Difference in Bidding on Performing & Non-Performing Notes | Real Estate Notes Show

Episode: Difference in Bidding on Performing & Non-Performing Notes FULL Dave's Goals and Plans: - Running a class on January 3rd about bidding on performing and non-performing notes - Spent an hour with a client reviewing assets for sale and connected her with a servicer to sort out pay history - Working with multiple sellers who have big tapes coming through in the next few weeks - Shared a spreadsheet with clients to help gather necessary data points for loan evaluation Nathan's Goals and Plans: - Seeing an influx of sellers and anticipating more notes becoming available - First thing he evaluates is location, specifically avoiding states that are difficult to deal with - Analyzes last date paid and next date due to understand pay history and likelihood of re-performance - Uses financial calculators to model multiple scenarios (if this happens, if that happens) before making offers Key Recommendations: - Build out calculators to model multiple scenarios before bidding to prepare for different possibilities - Focus on interest rate as the primary driver of returns when evaluating performing notes - Base bidding decisions on today's numbers only, not speculation about future refinances or sales - Don't target percentage of UPB - instead calculate based on yield/interest rate to ensure accurate returns - For performing assets: evaluate complete loan data including interest rate, term, remaining payments, and equity position before making offers - When buying partials on performing notes, you can bid strictly on yield since you have a defined maturity date Topics Discussed: - Differences between bidding on performing vs non-performing notes - Importance of interest rates in determining investment returns - Pay history analysis and reinstatement possibilities - How to properly evaluate loan data and avoid bidding mistakes - The pitfall of using percentage of UPB vs calculating yield - Location analysis as initial screening criteria - Why past performance doesn't guarantee future performance you're not going to get the return you're targeting even at performing you know I've made the mistake years ago so reinstatement happens yeah and and sometimes that's exactly what you want and sometimes that's your worst nightmare yes and it's the worst thing that could happen yeah I so and again you have to be prepared for all of these different possibilities uh and that's part of that is building out your calculator to say so if this happens if that happens if this happens if that happens and and to the best of our ability yeah trying to work that out and see what could happen [Music] foreign [Music] yeah so I want to connect with you Nathan we're talking about this with a couple investors yeah and we um ran this in our our class that we had it was a few weeks ago which will be re-running in January 3rd about this idea of bidding on performing and non-performing what entails what goes into it why do you use one or the other and what are some of the pitfalls so yeah I want to dive into it before we get there though how are things with you what's going on with your world how are noobs like you see an influx recently what you've seen recently I've seen a bit of an influx I'm talking with a few sellers who are talking about some big tapes coming through here in the next few weeks which uh is interesting it just you know points to what we've been talking about for the last couple years where we're we're anticipating seeing a lot more coming available for us to purchase which is kind of the good news bad news it's good for us bad news for a lot of folks um but again we're there to help and hopefully we can help out a lot more people so that's that's good we've seen a lot more coming through yeah we're seeing a lot of uh mixture of both some a lot more coming through yeah we're seeing a lot of uh mixture of both some fun some some funds send some things out but we're also going to influx of those people who joined us uh two weeks ago some seller finance people looking to sell seconds or seconds converted first and first and so like that and that led to more discussions which we're finding out is really cool because these people are amazed at what we can do to solve their problem and for me that's the key here because these people we're helping them get rid of assets or refinance the restoration into something they can actually make some money and go redo so those who are watching us again work great on feedback send us a message so we can look and we'll share with you some information but know the fact that we need some data points to run our calculations yeah I spent uh we I think we lost your mic for a second did you uh commute no if you lost your mic or are we uh can you hear me okay yeah I can hear you oh there we are all right back okay yeah I said it's been about an hour uh with a friend of ours here this last week uh with looking over a bunch of our assets she's got for sale um it's some good stuff it just needs a little bit of tweaking before it can be something that uh we can look at purchasing yeah got her hooked up with uh with a servicer uh so it can help sort out at the very least the pay history uh because that's that was the number one thing we couldn't actually tell what her unpaid balance was uh because she hadn't been recording it properly which only because she doesn't know how else to do it and so that's what we're here to do help people figure out how to do this we will buy these loans we just we just need them so we just need them the way we need them yeah and I think people are learning quickly what that means right uh the idea of what the loans are set up to be is important for us and you know the fact that when the loans are when the data points are in the right kind of setup we can evaluate things much faster and it helps us know what we need to do to move forward in that asset evaluation and what questions to ask we did share a spreadsheet to kind of helped get those data points from those several clients people but on the flip side when we're evaluating these assets we'd be run different determinations to decide what we're going to bid on it it was performing a non-performing it's it it depends right um yeah so Nathan yeah the answer that nobody likes to hear about that's the truth it does depend and we need we need certain things to be able to make it work properly but uh we're here to help we're here to help figure that out for people and yes Nate is having some kind of video issue we'll work through it and hopefully everything will work out okay um but when we when we look at these kind of things uh we want to make sure that we're valuing these assets correctly uh we don't want to just win an asset we want to make sure we bid and be successful with our offers um but that doesn't mean always winning an offer it means that we make a a bit that makes sense to those people out there um to a seller but also to ourselves we don't want to be in spot where we make an offer the seller accepts it and it doesn't make a good return for us right right um so Nathan when you get an asset one of the first things you look at is what you know what are some of the things you look at so I'll get a tape um there's a number of things that I look up right up off top of the you know right when I first get it one of the very first things I look at is location um there are certain states that just through experience I've learned kind of the hard way that they're difficult to deal in uh so I I skip over certain States um one of the other key things that I look at uh that kind of goes along with our discussion here today is I'm looking at last date paid or and next date due I want to know what the pay history is going into this to this loan to see where it's at uh How likely is it to start re-performing or is it performing already and just just so I have the story of where is it where is it today so I can know where to take it next yeah and I think that's important for most people who don't get what we're looking for um when an asset's performing you have to make sure that you you know the fact that how many payments are left what numbers go into it because you can't bid strictly based on certain data points it's an if you're bidding on a note right you're bidding on the term you're bidding on the the rates you're bidding on a IOU and if you're looking at one part of the IU and not others you make a real big issue with them it could cause a big problem for you because your returns won't equal what you think they are and that's where I think people fault is they kind of make an offer that the seller will accept but at the flip side it doesn't work in their returns when they run the final numbers yeah sorry with my video here I'm just trying to do some things shut down some other windows or something get this moving a little bit better Friday afternoon I think our computer is getting tired so when we look at these things um we look at the fact that these assets are performing what numbers go into are things like what is the interest rate because that determines what kind of return we're going to get because the p i is based off that number and the upb so if that return if that rates of two or three it makes it extremely difficult for us to make an offer on it and get it up to a 10 yield because of that problem but however there are times where performing asset you can bid it as a performing asset right right and a lot of that has to do with that interest rate and so if it's if it's a three percent interest rate that's going to be a very tough uh a tough one for me to bid on just because I'm gonna have to discount it I have a large amount for it for me to be able to get the return that I'm looking for versus something that's written at like a an eight nine ten percent uh interesting treatment that rate that comes in is the gross return of what that asset is gonna um interest is it a kick out so the fact that if it's an eight percent it's kicking out an eight percent return every year right way up to three percent is kicking at three percent so to get that three percent up to an 80 you gotta discount so much that it drives that three up higher because you're into it for X dollar well 100 note has three percent kicks out three percent a year or to get it up to an eight you've got to buy that 100 note for such a discount using your financial calculator to get to a point where you're paying 10 12 15 or a year because you're not buying it at a hundred percent of that value right and the argument can easily be made that well uh you know it's a 30-year amortization but they're probably going to pay off in a shorter amount of time than that that's probably true we don't know so we have to go with what we have today uh that's that's the only information that we can work off of I can't guess that maybe five years or seven years from now they're going to refinance or sell the house or something I I can't hypothecate and hope to make money that's sometimes the future it has to be based on today's numbers absolutely and I think for most people they don't understand that and math is difficult um and the financial part of it is extremely difficult but if you originally notes or if you understand what's going to happen in the future um right you can't guarantee you're gonna have a 20-year note for 12 a year and nothing happens to it right so when you flip over the non-performing world it's a lot of differences in opinions you and I differ in our opinions as much as anyone else would yeah but why besides the fact that if a loan is performing and it could not perform why is calculating and not performing asset important and saying screw its foreclosure I don't gotta worry about anything what other factors you do you agree with that come and play when it goes not performing why is non-performing assets are concerned that's always a concern so I mean I was having a discussion with somebody just the other day and we're talking about uh just locally here uh there was a development that was going up and about 10 years ago and and out of the blue for no reason that anybody knows of and there's obviously reasons but for whatever reason the developer stopped whether they ran out of money or ran some other kind of trouble or something uh and so development just stopped so you've got a bunch of houses that are either completed or partially completed they're now just sitting vacant a vacant property deteriorates surprisingly quickly I I and it's it makes no sense it makes no sense whatsoever that uh just because it's empty shouldn't make that much difference but it does it makes a huge difference all of a sudden things start breaking where it's you know people that lived there for five years and everything was fine and then all of a sudden it's been vacant a year and all kinds of things start happening whether it's just natural or from vandalism um so that's that's always a concern that's always something that I'm thinking of and you know how long has it been empty and how long could it be empty until something happens and it's always a concern so we're always looking at that possibility yeah I agree to you I think you also kind of play is that each day is different right how notes are originated the numbers that go into that radiation is the exact same numbers we're working with because yield is interest rate right and if you're looking for a certain return a year that's the number you're going to play with and that performing asset if it continues to perform to maturity date you're going to get that return every year until the maturity date um and that's one of the reasons why we don't Target percentage of upb because that actually doesn't work for you um because it just it doesn't calculate the interest rate which also drives in your returns and that's what it could work because if the interest rate happens to be at the right amount but if it's not then then you've just shot yourself in the foot and you've made a terrible investment so so if you see a loan written at a 13 14 which we're probably going to start seeing in some our plans were according to Max yeah would you be that 100 of upb honestly probably not uh I'm probably still going to discount it at least uh some because just because of the risk that I'm taking on uh you know and again there's other factors that go into it how much Equity is in there what's property value where is it located what kind of contracted coming through okay yeah my internet I think buffered for a second so I apologize for everyone it has been a crazy Friday yeah yeah something's funky here I know so on the flip side though the one time you can truly go off a performing asset form you know any one time is if you're buying a partial right why is that you have a beginning and set date if it goes non-performing you really don't want to worry about it so you're actually getting bid based on um the house that he reads but each state you can't guarantee that Texas is gonna be like Ohio which would be like Florida which would be like New Jersey like California but each state has a different way to it right right an asset that may work in Texas the pricing may not work New Jersey right because of taxes property taxes uh foreclosure laws um and you have to price it accordingly because of that problem and if you bid your Texas desk like you do an Ohio asset you can run to a lot of problems cost and time frame adds up because you have more expenses in a state that takes longer property taxes uh servicing fees um Force Place insurance and more time for that property to kind of get beat up um yeah and a classic example of that is is let's let's take Ohio and Texas so Ohio for whatever reason has very high taxes you can be in in Cleveland or Columbus or somewhere and the taxes are uh for the same value property the taxes will be a double or triple uh in Ohio versus Texas so if you've got even 6 six months worth of non-payment and you're responsible for those taxes that can make an enormous difference between those two states for you know everything else being equal yeah that can make a huge difference to your numbers yeah and I know some people use a flat foreclosure cost thing and for the most part that can be somewhat accurate um and you can dive into deeper once you get into due diligence on things but you need to make sure you calculate the Foreclosure costs and time frames um you also have to include things like the servicing fee because if it goes non-performing you're not foreclosing in a day right that coming into play that what not happens um and I think most people forget that because they don't they just say listen I'm foreclosed it's all good I have enough money set aside and especially if state laws um things like your foreclosure costs your attorney costs certain States like Ohio you can't add that to it right right um some states you can um in some states you can add it to your um you know your reinstatement but you can't add to your collectible um so those are the kind of things that come into play now do you have to be pristine everything you know well you have to know the fact that you can't add certain things on all the time um and things like Ohio which is the only state I don't understand why they do this is this 66 of a free appraisal value at foreclosure which means that any moment that appraisal that when you go to foreclosure in any other state you set the bid based on whatever you want to Ohio has this long place that says if I think it's three people go out they appraise the property and do 66 of what they think the property worth is the bid so if you want to bid lower you can't you give it higher but you can't bid lower um which doesn't always spare well for us no not always some and again it sounds like it should work but it doesn't and not always sometimes it does sometimes it doesn't and you don't want to get caught in that situation if you're not prepared for it if you're prepared for it and you plan for it no problem yeah but you don't want to get caught so you you've got to know and you know so going back to what you're saying before you know know um can you at what kind of Interest are you adding on at what point and all these kind of things that goes back to the origination side of things where hopefully you know how to do that and hopefully you know you know what you can do in your state or whatever state you're originating in uh you've added in the correct language and terms that can be allowed for your area or wherever you're originating so and again if you don't know that learn because it can make a huge difference and two points you said I recently had an original come up to me return wasn't attractive enough to to lure me into that uh and I wonder if part of it is just I'm just getting old it's too much work too much headache it is and the Performing without question it's a much easier thing to manage um the returns aren't as high the potential return is not as high uh but it's a lot less work yeah and so that's that's very attractive to me dude looks a little bit easier right you're not so worried about the the value of the property is marked the collateral files usually secure um it all works but I wanted to stress upon the fact that if you're bidding every asset that's performing as a performing moving forward you're asking for a lot of problems and as well as we said numerous times if you're bidding on assets that are non-performing strictly based on percentage of upb or whatever and you're forgetting the interest rate you're ignoring the different state it's in or all the costs you're really missing out on the big pieces of that note um and if you're doing this with other people's money yeah you're gonna get yourself in bad um luckily when we got first got started I wasn't you I was using a lot of people's money but our asset pricing was a lot different back then a lot yeah so today's world you need to be more precise you need to know um what Texas law versus Ohio versus you know what your different action strategies and which extra strategies is the most concerning in each deal and be aware of that because if you're not you're going to be in a bad spot um moving forward with that deal and as we talk about in our class um the 10 weeks even if you want to do the five week we start off with talking about the mindset and figuring out where you're going to be and what you should start Oregon first seconds performing on and then we jump right into building that calculator truly building a crazy wild calculator that you can plug and yield because you have a set start date and maturity date and that Bond expires that ex you're probably not going to sell it before that right unless it pays off right but and you can never predict that part of it however you know for me you can literally bid on yield on a partial every day of the week and count on it because again the defaults is how it kicks back in yeah yeah when you're buying these performing assets that are performing for two three four years let's flip it over because non-performing ever trickle in the head like it's been performing for three four years I'm gonna sell his asset at a great 12 yield but in the non-performing world that may be at really low return because of certain situations right do you even care about that strong pay history definitely helps that that makes me feel a lot more warm and fuzzy uh and it makes me much more comfortable um but there's always that possibility and I'm economy you know who knows who knows what's going to happen down the road and I I just I can't 100 say that just because they've made payments the last 24 months they're going to continue to make payments for the next 28 years I just there's no guarantee there so it's always in the back of my mind it's always something that I have to at least factor for yeah and I have to agree with you um I bid everything unless the partial based on a non-performing calculator that includes performance um and again those will have on next uh on December 30th to the the classmates that took our last class um explained some of what was going through their heads before they took the class and how they what their mindset change so please definitely tune in for it we have a Candace and David on two weeks because you can bid everything as a performing asset because they're performing before but you never know you're buying assets that are less than fifty thousand that foreclosure costs and if you're in Ohio that property tax will eat up a lot of your profit quickly before you even foreclose on it yeah absolutely three four thousand a year can eat up a lot plus you're six seven thousand for your foreclosure fee you're looking at easily 10 grand in foreclosing with the way with the property tax packed on to it right and heaven forbid the taxes get sold to a tax lien buyer and then all of a sudden they've jacked on 18 interest and it gets it gets very expensive very quickly yeah this is all stuff that we cover in our class and we had a great discussion on this and and went over it if you don't calculate this stuff oh yeah you need to learn it and I get we talked for a while about giving out our calculator but what we found out is that most people don't understand it and they really need to understand how to build their own and how to maneuver their own and Candace and Dave will talk about how they started developing their own calculator so they can calculate their own thing and figure out things on their own um in our class talks when you spend two weeks developing the calculator that you're going to use um so that is extremely important in part of that non-performing calculator you can include a performing feature that if it continues to perform it's okay right and if that is your hurdle because is a three percent loan then that will trigger it and say okay this is I have to bid this much to make sure it makes sense for me um but you get also include the reason we asked for like what's next due date is that there's also a situation where even a non-performing asset can flip to performing right and if you are in a spot where you're just bidding on non-performing bids expecting to get the property you're the rude awakening because it can reinstate at any moment for whatever reason and go performing and if that's a three percent two percent coupon interest rate right you can be in a really bad spot and says Dave um why do I need Dodd-Frank I'm selling to owner occupied person I'm allowed to do three a year I'm not gonna call any names for the case they're on right now but the problem is they didn't understand that yes you can write reading your name as an originator but if you're dealing with a home owner occupy there's a set rules done by them that needs to be followed um it's not about how many loans you can originate it's what kind of note you can put in place and if they're in a bad spot where you're a borrower in a really bad position that no can be violated the violent doc Frank laws and you really need to address that which next month will be covering a lot of uh what how to create a successful positive note but also what makes what can you add to it to make it more valuable which leads to the idea of if your originate notes and you're listening to this adding in a seller a service or fee is great yeah right and then you're bidding your non-performing assets or you're performing assets be sure to subtract the servicing fee unless the node includes a servicing fee inside the the the p i plus the servicing thing yeah it's it's kind of include in that taxes and insurance category where it's an extra fee on top of whatever the the principal and interest is but that allows you to bid higher because you don't have to subtract your 35 or your 30 or 20 whatever servicer charges for your performing asset I can literally take the entire p i which means my returns will go dramatically up so if you are bidding out of building a bid calculator be sure to subtract that but also have a trigger that you can adjust it and say listen I don't need to subtract it but this note already includes the ability to pay for the servicing outside of this p i payment right so let's get into preference just just for fun what do you like better performing a non-performing so it's funny you say that you know three years ago I could play assets desired returns kick out your returns and know we should be with a bunch of charts that you can tag things such as documentations right such as you know what is a Texas time frame what is Florida's time frame um what states have debt licenses things like that is part of the resources that we use in our calculators to know what we should be doing with that asset and we use those tools in this in our series which you'll get a hold of to make sure that we're we're in a better spot than if we just bid wildly yeah you've got to be a lot sharper than you used to have to be uh 10 years ago I you could pretty much shoot from the hip and you'd hit something uh and today that's not the case you've got to be a lot sharper you've got to be a lot more uh in tune and and on the ball with everything everything from your due diligence to even your like you say your state knowledge all those things you've got to be much more precise and much sharper than you used to have to be so it's it's worth it to get that education it's worth it to to practice practice practice and if you're not sure about the financial calculator um time value uh things either the manual or we we also show you how to do in a spreadsheet so you can do 50 assets in a blinkman eye that class also talks about that because that's a key thing if you don't know what the present value is what's the time value what's a term what's a rate how do you calculate it what does it mean we talk about that because if you're not learning about that in any of your classes you're missing the biggest part of a promissory note of any kind is the terms and the numbers because you're buying an IOU with a secured property the secured property is a secondary thing it just secures the note the promissory note so you need to understand those factors and numbers so you get into it so I encourage you guys if your RN should reach out to us we wanted to show you guys the difference between a performing calculator and not performing when to quickly when they put a bunch of money down you can't mod the deal and you move forward with the idea that you're gonna get the property and turn you start getting payments which you think is great however if you bid this thing way too low or too high you're not going to get the return you're targeting even at performing you know I've made the mistake years ago so reinstatement happens yeah and and sometimes that's exactly what you want and sometimes that's your worst nightmare yes and it's the worst thing that could happen yeah I so and again you have to be prepared for all of these different possibilities uh and that's part of that is building out your calculator to say so if this happens if that happens if this happens if that happens and and yeah to the best of our ability yeah trying to work that out and see what could happen yeah we don't know what's going to happen and we've heard people say well you know I've been taught that you can go into a deal knowing what the bar is probably going to do that's wonderful but that's as far as you can take it right don't count on the borrower to do what you think it's going to do because you don't know the moral story 100 yeah so and and people don't always do The Logical rational thing this is a house this is their home oh yeah we've both seen that several times over where this to if they did this that's the most logical that's makes the most sense but for whatever reason they do that and yeah absolutely so um I do see the fact that we have a question from Alan uh regarding uh can property tax be added to Legal collectible balance of a property that goes with foreclosure and yes the answer is yes pretty much anything you add as a collectible balance it could be Insurance it could be whatever and also read over your your note make sure what cheming cannot be added and depend the care less about performing assets I would love to do what everyone says right the rule of thumb was by and not performing and flip it over to performing and I think it was talked about so much people thought it was normal right it was a goal not something we could always achieve and get hoped and you try working things out to make it happen but I like the number form because the fact they can Skyrocket the returns ridiculous 40 50 60 70 80 ridiculous returns when not performing especially at the reinstate or if you made a killer deal with the sellers or you bought an asset where they thought the value was XYZ and you know it was much higher than that right um so when you're bidding on these assets you know make sure you look at that value of the property part of that calculator um because that may actually give you a leg up especially if you're in a local area now granted today things have changed and for me it's not about do I want non-performing performing it's what is right now going to go on sale or the best price we're buying more performers now than we did non-performing um it used to be 85 or so percent non-performing and now we flipped over now we're about 85 performing assets that we're buying simply because the return is there uh we're trickling in some partials and whatnot um and we're evaluating a large commercial deal as well but we're either buying those performing assets at a good return um or buying you know a partial situation but we're not buying a main non-performing simply because the pricing for non-performing hasn't been there recently um but we're hearing second quarter may change a lot of that yeah yeah and there are still deals out there and I'm still buying the non-performing but I agree with you and then yeah I'm buying a lot more of the Performing these days than I used to like you say I used to think on performing I mean whatever yeah but the use it yeah when you're looking at her non-performing assets there are numerous numerous expenses that go into it right and not every expense is into every category but what you can also Target is that different extra strategies and why do they matter and some of the key things for me is if there's Equity or not right that plays a huge role because my exits change yeah based on equity right yeah and then and again it comes down to a lot of preference all right do you want to put in all the extra work for a non-performer that you may not get paid on for you know nine twelve months from now uh or are you looking for something that's that's more for lack of a better term predictable uh which which is what we're saying it's not always predictable but it's more not sure if it lost your audio or not but uh yep I think I lost your audio I'm not sure if you lost your audio but I apologize if you did so um for me I I think with regards to the bidding structure and notes when you're we ran across this recently with an investor that didn't understand why I would bid such a significant drop when the value of the property worth a hundred and the the balance alone was sixty thousand they didn't understand why I was not bidding 65 or 70.

and right they couldn't understand what why would I not I mean the problem we're at 70 and what we had to explain to them is I wasn't buying a problem I was buying a note and if for those who don't understand if there's equity in the property and you go forward to buy that that note and you're expecting to get the equity once you foreclose on it a little bit more than if I'm buying you know 10 or 20 of loans at a time and we talk about our classes that you know you have to stay fixed on what return you want right and then filter Down based on what you think the seller will accept yeah because you can't adjust and say well okay I'll move up because the seller wants that because you may win the asset but lose the war yeah and for me I'll say okay fine if I'm X percentage of upb I'll filter it out right yeah in not that I'm calculated based on Upp but I'll say listen if I'm below say 55 percent of EPB because my it's a two percent coupon I'm most likely going to kick it out and never show the seller that that bid because it's never going to work and I don't want to make it look bad and yeah get in trouble or you know make it look like it's a bad offer yeah um so just avoid it so for me I do filter a little bit but I stay with my return desires and my yield in certain situations and we talk about in the class like irr uh yield and why those two different numbers come to play and and as the years go on we ask a seller what are you looking for yeah and most likely they're gonna they're gonna increase it or decrease it based on demand and supply and whatnot um but if you get in with the seller you can usually ask them where your target numbers are at right yeah and especially once you've worked up a relationship with them you can say listen so here I I mean I've even done this where I say listen I've got however much you know x amount of dollars that I I need to spend um and I'm trying to just kind of fit in whatever I can into that number what kind of pricing you're looking at so that I can bid appropriately and and make bids on you know the right assets oh Patrick I apologize I see Patrick said hello to us Patrick how are you man and you know I think this is the extremely important that people Overlook in due diligence they skip right to do dealings make an you're not 100 gonna get the activity it may sell at auction and if it goes third party to an outside investor you lose all that equity in that property because you don't get the property back now you can over bid above the balance your loan however you're not a promise they get that ass out so when there's equity in an asset please don't bid you know you're bidding on either one is lower per se but you're not going to get the equity because it's not there it's actually the owner's equity not yours exactly yeah and flip side right if that property was 50 and the upb is a hundred you're most likely gonna actually take it back because you're probably gonna list it for 45 or 50 50 trying to get someone out of it and then take it back because you're not going to get it or if you sell for 30 and take it and you bought it really well great but most likely you're gonna the equity play comes into the idea of which exit strategy were most likely after yeah now we've seen crazy things happen but yeah it is what it is and and there's all kinds of people out there predicting uh values to drop and so that's something just at least to take into consideration and if you think that okay so in this area uh we're looking at prices dropping five ten twenty percent but factor that in because it's you're not going to foreclose on it today and then sell it tomorrow you're gonna foreclose on it uh if that's the route you go and then that you're not going to see the sale for like I say nine twelve months from now so so you have to do some kind of prediction uh where house prices are going to be at that point attractive you've been and so one of the things that we've been I've been asking for Youth too is I'll ask the redundancy ridiculous question your calculator has offer and they don't spend enough time in this calculator and this calculator makes everything different um once you start calculating things correctly it opens up we had a couple you know investors in our last class who have been taught by a lot of people out there and they didn't realize of what all goes into this and why it goes into it because there are so many factors that go into bidding on an asset because they can go all different ways that's a really crucial item yeah um you know statutation is something that we don't talk a lot in the space but that's a huge Factor because if you are Beyond statute limitations yeah there are some situations you can't get out of right yeah there are somewhere you maybe you can advance the date other ones where yep too bad so sad you're just out of luck and you you can't do anything yeah I certainly don't want to be in that situation and you just spent money for absolutely nothing and there's Redemption period there are things like um you know when HOAs jump first um a lot of those things come into play um we also talk about in classes like when Dean Lou doesn't work right so people think that like modifications I can modify anything MD Lou will work at all times well unfortunately dealers doesn't always work especially at the second and third behind it and we talk about why why does that matter and what changes you need to make make sure that yeah yeah so when you're we also dive into due diligence which come to play in this whenever you run your calculation and you're getting a due diligence you've got to make sure the numbers that you plug into your calculator actually match what is in the actual collateral file yeah um and most people go off the tape which is great but you got to make sure those are coming to play um and then the servicing notes kind of help you out figure those things out as well yeah and a lot of a lot of other you know note teachers a lot of them do a good job of the due diligence portion of it yeah been exactly the same for 10 years right exactly I haven't changed a thing so it's still changing today yeah so understand the fact that it's gonna evolve as you learn things as you change things your mindset change um when you realize certain things you're gonna evolve so it's not about being precise exactly and leave and forget it you're adjusting it all time especially returns yes right if you're not targeting a higher return now than you were 18 months ago you're gonna win a lot of assets right now but the problem is you're going to be in real bad shape because if you're winning assets at eight ten percent and more eight it's extremely low return in given the market we're in right now right right now um when you're bidding non-performing assets and you come up with a number that you want to bid at it but you and you have 10 assets that you can make it offers on do you weed them down from what you think the seller will accept uh to a point yeah as long as it still works within my numbers if I think if I know certain sellers are gonna are gonna want more money or less money and so I'll go into it with that in fact I just did that this morning where I put in a couple of bids on two different assets and I said so you know give me give me your pricing on this this is what I'm willing to bid and he called me up and says okay one of them's already gone and here's what we would want for the other and sure enough it was much more than then I was bidding which I knew was going to happen but I I just wanted to be sure just to know for sure but but you got to know and I know that this seller is going to accept a different a higher or lower than another seller and so I I do adjust it a little bit um also how much I'm buying if I'm if it's a one-off I'm probably going to pay um but it's always good to get another opinion yeah because Dave does some things that I don't do and vice versa that are important to you because you know whatever because of whatever potential exit strategy because of I don't know all kinds of different reasons but but we all have just our little bit different take on it so it's worth it to get that second third opinion so what do you do in due diligence and you know nine out of ten things will be the same and then that tenth thing you go oh shoot yeah that's a good idea I should do that too yeah yeah divorce Place Insurance uh modification agreements uh yeah property presentation stuff all coming to play um and understanding that kind of stuff and sometimes understanding the servicer um if you're with one service or another it makes a difference um but we wanted to also bring up what we're going to be doing in two weeks too um I encourage you guys all to share with a friend we're gonna bring on two investors who are definitely not brand new anymore they've been playing for a while uh one will shock you where they previously worked um if you will want to share but the other people went through the class last time and they're going to discuss what are they doing today and what they've changed are that they have because it's amazing to turn around and the the eye waking that when we talk to them that they were amazed that wasn't spoken in the general conversations in all these you know videos and whatnot because most stuff we talk about in this class we don't share it publicly at all we have never done any videos on a lot of this stuff no that I mean we can node investors will tell you a whole lot of things but come on yeah we're not gonna tell you everything yes I know that's some kind of a price so yeah yeah absolutely and guys uh we encourage you guys if you have any questions or pricing what's up um we charge based on the knowledge and resources that you're going to get in this class um I'm gonna tell you that most likely some of the resources you've never seen or will ever have um in some of the information we're going to talk about um I don't know any other classes that and we have some students who've been through some of the big big classes and they don't have the calculator that we have um so I encourage you guys check it out um but also check out in two weeks when we have cameras on uh and David on on December 30th it's gonna be really cool to have that conversation um with them when they went through the class uh and what channel do they have and what they're doing today with the information they got and what for that big calculator I know we've talked about a lot but it's it's crucial and we'll start you off with something fairly simple like mine and then you can get it as crazy as you want like Dave's yeah absolutely so guys I appreciate you tuning in this week sorry for the whole time change um but we'll look forward to seeing you guys in two weeks uh we'll be this will be on YouTube and Facebook and everything else in the coming future um but we'll be uh putting up the event uh pretty soon for the ones gonna happen in a couple weeks hopefully if you have any questions feel free to reach out to us if you have assets you're looking to sell or questions on reach out to us um and we'll go from there I'll put in the comments the link to the uh the page if you do have questions again um you can go to our websites and check it out yeah other than that uh hopefully you have a nice easy weekend we're gonna have a lot of storms here so uh I think we've got staying inside weekend for us we're good for today but like starting tomorrow the temperature just falls off a cliff so it's gonna be very cold the next week that's well hopefully Christmas uh a nice when I hear the possibility for snow so should be a nice one should be a nice one we'll have some some snow on the ground and everything else should be beautiful we'll have a good weekend man have a good weekend everyone out there and uh the social media world and we'll uh see you soon all right fun some some funds send some things out but we're also going to influx of those people who joined us uh two weeks ago some seller finance people looking to sell seconds or seconds converted first and first and so like that and that led to more discussions which we're finding out is really cool because these people are amazed at what we can do to solve their problem and for me that's the key here because these people we're helping them get rid of assets or refinance the restoration into something they can actually make some money and go redo so those who are watching us again work great on feedback send us a message so we can look and we'll share with you some information but know the fact that we need some data points to run our calculations yeah I spent uh we I think we lost your mic for a second did you uh commute no if you lost your mic or are we uh can you hear me okay yeah I can hear you oh there we are all right back okay yeah I said it's been about an hour uh with a friend of ours here this last week uh with looking over a bunch of our assets she's got for sale um it's some good stuff it just needs a little bit of tweaking before it can be something that uh we can look at purchasing yeah got her hooked up with uh with a servicer uh so it can help sort out at the very least the pay history uh because that's that was the number one thing we couldn't actually tell what her unpaid balance was uh because she hadn't been recording it properly which only because she doesn't know how else to do it and so that's what we're here to do help people figure out how to do this we will buy these loans we just we just need them so we just need them the way we need them yeah and I think people are learning quickly what that means right uh the idea of what the loans are set up to be is important for us and you know the fact that when the loans are when the data points are in the right kind of setup we can evaluate things much faster and it helps us know what we need to do to move forward in that asset evaluation and what questions to ask we did share a spreadsheet to kind of helped get those data points from those several clients people but on the flip side when we're evaluating these assets we'd be run different determinations to decide what we're going to bid on it it was performing a non-performing it's it it depends right um yeah so Nathan yeah the answer that nobody likes to hear about that's the truth it does depend and we need we need certain things to be able to make it work properly but uh we're here to help we're here to help figure that out for people and yes Nate is having some kind of video issue we'll work through it and hopefully everything will work out okay um but when we when we look at these kind of things uh we want to make sure that we're valuing these assets correctly uh we don't want to just win an asset we want to make sure we bid and be successful with our offers um but that doesn't mean always winning an offer it means that we make a a bit that makes sense to those people out there um to a seller but also to ourselves we don't want to be in spot where we make an offer the seller accepts it and it doesn't make a good return for us right right um so Nathan when you get an asset one of the first things you look at is what you know what are some of the things you look at so I'll get a tape um there's a number of things that I look up right up off top of the you know right when I first get it one of the very first things I look at is location um there are certain states that just through experience I've learned kind of the hard way that they're difficult to deal in uh so I I skip over certain States um one of the other key things that I look at uh that kind of goes along with our discussion here today is I'm looking at last date paid or and next date due I want to know what the pay history is going into this to this loan to see where it's at uh How likely is it to start re-performing or is it performing already and just just so I have the story of where is it where is it today so I can know where to take it next yeah and I think that's important for most people who don't get what we're looking for um when an asset's performing you have to make sure that you you know the fact that how many payments are left what numbers go into it because you can't bid strictly based on certain data points it's an if you're bidding on a note right you're bidding on the term you're bidding on the the rates you're bidding on a IOU and if you're looking at one part of the IU and not others you make a real big issue with them it could cause a big problem for you because your returns won't equal what you think they are and that's where I think people fault is they kind of make an offer that the seller will accept but at the flip side it doesn't work in their returns when they run the final numbers yeah sorry with my video here I'm just trying to do some things shut down some other windows or something get this moving a little bit better Friday afternoon I think our computer is getting tired so when we look at these things um we look at the fact that these assets are performing what numbers go into are things like what is the interest rate because that determines what kind of return we're going to get because the p i is based off that number and the upb so if that return if that rates of two or three it makes it extremely difficult for us to make an offer on it and get it up to a 10 yield because of that problem but however there are times where performing asset you can bid it as a performing asset right right and a lot of that has to do with that interest rate and so if it's if it's a three percent interest rate that's going to be a very tough uh a tough one for me to bid on just because I'm gonna have to discount it I have a large amount for it for me to be able to get the return that I'm looking for versus something that's written at like a an eight nine ten percent uh interesting treatment that rate that comes in is the gross return of what that asset is gonna um interest is it a kick out so the fact that if it's an eight percent it's kicking out an eight percent return every year right way up to three percent is kicking at three percent so to get that three percent up to an 80 you gotta discount so much that it drives that three up higher because you're into it for X dollar well 100 note has three percent kicks out three percent a year or to get it up to an eight you've got to buy that 100 note for such a discount using your financial calculator to get to a point where you're paying 10 12 15 or a year because you're not buying it at a hundred percent of that value right and the argument can easily be made that well uh you know it's a 30-year amortization but they're probably going to pay off in a shorter amount of time than that that's probably true we don't know so we have to go with what we have today uh that's that's the only information that we can work off of I can't guess that maybe five years or seven years from now they're going to refinance or sell the house or something I I can't hypothecate and hope to make money that's sometimes the future it has to be based on today's numbers absolutely and I think for most people they don't understand that and math is difficult um and the financial part of it is extremely difficult but if you originally notes or if you understand how notes are originated the numbers that go into that radiation is the exact same numbers we're working with because yield is interest rate right and if you're looking for a certain return a year that's the number you're going to play with and that performing asset if it continues to perform to maturity date you're going to get that return every year until the maturity date um and that's one of the reasons why we don't Target percentage of upb because that actually doesn't work for you um because it just it doesn't calculate the interest rate which also drives in your returns and that's what it could work because if the interest rate happens to be at the right amount but if it's not then then you've just shot yourself in the foot and you've made a terrible investment so so if you see a loan written at a 13 14 which we're probably going to start seeing in some our plans were according to Max yeah would you be that 100 of upb honestly probably not uh I'm probably still going to discount it at least uh some because just because of the risk that I'm taking on uh you know and again there's other factors that go into it how much Equity is in there what's property value where is it located what kind of contracted coming through okay yeah my internet I think buffered for a second so I apologize for everyone it has been a crazy Friday yeah yeah something's funky here I know so on the flip side though the one time you can truly go off a performing asset form you know any one time is if you're buying a partial right why is that you have a beginning and set date if it goes non-performing you really don't want to worry about it so you're actually getting bid based on yield because you have a set start date and maturity date and that Bond expires that ex you're probably not going to sell it before that right unless it pays off right but and you can never predict that part of it however you know for me you can literally bid on yield on a partial every day of the week and count on it because again the defaults is how it kicks back in yeah yeah when you're buying these performing assets that are performing for two three four years let's flip it over because non-performing ever trickle in the head like it's been performing for three four years I'm gonna sell his asset at a great 12 yield but in the non-performing world that may be at really low return because of certain situations right do you even care about that strong pay history definitely helps that that makes me feel a lot more warm and fuzzy uh and it makes me much more comfortable um but there's always that possibility and I'm economy you know who knows who knows what's going to happen down the road and I I just I can't 100 say that just because they've made payments the last 24 months they're going to continue to make payments for the next 28 years I just there's no guarantee there so it's always in the back of my mind it's always something that I have to at least factor for yeah and I have to agree with you um I bid everything unless the partial based on a non-performing calculator that includes performance um and again those will have on next uh on December 30th to the the classmates that took our last class um explained some of what was going through their heads before they took the class and how they what their mindset change so please definitely tune in for it we have a Candace and David on two weeks because you can bid everything as a performing asset because they're performing before but you never know what's going to happen in the future um right you can't guarantee you're gonna have a 20-year note for 12 a year and nothing happens to it right so when you flip over the non-performing world it's a lot of differences in opinions you and I differ in our opinions as much as anyone else would yeah but why besides the fact that if a loan is performing and it could not perform why is calculating and not performing asset important and saying screw its foreclosure I don't gotta worry about anything what other factors you do you agree with that come and play when it goes not performing why is non-performing assets are concerned that's always a concern so I mean I was having a discussion with somebody just the other day and we're talking about uh just locally here uh there was a development that was going up and about 10 years ago and and out of the blue for no reason that anybody knows of and there's obviously reasons but for whatever reason the developer stopped whether they ran out of money or ran some other kind of trouble or something uh and so development just stopped so you've got a bunch of houses that are either completed or partially completed they're now just sitting vacant a vacant property deteriorates surprisingly quickly I I and it's it makes no sense it makes no sense whatsoever that uh just because it's empty shouldn't make that much difference but it does it makes a huge difference all of a sudden things start breaking where it's you know people that lived there for five years and everything was fine and then all of a sudden it's been vacant a year and all kinds of things start happening whether it's just natural or from vandalism um so that's that's always a concern that's always something that I'm thinking of and you know how long has it been empty and how long could it be empty until something happens and it's always a concern so we're always looking at that possibility yeah I agree to you I think you also kind of play is that each day is different right um the house that he reads but each state you can't guarantee that Texas is gonna be like Ohio which would be like Florida which would be like New Jersey like California but each state has a different way to it right right an asset that may work in Texas the pricing may not work New Jersey right because of taxes property taxes uh foreclosure laws um and you have to price it accordingly because of that problem and if you bid your Texas desk like you do an Ohio asset you can run to a lot of problems cost and time frame adds up because you have more expenses in a state that takes longer property taxes uh servicing fees um Force Place insurance and more time for that property to kind of get beat up um yeah and a classic example of that is is let's let's take Ohio and Texas so Ohio for whatever reason has very high taxes you can be in in Cleveland or Columbus or somewhere and the taxes are uh for the same value property the taxes will be a double or triple uh in Ohio versus Texas so if you've got even 6 six months worth of non-payment and you're responsible for those taxes that can make an enormous difference between those two states for you know everything else being equal yeah that can make a huge difference to your numbers yeah and I know some people use a flat foreclosure cost thing and for the most part that can be somewhat accurate um and you can dive into deeper once you get into due diligence on things but you need to make sure you calculate the Foreclosure costs and time frames um you also have to include things like the servicing fee because if it goes non-performing you're not foreclosing in a day right that coming into play that what not happens um and I think most people forget that because they don't they just say listen I'm foreclosed it's all good I have enough money set aside and especially if you're buying assets that are less than fifty thousand that foreclosure costs and if you're in Ohio that property tax will eat up a lot of your profit quickly before you even foreclose on it yeah absolutely three four thousand a year can eat up a lot plus you're six seven thousand for your foreclosure fee you're looking at easily 10 grand in foreclosing with the way with the property tax packed on to it right and heaven forbid the taxes get sold to a tax lien buyer and then all of a sudden they've jacked on 18 interest and it gets it gets very expensive very quickly yeah this is all stuff that we cover in our class and we had a great discussion on this and and went over it if you don't calculate this stuff oh yeah you need to learn it and I get we talked for a while about giving out our calculator but what we found out is that most people don't understand it and they really need to understand how to build their own and how to maneuver their own and Candace and Dave will talk about how they started developing their own calculator so they can calculate their own thing and figure out things on their own um in our class talks when you spend two weeks developing the calculator that you're going to use um so that is extremely important in part of that non-performing calculator you can include a performing feature that if it continues to perform it's okay right and if that is your hurdle because is a three percent loan then that will trigger it and say okay this is I have to bid this much to make sure it makes sense for me um but you get also include the reason we asked for like what's next due date is that there's also a situation where even a non-performing asset can flip to performing right and if you are in a spot where you're just bidding on non-performing bids expecting to get the property you're the rude awakening because it can reinstate at any moment for whatever reason and go performing and if that's a three percent two percent coupon interest rate right you can be in a really bad spot quickly when they put a bunch of money down you can't mod the deal and you move forward with the idea that you're gonna get the property and turn you start getting payments which you think is great however if you bid this thing way too low or too high you're not going to get the return you're targeting even at performing you know I've made the mistake years ago so reinstatement happens yeah and and sometimes that's exactly what you want and sometimes that's your worst nightmare yes and it's the worst thing that could happen yeah I so and again you have to be prepared for all of these different possibilities uh and that's part of that is building out your calculator to say so if this happens if that happens if this happens if that happens and and yeah to the best of our ability yeah trying to work that out and see what could happen yeah we don't know what's going to happen and we've heard people say well you know I've been taught that you can go into a deal knowing what the bar is probably going to do that's wonderful but that's as far as you can take it right don't count on the borrower to do what you think it's going to do because you don't know the moral story 100 yeah so and and people don't always do The Logical rational thing this is a house this is their home oh yeah we've both seen that several times over where this to if they did this that's the most logical that's makes the most sense but for whatever reason they do that and yeah absolutely so um I do see the fact that we have a question from Alan uh regarding uh can property tax be added to Legal collectible balance of a property that goes with foreclosure and yes the answer is yes pretty much anything you add as a collectible balance it could be Insurance it could be whatever and also read over your your note make sure what cheming cannot be added and depend the state laws um things like your foreclosure costs your attorney costs certain States like Ohio you can't add that to it right right um some states you can um in some states you can add it to your um you know your reinstatement but you can't add to your collectible um so those are the kind of things that come into play now do you have to be pristine everything you know well you have to know the fact that you can't add certain things on all the time um and things like Ohio which is the only state I don't understand why they do this is this 66 of a free appraisal value at foreclosure which means that any moment that appraisal that when you go to foreclosure in any other state you set the bid based on whatever you want to Ohio has this long place that says if I think it's three people go out they appraise the property and do 66 of what they think the property worth is the bid so if you want to bid lower you can't you give it higher but you can't bid lower um which doesn't always spare well for us no not always some and again it sounds like it should work but it doesn't and not always sometimes it does sometimes it doesn't and you don't want to get caught in that situation if you're not prepared for it if you're prepared for it and you plan for it no problem yeah but you don't want to get caught so you you've got to know and you know so going back to what you're saying before you know know um can you at what kind of Interest are you adding on at what point and all these kind of things that goes back to the origination side of things where hopefully you know how to do that and hopefully you know you know what you can do in your state or whatever state you're originating in uh you've added in the correct language and terms that can be allowed for your area or wherever you're originating so and again if you don't know that learn because it can make a huge difference and two points you said I recently had an original come up to me and says Dave um why do I need Dodd-Frank I'm selling to owner occupied person I'm allowed to do three a year I'm not gonna call any names for the case they're on right now but the problem is they didn't understand that yes you can write reading your name as an originator but if you're dealing with a home owner occupy there's a set rules done by them that needs to be followed um it's not about how many loans you can originate it's what kind of note you can put in place and if they're in a bad spot where you're a borrower in a really bad position that no can be violated the violent doc Frank laws and you really need to address that which next month will be covering a lot of uh what how to create a successful positive note but also what makes what can you add to it to make it more valuable which leads to the idea of if your originate notes and you're listening to this adding in a seller a service or fee is great yeah right and then you're bidding your non-performing assets or you're performing assets be sure to subtract the servicing fee unless the node includes a servicing fee inside the the the p i plus the servicing thing yeah it's it's kind of include in that taxes and insurance category where it's an extra fee on top of whatever the the principal and interest is but that allows you to bid higher because you don't have to subtract your 35 or your 30 or 20 whatever servicer charges for your performing asset I can literally take the entire p i which means my returns will go dramatically up so if you are bidding out of building a bid calculator be sure to subtract that but also have a trigger that you can adjust it and say listen I don't need to subtract it but this note already includes the ability to pay for the servicing outside of this p i payment right so let's get into preference just just for fun what do you like better performing a non-performing so it's funny you say that you know three years ago I could care less about performing assets I would love to do what everyone says right the rule of thumb was by and not performing and flip it over to performing and I think it was talked about so much people thought it was normal right it was a goal not something we could always achieve and get hoped and you try working things out to make it happen but I like the number form because the fact they can Skyrocket the returns ridiculous 40 50 60 70 80 ridiculous returns when not performing especially at the reinstate or if you made a killer deal with the sellers or you bought an asset where they thought the value was XYZ and you know it was much higher than that right um so when you're bidding on these assets you know make sure you look at that value of the property part of that calculator um because that may actually give you a leg up especially if you're in a local area now granted today things have changed and for me it's not about do I want non-performing performing it's what is right now going to go on sale or the best price we're buying more performers now than we did non-performing um it used to be 85 or so percent non-performing and now we flipped over now we're about 85 performing assets that we're buying simply because the return is there uh we're trickling in some partials and whatnot um and we're evaluating a large commercial deal as well but we're either buying those performing assets at a good return um or buying you know a partial situation but we're not buying a main non-performing simply because the pricing for non-performing hasn't been there recently um but we're hearing second quarter may change a lot of that yeah yeah and there are still deals out there and I'm still buying the non-performing but I agree with you and then yeah I'm buying a lot more of the Performing these days than I used to like you say I used to think on performing I mean whatever yeah but the return wasn't attractive enough to to lure me into that uh and I wonder if part of it is just I'm just getting old it's too much work too much headache it is and the Performing without question it's a much easier thing to manage um the returns aren't as high the potential return is not as high uh but it's a lot less work yeah and so that's that's very attractive to me dude looks a little bit easier right you're not so worried about the the value of the property is marked the collateral files usually secure um it all works but I wanted to stress upon the fact that if you're bidding every asset that's performing as a performing moving forward you're asking for a lot of problems and as well as we said numerous times if you're bidding on assets that are non-performing strictly based on percentage of upb or whatever and you're forgetting the interest rate you're ignoring the different state it's in or all the costs you're really missing out on the big pieces of that note um and if you're doing this with other people's money yeah you're gonna get yourself in bad um luckily when we got first got started I wasn't you I was using a lot of people's money but our asset pricing was a lot different back then a lot yeah so today's world you need to be more precise you need to know um what Texas law versus Ohio versus you know what your different action strategies and which extra strategies is the most concerning in each deal and be aware of that because if you're not you're going to be in a bad spot um moving forward with that deal and as we talk about in our class um the 10 weeks even if you want to do the five week we start off with talking about the mindset and figuring out where you're going to be and what you should start Oregon first seconds performing on and then we jump right into building that calculator truly building a crazy wild calculator that you can plug and play assets desired returns kick out your returns and know we should be with a bunch of charts that you can tag things such as documentations right such as you know what is a Texas time frame what is Florida's time frame um what states have debt licenses things like that is part of the resources that we use in our calculators to know what we should be doing with that asset and we use those tools in this in our series which you'll get a hold of to make sure that we're we're in a better spot than if we just bid wildly yeah you've got to be a lot sharper than you used to have to be uh 10 years ago I you could pretty much shoot from the hip and you'd hit something uh and today that's not the case you've got to be a lot sharper you've got to be a lot more uh in tune and and on the ball with everything everything from your due diligence to even your like you say your state knowledge all those things you've got to be much more precise and much sharper than you used to have to be so it's it's worth it to get that education it's worth it to to practice practice practice and if you're not sure about the financial calculator um time value uh things either the manual or we we also show you how to do in a spreadsheet so you can do 50 assets in a blinkman eye that class also talks about that because that's a key thing if you don't know what the present value is what's the time value what's a term what's a rate how do you calculate it what does it mean we talk about that because if you're not learning about that in any of your classes you're missing the biggest part of a promissory note of any kind is the terms and the numbers because you're buying an IOU with a secured property the secured property is a secondary thing it just secures the note the promissory note so you need to understand those factors and numbers so you get into it so I encourage you guys if your RN should reach out to us we wanted to show you guys the difference between a performing calculator and not performing when to use it yeah when you're looking at her non-performing assets there are numerous numerous expenses that go into it right and not every expense is into every category but what you can also Target is that different extra strategies and why do they matter and some of the key things for me is if there's Equity or not right that plays a huge role because my exits change yeah based on equity right yeah and then and again it comes down to a lot of preference all right do you want to put in all the extra work for a non-performer that you may not get paid on for you know nine twelve months from now uh or are you looking for something that's that's more for lack of a better term predictable uh which which is what we're saying it's not always predictable but it's more not sure if it lost your audio or not but uh yep I think I lost your audio I'm not sure if you lost your audio but I apologize if you did so um for me I I think with regards to the bidding structure and notes when you're we ran across this recently with an investor that didn't understand why I would bid such a significant drop when the value of the property worth a hundred and the the balance alone was sixty thousand they didn't understand why I was not bidding 65 or 70.

and right they couldn't understand what why would I not I mean the problem we're at 70 and what we had to explain to them is I wasn't buying a problem I was buying a note and if for those who don't understand if there's equity in the property and you go forward to buy that that note and you're expecting to get the equity once you foreclose on it you're not 100 gonna get the activity it may sell at auction and if it goes third party to an outside investor you lose all that equity in that property because you don't get the property back now you can over bid above the balance your loan however you're not a promise they get that ass out so when there's equity in an asset please don't bid you know you're bidding on either one is lower per se but you're not going to get the equity because it's not there it's actually the owner's equity not yours exactly yeah and flip side right if that property was 50 and the upb is a hundred you're most likely gonna actually take it back because you're probably gonna list it for 45 or 50 50 trying to get someone out of it and then take it back because you're not going to get it or if you sell for 30 and take it and you bought it really well great but most likely you're gonna the equity play comes into the idea of which exit strategy were most likely after yeah now we've seen crazy things happen but yeah it is what it is and and there's all kinds of people out there predicting uh values to drop and so that's something just at least to take into consideration and if you think that okay so in this area uh we're looking at prices dropping five ten twenty percent but factor that in because it's you're not going to foreclose on it today and then sell it tomorrow you're gonna foreclose on it uh if that's the route you go and then that you're not going to see the sale for like I say nine twelve months from now so so you have to do some kind of prediction uh where house prices are going to be at that point attractive you've been and so one of the things that we've been I've been asking for Youth too is I'll ask the redundancy ridiculous question your calculator has been exactly the same for 10 years right exactly I haven't changed a thing so it's still changing today yeah so understand the fact that it's gonna evolve as you learn things as you change things your mindset change um when you realize certain things you're gonna evolve so it's not about being precise exactly and leave and forget it you're adjusting it all time especially returns yes right if you're not targeting a higher return now than you were 18 months ago you're gonna win a lot of assets right now but the problem is you're going to be in real bad shape because if you're winning assets at eight ten percent and more eight it's extremely low return in given the market we're in right now right right now um when you're bidding non-performing assets and you come up with a number that you want to bid at it but you and you have 10 assets that you can make it offers on do you weed them down from what you think the seller will accept uh to a point yeah as long as it still works within my numbers if I think if I know certain sellers are gonna are gonna want more money or less money and so I'll go into it with that in fact I just did that this morning where I put in a couple of bids on two different assets and I said so you know give me give me your pricing on this this is what I'm willing to bid and he called me up and says okay one of them's already gone and here's what we would want for the other and sure enough it was much more than then I was bidding which I knew was going to happen but I I just wanted to be sure just to know for sure but but you got to know and I know that this seller is going to accept a different a higher or lower than another seller and so I I do adjust it a little bit um also how much I'm buying if I'm if it's a one-off I'm probably going to pay a little bit more than if I'm buying you know 10 or 20 of loans at a time and we talk about our classes that you know you have to stay fixed on what return you want right and then filter Down based on what you think the seller will accept yeah because you can't adjust and say well okay I'll move up because the seller wants that because you may win the asset but lose the war yeah and for me I'll say okay fine if I'm X percentage of upb I'll filter it out right yeah in not that I'm calculated based on Upp but I'll say listen if I'm below say 55 percent of EPB because my it's a two percent coupon I'm most likely going to kick it out and never show the seller that that bid because it's never going to work and I don't want to make it look bad and yeah get in trouble or you know make it look like it's a bad offer yeah um so just avoid it so for me I do filter a little bit but I stay with my return desires and my yield in certain situations and we talk about in the class like irr uh yield and why those two different numbers come to play and and as the years go on we ask a seller what are you looking for yeah and most likely they're gonna they're gonna increase it or decrease it based on demand and supply and whatnot um but if you get in with the seller you can usually ask them where your target numbers are at right yeah and especially once you've worked up a relationship with them you can say listen so here I I mean I've even done this where I say listen I've got however much you know x amount of dollars that I I need to spend um and I'm trying to just kind of fit in whatever I can into that number what kind of pricing you're looking at so that I can bid appropriately and and make bids on you know the right assets oh Patrick I apologize I see Patrick said hello to us Patrick how are you man and you know I think this is the extremely important that people Overlook in due diligence they skip right to do dealings make an offer and they don't spend enough time in this calculator and this calculator makes everything different um once you start calculating things correctly it opens up we had a couple you know investors in our last class who have been taught by a lot of people out there and they didn't realize of what all goes into this and why it goes into it because there are so many factors that go into bidding on an asset because they can go all different ways that's a really crucial item yeah um you know statutation is something that we don't talk a lot in the space but that's a huge Factor because if you are Beyond statute limitations yeah there are some situations you can't get out of right yeah there are somewhere you maybe you can advance the date other ones where yep too bad so sad you're just out of luck and you you can't do anything yeah I certainly don't want to be in that situation and you just spent money for absolutely nothing and there's Redemption period there are things like um you know when HOAs jump first um a lot of those things come into play um we also talk about in classes like when Dean Lou doesn't work right so people think that like modifications I can modify anything MD Lou will work at all times well unfortunately dealers doesn't always work especially at the second and third behind it and we talk about why why does that matter and what changes you need to make make sure that yeah yeah so when you're we also dive into due diligence which come to play in this whenever you run your calculation and you're getting a due diligence you've got to make sure the numbers that you plug into your calculator actually match what is in the actual collateral file yeah um and most people go off the tape which is great but you got to make sure those are coming to play um and then the servicing notes kind of help you out figure those things out as well yeah and a lot of a lot of other you know note teachers a lot of them do a good job of the due diligence portion of it yeah um but it's always good to get another opinion yeah because Dave does some things that I don't do and vice versa that are important to you because you know whatever because of whatever potential exit strategy because of I don't know all kinds of different reasons but but we all have just our little bit different take on it so it's worth it to get that second third opinion so what do you do in due diligence and you know nine out of ten things will be the same and then that tenth thing you go oh shoot yeah that's a good idea I should do that too yeah yeah divorce Place Insurance uh modification agreements uh yeah property presentation stuff all coming to play um and understanding that kind of stuff and sometimes understanding the servicer um if you're with one service or another it makes a difference um but we wanted to also bring up what we're going to be doing in two weeks too um I encourage you guys all to share with a friend we're gonna bring on two investors who are definitely not brand new anymore they've been playing for a while uh one will shock you where they previously worked um if you will want to share but the other people went through the class last time and they're going to discuss what are they doing today and what they've changed are that they have because it's amazing to turn around and the the eye waking that when we talk to them that they were amazed that wasn't spoken in the general conversations in all these you know videos and whatnot because most stuff we talk about in this class we don't share it publicly at all we have never done any videos on a lot of this stuff no that I mean we can node investors will tell you a whole lot of things but come on yeah we're not gonna tell you everything yes I know that's some kind of a price so yeah yeah absolutely and guys uh we encourage you guys if you have any questions or pricing what's up um we charge based on the knowledge and resources that you're going to get in this class um I'm gonna tell you that most likely some of the resources you've never seen or will ever have um in some of the information we're going to talk about um I don't know any other classes that and we have some students who've been through some of the big big classes and they don't have the calculator that we have um so I encourage you guys check it out um but also check out in two weeks when we have cameras on uh and David on on December 30th it's gonna be really cool to have that conversation um with them when they went through the class uh and what channel do they have and what they're doing today with the information they got and what for that big calculator I know we've talked about a lot but it's it's crucial and we'll start you off with something fairly simple like mine and then you can get it as crazy as you want like Dave's yeah absolutely so guys I appreciate you tuning in this week sorry for the whole time change um but we'll look forward to seeing you guys in two weeks uh we'll be this will be on YouTube and Facebook and everything else in the coming future um but we'll be uh putting up the event uh pretty soon for the ones gonna happen in a couple weeks hopefully if you have any questions feel free to reach out to us if you have assets you're looking to sell or questions on reach out to us um and we'll go from there I'll put in the comments the link to the uh the page if you do have questions again um you can go to our websites and check it out yeah other than that uh hopefully you have a nice easy weekend we're gonna have a lot of storms here so uh I think we've got staying inside weekend for us we're good for today but like starting tomorrow the temperature just falls off a cliff so it's gonna be very cold the next week that's well hopefully Christmas uh a nice when I hear the possibility for snow so should be a nice one should be a nice one we'll have some some snow on the ground and everything else should be beautiful we'll have a good weekend man have a good weekend everyone out there and uh the social media world and we'll uh see you soon all right you're not going to get the return you're targeting even at performing you know I've made the mistake years ago so reinstatement happens yeah and and sometimes that's exactly what you want and sometimes that's your worst nightmare yes and it's the worst thing that could happen yeah I so and again you have to be prepared for all of these different possibilities uh and that's part of that is building out your calculator to say so if this happens if that happens if this happens if that happens and and to the best of our ability yeah trying to work that out and see what could happen [Music] foreign [Music] yeah so I want to connect with you Nathan we're talking about this with a couple investors yeah and we um ran this in our our class that we had it was a few weeks ago which will be re-running in January 3rd about this idea of bidding on performing and non-performing what entails what goes into it why do you use one or the other and what are some of the pitfalls so yeah I want to dive into it before we get there though how are things with you what's going on with your world how are noobs like you see an influx recently what you've seen recently I've seen a bit of an influx I'm talking with a few sellers who are talking about some big tapes coming through here in the next few weeks which uh is interesting it just you know points to what we've been talking about for the last couple years where we're we're anticipating seeing a lot more coming available for us to purchase which is kind of the good news bad news it's good for us bad news for a lot of folks um but again we're there to help and hopefully we can help out a lot more people so that's that's good we've seen a lot more coming through yeah we're seeing a lot of uh mixture of both some fun some some funds send some things out but we're also going to influx of those people who joined us uh two weeks ago some seller finance people looking to sell seconds or seconds converted first and first and so like that and that led to more discussions which we're finding out is really cool because these people are amazed at what we can do to solve their problem and for me that's the key here because these people we're helping them get rid of assets or refinance the restoration into something they can actually make some money and go redo so those who are watching us again work great on feedback send us a message so we can look and we'll share with you some information but know the fact that we need some data points to run our calculations yeah I spent uh we I think we lost your mic for a second did you uh commute no if you lost your mic or are we uh can you hear me okay yeah I can hear you oh there we are all right back okay yeah I said it's been about an hour uh with a friend of ours here this last week uh with looking over a bunch of our assets she's got for sale um it's some good stuff it just needs a little bit of tweaking before it can be something that uh we can look at purchasing yeah got her hooked up with uh with a servicer uh so it can help sort out at the very least the pay history uh because that's that was the number one thing we couldn't actually tell what her unpaid balance was uh because she hadn't been recording it properly which only because she doesn't know how else to do it and so that's what we're here to do help people figure out how to do this we will buy these loans we just we just need them so we just need them the way we need them yeah and I think people are learning quickly what that means right uh the idea of what the loans are set up to be is important for us and you know the fact that when the loans are when the data points are in the right kind of setup we can evaluate things much faster and it helps us know what we need to do to move forward in that asset evaluation and what questions to ask we did share a spreadsheet to kind of helped get those data points from those several clients people but on the flip side when we're evaluating these assets we'd be run different determinations to decide what we're going to bid on it it was performing a non-performing it's it it depends right um yeah so Nathan yeah the answer that nobody likes to hear about that's the truth it does depend and we need we need certain things to be able to make it work properly but uh we're here to help we're here to help figure that out for people and yes Nate is having some kind of video issue we'll work through it and hopefully everything will work out okay um but when we when we look at these kind of things uh we want to make sure that we're valuing these assets correctly uh we don't want to just win an asset we want to make sure we bid and be successful with our offers um but that doesn't mean always winning an offer it means that we make a a bit that makes sense to those people out there um to a seller but also to ourselves we don't want to be in spot where we make an offer the seller accepts it and it doesn't make a good return for us right right um so Nathan when you get an asset one of the first things you look at is what you know what are some of the things you look at so I'll get a tape um there's a number of things that I look up right up off top of the you know right when I first get it one of the very first things I look at is location um there are certain states that just through experience I've learned kind of the hard way that they're difficult to deal in uh so I I skip over certain States um one of the other key things that I look at uh that kind of goes along with our discussion here today is I'm looking at last date paid or and next date due I want to know what the pay history is going into this to this loan to see where it's at uh How likely is it to start re-performing or is it performing already and just just so I have the story of where is it where is it today so I can know where to take it next yeah and I think that's important for most people who don't get what we're looking for um when an asset's performing you have to make sure that you you know the fact that how many payments are left what numbers go into it because you can't bid strictly based on certain data points it's an if you're bidding on a note right you're bidding on the term you're bidding on the the rates you're bidding on a IOU and if you're looking at one part of the IU and not others you make a real big issue with them it could cause a big problem for you because your returns won't equal what you think they are and that's where I think people fault is they kind of make an offer that the seller will accept but at the flip side it doesn't work in their returns when they run the final numbers yeah sorry with my video here I'm just trying to do some things shut down some other windows or something get this moving a little bit better Friday afternoon I think our computer is getting tired so when we look at these things um we look at the fact that these assets are performing what numbers go into are things like what is the interest rate because that determines what kind of return we're going to get because the p i is based off that number and the upb so if that return if that rates of two or three it makes it extremely difficult for us to make an offer on it and get it up to a 10 yield because of that problem but however there are times where performing asset you can bid it as a performing asset right right and a lot of that has to do with that interest rate and so if it's if it's a three percent interest rate that's going to be a very tough uh a tough one for me to bid on just because I'm gonna have to discount it I have a large amount for it for me to be able to get the return that I'm looking for versus something that's written at like a an eight nine ten percent uh interesting treatment that rate that comes in is the gross return of what that asset is gonna um interest is it a kick out so the fact that if it's an eight percent it's kicking out an eight percent return every year right way up to three percent is kicking at three percent so to get that three percent up to an 80 you gotta discount so much that it drives that three up higher because you're into it for X dollar well 100 note has three percent kicks out three percent a year or to get it up to an eight you've got to buy that 100 note for such a discount using your financial calculator to get to a point where you're paying 10 12 15 or a year because you're not buying it at a hundred percent of that value right and the argument can easily be made that well uh you know it's a 30-year amortization but they're probably going to pay off in a shorter amount of time than that that's probably true we don't know so we have to go with what we have today uh that's that's the only information that we can work off of I can't guess that maybe five years or seven years from now they're going to refinance or sell the house or something I I can't hypothecate and hope to make money that's sometimes the future it has to be based on today's numbers absolutely and I think for most people they don't understand that and math is difficult um and the financial part of it is extremely difficult but if you originally notes or if you understand how notes are originated the numbers that go into that radiation is the exact same numbers we're working with because yield is interest rate right and if you're looking for a certain return a year that's the number you're going to play with and that performing asset if it continues to perform to maturity date you're going to get that return every year until the maturity date um and that's one of the reasons why we don't Target percentage of upb because that actually doesn't work for you um because it just it doesn't calculate the interest rate which also drives in your returns and that's what it could work because if the interest rate happens to be at the right amount but if it's not then then you've just shot yourself in the foot and you've made a terrible investment so so if you see a loan written at a 13 14 which we're probably going to start seeing in some our plans were according to Max yeah would you be that 100 of upb honestly probably not uh I'm probably still going to discount it at least uh some because just because of the risk that I'm taking on uh you know and again there's other factors that go into it how much Equity is in there what's property value where is it located what kind of contracted coming through okay yeah my internet I think buffered for a second so I apologize for everyone it has been a crazy Friday yeah yeah something's funky here I know so on the flip side though the one time you can truly go off a performing asset form you know any one time is if you're buying a partial right why is that you have a beginning and set date if it goes non-performing you really don't want to worry about it so you're actually getting bid based on yield because you have a set start date and maturity date and that Bond expires that ex you're probably not going to sell it before that right unless it pays off right but and you can never predict that part of it however you know for me you can literally bid on yield on a partial every day of the week and count on it because again the defaults is how it kicks back in yeah yeah when you're buying these performing assets that are performing for two three four years let's flip it over because non-performing ever trickle in the head like it's been performing for three four years I'm gonna sell his asset at a great 12 yield but in the non-performing world that may be at really low return because of certain situations right do you even care about that strong pay history definitely helps that that makes me feel a lot more warm and fuzzy uh and it makes me much more comfortable um but there's always that possibility and I'm economy you know who knows who knows what's going to happen down the road and I I just I can't 100 say that just because they've made payments the last 24 months they're going to continue to make payments for the next 28 years I just there's no guarantee there so it's always in the back of my mind it's always something that I have to at least factor for yeah and I have to agree with you um I bid everything unless the partial based on a non-performing calculator that includes performance um and again those will have on next uh on December 30th to the the classmates that took our last class um explained some of what was going through their heads before they took the class and how they what their mindset change so please definitely tune in for it we have a Candace and David on two weeks because you can bid everything as a performing asset because they're performing before but you never know what's going to happen in the future um right you can't guarantee you're gonna have a 20-year note for 12 a year and nothing happens to it right so when you flip over the non-performing world it's a lot of differences in opinions you and I differ in our opinions as much as anyone else would yeah but why besides the fact that if a loan is performing and it could not perform why is calculating and not performing asset important and saying screw its foreclosure I don't gotta worry about anything what other factors you do you agree with that come and play when it goes not performing why is non-performing assets are concerned that's always a concern so I mean I was having a discussion with somebody just the other day and we're talking about uh just locally here uh there was a development that was going up and about 10 years ago and and out of the blue for no reason that anybody knows of and there's obviously reasons but for whatever reason the developer stopped whether they ran out of money or ran some other kind of trouble or something uh and so development just stopped so you've got a bunch of houses that are either completed or partially completed they're now just sitting vacant a vacant property deteriorates surprisingly quickly I I and it's it makes no sense it makes no sense whatsoever that uh just because it's empty shouldn't make that much difference but it does it makes a huge difference all of a sudden things start breaking where it's you know people that lived there for five years and everything was fine and then all of a sudden it's been vacant a year and all kinds of things start happening whether it's just natural or from vandalism um so that's that's always a concern that's always something that I'm thinking of and you know how long has it been empty and how long could it be empty until something happens and it's always a concern so we're always looking at that possibility yeah I agree to you I think you also kind of play is that each day is different right um the house that he reads but each state you can't guarantee that Texas is gonna be like Ohio which would be like Florida which would be like New Jersey like California but each state has a different way to it right right an asset that may work in Texas the pricing may not work New Jersey right because of taxes property taxes uh foreclosure laws um and you have to price it accordingly because of that problem and if you bid your Texas desk like you do an Ohio asset you can run to a lot of problems cost and time frame adds up because you have more expenses in a state that takes longer property taxes uh servicing fees um Force Place insurance and more time for that property to kind of get beat up um yeah and a classic example of that is is let's let's take Ohio and Texas so Ohio for whatever reason has very high taxes you can be in in Cleveland or Columbus or somewhere and the taxes are uh for the same value property the taxes will be a double or triple uh in Ohio versus Texas so if you've got even 6 six months worth of non-payment and you're responsible for those taxes that can make an enormous difference between those two states for you know everything else being equal yeah that can make a huge difference to your numbers yeah and I know some people use a flat foreclosure cost thing and for the most part that can be somewhat accurate um and you can dive into deeper once you get into due diligence on things but you need to make sure you calculate the Foreclosure costs and time frames um you also have to include things like the servicing fee because if it goes non-performing you're not foreclosing in a day right that coming into play that what not happens um and I think most people forget that because they don't they just say listen I'm foreclosed it's all good I have enough money set aside and especially if you're buying assets that are less than fifty thousand that foreclosure costs and if you're in Ohio that property tax will eat up a lot of your profit quickly before you even foreclose on it yeah absolutely three four thousand a year can eat up a lot plus you're six seven thousand for your foreclosure fee you're looking at easily 10 grand in foreclosing with the way with the property tax packed on to it right and heaven forbid the taxes get sold to a tax lien buyer and then all of a sudden they've jacked on 18 interest and it gets it gets very expensive very quickly yeah this is all stuff that we cover in our class and we had a great discussion on this and and went over it if you don't calculate this stuff oh yeah you need to learn it and I get we talked for a while about giving out our calculator but what we found out is that most people don't understand it and they really need to understand how to build their own and how to maneuver their own and Candace and Dave will talk about how they started developing their own calculator so they can calculate their own thing and figure out things on their own um in our class talks when you spend two weeks developing the calculator that you're going to use um so that is extremely important in part of that non-performing calculator you can include a performing feature that if it continues to perform it's okay right and if that is your hurdle because is a three percent loan then that will trigger it and say okay this is I have to bid this much to make sure it makes sense for me um but you get also include the reason we asked for like what's next due date is that there's also a situation where even a non-performing asset can flip to performing right and if you are in a spot where you're just bidding on non-performing bids expecting to get the property you're the rude awakening because it can reinstate at any moment for whatever reason and go performing and if that's a three percent two percent coupon interest rate right you can be in a really bad spot quickly when they put a bunch of money down you can't mod the deal and you move forward with the idea that you're gonna get the property and turn you start getting payments which you think is great however if you bid this thing way too low or too high you're not going to get the return you're targeting even at performing you know I've made the mistake years ago so reinstatement happens yeah and and sometimes that's exactly what you want and sometimes that's your worst nightmare yes and it's the worst thing that could happen yeah I so and again you have to be prepared for all of these different possibilities uh and that's part of that is building out your calculator to say so if this happens if that happens if this happens if that happens and and yeah to the best of our ability yeah trying to work that out and see what could happen yeah we don't know what's going to happen and we've heard people say well you know I've been taught that you can go into a deal knowing what the bar is probably going to do that's wonderful but that's as far as you can take it right don't count on the borrower to do what you think it's going to do because you don't know the moral story 100 yeah so and and people don't always do The Logical rational thing this is a house this is their home oh yeah we've both seen that several times over where this to if they did this that's the most logical that's makes the most sense but for whatever reason they do that and yeah absolutely so um I do see the fact that we have a question from Alan uh regarding uh can property tax be added to Legal collectible balance of a property that goes with foreclosure and yes the answer is yes pretty much anything you add as a collectible balance it could be Insurance it could be whatever and also read over your your note make sure what cheming cannot be added and depend the state laws um things like your foreclosure costs your attorney costs certain States like Ohio you can't add that to it right right um some states you can um in some states you can add it to your um you know your reinstatement but you can't add to your collectible um so those are the kind of things that come into play now do you have to be pristine everything you know well you have to know the fact that you can't add certain things on all the time um and things like Ohio which is the only state I don't understand why they do this is this 66 of a free appraisal value at foreclosure which means that any moment that appraisal that when you go to foreclosure in any other state you set the bid based on whatever you want to Ohio has this long place that says if I think it's three people go out they appraise the property and do 66 of what they think the property worth is the bid so if you want to bid lower you can't you give it higher but you can't bid lower um which doesn't always spare well for us no not always some and again it sounds like it should work but it doesn't and not always sometimes it does sometimes it doesn't and you don't want to get caught in that situation if you're not prepared for it if you're prepared for it and you plan for it no problem yeah but you don't want to get caught so you you've got to know and you know so going back to what you're saying before you know know um can you at what kind of Interest are you adding on at what point and all these kind of things that goes back to the origination side of things where hopefully you know how to do that and hopefully you know you know what you can do in your state or whatever state you're originating in uh you've added in the correct language and terms that can be allowed for your area or wherever you're originating so and again if you don't know that learn because it can make a huge difference and two points you said I recently had an original come up to me and says Dave um why do I need Dodd-Frank I'm selling to owner occupied person I'm allowed to do three a year I'm not gonna call any names for the case they're on right now but the problem is they didn't understand that yes you can write reading your name as an originator but if you're dealing with a home owner occupy there's a set rules done by them that needs to be followed um it's not about how many loans you can originate it's what kind of note you can put in place and if they're in a bad spot where you're a borrower in a really bad position that no can be violated the violent doc Frank laws and you really need to address that which next month will be covering a lot of uh what how to create a successful positive note but also what makes what can you add to it to make it more valuable which leads to the idea of if your originate notes and you're listening to this adding in a seller a service or fee is great yeah right and then you're bidding your non-performing assets or you're performing assets be sure to subtract the servicing fee unless the node includes a servicing fee inside the the the p i plus the servicing thing yeah it's it's kind of include in that taxes and insurance category where it's an extra fee on top of whatever the the principal and interest is but that allows you to bid higher because you don't have to subtract your 35 or your 30 or 20 whatever servicer charges for your performing asset I can literally take the entire p i which means my returns will go dramatically up so if you are bidding out of building a bid calculator be sure to subtract that but also have a trigger that you can adjust it and say listen I don't need to subtract it but this note already includes the ability to pay for the servicing outside of this p i payment right so let's get into preference just just for fun what do you like better performing a non-performing so it's funny you say that you know three years ago I could care less about performing assets I would love to do what everyone says right the rule of thumb was by and not performing and flip it over to performing and I think it was talked about so much people thought it was normal right it was a goal not something we could always achieve and get hoped and you try working things out to make it happen but I like the number form because the fact they can Skyrocket the returns ridiculous 40 50 60 70 80 ridiculous returns when not performing especially at the reinstate or if you made a killer deal with the sellers or you bought an asset where they thought the value was XYZ and you know it was much higher than that right um so when you're bidding on these assets you know make sure you look at that value of the property part of that calculator um because that may actually give you a leg up especially if you're in a local area now granted today things have changed and for me it's not about do I want non-performing performing it's what is right now going to go on sale or the best price we're buying more performers now than we did non-performing um it used to be 85 or so percent non-performing and now we flipped over now we're about 85 performing assets that we're buying simply because the return is there uh we're trickling in some partials and whatnot um and we're evaluating a large commercial deal as well but we're either buying those performing assets at a good return um or buying you know a partial situation but we're not buying a main non-performing simply because the pricing for non-performing hasn't been there recently um but we're hearing second quarter may change a lot of that yeah yeah and there are still deals out there and I'm still buying the non-performing but I agree with you and then yeah I'm buying a lot more of the Performing these days than I used to like you say I used to think on performing I mean whatever yeah but the return wasn't attractive enough to to lure me into that uh and I wonder if part of it is just I'm just getting old it's too much work too much headache it is and the Performing without question it's a much easier thing to manage um the returns aren't as high the potential return is not as high uh but it's a lot less work yeah and so that's that's very attractive to me dude looks a little bit easier right you're not so worried about the the value of the property is marked the collateral files usually secure um it all works but I wanted to stress upon the fact that if you're bidding every asset that's performing as a performing moving forward you're asking for a lot of problems and as well as we said numerous times if you're bidding on assets that are non-performing strictly based on percentage of upb or whatever and you're forgetting the interest rate you're ignoring the different state it's in or all the costs you're really missing out on the big pieces of that note um and if you're doing this with other people's money yeah you're gonna get yourself in bad um luckily when we got first got started I wasn't you I was using a lot of people's money but our asset pricing was a lot different back then a lot yeah so today's world you need to be more precise you need to know um what Texas law versus Ohio versus you know what your different action strategies and which extra strategies is the most concerning in each deal and be aware of that because if you're not you're going to be in a bad spot um moving forward with that deal and as we talk about in our class um the 10 weeks even if you want to do the five week we start off with talking about the mindset and figuring out where you're going to be and what you should start Oregon first seconds performing on and then we jump right into building that calculator truly building a crazy wild calculator that you can plug and play assets desired returns kick out your returns and know we should be with a bunch of charts that you can tag things such as documentations right such as you know what is a Texas time frame what is Florida's time frame um what states have debt licenses things like that is part of the resources that we use in our calculators to know what we should be doing with that asset and we use those tools in this in our series which you'll get a hold of to make sure that we're we're in a better spot than if we just bid wildly yeah you've got to be....