From the desk:Note Buying (Non-Performing)

The fund offered me $15k of the same note I'd be valuing

I'm partway through licensing and a small fund that buys defaulted paper asked whether I'd do their exterior valuations in my county. Flat $125 per report, photos, condition notes, an opinion of value, maybe eight to twelve a month. That's real money for the time.

Then on the second call the principal offered me a $15k slice of one of the notes I'd be reporting on. UPB $96k, they're buying at $41k, house on the low end of a solid suburb, and I already looked at it. I had it at $148k as-is, needs a roof.

The part I can't get past is that I'd be producing the valuation that supports a price on an asset I own a piece of. In an appraisal context that's obviously a problem. In a broker opinion context I genuinely don't know, and what triggers licensing obligations or disclosure duties on valuation work varies by state, so I've got a question in with the licensing board and haven't heard back.

Separately, $15k into a single note with no control over the workout is a position where I take the outcome and have no vote. They said the resolution decisions stay with them, which is honest.

So two decisions tangled together. Do the valuation work and decline the note, or take the note and disclose the ownership in writing on every report touching it. I don't want to start a licensed career with a conflict question in my file.

Answer

-1gregpowell66AG4BPRO8

Take the work, skip the note. Not because of the conflict, which you can probably paper over with disclosure, and your board will tell you. The $15k is the worse deal on its own terms. You have no vote on the workout, no say on whether they modify or foreclose, no visibility into whether they advance taxes, and no way out if you need the money in month eight. That's not passive income, that's handing someone $15k and hoping.

The valuation work is the actual opportunity here. Twelve reports a month at $125 is $1,500 for maybe fifteen hours, you learn what a distressed exterior looks like across a hundred houses, and you get to watch how a fund prices things without any money at risk. I'd do that for a year and then ask about co-investing, when you can see whether their $41k buys turned out like they said.

One caution on the roof. If you're writing "needs a roof" on a report a buyer is pricing off, get specific about the cost. I've had people read "needs a roof" as $8k and hand me a $19k bid on a cut-up 1960s hip roof with two layers on it. Your credibility with them is going to come from those numbers being right.

The fund offered me $15k of the same note I'd be valuing

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