A buddy of mine took me to a presentation about an investment opportunity that promised a 289% return on your investment, annualized. I was leery of it, of course. Still am. That's why I'm posting this here. I'm not a seasoned investor. Please tell me what's wrong and why this is a bad idea, or by the same token, please tell me if I'm being too cautious and it's perfectly acceptable to get into something like this. It will take quite a bit of your time to read through the attached documents, so I will offer my thanks in advance for taking a look at them. The whole investment process is explained.

Let me offer some details as well that are not explained on the attached documents., and a few bullet points for those who don't want to take the time or can't read the attached documents:

The whole concept revolves around NPN (non-performing notes)purchased from banks at pennies on the dollar. Mostly second liens on homes, etc.
The company renegotiates the note and collects the debt
They take a 30% service fee out of all of the collected debt for performing this debt collection service
Then they take 50% of the gains AFTER principal investment is returned as their gains
Then the sponsor takes 50% of what's left of the gains
After that, the investor (me, you, whomever invests) starts seeing gains

The whole thing is played like they are allowing small-time investors (less than 100k) to get into this huge opportunity, but it seems that they take such a big cut of the gains, the small time investor is hardly going to see any of them.

By the time you take out 30% for service fees, 50% to the partnership with the company, and split again (50%) with the sponsor guy, there's not much left for Joe Blow who puts his money in the pool for this thing.

Am I spot on, or am I missing something? Any opinions would be greatly appreciated.

Reading through the above, I feel the need to provide some clarification, so here's a quick model:

$10,000 initial investment from me
They put this $10k into a pool of funds with other investors, essentially creating an LLC company for this investment pool
Let's say they have $500k in total funds from multiple investors.
With that $500k, they go out and buy all these NPN debts from banks at $0.02 - $0.05 per dollar (which equates to $25 Million in actual debt if we use the $0.02 number)
They then re-negotiate this debt with the debtor at a higher rate than it was purchased, but a lower rate than the original, averaging $0.15 on the dollar
The first thing they do in the process is return the initial investment to the investor, so I'd get my $10k back before anything else happens
They say this initial investment return is averaging about 90 days, which is rather comforting, but also a little unrealistic in my opinion
After the initial investment is returned to the investor, they start taking percentages out of the gains from there on out.
30% is taken out immediately as the service fee for the debt collection service, the actual people making the calls, private investigators to find these people with debt, etc.
The company (Heritage Pacific) takes a cut for being the administrator of the whole situation (50%)
The guy that presented this to us takes a "management fee" of up to 50% after that, based on the performance/percentage of the gains.
Then we (the investor) get our cut of the gains after all of the above is taken out.

I think that's a better, more thorough explanation.

I always think if it's too good to be true...

Do you know what a non performing note is?
In the Business Model they say it can even be unsecured notes.

Now we are talking about unsecured, non-performing notes?

Why not just go with Prosper?

Meh! Too much risk. I have my money invested in Agape World. It's been returning 15% every 2-3 months and 99% guaranteed.

Thing is though... I haven't been able to get in touch with Nick Cosmo for a couple of months now. I'm sure he's been busy making money for me. I trust that guy.

So if I were you, I'd invest in Agape World before I'd put one penny in your unsafe investment.

Edit: Also see you at the Golf event. We are still having one this year right? I haven't gotten the invitation yet.

EvilCapitalist said:Banks are not selling these for pennies on a dollar. The best recent deals that I have seen were around 48c on a dollar.
No one, i repeat, absolutely no one should be paying "service" fee to participate in a deal like this because to do a deal like that you will -still- have to pay money ( attorneys and accountants ).
Banks are selling these for pennies on the dollar.

The only problem is that they're completely underwater, and behind a first mortgage already in foreclosure and with a greater balance than what the property is worth.

The only way to make these notes pay is if the deadbeat can be fraudulently refinanced into a new mortgage after the credit has been scrubbed and the appraisal boosted, or if the deadbeat can be talked into having a family member bail them out.

Neither of those exit strategies is something worth risking money for.

This friend would be better off buying charged off credit card debt at pennies on the dollar, and verbally harassing the deadbeats into paying an amount they can actually afford.

BBB said:You had me at 289% return.

How did I know TripleB would reply to this thread!

brettdoyle said:A buddy of mine took me to a presentation about an investment opportunity that promised a 289% return on your investment

I can promise you a 589% annual return if you send me all of your savings to my paypal account.

Your money will be securitized into a cash flow producing asset that will ultimately be invested in hookers and blow.

I'll go as far as to make a 3 page presentation regarding your "investment".

I'll believe it when I see this "so-called" 3 page presentation. In the mean time, I'll be earning a sweet 289% from the OP.

I think to be safe you should do this for maybe 3 years max at 289% then put all the money into a variable gold deferred annuity for long-term preservation.

Dude, seriously? This has SCAM written on it so big you can read it from a mile away.

Unbelieevable said:289% return on your investment, annualized.

That is the only sentence needed out of what you posted to say it is a total scam.