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Coastline Capital Fund Management

Fund V September Update.

Fund V closed to investment on July 31, 2020. We raised a total of $850,000. The following week we started our search to buy non performing notes. During the month of August we purchased 5 loans from three different sellers.

The buying process was smooth with our trading partners and I’m very pleased with the variety and quality of the notes we were able to select. The notes varied in purchase price between $50k and $180k for properties valued between $145k and $245k in the states of Ohio, Illinois, Virginia, Louisiana, and New Jersey.

We have enough available capital to buy one or more notes and will be doing so over the next few weeks.

At the end of September, I’ll provide more detailed loan level reporting like I do for the other Funds.

Tentative Opening for Coastline Capital Fund VI is November, 2020.

If you missed the chance to invest in Fund V, don’t worry! The opening for Fund VI is just around the corner.

We anticipate a lot of liquidations and distributions to investors in Fund III and IV over the next several months. We know that some investors will want to put their money right back to work so we’ll make sure that Fund VI is open to accommodate them.

Fund VI will most likely have at least two tiers of investment classes, in which the earliest investors will be offered the highest Profit Splits. Previous investors in Coastline Capital Funds will have the first opportunity to subscribe to higher tiers before we open it up to everyone else.

Stay tuned for updates!

 

Coastline Capital Fund V Webinar Presentation.

We presented a live webinar for Fund V on June 30, 2020. We received feedback that a lot of people enjoyed hearing directly from Sean and I about how we conduct our business and about the opportunity to invest in Fund V.

If you missed it, no need to worry because we recorded it. Check it out:

 

New Perks for Current & Previous Investors in our Funds.

We will waive the minimum investment amount in future funds for investors that have invested in previous funds.

This is a great perk for investors who have committed nearly all of their available investable capital and don’t have enough for the minimum investment for one of our current fund offerings or any other investments that they’re involved in. Our investor platform is robust and can easily handle additional investments regardless of size.

Current and Past Investors in our funds will get the first opportunity to invest in future funds.

Changing Fund V’s structure so that the first $500,000 received a higher profit split was a success. It provided the added incentive for some investors to come in earlier. We plan on using a similar structure for the next Fund later this year. Current and Past Investors in our Funds will have the first crack at investing in any higher profit split tiers before we open to the general public.

 

Fund IV July Update

Of the 4 assets remaining, 1 is an REO, and 3 are NPNs:

All Assets Have No Further Delay Due to Lockdowns

Annetta, TX (NPN) – trustee sale date scheduled for 7/7/20.

Houston, TX (NPN)– constable sale date scheduled for 7/7/20.

Dale City, VA (NPN) – obtained a Motion for Relief in mid June. Foreclosure to resume after 7/2/20.

Las Vegas, NV (REO) – moratorium on all evictions in NV expired June 30, 2020. We submitted an order requesting enforcement of eviction order today.

Fund III July Update

We sold one REO at the end of last month.

Of the 9 assets remaining, 6 are REOs, 2 are NPNs and 1 is re-performing. 

Assets with No Delay

Memphis, TN (REO) – occupants vacated property at the end of last month; getting estimates for the rehab now

Killeen, TX (REO) –scheduled to close in July

Carol Stream, IL (REO) – rehab should be completed in another two weeks.

Cape May Court House, NJ (REO)  –  on the market for sale.

Evergreen Park, IL (REO) – getting final permits before rehabbing the property 

Janesville, WI (NPN) – governor’s lockdown order has expired. We have a sheriff’s sale date in August.

Assets with a Delay

Homer Glen, IL (NPN) – redemption period expired on 5/24/20. Sheriff’s office still has not re-started foreclosure sales

Bolingbrook, IL (Re-performing) – borrower is re-performing again; we’ll wait until things normalize in the secondary loan markets before attempting to sell this loan again.

Rancho Murieta, CA (REO) – we have an ongoing eviction case with the former borrower which has been stalled. California has not re-started eviction hearings.

Recently Sold

554 Meadow Green Ln, Round Lake Beach, IL 60073 – Final Numbers:

Fund V Minimum Offering Reached! Preferred Return Now Accruing!

We changed the structure of Fund V so that the investors who put in the first $500,000 would get 60% of the profit split instead of 50%. We re-opened up investment in Fund V in early May and that first $500,000 was subscribed to in a matter of days.

We received the last of the committed funds yesterday and surpassed the Minimum Fund Offering of $500,000. This means that the 8% Preferred Return is now accruing on investor contributions.

It also means that we have the minimum amount we need to commence operations and that the Fund will close to additional investment by July 31, 2020.

The non performing note market is starting to unfreeze as state lockdowns continue to loosen up and we adjust to a new normal. Note buyers are expecting 8-15% discounts on notes compared to pre-pandemic pricing.

This is great news for investors in Fund V, which is in a perfect position to participate in acquiring distressed assets at an even greater discount than before.

Fund III June Update

Of the 10 assets remaining, 7 are REOs, 2 are NPNs and 1 is re-performing. All three notes are having delays due to the pandemic. One out of the seven REOs is facing pandemic related delays as well.

Assets with No Delay

Memphis, TN (REO) – we foreclosed on this note in early May. The former borrower has agreed to cash for keys and to move out by the end of June.

Round Lake Beach, IL (REO) – in contract to sell with a closing date in June.

Killeen, TX (REO) – in contract to sell with a closing date in June.

Carol Stream, IL (REO) – vacant; started minor rehab.

Cape May Court House, NJ (REO)  – fully rehabbed and on the market for sale.

Evergreen Park, IL (REO) – rehabbing the property before listing it for sale.

Assets with a Delay

Homer Glen, IL (NPN) – redemption period expired on 5/24/20. Sheriff’s foreclosure office to open 6/1/2020. We expect to get a sale date shortly thereafter.

Bolingbrook, IL (Re-performing) – borrower is re-performing again; we’ll wait until things normalize in the secondary loan markets before attempting to sell this loan again.

Janesville, WI (NPN) – governor’s lockdown order has expired. We’re expecting to get a sheriff’s sale soon.

Rancho Murieta, CA (REO) – we have an ongoing eviction case with the former borrower which has been stalled. No new hearings are being scheduled until at least June 1.

Recently Sold

9858 S Manistee Ave, Chicago, IL 60617 – Final Numbers:

Fund IV June Update

Of the 4 assets remaining, 1 is an REO, and 3 are NPNs:

Assets with No Delay

Annetta, TX (NPN) – the borrower does not appear to be able to sell his property before June 2, which would allow him to provide us a full payoff. We are preparing to start foreclosure with a July sale date.

Houston, TX – we’re back on track and have a constable sale scheduled for July.

Assets with a Delay

Dale City, VA (NPN) – we have a Motion for Relief hearing in mid June. The borrower has not made any mortgage payments since her proposed plan started in February.

Las Vegas, NV (REO) – there is a moratorium on all evictions in NV until at least June 30, so we cannot enforce our order. We have to wait until the order is lifted

Fund V Open for Investment

Coastline Capital Fund V is now open for further investment with a new Profit Split:

The first $500,000 invested into the Fund will now receive a 60/40 split of the Profit. Any capital raised over $500,000 will remain with the original terms and stay at a 50/50 Profit Split. All Class A and B units will earn the same 8% Preferred Return.

Limited Amount of Units Remaining for Higher Profit Split

$135,000 that was invested in February was automatically converted to Class A Units. Only $365,000 is left for further investment in Class A Units.

As we ramp up our marketing efforts and outreach, we believe that the Class A Units will be fully subscribed in the near future. If you’re interested in participating in a distressed asset fund, this is the best time to do so as the first investors onboard will get the highest percentage of profit.

To view the details of the offering and to review the amended documents, visit our dedicated investment portal. The system is accepting new subscriptions at this time.

For help navigating the website to subscribe to our offering, watch Investing in a New Offering, a video tutorial produced by IMS, our investor management service provider.

Our business model worked great before the coronavirus pandemic. The investments have turned out to be stable with minor delays to liquidation (which has actually worked in our investors favor by allowing them to accrue more preferred return).

If the economy gets worse, we’ll be in the perfect position to take advantage of upcoming opportunities with non performing loans. Now’s a great time to invest!

Feel free to schedule a call with me to learn more.

Fund V Re-Opening Tomorrow with Increased Profit Split!

Fund V Re-opens Friday, May 8, 2020 at 8 am PST

We’ve amended our Subscription and Operating Agreements for Fund V. The first $500,000 invested into the Fund will now receive a 60/40 split of the Profit. Any capital raised over $500,000 will remain with the original terms and stay at a 50/50 Profit Split. All Class A and B units will earn the same 8% Preferred Return.

(The investor who contributed $135,000 in February is automatically getting his Units converted to Class A. Only $365,000 is left for further investment in Class A Units.)

We hope that this added incentive will encourage investors to invest earlier, which will allow us to reach our Minimum Fund Offering more quickly, which will allow us to get started buying non performing notes quicker than previous Funds.

Let’s get this Fund up and running so we can immediately take advantage of opportunities in the non performing note market!

(You can view the details of the offering and review the amended documents at our investment portal. However, the system will not allow you to invest until tomorrow at 8 am PST.)

Fund III May Update

We are continuing to provide monthly reporting to keep our investors informed during this uncertain time. The investments in Coastline Capital Fund III are safe, things appear to be loosening up, and liquidations are moving forward for most of the remaining assets.

We sold 1 of our REOs in April. Of the 10 assets remaining, 7 are REOs, 2 are NPNs, and 1 is Re-performing, which may go non performing.

Assets with No Delay

9858 S Manistee Ave, Chicago, IL 60617 (REO) – We closed on the sale on 4/28/2020.

Homer Glen, IL (NPN) – redemption period expires on 5/24/20. We can go to judicial sale the day after but, so far, we have been unable to get a sheriff’s sale date. The current lockdown order expires 5/1/20. Unknown if this will be extended.

Memphis, TN (REO) – No delay to foreclose. Trustee sale held on 5/5/2020. Reverted to us as REO. It’s our standard procedure to attempt cash for keys first. If we have to evict, then will there will be a delay because of a moratorium on evictions until June 8, 2020.

Round Lake Beach, IL (REO) –listed for sale last week “as is.”

Evergreen Park, IL (REO) – 2-3 month rehab starting this week.

Killeen, TX (REO) –listed on the market for sale.

Carol Stream, IL (REO) – the borrower executed a Deed in Lieu of Foreclosure, vacated the property, and removed the rest of his belongings on 4/30/20. Our real estate agent is preparing a marketing plan. Once we receive the marketing plan, we will determine whether to rehab the property or list it “as is.”

Cape May Court House, NJ (REO) – rehab will be completed next week and listed for sale.

Assets with a Delay

Bolingbrook, IL (NPN) – after 13 on time monthly payments, the borrower failed to make his April payment. He reached out to our note servicer and indicated that he his willing to accept our short sale offer from December, 2019. We’re waiting for the borrower’s attorney to propose a plan because the borrower is in an active Ch 13 bankruptcy plan.

Rancho Murieta, CA (REO) – eviction in progress. All hearings have been postponed until after June 1.

Janesville, WI (NPN) – all foreclosures in the state have been delayed until May 27th, at a minimum, by the governor’s order.

Fund IV May Update

Of the 4 assets remaining, 1 is an REO, and 3 are NPNs.

Assets with No Delay

Annetta, TX (NPN) – per the borrower’s bankruptcy plan, he has until June 2 to close escrow on the property and pay us off in full. All indications are that he isn’t going to do this. We will be able to foreclose after June 2 and are making plans to go to trustee sale in early July.

Assets with a Delay

Houston, TX (NPN) – we’ve received an updated Order of Sale from the court in the last couple of weeks. We are waiting to get a sale date from the constable. Texas is one of the states that are re-opening so we expect this to happen within the next few weeks.

Dale City, VA (NPN) – the borrower filed an amended plan and the hearing is scheduled for 6/1/20. She has made no post-petition payments to us and is 90+ days late. We are filing a Motion for Relief with a tentative hearing date in early June. The VA governor has a lockdown in effect until June 1 so we’re trying to time this Motion for when we expect things to start opening up.

Las Vegas, NV (REO) – the governor ordered a lockdown and moratorium on evictions. The court was supposed to update its order 4/20/20 but has not done so. We must wait until they allow the enforcement of evictions before proceeding.

2020 Q1 Fund Updates & Current State of the Note Business

I’m one of the lucky ones that get to work from home in safety. In my past careers, I was one of the people at the tip of the spear or on the frontlines when things happened.

This time, healthcare professionals and support personnel are at the very forefront, risking their lives and health to help others. In addition, first responders and those working in support of our infrastructure and other essential businesses are also at increased risk to health compared to us working from home.

My hat is off to all of those in the fight. Thank you so much for what you do!!

I believe that April will be a tough month for us all. There is still fear about the pandemic itself and the effect it’s having on the markets.I hope that we will soon see the peaking of new cases, the success of social distancing, and new developments that will help in the treatment of those infected with the coronavirus.

Once that happens and fear begins to subside, we’ll be on the road to recovery…..

See below for the state of the note business and updates for Funds III and IV:

Current State of the Note Market

Our observations:

1. Those that don’t need to sell their loans are waiting until things stabilize.

We fit into that category. The shutdowns and moratoriums have pushed out the timelines on some of our assets. See the updates for Funds III and IV below.

One of our main trading partners has indicated that they’re not doing any buying or selling right now and are waiting to see how everything plays out.

2. Normal buyers of performing and re-performing notes have stopped buying.

A few weeks ago, we accepted bids from a large fund on two of our re-performing loans. When the lockdowns started a week later, the fund backed out of the trade. The note broker indicated that the fund didn’t want to put their capital at risk right now and were backing out of all of their trades including a $20M one.

This one makes a lot of sense, especially, for more conservative holders of paper. With so many people losing employment at the same time for an unknown period of time, it’s difficult to know one’s exact exposure to future defaulting borrowers even with the promise of government help.

We don’t need to sell our re-performers now so we’ll just wait and see. There should be a lot more clarity in the next few months. 

3. The more aggressive note buyers are getting really good deals or better quality loans from motivated sellers.

It’s logical to assume that those that need to sell are ones that have liquidity issues or want to go to cash for safety.

Our other main trading partner is buying aggressively right now. They indicated that they’re buying performing and non performing notes for 10% less than they offered a few weeks ago. (We’d love to be in a position to buy from them in a month or two!)

(I believe that we’re not going to see a wave of foreclosures because of coronavirus-recession induced defaults. I think the current fire sales of notes will end when the sellers get rid of what they need to or their reason for having to sell goes away when things stabilize.)

Fund III 2020 Q1 Update

Of the 11 assets remaining, 7 are REOs, 3 are NPNs and 1 is re-performing. Two out of the four notes are having delays due to the pandemic. Three out of the seven REOs are facing pandemic related delays as well.

Assets with No Delay

Chicago, IL (REO) – scheduled to close escrow on time on 4/14/20.

Homer Glen, IL (NPN) – redemption period expires on 5/24/20. We can go to judicial sale the day after but, so far, we have been unable to get a sheriff’s sale date. This one has not been delayed as of yet.

Memphis, TN (NPN) – the borrower is 120+ days past due. We initiated the foreclosure with no issues. Tennessee seems to be a state with no restrictions, at this time.

Round Lake Beach, IL (REO) – we took possession a month ago and have to wait until later this week before we can remove the contents. Once the trash out is completed, we’ll get bids for a minor cosmetic rehab.

Rancho Murieta, CA (REO) – we have an ongoing eviction case with the former borrower with a telephonic hearing this week. She’s been filing multiple motions, which are now being summarily dismissed by the court. Since this eviction pre-dates the pandemic, it is not covered by the Governor’s executive order on evictions.

Cape May Court House, NJ (REO)  – rehab is two weeks out from completions. Delays have been due to weather.

Assets with a Delay

Bolingbrook, IL (Re-performing) – we had accepted a bid with a large fund three weeks ago. The following week, the lockdowns started occurring and the fund canceled the trade. A lot of firms don’t want to risk capital right now on performing and re-performing notes because of uncertainty whether the borrowers will continue to pay. This particular borrower has made 13 on time payments in bankruptcy. Once things settle down, we’ll try to sell this loan again but only for a price that makes sense.

Janesville, WI (NPN) – this borrower filed a bad faith filing in January to stop the sheriff’s sale. The case was dismissed in February and we got an April sale date. The sheriff announced that all sales were canceled until further notice. (Talk about being saved by the bell!)

Evergreen Park, IL (REO) – we’re in the process of getting a loan to cover the extensive rehab on this one. The scheduled closing was delayed from last Friday to this week or next.

Killeen, TX (REO) – we took this property off the market to do a quick, minor cosmetic rehab. The rehab has been delayed because of shutdowns in Texas.

Carol Stream, IL (NPN) – the borrower executed a Deed in Lieu of Foreclosure and was supposed to move out 3/26/20. He indicated that he won’t be able to move out until 5/1/20. We’re in negotiations now to have the borrower pay reduced rent for the extra time he needs.

Fund IV 2020 Q1 Update

Of the 4 assets remaining, 1 is an REO, and 3 are NPNs:

Assets with No Delay

Annetta, TX (NPN) – the borrower filed a Ch 13 BK case in December, 2019, to stop the foreclosure sale. He submitted a plan in which he would sell the property by 6/2/20 and pay us in full. In February, he submitted a loan modification package in which he indicated he wanted to keep the property.

Sensing that the borrower was not serious about selling the property, we objected to the BK plan. The judge noted our objection but confirmed the plan. The borrower has until 6/2/20 to sell the property. If he does not, the stay against the property will be lifted and we will be clear to foreclose.

Assets with a Delay

Houston, TX – this has been a complicated note to work since it was a home equity line of credit involving a probate, which meant that it took a long time to get through court and involves an unusual process of foreclosure.

Currently, we are requesting a new order of sale from the court so we can take this to constable sale. Texas has declared a moratorium on foreclosures, evictions, and transfers. We’re monitoring the situation and will push things through as soon as we can.

Dale City, VA (NPN) – the borrower filed Ch 13 bankruptcy in January to stop the foreclosure sale. The trustee filed a Motion to Dismiss because the borrower failed to make the first payment on her payment plan. That motion would have been discussed at the plan confirmation hearing on 3/26/20. This hearing was postponed to 4/30/20, most likely because of the pandemic.

Las Vegas, NV (REO) – we won our eviction hearing and the court gave the occupants until 4/17/20 to vacate. This was pushed back to 4/20/20 as part of a general order to Clark County to postpone all evictions for 30 days.

Final numbers for the Pleasantville, NJ REO:

  • ROI: 13.8%

  • Annualized ROI: 32.7%

Impact of COVID-19 on CCFM

I hope everyone is doing what they have to do to keep themselves and their families safe during these tumultuous times.

I’m an optimist! I think that fear has taken over for too many people and that things will be on a much better path in the next couple of weeks as we all adjust and fear levels subside. Here are some updates on what’s happening in our business of non performing notes followed by a few of my personal views:

Immediate and Short Term Effects of Pandemic

There have been government and court moves to temporarily stop foreclosures and evictions.

Cook County, Illinois

In Cook County, Illinois, all cases have been continued for 30 days. The Sheriff has been ordered to cease execution of eviction orders for 30 days. Other nearby counties have postponed sheriff’s sales for 30 days.

We have a couple of non performing loans in the area, which may or may not be affected because of where they’re at in their liquidation processes.

One of our notes has an upcoming sale date in May. This first postponement may not be the only one. I believe that once fear subsides and society adjusts, we will get back on track. It’s too soon to tell for sure.

Las Vegas, NV

We had a telephonic hearing for an eviction yesterday and the judge ruled in our favor. I believe that hearings by phone and video might become more of a normal thing and I’m thankful for it.

(This case involved a borrower who owned three houses and filed 8 bankruptcies in the last 12 years including 1 to stall our trustee sale; we have no idea who’s living at the house because the occupants refused all contact with us.)

The judged stayed possession for a month, which I think is a lot longer than normal and was influenced by the pandemic.

Vendors

Fortunately, some of our vendors have been as responsive as they were before. Others have been slower to respond and a couple are missing in action. Over the next few weeks, I expect that almost everyone will have adjusted.

The ones that will take the longest to adjust will be the offices that never had employees work from home before.

Main Takeaways

We expect that there will be delays to foreclosures and evictions, which will push out the timelines for the liquidations of our REOs and non performing notes. These delays may just be for a month or they may get pushed out even longer. It’s outside of our control but we’ll monitor the situation as things unfold.

For the immediate future, I’m in favor of these measures. We need to do our collective part to practice social distancing and “flatten the curve” to allow our healthcare professionals time to treat the people that need extra help.

That even includes the former borrowers that have abused our systems to stay in houses for years without paying. Until things get better, they get to stay a little bit longer and I’m ok with that.

At a Personal Level

Sean and I were working from home quite a bit in the last few months so working remotely full time has been an easy transition so far. Our business was always run from an office so all we’ve needed is an internet connection and a phone line. It’s challenging , though, to figure out what to do with three young kids that bounce off the walls after a few minutes!

Investors seem to be staying put for now. It’s scary to see the stock market’s ups and mostly steep downs. People are seeing some of their wealth disappear. I understand that we’re all in a turbulent period right now with the idea that recession is right around the corner.

For some people, the fear and anxiety are tough to deal with right now, whether it’s the thought of personal survival or financial well being. Things will get better. We will adjust. We’re all doing the things we’re supposed to be doing right now and we will “flatten the curve.”

Wishing you and yours the best from CCFM!

(We’ll provide loan level reporting at the end of the month like we do every quarter; hopefully, by then, we should have an even better view of the immediate future.)

Fund V Offering Extended until April 30, 2020

It took us a year to raise $550,000 for Fund II, six months to raise $1.6 M for Fund III, and five months to raise $1.2M for Fund IV. After two months, we’ve raised $135,000 so far but we’re still short of the $500,000 minimum Fund Offering Amount, which we need to reach to commence operations and note buying.

We are extending the time that the Fund stays open to investors until April 30, 2020 and are confident that we will raise a good amount in the next month or two, enough to get the Fund going. (Per the Fund’s Operating Agreement, we are allowed to extend the offering up to 180 days after March 31, 2020.)

Market Volatility

We’ve all seen the extreme turmoil and volatility in the stock market sparked by fears of the coronavirus. Each of us has different risk tolerances and we respond differently to events like this one.

You might discover that you don’t like seeing your portfolio drop precipitously in value. You might also discover that “safe” investments in treasuries is just over 1%. Maybe now, you could consider allocating a portion of your portfolio to an alternative investment such as ours.

Asset Backed Investment

Our assets (non performing notes) are backed by real estate. With the exception of the Financial Crisis of 2008, you won’t see the same volatility in real estate as you will in the stock market. The real estate market doesn’t move up or down nearly as fast as the stock market can and does.

We force appreciation by taking a non performing loan and getting it performing again or by liquidating at a higher price. We don’t speculate and hope that the market goes up. We make a profit for our investors by fixing non performing notes.

I wrote an article about our strategies with dealing with a down real estate market back in September, 2019. If the global economy crashed, would we emerge unscathed? Probably not but everyone else would be affected as well.

Can we mitigate our risks? Yes. Will the coronavirus and any ensuing down markets end? Yes, these, too, will pass and things will eventually return to normal.

Conclusion

Fund V will be open to investors until April 30, 2020, so you have some extra time to get everything together to invest with us. We thank our current investors for their continued support and hope that others will decide to invest with us on Fund V!

March Update

We received our first investment in Coastline Capital Fund V but we’re still short of the minimum offering amount of $500,000 that we need before we can move forward with the Fund. $500,000 is also the point at which the 8% Preferred Return begins to accrue for investors.

We liquidated our first asset for Fund IV last week! We’ll be making the first distribution to investors in that Fund next week.

Fund III March Update

Homer Glen, IL – we obtained the order for foreclosure and now have to wait for the 90 day redemption period to expire before we can go to sale. Most likely, we’ll be able to liquidate this asset before we settle or go to trial with the title company that caused the 8 year delay in this foreclosure.

Round Lake Beach, IL – we gained possession of the condo this week. Upon inspection, it looks like we’ll have to do a trash out and minor updating. This will be a good REO for us.

Carol Stream, IL – the borrower executed a Deed in Lieu of Foreclosure and has a move out date in a few weeks. We’re preparing to sell this REO.

Rancho Murieta, CA – We’ve been reporting on the challenges that we’ve been facing with this former owner/borrower and the eviction process.

She’s continuing to use every legal right that she can to stall the eviction. Our attorney believes that she’ll run out of options and the eviction will be complete in another 2-3 months.

Buyers for two of our escrows canceled. Chicago, IL is going back on the market and should have increased activity now that we’re in March.

We’ll do a light cosmetic rehab of our REO in Killeen, TX before putting it back on the market.

Most of the portfolio has turned or will turn into REO soon, which gives us confidence that we’ll have a lot of liquidations (and distributions) in the upcoming months!

Fund IV March Update

Pleasantville, NJ – we closed on the REO last week and will make our first distribution to investors next week. We need to wait for all of the final invoices to come in before we announce the returns but this was a nice “base hit.” ROI will be north of 10% and annualized will be north of 30%.

Houston, TX – this has been a tricky asset to deal with because it involved a foreclosure judgment and a constable sale, which is unlike the usual Texas foreclosures. We’re actively working through the issues and will provide more detail when we can.

Las Vegas, NV – we have an eviction hearing for the occupants of this REO later this month.

The remaining two assets have borrowers that are in Chapter 13 bankruptcies. We are monitoring these assets and, hopefully, should see some resolutions soon.

Mid Winter Update

Coastline Capital Fund III, January

In January, we had two foreclosure sales for Fund III assets. One sale went through; no one bid at sale so the property came back to us as REO. The sale was confirmed at the end of the month and we’ll be able to take possession of the vacant property March 1st.

The borrower for the second sale filed an apparent bad faith Chapter 13 bankruptcy to stop the sale. He hasn’t filed the required paperwork or schedules and the trustee has already filed a Motion to Dismiss. We’ll find out later this month how this one will go.

We listed another REO on the market “as is” and are in negotiations to get a nearly full price on another REO that’s listed for sale.

Two of our remaining NPNs have loosened up. For the one we have in Homer Glen, IL, the primary obstacle (another lien) was lifted, leaving the path to foreclose clear. We filed the Motion to Foreclose with a court date at the end of February.

We’re close to reaching a settlement for a Deed in Lieu of Foreclosure for the note we have in Carol Stream, IL. We expect to have it executed or resume foreclosure by the end of the month.

We have 11 assets left. Here’s the breakdown:

4 NPNs 
6 REOs
1 Re-performing Note

Coastline Capital Fund IV, January

This month, we received our Order for Relief from the Automatic Stay for the Las Vegas, NV, note, in which the borrower filed an egregious, bad faith Chapter 13 bankruptcy filing to stop the December trustee sale. The judge saw things our way, realized that the borrower was taking advantage of the system, granted relief, and even waived the 14 day stay. Our trustee sale had been postponed by only a month with no more delays.

No bidders bid on the property at trustee sale so this one reverted to us as REO. The occupants have avoided contact with us so we’ve made the proper postings and stand ready to evict.

We had a trustee sale in Dale City, VA, canceled because the borrower filed Chapter 13 bankruptcy. So far, she hasn’t filed her required paperwork but her attorney has asked for an extension. Unfortunately, there is nothing for us to do but wait to see what she files.

We were waiting on a couple of trailing documents to come in before we could foreclose on the note in Houston, TX. On January 31st, those came in so we are clear to get the ball rolling again…

We have 5 assets:

3 NPNs
2 REOs

Coastline Capital Fund V

Opened January 15, 2020

Fund V is identical in most respects to the previous two Funds. It will be open to investors until March 31, 2020. Once it closes to investors, we will purchase one or more pools of notes with the capital we’ve raised. After the initial note purchases, we will not buy more. Net proceeds will be used to pay 100% of investors’ initial capital contribution first. Net proceeds beyond that will be used to pay an 8% Preferred Return that accrued while the investors’ money was in the Fund. Final Net Proceeds go 50% to the investors and 50% to the Sponsors (Us). There is a 2% Management Fee that gets paid to us along the way to help us pay the bills and provide a nominal income while we spend our time working these assets.

We expect the bulk of liquidations to occur within 6-18 months and the maximum investment timeline is three years. We will completely liquidate any remaining assets three years after we close the Fund to investors.

The biggest change from previous Funds is that we’ve lowered the minimum investment to $25,000 and decreased the size of Units to $5,000 each.

The Fund is available to Accredited Investors only.

We hope you decide to join us!

Coastline Capital Fund V Open to Investors!!!

Fund V officially opens to investors today! The Fund is scheduled to remain open for investment until March 31, 2020. It is virtually identical to Fund III and IV in structure:

Please take a look at the offering on the portal for more details. If you have any questions, please contact me or Sean. We’d love to have you onboard for this one!

Happy New Year!!

We hope that you all had a fantastic holiday season and a Happy New Year!!

Fund III and Fund IV had a great 2019! Lots of progress towards liquidations, which we hope will be completed for both Funds by the end of 2020.

Fund V is opening up to investors January 15th. The biggest change is that we’re lowering the minimum investment to $25,000 and making the Units $5,000 each for greater flexibility.

Coastline Capital Fund III, 2019 Final
We had another great quarter with our first liquidation! We made a lot of progress with all of our assets on all fronts. We stated in the beginning that we expected the bulk of liquidations to occur in 6-18 months, which equates to June, 2019, to June, 2020. We still hold to that and anticipate that all but two or three will liquidate by the summer of 2020.

The first asset to liquidate was the REO condo in Highland, CA, with a 68.0% ROI and a 92.3% annualized ROI. Keep in mind that we see some really good returns on individual notes but the Highland, CA note was extraordinarily high because of the unexpected jump in property value when we discovered that the property was much larger than the county assessor’s records indicated.

After raising $1,590,000, we purchased 12 Non Performing Notes from the end of December, 2018, to the end of March, 2019.

These assets looked like this at the beginning:

8 NPNs with significant issues that completely stalled progress towards foreclosure
2 NPNs with active foreclosures in progress with no issues.
1 NPN with no issues but foreclosure hadn’t started

As of year end, we have 11 assets left:

5 NPNs (2 with sale dates & 1 possible Deed in Lieu in January)
5 REOs
1 Re-performing Note

REO’s have more definite timelines than notes because the properties are under our control. With 5 REOs already and another 3 potential REOs in January, we’re very confident that most will liquidate within the next 6 months.

Coastline Capital Fund IV, 2019 Final

We finished the last quarter strongly, with much progress towards liquidations and handling last minute complications. Our small portfolio showed a lot of signs of liquidations in an extremely short time period but borrower actions have pushed those liquidation dates out another 6 months on average, which is still faster than normal.

We have 5 assets:

4 NPNs (2 with sale dates in January)
1 REO

We had two sale dates in December that were postponed due to last minute bankruptcy filings. In one case (Annetta, TX), the borrower is asking the judge for 6 months to sell his property. Since he has equity, he would be able to pay us in full and walk away with some cash. We’ve seen the listing of the property for sale on the internet and believe that the borrower is legitimately trying to take care of his situation. We’re going to let him carry out his plan and, hopefully, he won’t need the full 6 months to sell his house.

In the second case (Las Vegas, NV), the borrower made a clearly bad faith Chapter 13 bankruptcy filing to postpone the sale. She’s a serial bankruptcy filer and has an open Chapter 7 filing with a disposition for the collateralized property. The property is one of two rental properties that she owns in addition to her primary residence. We have an emergency hearing for our motion for relief on 1/7/20 and believe that the trustee sale will go through on 1/16/20.

We believe that this portfolio has a high chance of completely liquidating by the end of 2020.

Coastline Capital Fund V
Opening January 15, 2020

Fund V will be identical in most respects to the previous two Funds. It will be open to investors until March 31, 2020. Once it closes to investors, we will purchase one or more pools of notes with the capital we’ve raised. After the initial note purchases, we will not buy more. Net proceeds will be used to pay 100% of investors’ initial capital contribution first. Net proceeds beyond that will be used to pay an 8% Preferred Return that accrued while the investors’ money was in the Fund. Final Net Proceeds go 50% to the investors and 50% to the Sponsors (Us). There is a 2% Management Fee that gets paid to us along the way to help us pay the bills and provide a nominal income while we spend our time working these assets.

We expect the bulk of liquidations to occur within 6-18 months and the maximum investment timeline is three years. We will completely liquidate any remaining assets three years after we close the Fund to investors.

The biggest change from previous Funds is that we’ve lowered the minimum investment to $25,000 and decreased the size of Units to $5,000 each.

The Fund is available to Accredited Investors only.

On January 15, you’ll be able to access the details of and sign up for investment in Fund V here. We hope you decide to join us!

Fund V Opening Soon!

Happy Holidays and Best Wishes for a Happy New Year!! 

Coastline Capital Fund V will be opening January 15th, 2020. It will be very similar to the previous Funds with a Preferred Return, Profit Split, and Limited Time Commitment. We’ll send all the details after January 1st, so relax and enjoy the holidays with your families!

First Distribution Checks Sent Out!

We’re excited to announce that the first distribution checks for Fund III investors were sent out right before Thanksgiving!! Fund III closed to investors in December, 2018, so it’s been almost a year long wait and we appreciate our investors’ patience and support.

Coastline Capital Fund III, Nov 2019

The first asset to liquidate was the REO condo in Highland, CA. This one was especially exciting for me because of all the issues and complications that were involved in foreclosing on this note. We had to initiate a Quiet Title Action, fire a large, attorney firm, track down an old lien holder, and file an eviction against the occupants. 

For this note, preliminary numbers show ROI north of 50% and annualized ROI north of 60%. When we finalize the accounting I’ll provide the actual numbers. I’ll provide the details of this non-performing note in a future blog post.

This first distribution check is a return of principal. The way our Funds work is that the investors get 100% of their investment back first. Then, they received their accrued 8% preferred return. Finally, future proceeds are split 50% to the investors and 50% to us (sponsors). There should be quite a few more distribution checks over the next 6 months as more assets turn REO.

The remaining 11 assets have all progressed toward liquidation and we anticipate that most will do so by mid-2020. We said that we expect the bulk of liquidations to occur between 6 and 18 months. For this portfolio, it will be more like 11 to 18 months. Once a note turns into REO, our timeline to liquidate becomes relatively fixed since the borrower is no longer an issue and we control the property. By the end of January, 2020, we should have only 2 NPNs left.

Here’s the current breakdown

Fund IV Update

We purchased our last NPN for this Fund in October for a total of 5 NPNs. One already had a sale date and is reverting to us as REO. Three have sale dates or are close to having sale dates. We hit a snag with the last one because the prior servicer offered a trial loan mod during interim loan servicing and we are obligated to honor that. Although we didn’t expect this, we’re adapting to it and there are plenty of profitable exit strategies available to us.

Latest News, 2019 Q3….

September was a busy, busy month for us. We closed Fund IV to investors at the end of August and bought some notes last month. We had significant movement in Fund III’s portfolio…..

Fund IV Update

We raised a total of $1,150,000 at the end of August. Whoo hoo! We are extremely thankful to the investors that put their faith and trust in us and decided to place capital with us. We’ve assembled a fantastic little portfolio of loans and expect it to do very well.

September started out very smoothly and we identified 5 very good, non performing notes within the first week. We ended up closing on 4 out of the 5 by the end of the month. The 5th one was pulled by the seller at the last minute, which is a big “no no” in our industry, and resulted in killing the seller’s possibility of ever doing future business with us or the broker who set up the trade.

We ultimately found a replacement loan and are currently in due diligence on that one.

The four that we bought are all in late stage foreclosure or in very fast non-judicial foreclosure states:

Coastline Capital Fund III, 2019Q2

All of our 12 assets have progressed toward liquidation:

We expect to have 2-3 liquidations before the end of 2019. All but one or two should be liquidated by the end of summer, 2020.

The most noteworthy events happened with these three:

Highland, CA – we were finally able to get a hold of the occupant and arrange cash for keys. Once inside, we discovered a windfall. The county assessor showed the condo as a 2 bedroom, 1 bathroom, with 801 square feet. Instead, the condo was actually a 2 bedroom, 2 bath plus a loft with 1128 square feet! Instead of selling this for $130k as we expected to, we are anticipating selling it for $170k!

Homer Glen, IL – we knew that this note had issues with lien priority before we bought it but were not concerned because the title company was already fighting this in court. It took us three months to figure out that the title company was not really on our side and a few more months to find the right attorney to prepare a lawsuit for us. We filed a complaint against the title company for breach of contract (they waited 4 months before recording the mortgage). The title company responded by paying off the other mortgage, which will allow us to pursue foreclosure. We are currently in settlement talks over damages owed to us….

Rancho Murieta, CA – The borrower on this note didn’t make any payments for years. She did this by bullying her servicers with excessive complaints and filing bankruptcies to stop sales. She postponed our 1st sale date but not the 2nd with multiple bankruptcies. The judge ruled in our favor and annulled the automatic stay, which validated our trustee sale. We are currently evicting the borrower.

New Blog: “Andy’s Stories”

I started a new blog that will focus on my stories, experiences, adventures, and opinions. I want to tell the stories about my part of the non performing note business to educate, inform, and entertain. I want to provide value to potential investors in one of our Funds, other note investors, future business partners, vendors, friends and family. (My mom knows that I’m a note investor but has no idea what I actually do and this will be my way to let her know!)

Stories are a great way for those unfamiliar with non performing notes and note funds to learn while being entertained at the same time. During a conversation, I’ve been asked, “How is it possible that the borrower hasn’t made a single payment in 10 years and is still living in their house?” I reply, “It’s hard to believe but this is how these things happen…” People love these stories and the more loans I buy, the more interesting situations I come across and the more stories I have to share.

The old blog on this website called, “News,” will stay where it’s at and become just that. The posts there will tell you about the latest Funds that are available for investment, updates on the Funds that are liquidating assets, and so on. Information that’s important for the company but probably not as entertaining as you’ll find here.

For “Andy’s Stories” click on the page of the same name on our website.

Fund III 2019Q2 Update

Last quarter was excellent for us! All 12 notes were successfully transferred to our servicers. We got all the notes back on track to resolutions. We had a couple of difficult notes where it wasn’t clear the exact path to take or how to accomplish what we wanted to but we found solutions and they are mostly on auto-pilot now.

Two notes went to foreclosure sale and are now REOs. On one, the previous owner vacated and we are currently getting bids for the trash out and renovations. The other is still tenant occupied as we wait for a state mandated 90 day waiting period prior to eviction while we work on clearing title.

Two notes went re-performing. One is a borrower who filed Ch 13 Bankruptcy two days before the judicial sale. He’s been paying right on time on the 1st of every month. Our strategy is to hold this for another 1-7 months and sell the note as a reperformer. We initiated foreclosure on the other note and the borrower responded by reinstating the loan, which means he paid all the back payments and fees, and had enough left over to make three additional payments. We’ll hold this one for 1-7 months and sell as a reperformer.

We obtained judgments on two more notes and are within a month of getting judgment on one or two more. Getting a judgment is a significant milestone. It means that the bulk of the work has been done and that you’ve proved to the judge that you have the evidence and right to foreclose. Following the judgment is a redemption period, followed by a sale date, and confirmation of sale. Typically, the borrower’s last defense is to file bankruptcy but their opportunity to fight is severely diminished.

By obtaining a judgment, we’ve increased the value of our note since the hard work has been done. We will put the two reperforming notes and the two notes with judgments out for bid and see what the market is willing to pay for them. If the returns are good, we will sell some or all of these.

Investors in Coastline Capital Fund III get loan level reports with greater detail every quarter.

Preferred Return Now Accruing for Fund IV!

Yesterday, July 8th, 2019, we surpassed the Minimum Fund Offering of $500,000, which means that the Preferred Return of 8% is accruing for all investors. We’ve raised $610,000 (money in the bank) with verbal commitments of $70,000 to $300,000 in the next few weeks.

We will close the Fund to Investors on August 31st, 2019, or sooner. We won’t hold it open longer, now that the Preferred Return is accruing. We’ll raise as much as we possibly can with a quick turnaround to purchase as many non-performing notes as we are able to in September.

Don’t let your money sit idle in a checking or savings account earning little interest. If you’ve been considering an investment with us, put your money to work accruing a preferred return until we’re ready to go!

Visit Coastline Capital Fund IV to see details.

Coastline Capital Fund IV is Open to Investors!!

Coastline Capital Fund IV  is an unregistered security issued under a Regulation D, 506(c) exemption and is available to Accredited Investors only. The Fund opened to investors April 15, 2019 and will remain open until July 31, 2019, unless we close it sooner. The Fund offers an 8% Preferred Return and a 50% Profit Split to the Investor. The minimum investment is $50,000 (which can be waived at management’s discretion). The minimum Fund Offering is $500,000, which means that when we raise that amount, the 8% preferred return starts accruing. The maximum amount we’re looking to raise is $5 million. The Fund is a single purpose, non-leveraged, close-ended investment, designed to generate returns for its investors with a limited time commitment. The Fund will liquidate all assets within three years of the date that the Fund closes to new investors.

We’re using a different website platform for this new Fund and are excited to roll it out. The new platform will:

  • Present the investment opportunity more clearly and concisely.

  • Integrate with Invest Ready, a 3rd party, independent, accredited investor verification website.

  • Integrate with bank accounts, which will allow us to ACH payments/distributions to the investors. No more wire fees or delays waiting for checks to arrive.

  • Provide statements and analytics for your investment through an investor portal.

March 2019

It’s been a great beginning of the year for us so far! We completed the bulk of our buying for Coastline Capital Fund III. We’re about to sell the last asset from Fund II. And we’re gearing up to start up Fund IV next month!

 Coastline Capital Fund III Update:

We raised $1,590,000 for Fund III, which closed to new investors on December 1st, 2018. Since then, we’ve used $1,397,769 to purchase 11 notes with $2,259,835 in Unpaid Principal Balance (UPB). The notes are backed by property in the states of California (2), Illinois (6), Wisconsin (1), Tennessee (1), and Texas (1). We have enough to buy one or two more notes and are looking to do so in the next week or two. We’re very pleased with the notes that we were able to carefully select from our sellers and expect to do well with them.

We’ve provided detailed information on these notes including addresses, liquidation strategies, purchase price, and comments to the investors in Fund III. As notes liquidate, I’ll provide additional details for readers of this newsletter.

Of the 11 that we purchased, one already has a sale date later this month and several more are on track with probable foreclosure sale dates within the next 6 months. Six are still in interim servicing but we don’t wait longer than we have to before we start “righting the ship,” my term for getting non-performing notes that have stalled, back on track to foreclosure or other resolution.

We’ve reached out to all of the foreclosing attorneys and trustees to provide a smooth transition and to make sure that they have everything that they need to proceed with foreclosure. Usually, that means they need specific documents, which cause delays for months and years, in a few cases. We straighten out miscommunications and are persistent in getting needed documents to the appropriate vendors as soon as possible.

We’ve also offered short sale, foreclosure by consent, and deed in lieu/cash for keys options to most of the borrowers. These options may work better for the borrower by letting them get out of a situation that is too much for them to handle while minimizing the damage to their credit and allowing them to move on with their lives.

We’ll keep you updated on the progress of these notes!

Coastline Capital Fund IV

We are getting things ready to launch Fund IV next month. Tentative opening date for the next Fund is April 1st, 2019, and the closing date to investors is June 30th, 2019. This will be a 506(c) offering like Fund III, which means it will be open to accredited investors only. The terms are being finalized but it will most likely be similar to Fund III in that it will offer a Preferred Return and a Profit Split. 

We are looking into using a different web based platform that is more robust and streamlined than the system we are using now. Details to come later!

Coastline Capital Fund II Update:

Fund II should be completely liquidated next week.

Our REO in Chula Vista, CA is scheduled to close escrow next week. Even though this market had flattened out with little activity from Fall, 2018 to January, 2019, we remained patient and left our listing price alone as we were competitively priced. Our patience was rewarded with an above list offer from a motivated buyer. 

Sean and I made the decision to sell the REO in New Bern, NC at whatever the market could bear. At the end of last summer, we had just completed a light rehab of the house when Hurricane Florence hit the east coast. New Bern, NC, was one of the hardest hit areas. Our house sustained significant damage from flooding. After exploring different possible strategies, we decided to sell “as is,” recover as much money as possible, and move on to the next Fund and the next deals. We sold it for a loss at the end of January, 2019, but, thankfully, the gains from the other 4 notes in the portfolio make up for it.

Once Chula Vista closes, I’ll finalize the numbers for Fund II and present them in another newsletter.

January 2019 Update

Coastline Capital Fund III Update:

 We successfully raised $1.6 million for this Fund in December, 2018! We were able to purchase 2 non-performing notes before the end of the year. We’re getting tapes from our sellers now and expect to bid, perform due diligence, and purchase non-performing notes with the remaining investable capital by the end of January. 

The two notes that we bought are both in the Chicago, Illinois area. One should go to sale within the next 60 days. We’re about to get a judgment for foreclosure for the other one which puts us about 4 months away from liquidation.

 We’d like to thank the investors that contributed capital to let us make Fund III happen! We look forward to getting the best assets possible, liquidate, and return as much profit as we can….

Next Fund?

 If you didn’t invest in Fund III, there will be another opportunity to invest with us later this year. Once we complete our buying for Fund III, we will make plans for opening our next Fund. Tentative opening date for the next Fund is April 1st, 2019, which would tentatively close to investors June 30th, 2019. We want to take the previous year’s experience, investor feedback, and potential future investor interest into account so that we can make our next Fund is better than the last one.

 Let us know if you’d be interested in future opportunities.

Coastline Capital Fund II Update:

We were hoping to have Fund II wrapped up by the end of last year but we still have two assets left to liquidate.

Our REO in Chula Vista, CA has had no offers on it and we’ve been experiencing the flattening of the market in the San Diego market. In about October, 2018, the market flipped from low inventory and homes being sold quickly to much higher inventory and properties sitting on the market. It’s a good property in a good neighborhood and it will sell, just later than we expected it to.

Our REO in New Bern, NC, has also been sitting on the market. We are looking at different liquidation options and are working to get this taken care of as soon as possible.

Webinar Power Point Presentation followed by Q&A with the Sponsors of Fund III

We presented a webinar on Wednesday, November 7th that went into detail on the most important aspects of that Private Placement Offering. We discussed the opportunity and profit potential of investing in non-performing notes, our competitive advantages, our strategies on liquidations, and current and past liquidations of notes. We showed projected performances of non-performing note investments as well as what the return looks like to the investor.

Although Fund III is now closed to new investors, this can still be useful to you if you’re considering investing in one of our future funds.

Coastline Capital Fund Management LLC

27702 Crown Valley Pkwy D4 #268
Ladera Ranch, CA 92694

P: (949) 371-6749

andy@coastlinecapgrp.com

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