Buying multiple 2nd lien notes, instead of one 1st lien note - for the same amount of money - was one of the primary topics on this week's show. As we continue our march towards June, May the month of 2nds rolls on. This week we have a delightful conversation with Cathie Jeffs.

Cathie has been a full time investor in the second lien space since 2011. Like myself, and many others, she got her start in the space after being downsized.   She made a brief pitstop with the fix and flip crowd, but it didn't take her long to find the note people.

Buying Multiple 2nd Lien Notes

Buying multiple 2nd lien notes is something most people in the seconds space hang their hat on. Fuquan Bilal has mentioned it before on the show, and so has Dave Van Horn and Gabe Kass. There are a few different reasons why this is an important part to the second lien strategy. When buying multiple 2nd lien notes you get to mitigate some of the inherent risk in 2nd liens.

The typical example someone will shoot off is: when you buy 10 second lien non-performing notes, you know 3 will be trash right from the jump. 3 to 4 will be the bulk of your profit, then you'll have a few stragglers that'll do ok.

This isn't a strategy that's particularly easy to implement with 1st liens. The biggest issue is that it's usually cost prohibitive. Many have noted on the show that times have changed a bit, but typically you can buy 2 to 5 times more 2nds for the same money you'd buy one first. This risk mitigation and lower price point for deals are the two biggest selling points for are investors getting into the space.

Are 2nds Drying Up & WIN

One of the topics that has come up repeatedly during this month long odyssey, into the belly of the beast that 2nds, has been inventory. For the most part everyone on the show has rebuffed that claim. However, I will say that the sheer fact that everyone talks about it is interesting. A kind of, if there is smoke scenario.

Cathie gave an answer most would expect. Inventory is fine. And she backed it up. However, many 2nds investors will bring up how expensive 1sts have gotten. And many 1st lien investors will combat that with their own take on the industry and market. Though, it brings up images of smoke and fire again. Either 2nds do have a slight inventory issue and 1sts are getting priced too high. Or everyone is just talking out of turn.

I say again, where there is smoke.

Lastly, Cathie brought up her meet-up and note investing community WIN, Women In Notes. If you want details on making it out to a live event or one of their webinar broadcasts, you'll have to listen to the show.

That’s it for this week! Thanks for listening everyone and as always, if you have any questions, comments or potential deals to send our way, email us at [email protected].

Listen & Watch this Week’s Show to Learn:

• The Type Of Note Investing David Is Finding Most Interesting
• Do You Have To Give Your Loans Up To A Servicer
• How To Properly Shelve A Loan
• The Specific Target Some Of The Most Successful 2nd Lien Investors Focus On
• Is The Seconds Market Drying Up?
• And much more!

Featured on the Show:

• Due Diligence Pro
• PPR Note Co
• Paper Assets Capital
• TLO
• Pacer

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Thanks for listening to our show! We’ll be back next Wednesday morning.

Cheers,

Chase & Robby