How to Get Big Returns from Reverse Mortgage Note Investing | Real Estate Notes Show

Episode: How to Get Big Returns from Reverse Mortgage Note Investing ‪@RandyRodenhouse‬ Dave's Goals and Plans: - Running a five-week note class starting January 9th with Nathan Turner - Teaching bid calculator creation for both nonperforming and performing notes - Expecting the note market to shift from performing to nonperforming notes soon - Focusing on seller finance originations and reverse mortgages Nathan's Goals and Plans: - Attending Note Expo in Dallas and networking with experienced investors - Believes next recession will be caused by a combination of affordability crisis and commercial crash - Emphasizes importance of attending conferences for face-to-face networking and credibility building - Found many investors at conference unprepared for nonperforming note evaluation Key Recommendations: - Investors must learn to evaluate both performing and nonperforming notes, not just performing - Build comprehensive bid calculators including statute of limitations, foreclosure timelines, and costs - Attend conferences and network in person with other investors for credibility and learning - Know multiple note investing options but master one strategy at a time - Always have multiple exit strategies before purchasing notes Topics Discussed: - Reverse mortgage note investing opportunities - Market shift from performing to nonperforming notes - Bid calculator development and due diligence - Historical pricing trends in note market (35-45 cents to 65+ cents on dollar) - Rising house prices and interest rates impacting note availability - Conference networking importance - Upcoming recession indicators and market changes Guest Insights: - Randy has been investing in notes since 2011 and quit corporate job in 2008 to pursue real estate - Non-performing note prices have increased from 35-45 cents on dollar in 2011 to 65+ cents currently - Market inventory from 2008-2009 has been depleted, creating scarcity in nonperforming notes - High house prices and interest rates are causing more escrow falls, which will generate future NPA inventory - Proper due diligence and exit strategy analysis (rental, repair, or homeowner modification) is critical to avoid negative returns [Music] hey everybody I'm Dave puts from jkp Holdings alongside me as always Mr Nathan Turner hey Mr Nathan so you're traveling again which is always good right so I'm really excited to get together today uh one thing cool is we got to hang out together uh just last week at the note Expo for those who didn't know in Dallas was really really awesome um it was exciting to meet people we haven't seen a while connect with people new and we made some really good connections for those who weren't there um you missed out a good time so Nathan what do you think about what you saw yeah it's all about about going to conferences it's so important and we've talked about that a lot of times but it can't be overstated it's so important out there get in front of people talk face to face yeah go grab dinner whatever it's a it's a big deal difference yeah and it gives credibility right people who may see you posting on social media and then seeing you in person and actually having that conversation is night and day for a lot of people it just gives you the ability to network really truly a person right so one thing we found or I found at the conference was this idea of people weren't ready for the next stage with Note investing I think we found a lot of people who didn't know what a bid calculator was and um didn't know how to evaluate nonperforming notes who were only doing performing notes and we both know performing notes are only going to be around for a short period of time we're expecting everything going to change quickly yeah any yeah yeah anytime you're looking at performing it's always with the thought this might going on performing yeah and if that if that's going to happen eventually at some to know how to deal with it so it's it's really important to know both sides of business absolutely I totally agree with you um as you can see Nathan's traveling a little bit so you know bear with his uh audio video hopefully we be able to stay on with us the whole time um when we talk about this stuff one of the things we are uh very intrigued with his this idea of that the notes are going to be shifting soon and we're expecting that um Nathan and I are be running our Infamous five-week note class starting back in January uh if you are and should feel free to go to our website reach out to us about that we'll be starting janary 9th for those who are not sure about it take a look at the website we teach how to build a bid calculator on there a nonperforming and Performing bid calculator we talk about due diligence and it's a serious class for those who want to get to the next level um it's a really really really necessary process in your note development to get to the next stage that actually have a nonperforming calculator that includes things like statue limitations and next due dates and uh for closure timelines and costs because those things will kill you if you don't have them figured out so so Nathan what was some of your takeaways that you learned from note Expo that may have you know those who didn't go they need to understand or so they they attend next one uh there was a really good session with uh some bigger node investors so you had Chaz on there you had yanell uh built by Mel and uh Chris from Kirkland and it was a really great panel I where to be causing our next recession and and it seemed like the was that affordability was going to be the thing and my own personal opinion I think it's going to be a combinability and Commercial crash uh where people are not able to keep up with so I think it's going to be a combination of those two things that that leads us into the next wave and we're gonna see a bunch more these default of paper coming our way absolutely I agree with you so let's uh let's get into the thick of things one of the things that came up really really popular in the last couple weeks was his idea of reverse mortgages right outside the cell Finance World which we've been FOC focus a lot on and we're continue to focus on originations and seller finance is this idea of this reverse mortgages and I would definitely stay tuned in for the ending because Randy is going to tell us about a lot of his his successes and failures in that space right because rainy's done more than just reverse mortgages he's been a note investor for years and we want to hear at the end what is best situation and worse situation he's been through in the note space so stay tuned for that um I've met Randy uh through social media and in conferences and you know it's great and necessity to connect with others who are experienced because you learn from each other on a daily basis and I think that if you don't do that on a regular basis you're GNA get behind totally agree yeah you need to know all the different options there learn a few pick one and do one at a time but know what the other options are absolutely so we're gonna let uh I know Nathan is struggling with some audio and that's okay we at least see his pretty face and uh let's bring in our guest uh Randy on to the conversation uh Randy's been in notes for a long time but before I introduce him let me introduce let him introduce himself Randy Welcome to our show share a little bit about your background how did you get into the note space how did you learn about notes and what brought you into this world that we all enjoy wow yeah I mean uh back in uh 2008 time frame I actually quit my job my corporate job that I had for 18 years in 2008 and everybody's telling me you're crazy you know you're gonna go into real estate now and uh truthly I didn't have a crystal ball so felt a little lucky but um really just got into initially just buying houses and you know the traditional Fix and Flip or U mainly create a real estate buying with subject to lease option owner finance and then in 200 roughly 11 I uh heard about notes probably at a conference or something I just you know heard a little bit about it started digging a little bit more and uh really jumped into it fulltime around 2011 2012 and started buying notes so I think I bought my first note in 2011 okay and uh you know been uh it's been great ever since wow business that's awesome you know it's it's so cool to hear from other people who doing it for a regular business for this long um so did you get formalized training did you how did you how did you become successful yeah so I learned I my the first notes I bought were really perform forming notes that I you know was trying to buy maybe my IRA or 401k or something like that and um kind of learned a little bit during that process and uh when I was buying those notes at the time they were giving like a guarantee meaning if if the notes stopped performing they would buy the note back less the payments you received so I thought how can I lose right so I jumped into it and then I really started learning by you know looking at the note the mortgage the assignment what do you have to do to buy the note the purchase and sale agreement the loan sale agreement whatever you want to call it so I really kind of got my feet wet there but then there's a lot you know a lot more layers right I mean the node investing space is is uh really I wouldn't want to say difficult but if you don't have someone to help you you know it's nothing that's really intuitive you have to you know pretty much your attorneys are helping you or you get mentored by somebody I got a lot of mentoring through PPR for example so back then I was buying notes from from them they had a little bit of a a course and mentorship type stuff so I really learned a ton through through those guys so that was really really great so that's really where I learned most of my note investing gotta gotcha yeah they they've been the space for a long long time it's really cool to have a full circle so you've been the space as long as we have plus and what you've seen in the last couple years is probably a lot different than you saw for the first 10 years been the space can you tell us a little bit about that yeah it's really changed I mean you know starting off buying notes uh no again we're just let's say we just talk about non-performing notes you know buying non-performing notes at you know 3540 45 cents the dollar you know back in 2011 even 2011 because you think about it when the market came down it really didn't bot him until 2010 you're right and then kind of hovered around and started kind of trickling up a little a little bit but still the notes were still selling at a definite discount and then it just kept going up and up and up and up and then you know I was always say Okay 65% that's going to be it I'm never G to go past that and then now we're kind of you know past that so you really have to do your due diligence because you can get in trouble right you buy something and um you know unless you have an exit strategy that's going to work you could end up negative so I was always very probably conservative uh probably like you guys and I always made sure it's going to work nothing's 100% in this business sure um but if you really look into it and really do your due diligence and um you know look at a couple exits maybe it's going to be exiting through the house through the homeowner you know maybe if you get it back what happens can you fix it up can you should you if you rented it if you had to rent it can you make money at every every aspect of it but absolutely the notes are you know still a good business but you have to really it's a kind of more of a diamond in the rough right now in terms of npls but that'll that'll change yeah it'll change but the there still some out there yeah absolutely and I think for us it became a different world because people got used to this performing world that just is just unique I don't think I bought my first performing note the 2019 it just didn't wasn't available it was available but it wasn't priced well enough because non performers were killing in the pricing right we're getting huge Double D dig returns 40 50% we get modifications and restatements and stuff like that but things have shifted a lot in the last three years what do you think's been the biggest shift in the market because of what's going on yeah I mean over time a lot of it's just that the the sheer inventory from 20089 you know is starting to you know obviously get used up and depleted but uh also you know just the shift in values right when the values go up on houses the values go up on the notes and as everybody knows even before the coid happened the values of the notes in the house I'm sorry and the notes was going slowly up um but then when the co hit it really got more difficult so yeah now we're in a situation you know in my opinion that uh you know house prices are at such a high level with the high interest rates that we're seeing a lot of people that get it under contract and then it falls out of escrow right so I have a house right now this is a separate business but you know buying a house subject two it's it's in escrow and then it fell through this guy had it three times it happened to him so guess they're really motivated now they have to move and they've they've seen that this person couldn't get a loan that's going to happen more and more so that's produce more inventory npls and so on for everyone yeah you know it's going to take some time but uh it'll get there yeah absolutely um I think for us the nonperforming world is something we got comfortable with in the Performing World kind get boring um and how you calculate performing versus not performing are two different animals I think people are going to have to really learn how to bid on assets that are performing today that will most likely default in the future um and they don't know how to do that and they really need to learn that but we wanted to learn more about this idea of and I just got a question before we went live is reverse mortgages are you creating them tell us about why are we talking about reversed mortgages are you creating revers mortgages or are you doing something different with them like buying them gotcha yeah I'm definitely not creating them I'm not a originator never will be probably um you know God bless those people but that's not what I do so basically just a few clarifications about what reverse mortgages are things to know about reverse mortgages so we're kind of on you know the same page so the first thing is there's private reverse mortgages and then there's HUD reverse mortgages when you say when you hear the word heckum loan that is a HUD product meaning it's a h it's a HUD um uh underwritten product so he heckum stands for home equity conversion mortgage so those are reverse mortgages that we buy um and you know typically the exits through the house because people are usually deceased the house is usually vacant but uh sometimes we sell them at the auction sometimes it goes to sale uh and then sometimes we get it back and we either rent it fix it up and rent it or just sell it right outright um so the other thing I think everyone should kind of know about reverse mortgages is you know the so less important I guess on a reverse mortgage that's HUD back a heckum loan those the people can take the money and use it for anything okay private private one that they necessarily can't do that but again that's kind of not super important um the other thing is HUD requires the lenders uh to assign the loans to them once the person reaches LTV of 95% okay so that's why you'll see um a lot of times on these things that you know there's two notes and two mortgages oh okay so that's one of the major you know people ask what's the differences well that's one of the differences so there's two mortgages and two notes or two Deeds of trust and two notes why because the um HUD wants to make sure that once the lender can't put any more they get that that they have to start making the payments then um they have security right so that's one thing you definitely want to remember um the this idea reverse mortgages is literally the borrow reversing the process of making payments but instead of that the borrowers getting payments up to an agree amount M and that they're collecting income from their Equity of their house right yeah I guess I should explain the basics of it's all good uh get a lot of times I assume stuff but bottom line is yeah I mean RSE mortgage either one or three things happen one they get a big lump sum of money because they have acticity they have a house that's free and clear they got $200,000 house and they get a lump sum of 100 Grand or they get payments over time or they do like a line of credit that's probably that's pretty popular one um so line of credit will be certain amount now that the other thing to note is when they get this money of course and they can use it for Stuff um but a lot of times on the line of credit the amount goes up and this is the beauty of why this is a good business the amount goes up continuously so for example if they can go up to 150% of the original loan yeah so every year it goes up by the rate times the loan so if the loan's 100 Grand the rates 5% that's five grand so five if the the loan the amount you can pull from it is now 105 instead of 100 and the next year it's 110 and so on again a little bit Nuance we don't need to get into all that but bottom line is you know a lot of the ones that we see you know they'll owe you know 300,000 on a $200,000 house and you wonder how could that happen right so that's where HUD kicks in and they are basically guaranteeing that loan and uh the other thing you definitely have to remember besides the you know remember I talked about the two notes and two Deeds um is the fact that there's a separate loan agreement okay a loan agreement now when you buy and why is that different that's a piece of paper that's not really your typical piece of paper that you see when you buy a note mortgage right um because there's three parties now right you have the homeowner you got the lender and then you got HUD a lot of times they call it the secretary when you see secretary by the way that's HUD so you got those three parties so that loan agreement is talking about how those people interact right what's the association what happens when this happens and again it's a lot of nuance but that's important document to try to get now what I found is a lot of times I'll buy these things and the uh the person that's selling them won't have that document I like to have it can you do without it yeah you could still you know but a lot of like the one I had in I think it was in New Mexico recently um they really you know the the lender not the lender but the uh attorney really wanted that document uh to go you know to prove their case or whatever but we got through it without it so but it's it's really good to get you're you're going to be more secure feel a little bit better if you had that document um so that's another thing that's a little bit different from your your paperwork uh from your traditional you know note mortgage um and then the last thing I want to mention is you definitely want to get a release of the mortgage lean the HUD lean which is the second lean right the subordinate heckaman which is the hudle the Secretary of State excuse me and you want to get that release why because you know it's a second loan you want that released off and and HUD usually when they sell the loans they just release it they just sign a release and they record it and it you know it makes everything good satisfies that uh that that second lean so those those are the things you definitely want to keep in mind sure go ahead I was GNA say that most of the time when I buy those that that second is i that's part of my collateral package is the release of that secondly so like you say it's really important to get that um but that's pretty typical that that comes with it but make sure you know trust make sure make sure you're getting that yeah again that's something that's kind of unique and that's why I'm mentioning it um you know people are used to if they're buying notes now and they're buying you know they're getting the note the morgage those simus all those things you're going to get as well that's all going to be the same but these these are some of the things that are a little different and like you said Nathan that's usually you know part of the part of the package so to speak um but it might not be what something everybody's probably not aware of and you guys can chime in on this but a lot of times there's reporting requirements right yes if you bought some notes from somebody or you know if you went directly to HUD of course a lot of us don't do that but if if you did then there's reporting requirements basically HUD just wants to know what happened we sold you this note they would like you to sell it to an owner occupied or sell it to maybe a charity or maybe rent it to somebody you know uh in such a way that it's um what they really don't want is just to flip it but they allow that after for 30 days so typically you got to try to sell it to someone for 30 days after that you could quote unquote sell it to an investor um but you got to report that um and again usually again the seller would contact you and ask you to report hey what's your status on this note or that note so so let's let's dive into more of at what point does US investors get involved in any of this does this H as a note buyer all this happens before we even get started correct what what do you mean I'm not sure what you're saying so does the um when we're gonna when they originate this note this is all done with the borrower being aware of what's happening and things like that right right when we get involved in it this stuff's all created for us to make sure when we're looking at reverse mortgages it's done correctly would that be right yeah everything's done you're just taking all the documents and saying okay you know just like you do typically when you buy a note you got to make sure the assignments line up you got to run title um but all those documents are there you just got to you know verify right verify that they're correct you know make sure the names are the same make sure that you know addresses are the same I've seen things like that um you know make sure your chain is is good to go so yeah all the stuff is you're not having to do all this creation of all these documents we're mentioning I'm just mentioning some of the ones that are kind of unique that you have to get from your in your collateral packets that you get from your seller sure and you want to make sure obviously and then there's one more go ahead sure more important part of this is the servicing aspect do you want to talk a little bit about that because the servicing on these a little bit different as well yeah good good point and then again you can chime in so basically first of all you got to find a service that will service it all servicers service it so what I found I'll just tell you my experience you can tell me yours so um the servicers that will not service it is like FCI you guys heard of them I'm sure um uh SN will not service it as far as I know unless they change um who else uh why won't they service won service it what makes it that they can service it seriously I don't know I don't know I don't I think they just decided they don't want to do that for certain reason maybe there's reporting requirements or something yes but there are services that do do it like Madison management okay and uh who else BSI now most of us don't use BSI because they're a little bit bigger or bigger you know folks that have more loans a lot of loans I mean you know thousands but um those are the two that I know if you guys know of any other let me know because it's always good to know more but um and then I think part of it is their system isn't set up for it because when you buy one of these it doesn't it's not it doesn't continue to ACR interests the same way the regular mortgage would so guess is that their servicing software just isn't set up for it or they don't want to have to change their normal or something like that that's my guess I haven't got a straight no I think that's correct correct because I had another one I think it was a a simple interest loan it's a daily a daily oh my gosh it was really a weird one and and FCI wouldn't do it and some other ones wouldn't do it but bottom line is I think you hit the nail on the head that it's you know remember like Dave was talking about you know it's it's they're giving you know the lenders giving the homeowner money right yes basically it's not the homeowner giving the lender money so everything's kind of reversed so so let me just clarify real quick for that someone had a question what do you mean by service so in not space we have servicers who are act like a property manager but in our space when they they collect payments typically from the borrower and they send the lender so there's servicers who do not will not service a reverse mortgages and some that do and I agree I think it's the way it's set up in their system um I'm sure Kevin probably on here and maybe you'll explain a little more about that side of it but it's the idea of how the property manager in the world of real estate is handling this loan because it's not a typical loan that's set up like a traditional asset sorry go ahead yeah that's good that's good yeah so you really want a serer with everything you do in notes I mean you pretty much have to unless you're licensed in all these states and forget all that it's just too much work so um yeah you definitely need a good servicer to work with you um so absolutely so now it's set up ready to go what makes something why would anyone buy a reverse mortgage um well I think I think one thing is a people especially investors that want to maybe get the real estate and rent it or someone that wants to get the real estate and own or Finance it and and and and you know create note that way um you know that's a great way to get a house at a discount versus going out and trying to find a house through the MS which as we all know there's not many and um they're very difficult to get at a big enough discount right this a good way for maybe even a Fix and Flip like for example I have a couple I just got back now I have to decide am I gonna you know uh you know fix it myself upgrade it and sell it or maybe just upgrade it to a rental quality rent it or just try to sell it to another investor it's a wholesale type thing so it really depends um but that's a good way that's that's one of the reasons people do it um I do it basically because I don't want the house but I can't really obviously work with the home owners because they're passed away but what I can do is if I do get the house my preferred method is to sell it with owner financing so I'm good point we had Rich asked a question can you do a rap note with a reverse mortgage property well it's not a rra note because I own the property now right so when I first I own the property outright I have title so um I'm basically owner financing the house so you have to go through you know owner financing the dad Frank things you guys talk about on you know watch these guys videos on that um but bottom line is I sell the house as loaner financing follow the wonderful rules and it's it's basically a note stream right I'm getting monthly payments I get a down payment monthly payments and some point in the future they cash me out like actually on Monday I'm getting cash out of a house in in uh in Cleveland and uh so I'm getting I I think I sold the house of owner financing about two years ago okay now they're getting Bank on I'm getting all my money and I sold it at a you know a decent price for them and myself but and obviously was a lot higher than what I bought the note for so we're g at the end of this call we're going to be going over what your best situation your worst case scenario so I'm looking forward to hearing that and I want to be quickly understand the fact that most people are buying reverse mortgages knowing the property's vacant they go through the air scenarios make sure there's no errors to collect it and then they foreclose on it because the borrow is in default it sounds kind of weird to say they're in default because technically they're getting payments made to them but what what are some of the triggers that def caus that to be default yeah so there really three things if you look at the actual um you know the the triggers for default right in the you if you look at the mortgage and the note and the loan agreement so really transfer of ownership that's one right the title gets transferred they can call it due just like a do on sale Clause second is the homeowner dies now of course if there's two two people like a you know husband and wife or you know their spouse whoever it is the other person can continue that's not a problem but if both parties uh pass away or if there's just one then then they could accelerate the note and start to foreclose U the last one if if the homeowner moves out of the property and no longer it's no longer their primary residence right as long if there's one person that's still there that's fine that originally signed on the Note but if someone moves out no they're going to kick it out and they're going to start to foreclose absolutely so we have a few questions come in too um if we uh if we bought a reverse mortgage note should I continue to release monthly payments until I take possessions G no right um you're not releasing anything on the note it literally is in default and your process is either a foreclose or be tght to airs take over yeah so most of these again is is uh I would say most are a year to three years behind so meaning it's in default that long so they're not getting any distributions anymore from anyone um the there's no one to give a distribution to because the ones we buy at least myself uh are ones that all the parties are deceased so um yeah so there's not an issue there yeah now I have one question too from I think that you forwarded me I'm I'm GNA try to yeah so what want you're if you're looking for some scenarios and PowerPoint Randy has a great PowerPoint for you guys look at that we're probably going to go over today but I would definitely encourage you to reach out to him um we' shared his uh contact information um how to obtain it I'll repost it into all the chats so you can see it uh for those watching on R Play on YouTube feel free to take a look at it and uh go from there so if you want to get information you want to learn more about it see the Powerpoints feel free to go ahead and take a look at that and he can share it over to you so just reach out to him ask for the PowerPoint um and we'll go from there which is awesome so when you're going to um this process of buying this asset your goal is the fact that you're going to be foreclosing on this thing and taking the property back is there times where the errors have stepped up in your scenario yeah so let me there's two two things before I answer or one thing before I answer that question so yeah my goal is not always obviously is not always getting the house back so a lot of times I will price it at auction so I can try to sell it at auction so you know maybe they owe 200,000 I might price it at 80 cents so I price it at 150 at auction and hoping someone you know third party comes in buys the house at auction and then guess what I'm out of the picture I just get my money so as long as my spread between what I bought it for and what I can sell it to an auction is enough then I'll do that because my returns are higher because guess what you know it's a Time Time Value money right this a short time so um so that actually would be right now this been my preferred because I I have a lot of houses I'm working on so um I'd say in the auctions of the last 20 that I've done probably 70% 60 maybe 607 somewhere between 60 and 70% let's say 2third go to auction sale where it goes to a third party because I pr it that way now if I price it for full payoff I would get the property back each and every time because they owe a lot more usually than it's worth yeah but if I buy them the that particular asset at a value that's low enough or you know price is low enough then I I sell at auction but getting back to your yeah I forgot what your question was it's okay so it was about the so one of the question we had was to is does the D change ownership so Richie asked a question does a d change ownership to the investor now I thought that triggers and puts a mortgage company on notice that danged owners so when you're buying this reverse mortgage you are the lender on that situation you are the mortgage company so it's not that you're triggering it's not a Subic 2 scenario where you're like the all the big things going on we talked about in the past was you're taking over some borrowers mortgage you're literally becoming the bank it went from Bank of America the bank of you and now you own the debt on it because the reverse mortgage in the scenario now there's other ways of buying notes and we've done that we talked about that in many of our webinars right but this is the idea of you're buying a reverse mortgage so you become the lender on file on a default and reverse mortgage and now the deeded owner you're going to foreclose to get deed ownership on that hopefully it makes sense Rich uh Cindy made a comment that um I found a nice vacant property where the owner was deceased the title search to run and discovered it was a small line of credit plus the reverse mortgage and then uh that no was assigned to USDA it's been vacant for two years and no foreclosure yet I I hope that gets fixed right um and whatnot so it making trying to get a hold of the airs absolutely that's probably the most challenging part would you say Randy is getting a hold of the errors and make sure that you've well any note you're foreclosing on making sure that if a borrower is deceased that you're notifying the errors is that probably your biggest hurdle yeah because I remember the question now you had mentioned the so of the ones that I purchased let's just talk about you know we're talking about reverse mortgages today of the ones that I've purchased I'd say uh you know less than 5% reach out at all wow so the airs I have had I think two I remember one was uh they said oh uh we need one was just hey I need to get some stuff out of the house okay so I had to range that number the other one was you know I like to buy the house okay great um here's what they ow or here's what's owed oh no forget you know they see that huge number and they're like no forget it right so they're thinking they're going to get some kind of Steal but um you know if they came back and they negotiated you know I would I would negotiate with them right I'm not going to do it for the full payoff when it's worth I mean it's worth less than what's owed of course right I'd come back if they came maybe in the 80% range something like that 885 I'd probably do it but I haven't had that experience really very few people reach out at all so any of it's usually just we just go straight to foreclosure and that's it yeah so this fears no he Randy uh what naan was saying is that he's at the same scenario with heirs typically no one bothers him he goes straight to foreclosure and typically the airs don't hold up anything right yeah really they don't I mean you know sometime I had some you know maybe ones in the past on your traditional notes but probably I could kind of you know probably two last 10 years yeah so Kirk asked um so one of the things Kirk asked us was the when you're trying to price this what typically how do you price these things yeah these are a little bit easier to price in my opinion because you don't have to do all the calculations with if you get the house back and you do a loan mod with them you got to figure out what your return is going to be right so it's not always clearcut these are fairly clear cuts so usually you know I'll price them you know based on the value of course that's one of the most important things yeah and then I would also calculate it based on the assuming I went my exit of 80% of the value at auction right because that's what I'm finding as kind of sweet spot so if I price it at 90 cents they don't sell at auction if I price it at you know anything much higher than 80 some sometimes they do and sometimes they don't right because I've had one bid up like I just had one recently bid way up past more than I ever thought so it's kind of a guess game but yeah so you really have to price it and so if you find a house that's worth let's say 200,000 and they owe 200,000 and you buy that note at 160 yeah example then you know um you know you got to factoring your your turning costs and all that too so usually again i' price it roughly at 80% of what I could get at an auction because you're you're you're pricing an idea that you're you're going to buy this thing either own or Finance it or sell it as is on the market um ideally you want to sell at owner finance you get that note back rolling um and then we have a few more questions regarding just just to clarify the price I so I'm not buying at 88% of the value by the way I'm I'm assuming that if I got it if I sold it auction 80% how much you say that was 160 I better be buying at least least you 130 140 right to make a spread of 20 $330,000 right so my return I'm looking at you know 20 five 20 to 25% plus plus plus plus plus to get insurance some are you know 100% some are but it better be at least 20 25% in terms of that spread between what i s at auction and what I buy it for so uh rich I would suggest you to reach out to us directly I know you're asking questions sound like you're more in the owner finance sub2 world and that you're not sure how we can foreclose an owner we're become Bank of America Bank of America foreclosing anyone if you take on their debt as Bank of America and they assign a debt to you you have the ability just Bank of America can to foreclose this is the world of buying the Note versus orig the Note um what he's suggesting is once he has the property he then creates a note then after he's already foreclosed on it and removed the the borrower in that position feel free to out to stretch we can explain a little bit more off air um absolutely so we're we're we're curious to I know you know Nathan shared some of his off a stories and we're g to get to some of the fun stuff now can you tell us the best deal you've come across what was something that can you you don't have to Mar all the numbers but tell us the best scenario little story of your deal h oh boy think about this one um I don't know I had a lot of good ones um so let me think I guess the ones I like I mean I could talk about ones where I made a ton of money which I've made a ton of money in a lot of them but some that I feel good about in terms of the story I guess I'll tell one of those instead which you know I also made money on and actually this one it wasn't probably the biggest Money Maker because it wasn't it was a kind of a low value note but um so um why you think of that real quick one quick question came up was do you always have to foreclose or can you get a deedon l from an air instead of foreclosing yes you can get a a deed well you can talk about the reverse mortgages yes um can you get a deed and L well it depends so if the title is you know you have to look at the title right y l means that you're you're exchanging in deed in L of foreclosure for those who don't know I apologize yeah yeah I mean typically deed in L only you can do that when the the the title's pretty clean doesn't have a bunch of leans on it blah blah blah and then you know who can deed it over right well the passed away so an air technically can have to go through probate and probate mean the air would have to get control of the property and yeah I don't I don't do that yeah so it can happen um other than foreclosure so where would you say one of your best deals if you have some numbers ought be even better what states are you typically buying this in and what was the state that you bought probably one of your better deals in I've purchased notes in 32 states now um and uh you know I think the one in there's one in a couple in Virginia and in West Virginia what Virginia one kind of sticks out where I bought the note it was a um a house where the people uh really didn't want to keep the house um I had bought the note at a pretty good discount and they decided to leave so I think on this note I bought it at I don't know low hundreds like a let's say 100 to make the numbers easy house is probably worth two 180ish but it did need a little bit of work um and so I tried to do a loan mod obviously my first my first goal is to keep the P you know people in the home if they want to be in the home of course and uh try to modify because truthly if you modify a loan you can usually make more money right but that's not really the goal the goal is hey I don't really want to fight with anybody if they want to save in the home I'm G to try to make it so that they stay in there and work with them but these people did not so we did uh in that case we did a a a de L because they had a pretty good clean title they didn't have any you know IRS leans or state tax leans or whatever judgments so uh we got that done once we got that done we took hold of the property I found uh some people up in that area that are contractors to you know rehab the property again I never do like fullon you know HGTV rehabs no that's not me I do flooring the paint and whatever else it needs maybe needs sometimes it needs a whatever stove or whatever um if it needs a lot of work I'll just pass it on but this one needed kind of you know enough so I even did some some countertop work stuff like that this and I sold it 189 over higher than I thought I was and I bought the note for 100 you know that was a pretty good deal I mean I've had several like that um you know in the past which the great thing is it was pretty easy you know I greed the the homeowner or not it's not a contested you know fighting I want to fight anybody right so it was it was a de L easy um got the house back yeah longdistance rehabbing is not easy absolutely and give you some pointers on that one because I think I rehab no thank you 20 States now so uh I got some pretty good teams in certain States but Most states are very it doesn't matter it's long distance right it's hard um but it does pay you off more you get more money but sometimes like I got one right now in Oklahoma I could probably get at 70,000 more but you know I'm gonna sell it to this investor and just get rid of it because you know sometimes you gotta use your time wisely so with reverse mortgages have you had a bad deal Go reverse mortgages yeah um have you had a bad reverse mortgage deal that just s trying to think really I mean I feel I'm pretty like I said I vet them I vet the notes pretty well trying to think of anything I mean I have I well I have a two properties right now that I got back from River stores I fix up they're on the market now they're sell a little slower than I wanted one I think actually I got an offer yesterday and the other one I don't know something about Mississippi I haven't got much offer it's a nice house but um but I'll make money no matter what happens on those but you know how messy is a house when you walk into those things that have been vacant for two years how much that's a great thing that I'm glad you mention because I was going to mention this and I I one thing you want to see is because this can be a huge cost to you is if you buy a house that's reverse mortgage or whatever in vacant it's been there for a while usually they have all their stuff in there still sometimes they're pretty clean a lot of times they're not I mean I had one recently I had to spend over five 6,000 just to get the stuff out of it crash outs oh my Lord so you know if it's a big house a lot of stuff it can get super expensive so make sure you look at that stuff right make sure you determine whether that's worth or you just got to put it all it's all in the equation right you got time for for the attorney fees or whatever whatever you know I'm just making up numbers but you know if you're if you house is totally clean well that's that number might be zero but um yeah some of these houses are in great condition actually some of the reverse mortgages most of the reverse mortgages are in pretty good condition why you think about it it's an old you know grandmother and Grandpa living in the freaking house right they're not trashing their own house right they wanted to stay there in the first place that's how why they got the reverse mortgage want to live there till they died but it's been vacant for two years you're hoping that the lender put some kind of you know winterization on the property if it's up north or you know Bard it up put a lock on it so that you don't have any people you know squatting and yeah I mean you're gonna get stuff that happens right but usually you know you do the secur securing the property winterizing it I had you know somewhere you know they still go and steal the HVAC copper or whatever you know and if it's a bad in a bad area so that's why you got to pick and choose yeah but that doesn't happen a lot with those because usually those are in a little bit better you know decent neighborhoods yeah um so yeah you got it's a lot of little things you got to figure out along the way to make sure it works and um you know I think uh but if you do that you'll be fine I mean you don't know some things you don't know right like I had one I thought the hvbc looked nice looked at the outside unit blah blah blah but guess what it didn't work I had to replace it and that was an extra expense I didn't expect or the gas company comes and turn the gas on and guess what the gas is leaking in the house the gas pipes so now I got to replace the gas pipes in the house right so oh my gosh you gota you know this is not a game where you play that you know gota have some Capital yeah so Nathan we'll let you I know you're having audio still issues and whatnot we'll let you finalize our session here and uh get a crystal ball out yeah sorry the bad reception we're middle of Wisconsin someplace so it's not great reception yeah we always like to kind of find out from our guests what do you think what do you think we're in for what's what's coming down the pipe what's your vision for the next two three years with the O business yeah um I think right now I wouldn't expect I think house prices are going to stay stubbornly high because the the basically the supply is low um but what we what I am seeing there's a lot of people that are having a hard time sell the house just because the people they're buying can't get a loan because why can't loan because they high price and high interest right yeah so that's going to be hard so there's going to be some people that uh have problems not just only selling their homes but making their own payments um some people bought it way way too high during the coid time right so there's those there's the 1.9 million mortgages out there that you were in forbearance at one time never really got through the whole scheme of things they're over 120 days or more like 600 days uh late you know past du or whatever so I think we'll see more but I I don't I would not you know I would not think in the next I think it's gonna be I don't know probably towards the end of next year um but again I I don't know for sure ball is is always a little fuzzy maybe maybe towards you know you're always going to first of all just remember everybody you're always going to have nonperforming notes right good times bad times always are there right so don't say oh I'm not going to do it right now right you can't really pit you're always going to want to be going in looking at them finding the diamonds in rough then there's going to get easier because there's going to be more so get your feet wet learn from these guys or whatever and and and U you know take the Take the Lead right yep there's always going to be notes out there but I think there's going to be more coming down the pike but in terms of you know the no business obviously the seller finance world is you know look at the numbers there's more and more of those being originated why because people can't set their house right so that's a good area to be in seller finance notes either buy them buy the parcel whatever whatever you know you guys talk about a lot of that stuff and you know I buy some of those as well yeah so you know there's always a place right just like Market was bad when you're just a traditional investor buying properties right there's always good times and bad times but you just you know I was buying houses 2007 before I quit my job I was buying houses at the peak but guess what I was buying 20% below the market pricing yeah so when it came down 20% guess what no big deal if it came down 90% would I be hurting no because it was paying right yeah it's a paying house it was and those those are rentals right so as long as you have cash flow you're okay doesn't really matter what the market does it's like a if your stock goes up or down it doesn't matter you're still getting your dividend right yeah absolutely and the market will will even itself out we looked back and said that J 6 seven eight the market dropped not by 100% it dropped by a little and came back up but if someone needs a place to live they have to keep paying their bill you're GNA have some defaults but things are going to keep going and like you said before they're always non-performing notes and it's not because the market it's a Bor died uh someone got sick someone lost a job divorced you know credit card dead housing dead kids sitation million reasons why loans go to fall outside the economic part of this space so I think that you're absolutely right on that so I really appreciate you just kind of putting yourself out there and give us your crystal ball in and just idea from an experienced investor what you come to say so um I appreciate you coming on with us and joining us for this Friday afternoon um feel free guys this will be recorded it will be on YouTube on our podcast and like I said in January me and Nathan will be running our advanced class which is a five-week advanced class which I highly recommend you just check out um because if you're not ready for it when this scene comes at us we'll enjoy the returns while you guys are stuck with the Performing notes getting your little 1012 and we jumping on non performing world right so we encourage you guys to jump in that world but make sure you do it smart safe and intelligently because you can get Way Beyond So Randy once again hang on for after hours I appreciate you coming on and join us live and uh for everyone else have a great weekend [Music] hey everybody I'm Dave puts from jkp Holdings alongside me as always Mr Nathan Turner hey Mr Nathan so you're traveling again which is always good right so I'm really excited to get together today uh one thing cool is we got to hang out together uh just last week at the note Expo for those who didn't know in Dallas was really really awesome um it was exciting to meet people we haven't seen a while connect with people new and we made some really good connections for those who weren't there um you missed out a good time so Nathan what do you think about what you saw yeah it's all about about going to conferences it's so important and we've talked about that a lot of times but it can't be overstated it's so important out there get in front of people talk face to face yeah go grab dinner whatever it's a it's a big deal difference yeah and it gives credibility right people who may see you posting on social media and then seeing you in person and actually having that conversation is night and day for a lot of people it just gives you the ability to network really truly a person right so one thing we found or I found at the conference was this idea of people weren't ready for the next stage with Note investing I think we found a lot of people who didn't know what a bid calculator was and um didn't know how to evaluate nonperforming notes who were only doing performing notes and we both know performing notes are only going to be around for a short period of time we're expecting everything going to change quickly yeah any yeah yeah anytime you're looking at performing it's always with the thought this might going on performing yeah and if that if that's going to happen eventually at some to know how to deal with it so it's it's really important to know both sides of business absolutely I totally agree with you um as you can see Nathan's traveling a little bit so you know bear with his uh audio video hopefully we be able to stay on with us the whole time um when we talk about this stuff one of the things we are uh very intrigued with his this idea of that the notes are going to be shifting soon and we're expecting that um Nathan and I are be running our Infamous five-week note class starting back in January uh if you are and should feel free to go to our website reach out to us about that we'll be starting janary 9th for those who are not sure about it take a look at the website we teach how to build a bid calculator on there a nonperforming and Performing bid calculator we talk about due diligence and it's a serious class for those who want to get to the next level um it's a really really really necessary process in your note development to get to the next stage that actually have a nonperforming calculator that includes things like statue limitations and next due dates and uh for closure timelines and costs because those things will kill you if you don't have them figured out so so Nathan what was some of your takeaways that you learned from note Expo that may have you know those who didn't go they need to understand or so they they attend next one uh there was a really good session with uh some bigger node investors so you had Chaz on there you had yanell uh built by Mel and uh Chris from Kirkland and it was a really great panel I where to be causing our next recession and and it seemed like the was that affordability was going to be the thing and my own personal opinion I think it's going to be a combinability and Commercial crash uh where people are not able to keep up with so I think it's going to be a combination of those two things that that leads us into the next wave and we're gonna see a bunch more these default of paper coming our way absolutely I agree with you so let's uh let's get into the thick of things one of the things that came up really really popular in the last couple weeks was his idea of reverse mortgages right outside the cell Finance World which we've been FOC focus a lot on and we're continue to focus on originations and seller finance is this idea of this reverse mortgages and I would definitely stay tuned in for the ending because Randy is going to tell us about a lot of his his successes and failures in that space right because rainy's done more than just reverse mortgages he's been a note investor for years and we want to hear at the end what is best situation and worse situation he's been through in the note space so stay tuned for that um I've met Randy uh through social media and in conferences and you know it's great and necessity to connect with others who are experienced because you learn from each other on a daily basis and I think that if you don't do that on a regular basis you're GNA get behind totally agree yeah you need to know all the different options there learn a few pick one and do one at a time but know what the other options are absolutely so we're gonna let uh I know Nathan is struggling with some audio and that's okay we at least see his pretty face and uh let's bring in our guest uh Randy on to the conversation uh Randy's been in notes for a long time but before I introduce him let me introduce let him introduce himself Randy Welcome to our show share a little bit about your background how did you get into the note space how did you learn about notes and what brought you into this world that we all enjoy wow yeah I mean uh back in uh 2008 time frame I actually quit my job my corporate job that I had for 18 years in 2008 and everybody's telling me you're crazy you know you're gonna go into real estate now and uh truthly I didn't have a crystal ball so felt a little lucky but um really just got into initially just buying houses and you know the traditional Fix and Flip or U mainly create a real estate buying with subject to lease option owner finance and then in 200 roughly 11 I uh heard about notes probably at a conference or something I just you know heard a little bit about it started digging a little bit more and uh really jumped into it fulltime around 2011 2012 and started buying notes so I think I bought my first note in 2011 okay and uh you know been uh it's been great ever since wow business that's awesome you know it's it's so cool to hear from other people who doing it for a regular business for this long um so did you get formalized training did you how did you how did you become successful yeah so I learned I my the first notes I bought were really perform forming notes that I you know was trying to buy maybe my IRA or 401k or something like that and um kind of learned a little bit during that process and uh when I was buying those notes at the time they were giving like a guarantee meaning if if the notes stopped performing they would buy the note back less the payments you received so I thought how can I lose right so I jumped into it and then I really started learning by you know looking at the note the mortgage the assignment what do you have to do to buy the note the purchase and sale agreement the loan sale agreement whatever you want to call it so I really kind of got my feet wet there but then there's a lot you know a lot more layers right I mean the node investing space is is uh really I wouldn't want to say difficult but if you don't have someone to help you you know it's nothing that's really intuitive you have to you know pretty much your attorneys are helping you or you get mentored by somebody I got a lot of mentoring through PPR for example so back then I was buying notes from from them they had a little bit of a a course and mentorship type stuff so I really learned a ton through through those guys so that was really really great so that's really where I learned most of my note investing gotta gotcha yeah they they've been the space for a long long time it's really cool to have a full circle so you've been the space as long as we have plus and what you've seen in the last couple years is probably a lot different than you saw for the first 10 years been the space can you tell us a little bit about that yeah it's really changed I mean you know starting off buying notes uh no again we're just let's say we just talk about non-performing notes you know buying non-performing notes at you know 3540 45 cents the dollar you know back in 2011 even 2011 because you think about it when the market came down it really didn't bot him until 2010 you're right and then kind of hovered around and started kind of trickling up a little a little bit but still the notes were still selling at a definite discount and then it just kept going up and up and up and up and then you know I was always say Okay 65% that's going to be it I'm never G to go past that and then now we're kind of you know past that so you really have to do your due diligence because you can get in trouble right you buy something and um you know unless you have an exit strategy that's going to work you could end up negative so I was always very probably conservative uh probably like you guys and I always made sure it's going to work nothing's 100% in this business sure um but if you really look into it and really do your due diligence and um you know look at a couple exits maybe it's going to be exiting through the house through the homeowner you know maybe if you get it back what happens can you fix it up can you should you if you rented it if you had to rent it can you make money at every every aspect of it but absolutely the notes are you know still a good business but you have to really it's a kind of more of a diamond in the rough right now in terms of npls but that'll that'll change yeah it'll change but the there still some out there yeah absolutely and I think for us it became a different world because people got used to this performing world that just is just unique I don't think I bought my first performing note the 2019 it just didn't wasn't available it was available but it wasn't priced well enough because non performers were killing in the pricing right we're getting huge Double D dig returns 40 50% we get modifications and restatements and stuff like that but things have shifted a lot in the last three years what do you think's been the biggest shift in the market because of what's going on yeah I mean over time a lot of it's just that the the sheer inventory from 20089 you know is starting to you know obviously get used up and depleted but uh also you know just the shift in values right when the values go up on houses the values go up on the notes and as everybody knows even before the coid happened the values of the notes in the house I'm sorry and the notes was going slowly up um but then when the co hit it really got more difficult so yeah now we're in a situation you know in my opinion that uh you know house prices are at such a high level with the high interest rates that we're seeing a lot of people that get it under contract and then it falls out of escrow right so I have a house right now this is a separate business but you know buying a house subject two it's it's in escrow and then it fell through this guy had it three times it happened to him so guess they're really motivated now they have to move and they've they've seen that this person couldn't get a loan that's going to happen more and more so that's produce more inventory npls and so on for everyone yeah you know it's going to take some time but uh it'll get there yeah absolutely um I think for us the nonperforming world is something we got comfortable with in the Performing World kind get boring um and how you calculate performing versus not performing are two different animals I think people are going to have to really learn how to bid on assets that are performing today that will most likely default in the future um and they don't know how to do that and they really need to learn that but we wanted to learn more about this idea of and I just got a question before we went live is reverse mortgages are you creating them tell us about why are we talking about reversed mortgages are you creating revers mortgages or are you doing something different with them like buying them gotcha yeah I'm definitely not creating them I'm not a originator never will be probably um you know God bless those people but that's not what I do so basically just a few clarifications about what reverse mortgages are things to know about reverse mortgages so we're kind of on you know the same page so the first thing is there's private reverse mortgages and then there's HUD reverse mortgages when you say when you hear the word heckum loan that is a HUD product meaning it's a h it's a HUD um uh underwritten product so he heckum stands for home equity conversion mortgage so those are reverse mortgages that we buy um and you know typically the exits through the house because people are usually deceased the house is usually vacant but uh sometimes we sell them at the auction sometimes it goes to sale uh and then sometimes we get it back and we either rent it fix it up and rent it or just sell it right outright um so the other thing I think everyone should kind of know about reverse mortgages is you know the so less important I guess on a reverse mortgage that's HUD back a heckum loan those the people can take the money and use it for anything okay private private one that they necessarily can't do that but again that's kind of not super important um the other thing is HUD requires the lenders uh to assign the loans to them once the person reaches LTV of 95% okay so that's why you'll see um a lot of times on these things that you know there's two notes and two mortgages oh okay so that's one of the major you know people ask what's the differences well that's one of the differences so there's two mortgages and two notes or two Deeds of trust and two notes why because the um HUD wants to make sure that once the lender can't put any more they get that that they have to start making the payments then um they have security right so that's one thing you definitely want to remember um the this idea reverse mortgages is literally the borrow reversing the process of making payments but instead of that the borrowers getting payments up to an agree amount M and that they're collecting income from their Equity of their house right yeah I guess I should explain the basics of it's all good uh get a lot of times I assume stuff but bottom line is yeah I mean RSE mortgage either one or three things happen one they get a big lump sum of money because they have acticity they have a house that's free and clear they got $200,000 house and they get a lump sum of 100 Grand or they get payments over time or they do like a line of credit that's probably that's pretty popular one um so line of credit will be certain amount now that the other thing to note is when they get this money of course and they can use it for Stuff um but a lot of times on the line of credit the amount goes up and this is the beauty of why this is a good business the amount goes up continuously so for example if they can go up to 150% of the original loan yeah so every year it goes up by the rate times the loan so if the loan's 100 Grand the rates 5% that's five grand so five if the the loan the amount you can pull from it is now 105 instead of 100 and the next year it's 110 and so on again a little bit Nuance we don't need to get into all that but bottom line is you know a lot of the ones that we see you know they'll owe you know 300,000 on a $200,000 house and you wonder how could that happen right so that's where HUD kicks in and they are basically guaranteeing that loan and uh the other thing you definitely have to remember besides the you know remember I talked about the two notes and two Deeds um is the fact that there's a separate loan agreement okay a loan agreement now when you buy and why is that different that's a piece of paper that's not really your typical piece of paper that you see when you buy a note mortgage right um because there's three parties now right you have the homeowner you got the lender and then you got HUD a lot of times they call it the secretary when you see secretary by the way that's HUD so you got those three parties so that loan agreement is talking about how those people interact right what's the association what happens when this happens and again it's a lot of nuance but that's important document to try to get now what I found is a lot of times I'll buy these things and the uh the person that's selling them won't have that document I like to have it can you do without it yeah you could still you know but a lot of like the one I had in I think it was in New Mexico recently um they really you know the the lender not the lender but the uh attorney really wanted that document uh to go you know to prove their case or whatever but we got through it without it so but it's it's really good to get you're you're going to be more secure feel a little bit better if you had that document um so that's another thing that's a little bit different from your your paperwork uh from your traditional you know note mortgage um and then the last thing I want to mention is you definitely want to get a release of the mortgage lean the HUD lean which is the second lean right the subordinate heckaman which is the hudle the Secretary of State excuse me and you want to get that release why because you know it's a second loan you want that released off and and HUD usually when they sell the loans they just release it they just sign a release and they record it and it you know it makes everything good satisfies that uh that that second lean so those those are the things you definitely want to keep in mind sure go ahead I was GNA say that most of the time when I buy those that that second is i that's part of my collateral package is the release of that secondly so like you say it's really important to get that um but that's pretty typical that that comes with it but make sure you know trust make sure make sure you're getting that yeah again that's something that's kind of unique and that's why I'm mentioning it um you know people are used to if they're buying notes now and they're buying you know they're getting the note the morgage those simus all those things you're going to get as well that's all going to be the same but these these are some of the things that are a little different and like you said Nathan that's usually you know part of the part of the package so to speak um but it might not be what something everybody's probably not aware of and you guys can chime in on this but a lot of times there's reporting requirements right yes if you bought some notes from somebody or you know if you went directly to HUD of course a lot of us don't do that but if if you did then there's reporting requirements basically HUD just wants to know what happened we sold you this note they would like you to sell it to an owner occupied or sell it to maybe a charity or maybe rent it to somebody you know uh in such a way that it's um what they really don't want is just to flip it but they allow that after for 30 days so typically you got to try to sell it to someone for 30 days after that you could quote unquote sell it to an investor um but you got to report that um and again usually again the seller would contact you and ask you to report hey what's your status on this note or that note so so let's let's dive into more of at what point does US investors get involved in any of this does this H as a note buyer all this happens before we even get started correct what what do you mean I'm not sure what you're saying so does the um when we're gonna when they originate this note this is all done with the borrower being aware of what's happening and things like that right right when we get involved in it this stuff's all created for us to make sure when we're looking at reverse mortgages it's done correctly would that be right yeah everything's done you're just taking all the documents and saying okay you know just like you do typically when you buy a note you got to make sure the assignments line up you got to run title um but all those documents are there you just got to you know verify right verify that they're correct you know make sure the names are the same make sure that you know addresses are the same I've seen things like that um you know make sure your chain is is good to go so yeah all the stuff is you're not having to do all this creation of all these documents we're mentioning I'm just mentioning some of the ones that are kind of unique that you have to get from your in your collateral packets that you get from your seller sure and you want to make sure obviously and then there's one more go ahead sure more important part of this is the servicing aspect do you want to talk a little bit about that because the servicing on these a little bit different as well yeah good good point and then again you can chime in so basically first of all you got to find a service that will service it all servicers service it so what I found I'll just tell you my experience you can tell me yours so um the servicers that will not service it is like FCI you guys heard of them I'm sure um uh SN will not service it as far as I know unless they change um who else uh why won't they service won service it what makes it that they can service it seriously I don't know I don't know I don't I think they just decided they don't want to do that for certain reason maybe there's reporting requirements or something yes but there are services that do do it like Madison management okay and uh who else BSI now most of us don't use BSI because they're a little bit bigger or bigger you know folks that have more loans a lot of loans I mean you know thousands but um those are the two that I know if you guys know of any other let me know because it's always good to know more but um and then I think part of it is their system isn't set up for it because when you buy one of these it doesn't it's not it doesn't continue to ACR interests the same way the regular mortgage would so guess is that their servicing software just isn't set up for it or they don't want to have to change their normal or something like that that's my guess I haven't got a straight no I think that's correct correct because I had another one I think it was a a simple interest loan it's a daily a daily oh my gosh it was really a weird one and and FCI wouldn't do it and some other ones wouldn't do it but bottom line is I think you hit the nail on the head that it's you know remember like Dave was talking about you know it's it's they're giving you know the lenders giving the homeowner money right yes basically it's not the homeowner giving the lender money so everything's kind of reversed so so let me just clarify real quick for that someone had a question what do you mean by service so in not space we have servicers who are act like a property manager but in our space when they they collect payments typically from the borrower and they send the lender so there's servicers who do not will not service a reverse mortgages and some that do and I agree I think it's the way it's set up in their system um I'm sure Kevin probably on here and maybe you'll explain a little more about that side of it but it's the idea of how the property manager in the world of real estate is handling this loan because it's not a typical loan that's set up like a traditional asset sorry go ahead yeah that's good that's good yeah so you really want a serer with everything you do in notes I mean you pretty much have to unless you're licensed in all these states and forget all that it's just too much work so um yeah you definitely need a good servicer to work with you um so absolutely so now it's set up ready to go what makes something why would anyone buy a reverse mortgage um well I think I think one thing is a people especially investors that want to maybe get the real estate and rent it or someone that wants to get the real estate and own or Finance it and and and and you know create note that way um you know that's a great way to get a house at a discount versus going out and trying to find a house through the MS which as we all know there's not many and um they're very difficult to get at a big enough discount right this a good way for maybe even a Fix and Flip like for example I have a couple I just got back now I have to decide am I gonna you know uh you know fix it myself upgrade it and sell it or maybe just upgrade it to a rental quality rent it or just try to sell it to another investor it's a wholesale type thing so it really depends um but that's a good way that's that's one of the reasons people do it um I do it basically because I don't want the house but I can't really obviously work with the home owners because they're passed away but what I can do is if I do get the house my preferred method is to sell it with owner financing so I'm good point we had Rich asked a question can you do a rap note with a reverse mortgage property well it's not a rra note because I own the property now right so when I first I own the property outright I have title so um I'm basically owner financing the house so you have to go through you know owner financing the dad Frank things you guys talk about on you know watch these guys videos on that um but bottom line is I sell the house as loaner financing follow the wonderful rules and it's it's basically a note stream right I'm getting monthly payments I get a down pa....