2026 Investing Predictions for Note Investing & Seller Financing | Real Estate Notes Show

make an offer? Um they have about 5 to seven days to make an offer on that. And you know, as always, if if an extra day is needed because someone's away or someone has a a question that didn't get answered, you know, we allow that. So, it's it's not a firm bid date of five days on at 3:00 and if no bids after that, you know, we don't accept it. Um, we try to keep it as flexible as possible. >> So, and you're right, everyone gets exact same tape, apples to apples. There is no >> Yeah. >> You know, >> Yeah. And and for those who are maybe less familiar, 5 to seven days, that's plenty of time to do your homework on on especially if you're only looking at a couple of loans.

Uh that is tons of time to be able to >> just put an indicative Yeah. an indicative bid. >> Exactly. Exactly. >> What indicative means guys out there who don't know what that means is that you're just doing preliminary. You look at the note numbers. You can get a value of the property just a guesstimate and you can make a bid based on the note data and your value of your property. After that, you can dive deeper, get your BPOS or and your title reports, we call O&E, um, and dive deeper into the collateral. It's just based on, you know, figuring out what you think the value is. Now, if someone has a portfolio of hard money loans or seller finance notes, is that something you'd be willing to sell off? Absolutely.

And we we have in the last 12 months, we've actually had an uptick of that type of a product. >> That's really interesting. I And we were talking about a little bit before. I'm a fan these short-term loans because I'm buying for my fund. It's a pretty predictable way. I know exactly when it's going to close and then I can go out and turn that money around, which is its own problem, but but it gives me a timeline and it helps me to to plan. >> So, I'm I'm a fan. Yeah, we we have we have fix and flipped loans that far, maybe even par plus and then we have probably the least amount of transactions that we had done in 12 years.

Um it was it was probably actually not half but it was probably around 60% that we typically do. Um and the biggest reason I'm pretty sure is that we just we didn't have any of the hedge funds that really really to move some big portfolios which we had every you know previous years all the time. Um, and what we did have that was more than in the past is a lot smaller deals. So, we had we had more transactions, but the the the loan count was far less than had always been. Um, and it was interesting how a lot of the deals were coming from um from smaller funds, smaller buyers that, you know, I don't think they're saying it, but they were just they were getting out.

They're basically saying, "I'm done. I want to just move these last 10, 12 out of my fund. I need to close the fund." Um, you know, the investors want us to close the fund at this time right now. Um, so we had a lot of transactions like that and >> yes, the motivation on those definitely is um a transaction where the pricing gets done. So we do a lot of trades that do get done on that type of a process where we still have some hedge funds that that just got into buying. A good example is the heckhams. >> And so you know >> real quick real quick for those who don't know heckhams are reversed mortgage >> for the layman term.

>> Yeah. It's a it's almost considered an the next closest to an REO. >> Um and so you're really you're not buying the ability to collect uh from any borrowers. you're working that to the point where it's a foreclosure and a takeback of the property. And so really, you're, you know, you got to be an REO property management manager person, not a note buyer. And so that's where we've seen the most uh transactions that get a and we often find the fact that that really should not matter it's it it's what works for you in your business right if I'm buying at X yield Nathan doesn't have to be higher than me to make a better deal it depends on his scenario if his money if he's borrowing money at cheaper rate he can get a cheaper deal.

But for those person who's just getting into the game and sees all these social media posts of all these, you know, quoteunquote experts out there who are buying five, 10, 15 deals, what do you say to them when they're first time buyer on buying the first deal? >> Yeah. And also understand how um the information is coming from what what source. So if you had asked me to teach people to to buy loans, I'm going to go back to, you know, years ago where we were buying and making 40 to 50 40 to 45% profit on our loans on our yields. So that's what it was back then. Um, and of course I'm going to pitch that.

I wouldn't I was not going to tell them I pitched, you know, I made 5%. >> So it you got to figure out who who's where's this information coming from. Um, because that market is long gone. There is no there is no market where people are buying assets steadily and making anything higher than probably an 18% return right now. >> I agree with that. >> Yeah. >> And so that's where you see a lot of people >> looking for that above that 18 that have been on the sideline for many years. many years and so you know as I said to you uh before to me anything above 8% is really a comfortable level >> right we have a normal person in their 30s and 40s who have some capital they've heard about this note stuff they watch our show or have they learned and they want to get started right they want to buy their first asset >> and they ask all their friends what yield are you getting what yield what do you say to that person who's asking what yield should I get who just needs to learn and buy their first asset.

What do learning. Buy a deal 78%. Don't chase the big dogs. Buy from a reputable seller. Make sure you do your due diligence well. Ask questions and buy that first deal. Nathan and I can't compete with you if you're buying at 78%. That's okay. >> Take 80% and be happy, >> right? So, I would really push you guys if you're a first-time buyer or even a new creator is looking to switch over to the buying side, do that, right? Try buying it and learn from the other side of it. >> And understand that, you know, as buyers, we're buying bulk deals. And so, yes, we're hitting home runs on a lot of assets and we're losing our shirts on others.

So for us it's a you know we can we can hide it with the profits where if you're buying one load at one loan at a time I could see where that you know that's a difficult position uh a different view for that for that one single asset. So understand if someone's telling you that you know they're hitting home runs they're probably have a portfolio you know larger than two assets. >> Yeah. Yeah. >> Yeah. Yeah. Yeah. >> So, what in your experience now with buyers and stuff that's going on, what is your biggest issues or problems you're seeing from the buyer side as well as those who are creating or selling notes? What is your in 2025? What lessons did you learn that you want to share with everyone about how not to be a how do you become a better buyer and how do you become a better seller? Um, this year was pretty I I was impressed with this year because people, buyers, investors were more in tune with how to run through the due diligence.

So I I saw a lot more people um working through the files um educated questions running their own third party BPOS OE and coming back with issues that the seller was understanding and willing to work with. some um seller finance loans that were probably originated in the last 6 to 12 months that are selling for almost a 20 25% discount. So, it's it's all over the board. >> Wow. >> All over the board. >> Yeah. seller finance guys out there who are looking to liquidate their assets, you can also reach out to Polio to ask him, hey, listen, like to sell these assets. And I would give you a little quick thing.

He's ask you some questions that you may not know the answers of and you should. So, it's a good kind of test to figure out what's important, what's not. Um, because Nathan and I always come across these people who tell us data that doesn't really apply. Um, just example, the other day I had someone come out to me and told me how many acres the property was, which is wonderful and great. They told me three different trees that were actually on the grounds. That really doesn't matter to me, but I appreciate the details. So, you'll get a idea of where how notes are traded because we find over the years that were financed, they don't know how notes are traded often.

So for those who are seller financing notes, stuff like that, can they also go to your platform, sell notes, but also service them as well. Correct. >> Yes. Yep. We do service uh for seller for the seller finance uh buyers out there right now. Yeah. >> Awesome. >> Not a big part of our portfolio, but we do we have about maybe I think about eight or 10 clients. >> Okay. So, let's dive into the deep pills. What has the 2025 year been for you guys at the train desk? You guys see probably more assets than anyone out there. Um, from a sellers point of view and as a buyer's point of view, what do you see from the sellers? What were they selling at typically? Were they moving things quickly? Were they hesitant? Were they holding back? What's your analysis of what happened? Well, for 25 it absolutely was um lot of bids, but there's a big spread between where they can sell them.

Um, and of course, that's probably because it was during the time where they were buying them aggressively um from the HUD deals. >> Yeah, I know. I know how deals taking place uh this month as well. There's a big trade going on that people are bidding on that we're part of. Um and heckhams are going to be growing year after year. I believe due to the fact that the baby boomers are retiring and and passing away. I think that's going to be more and more common. Uh because reverse mortgages is just the it sounds what it is what it sounds like, right? It's just taking the mortgage, giving you money every month and adding up and default is when you sell or if you die.

Um the only tricky part is if there's heirs or if there's a spouse living that's not on the document you have to evict as well. >> But so let's flip over the buyer stuff. Go ahead. Go ahead. Sorry. >> Yeah. We had a lot more RP I'll say we had a lot more RPL sales than NPLs. >> Okay. >> Yeah. >> Is it because NPLs were too expensive from >> for the sellers to sell at a deeper discount? You think >> um the NPL had the valuation balance um dilemma. You know, the the values have gone up so high, legal balances have gone up with it and they all project to recover the full legal balance and that that's where you're going to have the biggest um the bid ass spread on those.

And with the RPLs, um, they were most of the assets of course were NPLs few years ago >> and they have the ability to sell them anywhere from low 80s to the mid 90s which moved them pretty quickly. >> So let's dive into that side of it. We were talking before we got on the call. >> There's a lot of investors out there on social media that sees Nathan put it out there. I just bought loans. I just bought loans. and the eagerness to buy loans is out there and we're competitive to a point but I think we run into is we start chasing who gets the best returns you tell them? >> Well, I guess not to be bogged down on the yield itself.

Um is to probably be more interested in the process. >> Um because um if you're an elephant hunter, you know, you're going to find one and down the road in the future, you're you're not going to be, you know, a consistent buyer. So, if you're able to get your feet wet now, um, and forget about the yield. I mean, don't be silly about it. you know, the, you know, be comfortable with a a little above a break even yield and move through the process where down the road you're going to be more educated, more um willing to make larger purchases because you now have the experience where others have been out of the market for five plus years.

>> Yeah. I remember we talked to somebody who I think it was just right maybe it had been at DME anyway and but he said he had just bought this one loan and he was kind of embarrassed about it. He said I just bought this one. It's like a 6% yield and we're like are you kidding? That's fantastic. Like now you've done it. >> Now you know how to go through the process. Now you've learned about servicing and how that works and all those different things that you don't know until you actually do it. You can hear about it, but you don't know until you actually do it. >> And Nathan and I talk about all the time, beat what your market is giving you.

If your market, your money's in a 6% CD or 5% CD, if you get seven, you just beat your own money. So, just take away that skinny and you've also not lost any money, which is a really big win because in this game, you can lose money. Let's be honest here, right? We've seen >> stuff happen and it's not fun. So, experience beats everything. We talk about all the time. I don't care how many deals you've done. The time you've been into it is the big big key because you're going to learn and learn some hard lessons as well. Just start Um, if anything, I saw on the seller side more issues where the uh collateral uh descriptions were different from what they have on the tape and also for the collateral uh documentation of what they actually had for someone to uh go through a funding and closing on it.

So, this was the first year where there was more issues on the seller side than I had issues on the buyer side. So, I think if buyers continue to, you know, do their work, if they're going to put an offer in and get awarded is to put in the time and ask the questions and don't run away if they find out that the property is, you know, 50,000 less than what was on the tape. Understand that you can negotiate and bring it to everyone's attention. >> So, a lot less a lot less ghosting this year. >> Good. So, to that point, um, I've seen it in the past, and I'll get your take on this, but I've seen in the past where sometimes sellers will put out something and then, uh, I've gone and do my due diligence and I say, "Look, there's these are some of the issues that I've come across in my due diligence." Um, my genuine feeling is it's not the seller trying to like pull one over.

It's it's they've got this big pool and something has changed over time. They were not aware of those issues. I don't I don't generally speaking I don't think it's the seller's like oh let's see if we can squeak this one past kind of thing. >> No I agree. >> Yeah. >> So it's so it's it's you're not you know generally speaking again we're this is a relationship business so the seller's not trying to pull one over because then nobody's going to buy from them ever again and they know that. And so there it's just a you know you found something and because whatever something happened over time all of a sudden a lean was put on the property that they weren't aware of uh and you found it because you ran an O and E and they hadn't for the last 12 months or something like that.

So >> so with that said that how is one a bad buyer? What's it what is how would you define a bad buyer? What um what's that look like? Because some people out there are afraid to make offers because they're afraid to be bad buyers. So, how do they prevent themselves or reassure that they're actually not bad buyers? They're just being cautious. Well, I guess I'm not I don't fully understand that is a bad buyer is someone's trying to do something that you know clearly is that they should not be doing other to the point where someone is not willing to make an offer because they don't have all the information or they're they're they're afraid to win the deal.

So >> yeah, >> um >> I think winning the deal is a scary thing for a lot of people and I think that's just education, experience, and Nathan and I run an advanced class if they're interested. Learn about due diligence, how to get over that. Um I would define bad buyer as someone that they make an offer and ghost you. That's totally a bad buyer. >> Another one is when they take it and they try brokering it to somebody else and then they try to play in between, >> right? Or lastly, a quoteunquote bad buyer. And this is a more of a middle ground is where I bid on five assets and I only have 100 grand, but I bid on 500,000 and I don't tell you, right? I think that's I wouldn't say it's a bad buyer.

I just would say remember to let the seller know that this is how much money I have, but I want to bid on all five in case I don't win one or two of these. These are all the assets I'm looking at. Um, that's what I mean by a bad buyer. I mean on the opposite the other side of that is just is to be as upfront as possible. Um because the more upfront you are that relationship will go further than someone that is just going to bid assets you know nearly willy and you know don't have the funds for it. And to get to the point where if you to be passed and moved on, right? Just move on from it. Just get a feel for it.

Just don't lowball. If you're making one offer and trying it out, that's fine. Just don't make a pool of, you know, 50 assets and bid 20 low balls. just don't do that. That makes a bad relationship. >> So, I think it's a great offer guys and girls out there to make that shadow bid. >> That's a really cool thing. >> With that said, >> do you also do the same thing for seller finance people who don't know anything about selling a note? I mean, most of those guys out there think we bid at a percentage of value property. Do you help them in that process of saying this is where you're probably going to be at for sales? >> Yeah.

Yeah, we definitely do anal free analysis. Absolutely. And I could take past results on other seller finance deals or if we even put it out into the trading desk and just to get, you know, get the offers that come in because at the end of the day, the seller has the final word. So, >> he that seller will get all the bids and a bid result and has the final word saying, you know what, we're not interested. You know, we're not interested in selling these assets right now. And with that, whoever's putting in those bids, they're if it's say for example, um it's a $100,000, that's what they're >> putting it up for sale at.

And if everyone's coming in at 75 or or 65, they're going to put in why. They're they're going to have the reason. Well, this is I'm going to go 75 or 60 or whatever it is because ABC and they're they're going to outline the reason. So, it'll give the seller an idea of like, oh, okay. So, in the future, uh, this is what I need to fix when I'm creating new loans. >> Yeah. >> Awesome. And guys and girls out there, if you are looking at this kind of stuff, um, you can pick your serer afterwards if you make the win the bid the first time. You don't have to have that serer right up front. It's always advantage to do that.

Um, if you win a bid, that's probably the most exciting, scary time in the moment. Um that's when you reach out to people that are experienced like Nathan and I and even to buy still >> they are not looking they're looking at the two you know two and a half percent rate. >> You know, at a 30% discount, it probably gets you close to, I don't know, five or six, maybe. >> It's not enough, but yeah, >> it's still not enough for that. And um so we've seen a lot of that um uh in the market on the seller finance. I'm seeing the trades where it's um it's coming from companies that um just want to move the cash in and out because the product is growing.

And so their warehouse lines are saying, "Great, it's great that you've got this product growing, but you need to move these off the warehouse line >> to bring in more loans." And so in that type of business, it's easy for them because it's really just a point game. It's it's not even holding the loans. It's how many times you can >> um revolve that money around. >> And you were saying that you've seen an increase in the seller finance this year. >> Yes, we definitely have. Yep. >> It's really interesting. >> Yep. >> The lines with everything were one of the questions I put on social media recently was I'm curious how many you know seller finance properties were sold seller finance increased over last year.

I'm curious where that's at. We'll we'll get with Tracy and Fred next year and get their yeah >> their analysis. >> The difficult product is the seller finance REOS >> because >> you can imagine that when everyone had bank loans and they went REO banks were set up to have property management companies. >> The seller finance groups, they're not doing anything to the properties. So >> those are the ones you really have to watch and make sure that you have the ability to get inside for those properties. And most of the seller finance notes are are they performing or not performing the ones you've sold or got in contact with? >> Mo most of them are performing.

>> Okay. >> Yeah. >> I know the >> that's music to my ears. That's that's have someone that is um um little their risk tolerance is extremely low and doesn't want to make an offer, they can always, as I said before, at least put an offer in and let me know that it's a shadow bid. And if I if I know it's a shadow bid, I'm not going to present that to the client. I'm just going to keep it in the result file and then go back to them and say, "Listen, here's where your offer was compared to eight other people that bid." >> What a shadow bid for those who don't know. >> So, it's someone that is interested in is interested in learning the process of buying these assets, doesn't want to really put their foot out and say, "I want to pay 100,000 for this loan." Because they're not quite sure if that's the right number or if they're if they're viewing it right.

So, they could go to me and say, "Listen, I don't want this to be, you know, a live offer. Make it a shadow bid. Here's my $100,000 bid. When all the bids come in, let me know where I stand." And, you know, maybe there's a reason why people were at 200,000 or everybody was at 50,000. So, at least I can let them know that, you know, you're a bit of a hundred. You would have won the deal, but you were, you know, you were 50,000 over the highest bid. And here's the reason why. I think guys if you're not doing this fantastic >> that's a that's a lot of time on you my man but that's an awesome feature you guys have because a lot of people are afraid to make offers and they're either afraid of being you know paying overpriced so they don't know what they're doing or really undercutting going oh my god I don't know this too low right they make an offer of a 25 yield way too low right so those are the kind of things to be knowing the fact that the seller >> the person who won it was 75 grand above you work.

You would have won it, but just be aware of what's happening. >> Hey, you never know. >> I want more buyers. >> Yes. >> Let the sellers say no, right? They're not going to be offended by stuff. They just you're just a number to them, right? If the ass is worth a million dollars, you be at 100 grand. It's going pull you and say listen what are my next step here right you know talk to your servicesers talk to your attorneys and start reviewing the collateral and diving deep into stuff and then you can always said listen I want my serer to be in servicing and then loan could transfer them and if you don't need the high touch after a while you can transfer out it's not stuck at that serer >> and you don't need to use us all right on the at all I mean you don't have to we don't we don't do the trade um saying that you have to use this as a serer ever.

>> I would tell you that most likely the biggest issue borrowers have is when you change servicesers. So just be caution with that process. They just don't know where to make payments, right? >> Gets confusing for them. Y >> yes. So we've gone through what sellers should be learning. We've gone through what buyers doing, right? >> If we, you know, we're not going back to 2011, we're buying at 40 cents. It's not going to be there. But when we look at the fact that when things are adjusting, we're seeing more hard money loans. We're seeing more seller finance notes happening. >> We're not seeing as much institutional, you know, loans being given out because the the yield, the interest rates being so low, it's harder to buy those loans.

Um, what are most sellers doing now? Are they holding loans and keeping them or are they trying to sell off from your experience? The selloff I've seen um are the mortgages that have the three I'll say two to 3% uh rates. >> Mhm. Um and it's amazing how those trades and they're coming from originators that um you know originated wasn't you know retraded as someone else and so forth and moved around um that they are taking them off their books um in the 70s >> 70s um really and it's just >> and that's a hard loan for many people what I'm looking for. So that's perfect. But uh interesting. >> I know a lot of the the world right now is still performing, right? We're not we're not tipped the scales yet.

Um I know a lot of people there are still looking for non-performing notes. And you said it perfectly before, we're no no longer in that world of what most of us live through and we talk about a lot. Non-performing world was, you know, 2010 and 2015 was all we saw. I mean, performing note was like three or four of them on a tape at that. >> Um, it's flipped. A lot of now are performing. So, if you live with non-performing, I get the angle, but I don't think you're going to get the yield that we were getting where you bought non-performing and you get a 45 50% yield, you know, irr after you foreclose and because the discount not there yet.

um will eventually maybe the banks have to be in position to sell the loan off and I don't think the seller finance people will be doing same structuring that banks did for writing off the loan against their books and having free and clear and be able to sell it and make proceeds. It's not set up the same way. >> Yeah. Have such a long title of different transfers right now. So that's where >> you know you never used to see that. You'd see one or two transfers. Now you could see as high as you know five to six different transfers on a loan. >> That's interesting. Are do you seeing uh over the past year about delinquencies? What are you seeing with that happening? >> So on the surfy side we have not we have not seen um any any uptick on the delinquent side.

Um we definitely have seen an uptick on assets moving out of the servicing platform because they're selling them a lot quicker now. Okay. >> Are you guys handling rap notes? I know on a private call we talk about them a little bit. >> No, >> we know why. So, those who are doing rap notes, there is issues with them, but just we won't dive deep into this call. We've had other calls about them, but right? Um, it understands it. It's intentional like paper. And I would tell you also, we've had ser like Madison come on is servicing will pick apart your paperwork if it's not clean. they will find issues with it, right? We've had where the PITI is fixed.

We've had it so the escrew is flipped over, the start date's missing, the the all kinds of issues on these paper that servicing is going to pick up on that. So, if you are seller financing and you go to board your loans with SN, they're going to pick it apart and say you're missing this, this, this. So, just be aware that it's not just put paperwork together and let your local real estate attorney put it together for you. doesn't work >> because we'll get we we'll get fined. >> Yes. >> Yeah. Yeah. It's not just SNP and picky like there's a reason for it. You guys get audited all the time and Yeah.

>> Yeah. >> So, I would we always talk it on the show. Make sure you're underwriting every borrower. Make sure you're using arm belows. Make sure the paperwork is done correctly, your disclosures, things like that. Because loans can always default, right? We talked about the show in our private call that loans used to be reuring every five to seven years. People would sell the property. it's now gone to 10 or 12 years where people are hanging out there for a little bit longer. Um, and there's more chance for default to happen during that period of time. Um, should it perform forever? Absolutely.

Um, I think my longest performer right now I bought in 2016. We still have it, which is wonderful. I think it is 2031. It will sit around forever. It's really good. Wonderful. So, >> I've never had hung on to anything that long. So, Nathan, let you uh ask your final question. We feel kind of a drum roll. >> Yeah, we I'm always interested in this and and we're both interested in this, but like what you've got all this experience and and you've got like a firsthand view of what's going on in the market. Um both on the buy sell side and on the surfacing side. So, so you're like the most qualified person.

wrap notes have a different world and they're defaulting at a higher risk than everything else. Um, and they're often not properly done. Well, >> do is that also the um uh they call DPAs, deposit loans, where um they're being done at a you know, which is like five maybe 5 to 8% of the original loan with the first lean just to get it um to get the loan um you know um >> they're doing what they're doing is just taking over someone else's sub two. They're taking over someone's property, someone else's debt sub two um or their own debt and then they wrap it where the note says 3 4% they wrap it for 910 >> but usually they do it at the same they they sell that property at the same that the UPB is.

So what they run into is the UPB in the property is 300,000. They now sell for 305 and they play a yield game where they're, you know, paying a monthly payment to the first lean 3% interest rate and they're collecting at 9 10%. What the problem they run into is like landlording that they if that the second borrower stops defaulting on them and they have 10 of them, they need to have enough capital to keep paying off that first lean. And typically they don't have that capital. because of the way they structure. >> Yeah. Funny because we had someone call me up and they wanted us to see if we could service for them.

And I asked them to explain what the product is. And I I kid you not. I kid you not. 25 minutes later, I said, "If it if it took you this long to explain that type of an asset, there's no way we're going to service the loan. Yeah, >> we are used to a bank made a loan, the borrower defaulted, done. >> And there's other services out there that are more familiar with the seller finance world. We have good friends of ours. >> Um, and we've had them on our show, too. So, SNING does more of that clean paper, What do you see coming up? What's 2026 look like just in terms of the market notes, all those things? >> It's going to be a slow churn.

I mean, it really is. I've >> um I've been on the soap box for at least five to eight years now. Um where I was the number, you know, when they always say 1 to 10, what's it going to be like? 10 being the most active. I've been a three every single year. So, I still believe, you know, yes, there's absolutely opportunities. There's definitely opportunities for buyers to be buying assets. Um, but it's going to be a lot more competitive because there's going to be a lot less a lot less more product unless you start looking at other instruments. So, you know, on the NPL side, you you need to move away from that if you're not finding them in the first quarter and start looking at RPLs, seller finance.

Um, if you're if you're interested in contract for deeds or land leases, start looking at those. Um, I don't even see small business commercial. I thought maybe by now we would see small business commercial assets ticking up. I I don't see that still. Um, I think it's going to be a repeat of last year. Um, and it's going to be a battle um to, you know, kind of pick and if you're really picky and choosy, it's going to be a real battle for you. How about on the >> house value side? What do you think house values will do? >> Um >> flatre. >> No, I I I think there'll be probably about a 10% decrease.

Um which still is well above where it was precoid. >> So I I don't see that um unless you're looking at assets that were originated in the last probably year, year and a half. Um you could have some borrowers are going to have uh some issues on those type of assets where they were over the head to start with. Um any small default will definitely have uh an equity issue on those assets. >> Agree. um >> interest being higher. >> You you you see a lot of properties that are listed for, you know, 2 million plus and they're dropping, you know, 200 $300,000 where, you know, you never used to see drops in um real estate pricing like that.

>> Not like that. Yeah. >> Absolutely. >> Very interesting. >> Dave, I appreciate you spending a little bit of time with us. Uh, I think we'll probably have you back on again in the next year to give us a year- end wrapup um for that wonderful Christmas season and holiday season for everyone. Um, I thank you again for coming on and spending time with us, spending and giving us your experience, your knowledge, and everything else and your time. Um, and also that for everyone else out there, Nathan and I will be back in a few weeks. We'll be taking a little bit off. Um, but polio, any final words for everyone out there? We will be sharing his contact information as well.

Um, and just be happy buying out there. Be smart, ask questions. We're going to share his uh email address. Um, so email him if you have any questions. Nathan, it was a pleasure and we will see everyone after the New Year's. >> Yeah. All righty. >> Take care, everyone. >> Thanks, guys. >> Take care. Thank you. Hey everybody. So Nate Turner, Dave Puts here. As you know, we're always looking to learn things and and we always bring on guests that know more than we do so that we can learn some stuff. So I'm really excited for our guest this time. We've got Dave Polio. Uh he's been around in the note business for a long time and he's hit up all kinds of really cool topics talking about looking past uh looking, you know, back over 2025 and seeing what has happened, different trends.

So he talks about things like market activity, transaction volume, just seeing what that's like. What else, Dave? >> Yeah, we talked about buyer education and what market's been doing and buyers getting better and what the market's been doing on the on the brokering side of note. >> Um, what he's seeing more this year was seller finance note on that broker and hard money loan trend. >> It was really unique to see his experience as a as a note broker in that world of servicing. So 2026 he's excited for >> but he has some >> caution things. So tune >> as always. You know we get that that last prediction of see what's going to happen next year and Dave Polio has got some really interesting thoughts.

So make sure to tune in. >> Tune in guys. We'll see you guys soon. Welcome back to another Real Estate Notes Show. I'm your host Dave Puts from JKP Holdings. Alongside me as always, Mr. Nathan Turner. >> Hey there. >> Hey. We're coming close to Christmas now. Holidays are coming amongst us. Things are coming >> cold as anything. I'm sure your snowboarding is getting more and more fun. >> Uh skiing is going well. >> Um and this is a time of year the fourth quarter is winding down. Deals are happening. >> Um I know that we're been approached last couple weeks asking us to close a deal here. Can you do this this this and funds are closing? And for seller finance people, this is a time where you just fine-tune your skills >> and get better at what you do and learn just the you know that time of year.

What do you see? What's your experience and what's your wintertime >> rhythm? >> Yeah, it's the same kind of thing. It's >> Yeah. And we're looking and seeing, you know, as you look back over the past year, it's been a really interesting year. We had a new president come in at the beginning of the year. All kinds of uncertainty, all kinds of changes going on. It doesn't matter what side of the aisle you're on. That's the fact. Uh, all kinds of different changes and things. and it's really made some interesting uh situations in the market where we're looking at different things and and you know some positive some negative but just change and it's interesting to see how it's how it's shaping up.

So I'm excited for a guest today to talk a little bit more about that and and see what he's been seeing as well. >> You know it's amazing when we talk about this stuff the market's changed since we got started. For those who don't know, me and Nathan's been in the space for over 15 years. This is a unique time. Um, things back when we got started were really different than they are today, but we're starting to see some similarities of what we got started. >> Um, and we hear from our friends in this creative finance, sell finance world. And if you are part of that industry, put your comment below and make sure you reach out to us and tell us what you're seeing from your side.

But we're seeing some weird things happening in that space too with the wrap notes double digit defaults there. So if you are creating a wrap be extremely careful that you have enough capital to carry that sub two first lean or whatnot. Nathan, what do you what's your opinion on the fact of we're seeing or in your portfolio of notes? Are you seeing things change with your borrowers? Are they staying the same? because most people are still saying, "Hey, everything's performing still." Are you seeing similar? >> I similar. I haven't seen a ton of change. A little bit, and it's enough to make me take notice and go, "Huh, that's interesting." We had a uh I Well, I think we're going to get into this a little bit later, but I've started buying uh short-term loans, just 12-month loans.

Um had one of those that uh defaulted this year, which was interesting. And uh the all works out. the person we bought from, they guarantee the the payments and everything. So, I I'm feel very safe and the um um probably new. It's only 12 years old. Uh, but it was really set up at a time where we put a stop on our buy side and wanted to match up all the deals that we kept getting with the new clients that we were servicing for. So, we thought it was a nice way to say, listen, if we're going to service for you and you don't have an acquisitions group on your on your team, we can do it for you. And so, that worked out really well and still has.

I mean, at to this day, we have about 200 210 clients that we service for. Um, and there's probably about 45 to 50,000 loans on our platform. And throughout the year, probably 65% of them will take their loans that we're servicing and ask us to put them on the trading desk >> to sell them. And so, it kind of works out really well because we know the assets. if we loaded them onto our platform, we know they're clean assets and um it's a simple uh two second put in the account numbers and we have a full data tape and a sale tape ready to go. Um, and so if anyone's interested and that that doesn't get that's not on my distribution list, all you have to do is send me an email to uh d polio, which is pllio at snsc.com and once I get your uh information, you'll just get back a link for the NDA and that's all that's needed.

>> Yeah. And if you did miss that, we're going to put that in the show notes, too, guys. um you'll get all the information for Dave and where he works at. Um so if you did miss that, don't worry about that. Um >> and also if if anyone's looking for information on the servicing side, the same route, just emailing, >> you know, servicing side, essence servicing, if you're a newer investor, Essence Servicing is one of the best out there for it. It does everything you need it to do. It'll handle everything. It won't make decisions for you. That's not their role. But they handle from interesting when just over the years looking at it and you see, you know, middle of November to about the middle of December is relatively slow and then those last couple of weeks it's just like bang bang bang.

There's all these deals. It's like, okay, everybody get it done and and you're trying to get, you know, whatever deals done just before the end of the year. Um, January for whatever reason for me has always been kind of a slower month. Uh, and then it picks up after that. But I'm hoping to change that. We'll see what we can do. I've got some other deals in the pipeline that look like January closings. So >> absolutely we don't want to remiss the fact that make sure you start getting your tickets for the DME uh which will be happening in May. Um and we'll announce >> we'll announce more details of that as we come along the show um and special guests and what we talk about it will be different from last year.

So get your tickets if you're new here. That conference is all about learning how to note do the note investing side as well as our finance creative financing >> uh and AI. So it's gonna be a lot of fun. Nathan's putting on. He does a great job down Nashville. >> We've got some really cool topics coming up. We've got some really cool speakers that have already uh jumped on board, which is awesome. And we're It's going to be a great one. We'll more details later. I don't want to spoil it yet, but uh but it's coming and yeah, it's going to be a good show. >> Absolutely. And we'll be launching, me and Nathan are both putting out our own book, so keep an eye out for that.

Um yeah, and we have a bunch of stuff on our website. Feel free to take a look at that. Um, I got a bunch of stuff new that's coming on the website, my JKP holdings. Nathan puts out a great great uh email every week. Feel free to take a look at that and just ask questions, respond, and Nathan is awesome. Good. >> Nathan, it's weird. We just had our last show with Melody and she broke some really crazy ideas out. >> Springtime is going to be very unique this year. Um, but we've also talked about how defaults are happening and things are just starting to kind of break and people aren't able to get loans anymore and things just shaking up, right? secure on that.

However, it's it's a thing and that's starting to happen and I'm starting to look at that and evaluating, you know, how much I want to continue on with these short-term notes. I really like them. I I think there's a lot of potential there, but got to be careful. >> Well, I think 2025 was all about hard money loans. That's everything everything we see. So, well, without further ado, let's bring on Dave Polio. Dave, thank you for joining us today. Um, I think this is the third or fourth year you've been on. Um, if you don't know Dave by now, please look up Essence Servicing. Dave Polio's been around almost as long as me and D Nathan been alive, I think, if we use the years.

Polio is is a wealth of knowledge, wealth of experience. Uh, he has a tremendous background. Um, and I'll put that in the show notes stuff. But let's dive right into it. Dave, just right now quick think where what's your position and how do most people reach out to you and learn about you in the in the scheme of things? Where do you work at and what's your role there? >> Well, it's great to see you guys again and always appreciate uh to be on the podcast with you guys and it seems like it's always right before Christmas time. So, I don't know if I'm father time, but um I guess that would be doing this for 30 plus years would be would make sense.

>> Yeah. >> Um so, yep. So, I head up the acquisitions um and trading group uh for SN servicing Corporation. So, >> on the acquisition side, we're out there buying residential, commercial, defaulted um RPL portfolios throughout the country, and we have ever since 1987. Um the servicing company was set up to service all of the uh portfolios that we were buying throughout all those years and also to help us work on servicing our securizations that we were doing about four four a year uh back then. The trading desk which is really from acquisition to foreclosure to ARO the whole gamut which there isn't too many servicesers out there that will do that whole facet.

Um most of the services we know is >> it stops at foreclosure. That's all they do. They don't even continue. So that's one thing. And if you're newer and don't understand attorney talk words, they do play the in between game of saying, "Okay, this what they said." and they kind of can sometimes explain to you what it means or ask you some questions to follow up. So, it's a really great serviceer. A high touch if you need it is perfect. >> Um, >> and for one loan if >> you just have one asset. >> Yeah. >> Yep. So, it's not only >> I'm curious, Dave, you're So, you say you got 45 50,000 loans on there of of that number today, and this is going to be different than 10 15 years ago.

How many of those are uh non institutional paper like not created by uh a bank? Do you do you happen to know? >> Yes. >> Um so give me an example what you considered that would that would fall into a non-bank loan. You mean a seller finance? Um >> yeah seller finance >> or >> contract. Does a contract redeed count for you for that? >> Yeah. Um 10%. >> Oh, is that all? Okay. Oh, yeah. Interesting. >> Very small. Yeah. >> Okay. >> Yeah. >> Interesting. I know. I The reason I ask is I know we get that question from Melody all the time like, "How many of these are non-bank loans?" And I'm like, "I have no idea." >> Yeah.

Because we've got a couple clients that have, you know, 10,000 plus each and they're all bank loans. >> Y. So when you put these asset lists out, um it goes to everyone in your portfolio. Everyone gets them. There's no hot someone gets it earlier than anyone else. Those go out to everyone. And you have typically how long does someone have to.