How to Invest in Structured Notes | Real Estate Notes Show

Episode: How to Invest in Structured Notes | David Meyerowitz Dave's Goals and Plans: - Bought a note in Chicago years ago that went into foreclosure, thinking it would be a slam dunk, but COVID hit and borrower is still there 5 years later - Typically never buys anything in Chicago because it's a huge pain, but broke own rules for this deal - Recently had a VAS report a property looked amazing on Google Maps, but when they turned the corner found half of it was burnt (one fire 6 months ago, another 2 years ago) - Always focuses on residential real estate notes and runs into investors like David looking at totally different kinds of notes Nathan's Goals and Plans: - Dealing with notes recently with reinstatements happening, which is great - Encountered weird scenarios where notes paid for 11 years then went default unexpectedly - Buying non-performers and found deals go in completely different direction than planned, not necessarily good or bad, just different - Struggled with note creators not understanding the regulatory world, had one create 40+ notes without properly following Dodd-Frank Key Recommendations: - Always turn the corner on Google Maps or Bing Maps when evaluating properties - property could disappear or have major damage - When creating notes, structure them in a way that maximizes value in case you ever need to sell - Plan for contingencies and every possible scenario when buying or creating notes, even though it's nearly impossible to predict everything - If creating owner-financed or seller-financed notes, consult with professionals on proper structuring to comply with regulations like Dodd-Frank - Never depend on a note not defaulting - prepare just in case Topics Discussed: - Structured notes and structured settlements as alternative investments to real estate notes - Challenges and unpredictability of note performance despite borrower quality - Importance of due diligence and property inspection beyond online research - Regulatory compliance (Dodd-Frank) for note creators - Structured settlement annuity payments from personal injury awards - Lottery prize payment secondary markets Guest Insights: - David Meyerowitz started in mortgage buying in early 1990s and pivoted to structured notes after being offered lottery prize payments as investment - Verified lottery prize payments were a real secondary market by meeting with New York State Lottery General Council - Has done hundreds of millions of dollars in lottery prize payments and structured settlement annuity purchases - Before early 2000s, structured settlement transactions were 'wild west' - done on promise to redirect payments, leading to many missed payments when sellers redirected back to themselves - Structured settlement annuities come from personal injury awards where recipients receive ongoing payments instead of lump sum to supplement income You'll never need more than likely another penny to handle that deal ever again.

>> That is correct. >> Where a lot of times we buy a performing note in our IRA, we got to hold back, you know, a percentage of our purchase price to in case default happens, tax is needed. >> Yeah. >> You have none of that. >> That's correct. That is correct. >> That's pretty nice. >> You know, it's interesting. You go you go you got your landlord. they've always got to put a certain percentage of their income aside because they're going to have to fix something. Uh, property taxes, all those different things. You've got us who are the lean llords. We we put a small amount aside in case we need to hire an attorney at some point.

And then you've got you that n it's fine. You're just >> Hey everybody, welcome back to another real estate note show. I'm your host Dave Puts from JKB Holdings. Alongside me as always, Mr. Nathan Turner. How are you? >> I'm doing well, man. Doing well. >> Good week. >> Busy summer. >> Busy summer. Gorgeous weather. We're getting amazing stuff here in Jersey. I can't believe it. Right. So, this is the time of year, we talked last show, I guess a week or so ago, where it's hard to do work when the weather's so nice and the kids want to hang out and do cool stuff. College is starting for your daughter, which is awesome.

>> It's hard. >> There's a lot going on. And then I get uh roped into going to Chicago for three times in three weeks and that's still not resolved and it's just in case anyone thinks that oh everything is always perfect and there's no problems and everything works just the way it's supposed to ins. >> Yeah. >> No, it's it's been tricky. And then uh I'm back in the office here for a few hours. Just got home last night and then I take off for an overnight camp tonight with my son and then on Sunday I'm out for a week again at a different camp for young entrepreneurs. And so it's it's busy. It's a busy time.

>> Awesome. >> It's funny you say that because we talk about in the show about picking the right place to buy assets. >> Yeah. >> And you went against your own logic, right? And >> that's what happens when we break the rules. >> Absolutely. Yeah. I I bought this note in Chicago. Typically, I never buy anything in Chicago because I've dealt with it before and it's just a huge pain. And this was years ago, but I bought the note because it was already in foreclosure. So, I thought, "No problem. Slam dunk. It'll be easy. Finish off the foreclosure, sell the property, we're done." And then COVID hit.

Somebody moved in and here we are 5 years later and they're still there. And and this was years ago having the most difficult time getting them out for good. They've been set out three different times. It's just been a major issue, but we're getting there. >> Makes for a good story. Yeah, absolutely. Um, we we saw an influx of assets about two weeks ago. I've seen it come down a little bit this past week. We're still getting some uh nonQM stuff, which is bad. It could be paper that was created, but the banks won't >> securitize it. Um, with Danny or Freddy, >> um, that tapes are still going out regularly.

Um, we're seeing some more finance paper coming through. And for those who don't know who we do, who we are, we buy paper that are created by banks, owner finance, whoever. We also help those who are creating notes create them in a way that to actually make it more valuable for you to if you need to sell, if you ever did, >> we kind of help you out doing that. So, we want to be there for both sides of it. No other reason, but just to help. Um, yeah, >> we don't always benefit from everything we're doing, but we know in the long run it will come back in uh in piles for us. So, >> yeah, >> you know, it's weird.

You know, I've dealing with some notes recently. We got some some reinstatements going on, which which is great, wonderful. Um, we've had some weird scenarios of some things that have been paying for 11 years and then they go default and it's weird stuff. Um, and I would thought they would defaulted four years ago. Well, they didn't. >> And that just shows or to me it shows that you never know what's going to happen in a note or if you're going to create a note, it doesn't always mean it's going to perform >> even if the borrowers are perfect. >> Yeah. And we saw this, especially when we were buying non-performers, and you and I both saw this, where I bought it thinking it was going to go down this one track and then something happens uh where it just completely goes off on a different direction.

Not that that's necessarily good or bad, it's just different than what I had planned on. And so when we're on the buying side of things, we're always trying to look at every possible scenario, which is nearly impossible. we're trying to plan for any kind of contingencies about this or that depending on what we think might happen or could happen. Uh we're always looking at that. And so again, that goes back to with people that are creating these notes. If you're looking at creating some paper, you're doing some creative financing, seller financing, whatever, uh and you're not exactly sure how to put it together, we would love to be part of that conversation.

um just to see how we can help you create it in a way that is going to be most beneficial for you. Even if you're never intending to sell it, uh or if you are thinking that maybe sometime down the road you might look at wanting to cash out of that, we can help you put it together so that it's it's the most valuable terms and conditions that are available to you. >> Yeah, absolutely. I agree with you. I think what we've struggled with is that they don't understand our world and a lot of times we get most of what they're doing. I talked to some recently that said to me, "Do we really have to follow DoddFrank?" I mean, I created this guy created 40 some notes.

I won't call them out, >> but yeah, we have to, you know, and well, if it never defaults, you're right. If it doesn't default, you're okay. >> Yeah. No matter what happens, you can't depend on it not to fall. >> Yeah. Wouldn't it be nice to be prepared just in case? >> Yeah, absolutely. So, with that said, you know, we always focus on these notes and making sure that the returns are good, make sure that the structure is right and the collateral is good and and the property is good. I was talking to one of my VAS recently and they said, "This property looks amazing." and they looked on Google Maps, looked awesome.

And one of the tricks we talked about years ago was always turn the corner on Google Maps or Bing Maps, whatever you're doing, is the property could disappear. >> And we turn the corner. Not only the property just was still there, half of it was burnt as crisp and the one to crisp was actually just six months ago where the other one was two years ago. So, just another facet of just making sure you do everything that's solid, right? >> Yeah. Yeah. And we're always looking at the same kind of notes. We're always looking at residential real estate. It's fairly specific what we're kind of looking for.

And uh and then we run into a guy like David who's looking at totally different kinds of notes and I just find it fascinating. >> Yeah, absolutely. So, let's bring David in because I agree we're always focused on real estate. notes, but structured notes is something I remember as a kid hearing about watching on TV going, "Is this true?" >> Yeah, >> let's find out. >> Yeah, >> David, welcome, man. >> Thanks a lot. Good to be here. Great to see you. >> Yeah, really great to have you. We had you come to Diversified Mortgage Expo earlier this year. Uh we had met through a what do you call that? Mutual friend, I guess.

>> Connection. Yeah. and uh great guy that I've known for years and he's he's been just a really good guy. Anyhow, he said that I should get in touch with you and uh lo and behold a fellow Canadian. So, excellent. That works out very well. Um but yeah, in this world of structured settlements, structured different kind of node investing. So, I'm curious, very curious how it works. >> Let's start off real quick. David, just give us a little background of who you are. How did you get into it, just that beginning stuff? >> It's a It's actually a great story. I was uh looking to buy some mortgages many many years ago.

I started in this business in the early 90s and I invest I investigated buying these mortgages. I didn't like them. But the guy I was talking to said, "If you're looking for good yields, how about buying some lottery prize payments?" >> And the hairs on the back of my neck stood up. And I thought, "Wow, he's trying to sell me these funny notes, real now. He's offering me lottery prize payments. Next thing it'll be swamp land in Florida." You know, who knows where it'll go. So I put the phone down saying, "Thanks a lot. No, that's not for me." I picked the phone up literally 30 seconds later and said, "Tell me more because if it's real, it's amazing." >> Yeah.

>> Yeah. >> So, went from there and uh we act I actually drove out to meet the New York State Lottery General Council in Albany to make sure this was a real secondary market. >> He confirmed it was and uh the rest is history as they say. >> Interesting. >> Interesting. Wow. So this is by chance. I think a lot of us get in this space by chance. >> Yeah. >> Right place, right time, right conversation. >> I I always say you have to be in the game because you never know what's going to come your way. >> Yeah. >> Sometimes it's good, sometimes it's not so good, but you have to be in the game. >> So give us some examples of what this looks like.

You know, the most common ones I hear is the slip and falls and, you know, the aimless chasers, those kind of prizes, tonight lottery winnings, sometimes contracts for pro teams, you know, give us some examples of what you've dealt with. So I as you as you as I mentioned I we started buying lottery prize payments and uh there was a whole effort to create a a bit of a regulatory structure and so many states across the country allowed people to sell their payments voluntarily and so we set up financing with some big insurance companies. We started buying sell their reprise payments and we've done hundreds and hundreds of millions of dollars of of those prize payments >> and and then in the early effort to create a a bit of a regulatory structure started to allow us to start buying structured settlement annuity payments.

Now those had been purchased before that but it was more of a wild west kind of approach. Can you define what what does that mean for those who may have no clue? >> What I mean is that when pre201202 if you you you people were buying these structured settlement annuity payments which are payments that come out of personal injury awards. So someone has a slip and fall the their lawyer wins them half a million dollars. they may not be able to work as in the same job that they had before. So the the lawyer and they then the client agree they'll put $250,000 in a structured settlement annuity which will pay them over time to supplement their income.

>> The other 250 they may take in cash and you know that's how it goes. Fast forward years later they've actually recovered better than they expected. their job's going well. They're earning what they used to earn and they want to buy a house or they've racked up some credit card debt and they need some cash. So, they're a market developed where they could sell their future payments that were being paid by an insurance company. What I mean before the early 2000s that those transactions were done based on the promise of someone to redirect their payments from themselves to a purchaser. >> Mhm. the insurance company was asked to send the payments to a different account to a lockbox and unfortunately many of the original sellers missed those payments and unfortunately try to redirect them back to themselves and so that's what I mean by a bit of a crazy time.

>> Yeah. Then in the early 2000s, structured settlement protection acts were passed by the states all under the umbrella of an internal revenue code section called section 5891 >> and that provided a framework for people to sell their payments. But it also required that every single payment be uh be subject to a court approval. So for every single payment we buy, we enter into contracts. We provide financial disclosure to the seller and then we have to go to court to get the transaction approved. >> Oh, okay. >> Interesting. >> And so that's the current environment that we're buying the structured settlement annuity payments under.

>> How much does that slow you down? Does like >> Yeah. >> You come up with an agreement and then You're talking months. Yes. It's almost like a real estate transaction when you're buying a house, you know, like you enter into a contract, then you go through a whole process. Maybe there's some inspection period or you someone has to get their financing in place. It for us, it's not about financing. It's more about the court's schedule. >> Yeah. Yeah. >> And we have to put the insurance company on notice, the insurance company who's making the payments. >> Mhm. And so, yes, it's a cumbersome process and different states have different timelines.

>> Sure. >> Uh, so you could close a deal in one month or you could take four or five months to close a deal. New York is particularly slow. >> Imagine that. New York, huh? >> So, these aren't the only type of structured notes you're buying, is it? Or are you buying other What other types are you buying right now? I mean, lottery winnings, I would think if someone won, you know, $2 million, that isn't set up the same way, is it? >> So, uh, before that same time period, early 2000s, when someone won a lottery, they won an annuity. Basically, they won payments over 20 or 25 years. So, a $2 million winner would win a h 100,000 a year over 20 years.

>> Every payment would be reduced by federal tax. and in some cases state tax. So you thought you were a millionaire but you're getting 70,000 a year and you know that wasn't doesn't meet some people's uh assessment of being a millionaire although they didn't have to work for it was a automatic payment that came every year. Uh, in the early 2000s, the IRS allowed the lotteryies to pay the winners cash up front if the winner selected that. And so in early 2000s, 80 85 or 90% of the states were able to offer a cash option. So that market significantly diminished in terms of the secondary opportunities.

Mhm. >> Got it. >> We still do buy lottery payments. Now there are some uh there are some states, Massachusetts is one which does not offer a cash option. And there are some legacy winners who either chose or didn't have a an option to choose and they're coming to the end of their payments but maybe they want uh maybe they want cash. And so we still buy lottery payments. uh we in fact buy both in the structured settlement annuities and the lotteryies we can buy both the guaranteed payments but we also can buy the life contingent payments. So >> instruct in a structured settlement situation when someone is a buys a structured settlement out of their personal injury they can set up the annuity as payments for life with a minimum guarantee period of 20 years let's say and so we can buy those lifetime payments we have do a mortality assessment of the person or we have to get their life insurance various things like that >> okay >> in addition to We buy casino payments.

We buy which are paid over time. We've bought uh legal fees that are paid out of uh lawsuit settlements. For example, there was the big tobacco settlement 20 years ago >> and all the lawyers who were acting on contingency were were rewarded their payments over time. Some of them went to Wall Street and structured financing on Wall Street, but the smaller ones didn't have the size to do that. And so bought a number of uh those lawyers payments. >> So with that, I mean, are you getting involved in like sports contracts like professional sports players? >> Uh we have looked at some of those. uh one of the uh I guess underwriting criteria we have is that for our this kind of business of ours we want to buy payments that are guaranteed to be paid by the obligor payer.

>> So in a sports contract you are sometimes worried about thoseity clauses and things like that or so we tend to steer away from those. >> That makes sense. So those annuity payments are they any kind of these structured settlements um if it's being paid out over time is there an interest rate attached to that or is it it's just the lump sum split over time? >> What happens when it's originally set up is that the structured settlement consultant goes to the insurance market and gets bids. And so there is typically let's say the person bought a payment for $250,000 over 10 years. there will be an interest component to that.

So they will get more than 250,000 over that 10year period. >> Is that a fixed number? Is that fluctuates with the market? >> Uh traditionally it's been fixed. There are now however some equity annuities. >> Interesting. Huh. What do you >> very market >> when it was fixed? What was the interest rate attached to it? It it is it depends on on the market. So I've seen original rates range from 0% say during the COVID pandemic when rates as you know were crazy low. >> Mhm. >> I've seen rates go up to four or 5%. >> Okay. >> Okay. >> But that's about it, you know, and it's a typical annuity. Basically, you're buying an investment annuity within a personal injury award settlement.

Is there any chance of this defaulting? I mean, to me it sounds like a guaranteed performing gold mine, >> right? Yeah. >> It's very secure. It's not 100%, but it's very secure. And you are typically relying on the country's strongest, financially strongest insurance companies. Met life, Pacific Life, New York Life, those kinds of companies. Got it. Interesting. >> And if you're buying four or 5%, I would think you'd have to buy it at a deeper discount to get the return you're looking for. >> That's correct. >> Is that hard to do? >> Yeah. On the receiving end, are they, you know, I want a million dollars, but you're offering me 700,000.

Uh, >> there is generally a market rate. There's a market range for these and for the the the person who's receiving the payments, the payments were set up to provide them peace of mind when they were recovering from their injury. >> Okay. >> Later, that has done its job. >> Yeah. >> Been able to recover. They haven't had to worry about supporting themselves necessarily. And so now they have either a different use for the fund that, you know, a positive use or a negative use. Maybe they're trying to save their house from foreclosure, which we were seeing, you know, 15 years ago, >> or maybe they've got too much credit card debt, or they've got a a health medical procedure they need to pay for.

>> Mhm. We we price these as well as we can to the customer and to a referral who might bring these to us, but we certainly cannot price them at that sub 5% rate. >> Sure. >> Yeah, of course. Yeah. >> How much competition's in this space? I mean, are you able to buy at double digits without, you know, going crazy? You can sometimes buy at in double digits. Uh there is a good amount of competition. I keep looking for a monopoly business. I have not found it yet. >> Yeah. >> Uh there is a good amount of competition. Uh we buy these payments. So you know we typically will uh pay for all the costs ourselves.

So, the legal fees, taking the the transaction to get court approval, the court cost. Every insurance, most of the insurance companies charge an admin fee ranging from $750 to $3,000 per transaction. And so, we bake all that into our offer to a to the person. >> Okay. >> And so, once you take that off, we're probably buying in the high single digits. >> Okay. >> Okay. And for most of these loans being so secure, anyone with any kind of high net worth, even funds, they're happy getting five, six%. On an ongoing basis, is this something that somebody could do with their simple IRA? >> Yes. >> Or the soul 401k and say, "Listen, I'm going to beat Dave.

I'm all I need to get is, you know, 7% and I'm happy. >> Excuse me. >> That's okay. >> Yeah. No, you you can certainly do that. Uh so we have a number of high netw worth investors who buy these from us. Keep in mind that the process to go from origination to closing is very cumbersome. And so we uh we have to take the transaction through that process and then we we have we we we fund with our own money. We fund with some high netw worth investors. We fund with some family offices. Uh there's a variety of investors in these. >> Wonderful. And then are you I forgot my question now. >> Now are you is this is this being serviced by somebody like is it like our real estate are always serviced by somebody who can manage payments but it doesn't seem like you have to do that because this is kind of a court order you know payout >> where you don't really need to track the payments.

I mean it's just what it is. So for our investors we actually have set up servicing slash payment agent arrangement >> and it's more for convenience typically you don't have to chase payments that it comes >> on the day or sometimes even ahead of the date. That's just the way the insurance companies issue their payments. >> Right. Um we we we've relied on companies such as Allied Servicing who knows a lot. >> Sure. >> Okay. >> We know those those folks. Uh and so it's it's more of a convenience for the investor side of it to receive and then reissue the payment because sometimes, you know, we can buy partial payments.

So we can someone may be getting $2,000 a month. uh we buy 500 a month of that or a thousand a month of that. So often the payment will all come to the servicing agent and they'll split the payments between the original person and the buyer. >> I remember my question. So >> yeah mine >> yeah no good. >> So um you talked about reselling to some of your investors. If you're reselling it, do you still have to go through that same court approved process? >> No, you do not. And that's one of the reasons that we use a a servicing agent. If if it went directly to the investor, let's say as an example, Nathan, you bought one of these and then five years later you want to sell it because you have a different investment opportunity.

>> Mhm. >> Because it's going through the servicing agent, it can just be an easy transaction where you can sell to a different investor. If you were getting the payment directly from the insurance company, you'd have to go through a court order. >> Got it. Okay, >> got it. Um, >> so it enhances the liquidity if you're doing it through a payment or servicing agent. >> That makes sense. >> Okay. >> Have you had a guaranteed payment somehow default? >> No, we have not had a guaranteed payment default. What we have had very occasionally, and I'm talking 0.01% 01% of the time uh a family member may object to the transaction.

Uh we've always resolved it whether it's through discussion or through a lawsuit because all our transactions are approved by a court. >> Yeah. Um, so I cannot think of one where we haven't resolved it, but there have been situations where there's been challenges. >> So you mentioned before that you guys do the work and then people can buy them off of you. Is that accurate? >> Yep. Correct. >> I gotcha. So you guys are buying these things at a discount and then the an investor can come and say, "I'm going to buy off of you." Are there also options for investors who may be accredited to get into a fund level where they're not buying off you, they're buying with you? >> We have not done that before.

>> Okay. >> So, that's an interesting opportunity and suggestion, Dave. >> Yeah. And I don't know if the rules in Canada are different from United States. So, I don't know if that's something to look into. >> We we keep Canada out of it. Everything we same as me. >> I don't do anything in Canada. I I have my my Canadian corporation that everything eventually funnels to, but everything I do is US-based. >> That's amazing. >> Same with me. >> Yeah. Yeah. So, it's amazing. We talk about this stuff and people can go out there and get a, you know, performing note which a lot of people love where it's like, listen, you got a half a million dollars in your 401k or IRA, go spend it.

And the and the one thing I just can't get over, I think me and Nathan struggle with this is that you'll never need more than likely another penny to handle that deal ever again. >> That is correct. where a lot of times we buy a performing note in our IRA, we got to hold back, >> you know, a percentage of our purchase price in case the fault happens, tax is needed. >> Yeah. >> You have none of that. >> That's correct. That is correct. >> That's pretty nice. >> You know, it's interesting. You go you go you've got your landlord. They've always got to put a certain percentage of their income aside because they're going to have to fix something.

Uh property taxes, all those different things. You've got us who are the lean llords. We we put a small amount aside in case we need to hire an attorney at some point. And then you've got you that >> n it's fine. You're just you just collect what you collect. >> You can >> interesting levels. >> Yeah. Um, would you guys say that you're closer to 5% or closer to 10% in your typical return over the course of the time you've been doing this for the years? >> Uh, I would say we're closer to 5% a year. >> Okay. >> Okay. >> Which for big funds makes a lot of sense. >> You have the capital s on the sideline.

>> Yeah. Family office cash, that kind of thing. Yeah. They're happy with that. it, you know, it's there's always a struggle that I think all of us entrepreneurs deal with. Do you >> try and go for the bigger returns which come with time, money, and challenges, or do you go for the lower returns that often tend to be more straightforward? And we're always trying to balance that. I think that's what I have to do, and I'm sure that's what you guys do. >> Absolutely. >> Yeah. Where do you find these deals? Are you advertising? Are you what's your process of getting these deals? Marketing are you are you chasing ambulances or chasing courtrooms? Like what's going on there? >> So we we buy we we get referred deals from many of the professionals in the legal world.

So whether it's the the structured settlement uh finance people, the lawyers, um the trustees who sometimes deal with, you know, more catastrophic cases. >> Mhm. >> Um and we buy a lot of transactions from brokers or people who are in the market looking for deals. >> Got it. And uh we have you know very high success rate in buying those payments and dealing with those people. >> It's we we we I love the creativity in these deals and I love dealing with the people that we're interacting with whether it's the customer, whether it's the intermediary, the broker, the lawyers. Uh there's always always interesting people and and we just try and do our best for each each person and each level.

>> Do you deal with a lot of leads that are empty from a broker? We call them joker brokers, but do you have that in that space? >> Oh, yeah, we do. We do. >> Can't get rid of them anyway. >> I know a guy who knows a guy who knows a guy. >> Yeah. How many deals a year are you expecting to do? Typically, >> we typically do in the hundreds. >> Wow. >> So, uh uh and again depends, you know, on any particular year. It's a range, but uh we're pretty busy. And that's the structured settlement deals. And then we have other transactions that we do which are not as common and not as frequent but uh we certainly pay attention and and love to do them.

>> Yeah. >> Amazing. >> Interesting. So So then the way the ways that people can work with you is either they're either going to broker you something or they're gonna buy something from you. Anything else? What what else? >> Yeah. Uh so they can broker it to us. They can you know in in your business I think there are many cases where you negotiate with a a seller and then you do a different negotiation with your buyer. So we can either pay a commission or we can deal with it where you're in charge of the pricing. We buy we we deal with investors and then we deal with straight out referers who know of people who are interested or who need money and trust us to do the right thing by them.

And so uh that's our ecosystem. >> And do you guys close with escrow? >> Just >> we typically don't need an escrow. We just fund and uh >> Okay. >> Everyone goes their way. And is it is it an assignment like in our space we have assignments. Is it an assignment of the payment? >> Yes, it is. >> Okay. >> Yes. >> So, it's an assignment of the payment confirmed by the insurance company and before confirmed by the insurance company, it's approved by the court. >> Yeah. Sanctioned by the court. Wow. Interesting. >> I wish we can get that. >> A be careful what you wish for. >> I know. This is true. This is true.

And could someone buy a partial from you instead of buying a whole payment? Could they do that too? Is that an option? If someone says has 50 grand, right? They don't have a lot of capital, but they want to try it out. Could they get in and say, "I'll buy a partial." And then you say, "Yeah, we'll give you six and a half% on $50,000 and the payments X, so you're going to receive the next four years of payments, whatever it is." Um so we we you know we we can structure pay transactions in a way that meets someone's particular financial uh preference. Uh we definitely don't get into sending multiple people portions of the same payment because >> sure >> that's getting into securities activ we don't want to do.

Uh but we we see so many different types of transactions that if someone has 50,000, 20,000, 3 million, uh we can accommodate those kinds of investor preferences. >> I'm presuming 50 grand is probably a minimum. You don't want to someone has a dollar in their pocket kind of thing, right? You Yeah, it has to have a minimum. What is it? you know, the fund level sounds like it would be a great structure for you, but sound like you've done what you've done successful for all these years that just keep doing it, right? Um, do you if someone is interested in buying something from you, do you send out an email of like the latest news? Do you send that kind of stuff out? >> Yes.

Well, well, so if someone's interested, you know, we have a large group of uh relation investor relationships that there's typically more demand, more more capital than deals. >> Mhm. >> So, we typically don't have a shortage of investors and if someone is interested, then we will share some of the transactions that we have on the go and let them decide which they prefer. It's very it's kind of customized, you know. Someone may say I want payments that start immediately that and I'm paid monthly. Someone may say I want payments. I'm going to retire in five years. So, I want payments that start in five years and go for 10 or 15 years.

>> Yeah. >> Someone says, "I've got my money, my $50,000. I don't want to have to worry about what I do with $1,000 a month. I'd rather buy a lump sum that's being paid in 10 years." and collect 150,000 or 100,000 whatever the however the calculations work out. >> Yep. >> Mhm. >> So we can certainly deal with people and investors who have different preferences. >> Absolutely. >> And have we've done it over the years and we continue to do it. >> So we do for those who are interested in getting this stuff there's a link inside the comments and it'll be on the YouTube channel and everything else um of how to get a hold of David.

think this is a a real awesome strategy for those who are looking for consistent pay and in the world of you know investing there comes a time where the non-performing goes from being really sexy to being really headache. Um juggling a 100 non-performing notes is not fun when you're young and have energy. We done we've done it. But in the world of as you get older, it's like I rather deal with a 9 8 76 flat return that I can count on for the next five 6 7 8 10 years where it's like right you're not and people the the roller coaster of the stock market going up to 12 going down to three just that and flow and saying hey listen it's not sexy this is like a bond curve right like bonds don't go bad it's a great facet for those who are in that that time of their life where they say, "I'm done with the headaches, let me just do this, right?" >> Um, >> I would like for people to reach out to David and just inquire about it because I think even in my life where I may say, "Listen, I got, you know, 60 grand sitting over here like, yeah, I'm not going to get 12%, but I'm also going out buying a headache.

I'm not buying anything but payments coming in for the next five years, 10 years, whatever it is. What is the smallest lumpsum you've purchased, right? And what's the largest if you don't mind sharing? So, we've bought lumpsums in the seven figure level. >> Mhm. >> So, million2,2 million, $3 million range. Um, our biggest purchase was a we paid $25 million to a big big lottery winner who was doing some estate planning. >> Okay. >> Ah. Uh, and then on the small side, we've paid we've we've invested in the $20,000 range. >> Wow. >> Yeah. >> It's it's a very wide range. And Dave, you're absolutely correct.

This is for your fixed income portion of your investment portfolio, which you if you wanted to be completely reliable, completely safe. Uh this is a good place to do it. You can buy bonds, you can buy structured settlement annuity payments, you can go direct to the insurance company and buy an annuity from them, but you get a better rate by buying from us because we're dealing the secondary market. >> Yes. Yeah. >> Yeah. >> This is similar to annuity, just a little higher return, right? Correct. >> Um, and it's fixed. It's not going to go anywhere unless the market changes, right? But it sounds >> doesn't matter what's going to happen, you're going to get your gu your contracted for payments are going to come in.

>> Yeah. >> Similar like when we buy a note, it it whatever's going on in the economy doesn't actually affect us. uh not with the current note that we have. >> Yeah. >> Um >> they might default and that would change. >> If it goes in equity play >> like you're saying before, David, that may change a lot because then it depends on the the equity market. >> That's correct. >> Exactly. >> That's like that's like a adjustable rate mortgage for us and going, "Oh my god." >> Yeah. Yeah. Yeah. >> Oh, the fluctuation of that. >> Um >> yeah. >> And are you buying nationwide? Are you buying across those or are there certain states or certain things you're avoiding like Nathan's Cook County kind of idea? >> No, we we buy a lot in Illinois and in and we're familiar with Cook County.

Uh we buy across the country. We've also bought payments from people who who are who live in Puerto Rico, for example. So we just have to make sure that all our transactions are documented and approved and closed in accordance with the federal and state laws. You know, just like you were talking earlier, we keep in mind what the what the laws are. >> Absolutely. All deal. >> Yeah. We buy across the country. We have local attorneys in every state who help us with our court approvals and >> that's amazing. So guys, I encourage you. There's a link inside the chat. Feel free to do that. Um, and I'm going to let Nathan finish up.

I'm not sure how he's going to finish this one up, but >> yeah, this is really interesting. We're usually talking about real estate related type things and yours isn't. It's it's not real estate tied at all. But let me get your sense on what do you see as as the economy like surely you're seeing some things in your side of the world where um I mean you've got a different vantage point uh as far as the economy is concerned. So that that'll be really interesting. So what do you see coming up? What's your crystal ball? >> That you're putting me in a tough spot, Nathan. >> That's the point of the question, right? >> Don't hold me to it.

Uh I I think rates are going to come down. >> Mhm. Uh, I think that's good for the real estate market generally and I and it's actually it's good for my business because if you're if you're entitled to these future payments and market rates come down, it means I can pay you more for your future payments. And so it means either you're going to get more money or I don't have to buy as many payments as I would have had to buy in order to get you the same amount of money. >> Really? >> So >> yeah, we really customize to each customer what they need. We we try and pay them not too much, not too little, just in the sweet spot for them.

Mhm. >> And uh I you know our business responds to financial stress and so if there's particular financial stress that people are feeling they may feel that the right thing to do is to sell some of these payments. >> And what we try to do is help them balance. They need some money now but we also don't want them to forget about their future. So we we buy just the you know as as many payments as it takes to help them with their current financial challenges and uh leave as much as we can for their future. >> Absolutely. Yes. I see I see your comments in actuary driven. >> Absolutely. But David, it you know, we typically focus strictly on real estate notes, >> but >> we're still notes.

I think we're more notes than real estate, Nathan, right? Like we're we're focused on the on the on the payments and being that lean lord kind of perspective. This still fits in that bucket of, hey, we're lazy investors at the end of the day. How can we be lazy? This is a way to be even more lazy if it's a fixed income kind of situation and those payments may be over five, 10, 15, 20 years like I said with lottery winning. That's amazing. Well, David, thank you so much for spending a Friday afternoon with us and your wealth of knowledge, wealth of experience, >> and just a different perspective um that we typically put ourselves around, which is the key here.

It's been a real pleasure to be on your show and thank you for inviting me. Great to speak. >> Pleasure. >> Well, hang on for after hours and we will uh talk to everyone soon. Me and Nathan will be back in about a month or so. We'll be putting on the calendar. Feel free to check out the podcast, the YouTube channel, and then add our calendar to yours so you can don't miss a show. I think our next show is September 5th. Uh we'll be taking off a month as I'll be traveling. Nathan will be traveling. Enjoy your August everyone and we'll see everyone soon. Take care. >> Thanks everybody..