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Where's Nancy Reagan when you need her? Many funds have been sharpening their knives for distressed deals, but should heed her "just say no" advice, warned Red River Asset Management's Bruce Stern yesterday at Herrick, Feinstein's Two Park Ave office.
Red River Asset Management's Bruce Stern, Herrick Feinstein's Gary Eisenberg, and Real Diligence's David Tesler
These funds are under the gun as investors say, “use it or lose it” and paying stupid prices because of compulsion, Bruce says. Here he is joined with Herrick's Gary Eisenberg and Real Diligence's David Tesler. There are three major mistakes investors are making:buying too early, underwriting the past, and not having multiple exit strategies—with these, you end up in a Stuyvesant Town situation, he says. On top of standard due diligence, it's critical that you value the note and real estate, and do your homework on the loan, seller, and property. And don't forget legal problems—you need to avoid trapping yourself: pay attention to warning signs; review documents and communications so a borrower doesn't a leg up on you; verify a default has occurred; and do proper searches, Gary says.