Notes Secured By Vacant Land | Real Estate Notes Show

Episode: Notes Secured By Vacant Land - FULL Dave's Goals and Plans: - Restarting five-week training course in a couple weeks for note investors looking to reach next level - Building non-performing bid calculators with state-specific situations in the course - Seeing influx of notes coming in recently with market changes and rising default rates - Currently buying notes at 18% yields, up from previous 9-10% expectations - Planning to discuss commercial loans and market changes in future webinar Nathan's Goals and Plans: - Currently in Utah visiting family while managing ticket sales for event - Posting on Facebook and LinkedIn to promote upcoming event and spread word - Meeting with people doing creative financing and seller financing to potentially buy their notes - Bringing owner finance and seller finance groups to the event to connect with note buyers - Will cash out sellers immediately at the event if notes are done correctly Key Recommendations: - Have all collateral files, mortgage documents, payment history ready before attending the event to sell notes - Build custom bid calculators that account for non-standard seller finance terms like balloon payments or interest-only clauses - Open pocketbooks and prepare for changing market conditions with higher yields now available - Owner finance originators should reach out to learn proper note creation for easy future selling - Review previous podcast from couple weeks ago if unfamiliar with note selling process Topics Discussed: - Notes secured by vacant land and their unique characteristics - Land valuation differences by geography (water access, location impact) - Owner financing and seller financing note purchasing - Rising market yields from 9-10% to 15-18% - Upcoming event for note buyers and sellers to connect - Five-week training course for advanced note investors - Building calculators for non-performing and seller finance notes Guest Insights: - Steve Lock has been in note business since 1979, started with owner-financed land purchase - Made first note investment in 1988, initially focused on seller finance but now does all types including bank notes - Primarily buys owner finance transactions across single family, mobile home, land, and commercial properties - Land notes are not specifically targeted but end up being significant portion of portfolio - Early success with land note ($38k note bought for $20k discount) hooked him on the business Episode: Notes Secured By Vacant Land - FULL Guest: Nathan Turner Summary: The episode discusses the growing market for notes secured by vacant land, covering valuation strategies, owner financing preparation, and current market trends with rising yields.

Main Topics: Notes secured by vacant land, Owner financing and seller finance notes, Land valuation and uses (mobile homes, residential builds, agricultural), Note investing training and calculator development, Market trends and changing note yields, Upcoming conference and networking opportunities Key Takeaways: Vacant land notes are becoming more common in the note investing space with regional value variations based on factors like water access | Seller finance notes have unique terms (interest-only periods, balloons) requiring customized valuation calculators different from institutional notes | Market conditions are shifting with increasing default rates and yields rising from 9-10% to 15-18% as inventory becomes available | Proper documentation and preparation (collateral files, mortgage documents, payment history) are essential for selling notes at conferences | Note investors should expand their criteria and education to handle non-traditional assets like land-backed notes Keywords: vacant land notes, owner financing, seller finance, note valuation, real estate investing, non-performing notes, yield rates but that would be a stretch I want to make sure we're clear on some things I'm seeing something in the chat um I'm not gonna need my name but someone mentioned this idea of sea of Thieves so land notes are different than notes on vacant land right so land contracts are different from Land notes right so we're not discussing the idea of having a cfeed land contract per se we're talking about more of the idea of having a note secured by vacant land right a land contract is typically or could be on land on your online well but it's it's the structure opposite of a mortgage if a mortgage or a link or land contract or a cfp so we're not talking about the idea of mortgage for cfd we're talking about the you can have a mortgage or cfd on a note secured by the promissory note being secured by a mortgage or land contract all uh vacant land so just so Clarity collateral is what we're talking about the instrument you use could be a contract for deed or land contract different parts of the country they call them different down the Deep South they call it a bond for title but it's still a contract for deed where you don't have title to the property until you pay it off right but you know and we buy those just like we do mortgage and notes or in some states it's a deed of trust to note depending on the state but when we're talking about today we're talking about land notes as a collateral not the instrument used but it could be either one or any of those three so give us a good story give us a you know give us a home run what a situation where you gotta land note and it worked out to be weird but you didn't expect it to be okay well that first one I gave you was a pretty good one yeah when I bought the are some people buy land to put a mobile home on you know there's um in land to put mobile homes on it's becoming more and more scarce so that they're actually the value of those are going up we see it varies greatly across the country you know something in Arizona that has water is worth a whole lot more than something in Arkansas the water rats can be where 75 000 just to have water to a lot that you put them Oklahoma but um you know some some people buy it to put a second home on the summer agricultural uh you know there's lots of different uses but I would say the most common is someone who's buying a piece of land to uh to build a house on or instead of mobile home later you know unless you're talking about commercials [Music] [Applause] there we go well they put some jkb Holdings start two alongside Miss Nathan Turner thank you for those who are tuning in letting me know no sound I think you should appreciate that for every little issue with Facebooks or uh fixnet right now so everyone a little bit a little technical late start but we have some big things are going on and first and foremost we're just talking about vme without sound so tell us about what you're doing you're posting like you just said which is shocking so yeah what's going on it's awesome well I'm so I'm in Utah right now visiting some family and things uh ticket sales are off and running I'm posting stuff on Facebook and Linkedin which is probably the biggest Miracle of them all yeah hopefully you've seen the post hopefully you're sharing those posts and just spreading the word we want to get as many people there as possible and the more people the more benefit everybody gets uh talking to some I was at a Rio last night talking to a bunch of people that are doing creative financing and seller financing and so I said you guys just keep doing what finance notes because they've got some terms that you might not normally see in an Institutional note they might throw in something about interest only or you know a balloon coming up or something like that that is not normally what we see in an Institutional note uh so building out that calculator so that you can include those calculations is a big deal absolutely it's all different different things the application schedule may be different they may have different numbers in it and different page structures it's just crazy out there but you can buy it all right because we want to stress that um this is awesome so one of the things we we do in our webinar podcast is try to connect people with everything they do with notes right our field of note investing Rico was a small bubble of banknotes and as we expand out right not only the techniques which we talk about and strategies but also the types of notes we focused recently on this idea of having a land I mean owner finance note on properties right and that's been exploding we've been having our Wednesday by the cold and they're like can you buy stuff and we're working with owner clients so if you're owner financing please stay tuned and reach out to us because we want to teach you how to do it right so that you can easily sell any longer you create today write to us yeah yeah and there's people that'll buy me included I will buy it at the table so if it's like if you've done it right I can cash you out immediately you can get a bump and you can go do it again absolutely it's a pretty good deal in this DME conference we'll be talking new investing in general not just real estate and banknotes right we'll be talking about all kinds of stuff one of the topics that I've avoided to kind of lack of knowledge his business world of what I consider to be weird notes and I don't understand the premise of it and I don't understand why people would do it so what people are right this idea of buying notes and vacant land make the zip weird to you as well it doesn't mean license and worked as an agent for about three years and I read a book called invested debt by Jimmy Napier some of you may have read it but uh it got me interested in I ended up buying a real estate note on it was actually land but I had a barn on it this guy lived in the end of the barn it was a horse barn and he had quarter horses and he really liked them so they had a living quarters and it's probably one I wouldn't have bought if I'd known better but anyway uh it turned out well it was 38 000 note and we bought it for 20 and it paid for like a year and then the guy paid us off I actually borrowed the money at the bank to purchase it and I made the payments for a year plus the difference in what the discount was and uh it didn't really pay down very much so that was more at that time than I'd made in a whole year you know yeah it kind of got me hooked on notes and uh a lot of the notes that we purchased were land notes you know but also houses but land notes are unique and you know any probably be best just maybe to ask me some questions but further further that story uh in 1988 we decided to make the note business but you know we went into that that's all we did from that point forward except for purchasing real estate from time to time and uh so that's that's kind of my you know nutshell my uh very thumbnail SketchUp man career where it started anyway so in 1988 were you doing like were you buying Bank paper or or seller finance or because that was a different time interest rates were were quite a thing yeah back back in those days we were buying seller finance we we bought some banknotes but mostly seller finance and you know during the 2008 910 we did a lot of banknotes you know yeah because that there were all said you guys just keep doing what you're doing I'll cash you out let's do this over and over again and uh they love that idea so hopefully they'll join us as well we want to stress those who are noting about turns I agree and love to see you guys but we want to see other people and what Nathan is doing is we shared last time is tremendous right we're really bringing together these seller plans owner finance group of people who know nothing about us bringing them to us and saying Hey listen we'll buy yourself and these people are going to come here with the idea of I want someone to buy my yields from it yeah handshake situation so oh yeah we can do a tremendous amount of business together yes yeah yeah so get there get your tickets get your stuff together your owner financing make sure you have your collateral file together make sure your mortgage or no anything together your pedal policy um your pay history everything ready because the people who will be buying your notes are going to be in attendance as well yeah and if you don't know what any of that means go back and watch our podcast from a couple weeks ago yeah and and get some education on what it is you need to to be able to sell your note and then just come and if you're missing some stuff we'll let you know we'll tell you what we need to make that hole so we can buy that note from you so it's awesome to see you know this whole conversation um of notes have been good uh we also want to stress the fact that we'll be um restarting up our five-week training course as well coming a couple weeks from now um that's for those people who are looking to get to the next level of note investing um if you want to understand what a big calculator is from the Performing side of it that's key but also in the non-performing we teach you and we build out a non-performing bid calculator in the course from the state specific situations and all the key things that go on so you can have your own calculator built to what you wanted with everything that you care about so yeah and that becomes extra important when we're talking about some seller which took a while to get up there but it's there so you're sure open your pocketbooks and get ready for your situations because it's coming make sure you have your big calculator is ready you can talk about course take it if you want but make sure you're ready for it so without further Ado I'm gonna release Mr Stephen luck I appreciate Steve coming on here and when I first got to know him I'm amazed at someone doing anything for any length of time consistently where it becomes second nature Steve thank you very much for joining us on this Friday afternoon hey thank you for inviting me glad to be here so Steve notes in general are buying a piece of paper with a security at some instrument right we're both in the same field we're behind the scene paper your security is a little bit different from ours right well we we bile in those but that's not all we buy so uh I'd say it's the same except we may have that if you don't buy land notes it's a little different yeah absolutely we're very curious about land notes so we're we're glad you're here today and help educate us on what it is what we could be looking for or should be looking for all that kind of thing so Steve I know you were probably a young age doing this in like five years old right let's be serious though how did you start how did you get involved in this land note world what I first got started it was when I was it was 1979 I actually bought some land from a realtor and I got interested in real estate and uh it was actually an Honor Finance transaction I was the payer on this not the not the purchaser of the note I was the purchaser of the land and under financed it and it got me interested in real estate so I got a real estate a website because phone books quit working you know and uh the we did some Statewide classifieds but that sort of quit working so pretty much the internet and Direct Mail still is a good source for us but uh I think your question was how do we find these notes they it's mostly we we do a lot of direct mail and it ends up to quite a few of the people we send to have land notes on me so we we don't necessarily just go looking for land notes but they come our way and they're purchased differently than a single family residence because the risk and the uh you know sometimes the risk is less sometimes it's more it depends on a lot of factors you know so let's I'm going to cut three to the chase I don't get this I know I do answer as well on the phone with me why would anyone want to buy a note on a vacant land that's not built upon may not be built on for a while like why would someone own a vacant lot and have a note for 20 years and never do anything with it like that is so weird to me well you know there's all different variations there most people that do have a plan you know they plan to build on it they plan to either build a second home or a home or some people buy a land to put a mobile home on the others um in land to put mobile homes on it's becoming more and more scarce so that they're actually the value of those are going up we see it varies greatly across the country you know something in Arizona that has water is worth a whole lot more than something in Arkansas the water rats can be worth 75 000 just to have water to a lot to you put them Oklahoma but um you know some some people buy it to put a second home on the summer agricultural uh you know there's lots of different uses but I would say the most you don't get it is because because of experience there's one note that I bought 12 years ago something like that 12 13 years ago where I thought I was buying it was a little bit outside of town which I hadn't really established my my criteria all the way yet and so I was a little bit outside of town uh like it seemed like a nice property on a bigger piece of land and this is in Massachusetts I want to say and uh and what it ended up being was the house was absolutely unlivable so what I what essentially what I bought was raw land and I had no idea what to do with it and and because I you know zero experience with what to do with land I don't know how to value that I don't know how to how to look at it and say yes that's a good thing that I bought or a bad thing that I bought so and I was completely lost thankfully I was able to sell it to the neighbor the neighbor picked it up and I still made a profit on that and so it all worked out okay but it it freaked me out because I don't know what I'm doing when it comes to land so that was that was one of those steps in my progression where I'm like okay new rule no land and that was kind of that experience but I know that it's a thing and so I'm very interested to learn about this today so before we bringing Steve for a second I want to let everyone know I must repeat you but I've got an influx of notes coming in recently um the Market's changing we're seeing news reports by defaults um so this idea of what we've been projecting and figuring out is starting to go fruition um banks are starting to fall commercial loans are kind of changing uh which we'll be getting to in a future webinar um but understand the fact that inventory is changing embracing expectations is changing as well right yeah people are expecting nine percent ten percent we're up to 15 16 17 18 we're buying a few right now at 18 years kinds of pools going around non-performing performing everything you can imagine sub performing but mostly throughout my uh business life I've done owner finance transactions and of all kinds a single family owner occupied mobile home land land we've done you know commercial just whatever it's kind of like a box of chocolates you never know what you're gonna get yeah we have done a lot of land notes you know we don't that's not necessarily what we look for but we end up buying a lot of them so I can I can answer some questions about it you know absolutely we're diving into questions here um just to let you guys know we're kind of multitasking here any kind of questions you asked we're gonna we'll feed it right to them and so please present any questions you have inside of chat if you are doing raw land please make sure you let us know as well so we can encourage uh and you know have you kind of an expert here actually great so when you're buying these land notes um are you sent a what we call a p a list of addresses like lots and you're is that the first step in it like how do you find those yeah we have a website that we you know that's pretty you know it's pretty active pretty aggressive it's not the the top one out there but uh we're working on it uh but we do a lot of direct mail as well just take you back just a little bit from the progression when we first started and doing buying notes like that note that I purchased it was a horse barn all we really did then was run and add the newspaper and you would get quite a bit quite a few there was not very many people buying notes then you know those kind of a best kept secret uh then we we started doing other things like direct mail and then we started doing actually running ads in telephone books we were in like 100 telephone books across the country in major cities like a half inch to an inch little ad but it got us quite a bit of business and then this thing called the internet came along so we had to develop yeah and so but you know I didn't know I have no idea what I'm looking at I don't know how to tell if it's buildable land or not buildable land or how do you how do you find that kind of thing out yeah well you know one you you know let me just give you a few things to watch for one is in a flood zone you know is it flood why flood zone what you know you can do you can find that out pretty easy that's something a realtor can help you with and you also can do that by doing a flood cert um to a credit bureau you know another thing is earning hazardous waste issues you know uh you know is it in a Wetlands you know there's there's things to look for like that um and it also is there access you know access is another exit landlocked or is there good access is the road all washed out and it's a private road with a private road maintenance agreement you know that has nobody's really maintaining you know or does it have a active HOA we brought some Lots in North Carolina has had a lot of HOA fees but no one was taking care of the roads you know they were the money was not being appropriated properly but um so access is is a big big one to watch for I think but if you you know with the risk you know maybe comes a reward if you uh if you buy a lot that has you know not the greatest access you may get a bigger discount that makes it worth the risk you know does it does it is it an advantage if the lot is cleared well it is unless you're selling the timber you know but uh normally it's if you're gonna if someone's looking to put a home there or a uh a mobile home yes you know it's definitely uh it's better if it's clear not totally you know just clear-cut but if there's some scattered trees but you know they've just manicure it and and I'm brush hogged and you know common is someone who's buying a piece of land to uh to build a house on or instead of mobile home later you know unless you're talking about commercial land and are these generally like in the in an established Community or are they just kind of out in the middle of nowhere could be either um we see a lot of land in Texas and Oklahoma that's just sort of out in the middle of nowhere maybe there's a lake or something nearby or some attraction but uh you know if they're one-offs sometimes it can be a piece of land that's down a private road or you know a dirt road or just a state or County Road it's there's no it's it's kind of like there's there's no cookie cutter they're all different you know but but we see some of each some are in established subdivisions and we bought one in Atlanta recently that was in an established subdivision very nice lot and they're getting ready to build on it and if we get paid off probably so you're more the likelihood of an early payoff if you purchase at a discount if it if it's more established subdivision there's probably they're probably going to build a home the problem you know we've seen recently is uh some of the people who plan to build homes now since rates have gone up and that are we're backing off and there's not as you know it may sit there a little bit longer but uh if the people had you know a lot of chips in the game paid a pretty good down payment you got decent uh credit and it's still a good risk because they're not going to walk away and that's why land uh I mentioned I think before we started this it the uh along the value needs to be better that as a single family house the investment to Value you want to stay in my opinion depending on the quality of the property but somewhere between 50 and 75 percent investment to Value if it's in a really you know established subdivision and a very uh vibrant Market you know uh then you might go 75 percent you know if it's in say for example South Carolina I can't drive down there so we use the agents as our eyes and ears and we get bpos you know and um like Dave was saying earlier sometimes you don't get a lot of information so you have to dig deeper you know if it's just a personal number uh somewhere out in the rural area so don't even have a 911 address yet so you have to be really diligent about trying to establish what you have and those may get discounted more because they're they're you know maybe a long time before anything's done on it you know they made about it just for hunting land or you know hoping that the future will bring something there some people buy you know land owner finance it sell the timber off and uh you know end up getting enough money off the timber to pay pretty much the note of you know there's lots of value that you can get like air rats Timber rides mineral rides yeah we're gonna get into like all these due diligence steps made my floats in our chat before earlier and we're going to talk about in a few minutes but the due diligence steps is I think the biggest difference right yeah for us we just dial your property three two versus three two bedroom in a certain distance based on population we we can compare it but man seems to have a whole different spin on due diligence stuff for example that that one that I talked about where I ended up taking taking the it was a piece of land initially we thought it was going to be worth a lot because uh Lots in the area were selling for quite a high amount what we found out was there was some kind of issue and I forget exactly what it was but there was some kind of issue that made that made it nearly impossible to build anything on that lot and so then that our value went from I think we thought it was going to be like 75 000 it went down to about 35 000.

is um my concern is that if I end up taking back the property the salability of that is going to be difficult like it's going to be difficult for me to be able to resell that piece of land is that valid or am I just getting worried about nothing um well it depends on the market you know the market we were in last for a couple years there you can sell anything you know that was you know there you know that it was holding the Earth together but [Music] um yeah it's it's a little harder sometimes to sell land you know unless if you usually have to offer terms but but not always so it's that's one of the concerns why you want to have a better loan to value and if things kind of go south like they did in 2008 then you know land values can really drop you know we saw some property out west that we bought for a hundred thousand the tax value on it was 2.6 million and uh we we bought the land not the notes this is some scenarios that we bought and we ended up selling for we made a good profit on it but we also made money because we got the taxes reevaluated and we got some retroactive tax money that have been paid by doing appraisals and some stuff that uh I think we got like 23 000 reimbursed from the state so right now what are you guys targeting for your ltvs what are your targets right now uh excuse me sorry man that's okay what part of LTV are you guys targeting right now um we like to stay 50 to 60 investment to Value you know a lot of the value is what you know how much Equity they have invested today is how much you put in so we like to stay at you know 50 to 60 percent you know they may only have 20 loan to value but we can discount it to 60 or 50 percent and that's why it's different places gas is a big thing you know natural gas you know that's that's the mineral rice that I'm receiving royalty's Honor on natural gas and uh but uh Cole you know uh you know there's other minerals out west that I've been too involved in but you know water rides are another big one it's huge out west we bought a piece of land and Santa Clarita California and we sold it off and owner financed it but we kept a little just probably a couple of Acres because there's supposed to be a huge aquifer under this land but you know for some future today if it does we'll have a little piece of it maybe can your agent help you determine what if there's minerals in the area or what kind of study do you do to find that out yeah sometimes it's sometimes you have to do a mineral search and title companies can do that if you're only just buying a small track you know I would say that you know if if the beads within the last 30 years they'll have it beaded out to minerals and they're probably there and they do a real in-depth mineral searches extremely expensive you know a small lot it's not worth it so what we do is if we buy we just say we're purchasing with the minerals and if we say I always say we we're excluding the minerals and we usually deed those minerals off to another entity so we can we can tell the people that that we don't own the minerals so they can't transfer them because that particular entity doesn't own them they're transferred somewhere else that's awesome yeah minerals can be a big big deal if you're buying land if you're buying the note you really unless you get the land back it's not really an issue but right yeah so we had questions right Nathan you said questions yeah I think we maybe just answered it horse barn you know that was it wasn't totally vacant it had a barn on it but um you know we we had one recently that we purchased in uh California it was a slow payer but uh anyway they we we would call make collection calls and they finally got mad and just said they were going to pay us off we said please don't throw us in a Briar Patch but they went in and paid us off to teach us a lesson so that one was if I remember correctly it was like a hundred thousand dollar note which we bought for pretty pretty sizable discount and they paid us off at the full face amount so what's the typical interest rate on when you uh they can vary you know we see you know two percent we see some that are 10 11 or 12.

uh the one thing you have to be careful is if it's very high to make sure it's not userous or does it you know um whatever so that it sounded like so far everything is pretty much the same as a regular note that we're used to with property attached to it uh like a house on there but on in the case of a vacant property like a vacant land how do you how do you evaluate that how do you decide what the value is in case of you know default and you need to take it back how do you say you know it's worth x amount I know we're comfortable taking on this risk we we have a kind of a I'd say a Corral of Realtors around the country we found most of our Realtors from a website called the REO Network and we found you know the most the agents there are good if we come we don't like to when we first when we get we call the next one because there's usually a list if you put a zip code in and we we found some really good agents and we have a list in most areas and we use agents to go out the all the underbrush cat you know that I would say yes you know if you're looking for a place to hunt deer or you know some type of animals and you know the but it all depends on these plan you know the plan you use of it now I know we talked before about environmental and I made this mistake on a commercial building and I didn't get a uh phase one phase one thank you and do you guys pull speeds one on your way of vacant land or do you not bother I've never actually done one that I can remember but I'm not saying that you shouldn't particularly if you're dealing with commercial land you know man if there's you know if there's been a dry cleaners there a gas station uh mechanic shop you know there can be issues with old tanks there could be there's I can't even pronounce it but there's a chemical that dry cleaners produced that that's very toxic and you have to be careful about if there's been a dry cleaner that's right three owners ago with dry cleaning and the owner before us was uh I think sorry excuse me that's okay I think that's where a realtor can help too you know if you if you're looking to say if I'm here in Arkansas I'm looking at something in South Texas and it's a commercial land and or somewhere in a potentially could be commercial and there's been buildings there before the agent will probably know that and be able to help to you know say hey this this could possibly have some environmental issues then we might need to get a phase one and even a phase two if it's because you know hit the face one shows there could potentially be something there huh so I think for me one of the other things that kind of scares me off is I'm not an expert on that I just know about it I've never really sold any but I like in and around airports and stuff like that oh okay okay interesting yeah I've never only close to an airport so but I know that people do sell those and they yeah it's not just airports also you link you can sell signage and cell tower and Lease land for that I know some people have done quite well doing that uh yeah High weeds and stuff like that yeah um yeah interestingly said that before uh about the fact of you know the minerals and Timber in New Jersey we don't have this whole minerals thing right for those people who are not familiar with the minerals in the land being a valuable Source can you explain a little bit more about what that looks like what minerals are they getting in what kind of profit can you make from buying land which is minerals on it yeah I used to subdivide land and we probably did a few thousand acres it was mostly rural land that we would find they had a road fronted you know a lot of Road Frontage we just built uh the plat and then subdivide off to the road to County Road but usually I would purchase with minerals you know I would buy and stay and stipulate that we were purchasing with the minerals then we would sell the laptop we would sell without the minerals so we would keep the minerals and we actually built up about a thousand acres of uh of mineral rights and I sold off you know probably 80 percent of those but we're keeping the ones that are producing and they're not producing a lot it's but they you know we get a check for a couple of thousand a month off of those sometimes more and but the different answer your question the different minerals uh can be you know depending on the state you know in Oklahoma and Texas of oil Arkansas even in Pennsylvania and know an interview that we do questions one of the questions is what are you planning to do with property you know are you planning on keeping it when it's first you know question and are you happy with it you know and uh so that that's you know kind of how we establish that so make sure I heard you correctly you say you've interviewed a borrower before you buy it yeah a lot of companies do an estoppel letter which can yeah and estoppels can be good but uh I don't like them because we usually do the interview like a day or two before we close if somebody's got really good credit you send them a stop a letter two weeks ahead of time and uh I said oh you're so bad they're selling my note at a discount so they go to the pay or the seller okay well you know they become your best competition so if we do the interview a day or two before we close they don't really have time to do that hmm and it just serves sort of the same purpose as a stopper so that later down the road if people say hey I don't agree with balance so we on such and such date at 3 22 p.m we talked to you and you said you agreed with the balance you know and we relied upon your uh you're worried at that time so what's changed you know sometimes Lisa what is your first step in your due diligence can you get the asset what's the person you doing are you Google searching it are you start pricing what you think the value of the property is are you reaching out to an agent what's your first step in that process of evaluating a land member or Landing yeah on a land note we the first step is to establish the value of the land you know and we usually if if it's an established subdivision you can get a pretty good idea through Zillow and some of the other you can look at the tax records which were pretty good looking up tax records you know they usually if they just have a partial number we can hard to determine a Yale yield because uh you know with land investment to value is you know Trump's yield and sometimes uh in order to get to the where we're Comfort comfortable we have to discount it considerably more and sometimes the partial Works bet you know we'll work it with that because you get your investment value and it doesn't just kill the the sale you know it's a certain number of payments and you know after they've established a payester with you for a year or two then you can go back and buy some more um I'm not sure if you've bought notes on Rick and mortar real estate before but I presume you have but do you is it deeper rate on vacant land higher or lower than on traditional real estate you know I really I don't know those statistics uh okay I would say that if I was guessing that uh it would probably be 20 more on land maybe the reason being is if a person owns a home and uh then they possibly on a piece of land somewhere that they're thinking of building a second home on or or another piece of land they're planning to rent I mean they're renting and planning to buy build a house later uh if things kind of go sideways they're gonna probably let that go before they win their home or you know the residents right so it's it's usually a secondary so I would say the risk would be you know 20 on a normal Market uh really bad in a really bad Market it might be higher I know you mentioned before about air rights can you tell us a little bit more about what that looked like but you know how do you best learn about the mineral rates or water rights or whatever rights there might be is and I think you said you do that through a title company well um usually the seller if somebody's selling you something they'll tell you you know if some value in the water rights or there's a lot of mineral rights that go with it if not you know usually the agent might know if you're just if if the if you're purchasing it the seller doesn't mention it you have a hint that there could be some mineral rights there then you could go to a tablet company and have them do a search so Robin Jackson mentioned in the comments that there was things called land men who um in the Texas at Oklahoma who can find yeah that's what they do yeah yeah we don't hear about them as much anymore they used to be everywhere but yeah land man they call them land men and they search for mineral rights and try to lease minerals from people and so they can drill well yeah New Jersey so so cool though um when you're working with kind of stuff do you get the idea of what the person so you're going to get a list of assets from whoever the sellers going to give you do you get to know what the borrower's intent is that a formal letter or that kind of uh what do you think's gonna do or how is that presented to you because that's important if you want to know if the borrowed intent is to build or to hunt how do you get that information about what their intent is well we first if if a note seller calls us wanting to sell the note we ask them you know what what was what are they planning to do you know they usually know and before we close I know we typically do an interview with payer and talk to them you know and ask them well we we established that they agree with the balance and we have a list of you that land I think in the market we're in right now um it sells pretty good you know and I when I was a realtor I used to tell people uh you know they'd ask how much they could sell their house for and I'd do a market analysis and I'd say well they said what can I sell it for God have like three-time zones or three-time periods yeah if you've got 180 days I can get this price if you got you know 90 days I can get you this price in 30 days this price and if you want to sell today I'll buy it at some price you know so of course it depends on you know how if you're into it right then you that helped that's why you want to be at 50 or 60 on the value because you can go you can ask a little bit lesser price if you get it back and the wearable market and even if the market drops you're still got the margin of error some cushion there so land can tend to sell slower sometimes it can sell faster if people mobile home lots are really difficult to find these things buy a note on a mobile home lot uh there's probably somebody standing in line wanting to buy it you know and you can go to dealerships and different people and like um I said earlier the next door neighbor is sometimes a good Prospect you know it's their best Prospect probably the next door neighbors yeah so Robin Jackson also asked us about uh going through a title company do you go to a title company to transfer or do you run title your own your own title we if it's a really small note we'll just do a title search we use a company um yeah Pro title do we use a lot of times we use a couple others that just do title searches they'll do a two two owner search if it's a you know 5 10 20 000 note we probably are not going to buy title insurance and spend a thousand or two dollars you know the economy of usually find them and see what the assessed value is that's just the rule of thumb it's not always correct but it gives you an idea and then once we have that uh we can make uh you know an offer on the on the note and if they accept it if if the offers not in the ballpark or what the people want to do then we don't we don't spend a lot of time on one that doesn't have much of a chance if they accept it we dig deeper you know we do our due diligence and we have an agent go look and give us a BPO we may order BPO through clear capital or one of the national companies you know yeah and uh so I'm so familiar we've definitely established the values there so yeah very interesting so it's it's it's not as different as I thought okay yeah I think I kind of had it built up in my head that it was a much bigger deal but I mean obviously there's some more homework and there's some more things you got to search out yeah one of the benefits of a land knows you don't have to worry about uh insurance and uh structure that destroyed our hurricane should hit or yeah I mean that might blow some trees down but you know that's about as bad as it would get so you have that one less thing to think about one last moving part and if you get it back you don't have to worry about the people destroying the house you know I've had some real horror stories there people cutting holes in the wild dumping fish in it and then Plastering it back you know you'll find about that until about that happened with real estate having a good overall yeah it happens yeah yeah so the biggest fear I have is selling it right if I have to foreclose Nathan uh is my borrower he default either foreclosure and I have to sell it my thought is who the hell buys it right what kind of time frame have you gone into where what's the longest time for me if you took something back to sell it's hard to compare each cycle because the variables are different you know and right now you're seeing we've been through a period of inflation which we're still in with lower interest rates but the rates are are going up in you know I don't know it's hard to there's a lot of moving Parts it's kind of like a three-dimensional jigsaw puzzle that's spinning and you're trying to put it together you know it makes sense yeah we're all kind of guessing right we're all kind of pursuing and hoping right let's see what happens um yeah you're right though in certain parts of the country land is never going to decrease just because there is none yeah and go Nevada but I have some property that I own where my house is and it's uh it's probably about 1998 it's probably worth um maybe 10 times what it was then you know but at one point along the way it was it may have dipped even lower than you know in 2008 but it came back stronger you know so yeah it's hard to really it's hard for me to guess you know yeah so before we let you go I want to remind mind everyone that this is was recorded we'll be on YouTube we'll be on our podcast something else uh if you're not sure go to our website you'll find it jkp holdings.com webinars [Music] where's the weirdest place you own land I think you told me on the phone where's the weirdest walk of land that you own I think you mentioned something about Nevada um maybe there's a weirder one than that uh I I don't own it now but at one time I bought 40 acres of tundra in Minnesota uh I actually traded for it from a friend of mine who got it some way that lived here locally and we were always trading property and he I had something that or he had something I had something scale is just not there but if it's a larger note that we always get a lender's policy if it's a contract for deed we get an owner's policy so yeah it just depends on the size of the note and uh or the contractor you know it is so similar it's just to do dealings and subscribe yeah that's very similar you just got to make sure that you you know that the collateral is there and uh but you know you have access there's no uh major hazardous waste problems you're not in a wetland of course you do that right if you're checking a house too you know it could be in a flood zone or that could possibly be you have to get flood insurance um but you know sometimes with land you know you can get it removed from before you know you can go to the Corps of Engineers and we had that happen on some land we bought where we got it removed it was worth a lot more money that's now guarantee and it takes some work but that's potential for that very interesting so I mean you've been doing this for a little while now so I mean you've been around the block a couple times you've seen a couple of Cycles where where do you think we are in this cycle like we I we've got our own opinions but for somebody that's seen Cycles come and go Jimmy Carter 22 interest rate error and it was different than 2008 because we didn't have the high interest rates now we're you know I remember in 1990 uh two or three I can't remember exactly a friend of mine called me it was a realtor and he said you're not going to believe this but you can get a 10 fixed rate 30-year loan I said no nobody could do it that cheap so back then you know it's all in perspective to the you know what you're used to you know we get used to something so now everybody's you know six percent is terrible at that time we would have thought you know no there's no way yeah wasn't really Bacon Land but it was presented that way so yeah yeah sometimes you just get lucky you know right yeah I appreciate you coming on explaining this weird world of land notes and I see it and I avoid it but now I'm gonna start looking at them and seeing what kind of if it's near a good Street or inside of a mobile home park um yeah I'd be interesting to kind of dive into that you're right mobile phone has become such a big big big big part of the investment world now um that yeah there's a blank blog instead of a mobile home park you never know what you said in a rural area and it's an acre and it's got a septic tank and it's got water and it's power it's been set up for a mobile home ours potentially could be set up it's got value there that's you know that makes it worth a lot more than if it didn't have that Potential from a loan to be set up it doesn't have to be in a mobile home park you can be out in a rural area come here oh that's great yeah I appreciate the information it's been really good Steve I appreciate going on spending time with us on a Friday afternoon um and keep on letting us know we'll share your information with everyone out there if you have any questions um inside the the format you once you fill it out you'll get an email automatically from our tree desk with Steve's information phone number and email address if you have any questions about Philippa reach out to Steve and Steve again I appreciate you uh jumping on spending an hour with us on a Friday afternoon and uh we hope to hear from you soon again all right thank you likewise you bet happy Good Friday everybody really good questions have a good answer for those who celebrate Easter he wanted and he said uh he wanted to be an owner financing he would give me 40 acres of land in Minnesota which I took and ended up selling it back to him a few years later but it was virtually worth very little but uh that was a weird one I can't remember the one you that I told you about now do you see a square mile in Arizona Nevada or is my back it just you know Nevada is a weird statement we don't say it like why would you buy something every a lot of land is owned somewhere by someone yeah uh probably because surprise you know it probably was really cheap I'm guessing but um I did I I will tell you one quick story if you have time I bought a back in 2000 2010 I bought a pool of vacant Lots from a bank and uh my son-in-law was working for me and he was going to be teaching in Dallas for a he's got a college he went to work for Teach for America where he was going to teach in the inner city for two years and he went down to to apply for his job or to talk to the guy's job interview and uh I asked him if he would go by and look at this property in Alvarado it was a viking supposed to be a half acre vacant lot when he came back there was like 10 lots that we bought in this package we came back he said it's not a bank a lot it's a double wide it's actually pretty darn nice so we bought this 10 lights from the bank and at that time they were going so fast and so crazy they didn't really know what they had and they threw in this one that had a mobile home on it it was double-ed on a half acre anyway they bought it for me for what I paid for it which is twenty five hundred dollars and you know because it was my daughter and son-in-law anyway we all worked on it that summer and then when they left two years later they sold it for 60 000.

that was kind of a unique situation it you're doing I'll cash you out let's do this over and over again and uh they love that idea so hopefully they'll join us as well we want to stress those who are noting about turns I agree and love to see you guys but we want to see other people and what Nathan is doing is we shared last time is tremendous right we're really bringing together these seller plans owner finance group of people who know nothing about us bringing them to us and saying Hey listen we'll buy yourself and these people are going to come here with the idea of I want someone to buy my yields from it yeah handshake situation so oh yeah we can do a tremendous amount of business together yes yeah yeah so get there get your tickets get your stuff together your owner financing make sure you have your collateral file together make sure your mortgage or no anything together your pedal policy um your pay history everything ready because the people who will be buying your notes are going to be in attendance as well yeah and if you don't know what any of that means go back and watch our podcast from a couple weeks ago yeah and and get some education on what it is you need to to be able to sell your note and then just come and if you're missing some stuff we'll let you know we'll tell you what we need to make that hole so we can buy that note from you so it's awesome to see you know this whole conversation um of notes have been good uh we also want to stress the fact that we'll be um restarting up our five-week training course as well coming a couple weeks from now um that's for those people who are looking to get to the next level of note investing um if you want to understand what a big calculator is from the Performing side of it that's key but also in the non-performing we teach you and we build out a non-performing bid calculator in the course from the state specific situations and all the key things that go on so you can have your own calculator built to what you wanted with everything that you care about so yeah and that becomes extra important when we're talking about some seller finance notes because they've got some terms that you might not normally see in an Institutional note they might throw in something about interest only or you know a balloon coming up or something like that that is not normally what we see in an Institutional note uh so building out that calculator so that you can include those calculations is a big deal absolutely it's all different different things the application schedule may be different they may have different numbers in it and different page structures it's just crazy out there but you can buy it all right because we want to stress that um this is awesome so one of the things we we do in our webinar podcast is try to connect people with everything they do with notes right our field of note investing Rico was a small bubble of banknotes and as we expand out right not only the techniques which we talk about and strategies but also the types of notes we focused recently on this idea of having a land I mean owner finance note on properties right and that's been exploding we've been having our Wednesday by the cold and they're like can you buy stuff and we're working with owner clients so if you're owner financing please stay tuned and reach out to us because we want to teach you how to do it right so that you can easily sell any longer you create today write to us yeah yeah and there's people that'll buy me included I will buy it at the table so if it's like if you've done it right I can cash you out immediately you can get a bump and you can go do it again absolutely it's a pretty good deal in this DME conference we'll be talking new investing in general not just real estate and banknotes right we'll be talking about all kinds of stuff one of the topics that I've avoided to kind of lack of knowledge his business world of what I consider to be weird notes and I don't understand the premise of it and I don't understand why people would do it so what people are right this idea of buying notes and vacant land make the zip weird to you as well it doesn't mean three years and I read a book called invested debt by Jimmy Napier some of you may have read it but uh it got me interested in I ended up buying a real estate note on it was actually land but I had a barn on it this guy lived in the end of the barn it was a horse barn and he had quarter horses and he really liked them so they had a living quarters and it's probably one I wouldn't have bought if I'd known better but anyway uh it turned out well it was 38 000 note and we bought it for 20 and it paid for like a year and then the guy paid us off I actually borrowed the money at the bank to purchase it and I made the payments for a year plus the difference in what the discount was and uh it didn't really pay down very much so that was more at that time than I'd made in a whole year you know yeah it kind of got me hooked on notes and uh a lot of the notes that we purchased were land notes you know but also houses but land notes are unique and you know any probably be best just maybe to ask me some questions but further further that story uh in 1988 we decided to make the note business but you know we went into that that's all we did from that point forward except for purchasing real estate from time to time and uh so that's that's kind of my you know nutshell my uh very thumbnail SketchUp man career where it started anyway so in 1988 were you doing like were you buying Bank paper or or seller finance or because that was a different time interest rates were were quite a thing yeah back back in those days we were buying seller finance we we bought some banknotes but mostly seller finance and you know during the 2008 910 we did a lot of banknotes you know yeah because that there were all kinds of pools going around non-performing performing everything you can imagine sub performing but mostly throughout my uh business life I've done owner finance transactions and of all kinds a single family owner occupied mobile home land land we've done you know commercial just whatever it's kind of like a box of chocolates you never know what you're gonna get yeah we have done a lot of land notes you know we don't that's not necessarily what we look for but we end up buying a lot of them so I can I can answer some questions about it you know absolutely we're diving into questions here um just to let you guys know we're kind of multitasking here any kind of questions you asked we're gonna we'll feed it right to them and so please present any questions you have inside of chat if you are doing raw land please make sure you let us know as well so we can encourage uh and you know have you kind of an expert here actually great so when you're buying these land notes um are you sent a what we call a p a list of addresses like lots and you're is that the first step in it like how do you find those yeah we have a website that we you know that's pretty you know it's pretty active pretty aggressive it's not the the top one out there but uh we're working on it uh but we do a lot of direct mail as well just take you back just a little bit from the progression when we first started and doing buying notes like that note that I purchased it was a horse barn all we really did then was run and add the newspaper and you would get quite a bit quite a few there was not very many people buying notes then you know those kind of a best kept secret uh then we we started doing other things like direct mail and then we started doing actually running ads in telephone books we were in like 100 telephone books across the country in major cities like a half inch to an inch little ad but it got us quite a bit of business and then this thing called the internet came along so we had to develop a website because phone books quit working you know and uh the we did some Statewide classifieds but that sort of quit working so pretty much the internet and Direct Mail still is a good source for us but uh I think your question was how do we find these notes they it's mostly we we do a lot of direct mail and it ends up to quite a few of the people we send to have land notes on me so we we don't necessarily just go looking for land notes but they come our way and they're purchased differently than a single family residence because the risk and the uh you know sometimes the risk is less sometimes it's more it depends on a lot of factors you know so let's I'm going to cut three to the chase I don't get this I know I do answer as well on the phone with me why would anyone want to buy a note on a vacant land that's not built upon may not be built on for a while like why would someone own a vacant lot and have a note for 20 years and never do anything with it like that is so weird to me well you know there's all different variations there most people that do have a plan you know they plan to build on it they plan to either build a second home or a home or some people buy a land to put a mobile home on the others um in land to put mobile homes on it's becoming more and more scarce so that they're actually the value of those are going up we see it varies greatly across the country you know something in Arizona that has water is worth a whole lot more than something in Arkansas the water rats can be worth 75 000 just to have water to a lot to you put them Oklahoma but um you know some some people buy it to put a second home on the summer agricultural uh you know there's lots of different uses but I would say the most common is someone who's buying a piece of land to uh to build a house on or instead of mobile home later you know unless you're talking about commercial land and are these generally like in the in an established Community or are they just kind of out in the middle of nowhere could be either um we see a lot of land in Texas and Oklahoma that's just sort of out in the middle of nowhere maybe there's a lake or something nearby or some attraction but uh you know if they're one-offs sometimes it can be a piece of land that's down a private road or you know a dirt road or just a state or County Road it's there's no it's it's kind of like there's there's no cookie cutter they're all different you know but but we see some of each some are in established subdivisions and we bought one in Atlanta recently that was in an established subdivision very nice lot and they're getting ready to build on it and if we get paid off probably so you're more the likelihood of an early payoff if you purchase at a discount if it if it's more established subdivision there's probably they're probably going to build a home the problem you know we've seen recently is uh some of the people who plan to build homes now since rates have gone up and that are we're backing off and there's not as you know it may sit there a little bit longer but uh if the people had you know a lot of chips in the game paid a pretty good down payment you got decent uh credit and it's still a good risk because they're not going to walk away and that's why land uh I mentioned I think before we started this it the uh along the value needs to be better that as a single family house the investment to Value you want to stay in my opinion depending on the quality of the property but somewhere between 50 and 75 percent investment to Value if it's in a really you know established subdivision and a very uh vibrant Market you know uh then you might go 75 percent but that would be a stretch I want to make sure we're clear on some things I'm seeing something in the chat um I'm not gonna need my name but someone mentioned this idea of sea of Thieves so land notes are different than notes on vacant land right so land contracts are different from Land notes right so we're not discussing the idea of having a cfeed land contract per se we're talking about more of the idea of having a note secured by vacant land right a land contract is typically or could be on land on your online well but it's it's the structure opposite of a mortgage if a mortgage or a link or land contract or a cfp so we're not talking about the idea of mortgage for cfd we're talking about the you can have a mortgage or cfd on a note secured by the promissory note being secured by a mortgage or land contract all uh vacant land so just so Clarity collateral is what we're talking about the instrument you use could be a contract for deed or land contract different parts of the country they call them different down the Deep South they call it a bond for title but it's still a contract for deed where you don't have title to the property until you pay it off right but you know and we buy those just like we do mortgage and notes or in some states it's a deed of trust to note depending on the state but when we're talking about today we're talking about land notes as a collateral not the instrument used but it could be either one or any of those three so give us a good story give us a you know give us a home run what a situation where you gotta land note and it worked out to be weird but you didn't expect it to be okay well that first one I gave you was a pretty good one yeah when I bought the horse barn you know that was it wasn't totally vacant it had a barn on it but um you know we we had one recently that we purchased in uh California it was a slow payer but uh anyway they we we would call make collection calls and they finally got mad and just said they were going to pay us off we said please don't throw us in a Briar Patch but they went in and paid us off to teach us a lesson so that one was if I remember correctly it was like a hundred thousand dollar note which we bought for pretty pretty sizable discount and they paid us off at the full face amount so what's the typical interest rate on when you uh they can vary you know we see you know two percent we see some that are 10 11 or 12.

uh the one thing you have to be careful is if it's very high to make sure it's not userous or does it you know um whatever so that it sounded like so far everything is pretty much the same as a regular note that we're used to with property attached to it uh like a house on there but on in the case of a vacant property like a vacant land how do you how do you evaluate that how do you decide what the value is in case of you know default and you need to take it back how do you say you know it's worth x amount I know we're comfortable taking on this risk we we have a kind of a I'd say a Corral of Realtors around the country we found most of our Realtors from a website called the REO Network and we found you know the most the agents there are good if we come we don't like to when we first when we get we call the next one because there's usually a list if you put a zip code in and we we found some really good agents and we have a list in most areas and we use agents to go out you know if it's in say for example South Carolina I can't drive down there so we use the agents as our eyes and ears and we get bpos you know and um like Dave was saying earlier sometimes you don't get a lot of information so you have to dig deeper you know if it's just a personal number uh somewhere out in the rural area so don't even have a 911 address yet so you have to be really diligent about trying to establish what you have and those may get discounted more because they're they're you know maybe a long time before anything's done on it you know they made about it just for hunting land or you know hoping that the future will bring something there some people buy you know land owner finance it sell the timber off and uh you know end up getting enough money off the timber to pay pretty much the note of you know there's lots of value that you can get like air rats Timber rides mineral rides yeah we're gonna get into like all these due diligence steps made my floats in our chat before earlier and we're going to talk about in a few minutes but the due diligence steps is I think the biggest difference right yeah for us we just dial your property three two versus three two bedroom in a certain distance based on population we we can compare it but man seems to have a whole different spin on due diligence stuff for example that that one that I talked about where I ended up taking taking the it was a piece of land initially we thought it was going to be worth a lot because uh Lots in the area were selling for quite a high amount what we found out was there was some kind of issue and I forget exactly what it was but there was some kind of issue that made that made it nearly impossible to build anything on that lot and so then that our value went from I think we thought it was going to be like 75 000 it went down to about 35 000.

yeah and so but you know I didn't know I have no idea what I'm looking at I don't know how to tell if it's buildable land or not buildable land or how do you how do you find that kind of thing out yeah well you know one you you know let me just give you a few things to watch for one is in a flood zone you know is it flood why flood zone what you know you can do you can find that out pretty easy that's something a realtor can help you with and you also can do that by doing a flood cert um to a credit bureau you know another thing is earning hazardous waste issues you know uh you know is it in a Wetlands you know there's there's things to look for like that um and it also is there access you know access is another exit landlocked or is there good access is the road all washed out and it's a private road with a private road maintenance agreement you know that has nobody's really maintaining you know or does it have a active HOA we brought some Lots in North Carolina has had a lot of HOA fees but no one was taking care of the roads you know they were the money was not being appropriated properly but um so access is is a big big one to watch for I think but if you you know with the risk you know maybe comes a reward if you uh if you buy a lot that has you know not the greatest access you may get a bigger discount that makes it worth the risk you know does it does it is it an advantage if the lot is cleared well it is unless you're selling the timber you know but uh normally it's if you're gonna if someone's looking to put a home there or a uh a mobile home yes you know it's definitely uh it's better if it's clear not totally you know just clear-cut but if there's some scattered trees but you know they've just manicure it and and I'm brush hogged and you know the all the underbrush cat you know that I would say yes you know if you're looking for a place to hunt deer or you know some type of animals and you know the but it all depends on these plan you know the plan you use of it now I know we talked before about environmental and I made this mistake on a commercial building and I didn't get a uh phase one phase one thank you and do you guys pull speeds one on your way of vacant land or do you not bother I've never actually done one that I can remember but I'm not saying that you shouldn't particularly if you're dealing with commercial land you know man if there's you know if there's been a dry cleaners there a gas station uh mechanic shop you know there can be issues with old tanks there could be there's I can't even pronounce it but there's a chemical that dry cleaners produced that that's very toxic and you have to be careful about if there's been a dry cleaner that's right three owners ago with dry cleaning and the owner before us was uh I think sorry excuse me that's okay I think that's where a realtor can help too you know if you if you're looking to say if I'm here in Arkansas I'm looking at something in South Texas and it's a commercial land and or somewhere in a potentially could be commercial and there's been buildings there before the agent will probably know that and be able to help to you know say hey this this could possibly have some environmental issues then we might need to get a phase one and even a phase two if it's because you know hit the face one shows there could potentially be something there huh so I think for me one of the other things that kind of scares me off is is um my concern is that if I end up taking back the property the salability of that is going to be difficult like it's going to be difficult for me to be able to resell that piece of land is that valid or am I just getting worried about nothing um well it depends on the market you know the market we were in last for a couple years there you can sell anything you know that was you know there you know that it was holding the Earth together but [Music] um yeah it's it's a little harder sometimes to sell land you know unless if you usually have to offer terms but but not always so it's that's one of the concerns why you want to have a better loan to value and if things kind of go south like they did in 2008 then you know land values can really drop you know we saw some property out west that we bought for a hundred thousand the tax value on it was 2.6 million and uh we we bought the land not the notes this is some scenarios that we bought and we ended up selling for we made a good profit on it but we also made money because we got the taxes reevaluated and we got some retroactive tax money that have been paid by doing appraisals and some stuff that uh I think we got like 23 000 reimbursed from the state so right now what are you guys targeting for your ltvs what are your targets right now uh excuse me sorry man that's okay what part of LTV are you guys targeting right now um we like to stay 50 to 60 investment to Value you know a lot of the value is what you know how much Equity they have invested today is how much you put in so we like to stay at you know 50 to 60 percent you know they may only have 20 loan to value but we can discount it to 60 or 50 percent and that's why it's hard to determine a Yale yield because uh you know with land investment to value is you know Trump's yield and sometimes uh in order to get to the where we're Comfort comfortable we have to discount it considerably more and sometimes the partial Works bet you know we'll work it with that because you get your investment value and it doesn't just kill the the sale you know it's a certain number of payments and you know after they've established a payester with you for a year or two then you can go back and buy some more um I'm not sure if you've bought notes on Rick and mortar real estate before but I presume you have but do you is it deeper rate on vacant land higher or lower than on traditional real estate you know I really I don't know those statistics uh okay I would say that if I was guessing that uh it would probably be 20 more on land maybe the reason being is if a person owns a home and uh then they possibly on a piece of land somewhere that they're thinking of building a second home on or or another piece of land they're planning to rent I mean they're renting and planning to buy build a house later uh if things kind of go sideways they're gonna probably let that go before they win their home or you know the residents right so it's it's usually a secondary so I would say the risk would be you know 20 on a normal Market uh really bad in a really bad Market it might be higher I know you mentioned before about air rights can you tell us a little bit more about what that looked like I'm not an expert on that I just know about it I've never really sold any but I like in and around airports and stuff like that oh okay okay interesting yeah I've never only close to an airport so but I know that people do sell those and they yeah it's not just airports also you link you can sell signage and cell tower and Lease land for that I know some people have done quite well doing that uh yeah High weeds and stuff like that yeah um yeah interestingly said that before uh about the fact of you know the minerals and Timber in New Jersey we don't have this whole minerals thing right for those people who are not familiar with the minerals in the land being a valuable Source can you explain a little bit more about what that looks like what minerals are they getting in what kind of profit can you make from buying land which is minerals on it yeah I used to subdivide land and we probably did a few thousand acres it was mostly rural land that we would find they had a road fronted you know a lot of Road Frontage we just built uh the plat and then subdivide off to the road to County Road but usually I would purchase with minerals you know I would buy and stay and stipulate that we were purchasing with the minerals then we would sell the laptop we would sell without the minerals so we would keep the minerals and we actually built up about a thousand acres of uh of mineral rights and I sold off you know probably 80 percent of those but we're keeping the ones that are producing and they're not producing a lot it's but they you know we get a check for a couple of thousand a month off of those sometimes more and but the different answer your question the different minerals uh can be you know depending on the state you know in Oklahoma and Texas of oil Arkansas even in Pennsylvania and different places gas is a big thing you know natural gas you know that's that's the mineral rice that I'm receiving royalty's Honor on natural gas and uh but uh Cole you know uh you know there's other minerals out west that I've been too involved in but you know water rides are another big one it's huge out west we bought a piece of land and Santa Clarita California and we sold it off and owner financed it but we kept a little just probably a couple of Acres because there's supposed to be a huge aquifer under this land but you know for some future today if it does we'll have a little piece of it maybe can your agent help you determine what if there's minerals in the area or what kind of study do you do to find that out yeah sometimes it's sometimes you have to do a mineral search and title companies can do that if you're only just buying a small track you know I would say that you know if if the beads within the last 30 years they'll have it beaded out to minerals and they're probably there and they do a real in-depth mineral searches extremely expensive you know a small lot it's not worth it so what we do is if we buy we just say we're purchasing with the minerals and if we say I always say we we're excluding the minerals and we usually deed those minerals off to another entity so we can we can tell the people that that we don't own the minerals so they can't transfer them because that particular entity doesn't own them they're transferred somewhere else that's awesome yeah minerals can be a big big deal if you're buying land if you're buying the note you really unless you get the land back it's not really an issue but right yeah so we had questions right Nathan you said questions yeah I think we maybe just answered it but you know how do you best learn about the mineral rates or water rights or whatever rights there might be is and I think you said you do that through a title company well um usually the seller if somebody's selling you something they'll tell you you know if some value in the water rights or there's a lot of mineral rights that go with it if not you know usually the agent might know if you're just if if the if you're purchasing it the seller doesn't mention it you have a hint that there could be some mineral rights there then you could go to a tablet company and have them do a search so Robin Jackson mentioned in the comments that there was things called land men who um in the Texas at Oklahoma who can find yeah that's what they do yeah yeah we don't hear about them as much anymore they used to be everywhere but yeah land man they call them land men and they search for mineral rights and try to lease minerals from people and so they can drill well yeah New Jersey so so cool though um when you're working with kind of stuff do you get the idea of what the person so you're going to get a list of assets from whoever the sellers going to give you do you get to know what the borrower's intent is that a formal letter or that kind of uh what do you think's gonna do or how is that presented to you because that's important if you want to know if the borrowed intent is to build or to hunt how do you get that information about what their intent is well we first if if a note seller calls us wanting to sell the note we ask them you know what what was what are they planning to do you know they usually know and before we close I know we typically do an interview with payer and talk to them you know and ask them well we we established that they agree with the balance and we have a list of you know an interview that we do questions one of the questions is what are you planning to do with property you know are you planning on keeping it when it's first you know question and are you happy with it you know and uh so that that's you know kind of how we establish that so make sure I heard you correctly you say you've interviewed a borrower before you buy it yeah a lot of companies do an estoppel letter which can yeah and estoppels can be good but uh I don't like them because we usually do the interview like a day or two before we close if somebody's got really good credit you send them a stop a letter two weeks ahead of time and uh I said oh you're so bad they're selling my note at a discount so they go to the pay or the seller okay well you know they become your best competition so if we do the interview a day or two before we close they don't really have time to do that hmm and it just serves sort of the same purpose as a stopper so that later down the road if people say hey I don't agree with balance so we on such and such date at 3 22 p.m we talked to you and you said you agreed with the balance you know and we relied upon your uh you're worried at that time so what's changed you know sometimes Lisa what is your first step in your due diligence can you get the asset what's the person you doing are you Google searching it are you start pricing what you think the value of the property is are you reaching out to an agent what's your first step in that process of evaluating a land member or Landing yeah on a land note we the first step is to establish the value of the land you know and we usually if if it's an established subdivision you can get a pretty good idea through Zillow and some of the other you can look at the tax records which were pretty good looking up tax records you know they usually if they just have a partial number we can usually find them and see what the assessed value is that's just the rule of thumb it's not always correct but it gives you an idea and then once we have that uh we can make uh you know an offer on the on the note and if they accept it if if the offers not in the ballpark or what the people want to do then we don't we don't spend a lot of time on one that doesn't have much of a chance if they accept it we dig deeper you know we do our due diligence and we have an agent go look and give us a BPO we may order BPO through clear capital or one of the national companies you know yeah and uh so I'm so familiar we've definitely established the values there so yeah very interesting so it's it's it's not as different as I thought okay yeah I think I kind of had it built up in my head that it was a much bigger deal but I mean obviously there's some more homework and there's some more things you got to search out yeah one of the benefits of a land knows you don't have to worry about uh insurance and uh structure that destroyed our hurricane should hit or yeah I mean that might blow some trees down but you know that's about as bad as it would get so you have that one less thing to think about one last moving part and if you get it back you don't have to worry about the people destroying the house you know I've had some real horror stories there people cutting holes in the wild dumping fish in it and then Plastering it back you know you'll find about that until about that happened with real estate having a good overall yeah it happens yeah yeah so the biggest fear I have is selling it right if I have to foreclose Nathan uh is my borrower he default either foreclosure and I have to sell it my thought is who the hell buys it right what kind of time frame have you gone into where what's the longest time for me if you took something back to sell that land I think in the market we're in right now um it sells pretty good you know and I when I was a realtor I used to tell people uh you know they'd ask how much they could sell their house for and I'd do a market analysis and I'd say well they said what can I sell it for God have like three-time zones or three-time periods yeah if you've got 180 days I can get this price if you got you know 90 days I can get you this price in 30 days this price and if you want to sell today I'll buy it at some price you know so of course it depends on you know how if you're into it right then you that helped that's why you want to be at 50 or 60 on the value because you can go you can ask a little bit lesser price if you get it back and the wearable market and even if the market drops you're still got the margin of error some cushion there so land can tend to sell slower sometimes it can sell faster if people mobile home lots are really difficult to find these things buy a note on a mobile home lot uh there's probably somebody standing in line wanting to buy it you know and you can go to dealerships and different people and like um I said earlier the next door neighbor is sometimes a good Prospect you know it's their best Prospect probably the next door neighbors yeah so Robin Jackson also asked us about uh going through a title company do you go to a title company to transfer or do you run title your own your own title we if it's a really small note we'll just do a title search we use a company um yeah Pro title do we use a lot of times we use a couple others that just do title searches they'll do a two two owner search if it's a you know 5 10 20 000 note we probably are not going to buy title insurance and spend a thousand or two dollars you know the economy of scale is just not there but if it's a larger note that we always get a lender's policy if it's a contract for deed we get an owner's policy so yeah it just depends on the size of the note and uh or the contractor you know it is so similar it's just to do dealings and subscribe yeah that's very similar you just got to make sure that you you know that the collateral is there and uh but you know you have access there's no uh major hazardous waste problems you're not in a wetland of course you do that right if you're checking a house too you know it could be in a flood zone or that could possibly be you have to get flood insurance um but you know sometimes with land you know you can get it removed from before you know you can go to the Corps of Engineers and we had that happen on some land we bought where we got it removed it was worth a lot more money that's now guarantee and it takes some work but that's potential for that very interesting so I mean you've been doing this for a little while now so I mean you've been around the block a couple times you've seen a couple of Cycles where where do you think we are in this cycle like we I we've got our own opinions but for somebody that's seen Cycles come and go Jimmy Carter 22 interest rate error and it was different than 2008 because we didn't have the high interest rates now we're you know I remember in 1990 uh two or three I can't remember exactly a friend of mine called me it was a realtor and he said you're not going to believe this but you can get a 10 fixed rate 30-year loan I said no nobody could do it that cheap so back then you know it's all in perspective to the you know what you're used to you know we get used to something so now everybody's you know six percent is terrible at that time we would have thought you know no there's no way yeah it's hard to compare each cycle because the variables are different you know and right now you're seeing we've been through a period of inflation which we're still in with lower interest rates but the rates are are going up in you know I don't know it's hard to there's a lot of moving Parts it's kind of like a three-dimensional jigsaw puzzle that's spinning and you're trying to put it together you know it makes sense yeah we're all kind of guessing right we're all kind of pursuing and hoping right let's see what happens um yeah you're right though in certain parts of the country land is never going to decrease just because there is none yeah and go Nevada but I have some property that I own where my house is and it's uh it's probably about 1998 it's probably worth um maybe 10 times what it was then you know but at one point along the way it was it may have dipped even lower than you know in 2008 but it came back stronger you know so yeah it's hard to really it's hard for me to guess you know yeah so before we let you go I want to remind mind everyone that this is was recorded we'll be on YouTube we'll be on our podcast something else uh if you're not sure go to our website you'll find it jkp holdings.com webinars [Music] where's the weirdest place you own land I think you told me on the phone where's the weirdest walk of land that you own I think you mentioned something about Nevada um maybe there's a weirder one than that uh I I don't own it now but at one time I bought 40 acres of tundra in Minnesota uh I actually traded for it from a friend of mine who got it some way that lived here locally and we were always trading property and he I had something that or he had something I had something he wanted and he said uh he wanted to be an owner financing he would give me 40 acres of land in Minnesota which I took and ended up selling it back to him a few years later but it was virtually worth very little but uh that was a weird one I can't remember the one you that I told you about now do you see a square mile in Arizona Nevada or is my back it just you know Nevada is a weird statement we don't say it like why would you buy something every a lot of land is owned somewhere by someone yeah uh probably because surprise you know it probably was really cheap I'm guessing but um I did I I will tell you one quick story if you have time I bought a back in 2000 2010 I bought a pool of vacant Lots from a bank and uh my son-in-law was working for me and he was going to be teaching in Dallas for a he's got a college he went to work for Teach for America where he was going to teach in the inner city for two years and he went down to to apply for his job or to talk to the guy's job interview and uh I asked him if he would go by and look at this property in Alvarado it was a viking supposed to be a half acre vacant lot when he came back there was like 10 lots that we bought in this package we came back he said it's not a bank a lot it's a double wide it's actually pretty darn nice so we bought this 10 lights from the bank and at that time they were going so fast and so crazy they didn't really know what they had and they threw in this one that had a mobile home on it it was double-ed on a half acre anyway they bought it for me for what I paid for it which is twenty five hundred dollars and you know because it was my daughter and son-in-law anyway we all worked on it that summer and then when they left two years later they sold it for 60 000.

that was kind of a unique situation it wasn't really Bacon Land but it was presented that way so yeah yeah sometimes you just get lucky you know right yeah I appreciate you coming on explaining this weird world of land notes and I see it and I avoid it but now I'm gonna start looking at them and seeing what kind of if it's near a good Street or inside of a mobile home park um yeah I'd be interesting to kind of dive into that you're right mobile phone has become such a big big big big part of the investment world now um that yeah there's a blank blog instead of a mobile home park you never know what you said in a rural area and it's an acre and it's got a septic tank and it's got water and it's power it's been set up for a mobile home ours potentially could be set up it's got value there that's you know that makes it worth a lot more than if it didn't have that Potential from a loan to be set up it doesn't have to be in a mobile home park you can be out in a rural area come here oh that's great yeah I appreciate the information it's been really good Steve I appreciate going on spending time with us on a Friday afternoon um and keep on letting us know we'll share your information with everyone out there if you have any questions um inside the the format you once you fill it out you'll get an email automatically from our tree desk with Steve's information phone number and email address if you have any questions about Philippa reach out to Steve and Steve again I appreciate you uh jumping on spending an hour with us on a Friday afternoon and uh we hope to hear from you soon again all right thank you likewise you bet happy Good Friday everybody really good questions have a good answer for those who celebrate Easter are some people buy land to put a mobile home on you know there's um in land to put mobile homes on it's becoming more and more scarce so that they're actually the value of those are going up we see it varies greatly across the country you know something in Arizona that has water is worth a whole lot more than something in Arkansas the water rats can be where 75 000 just to have water to a lot that you put them Oklahoma but um you know some some people buy it to put a second home on the summer agricultural uh you know there's lots of different uses but I would say the most common is someone who's buying a piece of land to uh to build a house on or instead of mobile home later you know unless you're talking about commercials [Music] [Applause] there we go well they put some jkb Holdings start two alongside Miss Nathan Turner thank you for those who are tuning in letting me know no sound I think you should appreciate that for every little issue with Facebooks or uh fixnet right now so everyone a little bit a little technical late start but we have some big things are going on and first and foremost we're just talking about vme without sound so tell us about what you're doing you're posting like you just said which is shocking so yeah what's going on it's awesome well I'm so I'm in Utah right now visiting some family and things uh ticket sales are off and running I'm posting stuff on Facebook and Linkedin which is probably the biggest Miracle of them all yeah hopefully you've seen the post hopefully you're sharing those posts and just spreading the word we want to get as many people there as possible and the more people the more benefit everybody gets uh talking to some I was at a Rio last night talking to a bunch of people that are doing creative financing and seller financing and so I said you guys just keep doing what you're doing I'll cash you out let's do this over and over again and uh they love that idea so hopefully they'll join us as well we want to stress those who are noting about turns I agree and love to see you guys but we want to see other people and what Nathan is doing is we shared last time is tremendous right we're really bringing together these seller plans owner finance group of people who know nothing about us bringing them to us and saying Hey listen we'll buy yourself and these people are going to come here with the idea of I want someone to buy my yields from it yeah handshake situation so oh yeah we can do a tremendous amount of business together yes yeah yeah so get there get your tickets get your stuff together your owner financing make sure you have your collateral file together make sure your mortgage or no anything together your pedal policy um your pay history everything ready because the people who will be buying your notes are going to be in attendance as well yeah and if you don't know what any of that means go back and watch our podcast from a couple weeks ago yeah and and get some education on what it is you need to to be able to sell your note and then just come and if you're missing some stuff we'll let you know we'll tell you what we need to make that hole so we can buy that note from you so it's awesome to see you know this whole conversation um of notes have been good uh we also want to stress the fact that we'll be um restarting up our five-week training course as well coming a couple weeks from now um that's for those people who are looking to get to the next level of note investing um if you want to understand what a big calculator is from the Performing side of it that's key but also in the non-performing we teach you and we build out a non-performing bid calculator in the course from the state specific situations and all the key things that go on so you can have your own calculator built to what you wanted with everything that you care about so yeah and that becomes extra important when we're talking about some seller finance notes because they've got some terms that you might not normally see in an Institutional note they might throw in something about interest only or you know a balloon coming up or something like that that is not normally what we see in an Institutional note uh so building out that calculator so that you can include those calculations is a big deal absolutely it's all different different things the application schedule may be different they may have different numbers in it and different page structures it's just crazy out there but you can buy it all right because we want to stress that um this is awesome so one of the things we we do in our webinar podcast is try to connect people with everything they do with notes right our field of note investing Rico was a small bubble of banknotes and as we expand out right not only the techniques which we talk about and strategies but also the types of notes we focused recently on this idea of having a land I mean owner finance note on properties right and that's been exploding we've been having our Wednesday by the cold and they're like can you buy stuff and we're working with owner clients so if you're owner financing please stay tuned and reach out to us because we want to teach you how to do it right so that you can easily sell any longer you create today write to us yeah yeah and there's people that'll buy me included I will buy it at the table so if it's like if you've done it right I can cash you out immediately you can get a bump and you can go do it again absolutely it's a pretty good deal in this DME conference we'll be talking new investing in general not just real estate and banknotes right we'll be talking about all kinds of stuff one of the topics that I've avoided to kind of lack of knowledge his business world of what I consider to be weird notes and I don't understand the premise of it and I don't understand why people would do it so what people are right this idea of buying notes and vacant land make the zip weird to you as well it doesn't mean you don't get it is because because of experience there's one note that I bought 12 years ago something like that 12 13 years ago where I thought I was buying it was a little bit outside of town which I hadn't really established my my criteria all the way yet and so I was a little bit outside of town uh like it seemed like a nice property on a bigger piece of land and this is in Massachusetts I want to say and uh and what it ended up being was the house was absolutely unlivable so what I what essentially what I bought was raw land and I had no idea what to do with it and and because I you know zero experience with what to do with land I don't know how to value that I don't know how to how to look at it and say yes that's a good thing that I bought or a bad thing that I bought so and I was completely lost thankfully I was able to sell it to the neighbor the neighbor picked it up and I still made a profit on that and so it all worked out okay but it it freaked me out because I don't know what I'm doing when it comes to land so that was that was one of those steps in my progression where I'm like okay new rule no land and that was kind of that experience but I know that it's a thing and so I'm very interested to learn about this today so before we bringing Steve for a second I want to let everyone know I must repeat you but I've got an influx of notes coming in recently um the Market's changing we're seeing news reports by defaults um so this idea of what we've been projecting and figuring out is starting to go fruition um banks are starting to fall commercial loans are kind of changing uh which we'll be getting to in a future webinar um but understand the fact that inventory is changing embracing expectations is changing as well right yeah people are expecting nine percent ten percent we're up to 15 16 17 18 we're buying a few right now at 18 years which took a while to get up there but it's there so you're sure open your pocketbooks and get ready for your situations because it's coming make sure you have your big calculator is ready you can talk about course take it if you want but make sure you're ready for it so without further Ado I'm gonna release Mr Stephen luck I appreciate Steve coming on here and when I first got to know him I'm amazed at someone doing anything for any length of time consistently where it becomes second nature Steve thank you very much for joining us on this Friday afternoon hey thank you for inviting me glad to be here so Steve notes in general are buying a piece of paper with a security at some instrument right we're both in the same field we're behind the scene paper your security is a little bit different from ours right well we we bile in those but that's not all we buy so uh I'd say it's the same except we may have that if you don't buy land notes it's a little different yeah absolutely we're very curious about land notes so we're we're glad you're here today and help educate us on what it is what we could be looking for or should be looking for all that kind of thing so Steve I know you were probably a young age doing this in like five years old right let's be serious though how did you start how did you get involved in this land note world what I first got started it was when I was it was 1979 I actually bought some land from a realtor and I got interested in real estate and uh it was actually an Honor Finance transaction I was the payer on this not the not the purchaser of the note I was the purchaser of the land and under financed it and it got me interested in real estate so I got a real estate license and worked as an agent for about three years and I read a book called invested debt by Jimmy Napier some of you may have read it but uh it got me interested in I ended up buying a real estate note on it was actually land but I had a barn on it this guy lived in the end of the barn it was a horse barn and he had quarter horses and he really liked them so they had a living quarters and it's probably one I wouldn't have bought if I'd known better but anyway uh it turned out well it was 38 000 note and we bought it for 20 and it paid for like a year and then the guy paid us off I actually borrowed the money at the bank to purchase it and I made the payments for a year plus the difference in what the discount was and uh it didn't really pay down very much so that was more at that time than I'd made in a whole year you know yeah it kind of got me hooked on notes and uh a lot of the notes that we purchased were land notes you know but also houses but land notes are unique and you know any probably be best just maybe to ask me some questions but further further that story uh in 1988 we decided to make the note business but you know we went into that that's all we did from that point forward except for purchasing real estate from time to time and uh so that's that's kind of my you know nutshell my uh very thumbnail SketchUp man career where it started anyway so in 1988 were you doing like were you buying Bank paper or or seller finance or because that was a different time interest rates were were quite a thing yeah back back in those days we were buying seller finance we we bought some banknotes but mostly seller finance and you know during the 2008 910 we did a lot of banknotes you know yeah because that there were all kinds of pools going around non-performing performing everything you can imagine sub performing but mostly throughout my uh business life I've done owner finance transactions and of all kinds a single family owner occupied mobile home land land we've done you know commercial just whatever it's kind of like a box of chocolates you never know what you're gonna get yeah we have done a lot of land notes you know we don't that's not necessarily what we look for but we end up buying a lot of them so I can I can answer some questions about it you know absolutely we're diving into questions here um just to let you guys know we're kind of multitasking here any kind of questions you asked we're gonna we'll feed it right to them and so please present any questions you have inside of chat if you are doing raw land please make sure you let us know as well so we can encourage uh and you know have you kind of an expert here actually great so when you're buying these land notes um are you sent a what we call a p a list of addresses like lots and you're is that the first step in it like how do you find those yeah we have a website that we you know that's pretty you know it's pretty active pretty aggressive it's not the the top one out there but uh we're working on it uh but we do a lot of direct mail as well just take you back just a little bit from the progression when we first started and doing buying notes like that note that I purchased it was a horse barn all we really did then was run and add the newspaper and you would get quite a bit quite a few there was not very many people buying notes then you know those kind of a best kept secret uh then we we started doing other things like direct mail and then we started doing actually running ads in telephone books we were in like 100 telephone books across the country in major cities like a half inch to an inch little ad but it got us quite a bit of business and then this thing called the internet came along so we had to develop a website because phone books quit working you know and uh the we did some Statewide classifieds but that sort of quit working so pretty much the internet and Direct Mail still is a good source for us but uh I think your question was how do we find these notes they it's mostly we we do a lot of direct mail and it ends up to quite a few of the people we send to have land notes on me so we we don't necessarily just go looking for land notes but they come our way and they're purchased differently than a single family residence because the risk and the uh you know sometimes the risk is less sometimes it's more it depends on a lot of factors you know so let's I'm going to cut three to the chase I don't get this I know I do answer as well on the phone with me why would anyone want to buy a note on a vacant land that's not built upon may not be built on for a while like why would someone own a vacant lot and have a note for 20 years and never do anything with it like that is so weird to me well you know there's all different variations there most people that do have a plan you know they plan to build on it they plan to either build a second home or a home or some people buy a land to put a mobile home on the others um in land to put mobile homes on it's becoming more and more scarce so that they're actually the value of those are going up we see it varies greatly across the country you know something in Arizona that has water is worth a whole lot more than something in Arkansas the water rats can be worth 75 000 just to have water to a lot to you put them Oklahoma but um you know some some people buy it to put a second home on the summer agricultural uh you know there's lots of different uses but I would say the most common is someone who's buying a piece of land to uh to build a house on or instead of mobile home later you know unless you're talking about commercial land and are these generally like in the in an established Community or are they just kind of out in the middle of nowhere could be either um we see a lot of land in Texas and Oklahoma that's just sort of out in the middle of nowhere maybe there's a lake or something nearby or some attraction but uh you know if they're one-offs sometimes it can be a piece of land that's down a private road or you know a dirt road or just a state or County Road it's there's no it's it's kind of like there's there's no cookie cutter they're all different you know but but we see some of each some are in established subdivisions and we bought one in Atlanta recently that was in an established subdivision very nice lot and they're getting ready to build on it and if we get paid off probably so you're more the likelihood of an early payoff if you purchase at a discount if it if it's more established subdivision there's probably they're probably going to build a home the problem you know we've seen recently is uh some of the people who plan to build homes now since rates have gone up and that are we're backing off and there's not as you know it may sit there a little bit longer but uh if the people had you know a lot of chips in the game paid a pretty good down payment you got decent uh credit and it's still a good risk because they're not going to walk away and that's why land uh I mentioned I think before we started this it the uh along the value needs to be better that as a single family house the investment to Value you want to stay in my opinion depending on the quality of the property but somewhere between 50 and 75 percent investment to Value if it's in a really you know established subdivision and a very uh vibrant Market you know uh then you might go 75 percent but that would be a stretch I want to make sure we're clear on some things I'm seeing something in the chat um I'm not gonna need my name but someone mentioned this idea of sea of Thieves so land notes are different than notes on vacant land right so land contracts are different from Land notes right so we're not discussing the idea of having a cfeed land contract per se we're talking about more of the idea of having a note secured by vacant land right a land contract is typically or could be on land on your online well but it's it's the structure opposite of a mortgage if a mortgage or a link or land contract or a cfp so we're not talking about the idea of mortgage for cfd we're talking about the you can have a mortgage or cfd on a note secured by the promissory note being secured by a mortgage or land contract all uh vacant land so just so Clarity collateral is what we're talking about the instrument you use could be a contract for deed or land contract different parts of the country they call them different down the Deep South they call it a bond for title but it's still a contract for deed where you don't have title to the property until you pay it off right but you know and we buy those just like we do mortgage and notes or in some states it's a deed of trust to note depending on the state but when we're talking about today we're talking about land notes as a collateral not the instrument used but it could be either one or any of those three so give us a good story give us a you know give us a home run what a situation where you gotta land note and it worked out to be weird but you didn't expect it to be okay well that first one I gave you was a pretty good one yeah when I bought the horse barn you know that was it wasn't totally vacant it had a barn on it but um you know we we had one recently that we purchased in uh California it was a slow payer but uh anyway they we we would call make collection calls and they finally got mad and just said they were going to pay us off we said please don't throw us in a Briar Patch but they went in and paid us off to teach us a lesson so that one was if I remember correctly it was like a hundred thousand dollar note which we bought for pretty pretty sizable discount and they paid us off at the full face amount so what's the typical interest rate on when you uh they can vary you know we see you know two percent we see some that are 10 11 or 12.

uh the one thing you have to be careful is if it's very high to make sure it's not userous or does it you know um whatever so that it sounded like so far everything is pretty much the same as a regular note that we're used to with property attached to it uh like a house on there but on in the case of a vacant property like a vacant land how do you how do you evaluate that how do you decide what the value is in case of you know default and you need to take it back how do you say you know it's worth x amount I know we're comfortable taking on this risk we we have a kind of a I'd say a Corral of Realtors around the country we found most of our Realtors from a website called the REO Network and we found you know the most the agents there are good if we come we don't like to when we first when we get we call the next one because there's usually a list if you put a zip code in and we we found some really good agents and we have a list in most areas and we use agents to go out you know if it's in say for example South Carolina I can't drive down there so we use the agents as our eyes and ears and we get bpos you know and um like Dave was saying earlier sometimes you don't get a lot of information so you have to dig deeper you know if it's just a personal number uh somewhere out in the rural area so don't even have a 911 address yet so you have to be really diligent about trying to establish what you have and those may get discounted more because they're they're you know maybe a long time before anything's done on it you know they made about it just for hunting land or you know hoping that the future will bring something there some people buy you know land owner finance it sell the timber off and uh you know end up getting enough money off the timber to pay pretty much the note of you know there's lots of value that you can get like air rats Timber rides mineral rides yeah we're gonna get into like all these due diligence steps made my floats in our chat before earlier and we're going to talk about in a few minutes but the due diligence steps is I think the biggest difference right yeah for us we just dial your property three two versus three two bedroom in a certain distance based on population we we can compare it but man seems to have a whole different spin on due diligence stuff for example that that one that I talked about where I ended up taking taking the it was a piece of land initially we thought it was going to be worth a lot because uh Lots in the area were selling for quite a high amount what we found out was there was some kind of issue and I forget exactly what it was but there was some kind of issue that made that made it nearly impossible to build anything on that lot and so then that our value went from I think we thought it was going to be like 75 000 it went down to about 35 000.

yeah and so but you know I didn't know I have no idea what I'm looking at I don't know how to tell if it's buildable land or not buildable land or how do you how do you find that kind of thing out yeah well you know one you you know let me just give you a few things to watch for one is in a flood zone you know is it flood why flood zone what you know you can do you can find that out pretty easy that's something a realtor can help you with and you also can do that by doing a flood cert um to a credit bureau you know another thing is earning hazardous waste issues you know uh you know is it in a Wetlands you know there's there's things to look for like that um and it also is there access you know access is another exit landlocked or is there good access is the road all washed out and it's a private road with a private road maintenance agreement you know that has nobody's really maintaining you know or does it have a active HOA we brought some Lots in North Carolina has had a lot of HOA fees but no one was taking care of the roads you know they were the money was not being appropriated properly but um so access is is a big big one to watch for I think but if you you know with the risk you know maybe comes a reward if you uh if you buy a lot that has you know not the greatest access you may get a bigger discount that makes it worth the risk you know does it does it is it an advantage if the lot is cleared well it is unless you're selling the timber you know but uh normally it's if you're gonna if someone's looking to put a home there or a uh a mobile home yes you know it's definitely uh it's better if it's clear not totally you know just clear-cut but if there's some scattered trees but you know they've just manicure it and and I'm brush hogged and you know the all the underbrush cat you know that I would say yes you know if you're looking for a place to hunt deer or you know some type of animals and you know the but it all depends on these plan you know the plan you use of it now I know we talked before about environmental and I made this mistake on a commercial building and I didn't get a uh phase one phase one thank you and do you guys pull speeds one on your way of vacant land or do you not bother I've never actually done one that I can remember but I'm not saying that you shouldn't particularly if you're dealing with commercial land you know man if there's you know if there's been a dry cleaners there a gas station uh mechanic shop you know there can be issues with old tanks there could be there's I can't even pronounce it but there's a chemical that dry cleaners produced that that's very toxic and you have to be careful about if there's been a dry cleaner that's right three owners ago with dry cleaning and the owner before us was uh I think sorry excuse me that's okay I think that's where a realtor can help too you know if you if you're looking to say if I'm here in Arkansas I'm looking at something in South Texas and it's a commercial land and or somewhere in a potentially could be commercial and there's been buildings there before the agent will probably know that and be able to help to you know say hey this this could possibly have some environmental issues then we might need to get a phase one and even a phase two if it's because you know hit the face one shows there could potentially be something there huh so I think for me one of the other things that kind of scares me off is is um my concern is that if I end up taking back the property the salability of that is going to be difficult like it's going to be difficult for me to be able to resell that piece of land is that valid or am I just getting worried about nothing um well it depends on the market you know the market we were in last for a couple years there you can sell anything you know that was you know there you know that it was holding the Earth together but [Music] um yeah it's it's a little harder sometimes to sell land you know unless if you usually have to offer terms but but not always so it's that's one of the concerns why you want to have a better loan to value and if things kind of go south like they did in 2008 then you know land values can really drop you know we saw some property out west that we bought for a hundred thousand the tax value on it was 2.6 million and uh we we bought the land not the notes this is some scenarios that we bought and we ended up selling for we made a good profit on it but we also made money because we got the taxes reevaluated and we got some retroactive tax money that have been paid by doing appraisals and some stuff that uh I think we got like 23 000 reimbursed from the state so right now what are you guys targeting for your ltvs what are your targets right now uh excuse me sorry man that's okay what part of LTV are you guys targeting right now um we like to stay 50 to 60 investment to Value you know a lot of the value is what you know how much Equity they have invested today is how much you put in so we like to stay at you know 50 to 60 percent you know they may only have 20 loan to value but we can discount it to 60 or 50 percent and that's why it's hard to determine a Yale yield because uh you know with land investment to value is you know Trump's yield and sometimes uh in order to get to the where we're Comfort comfortable we have to discount it considerably more and sometimes the partial Works bet you know we'll work it with that because you get your investment value and it doesn't just kill the the sale you know it's a certain number of payments and you know after they've established a payester with you for a year or two then you can go back and buy some more um I'm not sure if you've bought notes on Rick and mortar real estate before but I presume you have but do you is it deeper rate on vacant land higher or lower than on traditional real estate you know I really I don't know those statistics uh okay I would say that if I was guessing that uh it would probably be 20 more on land maybe the reason being is if a person owns a home and uh then they possibly on a piece of land somewhere that they're thinking of building a second home on or or another piece of land they're planning to rent I mean they're renting and planning to buy build a house later uh if things kind of go sideways they're gonna probably let that go before they win their home or you know the residents right so it's it's usually a secondary so I would say the risk would be you know 20 on a normal Market uh really bad in a really bad Market it might be higher I know you mentioned before abo....