you know, to really be there as a capital provider and take advantage of what I believe will be the greatest buying opportunity of our lifetime.

Bill:
I, I have friends, you know, I was a kid during the savings and loan crisis and, and so I was maybe in tea a teenager. I didn’t know anything about real estate or business or anything like that. I remember my father talking about a condo crisis in Florida in the eighties. A lot of people don’t even re remember that, those newbies for Florida, you know. But the guys that I know that are, that are multi multimillionaires in real estate today, some of them only did one deal during the SNL price one deal. There was a six year period with the, with, you know, and I think that we’ll end up there in some form or fashion history doesn’t repeat itself, but it always rhymes. Yeah,

Charles:
That’s for sure. Yeah, I remember my my dad had been a multifamily investor since 84, and I remember him talking about a partner of his that bought a ton of units for like six or 8,000 a unit back in like the early nineties. And it was just like, you know, insane.

Bill:
I mean, I was buying any, if that was really insane, I would love to get to that point. Again, I don’t, I mean, if that happens, we, it were probably post nuclear disaster or something, but even in 2008 you know, I was buying condos in West Palm Beach for 10, 15, 20,000 a piece and, and those, you know, those today are worth $300,000 all day long.

Charles:
Yeah. Yeah. I bought a property, a commercial property in 2009 for, yeah, $15,000 a door, something like that, you know what I mean, at that point. So it, it was crazy. I mean, I just had no idea that it would ever, like, I was like, oh, it’s like, we’ll never get back up to those levels again anytime soon. And but anyway, bill, tell us about just for like new note investors that are coming into this you know, you, you buy a property. You, you told us a little bit about how that conversation starts, but first of all, how do you do your due diligence on a note before you buy it? And then what happens once I I, you have the note, how do I start that conversation with the borrower?

Bill:
Yeah, and so there’s, first of all, the due diligence is, is the most important thing. And, and what I’ve seen post GFC, you saw a, what I would call a tertiary market, right? Which is a secondary market to the secondary market, which is new investors, you know, there’s guys out trying to give books and lessons about how to become a note investor, how to use your 401k et cetera. And that’s all great. And that was for folks who you know, the most real estate investors are mom and pop. A lot of people do invest in one or two properties, commercial, residential. So it really kind of opened the market of no buying over the last 15 years to a broader audience. And a lot of people got burned because it’s illegal. You’re buying paper. So you have to know that your, you know, your lien is perfected and that you know how to, if you have to enforce that lien through a legal or administrative foreclosure, that you have that ability.

Bill:
So the first and foremost, you gotta know the law very well, and you have to have good attorneys. The, the, the, the most states, it’s as simple as having possession of the original note, solves everything. As you get a little bit up higher up the food chain in this business and you start to buy more and more of these notes, there’s greater concerns like compliance, because when you start buying more than one or two notes in a state, you gotta be either a licensed lender in some states or you gotta be in A-D-S-T-A dis a statutory trust. And either way, I never I’m not a lawyer, but I like to play one on podcasts. The, the, I would never, you know, it’s not really our job. You’re not legally supposed to as an investor or anyone go out and start collecting debt if you’re not a debt collector.

Bill:
So in theory, you, you really leave the compliance, the servicing the collection portion to a licensed servicer. And there are several that will take on individual investors. So if you want to get in the business, you want to, you know, you find an attorney that you can trust to do the review of the collateral and the legal, the due diligence, which we’re very good at. And the key is not just on the legal, but also knowing that you paid the right price. So that’s a job you have to get good at valuing what the real estate’s really worth. And then figuring and buying notes that are non-performing, sub performing, just like fiction flip real estate, it’s kind of like a discount model. It’s, you know, I wanna make X amount at the end. Here’s how long I think it’s gonna take for me to fix the property up and in this case, that means taking the property back through foreclosure or deed in lie, and how long is it gonna take me to get there?

Bill:
So what can I pay for the pro property? So you hiring a licensed third party servicer that said, you are the investor in the loan, you own the loan. And a lot of what makes the mortgage industry inefficient with regard to non-performing, sub performing loans are those same servicers that are supposed to be keeping you in compliance. And this is really what the book kind of gets into, where, you know, a servicer can only do so much smiling and dialing. They can send letters, they can try to get the borrower on the phone. By the time these loans come to us, those borrowers have usually stopped taking those phone calls. <Laugh>, you get they’re embarrassed. They don’t want, you know, what are they gonna say, you know, I owe you 40 grand, sorry, you don’t have it. You know, so what we do do and what we train investors to do, or, or is to approach borrowers as the investor or have a real estate broker approach them, not as a debt collection conversation, but how do we work together to resolve this situation?

Bill:
We don’t even talk about numbers. We just say, you know, here’s your options. You know, I see, you know, you’re having some trouble. I’ve worked with the lender. I, you know, I’ll have a broker call up someone or, or I’ll have some of my staff go, Hey, we are, you know, we’re the investor. We on this loan. We know, we know that you’re in a tough situation. I see that foreclosure was filed a few months ago. How can we work with you? What would you like to do? And inside of that human conversation, you listen. If you listen well, you’ll hear what the, what their intention is. You’ll get 10 or 20% that think that they deserve a free house and they’re just going to sit there and till you drag them out by their, you know, their tail and, you know, so you could try to be nice and offer, but you know, okay, I’m putting that one on the list, send it to the lawyers, let’s deal with it.

Bill:
But the majority of humans wanna work something out. They don’t wanna deal with it. And I’ll tell you, getting out from underneath something like this can be the greatest blessing to folks. So, you know, if we can pay someone instead of be spending five, $10,000 on legal fees, I say that to Mar, I say, listen, it’s gonna cost another $5,000 for the attorneys to finish the foreclosure. You could live here for free for another, you know, three, four months. It maybe saves you another 5, 3, 4, $5,000. What if I paid you $10,000 today? It gave you the money to set you up in a new rental property. I’ll even pay the deposit and, you know, and it’ll just be out in 30 days. And then we won’t even do a foreclosure. It won’t be on your record. It’s a win-win. And that’s the method that we rinse and repeat over and over again.

Charles:
Yeah. Yeah. We call it cash for keys when in multifamily. So it works really well. I find the best time is when I don’t mention a price and I ask them a number and they mention a number, and it’s usually less.

Bill:
That’s right. So true. It’s funny. I gotta, yeah, I, I gotta remind my staff of this conversation, Charles, because a lot of my staff is based in New York City or the major cities where, you know, they’re used to, like, for them it’s like a $5,000 cash for keys is nothing, right? You go to like Wichita, Kansas or Mississippi, you, if you 5,000 bucks is like, you know, a half a year is <laugh> to some people’s. Yeah, you gotta, they’re really just, I need to teach my people to shut up and, and, and ask what they, what would the question first? Yeah,

Charles:
It makes it easier ’cause you’re like, eh, if you’re out a little earlier than that, I’ll give you additional money. But it’s so anyway, there, it’s a win-win for everyone and it keeps everybody they can leave, everybody, you know, wipes their hands. Everything’s a clean slate for both people and we’re, we’re on with our lives. So that’s a, that’s a great model of how it works. As we’re wrapping up here before you, you tell us more about your company. Can you tell us us, like if someone wants to get started in note investing, maybe on their selves or if they’re gonna work through someone like yourselves, what would be some top tips? Let’s say you’d give a new mortgage note investor?

Bill:
There are a few resources of, there’s, there’s good advisors in the world and there’s guys that are in it just for their own interests. And it’s not easy to differentiate one from the other. So do some, you know, don’t start spending 10,000 a month or, you know, join, you know, and, and spend a ton of money on expensive education because you can get a lot through books like mine and a couple of my other colleagues in the industry. You can learn a lot that way. You can attend a few lower price conferences to kind of get your feet wet and get, you gotta start making some initial connections. There’s a couple of good resources that people reach out to me directly that I can point them if they were very serious about it. The other recommendation though is and this is kind of just my paradigm for life, which is, you know, get on the court.

Bill:
I have seen so many folks over the years spend tens, maybe hundreds of thousands of dollars on education and events and podcasts and book and conferences and this and that. And, you know, free four years in, I say, oh, how’s the business going? Tell me what it’s about. And they haven’t yet ever bought their first deal. So there is an aspect of it that you will learn the most by doing, and, and I learn something new every day. So, so there’s a couple of websites out there that, you know you, you can get, you can get the myriad of information about our industry just by doing the research. And and then there’s some, there’s some avenues to get your feet wet with lower value you know, one-off deals as well. How

Charles:
Can our listeners learn more about you and your business? Bill?

Bill:
My company’s website is first lean capital.com, spelled out F-I-R-S-T-L-I-E-N capital.com. My personal website is bill by mail.com, B-I-L-L-B-Y-M-E l.com. You can find me through either of those portals. By the time this this podcast comes out, we will have closed our second fund to new investors and maybe we will have opened a third. We’ll see. But certainly we’re always open to new folks interested in our industry. And you can follow me on LinkedIn as well. I have my own podcast called the real Estate Lowdown, which we gotta get you on at some point, Charles. That

Charles:
Sounds great. Well, thank you so much for coming on today, bill, and looking forward to connecting with you here in the near future.

Bill:
My pleasure.

Speaker 4:
Hi guys, it’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in getting involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me@schedulecharles.com. That’s schedule charles.com. Thank you.

Speaker 5:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax, legal, real estate, financial, or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of syndication Superstars, LLC exclusively.

Links and Contact Information Mentioned In The Episode:

About Bill Bymel

A real estate investor and broker for over twenty years, Bill Bymel currently serves as CEO and Chief Investment Officer of First Lien Capital, a privately owned distressed mortgage investment platform he founded in 2021, focused on the acquisition and timely resolution of sub-performing, non-performing mortgage loans on residential and commercial real estate. First Lien Capital has purchased over 1000 residential mortgages and REOs in 30 states since its inception.
As an innovative speaker and author, Bill wrote the book on loss mitigation for non-performing residential loans (NPLs), Win-Win Revolution, and An Insider’s Guide to Investing in the Secondary Mortgage Market. Bill resides in Nevada with his daughter, army vet son, and two dogs, Sandy and Honey. Bill attended NYU Film School and produced several award-winning films.

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