Willie Sutton was a very productive bank robber for 40 years in the 20th century. Apparently he was asked, ‘Why do you rob banks?’ to which he responded:
“Because that’s where the money is.”
Now we here at Mogul don’t advocate any type of criminal behavior, especially not on the Willie Sutton level. But we do advocate going ‘where the money is.’ Banks can be a real estate investor’s best friend for financing properties at low interest rates or their worst nightmare if they start falling behind on payments.
Read on for a great tech tool to help navigate the bank’s rough waters…
Banks also hold the keys to tons of great deals for investors. After all, let’s face it – these days it’s getting tougher and tougher to find a good deal on the MLS. The real estate market is coming back and there is lots of competition.
Many of those great deals are held by banks in their loss mitigation department. They are also held by asset management companies that the banks work with to take care of properties.
The Keys to the Vault
You’ve probably heard it before, but banks don’t want to be in the business of owning property. They are doing everything they can to help homeowners and investors avoid foreclosure. In addition, regulations surrounding their charters don’t allow banks to have more than a certain number of properties at any one time.
When people don’t want something, they don’t mind letting it go for a very low price. That’s where real estate investors come in. Many successful investors buy properties from banks at a fraction of what the bank lent on the property.
Then those investors fix up and market the property for sale at a retail price. In effect, investors transfer a portion of the bank’s money into their bank account. All without guns, getaway cars or jail time!
Willie Sutton could learn a thing or two…
But how do you find these properties at the bank? Well, we definitely don’t advocate going into the bank with a loaded gun and saying to the teller:
“Stick ‘em up and give me a list of your distressed properties.”
Instead, we recommend going straight to the loss mitigation department of the banks and starting a relationship with these employees. And this week’s tech lesson is all about a tool for finding these ‘valuable’ employees.
The Loss Mitigation Rolodex
In the 1950s, John Lane was working as a credit manager for a finance company. He saw the need for one central source for credit managers, lenders and banks to look up information for all the other banks. So he created The Lane Guide.
At first, the Lane Guide listed all the contact information for all the banks in the Los Angeles area. It then grew to all of Southern California in the 60s, and by 1990 it covered all the banks in the United States. Now, there is easy online access to The Lane Guide that’s not just for bankers.
Anyone can subscribe to The Lane Guide, which provides:
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A complete reference on all banks, savings banks, finance companies, mortgage lenders, loan servicers, credit unions and other major creditors.
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Details about loan service centers, main offices, loan departments, specialized departments and branch offices.
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Complete mailing address, phone and fax numbers, REO and asset administrator contacts, short-sale/loss-mitigation, wholesale and conduit lending, toll-free information lines, credit rating policies, bureaus reported to, rating hours and more.
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Cross-references on all closed institutions so you can locate the current location of loan records.
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All this information is available nationwide on a CD-ROM desktop client and/or from an internet subscription.
Think of what you can do with this information. No more calling the customer service line for a bank and getting routed through 15 different departments, experiencing 5 hang-ups during transfers and finally reaching the wrong person at a bank. You can contact the head of the loss mitigation department with one phone call.
Or maybe you are looking to find non-performing notes? Banks want these off their books right away as well. The Lane Guide has contact information for the Credit and Special Asset Management department.
Trying to do a short sale? The Lane Guide can give you the contact information you need to find out what is required in your short sale package, and where to send it so it won’t get lost.
How about the REO departments at banks? Once you have the REO people’s phone numbers, you can find out which realtors they work with in your area to start a relationship.
Frustrated with public records searches that have out of date information? The Lane Guide shows you which banks (successors) took over banks that went out of business. That way if you are tracing the bank owning the mortgage on a property you are interested in, you can find out right away who to contact.
Remember that you don’t grab deals in slow motion. Chances are that either:
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The really good deals require you to dig and network to find them.
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If you have a good deal, your competition is probably hot on your heels to grab it away.
The Lane Guide can help you with both.
A Small Price to Pay for Unlimited Bank Access
An online subscription to The Lane Guide costs $165/year. That gives you access to more than 140,000 lenders nationwide. You can also get a desktop version (which includes access to the online version) for around $300/year.
A nice feature of the desktop version is export ability and bulk email settings. That way, you can create and manage a marketing campaign to the loss mitigation or other departments in a bank directly from the database.
Further information about the pricing structures is here.
If good deals were everywhere, then everyone would find them and there would no longer be good deals. The smart real estate investors develop relationships, network, follow up and use their wide range of contacts to find these deals that nobody else knows about. The Lane Guide is one great way to get started on the road to finding these deals.
Develop Relationships – Having a large network of real estate professionals will always help you find good deals. Develop those relationships early, and stay in touch with them.
Learn How Lenders Work – Take a banker out to lunch. Become friends with them. You can learn a lot about what a lender’s criteria is for foreclosure, how they get rid of properties they take back, and what they typically take as discounts.
Market to Lots of Banks –The local, small banks in your area are a lot easier to work with. Try to work with lots of them because the more you do, the more chances you will have of success.
Find Shortcuts – Don’t spend all your time doing hard stuff. Take some time to think about your business and figure out what you can do more easily. The Lane Guide is a great example of a shortcut for finding contacts.
JP Moses
is a real estate investor in Memphis, TN, with experience ranging from land lording to note buying, rehabbing, and wholesaling. However, wholesaling is the area that he enjoys most and where he bring the most experience and expertise to his students.