Note Investing Case Studies | Real Estate Notes Show

Episode: FULL - Note Investing Case Studies Dave's Goals and Plans: - Bought a performing loan for $23.5K with $47K unpaid balance and helped borrower refinance from 9.5% to ~4% interest rate - JKP Holdings is shifting strategy away from hedge funds and bank portfolios to focus on owner finance and bridge loans at higher yields (9-15%) - Purchased early bird tickets for DME conference and will be presenting with Nathan - Organizing ax throwing tournament at DME conference with champion prize Nathan's Goals and Plans: - Co-leading 5-week advanced education course on note investing covering asset breakdown, note math, non-performing bid calculators, and due diligence - Planning 10-week extended program after initial 5-week course for those wanting to learn source finding - Emphasizes importance of understanding Dodd-Frank regulations for owner-occupied properties requiring RMLO and underwriter involvement - Listened to lecture series on American history including baseball's cultural impact, connecting it to note investing concepts Key Recommendations: - Do not assume performing notes will continue performing - must have strategies for both performing and default scenarios - For owner-financed notes, ensure compliance with Dodd-Frank regulations by using licensed RMLO and underwriter for owner-occupied properties - Register for DME battle axe tournament the night before conference (included with ticket) - Consider owner financing notes as alternative to bank portfolios - can achieve 13-15% yields with less discount needed - Enroll in advanced 5-week education course to learn professional note math, valuation, and due diligence processes Topics Discussed: - Performing loan refinancing case study with payoff strategy - Non-performing note valuation and bid calculator methodology - Owner financing market and bridge strategy to connect buyers and sellers - Dodd-Frank compliance requirements for owner-occupied properties - Advanced education course curriculum and DME conference details - Shifting market conditions - declining yields on recent vintages (2018-2020 loans at 3-4%) Episode: FULL - Note Investing Case Studies Guest: N/A Summary: The episode presents note investing case studies and discusses advanced strategies including performing loan refinancing, non-performing note valuation, and owner financing bridges while promoting educational courses and the upcoming DME conference.

Main Topics: Note investing case studies and deal analysis, Performing vs non-performing loans, Note buyer education and advanced training courses, Owner financing and bridge lending strategies, Note valuation and bid calculator methodology, Refinancing opportunities for borrowers with good credit, Due diligence processes for note purchases, DME conference announcements and networking events Key Takeaways: A performing loan purchased at $23,500 unpaid balance of $47,000 was successfully refinanced by helping the borrower get better terms by reducing interest rate from 9.9% to 4% | Note investing requires different skills and knowledge than traditional real estate investing; investors must understand both performing and non-performing loan scenarios | Current market challenges require branching into owner financing and bridging strategies since newer loans have lower yields (3-4%) making traditional note buying less profitable | Advanced education in note math, asset breakdown, and non-performing bid calculators is essential for professional note investing | Connecting note buyers with owner financing sources creates mutual value and allows for higher yield deals (11-15% range) with reasonable discounts Keywords: note investing, performing loans, refinancing, non-performing notes, owner financing, yield analysis, due diligence, note valuation, unpaid balance, interest rates oh this is a payoff Irvin you know this I'll say when I start this this is not actually my highest return but I love the story of this uh which is helps it become a home run um so this is a performing loan that I I helped them to get paid off so this is a cool one I bought it for 23 23.5 unpaid balance of forty seven thousand and I was able to help him get refinanced and what I mean by that is uh he had a lot of things going for me had good credit uh we had a conversation early on when I bought the loan he had good credit and so immediately I'm going okay let's refinance because he was like at a nine percent interest rate something like that 99 and a half so as a high interest rate and then this was a couple years ago so interest rates were around four percent so I was saying okay listen we can get you refinanced why don't you go talk to your bank and see what what they can offer you [Music] [Applause] thank you good afternoon everybody Dave putz here from jkp Holdings alongside me as always Mr Nathan Turner how are you amen morning to you very good very good good afternoon so um let me connect for a few minutes today and do this really interesting case study we're doing today so before we dive deep into that kind of stuff um let's refresh people what we got going on um another reminder DME is coming up rather quickly I did buy my online tickets just yesterday so I'll be down there with Nathan um presenting talking and all that good stuff um yeah for sure so as of today you've got two weeks left for early bird tickets so if you want to save two hundred dollars maybe you don't that's fine but if you want to save 200 bucks make sure you go grab your ticket so check this out I put on my there it is my battle sweatshirt for those who may not know what that means that's just a reminder yeah in case people uh in case people Miss I know we've had a lot of people sign up for that which is great yeah we do have some more space for that but you do need to register uh it's included with your ticket but make sure you register for that the night before the conference I had ax throwing tournament you can either you can either compete or you can just watch uh and we're gonna somebody's gonna walk away being the the DME ax throwing Champion so we're very excited to put this on that's awesome so um there's another thing that going on um we're finally today for our next five week course which I believe except for uh the first week of May the first Tuesday uh you can go to the jkp Holdings um Advanced education part which that's a five-week intensive learning cycle where you're going to be where we talk about breaking down assets breaking down tapes breaking down all this good stuff that you knew what you need to do when you first look at tape then we dive into understanding the whole note math we call it where you're breaking down you know some for yields some for this and be able to check a seller's information but also to make offers on performing partials and whatnot and then we get into deep building a non-performing bid calculator um which most people don't have they bid based off of a upb or yield we explain why that's a dangerous dangerous thought process um should we build out we actually spend two weeks building you're gonna have homework you have a sign assignments you have tasks to do we have a couple great reviews of people who've taken the scores before it is for those who have some experience but want to build up their levels of knowledge and understanding of what this space is and how to do it in a professional manner yeah and it the importance of Education can't be overstated in this this is not real estate it's not the same thing even though you flip some houses you've owned some rentals it's not the same thing you you have to learn how to uh how to do this differently uh and and which is fine most people a lot of people come from a real estate background myself included uh but it's a different game so you got to learn the rules to this new game because it's it's a different thing absolutely so I'm glad that um we and we also run due diligence in there too so from start of having a asset coming up with a bid number what kind of due diligence do you do before once that the seller says yes to the agreement of the bid was due diligence afterwards all that is part of what we're talking about in this course um it's a weekly live session so definitely take a look at it um if you have questions email one of us will provide everything over to you that's been a lot of fun putting on for us I I know I've enjoyed it and I feel like uh just collaborating I mean every time you collaborate with somebody you learn something new and so I feel like that's been true this time as well absolutely so for those people who have know the basics know the difference between a mortgage and know know what a servicer is and really want to dive into it we can't stress enough that if you're buying a performing note don't count on continue to perform for life because it may default so you need to make sure you have both sides covered um additionally we also have um we go through with the collective group of what kind of hurdles you go through and we want you to come back every week with issues concerns problems so we encourage you guys to stay involved and watch it get a look of it um I also where is a 10-week part of it and that's for those people who want to take the next step afterwards how do you find sources and things like that so it's additional five weeks but this one's gonna be our first five weeks um and then we'll run the second five weeks uh at different time so feel free to reach out to us any questions and for those who are about to ask this question I know we always get every week this is recorded this will be on YouTube this will be on our podcast um you won't be able to see everything of course on the podcast but will be recorded and it will be there yeah awesome yeah so tune in now tune in later watch it over again whatever um I dig an email the other day asking are you guys buying things yes we are right yes um but what we're doing is a little different than we did in the past right everyone ran for hedge funds Heaven Renford Banks um and I'm gonna tell you right now when we're buying early on it was easy to buy six seven eight percent notes right but if you're not buying assets that were created in 2018 to 1920 we have three four percent it's extremely difficult to even make a profit on that because you have to discount it a lot of the sellers probably won't take the offer right so we're branching in we're as I'm sure those who've been tuning in to our uh our buy leak webinar we're doing a lot of stuff with owner finance and bridging this gap which is also collected back to the DME we're going to have owner finance people there tending and if you own a finance person you're gonna have note buyers so yeah sometimes why do you care it really is because when you're connecting the two of these two we can help each other right and no we're dealing with loans at 9 10 11 12 yield a radiation interest rates and to get that up to a 13 or 14 15 isn't that much of a discount right so you're gonna be able to snag these things and we're connecting the bridge these people don't know about no buyers and vice versa so it's gonna be awesome are coming webinars as well as the DME so I encourage you guys to join both yeah and nothing like meeting people in person it makes such a difference yeah look at them in the eye going and grabbing food together whatever like that it makes such a difference absolutely cannot be overstated so make sure you get there so this week's a little bit different we are not having guest house to those who look forward to that we are not we are having some awesome upcoming webinars um we're working on connecting an rmlo and an underwriter to come on and tell us what that means why did note buyers care about this that stuff when you're dealing with owner finance or underwriter in armalo for owner occupy properties is required right it's a Dodd-Frank regulation so we wanted to bring those people on explain what that means share a little bit more about their roles and to understand what we do if situation doesn't have them right yeah we've it's been fascinating for us as we've met and and talked with other fellow Finance people either they're not aware or they don't care or they don't understand how important it is and and so we're trying to make sure that everyone understands what exactly it means why you need this and why you should be doing it and uh yeah it's hugely important hopefully we can spread that message yeah we're struggling with the fact of having these people understand that this is required for those who we've been buying bank loans they're all regulated already so it's not a big deal it's the owner finance notes if you guys are listening this is a No-No who go to a borrower find a borrower asking for 10 down write up a contract and go with it that's a No-No like you can't do that um Dodd-Frank regulates the fact that that's owner occupied you can't just take their money and run with it um however if performing forever and it completely for you know performing no finalize that for 30 years you may never get caught yeah but when it if and when it defaults you're going to have a lot of issues so yeah on top of that it also may run be having Jeff Watson join us so yeah a lot of cool stuff coming up uh in the coming weeks uh with this idea yeah so we're gonna dive into this we did Semi-Pro uh uh webinar uh presentation about this in Paper Source uh last year but we expanded it for those who may never heard of it or saw it it's our presentation on actually our past deals numbers data points case studies right um so we're excited um I'm I'm expecting others to be excited too um this is an awesome situation to see what what we saw what we did what kind of issues we ran into and other things like that so let's jump into this can you uh Nathan's gonna run the presentation the PowerPoint for me so let me uh switch things we've learned as we've gone along and why it's important all those kinds of things all right my screen up there we are bringing it up yes all right all right yeah this is this is a fun one to put together I had initially put it together and then Dave and I worked on this together um it's kind of a fun one who's on first yeah let's get into this first things first we've got to watch a little video clip who's on first What's On Second second [Music] cool who is on first why am I [Music] [Music] those I'm sure are enjoying this if you've heard of skip before um I don't know I can't climately guys a little baseball skit for those people who uh I'm sure you know it um it's all about you know you know baseball so native has a really interesting perspective on this whole idea of baseball and how it hits home for those people who probably just gonna have to take over yeah go ahead so I I uh when I exercise I listen to different uh lecture series and I was listening to One called turning points in American history uh and it was really interesting I learned all kinds of different things it was really good I didn't learn so much about American history when I was in school since I went to school in Canada uh but it's things like the Boston Tea Party Industrial Revolution Civil War and then there was one lecture on baseball and I went really like come on that's a stretch but he made a really convincing argument um he started talking about baseball and how that has really shaped American culture uh talking about like how many movies do you know where it's all about baseball or or has some kind of baseball reference or music or comedy sketches I mean there's there are tons of them yeah expression the the thing that really I was like okay I'm in started talking about Expressions when you talk about like oh that guy's way out in that field and we're like all that you know I got a single got a double that was a home run I mean there are tons of them tons of them a bad real estate deals a strikeout right like you just like nothing to do with baseball absolutely yeah yeah and you know that one was a curveball you know whatever I mean there's so many that are out there so when he started naming off some of these Expressions I went oh that is really like talk about permeating the culture that it has taken over a good section of language and if you say that that one was a strikeout or that one's a home run people know exactly what you're talking about and so I thought that was really interesting so I'm in absolutely so um oh gurus here's the thing you come home from a baseball game and uh everyone talks about the home runs or the grand slams or like that's a thing those are the highlight reels that's all the stuff um so when you're listening to a guru if you're in a weekend class and you hear somebody talking about all these home run deals well yeah because they're the fun ones but but the reality is that most of the deals and Dave and I have talked about this a lot most of the deals we do are singles and doubles uh of course we get the home runs and those are a lot of fun and of course we get the strikeouts because that's just part of investing yeah but the reality is they're not all home runs you know and everyone can do it all right real quick just wanted to put this up here uh this is something I came up with a few years back um just kind of showing the game plan anytime you get into anything you want to make sure you've got some kind of plan this is the flow chart that I put together uh you can pause and copy it down or whatever you want to do another listen to podcasts let me know like give you a copy of it so you can see it just shoot an email over to me or Nathan yeah but just showing one of the things that I love about notes of of the many things is that there's just so many options you've got so many exit strategies compared to owning just a property where we've got tons and tons of different ways that we can get out of the node versus on a property you can rent it or sell it you can you know flip it their your options are far more limited so I love that about notes so this is just kind of an illustration of how that works awesome all right so we'll get into some case studies this one's mine yeah reo's okay so this one is a strikeout this was one that unfortunately didn't make any money Fuller Avenue is a vacant real estate so uh in that case I have to foreclose on the property because I own the note not the property so I have to foreclose to take it back bought this one for eighty thousand dollars and I knew about a property tax bill out there for seven thousand dollars so that's fine I was aware of that and no problem uh we thought that the house is worth something like 150 000 uh when it came down to it though we only sold it after we took it back and went through the whole process ended up selling it for about 110.

so not nearly as much as we thought overall uh the other factor in here and I don't know if I've got a point for it but the other factor in here is there are all kinds of City liens that were not showing up on the title report which I was not aware of so I didn't know about these City Lanes that added to the expenses end of the story is uh it was an overall loss about thirty six hundred dollars it's not the end of the world and I'm not gonna lose a lot of sleep over that but it was a small loss so don't love that kind of idea but it happens and just want to put that out there that yes sometimes you're going to lose money on these deals yeah not every deal is a golden situation right it's just it's it stinks but it's just what it is sometimes so initially there was a good plan everything looked good we had these City specific rules and things that we had to jump through and these liens that we weren't aware of and that contributed to that loss it's like a Dave's yes so we're gonna dive into another strike yesterday you know we got involved with um we got so when we look at stuff like this we really focus on the fact of we want to go into with all our eyes wide open however we've run into situations that we sometimes we know about sometimes we don't know about in this situation I was guaranteed I knew the property I knew the issue um what can go wrong I knew when I bought this asset that I was gonna have to file a Insurance claim on it talk to the seller the seller was aware of it I had the date the time everything locked in that I'm gonna go ahead and file an insurance claim to get this property we bought it with the idea of the fact that it was a vacant non-performer foreclose Indiana purchase price of 50 we knew but the water damage value is 80.

we're going to foreclose in a short period of time and kill it yeah well as you can see we end up selling it for 32 000 as is what happened we from the plan of going forward with the uh Insurance claim once we bought it we went ahead and talked to our insurance company and said we'd like to file a claim and our insurance company same one that was on the previous seller's claim said I couldn't and I didn't understand why we've filed claims before on other people and never had a problem well we found out I spoke to the seller there was nothing he could do either this was under a different kind of force Place insurance policy we did I did a web we did a webinar on that difference before but the first place policies there's two different kind of policies out there and the policies matter right and we've talked about the before but depending on which policy that fourth place is there's claims made and there's a Kearns policy a claims May policy ends when the seller uh ends and sells a deal that no longer any claim can be filed and the current space policy you can file claim anytime anytime during that policy period doesn't matter well we couldn't do anything with this we had no extra strategy right so we ended up having to take it and sell it as is with the water damage in Indiana and to top it off this is what Ira money that stinks right so we didn't expect it to be that bad but it was and it it is what it is we learn our lesson so now what in part of I'm just gonna make this a little larger for people um in part of it what we learn now is we ask every seller what type of force Place insurance they have they can get a policy just to prevent any kind of future issues concerns problems we may have right so we ask them and oftentimes is why and give you some Graces we have not run to too many issues of having claims made um there was a servicer plan but just to give you a heads up that can cause an issue so yes big strikeout I plan to file an insurance claim on this went forward with it and couldn't stop and so for both you and I let's again just be clear that's not my only loss no I had to pick one and I it was I had a hard time choosing which one yeah so I have I had another one that I I kind of hid because I said well that's not in yeah yes Mark uh there will be a ray there's a there's a replay YouTube and everything else so glad you could join us so yes so this is strikeout so we have a bunch more to go those are just jumping in here I see oh the numbers going up here we have a bunch more we're on strikeouts we're talking about Castile numbers and whatnot so we stroke out on this deal and we have a lot more strikeouts sometimes than we plan on it and sometimes we know it's a bad deal and we took a risk some deals like this one we plan I plan on getting thirty thousand dollars to fix out stop their insurance money and then sell for 80 and be golden yeah and then it just didn't happen yeah yeah FYI Beth from U.S risk will be at DC yes get some free advice while you're there yep yeah so and it happened so I and I think when Dave and I were looking at this presentation and talking about it part of what we wanted to get across is the you know the gurus when they talk about home runs all the time that's nice but that's not real the reality is sometimes you're gonna lose and sometimes it's a 40 loss and that's that's not fantastic but it happens yeah and so just be prepared nothing is guaranteed this is not a magic pill all right absolutely so yep all right let's do it all right so here's uh here's an example of a single for me and Dave will get one too so this is Clinton Avenue uh this is out in Ohio I don't remember exactly where Cincinnati Columbus somewhere like that uh man this was a tough one because I meant I really tried for this lady um we'd had some communication uh and I don't know exactly all that was going on I know she had had it she'd gone through a bunch of difficult things in her life and I really tried uh to to help her stay and and be able to take care of the house the reality was and the position she was currently in she just couldn't afford it and and I tried to do like a cash or keys and give her something to help her on her way and she just fell off and I didn't didn't get anything else going with her so it was really too bad but that it happens um I in the end it was a vacant property she eventually moved on and found somewhere else to go so I felt you know some comfort in that knowing that I didn't foreclose on a person typically when I foreclose it's on an empty house yeah it's about this on for 29.5 uh CMV on this was 60 000 market value we figured it was about 60 000 um and then we started getting calls from the city saying that there's trash here and there's things that need to get fixed up and all that uh this is when I still own the note so I first of all I thought it was kind of interesting that I was getting calls from the city as the note holder but I did so okay and I explained to them you know I don't have possession I don't really have the right to do anything in this house yet because it's not mine I can you know I can take some preventative measures but they were very understanding uh and they worked with me there and that's been my experience generally if you do get something from the city saying that there's trash or grass needs to be cut they're usually pretty understanding they just want it cleaned up and and we all understand that nobody wants to dilapidated house on their street uh but they're they're pretty understanding we were able to work uh eventually we went to foreclosure auction I was a little bit surprised that this one sold at foreclosure auction I I didn't think they would love that equity yeah but it sold for a little under 40 000.

so not a ton of of uh profit on that this on this one I made about two grand about six percent return uh so not fantastic uh but it was a win in the end I was hoping for something a little bit better I I really expected that I was going to take back this property and then be able to resell it for fifty five sixty thousand dollars so it should have been better but somebody came in at auction and that's the process and so they ended up taking it and that's how it goes sometimes so you can see not a huge one when you have Equity you can't guarantee the equity to come to you no no it sounds really nice to say oh you know I I paid whatever 29 000 for this and the houses were 60.

I'm gonna kill it or somebody will buy it for culture rocks and auction and yeah and you don't uh something I think that I did really well on this one is I've stayed in touch with with the city um and just uh we were able to kind of smooth things over with them in the meantime so we didn't incur any other liens or anything else and so that was that was a good move awesome let's look at Dave's single yes so we uh this is a ground ball right um this is a nice simple clean looking one uh per setting but ground balls aren't always so smooth and they hit a bump near there all right so we bought it as a performer it was uh secondly we're excited by it and we went ahead and it's in Texas so we're on Edgemoor um during the onion of the acid the borrower passed away right not a killer situation we're gonna deal with The Heirs ready to keep it are they gonna pay for it or whatnot well gladly enough that they paid for it a monthly then it defaulted got three six three months behind start my foreclosure process how to got reinstatement then I had to pay Force Place insurance on it because they were not paying for it they weren't doing anything um it was not escrowed try to get a hold of the daughter unfortunately the son was living there so it was really not negotiation real well um so we kind of worked through our processes here we purchased it for 17 just under 18 000 we had a great CMV of 170.

uh the first lien was about a hundred rubb was 22 000. so we bought it for just under the upb um one of the reasons was this was a 10 interest loan a 10 interest uh well yes so we didn't have the discount a lot right so those who go off 85 percent of upba whatever that goes out the Lee side this is 10 loan so I'm gonna have to buy it for a higher percent of the upb simply because that rate yeah okay all right so we bought it we have our upb we have our value uh we also have errors we're dealing with uh they stopped performing they perform and whatnot but in in the end we started two foreclosures and got two reinstatements but then we made our profit right and it's to continue to progress we're still making some money we're hoping it'll continue what's hold it down is we're paying for Forest Place insurance and we're unfortunately they're doing a two-year plan for stuff and I'm trying to get them over to one year plan but I don't want to put them over the edge so we're really kind of getting an 8.5 return right now on it which should increase we just got a reinstatement um last week so we're hoping that it will kick back up so the lesson learned which is the next bullet is the fact that performers can default right we teach this all the time your financial calculator Say everything's great but you can default and foreclosures can happen so but they also may stay performing but might be Beyond bumpy you don't know what's going to happen in these assets because it's not performing does it means you could turn performing in reinstate which means you can't mod and some performers default for any reason in this case a borrower passed away yeah so yeah so things happen this is crazy so I kind of going back to what we're saying at the beginning you know why do you need it properly underwritten and everything because this happens and then you're gonna have to deal with it and and if it's not done properly in the beginning you're going to have a hard time getting through the foreclosure absolutely and just know the fact this was actually boarded with the servicer wrong at first which even crazier it was because of the month 10 um and it moved off the arm um it was supposed to be interest uh loans the rate was would be higher so we had to do a lot of negotiations right now they've just reinstated for like six grand um we're hoping it will up for 40 200 think it was so we're hoping that it will kind of bump up everything once we get the money in hand or return maybe dropped a little higher but we're I'm expecting it to reinstate default reinstate default reinstate default and just that bumpy ride and then are you just gonna hang on to this one just knowing that yeah it's gonna be the pattern yeah you know it's a situation where it's low upb and all that stuff um we'll hope that it will just kind of it with the reinstatement we should get up to like 11 12 which is fine we'll be okay with that um but yeah eventually it'll pay off and then yes all done but yeah yeah okay doubles we're gonna hit some doubles down we're gonna get a little bit farther around that Baseline a little further in a little bit more on the what right whatever we were on the who base now we're on the what yeah that's on second yes so this is a this is one it was a non-performing uh loan that I just I resold so this was kind of an interesting one uh loop and drive this was in Reno Nevada uh which is already kind of unusual we don't see a lot of West Western half of the country notes so this is kind of a cool one um the plan on this was I was going to foreclose it was a vacant property same kind of thing I was gonna foreclose and then take it to sale purchase price of 72 000 um market value 165 and this is a mobile home and as a general rule I don't usually deal with mobile homes and this is part of the reason why I had dealt with a mobile home years ago and I thought that I'd learned my lesson I knew that I needed um both the title of the like the land and of the actual property because mobile home is mobile so it's you know oftentimes it's registered as a vehicle rather than a home yeah so I knew I needed those two documents and so as I was doing the due diligence on this I saw that I had both of them I'm like okay good we're in the clear I've done this before now I've learned my lesson ready to go this looked like again it was going to be another home run um what ended up happening is as we went along I was working with a local realtor who would give me the the property value and she came back to me and said you know there's an issue with this I said oh really like what what do you mean and she says well you don't have the proper documentation to make it a a real property I'm like no no I've got the two documents so you know I've got the title and the title we're all good it's all it's everything squared away we're cool she's like well in Nevada there's another part where it needs to be registered a different way or I don't remember exactly what it was but there was a second part that hadn't been done I'm like oh my goodness are you kidding me in the end I was able to sell it to another buyer I sold the note off to another buyer somebody who is local to Nevada who understood uh all the rules for the for you know the special Nevada and mobile home rules uh and overall I got a pretty nice profit 20 or sorry twenty thousand dollars twenty seven percent that's pretty good and I'm I'm fairly happy with the 27 return this all took place in less than a year so if you do that as an annualized that's going to jump even more but just Plano or Roi that's 27 percent so um a part of this one I think was just recognizing my own shortcomings uh I ignored both the state rules and my own rules I I had said I'm not going to do any more mobile homes and then this one came up and I'm like yeah but look at those numbers that looks fantastic and I already know what I'm doing so we're all good I'm gonna do this and luckily I was able to get out with a really decent return uh but I think I lucked out on this one so I I count my lucky stars and move on to the next but but again most of the deals that we do are going to be singles and doubles yes so yes we're going to show you some home runs and they're awesome and they're yeah fun and we love it when that happens but most of the time same as you go to a baseball game you're going to see singles and doubles you don't see a ton of home runs yeah and singles and doubles are okay and you know the home runs are great stories and yeah like I said before following your gurus are always okay you're right um but getting single doubles what this business is all about if you're swinging for the fences you're going to strike out and or the balls get caught on that warning track right right so a lot of problems can happen when you go for those big risky things if I can get a single double all the time I mean you're gonna get your you're going to get your returns you're gonna get around 10 12 I mean it's not bad right so if we get a little bit higher it's even better right so when we get to 20s and 30s and 40s that's really good return on an annual basis because think about this if you're if you're at all borrowing any kind of money at an interest rate of 8 10 12 and you're getting a 20 that's great yeah right so think about from that perspective yeah absolutely all right let's check out your double Dave all right we're going with doubles so a name is double in the corner so I'm sure you've lost baseball you can hit a double way in the corner you can get second base so we're on the what right this non-performer was owned um so Greg gas question could you let us know how quick your turn on these was great question um I did not actually put it in I'll see if I can bring this up and we can add it to the other ones but yeah I appreciate your question Greg so the last one he just said it was about uh less than a year um this one here was um I can bring it up too I think it's just 18 months or so um uh I'll see if I can find it real quick for you guys so you can kind of see what it looks like um or whatnot so but really that's that's a great point because again notes are fantastic and I love the business and I'm going to do it forever it's not get rich quick yes average turnaround time for me and you can say yours Dave but average turnaround for me is about 13 14 months if I'm going to take something to resell it it's more than a year so yeah don't think you're gonna make a million dollars day one month so so I brought I was as Nathan nicely uh kind of stalled me for a second I was able to bring it up this next one yeah um we did in about we have had 0.9 months so that was a nine years so that was uh just over 11 months right so in 11 months um we went into the fact that this double here was actually the the loan the the property was owned by an HOA but the borrower defaulted they were still subject to us right because they were behind us in the situation so we took over the non-performing loan and we had a foreclosure in first position right so when we looked at the stuff we bought this knowing the fact that the HOA owned it I had to foreclose on it because the bar was still on the lung right they were renting it out doing whatever they're going to do with it knowing the fact that we're where are where we are so this was in Florida um we then filed for foreclosure and I had this one in here for some learning lessons for those who need not known I'll explain in a second what we did we did a foreclosure with non-merger language what's that mean non-merger language means that the the the debt is removed from the the the instrument the security so removing the mortgage and notes separated them why did I do that I can now foreclose but then I could take ownership of the property at the same time right so I'm just foreclosing on the debt to get rid of the title problem on the property but I'm actually owning the property during the process so I'm foreclosing on myself pretty much right so I did the foreclosure while owned the property and rehabbing it took the risk we rehabbed the property we bought this property um this is 2017 I think the date was for this month so we bought it knowing the fact that the value of the property or CMV on this one was 50 000.

the condo was vacant when we bought it but we were going to rent it out we're going to fix them do all good stuff owned by the HOA remember so we had to get a deep and Lou from the HOA pay the money get the deal into our name so we can own it so we can start doing rehab work on it now any rehab work we do we can lose everything on it at the auction so our next line we we purchased it for seventeen thousand dollars right the unpaid balance is 84. we're in great shape the reason we bought it for 17 was based actually on the value of the property we don't bid based on that but the reason it's not higher based on upb is because of the fact the value is 50 000.

yeah we did all this work in a lot of expenses and we ended up selling it for fifty nine thousand dollars well the next line shows our rehab and our legal costs was 27 000 are all in including our purchase price this was forty four thousand dollars All In okay but because we had to buy it from the HOA we'd negotiate with them we bought it for three thousand dollars in Dean Liu they know they didn't have any kind of ground to stand on and HOAs don't really want to play the real estate game they just want to get their HOA money right so that was a really interesting part of it so overall profiting was eight thousand dollars that we end up selling it to 59 and we made a 17 return great situation this happened about place of about 11 months um we were thinking about renting it um we sold it quick too so we could have sold for a little bit more but we want to get rid of it um this was just before uh some other stuff going on with some business stuff so we wanted to get that kind of process going um we understood the fact that this is I didn't know what I didn't know so I hadn't understand that the the state rules also applied to the situation not only to me but I had to use the state rules of being able to do deep and lose also the non-merger language right and the fact that I'm terrible at rehabs I hate them I don't like them my partner loves them right so I would have sold this as is and probably lost money but I recognize the fact that doing a bad job of what I am I let the rehab situation take place I let the non-merger language take place own it fix it up enable sell it because we're able to do it crunch time so we learned some stuff same thing with with Nathan's double I took his words because we learned the same kind of concept here that state rules of non-merge language is not Nationwide it's really just a specific location in certain States but also knowing the fact that rehabbing even though it's not my back pocket I want to sold it for less and let's sold it as is it would have done a bad situation for this note so we left we did rehab it we spent twenty seven thousand dollars in rehab and legal costs a lot of money yeah yeah overall 17 I mean that's decent that's yeah that's a nicer absolutely yep absolutely so I'm going to see those more often we're rounding the bases we're getting for those who didn't watch the beginning we did a Albany Costello's bit in the beginning of who's on first so we're rounding third base and we're getting to our big home runs go ahead and get in there get in there triples I mean and you get triples they happen uh this is a good one Mill Street this is in Illinois somewhere I forget exactly where just right close to uh St Louis Missouri just across the river there uh but anyway a Mill Street forget the name of the town this is a non-performer npl to a re-performer that I then sold so a few moving Parts here this one was a lease option uh and some people have heard me talk about that before I buy lease option contracts as well because I can get them in a good deal and then I convert them to something that's more sellable so I converted these guys to a contract for deed a cfd a really nice couple and they were very willing to do that and they saw that all the benefits and that was fantastic so I bought this one for 27.5 unpaid balance 54 000 and and it's really interesting when I go through with the borrowers and I compare the lease option contract to a contract for deed and I show them how much money that they can save over time by converting to a percentage rather than a flat fee coming off of their their monthly payment going towards principal I it's a no-brainer it's a real easy conversation to have and they they jump on that because they they see immediately you know you mean I'm going to save how much money over and I'm going to pay off my house that much faster oh my goodness so a real easy thing to convert um I haven't had really any issues with that um once this was converted I sold it to another investor um as a re-performing note for 39 000 plus I'd already see 3 500 in income overall um 25 000 profit on a 43 return that's great and and love it when that happens again these are not the deals we see every day but it happens yeah uh time frame on this one uh this was right around a year uh if I remember correctly but yeah it was right around a year but it just it takes time and all these things take time it's it's nice to think that you can just you know wrap it all up in a month but it takes time so get used to it uh this one this was kind of the plan from the beginning uh one of the things we're able to do that that worked really well is I increased the interest rate uh and and kind of sort it because they didn't actually have an interest rate before because it was a lease option so because I was converting it I was able to set it I believe we set it at like nine percent uh which makes it very attractive to sell off to somebody else and so I did not take a ginormous discount in order to sell it sure so you know that's another one uh again doesn't happen all the time and there's definitely work involved it's not just a super easy get it all done in a month or two it takes time but it worked out very well in the end so we had a question from uh Jose on Facebook this is streaming Facebook and Linkedin and we'll be recorded and sent to YouTube and our podcast as well so the question from Jose is that his understanding that node holders um decide when they decided foreclose that they're only entitled to the dead owed not the property so we're gonna go a little bit more into um able to keep the property um and collecting data foreclosure if the so thank you for asking that question so when we a notice created it's secured by a secured debt secured by a property so the bank or us has the ability to recapture that security instrument like your security of the loan which is the property and take it back now if we go to foreclosure auction right and we sell it for we can sell it for as much as up to the up legal balance which is upb plus any additional cost like foreclosed legal costs as well as like uh back taxes and any kind of stuff like that we can sell up to that number we could add Capital cash and go higher if we chose to now if it doesn't sell at the Foreclosure auction this is not for every state per mind like like Ohio is a little different but we won't get into that right if you go to if in the state situation if that goes to auction and no one bids on it even if there's equity which I've has durations when it happened debt loan goes to the highest better which is the bank because we set the minimum okay we set the minimum and we now are the quote unquote winners Walters Equity or no equity we get the property back yeah right so a lot of times when there's Equity it usually sells the auction yeah but not all the time so yes you can get the property back in a note foreclosure you're taking the asset security you're getting your money back but you can now the asset sells higher right than the legal balance the borrower actually cannot get that capital for themselves there's some accuracies that goes along with that but it can happen so hopefully Jose they answer your question feel free put in the chat if it uh any additional so we're gonna jump into uh my triple here so let me just comment on that so and I know where Jose is coming from that's exactly what I used to think is like this is a great way to get property it can be uh the more that I've gotten into notes the more I realize I don't want the property so I have I've had this many times where I'm going through foreclosure let's say the house is worth a hundred thousand what's owed to me is 120.

I will purposefully I will try to like I can choose what my minimum bid is so I would put it in at like 80. uh because I'm I'm trying to gauge what's just enough equity that somebody will buy this at auction because I don't I don't actually want to own the property if I own the property then I've got to get into it then I don't know what the condition is inside I've got to deal with trashing it out at the very least um property taxes now become my problem uh all these things that I just I don't want to deal with so if I can if I can work it so that I can just sell it at auction and never actually have to take possession of the house or ownership of the house oh that's a liability yeah I want to get rid of tenants toilets and turnovers right I don't want to be in that position um I lose appreciation but the same time I'm becoming a bank banks are not landlords they don't play that game right borrow money for a cheaper rate because they take your money from a savings account right and they give you four but then they loaned it out at eight yeah and do it over and over and over and over again right so you're welcome Jose um it's a great question you have um we have this question quite often and we're gonna have more and more we encourage you to check out DME in June if you're not attending uh to Nashville uh we're gonna have a lot of owner finance and a lot of note buyers coming together so hopefully uh if you had a question about that let us know and if you just want to learn more about notes that's the place to be Diversified mortgage expo.com okay go yeah you got it and we have an advanced training class coming in next week that's another plug too so anyway let's go yeah we're in the triple we're into the Outfield Gap right triple so in this situation we bought the note with the idea that um we love the area uh it's a great place for us uh this is in Florida um and we knew the fact that we're going to get information that was awesome because of few reasons when we look at the file the seller of the new already got a deed and Lou done with the borrower right they already had non-merger language already done and was already in the process of foreclosing so we picked up a loan in the middle foreclosure that we owned the property now we can rent it out we can do what we want because now we own it deed in Louisville foreclosure allows us to literally own the property deeded to us and not for clues in their name so it doesn't hurt them before closing ourselves right while we did that we rehabbed it again we rented it out as well what an awesome situation that we can really go into and have a property now Dean Lou foreclosure is not available in all states right um we go into our advanced class which states are available or not but it is so this is in Florida a place called Locus app we purchased it knowing that is in foreclosure already established we purchased it for 21 600.

our value on it was around 50 60 000. we end up having 48 000 in expenses which included fixing the house up okay great however the upb was a hundred thousand dollars uh at the uh when we bought it we bought it based on the fact that we thought it would sell at auction and we were hoping it wouldn't because we put some money into it um and we were kind of crossing our fingers yeah but we want to rent it out while we foreclose on us this process this deal took two years to do this is an idea it wasn't uh fully through foreclosure I had no judgment it wasn't that far into it but it was really interesting to get into this deal in the beginning of foreclosure rent it out make some money while we're foreclosing on it have money coming in it was a very weird shaped house too so like it was like an eight it was like an odd law minute away front was wide middle hallway it was just very odd so yes so we went ahead and we sold it uh we finished our foreclosure rented it out then we sold it for 120 000 nice really sweet situation we held it for two years so our overall profit was forty seven thousand dollars including the ten thousand dollars in rent that we got for an angle Roi of 68 percent very good right we undervalued it because of the asset prior to foreclosure the value of the property was not in good shape so our value is 60 Grand but once we rehabbed it and did everything we could do with it it was over 120 000 and for those who don't know this is the one thing we love about Florida while you're foreclosing value usually go up so what really benefits us while we're in foreclosure to hold the asset because it the increases in value so that's pretty cool so yeah well that's really cool yeah awesome oh do you have another one uh are we skipping that one to get just go right to um all right bottom line nice work all right oh this is payoff Irvin you know this I'll say when I start this this is not actually my highest return but I love the story of this uh which is helps it become a home run so this is a performing loan that I helped them to get paid off so this is a cool one I bought it for 23 23.5 unpaid balance of 47 000.

and I was able to help him get refinanced and what I mean by that is uh he had a lot of things going for him he had good credit uh we had a conversation early on when I bought the loan he had good credit and so immediately I'm going okay let's refinance because he was like at a nine percent interest rate something like that 99 and a half so as a high interest rate and then this was a couple years ago so interest rates were around four percent so I was saying okay listen we can get you refinanced why don't you go talk to your bank and see what what they can offer you uh so he came back and he said yes I can do that um here's the issue is that the bank is going to require they had done a home inspection and they required him to replace the furnace in his house uh and and to make it a little extra complicated he had some health issues that meant that he couldn't just do like the cheapest furnace out there he needed like a high efficiency something or other that was going to help clean the air uh for his health condition which could possibly put eleven thousand dollars so it was not a nothing expense and he didn't have an additional 11 000 sitting around um so when I got that story and knowing that the bank is ready to go as soon as this is done I actually fronted the money I was able to pay for his brand new furnace in his house uh and then when he came back and was able to refinance I got all of that money back wow so it I just it was an awesome story I love being able to help um overall profit on this uh a little over 25 000 but an 87 percent expenses in so it's a killer deal and and what made it even better is I was able to help somebody and that that feels really good so that made that even better I like that one we hope that these stories kind of help you kind of give you light of what the situation is it's it is a it can be a passive investment strategy here but there's a lot of stories that go along with our assets right it's you know when you go to conferences you're gonna hear tell stories left and right so it's really kind of cool to hear about it um it makes it actual real life it's not just a numbers game at times yeah and we have a lot of stories like this oh yeah all the time um one of the questions Greg has did you put another lien on it for 11 000 you know I didn't um I oh it was a gentleman's agreement we had a pretty good relationship and uh and I I did add it to uh so I didn't have anything uh like an additional lean but I did say you know we had an agreement kind of in writing over email um and I knew that uh oh and I got a copy of the receipt I had to receive myself so I I was able to add that to the payoff without any problem because I had proof of of the additional expense um so it was it was you could make it a little more uh formal and maybe I should have but I I knew the situation I knew the guy and I felt comfortable going ahead and doing that so I felt good about that but this one so I said at the end of this one it was a situation where you know you're up to bat and then you take a step outside of the batter's box just to kind of evaluate everything for a second then step back in and okay here we go and it ended up being a really good payoff awesome that's good to hear so we're gonna we're gonna step onto our home run for myself I think this was a really cool and this story was really interesting um um unfortunately this was uh he has helping people is an awesome thing this was a situation I thought I was gonna be a really big help um being an old landlord dealing with tenants but this was a reverse duration we literally were helping the tenant get a hold of the landlord crazy right so we bought this thing um go one uh one up I think it is go welcome one we're gonna do the other one should we try this one uh should be the number two one the number two yeah here we go this guy it's uh yep cool all right sorry about that guys uh hidden the the PowerPoint slide I think you're running it manually so it's all good so we look at the fact that this situation is um we bought this knowing the fact this is a non-performer uh and I thought I was gonna foreclose um and the technique was having a hard time I did door knock which I don't do as often anymore as I used to um but we get a hold of the tenant and we said listen we would like to talk to the the landlord about what's going on we weren't going to tell much we just wanted in the tenant said I'd love for you to let me know if you can get a hold of landlord I've been paying my my rent payment but I can't reach her we said ah so my door knock says here's new address this is great can you go knock at their door not a problem so whatever the door knocking the bar the borrower was living in our own house she had worked nights the door knocker thought she had something happened to her so the door knocker called the police had the police show up try to get her open the door and she just was tired from working overnight not a really good situation to be in but it is what it is but we then got the borrower to reinstate put five grand down working it awesome we did notice when we were working it that the HOA had started a foreclosure just like three years ago but I ignored it I thought what situation went HOA they just there's the barn into Arlene especially in Ohio there's no super lean ruling what are we gonna do so we went ahead and um HOA then all of a sudden within I think it was two months after us doing this uh getting reinstated money like December February complete the Foreclosure that has judgment and standard auction date hmm we found out not worrying about it at all that the Arlene or first lien was never agreed in the these judgment settlement to be part of it all we're not named at all they had been sent letters never responds to the the Foreclosure action by the HOA so we are actually out of it completely we lost our entire position on this note wow we then asked the HOA if we can jump into second session so we had a little bit of a deal we had to pay off it was like six grand or so we had to pay um the HOA we also didn't factors come with some of the things like are the angle tax amount I had to pay for that I didn't know it at the time it was an older deal and I didn't know what time I had to pay you know my taxes uh uh one foreclosures and even think about adnet in my expense situation so we got the borrower to we perform she got foreclosed on right then we ended up having to um we had a tenant who's in the property so that we bought it for twelve thousand we had fourteen thousand dollars expenses including I think it was like eight thousand for um foreclosure uh taxes and and then you got a little rehab you had to do we then went ahead and um we had our tenant in there for 800 a month so we can't kick the tenant out they're active they're current so we allowed them to stay in the house we had thought the house value was probably around you know fifty sixty thousand it was like it was a not a condo but townhouse area it was a situation the HOA was friendly with us for good with things the upb was forty eight thousand dollars we ended up selling this thing for sixty eight thousand dollars and we are into the deal for 26.

nice including renting it for eight months our profit on this thing was forty two thousand dollars over 18 months a hundred and sixty one percent return we basically learned from the situation that we had a confused landlord because she didn't know how to deal with tenants and we're gonna help her out we had a great local value we knew the fact this was a basic Hondo Plex area and the value is pretty solid this is our highers and I added at the end our highest Roi looked at through it was 697 not this deal but I kind of flew it on the end of this this slide our highest ever I looked at it was about 697 return nice right um boring story but well not boring story but it was both the tenant was happy that we actually were responding to things the landlord was happy to get out of it she had taken a um a course on being a landlord and hated it yeah um single female uh but it was really interesting and then we sold it it was so easy to sell this thing we had multiple offers I think we listed like 60 got 68 in a matter of 18 months and made a killer return well that's really cool yeah Roi is not boring you're right Greg Roi is not we don't calculate our deals based on Roi we calculation like irr and things like that but yeah which we thought in our advanced class but yeah um again we can show these home runs I had another one like Nathan was showing uh that was another good returner but these can happen all the time right but they can also strike out all the time too so if you bought one and struck out your next one may be a home run you don't know yeah yeah so just yeah settle in because it's the the whole game you're gonna win some you're gonna lose some and sometimes it's gonna be a huge trans slam and other times it's it's a total strikeout and everyone should the only way to learn is by doing and networking with others getting out there and talking to other people yeah absolutely so around on the bases like you say Dave one's going to be a strikeout one's going to be a single just keep going keep going because those home runs are definitely out there and the more experience you get the more those seem to come around um but just just keep going keep playing the game and watch your coaches man yes this you can't just walk into this business and we talked about this a little bit before you can't just walk into this there's there's too many rules there's too many things uh we even I mean we talk all the time Dave says they're completely separate but we bounce ideas off each other all the time yeah absolutely just to see you know what do you think about this have you ever run into that yeah all it's all communicate yeah networking is a big thing in this business yeah and there's nobody that's a thousand I like Nathan's uh you know and watch for science if you think something looks weird act weird ask questions ask your attorney or whatnot yeah yeah there's plenty of people out there that can help uh help coach you along so even if they're not necessarily paid but there's a lot of people that can help you figure stuff out absolutely I think this is the last side I just just don't spit it's gross just don't disrespect the game and part of it is learning the rules you can't just go off willy-nilly half [ __ ] like you you've got to learn the rules of this game because it's yeah it's it's not good and if you get any you disrespect too much you're gonna get thrown out of the game yeah so make sure you respect the fact the borrowers respect the sellers respective vendors to the expectations are realistic right yeah um you can say listen I expect this to be done in two weeks but you have to be optimistic and say listen this may take longer I don't know yeah ask for questions you know set expectation for yourself but also for other vendors hey if I don't hear from you in two weeks uh I'll be giving you a call is that okay and they say Well it may take three weeks so can we do three weeks just respect each other yeah right you want to respect borrowers right if you try doing something that will hurt the borrower you're gonna get beat up later yeah yeah you're gonna get hurt so just don't do it just be yeah be a good person that's it absolutely so I know you have two little little things there but yeah it's good to see the fact that um you know we we want to make fun of the fact that you know this is a you know around the base baseball thing and now but Costello Beginning video was kind of an introduction the fact that we're going for all the bases right this is all about connecting with other people um and networking and understand the space ask questions returns will happen and returns will fail but we want to show you the gamut of everything we've learned and we will strike out again and I will hit home runs again it just happens right absolutely we try to prevent them we don't know what we're going to want to do so those people say I'm buying this loan because it's going to perform or it's not gonna perform because I want the property it doesn't mean you're going to get the property they reinstate you ain't getting the property yeah I mean how many times have you seen that day where you're going down one road and like oh for sure this is the way it's going to end up and then it does absolutely it takes the detour and you go oh didn't see that coming yeah like it didn't what you expected right and things just happen borrower dies all the time what can I do yeah so well guys I appreciate you guys jumping in there for a little while and spend some time with us and just kind of you know being there with us um so if you have any questions Curiosities what not please reach out to us you have any questions about that PowerPoint slide um or deals examples you can post in one of our groups um we both have two of them groups that are going on but you can post anywhere and we encourage you to join up with DME that's coming in June um and we have our Advanced Training which will be coming up in a week I'll be probably sending emails out probably next couple days um it's a five week intense course but you will learn a lot and we'll have one-on-one conversations about different things so yeah guys I appreciate you guys joining me of course Mr Nathan Turner hopefully it's nice weather we are sunny skies and gorgeous outside um but uh hopefully everyone has a great weekend Happy Hunting happy investing um but stay in touch yeah absolutely thanks everybody take care [Music] oh this is a payoff Irvin you know this I'll say when I start this this is not actually my highest return but I love the story of this uh which is helps it become a home run um so this is a performing loan that I I helped them to get paid off so this is a cool one I bought it for 23 23.5 unpaid balance of forty seven thousand and I was able to help him get refinanced and what I mean by that is uh he had a lot of things going for me had good credit uh we had a conversation early on when I bought the loan he had good credit and so immediately I'm going okay let's refinance because he was like at a nine percent interest rate something like that 99 and a half so as a high interest rate and then this was a couple years ago so interest rates were around four percent so I was saying okay listen we can get you refinanced why don't you go talk to your bank and see what what they can offer you [Music] [Applause] thank you good afternoon everybody Dave putz here from jkp Holdings alongside me as always Mr Nathan Turner how are you amen morning to you very good very good good afternoon so um let me connect for a few minutes today and do this really interesting case study we're doing today so before we dive deep into that kind of stuff um let's refresh people what we got going on um another reminder DME is coming up rather quickly I did buy my online tickets just yesterday so I'll be down there with Nathan um presenting talking and all that good stuff um yeah for sure so as of today you've got two weeks left for early bird tickets so if you want to save two hundred dollars maybe you don't that's fine but if you want to save 200 bucks make sure you go grab your ticket so check this out I put on my there it is my battle sweatshirt for those who may not know what that means that's just a reminder yeah in case people uh in case people Miss I know we've had a lot of people sign up for that which is great yeah we do have some more space for that but you do need to register uh it's included with your ticket but make sure you register for that the night before the conference I had ax throwing tournament you can either you can either compete or you can just watch uh and we're gonna somebody's gonna walk away being the the DME ax throwing Champion so we're very excited to put this on that's awesome so um there's another thing that going on um we're finally today for our next five week course which I believe except for uh the first week of May the first Tuesday uh you can go to the jkp Holdings um Advanced education part which that's a five-week intensive learning cycle where you're going to be where we talk about breaking down assets breaking down tapes breaking down all this good stuff that you knew what you need to do when you first look at tape then we dive into understanding the whole note math we call it where you're breaking down you know some for yields some for this and be able to check a seller's information but also to make offers on performing partials and whatnot and then we get into deep building a non-performing bid calculator um which most people don't have they bid based off of a upb or yield we explain why that's a dangerous dangerous thought process um should we build out we actually spend two weeks building you're gonna have homework you have a sign assignments you have tasks to do we have a couple great reviews of people who've taken the scores before it is for those who have some experience but want to build up their levels of knowledge and understanding of what this space is and how to do it in a professional manner yeah and it the importance of Education can't be overstated in this this is not real estate it's not the same thing even though you flip some houses you've owned some rentals it's not the same thing you you have to learn how to uh how to do this differently uh and and which is fine most people a lot of people come from a real estate background myself included uh but it's a different game so you got to learn the rules to this new game because it's it's a different thing absolutely so I'm glad that um we and we also run due diligence in there too so from start of having a asset coming up with a bid number what kind of due diligence do you do before once that the seller says yes to the agreement of the bid was due diligence afterwards all that is part of what we're talking about in this course um it's a weekly live session so definitely take a look at it um if you have questions email one of us will provide everything over to you that's been a lot of fun putting on for us I I know I've enjoyed it and I feel like uh just collaborating I mean every time you collaborate with somebody you learn something new and so I feel like that's been true this time as well absolutely so for those people who have know the basics know the difference between a mortgage and know know what a servicer is and really want to dive into it we can't stress enough that if you're buying a performing note don't count on continue to perform for life because it may default so you need to make sure you have both sides covered um additionally we also have um we go through with the collective group of what kind of hurdles you go through and we want you to come back every week with issues concerns problems so we encourage you guys to stay involved and watch it get a look of it um I also where is a 10-week part of it and that's for those people who want to take the next step afterwards how do you find sources and things like that so it's additional five weeks but this one's gonna be our first five weeks um and then we'll run the second five weeks uh at different time so feel free to reach out to us any questions and for those who are about to ask this question I know we always get every week this is recorded this will be on YouTube this will be on our podcast um you won't be able to see everything of course on the podcast but will be recorded and it will be there yeah awesome yeah so tune in now tune in later watch it over again whatever um I dig an email the other day asking are you guys buying things yes we are right yes um but what we're doing is a little different than we did in the past right everyone ran for hedge funds Heaven Renford Banks um and I'm gonna tell you right now when we're buying early on it was easy to buy six seven eight percent notes right but if you're not buying assets that were created in 2018 to 1920 we have three four percent it's extremely difficult to even make a profit on that because you have to discount it a lot of the sellers probably won't take the offer right so we're branching in we're as I'm sure those who've been tuning in to our uh our buy leak webinar we're doing a lot of stuff with owner finance and bridging this gap which is also collected back to the DME we're going to have owner finance people there tending and if you own a finance person you're gonna have note buyers so yeah sometimes why do you care it really is because when you're connecting the two of these two we can help each other right and no we're dealing with loans at 9 10 11 12 yield a radiation interest rates and to get that up to a 13 or 14 15 isn't that much of a discount right so you're gonna be able to snag these things and we're connecting the bridge these people don't know about no buyers and vice versa so it's gonna be awesome are coming webinars as well as the DME so I encourage you guys to join both yeah and nothing like meeting people in person it makes such a difference yeah look at them in the eye going and grabbing food together whatever like that it makes such a difference absolutely cannot be overstated so make sure you get there so this week's a little bit different we are not having guest house to those who look forward to that we are not we are having some awesome upcoming webinars um we're working on connecting an rmlo and an underwriter to come on and tell us what that means why did note buyers care about this that stuff when you're dealing with owner finance or underwriter in armalo for owner occupy properties is required right it's a Dodd-Frank regulation so we wanted to bring those people on explain what that means share a little bit more about their roles and to understand what we do if situation doesn't have them right yeah we've it's been fascinating for us as we've met and and talked with other fellow Finance people either they're not aware or they don't care or they don't understand how important it is and and so we're trying to make sure that everyone understands what exactly it means why you need this and why you should be doing it and uh yeah it's hugely important hopefully we can spread that message yeah we're struggling with the fact of having these people understand that this is required for those who we've been buying bank loans they're all regulated already so it's not a big deal it's the owner finance notes if you guys are listening this is a No-No who go to a borrower find a borrower asking for 10 down write up a contract and go with it that's a No-No like you can't do that um Dodd-Frank regulates the fact that that's owner occupied you can't just take their money and run with it um however if performing forever and it completely for you know performing no finalize that for 30 years you may never get caught yeah but when it if and when it defaults you're going to have a lot of issues so yeah on top of that it also may run be having Jeff Watson join us so yeah a lot of cool stuff coming up uh in the coming weeks uh with this idea yeah so we're gonna dive into this we did Semi-Pro uh uh webinar uh presentation about this in Paper Source uh last year but we expanded it for those who may never heard of it or saw it it's our presentation on actually our past deals numbers data points case studies right um so we're excited um I'm I'm expecting others to be excited too um this is an awesome situation to see what what we saw what we did what kind of issues we ran into and other things like that so let's jump into this can you uh Nathan's gonna run the presentation the PowerPoint for me so let me uh switch things we've learned as we've gone along and why it's important all those kinds of things all right my screen up there we are bringing it up yes all right all right yeah this is this is a fun one to put together I had initially put it together and then Dave and I worked on this together um it's kind of a fun one who's on first yeah let's get into this first things first we've got to watch a little video clip who's on first What's On Second second [Music] cool who is on first why am I [Music] [Music] those I'm sure are enjoying this if you've heard of skip before um I don't know I can't climately guys a little baseball skit for those people who uh I'm sure you know it um it's all about you know you know baseball so native has a really interesting perspective on this whole idea of baseball and how it hits home for those people who probably just gonna have to take over yeah go ahead so I I uh when I exercise I listen to different uh lecture series and I was listening to One called turning points in American history uh and it was really interesting I learned all kinds of different things it was really good I didn't learn so much about American history when I was in school since I went to school in Canada uh but it's things like the Boston Tea Party Industrial Revolution Civil War and then there was one lecture on baseball and I went really like come on that's a stretch but he made a really convincing argument um he started talking about baseball and how that has really shaped American culture uh talking about like how many movies do you know where it's all about baseball or or has some kind of baseball reference or music or comedy sketches I mean there's there are tons of them yeah expression the the thing that really I was like okay I'm in started talking about Expressions when you talk about like oh that guy's way out in that field and we're like all that you know I got a single got a double that was a home run I mean there are tons of them tons of them a bad real estate deals a strikeout right like you just like nothing to do with baseball absolutely yeah yeah and you know that one was a curveball you know whatever I mean there's so many that are out there so when he started naming off some of these Expressions I went oh that is really like talk about permeating the culture that it has taken over a good section of language and if you say that that one was a strikeout or that one's a home run people know exactly what you're talking about and so I thought that was really interesting so I'm in absolutely so um oh gurus here's the thing you come home from a baseball game and uh everyone talks about the home runs or the grand slams or like that's a thing those are the highlight reels that's all the stuff um so when you're listening to a guru if you're in a weekend class and you hear somebody talking about all these home run deals well yeah because they're the fun ones but but the reality is that most of the deals and Dave and I have talked about this a lot most of the deals we do are singles and doubles uh of course we get the home runs and those are a lot of fun and of course we get the strikeouts because that's just part of investing yeah but the reality is they're not all home runs you know and everyone can do it all right real quick just wanted to put this up here uh this is something I came up with a few years back um just kind of showing the game plan anytime you get into anything you want to make sure you've got some kind of plan this is the flow chart that I put together uh you can pause and copy it down or whatever you want to do another listen to podcasts let me know like give you a copy of it so you can see it just shoot an email over to me or Nathan yeah but just showing one of the things that I love about notes of of the many things is that there's just so many options you've got so many exit strategies compared to owning just a property where we've got tons and tons of different ways that we can get out of the node versus on a property you can rent it or sell it you can you know flip it their your options are far more limited so I love that about notes so this is just kind of an illustration of how that works awesome all right so we'll get into some case studies this one's mine yeah reo's okay so this one is a strikeout this was one that unfortunately didn't make any money Fuller Avenue is a vacant real estate so uh in that case I have to foreclose on the property because I own the note not the property so I have to foreclose to take it back bought this one for eighty thousand dollars and I knew about a property tax bill out there for seven thousand dollars so that's fine I was aware of that and no problem uh we thought that the house is worth something like 150 000 uh when it came down to it though we only sold it after we took it back and went through the whole process ended up selling it for about 110.

so not nearly as much as we thought overall uh the other factor in here and I don't know if I've got a point for it but the other factor in here is there are all kinds of City liens that were not showing up on the title report which I was not aware of so I didn't know about these City Lanes that added to the expenses end of the story is uh it was an overall loss about thirty six hundred dollars it's not the end of the world and I'm not gonna lose a lot of sleep over that but it was a small loss so don't love that kind of idea but it happens and just want to put that out there that yes sometimes you're going to lose money on these deals yeah not every deal is a golden situation right it's just it's it stinks but it's just what it is sometimes so initially there was a good plan everything looked good we had these City specific rules and things that we had to jump through and these liens that we weren't aware of and that contributed to that loss it's like a Dave's yes so we're gonna dive into another strike yesterday you know we got involved with um we got so when we look at stuff like this we really focus on the fact of we want to go into with all our eyes wide open however we've run into situations that we sometimes we know about sometimes we don't know about in this situation I was guaranteed I knew the property I knew the issue um what can go wrong I knew when I bought this asset that I was gonna have to file a Insurance claim on it talk to the seller the seller was aware of it I had the date the time everything locked in that I'm gonna go ahead and file an insurance claim to get this property we bought it with the idea of the fact that it was a vacant non-performer foreclose Indiana purchase price of 50 we knew but the water damage value is 80.

we're going to foreclose in a short period of time and kill it yeah well as you can see we end up selling it for 32 000 as is what happened we from the plan of going forward with the uh Insurance claim once we bought it we went ahead and talked to our insurance company and said we'd like to file a claim and our insurance company same one that was on the previous seller's claim said I couldn't and I didn't understand why we've filed claims before on other people and never had a problem well we found out I spoke to the seller there was nothing he could do either this was under a different kind of force Place insurance policy we did I did a web we did a webinar on that difference before but the first place policies there's two different kind of policies out there and the policies matter right and we've talked about the before but depending on which policy that fourth place is there's claims made and there's a Kearns policy a claims May policy ends when the seller uh ends and sells a deal that no longer any claim can be filed and the current space policy you can file claim anytime anytime during that policy period doesn't matter well we couldn't do anything with this we had no extra strategy right so we ended up having to take it and sell it as is with the water damage in Indiana and to top it off this is what Ira money that stinks right so we didn't expect it to be that bad but it was and it it is what it is we learn our lesson so now what in part of I'm just gonna make this a little larger for people um in part of it what we learn now is we ask every seller what type of force Place insurance they have they can get a policy just to prevent any kind of future issues concerns problems we may have right so we ask them and oftentimes is why and give you some Graces we have not run to too many issues of having claims made um there was a servicer plan but just to give you a heads up that can cause an issue so yes big strikeout I plan to file an insurance claim on this went forward with it and couldn't stop and so for both you and I let's again just be clear that's not my only loss no I had to pick one and I it was I had a hard time choosing which one yeah so I have I had another one that I I kind of hid because I said well that's not in yeah yes Mark uh there will be a ray there's a there's a replay YouTube and everything else so glad you could join us so yes so this is strikeout so we have a bunch more to go those are just jumping in here I see oh the numbers going up here we have a bunch more we're on strikeouts we're talking about Castile numbers and whatnot so we stroke out on this deal and we have a lot more strikeouts sometimes than we plan on it and sometimes we know it's a bad deal and we took a risk some deals like this one we plan I plan on getting thirty thousand dollars to fix out stop their insurance money and then sell for 80 and be golden yeah and then it just didn't happen yeah yeah FYI Beth from U.S risk will be at DC yes get some free advice while you're there yep yeah so and it happened so I and I think when Dave and I were looking at this presentation and talking about it part of what we wanted to get across is the you know the gurus when they talk about home runs all the time that's nice but that's not real the reality is sometimes you're gonna lose and sometimes it's a 40 loss and that's that's not fantastic but it happens yeah and so just be prepared nothing is guaranteed this is not a magic pill all right absolutely so yep all right let's do it all right so here's uh here's an example of a single for me and Dave will get one too so this is Clinton Avenue uh this is out in Ohio I don't remember exactly where Cincinnati Columbus somewhere like that uh man this was a tough one because I meant I really tried for this lady um we'd had some communication uh and I don't know exactly all that was going on I know she had had it she'd gone through a bunch of difficult things in her life and I really tried uh to to help her stay and and be able to take care of the house the reality was and the position she was currently in she just couldn't afford it and and I tried to do like a cash or keys and give her something to help her on her way and she just fell off and I didn't didn't get anything else going with her so it was really too bad but that it happens um I in the end it was a vacant property she eventually moved on and found somewhere else to go so I felt you know some comfort in that knowing that I didn't foreclose on a person typically when I foreclose it's on an empty house yeah it's about this on for 29.5 uh CMV on this was 60 000 market value we figured it was about 60 000 um and then we started getting calls from the city saying that there's trash here and there's things that need to get fixed up and all that uh this is when I still own the note so I first of all I thought it was kind of interesting that I was getting calls from the city as the note holder but I did so okay and I explained to them you know I don't have possession I don't really have the right to do anything in this house yet because it's not mine I can you know I can take some preventative measures but they were very understanding uh and they worked with me there and that's been my experience generally if you do get something from the city saying that there's trash or grass needs to be cut they're usually pretty understanding they just want it cleaned up and and we all understand that nobody wants to dilapidated house on their street uh but they're they're pretty understanding we were able to work uh eventually we went to foreclosure auction I was a little bit surprised that this one sold at foreclosure auction I I didn't think they would love that equity yeah but it sold for a little under 40 000.

so not a ton of of uh profit on that this on this one I made about two grand about six percent return uh so not fantastic uh but it was a win in the end I was hoping for something a little bit better I I really expected that I was going to take back this property and then be able to resell it for fifty five sixty thousand dollars so it should have been better but somebody came in at auction and that's the process and so they ended up taking it and that's how it goes sometimes so you can see not a huge one when you have Equity you can't guarantee the equity to come to you no no it sounds really nice to say oh you know I I paid whatever 29 000 for this and the houses were 60.

I'm gonna kill it or somebody will buy it for culture rocks and auction and yeah and you don't uh something I think that I did really well on this one is I've stayed in touch with with the city um and just uh we were able to kind of smooth things over with them in the meantime so we didn't incur any other liens or anything else and so that was that was a good move awesome let's look at Dave's single yes so we uh this is a ground ball right um this is a nice simple clean looking one uh per setting but ground balls aren't always so smooth and they hit a bump near there all right so we bought it as a performer it was uh secondly we're excited by it and we went ahead and it's in Texas so we're on Edgemoor um during the onion of the acid the borrower passed away right not a killer situation we're gonna deal with The Heirs ready to keep it are they gonna pay for it or whatnot well gladly enough that they paid for it a monthly then it defaulted got three six three months behind start my foreclosure process how to got reinstatement then I had to pay Force Place insurance on it because they were not paying for it they weren't doing anything um it was not escrowed try to get a hold of the daughter unfortunately the son was living there so it was really not negotiation real well um so we kind of worked through our processes here we purchased it for 17 just under 18 000 we had a great CMV of 170.

uh the first lien was about a hundred rubb was 22 000. so we bought it for just under the upb um one of the reasons was this was a 10 interest loan a 10 interest uh well yes so we didn't have the discount a lot right so those who go off 85 percent of upba whatever that goes out the Lee side this is 10 loan so I'm gonna have to buy it for a higher percent of the upb simply because that rate yeah okay all right so we bought it we have our upb we have our value uh we also have errors we're dealing with uh they stopped performing they perform and whatnot but in in the end we started two foreclosures and got two reinstatements but then we made our profit right and it's to continue to progress we're still making some money we're hoping it'll continue what's hold it down is we're paying for Forest Place insurance and we're unfortunately they're doing a two-year plan for stuff and I'm trying to get them over to one year plan but I don't want to put them over the edge so we're really kind of getting an 8.5 return right now on it which should increase we just got a reinstatement um last week so we're hoping that it will kick back up so the lesson learned which is the next bullet is the fact that performers can default right we teach this all the time your financial calculator Say everything's great but you can default and foreclosures can happen so but they also may stay performing but might be Beyond bumpy you don't know what's going to happen in these assets because it's not performing does it means you could turn performing in reinstate which means you can't mod and some performers default for any reason in this case a borrower passed away yeah so yeah so things happen this is crazy so I kind of going back to what we're saying at the beginning you know why do you need it properly underwritten and everything because this happens and then you're gonna have to deal with it and and if it's not done properly in the beginning you're going to have a hard time getting through the foreclosure absolutely and just know the fact this was actually boarded with the servicer wrong at first which even crazier it was because of the month 10 um and it moved off the arm um it was supposed to be interest uh loans the rate was would be higher so we had to do a lot of negotiations right now they've just reinstated for like six grand um we're hoping it will up for 40 200 think it was so we're hoping that it will kind of bump up everything once we get the money in hand or return maybe dropped a little higher but we're I'm expecting it to reinstate default reinstate default reinstate default and just that bumpy ride and then are you just gonna hang on to this one just knowing that yeah it's gonna be the pattern yeah you know it's a situation where it's low upb and all that stuff um we'll hope that it will just kind of it with the reinstatement we should get up to like 11 12 which is fine we'll be okay with that um but yeah eventually it'll pay off and then yes all done but yeah yeah okay doubles we're gonna hit some doubles down we're gonna get a little bit farther around that Baseline a little further in a little bit more on the what right whatever we were on the who base now we're on the what yeah that's on second yes so this is a this is one it was a non-performing uh loan that I just I resold so this was kind of an interesting one uh loop and drive this was in Reno Nevada uh which is already kind of unusual we don't see a lot of West Western half of the country notes so this is kind of a cool one um the plan on this was I was going to foreclose it was a vacant property same kind of thing I was gonna foreclose and then take it to sale purchase price of 72 000 um market value 165 and this is a mobile home and as a general rule I don't usually deal with mobile homes and this is part of the reason why I had dealt with a mobile home years ago and I thought that I'd learned my lesson I knew that I needed um both the title of the like the land and of the actual property because mobile home is mobile so it's you know oftentimes it's registered as a vehicle rather than a home yeah so I knew I needed those two documents and so as I was doing the due diligence on this I saw that I had both of them I'm like okay good we're in the clear I've done this before now I've learned my lesson ready to go this looked like again it was going to be another home run um what ended up happening is as we went along I was working with a local realtor who would give me the the property value and she came back to me and said you know there's an issue with this I said oh really like what what do you mean and she says well you don't have the proper documentation to make it a a real property I'm like no no I've got the two documents so you know I've got the title and the title we're all good it's all....