How to Make More Money with Creative Financing = Sell a Partial | Real Estate Notes Show

Episode: How to Make more Money Creative Financing = Sell a Partial (Full Video) Dave's Goals and Plans: - Focus this year on connecting note buyers with originators and sellers in creative finance space - Learn from originators to understand note creation process and tailor business accordingly - Educate the seller finance community about proper note creation and regulatory compliance - Shift strategy from bank notes to seller finance notes due to better yields at 9-10-11% versus 3-4% Nathan's Goals and Plans: - Increasing social media presence and personal engagement as Dave recommended - Taking more active time off to volunteer and spend time with family while maintaining business systems - Connecting with experts in note creation, wraps, subject-tos, and creative finance strategies - Working to understand proper note creation standards and Dodd-Frank compliance requirements Key Recommendations: - Ensure seller finance notes comply with Dodd-Frank laws and 2008 regulations from the start to avoid major problems later - Note creation quality is just as important as note details - do it right upfront - Hire Residential Mortgage Loan Originators (RMLOs) to navigate Dodd-Frank compliance properly - Verify state-specific requirements for seller carry-back loans as they vary by state - Focus on seller finance notes written at higher interest rates (9-10-11%) for better deal economics Topics Discussed: - Partial note sales strategy - immediate cash while retaining future payments and interest - Seller finance market growth (estimated $32 billion created last year) - Dodd-Frank Act compliance and loan originator requirements - Advantages of seller finance over traditional bank financing - Note creation and regulatory compliance in the private money lending space Guest Insights: - Mark has 50+ years experience starting in hard money lending in the 1970s - Dodd-Frank Act (2010, with remaining provisions in 2014) created opportunities for loan originators in seller carry-back market - Different states have different seller carry-back requirements - Arizona has none while Texas has extensive requirements - Compliance problems don't surface until portfolios experience stress, then become major costly issues - RMLOs focus on Dodd-Frank compliance while state compliance varies by jurisdiction much I'm done getting my 240 months of payments of that monthly payment right that uh 779.42 that loan goes back for goes from me back to you the seller and you still get to collect the remaining 105 payments which at that time when we sent it back to you the balance of the note is sixty three thousand dollars so you're still going to collect another sixty three thousand dollars plus interest for the 105 payments moving forward which that's awesome right and I got my yield you got your some money out of it and you can move forward to it um so if this was something that you were holding in your IRA this is a perfect uh strategy because then you've got that you've got income whatever it is 10 years from now five years from now 15 years from now whatever it is uh plus a lump sum today so a lump sum today after some time goes by once that partial is completed you still get that income back thank you hey everybody Dave putz here from jkp Holdings alongside me as always Mr Nathan Turner how are you doing well doing well awesome man it's been another week going back to back weeks here it's been a fun fall how are things with you I saw some pictures of you uh doing a little bit traveling with your son yes I'm I'm finally doing what you asked and what you told me to do for a couple years now getting a little more active on social media so that's an example yeah I was able to go and uh take off for a few days with my son uh for camping trip that he's got he got into this program where he gets to do all this Outdoor Learning stuff which is so so so cool and so I'm happy to be able to volunteer and to have a business where I can do that that's that's been awesome yeah so you good point you said there are you doing something you unload recoup cash out whatever word you want to use you get some of that money back out um so for that feature I think working together as a team is going to be our biggest um asset moving forward yeah definitely so one of the things we've learned in the past year uh which has been really interesting this idea of what is a correct note on your world because remember we bought banknotes everyone yeah for years and we never worried about any of that kind of stuff so we wanted to make sure that we understand what is to create a new note and we've connected with some of the best experts in the space who were creating and basically running teams of of creations of notes raps subject twos self-refinance cries greater finance and getting a good understanding of what you guys do um so it's awesome so please I'd encourage you guys to share our content with those people in that space yeah definitely several Finance I think we've estimated 32 billion dollars was created last year it's a heat industry yeah and and there's no slowing down like I say I I think we're gonna see more and more of that coming out yeah uh it's tough to get a loan in the bank and if you're not able to seller financing is a really great way to go not to say you're a bad borrower not to say that uh there's something wrong with with those kinds of borrowers that get seller finance it's just it's another option um and speaking as a self-employed person man it's so much easier to deal with a person than it is to deal with the bank a lot of the time yeah yeah so you guys are out there please keep in touch with us for you no buyers I'm hoping that the information we've given you has been useful for you right um and if if it hasn't or something else you want to hit on let us know so one of the reasons we've been asking is why are we shifting from the bank to the seller actually in the 70s that's when I started in this in this field so I'm on old old fart from that perspective um and the uh the first 10 years of my career all I did was hard money lending I didn't know what an FHA or VA or conventional loan was I just cut my teeth on on the private money and work in that Arena and then expanded um a number of years later into the more traditional market so we just kind of added that component to our business and started my own company in 86 and ran it for over 25 years before I merged it into my current to my current operation so it it's been something that I've been working on for a long time it's basically my career and um my passion is more on the private money or hard money side of things and after Dodd-Frank uh came out in an effective 2010 uh that's when things really started to change after the housing prices in 08 uh rules started to come out and everything changed as of 2010 and one of the things that I noticed was that I figured that the Dodd-Frank Act was the I I kind of call it the loan originator Employment Act because it gave us uh Sloan Originators an opportunity to participate in this in this world in the seller carry back world because Dodd-Frank requires to hire loan Originators in a number of cases so um we started to play in that Arena and it just have expanded it we do our mlos which is the residential mortgage loan originator program uh in across the country we just do the Dodd-Frank compliance piece we don't necessarily do the state compliance piece different states have different requirements some have no requirements I'm in Arizona we have no requirements on seller carry I'm done getting my 240 months of payments of that monthly payment right that uh 779.42 that loan goes back for goes from me back to you the seller and you still get to collect the remaining 105 payments which at that time when we sent it back to you the balance of the note is sixty three thousand dollars so you're still going to collect another sixty three thousand dollars plus interest for the 105 payments moving forward which that's awesome right and I got my yield you got your some money out of it and you can move forward to it um so if this was something that you were holding in your IRA this is a perfect uh strategy because then you've got that you've got income whatever it is 10 years from now five years from now 15 years from now whatever it is uh plus a lump sum today so a lump sum today after some time goes by once that partial is completed you still get that income back thank you hey everybody Dave putz here from jkp Holdings alongside me as always Mr Nathan Turner how are you doing well doing well awesome man it's been another week going back to back weeks here it's been a fun fall how are things with you I saw some pictures of you uh doing a little bit traveling with your son yes I'm I'm finally doing what you asked and what you told me to do for a couple years now getting a little more active on social media so that's an example yeah I was able to go and uh take off for a few days with my son uh for camping trip that he's got he got into this program where he gets to do all this Outdoor Learning stuff which is so so so cool and so I'm happy to be able to volunteer and to have a business where I can do that that's that's been awesome yeah so finance world can you hit on one thing dealing with a hedge fund or bank is not as negotiable a lot of times as a seller finance yeah but the other feature is the fact that these loans are created 10 11 12 where we're just having a trouble getting those loans from a bank because last three five years has been really low interest rates yeah and and we're always buying our main goal of node investing is yield so we're always just going after yield so if we've got a note written at three or four percent the discount that we have to work in there is huge and so it makes it really difficult to get a deal done so when we see these notes being written at 9 10 11 percent uh that's much easier for us to to get a deal done yeah absolutely and I think that we we want to make sure we understand you guys right so when you have a question let us know as a no buyer right we're trying to work on how to buy wraps and stuff like that it's been a little bit more challenging um but one of the key features that most people don't get is when you're creating these loans and I don't know why it's not taught as much as it should be the creation of the note is just as important as the details inside the note absolutely when you guys are creating these notes and these borrowers are owner occupants meaning they bought the property they bought the property they're gonna live in it and they took a loan out on it we've run into too many people out there who are teaching or learning that these seller finance paper needs to be passing the Dodd-Frank laws and passing all the regulations that was put forth back in 2006 some of the eight that changed the industry and said listen no longer can we have this happen and we want to make sure you guys get that because if you don't you can have problems along moving forward and what people I don't think you're getting is that the last three four years portfolios are all performing when things are good there's no problems back you go to Texas there's lots of requirements so it just depends on what state you're in but uh we do the the Dodd-Frank piece of the piece of the puzzle uh and keep you keep your nose clean when it comes to compliance there so that's where we play uh in one sector of our business operation is the rmlo uh it's funny you say that Mark so I was I was originating notes in Columbus Ohio 2010 2011 2012 and then when the rules was it 2012 or 13 that Dodd-Frank became kind of came I actually actually it's 2010.

it was and 2014 is when all of the remaining Provisions gotcha that's what it was so I I had heard about it I learned a little bit about it um and and we were looking around for an rmlo and could not find anybody like just they didn't seem to exist we'd I'd go and talk to like a mortgage broker or something like that I'd say so you know I'm looking for somebody that can help me navigate Dodd-Frank and they're like God who like they had no idea what we were talking about uh so you know knowing that this was a rule uh and that it was going to be you know all the uh kind of fines and everything attached to it it was an important enough thing we eventually shut that down I stopped originating because I knew that this was going to be a challenge and I couldn't find a normal low so we're glad to have you here this is a normal oh this is somebody who can help you Nationwide too which is yeah on unbelievable having it's a big deal what is in a quick summary if someone says screw it and they create 50 60 20 loans without an armalo what's the consequence so you know I don't know what the fines and penalties are because I've never played in that Arena thankfully I haven't had to deal with that I just know that um the Dodd-Frank has teeth and it can you good point you said there are you doing something you can do anywhere in the country anywhere in the world and kind of have things set up in systems um but what we're finding as a lot of people who are on the other side of this space of doing seller finance and owner finance and creative Finance all this kind of world it's a little bit different for them right because they're doing marketing they're doing all kinds of different stuff and we get all that but we want to be that bang for a lot of these people and a lot of people don't know about us right um so we wanted to dive more into it and this year if you're new to us this would be on YouTube our podcast everything else we focus this year truly on connecting note buyers with Originators cell Finance all kinds of different way of by creating notes yeah like what is your opinion yeah what's your favorite experience your thoughts you know it's been interesting and we've been talking about this all year um just yesterday I had two different phone calls with two different people that talked about how uh they're originating some fairly large numbers one guy's talking about 30 to 40 a month um where they're just they're originating just a bunch of notes and they want to sell them so I mean they it's out there people are looking to sell this stuff uh and they're and most of the people that I've talked to they're willing to tailor make it uh to what we're looking for which is perfect that's exactly what we're looking for so there there's tons out there I think we're going to see more and more of that as interest rise interest rates continue to stay high yeah maybe rise uh but I think we're going to see more and more seller finance come out yeah absolutely and I think for us you know we want to educate them but also learn from them as well yeah so it's a two-way street so we can kind of really grasp what you guys are doing so we can tailor our business but also help you tell your business to yeah it's when they go back yeah yeah it's only a problem until it's it's not a problem until it's a problem but then when it's a problem it's a big problem yeah and if you haven't done it right up front uh you're going to run into some really difficult challenges going forward uh which could cost you a lot of money a lot of heartache and so do it right up front uh and there are ways to do that and so that's part of who you got on today is yeah let's bring up let's bring Mark um man it is a pleasure to have you on with us I think that the information you've shared with us just in the recent couple months has been amazing yeah well thanks appreciate that uh David and Nate it's it's a pleasure to be here and to address your audience it's always good to be among like-minded people and um we we all have the same kind of uh approach to things I was always the loner out there and most of my career and it's nice to see there's others uh that kind of have the same mindset that I do yeah so let's back up here A second we gonna do some work um we do a private call on Wednesdays with a bunch of really smart people and Mark came on this like a ebola shoot because he really said to us guys I've been doing this for a long time the knowledge the experience the in the wealth of information and women always agree on certain situations but you bring the facts up and say this is what the law states and you play by the law and that's extremely useful so Mark how did you get introduced to this what do you guys do currently and how many states are you doing it in so uh again thank you for having me the uh my my background actually is primarily in the private money or hard money Arena I I cut my teeth back make someone's life pretty unbearable um so fines and obviously cease and desist and all sorts of different things if you don't have the thing that people don't realize is that seller carry bags generally are created between a buyer and a seller simply somebody has a house they want to sell it and they want to be the bank for the buyer right and you can see You'd think that that was a simple capitalistic kind of activity but Dodd-Frank comes in and steps into the way and says no that's not the way you you can do it and I I personally think that the ACT is misplaced I really don't see any reason for it nor do I see any reason for my activities honestly you don't need me for yeah if Frank wasn't there you wouldn't need me but because it's there there's this sense that you got to play by the play by the rules yeah and you don't want to be known as the lender who doesn't do it right herodies will jump all over that you know your borrowers will talk to their attorney something when something goes to fault and things start changing all this stuff's gonna start twinkling down and that attorney is gonna wet their teeth is gonna go after that lender and hit every loan that you guys own so be sure you get talking with Mark about what you're doing and what states you're in and stuff like that so Mark we've went across a lot of these owner finance people who oddly enough never heard of actually selling a note let's get back is it legal to sell a note absolutely a note is a negotiable instrument just like a stock or a bond is and so it can can be marketed and sold in the same vein that any other type of financial instrument can be sold the beauty of it is is that it's generally done on the private side of the market I mean it's between you and me uh it's not sold on Wall Street although you can find companies that have hundreds of notes for sale at any given time but generally it's going to be a one-on-one type of situation so somebody sells a piece of property carries it back they're happy with the terms and then something in their life changes and they need some cash and this note is something that they can utilize to to achieve some cash and we last we talked about some of the advanced strategies of no partials which tricked us triggered us to talk to you about our seller finance people familiar with this idea of selling a partial of their payments and and it seemed to us that they're not super familiar with it and they're kind of uncertain about it and then we bring the numbers with you kind of question why they don't know more about it because the money they can make in a quick kind of cup of the money and then hold the back end seem to be a win-win for them as well as for us right we've seen a lot of that in fact I teach a class at one of the local real estate schools the continuing ed class and one of the things we go over is just this particular topic why and no it has value uh how it could be sold how it could be structured and some of the ways to move through it to get some money and actually when you sell a partial you actually can make more money than you would by getting paid off in full so it really is a a win-win for everybody involved in a transaction like this so let's get back for those who didn't join us last week definitely uh check out the podcast or the YouTube channel or whatever can you break down what a partial is what does that mean so I actually have an example David that I can I can share if I might let's go over the definition and we're gonna break it down we're going to share a screen but what is overall what is a partial I mean are we am I buying five hours of next week's payment or what's it look like overall the beauty of it is got I think three different sessions having to do with celebrity so it's awesome come and join it's going to be really really educational you'll see you'll see yeah so let's dive into some number share Mark I think people you know and feel free in the chat guys feel free to have questions Curiosities understanding and stuff like that anything we kind of not sure we're doing right please feel free to jump in there please give me I see Cindy made a comment they're doing it right the right way the first time is called Integrity yes something I appreciate it yeah absolutely it's key for anyone you need to understand because us note buyers need to learn the stuff there's no sellers need to learn itself and US note buyers understand it it's a different world you guys used to find the property get in the borrower and put them in place but we want to make sure you understand this side of it so that if you need to recoup some of that money and get us going we can do that as well so um absolutely so yeah so one thing came up with that uh Randy mentioned that he's planning creating a wrapped and selling note as a partial just before we get to the partial numbers just be understand the fact that rap notes are a little bit difficult for partials the reason being is you have the underlying borrower um unless that underlying borrower is you or someone you know and not an actual uh home owner that you moved out and you have an underlying first the intricacies of getting that borrower to sign over POA to this partial buyer can get a little bit cumbersome um so Randy feel free to reach out to us with some Curiosities um it just makes a little bit more difficult but um if we can come up with an idea Nathan and I will definitely entertain it because I know wrap notes are huge so yeah yeah I'm very interested in that let's let's um yeah so it's awesome yeah I guess Heidi asked the same thing with Heidi we're just trying to um work out that thing if we can pay out get when they get the note back their total return is 137 000 and if you look at that if the buyer paid off the note today they'd be paying off just short of a hundred and twenty eight thousand dollars to pay off the note so there's a nine thousand dollar gain by by the utilizing this strategy which is a seven percent additional return an additional gain so that's one of the advantages of this now it gets even more extreme when you shorten the period that's sold so as an example if we sold a 15-year term um my my price is going to be 69.5 the balance remaining on the notice a lot higher it's 87 000.

the total return then to the note holder is 157 000 and again if they pay off the note today there's a 29 000 Advantage by utilizing this strategy over if the note was paid off in full today and then the third option is even more dramatic you can see the yields are dropping my yield is about nine percent on these second and third options it's primarily because the term is shorter I don't need to make as much on a shorter term than I would if I was buying 345 payments so let's let me reword it for some people may not fully understand right but he laid up perfectly when they say the balance right after 240 months in that scenario option one once I'm done getting my 240 months of payments of that monthly payment right that 7 79.42 that loan goes back for goes from me back to you the seller and you still get to collect the remaining 105 payments which at that time when we send them back to you the balance of the note is sixty three thousand dollars yeah so you're still going to collect another 63 000 plus interest for the 105 payments moving and for 24 months really short one it'd be 16 890 70 right which is traumatically lower so no buyers who may have 15 grand in the Roth IRA or whatever can definitely fund these deals so it depends on how much money you want out right if you're looking Hey listen I need to pull 50 grand out of this we can back into it and say okay fine how many months can we buy T equivalent to 50 000 and we can work numbers all over the place as long as it works for us for our returns and for you guys and we would take ownership over you would stay on the servicing side of it we both work with our servicer to make sure that you can dilanate time to see where things are at and we turn around and say great this works for you services sorry do you guys service loans as well no we don't okay we we have a third party servicer handle it it's uh it makes life a lot easier when you have that Independence that way yeah absolutely and and plus it converts back to the seller the paper easier you know if we're collecting those payments of somebody else is it's a simple matter of signing a an assignment back and it's done we encourage you those who are creating notes please use a servicer when you create the note for payment it's like a property manager um it's crucial in our space to do that for multiple reasons monthly statement going out the end of the year tax paperwork all that stuff most originals are not doing and you need to start doing it but right so when people do this you know there's an amortization schedule that shows if I'm gonna ask a dumb question you're a softball question in the beginning of ever amortization schedule what gets paid more the interest of the principal but it's the interest that's a softball for sure yeah so there's a ton of upb left at 15 years or 20 years or five that you can structure a partial sale any way you want so we've done transactions where we've sold obviously the whole note somebody says I have this note I want to sell it I want to be cashed out and done so that's the full or the entire note sale strategy but then beyond that there's this partial node so we can sell a portion of that note we can sell a portion of the payment we can sell a portion of the balance we can sell any kind of piece of it that we want the beauty of it is is that there's no structure or absolute formula that you have to follow it's just basically what buyer and seller agree to is what can be sold and that's what I like about this in industry in general is that it's there's no um absolute rules that I have to follow I can say yeah right I want to sell you know five years worth of payments okay then let's figure out what five years what the payments look like and at least and I want to jump in here just so those who don't know who me Nathan are you know we've been buying notes since 2010 and previous and buying these notes has been a real attractive thing and this partial world was kind of a a mysterious world for us for a long time because not a lot of people were selling it I think it's because most people didn't understand it but it's a great scenario for us and also people who may not have a lot of money that may only have 10 15 20 000 they just want to get their money working Ira money is key right in the documentation of the contract can be written any way we want and I would definitely tune into last week's video to see some of the intricacies of that but we can if someone has six grand the Roth IRA you can buy six months of payments right so Mark what what do you think owner fans peoples understand when it comes to selling a note or selling a person where is their understanding stop I would say or well I I just think that there's not a good educational component to this side of the world you know that um you know I mentioned I teach a little bit of it I teach 45 minutes of a three-hour course so that it's not like you're gonna get a lot of Education uh in in something like this there's just a lack of quality information and you guys with your YouTube channels and things of that nature are spreading the word and that's what really needs to be done is to let people know that there are opportunities out there beyond the simple transactions that you may have heard about in the past so for me I've been doing it a long time but I do it in a pretty very small world and that's where I think by opening it up you know like social media has given us more opportunities to make things known and certainly it's a great tool that you guys are doing to put that information out yeah we're trying we're trying to educate the masses here yeah it's time and the more people that know about the more stability that industry will have the more product that industry will have just gonna grow and grow with with that educational component and even just Conformity like that's been a big Focus we're trying to get people on board using an rmlo uh like you said do you need to exist that's debatable but the rules are there so yes let's just follow the rules and and get it done properly so that there's it just solves problems in the long run yeah and I would encourage you guys to we'll chime in here for a second um coming next year in 2024 May June um Nathan runs the Diversified mortgage Expo down in Nashville so any of you guys are in the seller finance world stop for me for Nathan right come down take a look at it and talk to us in person just chatting together yeah we're putting together the schedule and everything this week uh and it's coming together really nicely it looks we've that's a 36 discount and Dave and I probably wouldn't even pay that much so I understand that right now right so we're gonna have a discount so much and this is one of the creativity and make sure that interest rate as high as possible yeah but not every situation can have a higher interest rate because the borrower may not have the ability to repay right that's one of the key features so in this situation we're gonna have to give you a lot less money than you would normally get if we bought the whole loan right it may not work out doesn't make it a bad deal just make the numbers don't work now if this was a 12 interest rate it may work out better but you're still gonna have to get a discount and you may not like that or it may not be enough money to do what you want to do with it right and so what we did was we expanded the concept and we've now created a partial note sale strategy and these next three columns are showing what it would look like if you sold a partial so these are just three examples of selling that partial and option number one we sell the the holder the paper sells 240 months instead of the 345 he sells 20 years of payments we're gonna give him 73.5 for that note almost as much as we would give them for the whole note as you can see it's pretty close there but at the end of 240 months the balance remaining on the note is 63.5 so that buyer who's been making those payments for 240 months at the end of that term still owes sixty three thousand dollars on their on their debt which means that when we're paid off our 240 months is paid off the holder the paper the seller of the note actually gets it back with a balance of 63.5 so their Total return is my 73.5 plus the 63.5 balance that they're going to can see it and it really comes together to show you the fact that this is a great option for people who are looking for an idea of how much money can I get for a note that makes sense to you me and everyone else but you get some money out of it I get a great return right and it's only for a short period of time or a long period of time you have 120 months I've done a two-year partial I've done a 16 month partial I've done a 12-year partial in this idea is amazing for both note Sellers and note buyers and a lot of note buyers out there are hungry for this so you know Originators if you can do more of this you're going to get a lot of money coming your way and as long as you have the nice the ability to do this it'll hold a home run every single time you do it yep the one of the other benefits of this is the amount of money you need to play in this Arena as a buyer of paper yeah sure you don't need as much I mean yes the whole notes 81 000 to buy 10 years is only 54 000.

so you you get to reduce the amount of capital that you have to invest in any one given note and you can spread your Capital among multiple nodes that way rather than putting it all into one transaction so it gives that strength as well to the node buyer or the partial node buyer of uh of expanding their their Market their opportunities yeah so Mark when you've told what is the biggest hurdle most of these seller Originators and so that struggle with this concept what what are some of the questions or pushback you've gotten on this well the first the big question is uh what happens if the buyer pays off early comes into play and then the second question is what happens if they don't make the payments and I have to and there's a foreclosure so those are usually the two key elements that have years after that's a ton of money to collect that witnessing pays off all we're doing is really collecting the the beginning interest and you're collecting all the money in the back end which is awesome so we encourage you guys to think about the strategy but again we would rather do this with a loan that that either there's no first or this is the first or that the rap uh the partial purchase would pay off that underline first um to make it cleaner easier and more attractive and for you guys who are doing this you can if you're doing 80 20 loans that some of the bigger players are suggesting you could do this with both of them or one of them or you know at any time and you can sell a partial then sell another partial after that was done and do another partial after that one's done all along the way you would actually make more money that way yeah one of the things we've been seeing lately is we've got uh some transactions that are coming in where it's a it's a first and a second so the seller is selling the property carrying back at first in a second and that first is at 70 loan to value so the beauty of that is that we can then structure a transaction where we would buy a portion of that first or the whole first for that matter but generally it's buying a portion of that first uh and then the seller's profit picture really comes into play in that second and so the advantages they get cash even with a low down payment buyer they still get cash from the selling of the partial on the first and they still retain that cash flow on the second and the profitability picture comes in on that second so it really is a good strategy for Real Estate sellers that are selling owner occupants or even Nano rocket boats for that matter as well yeah so I encourage you guys to reach out to me Nathan if you are curious about this not sure about it we can run the numbers we could jump on a zoom even and run numbers please ask that you have the that first with our partial purchase we have no problem doing it um it just makes a little bit more difficult right so awesome we'll uh I'll let Nathan kind of respond to that and uh we can talk some more for sure yeah definitely um so let's let's change our remark I'm gonna let you go ahead and share your screen hopefully this will uh go successfully here and uh see what you got to show us we're gonna go over some numbers and partials and see why it's uh attractive uh for us as well for the seller to buy it and why is it attractive right so this is an example I put together um this is actually a real transaction that occurred some time ago but it kind of gives you a sense of what we're dealing with so in this particular case there was a sale of a hundred eighty thousand dollars buyer put 50 down carry back was 130 30-year term it was written at six percent interest rate this is the current balance 127 and the payment is 7.79 and there's 345 months remaining so if somebody held that note they would be they would be saying you know I need some cash I've got this note what can I do to generate some cash the normal strategy would be to sell the entire node and this portion here in tan kind of gives you that idea so they're selling 345 payments we would give them 81 000 for that that would yield us 10.303 so that six percent note now yields me ten percent uh I'm gonna I'm gonna carry it for 345 months and I'm going to give the seller a net of 81 000 wow so that means that there's almost a forty seven thousand dollar discount here so if I had a yield requirement of 10 on my paper in order to do that I'm gonna I'm gonna have to Discount that 47 000 which is a huge amount of money and people aren't going to like that and forward which that's awesome right and I got my yield you got your some money out of it and you can move forward to it um so if this was something that you were holding in your IRA this is a perfect strategy because then you've got that you've got income whatever it is 10 years from now five years from now 15 years from now whatever it is uh plus a lump sum today so a lump sum today after some time goes by once that partial is completed you still get that income back into your IRA so it's a it's a great strategy for an IRA it's actually new for everybody because the holder the paper is actually when they sell X number of months of payments they're actually retaining a portion of the interest that they wrote on that note that's why the yields or that's why the returns are are higher is because they're still getting interest and that's the beauty of it the balance doesn't drop to zero at the end of 240 months on their note it drops to whatever the remaining balance is and then they take it over so the advantage really is very strong it it's a win for the seller the paper it's a win for you as a buyer of the paper uh for you you mentioned Nathan the IRAs it's a great strategy for IRAs for long-term investment strategies there it really is um Everybody benefits on a transaction like this yes yeah you know as you can see the entire note I can only pay eighty one thousand dollars this is all about time value money it's a financial calculator now so in the in the chat asking about it um this is a financial calculator right and it's just because we're changing the number of months right we're reducing number months and we're fact that we're setting the the rate we're looking for to be exactly right this all makes sense if your original interest rates at 10 and we look for 12 the numbers come come together um we have a great chart to kind of give you an idea of what that looked like I'll put that in the uh chat so people to that have to be addressed when we do a transaction like this we create an alternative alternative amortization schedule and that amortization schedule shows what our involvement is for the period of time that we have that note and it shows what the balance is at any given moment of that time so we may buy uh 15 let's say 15 years of option two and five years into the deal the buyer pays off so uh we we would look at our amortization our 15-year amortization see what our what the balance is based upon what we bought the note for sure and um and then we just picked that balance and that's what our return would be we would collect that amount of money and the seller of the paper would get the rest so they get the benefit of uh that that shortened amortization or that minimal amortization because I'm again we're only buying 69 000 of a balance of 128 000.

we're only buying you know half of so we're only entitled to half the payoff in a sense uh when when the note pays off in full so that's what happens with a early payoff same strategy occurs if there's a default if there's a default situation we're going to say to the holder to the original holder of the paper look we we need to collect our balance you can come in and pass off that balance and then you can take back over the note and foreclose and a lot of times that note originator knows the borrower right and it's like listen I'll take over and get it performing and would you buy it back sure right it no skin of our back like usually you can get that done because you know the borrower us no partial buyers we don't know the borrowers it's a little bit different so I ran some quick numbers if you guys want to know if we bought this thing at a 10 interest rate which is the yield number and the same payment number note in hand you're not brokering it so we can literally go over that piece by piece and we can break it all down right as long as you're willing to work with us um the returns we're looking for maybe a little higher than this but your notes probably not a six you're probably notes it at eight nine ten eleven twelve and remember the higher than interest rate the easier it is for us to to purchase uh for that because that's really your inches is your return so so Mark when you do these kind of partial transactions and so at that what I'm finding is that this is really a simple way just to cash the money out and still being control on both the original side and the buyer side and we can do this as many times we want I find that most originals are just not aware of it is that what your biggest hurdle I guess not even teaching it but just making them aware of it yeah it's always uh jaw-dropping when I talk to a real estate agent who hasn't seen this strategy before and then they they realize how they can expand the opportunities to sell more property in a market like this when Real Estate is challenging to sell when prices are high interest rates are high you try to come up with strategies that are going to make sales occur more often and this is a strategy and most agents are not taught this most agents have no clue about it and I usually have a conference call with the agent and the seller uh so that I can explain the strategy to them so that when they do have a buyer that it they can structure it in a proper fashion it really works well but it's a one by one educational process it's a very slow education because it's just not mainstream most agents are used to selling with somebody getting conventional or FHA financing right and that's I'd be curious if you can post in the chat even on YouTube in the comments who would like to see us run these kind of deals live right and I have this deal and kind of do a a shark tank kind of idea that hey I got this note what do you guys think what do you guys see if you do put in the comments in chat and we need to discuss about having that option for you guys to really kind of narrow down and see scenarios um because I think it's important to see the math this is a great layout of what we're looking for um and what we're seeing but tell us what you're what you're trying to learn what you're trying to do and what you're doing and do you have assets that you literally can do this with um please let us know about that uh we'd love to hear about that opportunity for you I'm seeing Heidi and Randy on Facebook and in uh LinkedIn I see a couple more people there as well uh seeing some interest so I definitely want to encourage you guys to stay in touch with us we'll help you through this um it is a win-win if we all all can come through that um and go from there Marcus you can reach out to me and Nathan um you can hit us up in the chat or you can choose an email or there's actually that uh the beginning pinned uh comments a way to get a hold of Mark's information and in that case we'll you'll get an email from both of us I think you can reach out to us I'll put that again in the comments here so good question though there are the services are all over and there are a lot of great ones so yeah we're happy to hook you up with them yeah so we're getting some more questions in here um we'll go back to if we need to go back this is fine let's go back and uh kill the share and just talk for a few minutes and answer some questions here awesome um Heidi made the comment uh if I would have seen this I could have sold my last no uh I guess last whole silver Finance because I owned it outright beneath the cash oh oh yes you don't have to sell the whole number right write it up we'll have a servicer do it we'll have attorney well if you need escort we'll do that and we'll keep going over and over again and we'll cash out as much as we possibly can and we have plenty of capital dues with we just want to basically be in a position of the no buyer and let you do what you do as best you can we're we're the laziest investors you'll meet we just want to buy a stream of payments that's it I don't see Bank America go down there hustling right Wells Fargo's not hustling we're just like that we like our computer seats we like being close to our fridge all that good stuff right yeah but we have the capital to do this kind of stuff um we encourage you to go to through Mark and let him know I'm looking to sell this note right or there's plenty of other ones too Mark's not the only one but he's a nationwide with tons of knowledge so I would start with Mark so then Martin kind of lead you the right direction right if you have a weird scenario he can refer you if he needs to but more likely he can write for all 50 states without any problems right so mark everything we've said here you've had years and decades and years of experience is anything we're saying here incorrect I know we've been probably talking for a couple months now is anything here that we're maybe misguiding people on or from what you've seen in your experience no the only the only caveat I'd be a little careful of was when Nathan said you can have the the buyer pay the fee the rmlo fee you have to be a little careful there because most states have a licensing law and that licensing law prohibits anybody from collecting a fee without being licensed so if the seller tries to collect that fee that can be problematic but if the if the buyer is paying the fee directly then you don't have that issue the other thing is that the rmll requirement is for sellers it's not for buyers buyers there's a change of servicer so if somebody's been making payments to whoever one Servicing Company for the last six months and now all of a sudden they're changing I it can just be a little bit confusing it can put people off and then pigments can get missed and we've seen that Dave you've seen that we've seen that over the years yep so again my reasoning is if I can be the first servicer and the only servicer that they're dealing with then great and not me personally obviously I use a third-party servicer but if their first payment can go straight to my servicer so that that's what they're used to and that's what they're they're habituated to do is just continue to pay that one servicer that's another reason why I'll I'll table fund that guy So Randy asked last question uh Dodd-Frank only allows you to do three seller finance transactions in a calendar year is that correct mark no no it's not it's the three rule the three loan or three transaction rule applies to when you have to hire a loan originator if you're doing three or more in a given year then you have to hire a loan originator for the for the owner occupied transactions um that's where that three three transaction rule comes into play if you're doing less than three in a given 12 month period and it's not by the way a calendar year it's a 12 month 12 month count a 12-month period then you may not have to hire a loan originator so if you're only if you're one-offs either that type of thing if you've just got a a seller who's got one property selling and carrying back and he's not an investor of any sort you don't really need the loan originator I have people that still hire me to do it just because they want to know that they have confidence in the buyer to be able to perform but it's not a requirement where Dodd-Frank does require three or more but they still need to make sure that bar has the ability to repay they can't just say give me a checkbook and boom they need to make sure that the ability that borrower's ability to pay is that correct well they should they note now you need to work oh it's okay Heidi we encourage you what makes more notes with you let's get you some more cash in your pocket and let you can continue um so uh Marcus asked how can you locate Services um if you're looking for us you can reach out to us through our our pages and groups and all stuff um we both want some great stuff um you sure I'm sure you can find us on our websites um and if you're looking for uh our boy Mark here um you can go right to the link click on it and you'll get his information uh but he's a wealth of knowledge if you have in his arm a little before you need to start doing it um please do that um Heidi yeah please feel free to reach out to us we'll definitely jump on a call with you to kind of walk through this um if you want send us a message or PM whatever and we'll go from there so one thing I want to mention for those who have not used an armalo yet uh here's one of the cool things you can do so and servicer by the way uh you can have the borrower pay for it so it's relatively inexpensive to begin with uh however uh that can be a charge placed on the borrower where the buyer borrow or whatever you want to call them the person buying the house they can be the ones that pay for that and that's part of their um you know processing fee whatever you want to call it just to be able to enter into a loan with you you can also write into your loan that the borrower will pay for servicer cost servicing again is relatively inexpensive typically it's a flat fee you're talking maybe 30 a month kind of thing like it's really not expensive but again you can have the borrower pay for that I wouldn't put a number in that I would just pay that they are going to pay for servicing and leave it open and that allows us to actually buy it for a higher amount because we don't have to when we buy a note that's 779 we have to eat that 30 bucks for servicing right because that won't come to us right and make sure you are not required to hire somebody to do this process sellers are the ones that are required so anytime you have an rmlo Engaged in that process they're going to be um their their client is the seller not the buyer so they they're obligated to fulfill the report based upon what the seller tells us is is the nature of it so that obligation is the seller's obligation to pay that fee they can pass it on however they can figure out a way to pass it on but it's really the relationship is between the rmlo and the seller that's where that's where the client relationship is yeah um Randy made a comment there he's in the process of uh buying a fine steel just close the subject to and about to execute a strategy with a wrap um can you create a note prior to closing with the end buyer uh how long do you need seasoning for uh we can buy the note um I'm not sure if I fully understand your question I'm not sure how you'd create a note before so again you're creating a note with the borrower that wrap borrow in that position the notes between you and them the green between you and I is I'm buying a part of that note right I'm not we're not creating a new note I'm not giving you a loan in this case I'm working with a partial I'm buying a part of that note you just created but that makes sense I mean now just a land contract or D to trust or a mortgage that may change our return number but in the case of we're gonna buy a part of it just like you sold that entire note to us in this case you're not selling the entire 360 months you're only selling 60 months 24 months 180 months you're buy we're buying a part of that future payment and it reverts back to you um there's a Simon a mortgage and all that stuff that goes inside of that um for the second question Nathan I'll don't have to hire a loan originator to make that determination though gotcha that's that's a distinction is that the three property rule three transaction rule is where I mentioned earlier that's the loan originator Employment Act I mean that's where we get paid when it happens for three or more but less than three uh if it's one-offs every once in a while you just don't have that the the requirement under Dodd-Frank to hire anybody and and Jeff Watson is working to put you out of business he changed that to 24 to 12 months yeah is that right yeah we had him on a few months ago he's trying to push 24 but even with 24 you still want someone to kind of look over the numbers I would yeah I would still want to have a third party look at that a strategy it's a good strategy to make sure somebody else is looking over your shoulder that's really what it pulls down to again it makes it more valuable when you're going to resell it so a third party check this out yes qualified and that's dope buyers want to see that too right I don't want to see the fact that well I ran numbers right what'd you've run right I want to make sure that someone qualified that that borrower to make me feel more comfortable that that borrower is going to perform not someone said Hey listen I met one of the diner they had Chuck book and they wrote me a deposit thing ran that doesn't that doesn't track me at all it's not a deal it actually actually reverses it I I kind of want to run from that deal so make sure you do it right so that you have options when you need to get cash yeah all right Mark so we're we'll wrap up here but we're we're always curious to hear from our guests about where you think we're headed um we're talking a lot about seller finance so let's let's go in that direction where do you see seller finance going here in the future what's your crystal ball it just seems to me that when you've got high interest rate cycle like we have focus on the p i the principal interest not the Piti because the tax Insurance don't come to us we're focused on just the p i payment yeah we're getting some good questions here keep them coming um so one of the questions about there in Illinois is this a great state for Sarah financing I I hate to say it's not but it's really not especially outside of Cook County you're going to do much better in in Cook County you're going to have a hard time finding buyers for those notes outside of Cook County better uh but Illinois is a tough state so just be sure to I know a lot of the seller finance people either don't talk at this or just not aware of it there are debt license collection license you need to have in certain States and Illinois is one of the states that requires you to have a debt license a bond so I would encourage you to explore more about that we're not attorneys but we definitely would like to uh make sure you're focused on that um yeah so Heidi made the comment too this is the perfect option so they don't have to ask for a down payment when selling a house sure um if we can solve that problem we would love to be able to do that for you um in getting an information is key so what we want you to do this is the game plan we're putting forth I want you to go get in a house find that borrower right this is a technique that uh our buddy Dan Diaz um didn't know about this whole partial World he's done hundreds not thousands of owner finance notes get your borrower in place reach out to Mark get him to underwrite that loan make sure the borrower has the ability to repay and everything is clean have a documentation get the loan you can get down payment I encourage you to still get that down payment right reduce your basis reach out to us and say listen I need 40 Grand to go do this how many payments will you do for 40 Grand and we'll give you a let you answer this how long do you need what seasoning do you need I know Mark argue with it's not a private call about this right um how long do you need to buy a note for seasoning so um I'm personally I'm more interested in buying a whole note and if you've gone through an rmlo and it's gone through the proper render writing I'll buy it I'll table fund that I'll I'll buy that right away uh my my thinking on that my reasoning on that is if you've just qualified this borrower then that's good enough you know if they're brand new and they're and they've just been qualified then they're qualified in my mind uh so I'll buy that right away I don't need any seasoning you want some seasoning on that I want a month or so just to make sure the borrower even though their billiard pays they actually have the motivation um Mark is there any concerns with us buying a note table funded is there any kind of rules or laws that get there with Doc Frank at all or no there's no restriction but the reality is you know when a mortgage company makes a brand new home loan they don't have a seasoning history on how they made those payments it's a it's from day one there's a brand new loan being made and they'll get loan based upon the underwriting criteria and that's my attitude as well and similar to Nathan's in in that respect is that if it's if I can do the underwriting and I feel confident with the buyer being able to make the payments I don't need seasoning there's a there's an addition in this industry that seasoning is a key component to it and you know they can get run over by a truck tomorrow it has nothing to do with right the seasoning how they've done in the past so I prefer looking at it from the perspective of underwriting today whether they look like today and do I think that they're going to make the payments based upon the rmlo that's kind of how I look at at the paper yeah and one other thing that goes along with that as well is It's Not Unusual for payments to drop off when going on and high prices seller carry back has traditionally been much more attractive uh it allows a buyer to get in without having to jump through all the hoops and it allows the seller to sell the property and create that Revenue Stream So for me uh and if you look back at Cycles when we've seen High interest rate or high inflation Cycles seller carry back is is very common um kind of rears its head and becomes much more of a prominent player in those types of economies so I suspect that's what we're looking at in the in the near term it seems like until rates drop significantly I think that's what you're going to see wow what's what's your rate drop prediction any thoughts on that oh boy that's I had a crystal ball I wouldn't be talking to you guys right now um you know it just it's hard to say uh you know um I read something yesterday that uh 80 some percent of of panelists experts think that rates are going to stay the same or go up so that kind of gives you a perspective we read recently that the what the credit card debt in America is like 1.3 billion a trillion trillion its highest ever yeah so these borrowers are putting a lot of money so those people who are doing owner finance just be aware of that that gas things have been good for the last three to four years that things have been performing great which me Nathan as you probably could see were in the space of buying performing notes which was very rare 10 years ago even five years ago um just be careful that because if that hits your portfolio may drop dramatically that's the scary part about this yeah so just be aware of that so well uh Mark uh hold on for a minute we're gonna let the public go and we'll recap with you and uh I appreciate you joining us on this Friday afternoon and sharing your wealth and knowledge well thanks appreciate the opportunity to be with you guys fantastic thanks so can do anywhere in the country anywhere in the world and kind of have things set up in systems um but what we're finding as a lot of people who are on the other side of this space of doing seller finance and owner finance and creative Finance all this kind of world it's a little bit different for them right because they're doing marketing they're doing all kinds of different stuff and we get all that but we want to be that bang for a lot of these people and a lot of people don't know about us right um so we wanted to dive more into it and this year if you're new to us this would be on YouTube our podcast everything else we focus this year truly on connecting note buyers with Originators cell Finance all kinds of different way of by creating notes yeah like what is your opinion yeah what's your favorite experience your thoughts you know it's been interesting and we've been talking about this all year um just yesterday I had two different phone calls with two different people that talked about how uh they're originating some fairly large numbers one guy's talking about 30 to 40 a month um where they're just they're originating just a bunch of notes and they want to sell them so I mean they it's out there people are looking to sell this stuff uh and they're and most of the people that I've talked to they're willing to tailor make it uh to what we're looking for which is perfect that's exactly what we're looking for so there there's tons out there I think we're going to see more and more of that as interest rise interest rates continue to stay high yeah maybe rise uh but I think we're going to see more and more seller finance come out yeah absolutely and I think for us you know we want to educate them but also learn from them as well yeah so it's a two-way street so we can kind of really grasp what you guys are doing so we can tailor our business but also help you tell your business to unload recoup cash out whatever word you want to use you get some of that money back out um so for that feature I think working together as a team is going to be our biggest um asset moving forward yeah definitely so one of the things we've learned in the past year uh which has been really interesting this idea of what is a correct note on your world because remember we bought banknotes everyone yeah for years and we never worried about any of that kind of stuff so we wanted to make sure that we understand what is to create a new note and we've connected with some of the best experts in the space who were creating and basically running teams of of creations of notes raps subject twos self-refinance cries greater finance and getting a good understanding of what you guys do um so it's awesome so please I'd encourage you guys to share our content with those people in that space yeah definitely several Finance I think we've estimated 32 billion dollars was created last year it's a heat industry yeah and and there's no slowing down like I say I I think we're gonna see more and more of that coming out yeah uh it's tough to get a loan in the bank and if you're not able to seller financing is a really great way to go not to say you're a bad borrower not to say that uh there's something wrong with with those kinds of borrowers that get seller finance it's just it's another option um and speaking as a self-employed person man it's so much easier to deal with a person than it is to deal with the bank a lot of the time yeah yeah so you guys are out there please keep in touch with us for you no buyers I'm hoping that the information we've given you has been useful for you right um and if if it hasn't or something else you want to hit on let us know so one of the reasons we've been asking is why are we shifting from the bank to the seller finance world can you hit on one thing dealing with a hedge fund or bank is not as negotiable a lot of times as a seller finance yeah but the other feature is the fact that these loans are created 10 11 12 where we're just having a trouble getting those loans from a bank because last three five years has been really low interest rates yeah and and we're always buying our main goal of node investing is yield so we're always just going after yield so if we've got a note written at three or four percent the discount that we have to work in there is huge and so it makes it really difficult to get a deal done so when we see these notes being written at 9 10 11 percent uh that's much easier for us to to get a deal done yeah absolutely and I think that we we want to make sure we understand you guys right so when you have a question let us know as a no buyer right we're trying to work on how to buy wraps and stuff like that it's been a little bit more challenging um but one of the key features that most people don't get is when you're creating these loans and I don't know why it's not taught as much as it should be the creation of the note is just as important as the details inside the note absolutely when you guys are creating these notes and these borrowers are owner occupants meaning they bought the property they bought the property they're gonna live in it and they took a loan out on it we've run into too many people out there who are teaching or learning that these seller finance paper needs to be passing the Dodd-Frank laws and passing all the regulations that was put forth back in 2006 some of the eight that changed the industry and said listen no longer can we have this happen and we want to make sure you guys get that because if you don't you can have problems along moving forward and what people I don't think you're getting is that the last three four years portfolios are all performing when things are good there's no problems yeah it's when they go back yeah yeah it's only a problem until it's it's not a problem until it's a problem but then when it's a problem it's a big problem yeah and if you haven't done it right up front uh you're going to run into some really difficult challenges going forward uh which could cost you a lot of money a lot of heartache and so do it right up front uh and there are ways to do that and so that's part of who you got on today is yeah let's bring up let's bring Mark um man it is a pleasure to have you on with us I think that the information you've shared with us just in the recent couple months has been amazing yeah well thanks appreciate that uh David and Nate it's it's a pleasure to be here and to address your audience it's always good to be among like-minded people and um we we all have the same kind of uh approach to things I was always the loner out there and most of my career and it's nice to see there's others uh that kind of have the same mindset that I do yeah so let's back up here A second we gonna do some work um we do a private call on Wednesdays with a bunch of really smart people and Mark came on this like a ebola shoot because he really said to us guys I've been doing this for a long time the knowledge the experience the in the wealth of information and women always agree on certain situations but you bring the facts up and say this is what the law states and you play by the law and that's extremely useful so Mark how did you get introduced to this what do you guys do currently and how many states are you doing it in so uh again thank you for having me the uh my my background actually is primarily in the private money or hard money Arena I I cut my teeth back actually in the 70s that's when I started in this in this field so I'm on old old fart from that perspective um and the uh the first 10 years of my career all I did was hard money lending I didn't know what an FHA or VA or conventional loan was I just cut my teeth on on the private money and work in that Arena and then expanded um a number of years later into the more traditional market so we just kind of added that component to our business and started my own company in 86 and ran it for over 25 years before I merged it into my current to my current operation so it it's been something that I've been working on for a long time it's basically my career and um my passion is more on the private money or hard money side of things and after Dodd-Frank uh came out in an effective 2010 uh that's when things really started to change after the housing prices in 08 uh rules started to come out and everything changed as of 2010 and one of the things that I noticed was that I figured that the Dodd-Frank Act was the I I kind of call it the loan originator Employment Act because it gave us uh Sloan Originators an opportunity to participate in this in this world in the seller carry back world because Dodd-Frank requires to hire loan Originators in a number of cases so um we started to play in that Arena and it just have expanded it we do our mlos which is the residential mortgage loan originator program uh in across the country we just do the Dodd-Frank compliance piece we don't necessarily do the state compliance piece different states have different requirements some have no requirements I'm in Arizona we have no requirements on seller carry back you go to Texas there's lots of requirements so it just depends on what state you're in but uh we do the the Dodd-Frank piece of the piece of the puzzle uh and keep you keep your nose clean when it comes to compliance there so that's where we play uh in one sector of our business operation is the rmlo uh it's funny you say that Mark so I was I was originating notes in Columbus Ohio 2010 2011 2012 and then when the rules was it 2012 or 13 that Dodd-Frank became kind of came I actually actually it's 2010.

it was and 2014 is when all of the remaining Provisions gotcha that's what it was so I I had heard about it I learned a little bit about it um and and we were looking around for an rmlo and could not find anybody like just they didn't seem to exist we'd I'd go and talk to like a mortgage broker or something like that I'd say so you know I'm looking for somebody that can help me navigate Dodd-Frank and they're like God who like they had no idea what we were talking about uh so you know knowing that this was a rule uh and that it was going to be you know all the uh kind of fines and everything attached to it it was an important enough thing we eventually shut that down I stopped originating because I knew that this was going to be a challenge and I couldn't find a normal low so we're glad to have you here this is a normal oh this is somebody who can help you Nationwide too which is yeah on unbelievable having it's a big deal what is in a quick summary if someone says screw it and they create 50 60 20 loans without an armalo what's the consequence so you know I don't know what the fines and penalties are because I've never played in that Arena thankfully I haven't had to deal with that I just know that um the Dodd-Frank has teeth and it can make someone's life pretty unbearable um so fines and obviously cease and desist and all sorts of different things if you don't have the thing that people don't realize is that seller carry bags generally are created between a buyer and a seller simply somebody has a house they want to sell it and they want to be the bank for the buyer right and you can see You'd think that that was a simple capitalistic kind of activity but Dodd-Frank comes in and steps into the way and says no that's not the way you you can do it and I I personally think that the ACT is misplaced I really don't see any reason for it nor do I see any reason for my activities honestly you don't need me for yeah if Frank wasn't there you wouldn't need me but because it's there there's this sense that you got to play by the play by the rules yeah and you don't want to be known as the lender who doesn't do it right herodies will jump all over that you know your borrowers will talk to their attorney something when something goes to fault and things start changing all this stuff's gonna start twinkling down and that attorney is gonna wet their teeth is gonna go after that lender and hit every loan that you guys own so be sure you get talking with Mark about what you're doing and what states you're in and stuff like that so Mark we've went across a lot of these owner finance people who oddly enough never heard of actually selling a note let's get back is it legal to sell a note absolutely a note is a negotiable instrument just like a stock or a bond is and so it can can be marketed and sold in the same vein that any other type of financial instrument can be sold the beauty of it is is that it's generally done on the private side of the market I mean it's between you and me uh it's not sold on Wall Street although you can find companies that have hundreds of notes for sale at any given time but generally it's going to be a one-on-one type of situation so somebody sells a piece of property carries it back they're happy with the terms and then something in their life changes and they need some cash and this note is something that they can utilize to to achieve some cash and we last we talked about some of the advanced strategies of no partials which tricked us triggered us to talk to you about our seller finance people familiar with this idea of selling a partial of their payments and and it seemed to us that they're not super familiar with it and they're kind of uncertain about it and then we bring the numbers with you kind of question why they don't know more about it because the money they can make in a quick kind of cup of the money and then hold the back end seem to be a win-win for them as well as for us right we've seen a lot of that in fact I teach a class at one of the local real estate schools the continuing ed class and one of the things we go over is just this particular topic why and no it has value uh how it could be sold how it could be structured and some of the ways to move through it to get some money and actually when you sell a partial you actually can make more money than you would by getting paid off in full so it really is a a win-win for everybody involved in a transaction like this so let's get back for those who didn't join us last week definitely uh check out the podcast or the YouTube channel or whatever can you break down what a partial is what does that mean so I actually have an example David that I can I can share if I might let's go over the definition and we're gonna break it down we're going to share a screen but what is overall what is a partial I mean are we am I buying five hours of next week's payment or what's it look like overall the beauty of it is that you can structure a partial sale any way you want so we've done transactions where we've sold obviously the whole note somebody says I have this note I want to sell it I want to be cashed out and done so that's the full or the entire note sale strategy but then beyond that there's this partial node so we can sell a portion of that note we can sell a portion of the payment we can sell a portion of the balance we can sell any kind of piece of it that we want the beauty of it is is that there's no structure or absolute formula that you have to follow it's just basically what buyer and seller agree to is what can be sold and that's what I like about this in industry in general is that it's there's no um absolute rules that I have to follow I can say yeah right I want to sell you know five years worth of payments okay then let's figure out what five years what the payments look like and at least and I want to jump in here just so those who don't know who me Nathan are you know we've been buying notes since 2010 and previous and buying these notes has been a real attractive thing and this partial world was kind of a a mysterious world for us for a long time because not a lot of people were selling it I think it's because most people didn't understand it but it's a great scenario for us and also people who may not have a lot of money that may only have 10 15 20 000 they just want to get their money working Ira money is key right in the documentation of the contract can be written any way we want and I would definitely tune into last week's video to see some of the intricacies of that but we can if someone has six grand the Roth IRA you can buy six months of payments right so Mark what what do you think owner fans peoples understand when it comes to selling a note or selling a person where is their understanding stop I would say or well I I just think that there's not a good educational component to this side of the world you know that um you know I mentioned I teach a little bit of it I teach 45 minutes of a three-hour course so that it's not like you're gonna get a lot of Education uh in in something like this there's just a lack of quality information and you guys with your YouTube channels and things of that nature are spreading the word and that's what really needs to be done is to let people know that there are opportunities out there beyond the simple transactions that you may have heard about in the past so for me I've been doing it a long time but I do it in a pretty very small world and that's where I think by opening it up you know like social media has given us more opportunities to make things known and certainly it's a great tool that you guys are doing to put that information out yeah we're trying we're trying to educate the masses here yeah it's time and the more people that know about the more stability that industry will have the more product that industry will have just gonna grow and grow with with that educational component and even just Conformity like that's been a big Focus we're trying to get people on board using an rmlo uh like you said do you need to exist that's debatable but the rules are there so yes let's just follow the rules and and get it done properly so that there's it just solves problems in the long run yeah and I would encourage you guys to we'll chime in here for a second um coming next year in 2024 May June um Nathan runs the Diversified mortgage Expo down in Nashville so any of you guys are in the seller finance world stop for me for Nathan right come down take a look at it and talk to us in person just chatting together yeah we're putting together the schedule and everything this week uh and it's coming together really nicely it looks we've got I think three different sessions having to do with celebrity so it's awesome come and join it's going to be really really educational you'll see you'll see yeah so let's dive into some number share Mark I think people you know and feel free in the chat guys feel free to have questions Curiosities understanding and stuff like that anything we kind of not sure we're doing right please feel free to jump in there please give me I see Cindy made a comment they're doing it right the right way the first time is called Integrity yes something I appreciate it yeah absolutely it's key for anyone you need to understand because us note buyers need to learn the stuff there's no sellers need to learn itself and US note buyers understand it it's a different world you guys used to find the property get in the borrower and put them in place but we want to make sure you understand this side of it so that if you need to recoup some of that money and get us going we can do that as well so um absolutely so yeah so one thing came up with that uh Randy mentioned that he's planning creating a wrapped and selling note as a partial just before we get to the partial numbers just be understand the fact that rap notes are a little bit difficult for partials the reason being is you have the underlying borrower um unless that underlying borrower is you or someone you know and not an actual uh home owner that you moved out and you have an underlying first the intricacies of getting that borrower to sign over POA to this partial buyer can get a little bit cumbersome um so Randy feel free to reach out to us with some Curiosities um it just makes a little bit more difficult but um if we can come up with an idea Nathan and I will definitely entertain it because I know wrap notes are huge so yeah yeah I'm very interested in that let's let's um yeah so it's awesome yeah I guess Heidi asked the same thing with Heidi we're just trying to um work out that thing if we can pay out that first with our partial purchase we have no problem doing it um it just makes a little bit more difficult right so awesome we'll uh I'll let Nathan kind of respond to that and uh we can talk some more for sure yeah definitely um so let's let's change our remark I'm gonna let you go ahead and share your screen hopefully this will uh go successfully here and uh see what you got to show us we're gonna go over some numbers and partials and see why it's uh attractive uh for us as well for the seller to buy it and why is it attractive right so this is an example I put together um this is actually a real transaction that occurred some time ago but it kind of gives you a sense of what we're dealing with so in this particular case there was a sale of a hundred eighty thousand dollars buyer put 50 down carry back was 130 30-year term it was written at six percent interest rate this is the current balance 127 and the payment is 7.79 and there's 345 months remaining so if somebody held that note they would be they would be saying you know I need some cash I've got this note what can I do to generate some cash the normal strategy would be to sell the entire node and this portion here in tan kind of gives you that idea so they're selling 345 payments we would give them 81 000 for that that would yield us 10.303 so that six percent note now yields me ten percent uh I'm gonna I'm gonna carry it for 345 months and I'm going to give the seller a net of 81 000 wow so that means that there's almost a forty seven thousand dollar discount here so if I had a yield requirement of 10 on my paper in order to do that I'm gonna I'm gonna have to Discount that 47 000 which is a huge amount of money and people aren't going to like that and that's a 36 discount and Dave and I probably wouldn't even pay that much so I understand that right now right so we're gonna have a discount so much and this is one of the creativity and make sure that interest rate as high as possible yeah but not every situation can have a higher interest rate because the borrower may not have the ability to repay right that's one of the key features so in this situation we're gonna have to give you a lot less money than you would normally get if we bought the whole loan right it may not work out doesn't make it a bad deal just make the numbers don't work now if this was a 12 interest rate it may work out better but you're still gonna have to get a discount and you may not like that or it may not be enough money to do what you want to do with it right and so what we did was we expanded the concept and we've now created a partial note sale strategy and these next three columns are showing what it would look like if you sold a partial so these are just three examples of selling that partial and option number one we sell the the holder the paper sells 240 months instead of the 345 he sells 20 years of payments we're gonna give him 73.5 for that note almost as much as we would give them for the whole note as you can see it's pretty close there but at the end of 240 months the balance remaining on the note is 63.5 so that buyer who's been making those payments for 240 months at the end of that term still owes sixty three thousand dollars on their on their debt which means that when we're paid off our 240 months is paid off the holder the paper the seller of the note actually gets it back with a balance of 63.5 so their Total return is my 73.5 plus the 63.5 balance that they're going to get when they get the note back their total return is 137 000 and if you look at that if the buyer paid off the note today they'd be paying off just short of a hundred and twenty eight thousand dollars to pay off the note so there's a nine thousand dollar gain by by the utilizing this strategy which is a seven percent additional return an additional gain so that's one of the advantages of this now it gets even more extreme when you shorten the period that's sold so as an example if we sold a 15-year term um my my price is going to be 69.5 the balance remaining on the notice a lot higher it's 87 000.

the total return then to the note holder is 157 000 and again if they pay off the note today there's a 29 000 Advantage by utilizing this strategy over if the note was paid off in full today and then the third option is even more dramatic you can see the yields are dropping my yield is about nine percent on these second and third options it's primarily because the term is shorter I don't need to make as much on a shorter term than I would if I was buying 345 payments so let's let me reword it for some people may not fully understand right but he laid up perfectly when they say the balance right after 240 months in that scenario option one once I'm done getting my 240 months of payments of that monthly payment right that 7 79.42 that loan goes back for goes from me back to you the seller and you still get to collect the remaining 105 payments which at that time when we send them back to you the balance of the note is sixty three thousand dollars yeah so you're still going to collect another 63 000 plus interest for the 105 payments moving forward which that's awesome right and I got my yield you got your some money out of it and you can move forward to it um so if this was something that you were holding in your IRA this is a perfect strategy because then you've got that you've got income whatever it is 10 years from now five years from now 15 years from now whatever it is uh plus a lump sum today so a lump sum today after some time goes by once that partial is completed you still get that income back into your IRA so it's a it's a great strategy for an IRA it's actually new for everybody because the holder the paper is actually when they sell X number of months of payments they're actually retaining a portion of the interest that they wrote on that note that's why the yields or that's why the returns are are higher is because they're still getting interest and that's the beauty of it the balance doesn't drop to zero at the end of 240 months on their note it drops to whatever the remaining balance is and then they take it over so the advantage really is very strong it it's a win for the seller the paper it's a win for you as a buyer of the paper uh for you you mentioned Nathan the IRAs it's a great strategy for IRAs for long-term investment strategies there it really is um Everybody benefits on a transaction like this yes yeah you know as you can see the entire note I can only pay eighty one thousand dollars this is all about time value money it's a financial calculator now so in the in the chat asking about it um this is a financial calculator right and it's just because we're changing the number of months right we're reducing number months and we're fact that we're setting the the rate we're looking for to be exactly right this all makes sense if your original interest rates at 10 and we look for 12 the numbers come come together um we have a great chart to kind of give you an idea of what that looked like I'll put that in the uh chat so people can see it and it really comes together to show you the fact that this is a great option for people who are looking for an idea of how much money can I get for a note that makes sense to you me and everyone else but you get some money out of it I get a great return right and it's only for a short period of time or a long period of time you have 120 months I've done a two-year partial I've done a 16 month partial I've done a 12-year partial in this idea is amazing for both note Sellers and note buyers and a lot of note buyers out there are hungry for this so you know Originators if you can do more of this you're going to get a lot of money coming your way and as long as you have the nice the ability to do this it'll hold a home run every single time you do it yep the one of the other benefits of this is the amount of money you need to play in this Arena as a buyer of paper yeah sure you don't need as much I mean yes the whole notes 81 000 to buy 10 years is only 54 000.

so you you get to reduce the amount of capital that you have to invest in any one given note and you can spread your Capital among multiple nodes that way rather than putting it all into one transaction so it gives that strength as well to the node buyer or the partial node buyer of uh of expanding their their Market their opportunities yeah so Mark when you've told what is the biggest hurdle most of these seller Originators and so that struggle with this concept what what are some of the questions or pushback you've gotten on this well the first the big question is uh what happens if the buyer pays off early comes into play and then the second question is what happens if they don't make the payments and I have to and there's a foreclosure so those are usually the two key elements that have to that have to be addressed when we do a transaction like this we create an alternative alternative amortization schedule and that amortization schedule shows what our involvement is for the period of time that we have that note and it shows what the balance is at any given moment of that time so we may buy uh 15 let's say 15 years of option two and five years into the deal the buyer pays off so uh we we would look at our amortization our 15-year amortization see what our what the balance is based upon what we bought the note for sure and um and then we just picked that balance and that's what our return would be we would collect that amount of money and the seller of the paper would get the rest so they get the benefit of uh that that shortened amortization or that minimal amortization because I'm again we're only buying 69 000 of a balance of 128 000.

we're only buying you know half of so we're only entitled to half the payoff in a sense uh when when the note pays off in full so that's what happens with a early payoff same strategy occurs if there's a default if there's a default situation we're going to say to the holder to the original holder of the paper look we we need to collect our balance you can come in and pass off that balance and then you can take back over the note and foreclose and a lot of times that note originator knows the borrower right and it's like listen I'll take over and get it performing and would you buy it back sure right it no skin of our back like usually you can get that done because you know the borrower us no partial buyers we don't know the borrowers it's a little bit different so I ran some quick numbers if you guys want to know if we bought this thing at a 10 interest rate which is the yield number and the same payment number and for 24 months really short one it'd be 16 890 70 right which is traumatically lower so no buyers who may have 15 grand in the Roth IRA or whatever can definitely fund these deals so it depends on how much money you want out right if you're looking Hey listen I need to pull 50 grand out of this we can back into it and say okay fine how many months can we buy T equivalent to 50 000 and we can work numbers all over the place as long as it works for us for our returns and for you guys and we would take ownership over you would stay on the servicing side of it we both work with our servicer to make sure that you can dilanate time to see where things are at and we turn around and say great this works for you services sorry do you guys service loans as well no we don't okay we we have a third party servicer handle it it's uh it makes life a lot easier when you have that Independence that way yeah absolutely and and plus it converts back to the seller the paper easier you know if we're collecting those payments of somebody else is it's a simple matter of signing a an assignment back and it's done we encourage you those who are creating notes please use a servicer when you create the note for payment it's like a property manager um it's crucial in our space to do that for multiple reasons monthly statement going out the end of the year tax paperwork all that stuff most originals are not doing and you need to start doing it but right so when people do this you know there's an amortization schedule that shows if I'm gonna ask a dumb question you're a softball question in the beginning of ever amortization schedule what gets paid more the interest of the principal but it's the interest that's a softball for sure yeah so there's a ton of upb left at 15 years or 20 years or five years after that's a ton of money to collect that witnessing pays off all we're doing is really collecting the the beginning interest and you're collecting all the money in the back end which is awesome so we encourage you guys to think about the strategy but again we would rather do this with a loan that that either there's no first or this is the first or that the rap uh the partial purchase would pay off that underline first um to make it cleaner easier and more attractive and for you guys who are doing this you can if you're doing 80 20 loans that some of the bigger players are suggesting you could do this with both of them or one of them or you know at any time and you can sell a partial then sell another partial after that was done and do another partial after that one's done all along the way you would actually make more money that way yeah one of the things we've been seeing lately is we've got uh some transactions that are coming in where it's a it's a first and a second so the seller is selling the property carrying back at first in a second and that first is at 70 loan to value so the beauty of that is that we can then structure a transaction where we would buy a portion of that first or the whole first for that matter but generally it's buying a portion of that first uh and then the seller's profit picture really comes into play in that second and so the advantages they get cash even with a low down payment buyer they still get cash from the selling of the partial on the first and they still retain that cash flow on the second and the profitability picture comes in on that second so it really is a good strategy for Real Estate sellers that are selling owner occupants or even Nano rocket boats for that matter as well yeah so I encourage you guys to reach out to me Nathan if you are curious about this not sure about it we can run the numbers we could jump on a zoom even and run numbers please ask that you have the note in hand you're not brokering it so we can literally go over that piece by piece and we can break it all down right as long as you're willing to work with us um the returns we're looking for maybe a little higher than this but your notes probably not a six you're probably notes it at eight nine ten eleven twelve and remember the higher than interest rate the easier it is for us to to purchase uh for that because that's really your inches is your return so so Mark when you do these kind of partial transactions and so at that what I'm finding is that this is really a simple way just to cash the money out and still being control on both the original side and the buyer side and we can do this as many times we want I find that most originals are just not aware of it is that what your biggest hurdle I guess not even teaching it but just making them aware of it yeah it's always uh jaw-dropping when I talk to a real estate agent who hasn't seen this strategy before and then they they realize how they can expand the opportunities to sell more property in a market like this when Real Estate is challenging to sell when prices are high interest rates are high you try to come up with strategies that are going to make sales occur more often and this is a strategy and most agents are not taught this most agents have no clue about it and I usually have a conference call with the agent and the seller uh so that I can explain the strategy to them so that when they do have a buyer that it they can structure it in a proper fashion it really works well but it's a one by one educational process it's a very slow education because it's just not mainstream most agents are used to selling with somebody getting conventional or FHA financing right and that's I'd be curious if you can post in the chat even on YouTube in the comments who would like to see us run these kind of deals live right and I have this deal and kind of do a a shark tank kind of idea that hey I got this note what do you guys think what do you guys see if you do put in the comments in chat and we need to discuss about having that option for you guys to really kind of narrow down and see scenarios um because I think it's important to see the math this is a great layout of what we're looking for um and what we're seeing but tell us what you're what you're trying to learn what you're trying to do and what you're doing and do you have assets that you literally can do this with um please let us know about that uh we'd love to hear about that opportunity for you I'm seeing Heidi and Randy on Facebook and in uh LinkedIn I see a couple more people there as well uh seeing some interest so I definitely want to encourage you guys to stay in touch with us we'll help you through this um it is a win-win if we all all can come through that um and go from there Marcus you can reach out to me and Nathan um you can hit us up in the chat or you can choose an email or there's actually that uh the beginning pinned uh comments a way to get a hold of Mark's information and in that case we'll you'll get an email from both of us I think you can reach out to us I'll put that again in the comments here so good question though there are the services are all over and there are a lot of great ones so yeah we're happy to hook you up with them yeah so we're getting some more questions in here um we'll go back to if we need to go back this is fine let's go back and uh kill the share and just talk for a few minutes and answer some questions here awesome um Heidi made the comment uh if I would have seen this I could have sold my last no uh I guess last whole silver Finance because I owned it outright beneath the cash oh oh yes you don't have to sell the whole note now you need to work oh it's okay Heidi we encourage you what makes more notes with you let's get you some more cash in your pocket and let you can continue um so uh Marcus asked how can you locate Services um if you're looking for us you can reach out to us through our our pages and groups and all stuff um we both want some great stuff um you sure I'm sure you can find us on our websites um and if you're looking for uh our boy Mark here um you can go right to the link click on it and you'll get his information uh but he's a wealth of knowledge if you have in his arm a little before you need to start doing it um please do that um Heidi yeah please feel free to reach out to us we'll definitely jump on a call with you to kind of walk through this um if you want send us a message or PM whatever and we'll go from there so one thing I want to mention for those who have not used an armalo yet uh here's one of the cool things you can do so and servicer by the way uh you can have the borrower pay for it so it's relatively inexpensive to begin with uh however uh that can be a charge placed on the borrower where the buyer borrow or whatever you want to call them the person buying the house they can be the ones that pay for that and that's part of their um you know processing fee whatever you want to call it just to be able to enter into a loan with you you can also write into your loan that the borrower will pay for servicer cost servicing again is relatively inexpensive typically it's a flat fee you're talking maybe 30 a month kind of thing like it's really not expensive but again you can have the borrower pay for that I wouldn't put a number in that I would just pay that they are going to pay for servicing and leave it open and that allows us to actually buy it for a higher amount because we don't have to when we buy a note that's 779 we have to eat that 30 bucks for servicing right because that won't come to us right and make sure you focus on the p i the principal interest not the Piti because the tax Insurance don't come to us we're focused on just the p i payment yeah we're getting some good questions here keep them coming um so one of the questions about there in Illinois is this a great state for Sarah financing I I hate to say it's not but it's really not especially outside of Cook County you're going to do much better in in Cook County you're going to have a hard time finding buyers for those notes outside of Cook County better uh but Illinois is a tough state so just be sure to I know a lot of the seller finance people either don't talk at this or just not aware of it there are debt license collection license you need to have in certain States and Illinois is one of the states that requires you to have a debt license a bond so I would encourage you to explore more about that we're not attorneys but we definitely would like to uh make sure you're focused on that um yeah so Heidi made the comment too this is the perfect option so they don't have to ask for a down payment when selling a house sure um if we can solve that problem we would love to be able to do that for you um in getting an information is key so what we want you to do this is the game plan we're putting forth I want you to go get in a house find that borrower right this is a technique that uh our buddy Dan Diaz um didn't know about this whole partial World he's done hundreds not thousands of owner finance notes get your borrower in place reach out to Mark get him to underwrite that loan make sure the borrower has the ability to repay and everything is clean have a documentation get the loan you can get down payment I encourage you to still get that down payment right reduce your basis reach out to us and say listen I need 40 Grand to go do this how many payments will you do for 40 Grand and we'll give you a number right write it up we'll have a servicer do it we'll have attorney well if you need escort we'll do that and we'll keep going over and over again and we'll cash out as much as we possibly can and we have plenty of capital dues with we just want to basically be in a position of the no buyer and let you do what you do as best you can we're we're the laziest investors you'll meet we just want to buy a stream of payments that's it I don't see Bank America go down there hustling right Wells Fargo's not hustling we're just like that we like our computer seats we like being close to our fridge all that good stuff right yeah but we have the capital to do this kind of stuff um we encourage you to go to through Mark and let him know I'm looking to sell this note right or there's plenty of other ones too Mark's not the only one but he's a nationwide with tons of knowledge so I would start with Mark so then Martin kind of lead you the right direction right if you have a weird scenario he can refer you if he needs to but more likely he can write for all 50 states without any problems right so mark everything we've said here you've had years and decades and years of experience is anything we're saying here incorrect I know we've been probably talking for a couple months now is anything here that we're maybe misguiding people on or from what you've seen in your experience no the only the only caveat I'd be a little careful of was when Nathan said you can have the the buyer pay the fee the rmlo fee you have to be a little careful there because most states have a licensing law and that licensing law prohibits anybody from collecting a fee without being licensed so if the seller tries to collect that fee that can be problematic but if the if the buyer is paying the fee directly then you don't have that issue the other thing is that the rmll requirement is for sellers it's not for buyers buyers are not required to hire somebody to do this process sellers are the ones that are required so anytime you have an rmlo Engaged in that process they're going to be um their their client is the seller not the buyer so they they're obligated to fulfill the report based upon what the seller tells us is is the nature of it so that obligation is the seller's obligation to pay that fee they can pass it on however they can figure out a way to pass it on but it's really the relationship is between the rmlo and the seller that's where that's where the client relationship is yeah um Randy made a comment there he's in the process of uh buying a fine steel just close the subject to and about to execute a strategy with a wrap um can you create a note prior to closing with the end buyer uh how long do you need seasoning for uh we can buy the note um I'm not sure if I fully understand your question I'm not sure how you'd create a note before so again you're creating a note with the borrower that wrap borrow in that position the notes between you and them the green between you and I is I'm buying a part of that note right I'm not we're not creating a new note I'm not giving you a loan in this case I'm working with a partial I'm buying a part of that note you just created but that makes sense I mean now just a land contract or D to trust or a mortgage that may change our return number but in the case of we're gonna buy a part of it just like you sold that entire note to us in this case you're not selling the entire 360 months you're only selling 60 months 24 months 180 months you're buy we're buying a part of that future payment and it reverts back to you um there's a Simon a mortgage and all that stuff that goes inside of that um for the second question Nathan I'll let you answer this how long do you need what seasoning do you need I know Mark argue with it's not a private call about this right um how long do you need to buy a note for seasoning so um I'm personally I'm more interested in buying a whole note and if you've gone through an rmlo and it's gone through the proper render writing I'll buy it I'll table fund that I'll I'll buy that right away uh my my thinking on that my reasoning on that is if you've just qualified this borrower then that's good enough you know if they're brand new and they're and they've just been qualified then they're qualified in my mind uh so I'll buy that right away I don't need any seasoning you want some seasoning on that I want a month or so just to make sure the borrower even though their billiard pays they actually have the motivation um Mark is there any concerns with us buying a note table funded is there any kind of rules or laws that get there with Doc Frank at all or no there's no restriction but the reality is you know when a mortgage company makes a brand new home loan they don't have a seasoning history on how they made those payments it's a it's from day one there's a brand new loan being made and they'll get loan based upon the underwriting criteria and that's my attitude as well and similar to Nathan's in in that respect is that if it's if I can do the underwriting and I feel confident with the buyer being able to make the payments I don't need seasoning there's a there's an addition in this industry that seasoning is a key component to it and you know they can get run over by a truck tomorrow it has nothing to do with right the seasoning how they've done in the past so I prefer looking at it from the perspective of underwriting today whether they look like today and do I think that they're going to make the payments based upon the rmlo that's kind of how I look at at the paper yeah and one other thing that goes along with that as well is It's Not Unusual for payments to drop off when there's a change of servicer so if somebody's been making payments to whoever one Servicing Company for the last six months and now all of a sudden they're changing I it can just be a little bit confusing it can put people off and then pigments can get missed and we've seen that Dave you've seen that we've seen that over the years yep so again my reasoning is if I can be the first servicer and the only servicer that they're dealing with then great and not me personally obviously I use a third-party servicer but if their first payment can go straight to my servicer so that that's what they're used to and that's what they're they're habituated to do is just continue to pay that one servicer that's another reason why I'll I'll table fund that guy So Randy asked last question uh Dodd-Frank only allows you to do three seller finance transactions in a calendar year is that correct mark no no it's not it's the three rule the three loan or three transaction rule applies to when you have to hire a loan originator if you're doing three or more in a given year then you have to hire a loan originator for the for the owner occupied transactions um that's where that three three transaction rule comes into play if you're doing less than three in a given 12 month period and it's not by the way a calendar year it's a 12 month 12 month count a 12-month period then you may not have to hire a loan originator so if you're only if you're one-offs either that type of thing if you've just got a a seller who's got one property selling and carrying back and he's not an investor of any sort you don't really need the loan originator I have people that still hire me to do it just because they want to know that they have confidence in the buyer to be able to perform but it's not a requirement where Dodd-Frank does require three or more but they still need to make sure that bar has the ability to repay they can't just say give me a checkbook and boom they need to make sure that the ability that borrower's ability to pay is that correct well they should they don't have to hire a loan originator to make that determination though gotcha that's that's a distinction is that the three property rule three transaction rule is where I mentioned earlier that's the loan originator Employment Act I mean that's where we get paid when it happens for three or more but less than three uh if it's one-offs every once in a while you just don't have that the the requirement under Dodd-Frank to hire anybody and and Jeff Watson is working to put you out of business he changed that to 24 to 12 months yeah is that right yeah we had him on a few months ago he's trying to push 24 but even with 24 you still want someone to kind of look over the numbers I would yeah I would still want to have a third party look at that a strategy it's a good strategy to make sure somebody else is looking over your shoulder that's really what it pulls down to again it makes it more valuable when you're going to resell it so a third party check this out yes qualified and that's dope buyers want to see that too right I don't want to see the fact that well I ran numbers right what'd you've run right I want to make sure that someone qualified that that borrower to make me feel more comfortable that that borrower is going to perform not someone said Hey listen I met one of the diner they had Chuck book and they wrote me a deposit thing ran that doesn't that doesn't track me at all it's not a deal it actually actually reverses it I I kind of want to run from that deal so make sure you do it right so that you have options when you need to get cash yeah all right Mark so we're we'll wrap up here but we're we're always curious to hear from our guests about where you think we're headed um we're talking a lot about seller finance so let's let's go in that direction where do you see seller finance going here in the future what's your crystal ball it just seems to me that when you've got high interest rate cycle like we have going on and high prices seller carry back has traditionally been much more attractive uh it allows a buyer to get in without having to jump through all the hoops and it allows the seller to sell the property and create that Revenue Stream So for me uh and if you look back at Cycles when we've seen High interest rate or high inflation Cycles seller carry back is is very common um kind of rears its head and becomes much more of a prominent player in those types of economies so I suspect that's what we're looking at in the in the near term it seems like until rates drop significantly I think that's what you're going to see wow what's what's your rate drop prediction any thoughts on that oh boy that's I had a crystal ball I wouldn't be talking to you guys right now um you know it just it's hard to say uh you know um I read something yesterday that uh 80 some percent of of panelists experts think that rates are going to stay the same or go up so that kind of gives you a perspective we read recently that the what the credit card debt in America is like 1.3 billion a trillion trillion its highest ever yeah so these borrowers are putting a lot of money so those people who are doing owner finance just be aware of that that gas things have been good for the last three to four years that things have been performing great which me Nathan as you probably could see were in the space of buying performing notes which was very rare 10 years ago even five years ago um just be careful that because if that hits your portfolio may drop dramatically that's the scary part about this yeah so just be aware of that so well uh Mark uh hold on for a minute we're gonna let the public go and we'll recap with you and uh I appreciate you joining us on this Friday afternoon and sharing your wealth and knowledge well thanks appreciate the opportunity to be with you guys fantastic thanks so much I'm done getting my 240 months of payments of that monthly payment right that uh 779.42 that loan goes back for goes from me back to you the seller and you still get to collect the remaining 105 payments which at that time when we sent it back to you the balance of the note is sixty three thousand dollars so you're still going to collect another sixty three thousand dollars plus interest for the 105 payments moving forward which that's awesome right and I got my yield you got your some money out of it and you can move forward to it um so if this was something that you were holding in your IRA this is a perfect uh strategy because then you've got that you've got income whatever it is 10 years from now five years from now 15 years from now whatever it is uh plus a lump sum today so a lump sum today after some time goes by once that partial is completed you still get that income back thank you hey everybody Dave putz here from jkp Holdings alongside me as always Mr Nathan Turner how are you doing well doing well awesome man it's been another week going back to back weeks here it's been a fun fall how are things with you I saw some pictures of you uh doing a little bit traveling with your son yes I'm I'm finally doing what you asked and what you told me to do for a couple years now getting a little more active on social media so that's an example yeah I was able to go and uh take off for a few days with my son uh for camping trip that he's got he got into this program where he gets to do all this Outdoor Learning stuff which is so so so cool and so I'm happy to be able to volunteer and to have a business where I can do that that's that's been awesome yeah so you good point you said there are you doing something you can do anywhere in the country anywhere in the world and kind of have things set up in systems um but what we're finding as a lot of people who are on the other side of this space of doing seller finance and owner finance and creative Finance all this kind of world it's a little bit different for them right because they're doing marketing they're doing all kinds of different stuff and we get all that but we want to be that bang for a lot of these people and a lot of people don't know about us right um so we wanted to dive more into it and this year if you're new to us this would be on YouTube our podcast everything else we focus this year truly on connecting note buyers with Originators cell Finance all kinds of different way of by creating notes yeah like what is your opinion yeah what's your favorite experience your thoughts you know it's been interesting and we've been talking about this all year um just yesterday I had two different phone calls with two different people that talked about how uh they're originating some fairly large numbers one guy's talking about 30 to 40 a month um where they're just they're originating just a bunch of notes and they want to sell them so I mean they it's out there people are looking to sell this stuff uh and they're and most of the people that I've talked to they're willing to tailor make it uh to what we're looking for which is perfect that's exactly what we're looking for so there there's tons out there I think we're going to see more and more of that as interest rise interest rates continue to stay high yeah maybe rise uh but I think we're going to see more and more seller finance come out yeah absolutely and I think for us you know we want to educate them but also learn from them as well yeah so it's a two-way street so we can kind of really grasp what you guys are doing so we can tailor our business but also help you tell your business to unload recoup cash out whatever word you want to use you get some of that money back out um so for that feature I think working together as a team is going to be our biggest um asset moving forward yeah definitely so one of the things we've learned in the past year uh which has been really interesting this idea of what is a correct note on your world because remember we bought banknotes everyone yeah for years and we never worried about any of that kind of stuff so we wanted to make sure that we understand what is to create a new note and we've connected with some of the best experts in the space who were creating and basically running teams of of creations of notes raps subject twos self-refinance cries greater finance and getting a good understanding of what you guys do um so it's awesome so please I'd encourage you guys to share our content with those people in that space yeah definitely several Finance I think we've estimated 32 billion dollars was created last year it's a heat industry yeah and and there's no slowing down like I say I I think we're gonna see more and more of that coming out yeah uh it's tough to get a loan in the bank and if you're not able to seller financing is a really great way to go not to say you're a bad borrower not to say that uh there's something wrong with with those kinds of borrowers that get seller finance it's just it's another option um and speaking as a self-employed person man it's so much easier to deal with a person than it is to deal with the bank a lot of the time yeah yeah so you guys are out there please keep in touch with us for you no buyers I'm hoping that the information we've given you has been useful for you right um and if if it hasn't or something else you want to hit on let us know so one of the reasons we've been asking is why are we shifting from the bank to the seller finance world can you hit on one thing dealing with a hedge fund or bank is not as negotiable a lot of times as a seller finance yeah but the other feature is the fact that these loans are created 10 11 12 where we're just having a trouble getting those loans from a bank because last three five years has been really low interest rates yeah and and we're always buying our main goal of node investing is yield so we're always just going after yield so if we've got a note written at three or four percent the discount that we have to work in there is huge and so it makes it really difficult to get a deal done so when we see these notes being written at 9 10 11 percent uh that's much easier for us to to get a deal done yeah absolutely and I think that we we want to make sure we understand you guys right so when you have a question let us know as a no buyer right we're trying to work on how to buy wraps and stuff like that it's been a little bit more challenging um but one of the key features that most people don't get is when you're creating these loans and I don't know why it's not taught as much as it should be the creation of the note is just as important as the details inside the note absolutely when you guys are creating these notes and these borrowers are owner occupants meaning they bought the property they bought the property they're gonna live in it and they took a loan out on it we've run into too many people out there who are teaching or learning that these seller finance paper needs to be passing the Dodd-Frank laws and passing all the regulations that was put forth back in 2006 some of the eight that changed the industry and said listen no longer can we have this happen and we want to make sure you guys get that because if you don't you can have problems along moving forward and what people I don't think you're getting is that the last three four years portfolios are all performing when things are good there's no problems yeah it's when they go back yeah yeah it's only a problem until it's it's not a problem until it's a problem but then when it's a problem it's a big problem yeah and if you haven't done it right up front uh you're going to run into some really difficult challenges going forward uh which could cost you a lot of money a lot of heartache and so do it right up front uh and there are ways to do that and so that's part of who you got on today is yeah let's bring up let's bring Mark um man it is a pleasure to have you on with us I think that the information you've shared with us just in the recent couple months has been amazing yeah well thanks appreciate that uh David and Nate it's it's a pleasure to be here and to address your audience it's always good to be among like-minded people and um we we all have the same kind of uh approach to things I was always the loner out there and most of my career and it's nice to see there's others uh that kind of have the same mindset that I do yeah so let's back up here A second we gonna do some work um we do a private call on Wednesdays with a bunch of really smart people and Mark came on this like a ebola shoot because he really said to us guys I've been doing this for a long time the knowledge the experience the in the wealth of information and women always agree on certain situations but you bring the facts up and say this is what the law states and you play by the law and that's extremely useful so Mark how did you get introduced to this what do you guys do currently and how many states are you doing it in so uh again thank you for having me the uh my my background actually is primarily in the private money or hard money Arena I I cut my teeth back actually in the 70s that's when I started in this in this field so I'm on old old fart from that perspective um and the uh the first 10 years of my career all I did was hard money lending I didn't know what an FHA or VA or conventional loan was I just cut my teeth on on the private money and work in that Arena and then expanded um a number of years later into the more traditional market so we just kind of added that component to our business and started my own company in 86 and ran it for over 25 years before I merged it into my current to my current operation so it it's been something that I've been working on for a long time it's basically my career and um my passion is more on the private money or hard money side of things and after Dodd-Frank uh came out in an effective 2010 uh that's when things really started to change after the housing prices in 08 uh rules started to come out and everything changed as of 2010 and one of the things that I noticed was that I figured that the Dodd-Frank Act was the I I kind of call it the loan originator Employment Act because it gave us uh Sloan Originators an opportunity to participate in this in this world in the seller carry back world because Dodd-Frank requires to hire loan Originators in a number of cases so um we started to play in that Arena and it just have expanded it we do our mlos which is the residential mortgage loan originator program uh in across the country we just do the Dodd-Frank compliance piece we don't necessarily do the state compliance piece different states have different requirements some have no requirements I'm in Arizona we have no requirements on seller carry back you go to Texas there's lots of requirements so it just depends on what state you're in but uh we do the the Dodd-Frank piece of the piece of the puzzle uh and keep you keep your nose clean when it comes to compliance there so that's where we play uh in one sector of our business operation is the rmlo uh it's funny you say that Mark so I was I was originating notes in Columbus Ohio 2010 2011 2012 and then when the rules was it 2012 or 13 that Dodd-Frank became kind of came I actually actually it's 2010.

it was and 2014 is when all of the remaining Provisions gotcha that's what it was so I I had heard about it I learned a little bit about it um and and we were looking around for an rmlo and could not find anybody like just they didn't seem to exist we'd I'd go and talk to like a mortgage broker or something like that I'd say so you know I'm looking for somebody that can help me navigate Dodd-Frank and they're like God who like they had no idea what we were talking about uh so you know knowing that this was a rule uh and that it was going to be you know all the uh kind of fines and everything attached to it it was an important enough thing we eventually shut that down I stopped originating because I knew that this was going to be a challenge and I couldn't find a normal low so we're glad to have you here this is a normal oh this is somebody who can help you Nationwide too which is yeah on unbelievable having it's a big deal what is in a quick summary if someone says screw it and they create 50 60 20 loans without an armalo what's the consequence so you know I don't know what the fines and penalties are because I've never played in that Arena thankfully I haven't had to deal with that I just know that um the Dodd-Frank has teeth and it can make someone's life pretty unbearable um so fines and obviously cease and desist and all sorts of different things if you don't have the thing that people don't realize is that seller carry bags generally are created between a buyer and a seller simply somebody has a house they want to sell it and they want to be the bank for the buyer right and you can see You'd think that that was a simple capitalistic kind of activity but Dodd-Frank comes in and steps into the way and says no that's not the way you you can do it and I I personally think that the ACT is misplaced I really don't see any reason for it nor do I see any reason for my activities honestly you don't need me for yeah if Frank wasn't there you wouldn't need me but because it's there there's this sense that you got to play by the play by the rules yeah and you don't want to be known as the lender who doesn't do it right herodies will jump all over that you know your borrowers will talk to their attorney something when something goes to fault and things start changing all this stuff's gonna start twinkling down and that attorney is gonna wet their teeth is gonna go after that lender and hit every loan that you guys own so be sure you get talking with Mark about what you're doing and what states you're in and stuff like that so Mark we've went across a lot of these owner finance people who oddly enough never heard of actually selling a note let's get back is it legal to sell a note absolutely a note is a negotiable instrument just like a stock or a bond is and so it can can be marketed and sold in the same vein that any other type of financial instrument can be sold the beauty of it is is that it's generally done on the private side of the market I mean it's between you and me uh it's not sold on Wall Street although you can find companies that have hundreds of notes for sale at any given time but generally it's going to be a one-on-one type of situation so somebody sells a piece of property carries it back they're happy with the terms and then something in their life changes and they need some cash and this note is something that they can utilize to to achieve some cash and we last we talked about some of the advanced strategies of no partials which tricked us triggered us to talk to you about our seller finance people familiar with this idea of selling a partial of their payments and and it seemed to us that they're not super familiar with it and they're kind of uncertain about it and then we bring the numbers with you kind of question why they don't know more about it because the money they can make in a quick kind of cup of the money and then hold the back end seem to be a win-win for them as well as for us right we've seen a lot of that in fact I teach a class at one of the local real estate schools the continuing ed class and one of the things we go over is just this particular topic why and no it has value uh how it could be sold how it could be structured and some of the ways to move through it to get some money and actually when you sell a partial you actually can make more money than you would by getting paid off in full so it really is a a win-win for everybody involved in a transaction like this so let's get back for those who didn't join us last week definitely uh check out the podcast or the YouTube channel or whatever can you break down what a partial is what does that mean so I actually have an example David that I can I can share if I might let's go over the definition and we're gonna break it down we're going to share a screen but what is overall what is a partial I mean are we am I buying five hours of next week's payment or what's it look like overall the beauty of it is that you can structure a partial sale any way you want so we've done transactions where we've sold obviously the whole note somebody says I have this note I want to sell it I want to be cashed out and done so that's the full or the entire note sale strategy but then beyond that there's this partial node so we can sell a portion of that note we can sell a portion of the payment we can sell a portion of the balance we can sell any kind of piece of it that we want the beauty of it is is that there's no structure or absolute formula that you have to follow it's just basically what buyer and seller agree to is what can be sold and that's what I like about this in industry in general is that it's there's no um absolute rules that I have to follow I can say yeah right I want to sell you know five years worth of payments okay then let's figure out what five years what the payments look like and at least and I want to jump in here just so those who don't know who me Nathan are you know we've been buying notes since 2010 and previous and buying these notes has been a real attractive thing and this partial world was kind of a a mysterious world for us for a long time because not a lot of people were selling it I think it's because most people didn't understand it but it's a great scenario for us and also people who may not have a lot of money that may only have 10 15 20 000 they just want to get their money working Ira money is key right in the documentation of the contract can be written any way we want and I would definitely tune into last week's video to see some of the intricacies of that but we can if someone has six grand the Roth IRA you can buy six months of payments right so Mark what what do you think owner fans peoples understand when it comes to selling a note or selling a person where is their understanding stop I would say or well I I just think that there's not a good educational component to this side of the world you know that um you know I mentioned I teach a little bit of it I teach 45 minutes of a three-hour course so that it's not like you're gonna get a lot of Education uh in in something like this there's just a lack of quality information and you guys with your YouTube channels and things of that nature are spreading the word and that's what really needs to be done is to let people know that there are opportunities out there beyond the simple transactions that you may have heard about in the past so for me I've been doing it a long time but I do it in a pretty very small world and that's where I think by opening it up you know like social media has given us more opportunities to make things known and certainly it's a great tool that you guys are doing to put that information out yeah we're trying we're trying to educate the masses here yeah it's time and the more people that know about the more stability that industry will have the more product that industry will have just gonna grow and grow with with that educational component and even just Conformity like that's been a big Focus we're trying to get people on board using an rmlo uh like you said do you need to exist that's debatable but the rules are there so yes let's just follow the rules and and get it done properly so that there's it just solves problems in the long run yeah and I would encourage you guys to we'll chime in here for a second um coming next year in 2024 May June um Nathan runs the Diversified mortgage Expo down in Nashville so any of you guys are in the seller finance world stop for me for Nathan right come down take a look at it and talk to us in person just chatting together yeah we're putting together the schedule and everything this week uh and it's coming together really nicely it looks we've got I think three different sessions having to do with celebrity so it's awesome come and join it's going to be really really educational you'll see you'll see yeah so let's dive into some number share Mark I think people you know and feel free in the chat guys feel free to have questions Curiosities understanding and stuff like that anything we kind of not sure we're doing right please feel free to jump in there please give me I see Cindy made a comment they're doing it right the right way the first time is called Integrity yes something I appreciate it yeah absolutely it's key for anyone you need to understand because us note buyers need to learn the stuff there's no sellers need to learn itself and US note buyers understand it it's a different world you guys used to find the property get in the borrower and put them in place but we want to make sure you understand this side of it so that if you need to recoup some of that money and get us going we can do that as well so um absolutely so yeah so one thing came up with that uh Randy mentioned that he's planning creating a wrapped and selling note as a partial just before we get to the partial numbers just be understand the fact that rap notes are a little bit difficult for partials the reason being is you have the underlying borrower um unless that underlying borrower is you or someone you know and not an actual uh home owner that you moved out and you have an underlying first the intricacies of getting that borrower to sign over POA to this partial buyer can get a little bit cumbersome um so Randy feel free to reach out to us with some Curiosities um it just makes a little bit more difficult but um if we can come up with an idea Nathan and I will definitely entertain it because I know wrap notes are huge so yeah yeah I'm very interested in that let's let's um yeah so it's awesome yeah I guess Heidi asked the same thing with Heidi we're just trying to um work out that thing if we can pay out that first with our partial purchase we have no problem doing it um it just makes a little bit more difficult right so awesome we'll uh I'll let Nathan kind of respond to that and uh we can talk some more for sure yeah definitely um so let's let's change our remark I'm gonna let you go ahead and share your screen hopefully this will uh go successfully here and uh see what you got to show us we're gonna go over some numbers and partials and see why it's uh attractive uh for us as well for the seller to buy it and why is it attractive right so this is an example I put together um this is actually a real transaction that occurred some time ago but it kind of gives you a sense of what we're dealing with so in this particular case there was a sale of a hundred eighty thousand dollars buyer put 50 down carry back was 130 30-year term it was written at six percent interest rate this is the current balance 127 and the payment is 7.79 and there's 345 months remaining so if somebody held that note they would be they would be saying you know I need some cash I've got this note what can I do to generate some cash the normal strategy would be to sell the entire node and this portion here in tan kind of gives you that idea so they're selling 345 payments we would give them 81 000 for that that would yield us 10.303 so that six percent note now yields me ten percent uh I'm gonna I'm gonna carry it for 345 months and I'm going to give the seller a net of 81 000 wow so that means that there's almost a forty seven thousand dollar discount here so if I had a yield requirement of 10 on my paper in order to do that I'm gonna I'm gonna have to Discount that 47 000 which is a huge amount of money and people aren't going to like that and that's a 36 discount and Dave and I probably wouldn't even pay that much so I understand that right now right so we're gonna have a discount so much and this is one of the creativity and make sure that interest rate as high as possible yeah but not every situation can have a higher interest rate because the borrower may not have the ability to repay right that's one of the key features so in this situation we're gonna have to give you a lot less money than you would normally get if we bought the whole loan right it may not work out doesn't make it a bad deal just make the numbers don't work now if this was a 12 interest rate it may work out better but you're still gonna have to get a discount and you may not like that or it may not be enough money to do what you want to do with it right and so what we did was we expanded the concept and we've now created a partial note sale strategy and these next three columns are showing what it would look like if you sold a partial so these are just three examples of selling that partial and option number one we sell the the holder the paper sells 240 months instead of the 345 he sells 20 years of payments we're gonna give him 73.5 for that note almost as much as we would give them for the whole note as you can see it's pretty close there but at the end of 240 months the balance remaining on the note is 63.5 so that buyer who's been making those payments for 240 months at the end of that term still owes sixty three thousand dollars on their on their debt which means that when we're paid off our 240 months is paid off the holder the paper the seller of the note actually gets it back with a balance of 63.5 so their Total return is my 73.5 plus the 63.5 balance that they're going to get when they get the note back their total return is 137 000 and if you look at that if the buyer paid off the note today they'd be paying off just short of a hundred and twenty eight thousand dollars to pay off the note so there's a nine thousand dollar gain by by the utilizing this strategy which is a seven percent additional return an additional gain so that's one of the advantages of this now it gets even more extreme when you shorten the period that's sold so as an example if we sold a 15-year term um my my price is going to be 69.5 the balance remaining on the notice a lot higher it's 87 000.

the total return then to the note holder is 157 000 and again if they pay off the note today there's a 29 000 Advantage by utilizing this strategy over if the note was paid off in full today and then the third option is even more dramatic you can see the yields are dropping my yield is about nine percent on these second and third options it's primarily because the term is shorter I don't need to make as much on a shorter term than I would if I was buying 345 payments so let's let me reword it for some people may not fully understand right but he laid up perfectly when they say the balance right after 240 months in that scenario option one once I'm done getting my 240 months of payments of that monthly payment right that 7 79.42 that loan goes back for goes from me back to you the seller and you still get to collect the remaining 105 payments which at that time when we send them back to you the balance of the note is sixty three thousand dollars yeah so you're still going to collect another 63 000 plus interest for the 105 payments moving forward which that's awesome right and I got my yield you got your some money out of it and you can move forward to it um so if this was something that you were holding in your IRA this is a perfect strategy because then you've got that you've got income whatever it is 10 years from now five years from now 15 years from now whatever it is uh plus a lump sum today so a lump sum today after some time goes by once that partial is completed you still get that income back into your IRA so it's a it's a great strategy for an IRA it's actually new for everybody because the holder the paper is actually when they sell X number of months of payments they're actually retaining a portion of the interest that they wrote on that note that's why the yields or that's why the returns are are higher is because they're still getting interest and that's the beauty of it the balance doesn't drop to zero at the end of 240 months on their note it drops to whatever the remaining balance is and then they take it over so the advantage really is very strong it it's a win for the seller the paper it's a win for you as a buyer of the paper uh for you you mentioned Nathan the IRAs it's a great strategy for IRAs for long-term investment strategies there it really is um Everybody benefits on....