Real Estate Note Investing Tom Henderson Partials Mortgage Note Investor Strategies | Real Estate Notes Show

Episode: Real Estate Note Investing Tom Henderson Partials Mortgage Note Investor Strategies Dave's Goals and Plans: - Selling a couple of assets and looking to buy a small pool - Planning vacation next week Tuesday-Thursday with camping and tree obstacle course - Intentionally disconnecting from phone during vacation to be present with family - Has a YouTube channel with weekly recordings, beginner series, and investment community Nathan's Goals and Plans: - Struggling to balance vacation and work during summer - Currently working on setting up a fund - Managing multiple priorities coming together at once Key Recommendations: - Subscribe to JKP Holdings YouTube channel for weekly note investing content - Join the investment community for networking with like-minded investors - Use the 10-12 technique: buy 10 months of payments for the right to receive 12 months (yields 35.07% return) - Find investor partners (deadbeat brother-in-laws or wealthy investors) to fund deals when out of cash - Attend the beginner video series (20 topics, under 15 minutes each) instead of expensive training programs Topics Discussed: - Partial mortgage note investing strategies - Work-life balance and vacation planning - Creative real estate financing techniques - Mathematical approaches to note deals and yield calculations - Finding investor partners for underfunded deals - Note investing fundamentals for beginners Guest Insights: - Tom Henderson has been investing in notes since 1980 when interest rates were 18% - The 10-12 technique consistently yields 35.07% regardless of payment amounts - Creative structuring can solve cash shortfall problems (example: 16 payments instead of 12 to raise $150k on $1.5M note) - Having an investor partner can double your network even with zero capital - Understanding note mathematics is more valuable than formal degrees so thanks so much for coming on tom that's great yeah and i enjoyed it guys all right guys thank you so much [Music] all right everybody dave fitz here from jkp holdings alongside me nathan turner good afternoon man you're doing very well very well as well is going with everybody else um i think you know we've done a lot with notes in the past um i think that we have shared a lot of information and i think summertime is tough for a lot of people nathan what has it been like for you in the last couple weeks for notes i think it's just kind of weird for you lately you know one of the toughest things about summer is just trying to find the balance of vacation and work and you know and then i've got extra things going on now that uh they're coming up i'm doing this fund and everything and some it's just all these different things coming together and just trying to keep everything balanced yeah uh but yeah you know you do what you can it's funny because you know summertime you want to get out there you want to do things with the family and the friends and whatnot at the same time we've got so many things coming on and going through and sales we're actually selling a couple assets ourselves um and we're looking to buying a small pool nothing big right now and we're going through that process so we're excited by that stuff but at the same time as you don't be tied to the chair looking at assets when your kid's outside running right so it's trying to block off the time so like for example next week tuesday wednesday thursday we're going out vacation we've got some camping we're doing like a tree obstacle course thing and all this kind of thing and and the temptation of course is to take your phone along and yeah keep checking in and stuff but no oh so if anyone tries to call me next week middle of the week i'm not going to answer everyone call and if those go away what happens if those go away it does that does the price that real estate is directly proportional to the financing available what happens when the financing goes away real estate goes down right yeah and then is it seller finance that fills the void or how does that void get filled uh maybe maybe seller financing they fill the void yeah that i don't know see the reason i'm saying that yeah is 10 years ago you could plan on certain things happening sure you did not have to worry about what will congress do yeah this week what will they do this week i mean it's where they're republican or democrat yeah just uh you can't live in a business where you just constantly change it's it's just real hard i just say keep your powder dry and don't stick your head in the sand but uh be careful going out and using your home as a atm machine i i'm very surprised that that hasn't started yet right because that's what happened back goes six or seven and people's you know right before 506 is that people took out heloc's people took out second loans i know somebody in my own street doubled the of their house within a year and i i'm amazed that we don't hear more about that where the second space isn't getting where we're seeing everyone doing helocs maybe they're out there we're just not seeing it but we're just not i i i'm amazed that that maybe people didn't learn from last time hopefully they did but people are dumb right well they keep the banks they keep doing the same thing yeah yeah we're seeing the same cycle week middle of the week i'm not going to answer everyone call nathan give him a call um well good for you man um and i just want to remind everybody um those who are looking to get into stuff like this we have a great youtube channel all our videos have been on there we do weekly recordings um we have a beginner series for those who are newer and we have also have an investment community where we weekly um to talk about networking and whatnot and it's so key in a time where we haven't been to a conference and feels for forever getting together with other like-minded people is essential so be sure to get on there um to you know like subscribe to our channel and catch up on all the different people we've had on now nathan we've talked about partials in touched upon these things and i'm going to say that most people felt really good about what we talked about yeah we we get into we start feeling real good about ourselves when we can figure out a financial calculator and figure out a couple of a couple of variables and then you and then you talk to tom tom yo may surprise you i surprised everybody right um it's interesting that we bring tom on i shared before we went on um time was someone i walked into the room sold a guy and says he'd been doing it forever i'm probably going to learn something yeah and then i did the point where i actually had to buy the recording of the conference just so go watch him again yeah so ellen i see you there's a semeko in the background hopefully it's fixed if what we've learned in that conference come across here you're gonna i'm gonna watch this video again the math that tom knows is ridiculous so tom how long you've been in real estate how did you get into real estate oh lord uh i bought my first note in 1980 uh this was back during the time when real estate well interest rates were 18 yeah and i wanted to get into real estate so at that time in texas all you needed to get your real estate broker's license was to have enough hours in certain subjects and you could go straight to your broker you didn't have to you didn't have to go through salesman so okay i submitted my transcript and they said yeah you can take the test and so i took the test and uh back then it was number two pencil handed in and they didn't grade it right there he had to send it off to austin texas wow yeah about a week later i got a little thing in the mail said pass and i don't know how i did on it because some of those we got all i know is they had some dumb questions yeah dumb and so i took my little letter to the number one brokerage here in dallas and said let me lucky i'm a broker and uh you guys are the best and i want to learn how to make a million dollars they said fantastic i'm glad you came this friday we had the speaker coming in and he is fantastic we've been waiting for him and uh so come see him and i when it was a high school gymnasium i mean it was and it was full yeah and i woke up down to the front of the road i'm sitting there and people introducing myself and they're introducing me and there's electricity in the air never said yeah he's finally here yeah yeah he walks in and standing ovation you know i thought the pope had walked in or something and he started talking and about 10 minutes in he said now when you have open house you want to have the coffee extremely hot so they won't drink it as fast and they'll stay longer and it will give the appearance of activity and i'm looking around and people are taking notes and i to this day i don't know what it was but i just i just get up and start walking down the aisle and walking back and everybody's watching me and my the broker who i talked to says where are you going where are you going and i said if this is what you're going to teach me i don't want to learn and i walked in and got my car and i said my god tom you just told the number one brokerage in dallas to bend over and crack a vertical smile and you know what are you going to do well at that time during the radio they had little interviews with people who who were in town and a guy by the name of ark hamill was going to be teaching a course on how to buy businesses with nothing down and just different creative ways to buy businesses and so i went to that saturday and my mom's just blown away and i told him what i was doing asking can you do this in real estate and he said yes you need to go to the creative real estate uh convention next week and so i go there and it was just mind-blowing uh i took a seminar there and i i smoked at the time i would get up and leave to smoke a cigarette and come back and i hadn't missed the thing because i did i still didn't understand what the heck they were talking about was changing and it was then i realized well i have all these degrees and this uh well rectal thermometers have degrees too it doesn't mean anything but i learned how to exchange real estate and they always were doing notes and it just went and i took another course and still quite didn't understand it and then i went up to salt lake city a guy with the name of john berlin and there were only 10 of us there and on my right does anybody know who robert allen is yeah yeah he was sitting on my right and behind me was john bailey b-e-h-l-e anything you can get from him he takes things to a different level he was behind me and i didn't know who robert allen was and bergen handed him his book and said would you autograph yesterday and i looked over at him and said wow you're as dumb as i am but there it all clicked in and i just got the calculator and i mean i was up all night my wife would say you know go to bed go to bed you know okay so i bought my first note and i did everything wrong with bike then i took a sanity test and i failed and that qualified me to be a note buyer [Music] that's about right david davier got you on mute man dave's on mute sorry for the distraction i'm trying to get the some of the audio it seems to be echoing off somebody i'm not sure who it is but they're saying they're they're having a big echo i don't know what it is so guys i apologize for the echo um we this is recorded but we're gonna try fixing it um i'm trying to fly around real quick uh micah yes appreciate it so hey you mind if i look up so i don't forget it at the end because people are going to want to know how to contact me yes yeah it's uh go to my website www.hp as in henrypaul notes in otes.com all right i'll put in the chapter for him um you know hopefully we got this the audio figured out or at least comparable uh for everyone i apologize for it don't know what's going on but tom some people get into notes and they say i'm gonna buy a performing note and i'm gonna make a million dollars doing it and then some people get into it like rentals and say i ran out of money i don't know what to do i can't do anything and then we walk into the room and you sit there and you see a gentleman talk numbers and share the information that you have and show how you can take a simple deal nine percent interest yielding asset and super size it is like best called it can you share a little bit about that for those who may be in a deal and just they're out of cash right they're both a couple performers they have no money and they're trickling with the dollars coming in oh they don't have any money they need to find i call it the deadbeat brother-in-law or an investor hey fellow no investor are you looking to learn the basics of note investing so you can get started however you don't want to spend a few hundreds or thousands of dollars and hours online on some training program have you thought about attending a notes conference however you don't want to spend the money or the time away from your family well we have a tremendous beginners video series of 20 different topics with each video being less than 15 minutes this means each video is less fluff and direct to the content visit slash www.jkpholdings.com dash series to learn more again www.jkpholdings.com slash beginner dash everybody's got somebody in their family that uh you know he's he's a deadbeat and he's not too bright and at thanksgiving uh your mother or father i said you know help him out you know your sister's in trouble help him out and so he does have money to invest that's what you need to buy investors or deadbeat brother-in-laws because they can uh uh oh they can make they can make you money to give you an example i'm going to start off with the 10 through 12 technique that's where you buy uh about 10 months worth of payments for the right to receive 12 months for example if your payments are a thousand dollars a month i'll give you ten thousand dollars for the right to receive 12 pounds your yield on that is 35.07 percent yield i don't care what the numbers are every time every time just just test it out now that's a concept it's not a technique the first one i used i was cultivating this investor who was he he had lots of money he was a multi-millionaire and he liked passive income and i was trying to sell him on notes and i take him to breakfast you know two or three times a month and he knew how to use the calculator and i knew what i was talking about finally and he said well yeah i'll entertain him well like the first note i got that i could take to him it was a million five and i think the payments were twelve thousand some odd dollars a month and the guy needed a hundred and fifty thousand dollars so i uh well he said what can you sell it for and i said well i'll do the ten for twelve that's that's 120.

and he said well yeah but i need 150. and this was another god thing and i don't know how i did it wasn't any mathematic i said okay i can do that i'll get you 150. i'm gonna need 16 payments and he said okay that was 43 and i'm shaking i mean uh let's put it this way if you were to fill my car up full of gas it would have doubled my network [Laughter] i didn't have any money but i had this investor so i told the the note seller listen let me go rearrange some assets when you hear that that means let me go find the money yeah well i talked to him and it was on some farmland and he knew all about it and now what you think about this this was a million five note he's going to be putting in 150 000 or he's going to take over first position is that safe yeah yeah if they quit paying you and you go to foreclosure are you going to get your 100 000 back oh yeah well he went for it the only thing is he said tom i trust you however you don't have anything in it so i said how about if i put ten thousand in he said that will make me feel better i didn't hit 1000 so i went to the bank and i borrowed ten thousand dollars for 90 days make a short story long i got something like 18 like 15 1800 a month for 16 months and we renewed it a second time and that was all knowing what to do as well as finding that investor if you don't want to use your own money you need to find passive investors that trust you and the way you get them to trust you is you say what you do and do what you say and if you can't do it tell them i can't do that it's uh it's only a rat race if you run with rats so you know just surround yourself with the people that you trust things like that 10 for 12 where did you learn that was that at a seminar i i don't know a lot of these techniques i wish i could tell you i thought of them i didn't but i it's been so long ago i don't know who taught it to me it i just don't know but it doesn't have to be 10 for 12 like when i turned it into a 10 16 uh mike mitchell uh he's abilene he did one i believe it was uh what uh 16 for 24.

he gets a 42 year you just start talking with him and then look it's there and people ask me where do you find these notes you don't find them they find you some of the best videos you guys got i bet you were out looking for something else and it just dropped in your lap is that right i mean how does that happen yeah put all these hands out there and do all this advertisement and something just drops in your lap and uh uh how many times you love rolls it's a learning curve now i don't suggest people quit their day job and start buying those now's not a good time i'm uh most of the paper i'm seeing now is what i call toilet paper uh it's it's i don't want it and neither does anybody else yeah which brings me to an accident if you get nothing out of this recording like this yields are not realized until you're paid [Music] it's so funny to say that i've talked to so many sellers that say listen this thing is performing for 24 months [Laughter] you know how many times you just change the lender and they stop paying for whatever reason they stop hands all the time that happens yeah yeah that uh sometimes i don't think they were paying to begin with that's the reason when i'm buying notes always have an exit interview by that i mean i'll call him borrow her up and dave i'm going to role play with you here sure i'm going to be buying you know now rest assured nothing's going everything's gonna remain the same the only difference is uh who you send the payments to and uh you know nathan's only the note and you'll be getting information from nathan i just wanna make sure we're on the same page i'm showing a balance of that right yes yes and you've been making payments yes then that makes me feel a little warm and fuzzy but you'll be surprised how many times you'll get well no i made a three thousand dollar extra payment last year that the balance is all up so i'm not saying the no seller lied that's uh i'm gonna use insurance terms they you never lie on your application you misrepresented yeah so tom has you know one of the situations you talked about is that this is a difficult time to be in notes you know for those people who are looking to get in are you saying they should avoid it or do you think that i don't know you need to learn and risk versus reward if i had to start small in small steps today because what's what are the interest rates going to be tomorrow right are they going to put a moratorium on foreclosures and evictions that's going on like obviously i mean do you understand what i'm saying yeah you can buy a note that's perfectly good and hey once these people realize they don't have to pay uh would you hey you don't have to pay hey honey go ahead and buy that big coat yeah yeah you know uh it's like what 2008 and people were telling uh borrowers to let their note go and be default and they could negotiate yeah yeah so i mean we've got one of those situations happening right now as we speak uh it's happening in washington right now where the eviction moratorium is supposed to run out tomorrow and now all of a sudden today they're saying well maybe we'll extend it maybe we'll send it and they're trying to pass something new right now as we speak so we'll see how that plays out yes in my seminars and uh i do also in in my newsletters most people think notes are discounted because of the time value of money well that's not true if that were the case if somebody offered you a 12 note and you you wanted a 9 yield you would pay over bar wouldn't you right matthew says yeah if you want to do that call me i will fill you up because what happens now if they pay off the next day yeah you've lost money there you go wow notes are discounted by the risk that a note buyer incurs proportionally so tommy you only you only buy stuff locally is that right just in texas i only buy in texas very rarely do i get out of texas and for the reason that it's hard enough keeping up with texas law much less keeping up with oklahoma utah california uh it's uh in fact i don't want to know california law i just uh it it takes as long as hard enough right and that texas law is usually pretty easy right it's one of the easier states in the country but then you get into other states where it's just ohio is just always uncertainty maryland always uncertain oh yeah and and new york we have uh mortgage states instead of digital trust with dodd-frank where you have to wait what uh 180 days or something for you foreclosed before that in texas i mean you could foreclose within 40 42 days lethal injection yeah we used to call it post them and toast them so you know being in the space you probably know as well we do you're always learning right it's always an illustration even if you have the same kind of deal the deal always teach you something new has there been anything recently that you can recall that just stood out to be different something that just was amazing that you just didn't know no not really that i didn't know uh the techniques that i teach somebody asked me how many ways can you buy can you think of divine note i don't know you give me a number and i'll add one more you tell me everyone that you can do it i'll add one more because you can combine these things in so many different ways uh it's a i i guess the most recent that i've used that i haven't used in a long time is the two note partial are you guys familiar with that i i don't think so some attorneys and other and say that buying a partial is immoral illegal or patent and that it's a security blah blah blah blah well you can i had one recently where i was gonna buy a partial of this note at closing just because they put so much down i generally don't buy notes at closing and she took it to her attorney and he said no i don't want him holding the note because i hold no that's what i don't like about services i'm sorry they want to hold a note and understand why but if they lose it it's my butt not there and all they can do is say i'm sorry so i formed two two note partial and basically what it was was for 60 months i put the interest rate in i wanted and then the second note was zero payments for that 60 months after 60 months kicked off was was through and my note was gone the second note would kick in and it's the same to the bar it's the same thing but now you have two notes uh there's two ways to do it two notes secured against one data trust if you if you're doing this if you're selling that and you want to sell maybe the first note talk to your institutional funder or your note buyer and ask them how do they want you to do it some of my institutional funders don't want two notes secured against one data trust they want a first note and then a second note and then you put in the language there the first goes bad in real contact the second and they can make it up and that sort of thing so sure is that clear as much this is going to be like taking a sip out of niagara falls i'm sure yeah that's interesting so so you got the first note and then once that you set an expiry date for whatever five years or something you say you're instead of buying a five-year partial you had one note for five years the second note was a remainder of what the first note was but no payments it was drawing interest all this time so that when you take it over it's the same thing as if it been amortized for five years oh interesting okay and why would you do that versus a partial what would be the advantage of that i uh one if the attorneys don't like it and uh you mean if you're selling a partial or buying a person if what's in between doing that and a partial why would you do that right with the partial like if uh you buy a partial for me i have to give you the note i don't like that okay i just i i don't don't do it so uh i don't mind giving you the first lean note and let you holding on to that and i'll keep it uh personally i do like partials when i'm buying them rather than the two no partial there's there's some moving parts in there that you got to send them oh my mind just went blank when they pay it off you gotta send them saying hey uh yes at least whereas partially it's to me is a lot smoother it's just a different way of doing it so partials what we're learning over our time meaning being together they're so we're used to the traditional partial it sounds to me is that there's a whole lot more different kind of partials out there can you share some ideas of how partials can be structured i think we saw an 84 return can you share some of the other techniques you've seen with partials oh yeah uh nathan do you know uh dude marquise don't you i don't okay if you see him you'll know him okay he's a colleague and he takes my newsletters and takes his taking my courses in my no professor notebook i have a section where if you buy half of the balance for half of the number of payments whatever the interest rate is on the note you double it so again yeah break it down all right let's say you have a a 360 month note and the uh it's a hundred thousand dollar note if i buy give you uh 50 000 for 180 months whatever that uh interest rate is you just double let's say it was for nine percent it goes to 18.

yeah okay what happens if you give a third for a third [Laughter] well in my newsletter this time i uh relayed one that duke did he did a third for a third and then he combined it with finding somebody he had an investor who uh uh put in 15 150 000 on it he had duke had to put six in 16 sixty six dollars or something and he ended up with a what a 93.04 yield good grady that's crazy i love america so you can't do this in russia no no so yeah you're you're really doing the third or third is crazy math right and i challenge people to take the time and do it you know i'll do it as well and just see how it works i saw it live and i didn't believe tom when i first saw him and then i realized i got to sit down and watch and just learn because it's the creativity i think that we lack as institutional buyers where seller finance notes you become creative you become outside the box thinking you know tom i know you've pretty much bought simplified have you bought institutional or mostly just seller finance paper just i just seller finance institutional uh they don't want to sell me their paper okay okay but they don't want the discount i don't buy a non-performing notes okay if you want to learn about non-performing notes by performing though very true yeah so i mean pretty much your guess is that most performing notes go bad for whatever reason right there's all kinds of and it could be intentional or non-intentional right things happen to people along those lines i've been doing this since 1980 and i've never had to foreclose jesus i've had him go bad so how do you avoid the foreclosure you just work out some kind of a modification exactly cash for keys like i'm going to role play with you nathan i you're you're behind my nathan you know you missed your payment this month uh you know i got to tell you this vlog says you know i'm attempting to collect the debt but what's the matter oh you lost your job and then uh that's terrible i'll tell you what i'll do i'll put your payment on the back end of the note and let's just see how you're doing next month ninety percent of the time see i've already interviewed them i know they're good people or i wouldn't have bought them no nine percent of the time they found a job or something but if they didn't i said nathan have you thought about where you're going to move i know it's tough and you're going to need uh some help moving uh yeah i'll have a moving van over there first of the month i'll pay for it and you're gonna need your 400 aren't you walking money uh yeah just keep the place clean and watch it and uh and we can get you out of there as famous as possible what do you typically do if the borrower doesn't respond you can't get all of them i've never had that happen wow i've never had the that's where if you do your if you do your exit interview that tells me right there but if i want to buy them a lot of that tells me sometimes i just i'll talk to the bar and the hair goes on the back of my neck and the dog starts yelping and everything i don't want any part yeah have you ever done that just talk to somebody and yeah and you can't put your finger on it yeah it's just uh no i don't think i want this one so that's when i send them off to my competitors okay and how many how many notes do you have at any given time i've had as many as a hundred and as few as oh lord when i started off i had one you know i don't know i don't keep track of all that stuff i guess i should i'm just not that anal to know hey i've got this much in my portfolio i've got this much i look at the cash flow coming in and cash flow going out and uh well that's just me i'm uh i work for the government uh right after i got out of college and i learned right then not to get caught in a paper trap where you're spending all your time doing statistics you're not doing any work you're doing you know how many people are doing do so uh i do keep track of my letters that i send out in their postcards how it's doing but uh other than that do you use a servicer for monthly mailings or do you not use them at all oh well i do for my monthly mailings i uh i move around and i buy my list uh from a from a person who sells lists of note orders okay and you get a meal between 10 and 12 cents and then you you you sell your mailers every month and then when you go to buy it you're having that conversation you're getting a feel for who they are and feeling out if it's something worth it for you what do you think that's a lot of processes because not a lot of them call you back i'm sure what do you think the typical response rate that you're getting right now not a lot of oh right now my response rate is uh it's not quite zero but it's it's approaching it i'm not even getting tire kickers wow and i've heard others are having the same problem and i switched my letters up i switched my postcards i switched everything up i'm just not getting the response and i know they're being sent out because i in my note service by noting this guy that's uh gives me the list i have some of my friends on there you know and they'll tell me if they got it or not you know that's your problem yeah i'm just gonna check them any ideas like any ideas on why there's no reason i had no idea that's so strange i i don't know are you guys having the same thing we're not doing the postcarding right we're gonna i'm gonna be starting it probably pretty soon but we're not doing uh we're typically buying either cfds or from no brokers or from you know funds directly or for other investors right we're not dealing with those small time mom and pop sellers so we're not having the same experience because we're getting the list sent to us of available assets oh you're aggressive buying cfds uh that's that's our buddy over here don't do it in texas no not in texas um but there are a lot of good states where they work well what do you do if uh uh they they come up and say you don't have jurisdiction you know you don't you can't vietnam you don't you're not it's never happened all right don't do it in texas they'll they'll say that every time you have a party you have no authority to evict me that's just it yeah so no i i don't ever buy them in texas for good reason you know why i don't buy outside of texas i know texas is long sure yeah yeah they're not usually available in texas but no so what is the typical asset you're buying are you buying the the larger assets fees you know 100 200 000 or do you have a box that you simply look for um i don't have a box i mean i threw away the box i look at each note uh you know i don't i bought a five thousand dollar note uh a few weeks ago okay yeah i mean hey i didn't do hardly any checking there he was a first man no wow yes i did and i gave him 2500 for it twenty five hundred for uh an unpaid balance of five thousand unpaid balance five thousand okay and how much time is left on that uh that three years something like that wasn't they just needed money yeah yeah again i didn't check any anything well i take that back i did go in online you know and does the property exist and uh that sort of thing but if you do too much due diligence and paying for things when you're buying notes like this your yield just goes you know how much changes you want to do yeah yeah so what sounds to me is that most of the time notes if the lender is a good person the borrower's contraction you can work out a number that makes sense to both people generally yes if they really want to sell you're not you have to get over this is the number one note myth that note holders have that this hundred thousand dollar note is the same as a hundred thousand dollars cash yeah they think if i give them eighty thousand dollars for it that they're losing twenty thousand dollars right right and if you don't get over that myth it's going to be hard to to buy it from and the second myth you've got to overcome is that well if i if i have to foreclose i'll just take the property back yeah and they have this dream that it's going to be in the same clean crisping condition yeah even for the catcher keys it's not usually in fantastic shape no again they're not wearing the flowers and moving out at the same time you know yeah but uh along those same lines nathan won the cash for keys yeah i have that property sold second they moved out yeah that's right i mean uh let's let's i'm gonna go play with you nathan you're in an event hey i'm foreclosing on this house what are you gonna give me for yeah yeah what kind of deal yeah you know i want paper i don't want any money for you you know you can exchange a minute as far as the cash flow right yeah you're doing exchanges then right you're doing instead of a cash deal you're exchanging hey give me a paper for this property i've done that yes that's what got me into paper to begin with is that we were buying paper at 18 yield and uh trading it in on real estate it faceback wow i love america yeah we had someone on fubisco and he was sharing about doing exchanges and how the whole game is to get bigger and bigger without using cash because cash is the most difficult threshold because it's the highest priced item that if you can exchange a property for a performing note it's so much better because the discount is not a 1031 exchange but you can swap it couldn't you it just swap you can swap it but it's not a 1031 exchange exactly right so you're doing you're basically instead of getting passed for a deal you're getting another deal and most people don't understand that because people say well you have to give cash for a deal can you share a story where you literally instead of getting cash for an asset you've got something in return oh yeah i've gotten votes i mean yes the first exchange that i did it was in my exchange group and this other broker was involved and we were doing all the math and looking at it and his client and my client and when we got to closing there wasn't any money for our commission and we said what the heck would we do and so we were looking and uh i think it was my client at a bass boat and if we told hey he throw in the bass vote for our commission we're going to play an act and that was it yeah that was five thousand dollars and i didn't know how anal this guy was until then because it's over with and now he says tom we need to discuss this basketball i said okay let's go we'll have lunch next week when i get there now this was back before computers you had to type it on a time he had about a 10 page calendar written up now in january so i want it here and here you can have it here in germany and i'm just looking at it mom are you kidding me just just give me my half now well i don't have any money well just give me a note and he said uh what interest do you want what interest do you want you know just give me make a short story long uh i ended up with you know with a note for twenty five hundred dollars where he paid me off something like 100 wow yeah that's okay and for those people out there who are looking to get three four five thousand dollars a month income versus buying performing notes doing it this way and being creative you can super size your returns to getting much higher returns than just buying normal paper or buying partials this is the matter of doing it yes if you even if you have money you need to find investors with deep pockets that will trust you and buy is like the million five no i it was i don't remember the eighteen hundred something a month i was getting uh you know ten thousand dollars i like that yeah that's great yeah that's that's how you get that's how you get rich yeah everybody knows what the rule of 72 is yeah you find 72 into are you interested in 72 you know well divide 0 into 72 and that's what happens oftentimes when i'm doing my 10 for 12 my any of my i call the 10 for 12 the perpetual partial because in the month 10 or 11 i'm going to role play again here david yeah you're you're paying me and i'll come back 10 or 11.

davey that notes coming up in this thousand dollars a month you know i gave you 10 000 for it you want to do it again sure it's easy so in the 10 for 12 situation are you still collecting from the borrower and forwarding it on to david yeah yes yeah there's no assignments or a launches it's literally you get the payment sent to me you're you're not the note is it's a special document have you ever seen a partial documents and uh it's an assignment and then they will pay me the money and at the end when it's the it's over with and i'll sign a sort of release and then the note converts back to you for those who may be unfamiliar with the paper what what kind of paper do you put together for your parcels uh i have a contract and there are hard contracts and soft contracts if you're selling a partial you want to read those babies there's some of them i've seen out there that you're you're in default just as soon as you sign wow i mean uh but basically mine says i'll have what what i'll buy what i'm buying it for how many payments and i i have you have what what's called you don't have time to go into it but it's called schedule b okay and then a default or early payoff i will have that schedule be in there parenthetically if people will email me i will send them a link to get my book who gets welcome to been an early payoff i'll send them that for free they'll email me uh i also in excel or word i will make out that amortization schedule b and give it to them and have them sign it that way if there is a goals in the default and or if it's paid off early here it is everybody knew what was happening and guys if you if you ever need timed information and you watch this later just shoot us shoot me an email um and i'll get you this information and link to all his websites what not yeah if you need i'll say this interrupt you uh if if you need help on anything give me a call yeah.time you'll have to hang up on me [Laughter] it's just sharing of ideas right it's well i i my partner gets mad so hear you waking you down i find out what's going on out there yes you understand i mean there's somebody that's new but hey they're running into a situation and uh maybe i can help them maybe but i'm learning something as i'm going along hey why not try this technique on that situation yeah they're just and it could it could be a situation where you didn't just think of it right you could be a situation where you're just in the weeds in the thick of things and someone come by and says hey you forgot about this yeah i call people all the time and just sound use them and people call me just use me as a sounding board yeah that's all i am is a sounding board yeah and isn't it funny when you're talking to somebody things you you know what the answer is but when you talk to somebody and uh what are you going to do about so-and-so talking yeah and i do that all the time because we do get wrapped up in our own head yeah and i think the networking allows you to talk out loud and hear your thoughts out loud sometimes you can come into closing yourself other times someone else says hey i've been there here's what i did right exactly and what people find out and i i'm super impressed with the space is that people are willing to give a lot for free and share and give and all stuff which is amazing where i don't know many other real estate worlds that do that kind of stuff but the amount of free information and resources available is a mess it's crazy so just yeah yeah it is uh i got a lot of free stuff but my only caveat to that is myself included do not take legal or accounting advice don't give it either but but you're professional yeah don't give a quick giving it so tom i know you you go around speaking right um i know i've seen you before in mini cop do you have anything coming up that's something that people could see you live at we are planning something on october the 9th in san antonio but that's just in the making and with the new virus coming out you know well over there this week you've got to wear a mask i don't know what's going to happen next week so it's still in the making if people would like to attend that if they'll go to my website and sign up for my newsletter it's free uh that's another place you can get some of my varieties and just get good information i'll notify people there and when it's going to take place but it'll be in san antonio clean it's on a friday and a saturday all day friday and half the day saturday gives you a chance to get out of there yeah yeah yeah so you know i would say that my time at those conferences and just watching you do things on the board because most note investors in our group and our followings are institutional they're not the sour finance you know kind of people um i want to make sure they understand that that even though they may not be a sour finance they're known people so just walk around asking questions and talking to people they're going to find deals yes at the last seminar i gave in san antonio there were five deals i know of of people within that room wow that just yes just and uh i don't know 67 i'm not sure how many you know but that's a lot of deals because you know yourself and this is sad eighty percent of the people who come to these seminars will never buy a note will never do anything it's with all the seminars they'll take them their seminar judges which is fine but uh it's uh i met somebody i don't know it was a while back that i think i saw every single conference and weirdly enough i asked him one time you've spent all those time money and energy have you bought a note and the answer was no i mean i saw him for years shockingly there was nothing i could not believe it i just didn't understand like you know i get the fact you shouldn't just pull the trigger in his pot right you should take it slow but just maybe teaming up with someone not even jv with them just teaming up and say listen can you look over my deal just let me know and i always express people people spend hundreds of thousand dollars go to college and while they're in college they absolutely learn nothing with a degree until they actually graduate then they start making money if you spend that money buying deals and learning just like college and don't make money you have just as much education so you were willing to spend 100 200 grand on college to make no money where you're depending on learning right now on notes and not willing to spend the money to learn spend some money do the deal if you lose the money it's just that's my uh my my soapbox stands right yeah uh that's the reason i don't do mentoring anymore i used to do a mentoring program and people would pay me they they didn't they never followed through yeah that's pretty good all right here's what i want you to do this is before the computer i want you to go down to the county and i want you to start looking up deeds and trust and release the liens because you got to know the paperwork yeah and the sun you know note assignments just look them up and and make copies of them and bring it well i didn't have time to do that how are you going to find back then how are you going to find the note and one person it's like you said dave uh she had been i was the third one i said you know all of this uh here's what i want you to do here's i i had some names here this i want you to send them a letter i want you to call them up and i want you to make them an offer just make them an offer yeah well i don't know here look in the dallas morning news i want you to read it from cover to cover and see if you see anything there man shop for making an offer on the note no but she wouldn't do it i said scary yeah did you you're and this is to everybody out there too and i've got it you got to get over what you're afraid of do something each day that you're hey i don't want to do this i'm afraid why i just think you guys are like that sometimes you know i don't want to yeah and you know what i think that once you get comfortable i remember when i first got in calling an agent up to ask questions about the property area was probably the most difficult thing i can do after a while i don't think twice about it if calling them right that fear of calling them and getting it either negative or positive or any response goes away with time so i just encourage people just start doing it yes get into it just get because the beginning is going to be a mess and you and just when you get into those problems go up to somebody who's done it before and ask them hey i've got stuck here what do you recommend what are your thoughts you know we run the investment community for the weekly one just to network with other people right there's people that even though they're newer may have an experience that i don't have for knowledge i don't have so i encourage people constantly be networking somehow some way yes i help people all the time they'll say how much how much do i owe you and here's the way i do it if you tell me what it's worth that's it i've been paid as little as 150 and as much as seven pounds there you go but i i don't know how much it's worth if you call me up dave and i'll give you a suggestion and uh oh yeah how much is that worth i don't know yeah maybe a gift card you know yeah a little gift or something right yeah dude always i always cross people's phone with something even if it's a gift card so madame years ago now yeah yes so what do you what do you see going forward here tom what's your uh do you have a magic crystal ball let's see what's going down in my newsletter i do give an economic uh article because i am a good economist and yeah guys i i see storm clouds coming i mean the price of real estate is directly proportional to the financing available that's just an axiom sure and a lot of these uh fha and jennie mae are being bought up by the federal reserve in the june meeting they were discussing whether or not to start tapering off happening all over again it's just a matter of just a matter of uh about different people in there yeah remember they're not using their own money so yeah it's uh that's how you guys remember note one yep that's what happened to them they were really brokens okay they they had a hedge fund that they were selling to and they were buying notes at 92 with a credit score as low as 600 at closing wow and i was telling them hey guys this this is a bug looking for a windshield i don't know what they were selling them to hedge funds but when the hedge funds went broke they were left there with no worries yeah and i had a colleague who she had 15 notes entitled closing and closing with no one often they went under ouch yeah they had to put her on suicide alert oh she you know she's already had the money spent yeah wow her money is somebody that's probably somebody else's money as well yeah it's scary right now with you know with the government giving so much handout money that i think that's kind of holding things in tight right now and the curiosity what happens when it releases so uh again that's in my uh risk in the solutions that the different risk the note buyer takes and the solution uh but there's one solution the risk that i don't know the answer to and that's politicians changing the right but that being said unless you want to stick your head in the sand if you buy a good seller finance note i'm not a a non-performing note guru i mean so i don't know but you buy a good not a seller finance note especially on a partial that to me is the least risky investment that there is today yeah you know interesting i i we always tell people i don't see a lot of parcels for sale be honest with you we don't see them come through and it's definitely different channels but buying a partial for beginners you're right the best move because you're handcuffed to the seller during the entire process yeah well no not really you're not unless you buy half the payments so that's another way of buying a partial you're getting a thousand dollar a month payment in and updating that uh but i need 500.

okay i'll buy 500 a month from you for 60 months now i'm tied to you yes but if if i buy five years worth of payments period you're out of the picture baby what i'm saying is if it goes to fault it goes bad for a new investor typically the contract's written up that that that seller will either make you whole or bail you out or hold your hand that's what i mean by handcuff that don't help you if the milk goes bad yeah uh that's why you need an attorney i can help you on the on the uh investment side but you you need everybody ought to have their their attorney and your police stands notes not one that has that says they did you know you should punch those out there yeah and it sounds amazing you mostly buy your partials when you're wheeling and dealing these seller finance paper versus buying it from nathan or buying from me you're not typically buying a partial from us you're buying it from a seller finance owner yeah who said listen i don't need all the money i'm super some you know 10 grand 15 20 grand you know kind of money yeah yeah 10 grand 15 grand those are the smaller notes yep the person i talked about he needed 150 yep now what i'm doing now that and uh last year i was having a lot of success in it not so much this year as i was buying notes at closing and i'd get something like a 23 yield about 18 18 20 months worth of payments oh you buy a partial closing at closing and that would give the no that would give the seller the property some extra money and or if the buyer needed extra money to get into it it would give them extra money to get to them are you typically hooking up with like title companies to do that are you typically hooking up with title companies no i'm hicking up hooking up with the buyer and sellers before it happens before it happens they'll come to me and say tomorrow um most of them are investors i don't like i don't like dealing with mom and pop uh i like dealing with investors because let's put it this way you two guys cheat me you know i'll clap my hand or you're good you know but if you cheat mom and pop get rea i hope you've got good lawyers and and a bunch of them because you're going you're you're going to jail these investors will call me up you know hey i have a house here about 200 000 and i uh i'm giving them 10 down and but they want 20.

what can you do all right i'm giving another 10 000 and then i back into it you know and generally it's uh right around 23 percent yield that's important and the way i do that is output 18 yield and the amount of money i'm giving them and then i see how many months that is and nine times out of ten they'll have uh like 17.25 months okay i i'll round it up to 18 yeah and that jumps at you wow over 20. not spend time with 10 is a small number it doesn't take much of a discount to jump at you skydiving yeah yeah tom that's great it's amazing i encourage everyone you don't have connected with tom get connect with tom if you can get to the conference in san antonio get down there just being in the room and hearing this over again you start learning just how tom learned too right and as me nathan here comfort again it's get our wheels turning right it gets our brain thinking and be more creative being outside the box thinkers so i encourage you guys to hook up with tom on his website his email um and it's been a awesome friday um i'm taking the rest of the afternoon off to do some math and figure out some angles here um but i appreciate your knowledge your experience and how willing and giving you are it's it's been a pleasure yeah anything i could do to help you and lately you were talking about you didn't understand it if you get a deal call me absolutely yeah and we'll and i'll lead you by the hand and then uh where you feel comfortable with it and then i'll tell you what you're going to do you're going to go and it's so simple it's so simple once you get it then you get it yes yes yeah yeah just got to do it just got to do it nathan give him a call um well good for you man um and i just want to remind everybody um those who are looking to get into stuff like this we have a great youtube channel all our videos have been on there we do weekly recordings um we have a beginner series for those who are newer and we have also have an investment community where we weekly um to talk about networking and whatnot and it's so key in a time where we haven't been to a conference and feels for forever getting together with other like-minded people is essential so be sure to get on there um to you know like subscribe to our channel and catch up on all the different people we've had on now nathan we've talked about partials in touched upon these things and i'm going to say that most people felt really good about what we talked about yeah we we get into we start feeling real good about ourselves when we can figure out a financial calculator and figure out a couple of a couple of variables and then you and then you talk to tom tom yo may surprise you i surprised everybody right um it's interesting that we bring tom on i shared before we went on um time was someone i walked into the room sold a guy and says he'd been doing it forever i'm probably going to learn something yeah and then i did the point where i actually had to buy the recording of the conference just so go watch him again yeah so ellen i see you there's a semeko in the background hopefully it's fixed if what we've learned in that conference come across here you're gonna i'm gonna watch this video again the math that tom knows is ridiculous so tom how long you've been in real estate how did you get into real estate oh lord uh i bought my first note in 1980 uh this was back during the time when real estate well interest rates were 18 yeah and i wanted to get into real estate so at that time in texas all you needed to get your real estate broker's license was to have enough hours in certain subjects and you could go straight to your broker you didn't have to you didn't have to go through salesman so okay i submitted my transcript and they said yeah you can take the test and so i took the test and uh back then it was number two pencil handed in and they didn't grade it right there he had to send it off to austin texas wow yeah about a week later i got a little thing in the mail said pass and i don't know how i did on it because some of those we got all i know is they had some dumb questions yeah dumb and so i took my little letter to the number one brokerage here in dallas and said let me lucky i'm a broker and uh you guys are the best and i want to learn how to make a million dollars they said fantastic i'm glad you came this friday we had the speaker coming in and he is fantastic we've been waiting for him and uh so come see him and i when it was a high school gymnasium i mean it was and it was full yeah and i woke up down to the front of the road i'm sitting there and people introducing myself and they're introducing me and there's electricity in the air never said yeah he's finally here yeah yeah he walks in and standing ovation you know i thought the pope had walked in or something and he started talking and about 10 minutes in he said now when you have open house you want to have the coffee extremely hot so they won't drink it as fast and they'll stay longer and it will give the appearance of activity and i'm looking around and people are taking notes and i to this day i don't know what it was but i just i just get up and start walking down the aisle and walking back and everybody's watching me and my the broker who i talked to says where are you going where are you going and i said if this is what you're going to teach me i don't want to learn and i walked in and got my car and i said my god tom you just told the number one brokerage in dallas to bend over and crack a vertical smile and you know what are you going to do well at that time during the radio they had little interviews with people who who were in town and a guy by the name of ark hamill was going to be teaching a course on how to buy businesses with nothing down and just different creative ways to buy businesses and so i went to that saturday and my mom's just blown away and i told him what i was doing asking can you do this in real estate and he said yes you need to go to the creative real estate uh convention next week and so i go there and it was just mind-blowing uh i took a seminar there and i i smoked at the time i would get up and leave to smoke a cigarette and come back and i hadn't missed the thing because i did i still didn't understand what the heck they were talking about was changing and it was then i realized well i have all these degrees and this uh well rectal thermometers have degrees too it doesn't mean anything but i learned how to exchange real estate and they always were doing notes and it just went and i took another course and still quite didn't understand it and then i went up to salt lake city a guy with the name of john berlin and there were only 10 of us there and on my right does anybody know who robert allen is yeah yeah he was sitting on my right and behind me was john bailey b-e-h-l-e anything you can get from him he takes things to a different level he was behind me and i didn't know who robert allen was and bergen handed him his book and said would you autograph yesterday and i looked over at him and said wow you're as dumb as i am but there it all clicked in and i just got the calculator and i mean i was up all night my wife would say you know go to bed go to bed you know okay so i bought my first note and i did everything wrong with bike then i took a sanity test and i failed and that qualified me to be a note buyer [Music] that's about right david davier got you on mute man dave's on mute sorry for the distraction i'm trying to get the some of the audio it seems to be echoing off somebody i'm not sure who it is but they're saying they're they're having a big echo i don't know what it is so guys i apologize for the echo um we this is recorded but we're gonna try fixing it um i'm trying to fly around real quick uh micah yes appreciate it so hey you mind if i look up so i don't forget it at the end because people are going to want to know how to contact me yes yeah it's uh go to my website www.hp as in henrypaul notes in otes.com all right i'll put in the chapter for him um you know hopefully we got this the audio figured out or at least comparable uh for everyone i apologize for it don't know what's going on but tom some people get into notes and they say i'm gonna buy a performing note and i'm gonna make a million dollars doing it and then some people get into it like rentals and say i ran out of money i don't know what to do i can't do anything and then we walk into the room and you sit there and you see a gentleman talk numbers and share the information that you have and show how you can take a simple deal nine percent interest yielding asset and super size it is like best called it can you share a little bit about that for those who may be in a deal and just they're out of cash right they're both a couple performers they have no money and they're trickling with the dollars coming in oh they don't have any money they need to find i call it the deadbeat brother-in-law or an investor hey fellow no investor are you looking to learn the basics of note investing so you can get started however you don't want to spend a few hundreds or thousands of dollars and hours online on some training program have you thought about attending a notes conference however you don't want to spend the money or the time away from your family well we have a tremendous beginners video series of 20 different topics with each video being less than 15 minutes this means each video is less fluff and direct to the content visit slash www.jkpholdings.com dash series to learn more again www.jkpholdings.com slash beginner dash everybody's got somebody in their family that uh you know he's he's a deadbeat and he's not too bright and at thanksgiving uh your mother or father i said you know help him out you know your sister's in trouble help him out and so he does have money to invest that's what you need to buy investors or deadbeat brother-in-laws because they can uh uh oh they can make they can make you money to give you an example i'm going to start off with the 10 through 12 technique that's where you buy uh about 10 months worth of payments for the right to receive 12 months for example if your payments are a thousand dollars a month i'll give you ten thousand dollars for the right to receive 12 pounds your yield on that is 35.07 percent yield i don't care what the numbers are every time every time just just test it out now that's a concept it's not a technique the first one i used i was cultivating this investor who was he he had lots of money he was a multi-millionaire and he liked passive income and i was trying to sell him on notes and i take him to breakfast you know two or three times a month and he knew how to use the calculator and i knew what i was talking about finally and he said well yeah i'll entertain him well like the first note i got that i could take to him it was a million five and i think the payments were twelve thousand some odd dollars a month and the guy needed a hundred and fifty thousand dollars so i uh well he said what can you sell it for and i said well i'll do the ten for twelve that's that's 120.

and he said well yeah but i need 150. and this was another god thing and i don't know how i did it wasn't any mathematic i said okay i can do that i'll get you 150. i'm gonna need 16 payments and he said okay that was 43 and i'm shaking i mean uh let's put it this way if you were to fill my car up full of gas it would have doubled my network [Laughter] i didn't have any money but i had this investor so i told the the note seller listen let me go rearrange some assets when you hear that that means let me go find the money yeah well i talked to him and it was on some farmland and he knew all about it and now what you think about this this was a million five note he's going to be putting in 150 000 or he's going to take over first position is that safe yeah yeah if they quit paying you and you go to foreclosure are you going to get your 100 000 back oh yeah well he went for it the only thing is he said tom i trust you however you don't have anything in it so i said how about if i put ten thousand in he said that will make me feel better i didn't hit 1000 so i went to the bank and i borrowed ten thousand dollars for 90 days make a short story long i got something like 18 like 15 1800 a month for 16 months and we renewed it a second time and that was all knowing what to do as well as finding that investor if you don't want to use your own money you need to find passive investors that trust you and the way you get them to trust you is you say what you do and do what you say and if you can't do it tell them i can't do that it's uh it's only a rat race if you run with rats so you know just surround yourself with the people that you trust things like that 10 for 12 where did you learn that was that at a seminar i i don't know a lot of these techniques i wish i could tell you i thought of them i didn't but i it's been so long ago i don't know who taught it to me it i just don't know but it doesn't have to be 10 for 12 like when i turned it into a 10 16 uh mike mitchell uh he's abilene he did one i believe it was uh what uh 16 for 24.

he gets a 42 year you just start talking with him and then look it's there and people ask me where do you find these notes you don't find them they find you some of the best videos you guys got i bet you were out looking for something else and it just dropped in your lap is that right i mean how does that happen yeah put all these hands out there and do all this advertisement and something just drops in your lap and uh uh how many times you love rolls it's a learning curve now i don't suggest people quit their day job and start buying those now's not a good time i'm uh most of the paper i'm seeing now is what i call toilet paper uh it's it's i don't want it and neither does anybody else yeah which brings me to an accident if you get nothing out of this recording like this yields are not realized until you're paid [Music] it's so funny to say that i've talked to so many sellers that say listen this thing is performing for 24 months [Laughter] you know how many times you just change the lender and they stop paying for whatever reason they stop hands all the time that happens yeah yeah that uh sometimes i don't think they were paying to begin with that's the reason when i'm buying notes always have an exit interview by that i mean i'll call him borrow her up and dave i'm going to role play with you here sure i'm going to be buying you know now rest assured nothing's going everything's gonna remain the same the only difference is uh who you send the payments to and uh you know nathan's only the note and you'll be getting information from nathan i just wanna make sure we're on the same page i'm showing a balance of that right yes yes and you've been making payments yes then that makes me feel a little warm and fuzzy but you'll be surprised how many times you'll get well no i made a three thousand dollar extra payment last year that the balance is all up so i'm not saying the no seller lied that's uh i'm gonna use insurance terms they you never lie on your application you misrepresented yeah so tom has you know one of the situations you talked about is that this is a difficult time to be in notes you know for those people who are looking to get in are you saying they should avoid it or do you think that i don't know you need to learn and risk versus reward if i had to start small in small steps today because what's what are the interest rates going to be tomorrow right are they going to put a moratorium on foreclosures and evictions that's going on like obviously i mean do you understand what i'm saying yeah you can buy a note that's perfectly good and hey once these people realize they don't have to pay uh would you hey you don't have to pay hey honey go ahead and buy that big coat yeah yeah you know uh it's like what 2008 and people were telling uh borrowers to let their note go and be default and they could negotiate yeah yeah so i mean we've got one of those situations happening right now as we speak uh it's happening in washington right now where the eviction moratorium is supposed to run out tomorrow and now all of a sudden today they're saying well maybe we'll extend it maybe we'll send it and they're trying to pass something new right now as we speak so we'll see how that plays out yes in my seminars and uh i do also in in my newsletters most people think notes are discounted because of the time value of money well that's not true if that were the case if somebody offered you a 12 note and you you wanted a 9 yield you would pay over bar wouldn't you right matthew says yeah if you want to do that call me i will fill you up because what happens now if they pay off the next day yeah you've lost money there you go wow notes are discounted by the risk that a note buyer incurs proportionally so tommy you only you only buy stuff locally is that right just in texas i only buy in texas very rarely do i get out of texas and for the reason that it's hard enough keeping up with texas law much less keeping up with oklahoma utah california uh it's uh in fact i don't want to know california law i just uh it it takes as long as hard enough right and that texas law is usually pretty easy right it's one of the easier states in the country but then you get into other states where it's just ohio is just always uncertainty maryland always uncertain oh yeah and and new york we have uh mortgage states instead of digital trust with dodd-frank where you have to wait what uh 180 days or something for you foreclosed before that in texas i mean you could foreclose within 40 42 days lethal injection yeah we used to call it post them and toast them so you know being in the space you probably know as well we do you're always learning right it's always an illustration even if you have the same kind of deal the deal always teach you something new has there been anything recently that you can recall that just stood out to be different something that just was amazing that you just didn't know no not really that i didn't know uh the techniques that i teach somebody asked me how many ways can you buy can you think of divine note i don't know you give me a number and i'll add one more you tell me everyone that you can do it i'll add one more because you can combine these things in so many different ways uh it's a i i guess the most recent that i've used that i haven't used in a long time is the two note partial are you guys familiar with that i i don't think so some attorneys and other and say that buying a partial is immoral illegal or patent and that it's a security blah blah blah blah well you can i had one recently where i was gonna buy a partial of this note at closing just because they put so much down i generally don't buy notes at closing and she took it to her attorney and he said no i don't want him holding the note because i hold no that's what i don't like about services i'm sorry they want to hold a note and understand why but if they lose it it's my butt not there and all they can do is say i'm sorry so i formed two two note partial and basically what it was was for 60 months i put the interest rate in i wanted and then the second note was zero payments for that 60 months after 60 months kicked off was was through and my note was gone the second note would kick in and it's the same to the bar it's the same thing but now you have two notes uh there's two ways to do it two notes secured against one data trust if you if you're doing this if you're selling that and you want to sell maybe the first note talk to your institutional funder or your note buyer and ask them how do they want you to do it some of my institutional funders don't want two notes secured against one data trust they want a first note and then a second note and then you put in the language there the first goes bad in real contact the second and they can make it up and that sort of thing so sure is that clear as much this is going to be like taking a sip out of niagara falls i'm sure yeah that's interesting so so you got the first note and then once that you set an expiry date for whatever five years or something you say you're instead of buying a five-year partial you had one note for five years the second note was a remainder of what the first note was but no payments it was drawing interest all this time so that when you take it over it's the same thing as if it been amortized for five years oh interesting okay and why would you do that versus a partial what would be the advantage of that i uh one if the attorneys don't like it and uh you mean if you're selling a partial or buying a person if what's in between doing that and a partial why would you do that right with the partial like if uh you buy a partial for me i have to give you the note i don't like that okay i just i i don't don't do it so uh i don't mind giving you the first lean note and let you holding on to that and i'll keep it uh personally i do like partials when i'm buying them rather than the two no partial there's there's some moving parts in there that you got to send them oh my mind just went blank when they pay it off you gotta send them saying hey uh yes at least whereas partially it's to me is a lot smoother it's just a different way of doing it so partials what we're learning over our time meaning being together they're so we're used to the traditional partial it sounds to me is that there's a whole lot more different kind of partials out there can you share some ideas of how partials can be structured i think we saw an 84 return can you share some of the other techniques you've seen with partials oh yeah uh nathan do you know uh dude marquise don't you i don't okay if you see him you'll know him okay he's a colleague and he takes my newsletters and takes his taking my courses in my no professor notebook i have a section where if you buy half of the balance for half of the number of payments whatever the interest rate is on the note you double it so again yeah break it down all right let's say you have a a 360 month note and the uh it's a hundred thousand dollar note if i buy give you uh 50 000 for 180 months whatever that uh interest rate is you just double let's say it was for nine percent it goes to 18.

yeah okay what happens if you give a third for a third [Laughter] well in my newsletter this time i uh relayed one that duke did he did a third for a third and then he combined it with finding somebody he had an investor who uh uh put in 15 150 000 on it he had duke had to put six in 16 sixty six dollars or something and he ended up with a what a 93.04 yield good grady that's crazy i love america so you can't do this in russia no no so yeah you're you're really doing the third or third is crazy math right and i challenge people to take the time and do it you know i'll do it as well and just see how it works i saw it live and i didn't believe tom when i first saw him and then i realized i got to sit down and watch and just learn because it's the creativity i think that we lack as institutional buyers where seller finance notes you become creative you become outside the box thinking you know tom i know you've pretty much bought simplified have you bought institutional or mostly just seller finance paper just i just seller finance institutional uh they don't want to sell me their paper okay okay but they don't want the discount i don't buy a non-performing notes okay if you want to learn about non-performing notes by performing though very true yeah so i mean pretty much your guess is that most performing notes go bad for whatever reason right there's all kinds of and it could be intentional or non-intentional right things happen to people along those lines i've been doing this since 1980 and i've never had to foreclose jesus i've had him go bad so how do you avoid the foreclosure you just work out some kind of a modification exactly cash for keys like i'm going to role play with you nathan i you're you're behind my nathan you know you missed your payment this month uh you know i got to tell you this vlog says you know i'm attempting to collect the debt but what's the matter oh you lost your job and then uh that's terrible i'll tell you what i'll do i'll put your payment on the back end of the note and let's just see how you're doing next month ninety percent of the time see i've already interviewed them i know they're good people or i wouldn't have bought them no nine percent of the time they found a job or something but if they didn't i said nathan have you thought about where you're going to move i know it's tough and you're going to need uh some help moving uh yeah i'll have a moving van over there first of the month i'll pay for it and you're gonna need your 400 aren't you walking money uh yeah just keep the place clean and watch it and uh and we can get you out of there as famous as possible what do you typically do if the borrower doesn't respond you can't get all of them i've never had that happen wow i've never had the that's where if you do your if you do your exit interview that tells me right there but if i want to buy them a lot of that tells me sometimes i just i'll talk to the bar and the hair goes on the back of my neck and the dog starts yelping and everything i don't want any part yeah have you ever done that just talk to somebody and yeah and you can't put your finger on it yeah it's just uh no i don't think i want this one so that's when i send them off to my competitors okay and how many how many notes do you have at any given time i've had as many as a hundred and as few as oh lord when i started off i had one you know i don't know i don't keep track of all that stuff i guess i should i'm just not that anal to know hey i've got this much in my portfolio i've got this much i look at the cash flow coming in and cash flow going out and uh well that's just me i'm uh i work for the government uh right after i got out of college and i learned right then not to get caught in a paper trap where you're spending all your time doing statistics you're not doing any work you're doing you know how many people are doing do so uh i do keep track of my letters that i send out in their postcards how it's doing but uh other than that do you use a servicer for monthly mailings or do you not use them at all oh well i do for my monthly mailings i uh i move around and i buy my list uh from a from a person who sells lists of note orders okay and you get a meal between 10 and 12 cents and then you you you sell your mailers every month and then when you go to buy it you're having that conversation you're getting a feel for who they are and feeling out if it's something worth it for you what do you think that's a lot of processes because not a lot of them call you back i'm sure what do you think the typical response rate that you're getting right now not a lot of oh right now my response rate is uh it's not quite zero but it's it's approaching it i'm not even getting tire kickers wow and i've heard others are having the same problem and i switched my letters up i switched my postcards i switched everything up i'm just not getting the response and i know they're being sent out because i in my note service by noting this guy that's uh gives me the list i have some of my friends on there you know and they'll tell me if they got it or not you know that's your problem yeah i'm just gonna check them any ideas like any ideas on why there's no reason i had no idea that's so strange i i don't know are you guys having the same thing we're not doing the postcarding right we're gonna i'm gonna be starting it probably pretty soon but we're not doing uh we're typically buying either cfds or from no brokers or from you know funds directly or for other investors right we're not dealing with those small time mom and pop sellers so we're not having the same experience because we're getting the list sent to us of available assets oh you're aggressive buying cfds uh that's that's our buddy over here don't do it in texas no not in texas um but there are a lot of good states where they work well what do you do if uh uh they they come up and say you don't have jurisdiction you know you don't you can't vietnam you don't you're not it's never happened all right don't do it in texas they'll they'll say that every time you have a party you have no authority to evict me that's just it yeah so no i i don't ever buy them in texas for good reason you know why i don't buy outside of texas i know texas is long sure yeah yeah they're not usually available in texas but no so what is the typical asset you're buying are you buying the the larger assets fees you know 100 200 000 or do you have a box that you simply look for um i don't have a box i mean i threw away the box i look at each note uh you know i don't i bought a five thousand dollar note uh a few weeks ago okay yeah i mean hey i didn't do hardly any checking there he was a first man no wow yes i did and i gave him 2500 for it twenty five hundred for uh an unpaid balance of five thousand unpaid balance five thousand okay and how much time is left on that uh that three years something like that wasn't they just needed money yeah yeah again i didn't check any anything well i take that back i did go in online you know and does the property exist and uh that sort of thing but if you do too much due diligence and paying for things when you're buying notes like this your yield just goes you know how much changes you want to do yeah yeah so what sounds to me is that most of the time notes if the lender is a good person the borrower's contraction you can work out a number that makes sense to both people generally yes if they really want to sell you're not you have to get over this is the number one note myth that note holders have that this hundred thousand dollar note is the same as a hundred thousand dollars cash yeah they think if i give them eighty thousand dollars for it that they're losing twenty thousand dollars right right and if you don't get over that myth it's going to be hard to to buy it from and the second myth you've got to overcome is that well if i if i have to foreclose i'll just take the property back yeah and they have this dream that it's going to be in the same clean crisping condition yeah even for the catcher keys it's not usually in fantastic shape no again they're not wearing the flowers and moving out at the same time you know yeah but uh along those same lines nathan won the cash for keys yeah i have that property sold second they moved out yeah that's right i mean uh let's let's i'm gonna go play with you nathan you're in an event hey i'm foreclosing on this house what are you gonna give me for yeah yeah what kind of deal yeah you know i want paper i don't want any money for you you know you can exchange a minute as far as the cash flow right yeah you're doing exchanges then right you're doing instead of a cash deal you're exchanging hey give me a paper for this property i've done that yes that's what got me into paper to begin with is that we were buying paper at 18 yield and uh trading it in on real estate it faceback wow i love america yeah we had someone on fubisco and he was sharing about doing exchanges and how the whole game is to get bigger and bigger without using cash because cash is the most difficult threshold because it's the highest priced item that if you can exchange a property for a performing note it's so much better because the discount is not a 1031 exchange but you can swap it couldn't you it just swap you can swap it but it's not a 1031 exchange exactly right so you're doing you're basically instead of getting passed for a deal you're getting another deal and most people don't understand that because people say well you have to give cash for a deal can you share a story where you literally instead of getting cash for an asset you've got something in return oh yeah i've gotten votes i mean yes the first exchange that i did it was in my exchange group and this other broker was involved and we were doing all the math and looking at it and his client and my client and when we got to closing there wasn't any money for our commission and we said what the heck would we do and so we were looking and uh i think it was my client at a bass boat and if we told hey he throw in the bass vote for our commission we're going to play an act and that was it yeah that was five thousand dollars and i didn't know how anal this guy was until then because it's over with and now he says tom we need to discuss this basketball i said okay let's go we'll have lunch next week when i get there now this was back before computers you had to type it on a time he had about a 10 page calendar written up now in january so i want it here and here you can have it here in germany and i'm just looking at it mom are you kidding me just just give me my half now well i don't have any money well just give me a note and he said uh what interest do you want what interest do you want you know just give me make a short story long uh i ended up with you know with a note for twenty five hundred dollars where he paid me off something like 100 wow yeah that's okay and for those people out there who are looking to get three four five thousand dollars a month income versus buying performing notes doing it this way and being creative you can super size your returns to getting much higher returns than just buying normal paper or buying partials this is the matter of doing it yes if you even if you have money you need to find investors with deep pockets that will trust you and buy is like the million five no i it was i don't remember the eighteen hundred something a month i was getting uh you know ten thousand dollars i like that yeah that's great yeah that's that's how you get that's how you get rich yeah everybody knows what the rule of 72 is yeah you find 72 into are you interested in 72 you know well divide 0 into 72 and that's what happens oftentimes when i'm doing my 10 for 12 my any of my i call the 10 for 12 the perpetual partial because in the month 10 or 11 i'm going to role play again here david yeah you're you're paying me and i'll come back 10 or 11.

davey that notes coming up in this thousand dollars a month you know i gave you 10 000 for it you want to do it again sure it's easy so in the 10 for 12 situation are you still collecting from the borrower and forwarding it on to david yeah yes yeah there's no assignments or a launches it's literally you get the payment sent to me you're you're not the note is it's a special document have you ever seen a partial documents and uh it's an assignment and then they will pay me the money and at the end when it's the it's over with and i'll sign a sort of release and then the note converts back to you for those who may be unfamiliar with the paper what what kind of paper do you put together for your parcels uh i have a contract and there are hard contracts and soft contracts if you're selling a partial you want to read those babies there's some of them i've seen out there that you're you're in default just as soon as you sign wow i mean uh but basically mine says i'll have what what i'll buy what i'm buying it for how many payments and i i have you have what what's called you don't have time to go into it but it's called schedule b okay and then a default or early payoff i will have that schedule be in there parenthetically if people will email me i will send them a link to get my book who gets welcome to been an early payoff i'll send them that for free they'll email me uh i also in excel or word i will make out that amortization schedule b and give it to them and have them sign it that way if there is a goals in the default and or if it's paid off early here it is everybody knew what was happening and guys if you if you ever need timed information and you watch this later just shoot us shoot me an email um and i'll get you this information and link to all his websites what not yeah if you need i'll say this interrupt you uh if if you need help on anything give me a call yeah.time you'll have to hang up on me [Laughter] it's just sharing of ideas right it's well i i my partner gets mad so hear you waking you down i find out what's going on out there yes you understand i mean there's somebody that's new but hey they're running into a situation and uh maybe i can help them maybe but i'm learning something as i'm going along hey why not try this technique on that situation yeah they're just and it could it could be a situation where you didn't just think of it right you could be a situation where you're just in the weeds in the thick of things and someone come by and says hey you forgot about this yeah i call people all the time and just sound use them and people call me just use me as a sounding board yeah that's all i am is a sounding board yeah and isn't it funny when you're talking to somebody things you you know what the answer is but when you talk to somebody and uh what are you going to do about so-and-so talking yeah and i do that all the time because we do get wrapped up in our own head yeah and i think the networking allows you to talk out loud and hear your thoughts out loud sometimes you can come into closing yourself other times someone else says hey i've been there here's what i did right exactly and what people find out and i i'm super impressed with the space is that people are willing to give a lot for free and share and give and all stuff which is amazing where i don't know many other real estate worlds that do that kind of stuff but the amount of free information and resources available is a mess it's crazy so just yeah yeah it is uh i got a lot of free stuff but my only caveat to that is myself included do not take legal or accounting advice don't give it either but but you're professional yeah don't give a quick giving it so tom i know you you go around speaking right um i know i've seen you before in mini cop do you have anything coming up that's something that people could see you live at we are planning something on october the 9th in san antonio but that's just in the making and with the new virus coming out you know well over there this week you've got to wear a mask i don't know what's going to happen next week so it's still in the making if people would like to attend that if they'll go to my website and sign up for my newsletter it's free uh that's another place you can get some of my varieties and just get good information i'll notify people there and when it's going to take place but it'll be in san antonio clean it's on a friday and a saturday all day friday and half the day saturday gives you a chance to get out of there yeah yeah yeah so you know i would say that my time at those conferences and just watching you do things on the board because most note investors in our group and our followings are institutional they're not the sour finance you know kind of people um i want to make sure they understand that that even though they may not be a sour finance they're known people so just walk around asking questions and talking to people they're going to find deals yes at the last seminar i gave in san antonio there were five deals i know of of people within that room wow that just yes just and uh i don't know 67 i'm not sure how many you know but that's a lot of deals because you know yourself and this is sad eighty percent of the people who come to these seminars will never buy a note will never do anything it's with all the seminars they'll take them their seminar judges which is fine but uh it's uh i met somebody i don't know it was a while back that i think i saw every single conference and weirdly enough i asked him one time you've spent all those time money and energy have you bought a note and the answer was no i mean i saw him for years shockingly there was nothing i could not believe it i just didn't understand like you know i get the fact you shouldn't just pull the trigger in his pot right you should take it slow but just maybe teaming up with someone not even jv with them just teaming up and say listen can you look over my deal just let me know and i always express people people spend hundreds of thousand dollars go to college and while they're in college they absolutely learn nothing with a degree until they actually graduate then they start making money if you spend that money buying deals and learning just like college and don't make money you have just as much education so you were willing to spend 100 200 grand on college to make no money where you're depending on learning right now on notes and not willing to spend the money to learn spend some money do the deal if you lose the money it's just that's my uh my my soapbox stands right yeah uh that's the reason i don't do mentoring anymore i used to do a mentoring program and people would pay me they they didn't they never followed through yeah that's pretty good all right here's what i want you to do this is before the computer i want you to go down to the county and i want you to start looking up deeds and trust and release the liens because you got to know the paperwork yeah and the sun you know note assignments just look them up and and make copies of them and bring it well i didn't have time to do that how are you going to find back then how are you going to find the note and one person it's like you said dave uh she had been i was the third one i said you know all of this uh here's what i want you to do here's i i had some names here this i want you to send them a letter i want you to call them up and i want you to make them an offer just make them an offer yeah well i don't know here look in the dallas morning news i want you to read it from cover to cover and see if you see anything there man shop for making an offer on the note no but she wouldn't do it i said scary yeah did you you're and this is to everybody out there too and i've got it you got to get over what you're afraid of do something each day that you're hey i don't want to do this i'm afraid why i just think you guys are like that sometimes you know i don't want to yeah and you know what i think that once you get comfortable i remember when i first got in calling an agent up to ask questions about the property area was probably the most difficult thing i can do after a while i don't think twice about it if calling them right that fear of calling them and getting it either negative or positive or any response goes away with time so i just encourage people just start doing it yes get into it just get because the beginning is going to be a mess and you and just when you get into those problems go up to somebody who's done it before and ask them hey i've got stuck here what do you recommend what are your thoughts you know we run the investment community for the weekly one just to network with other people right there's people that even though they're newer may have an experience that i don't have for knowledge i don't have so i encourage people constantly be networking somehow some way yes i help people all the time they'll say how much how much do i owe you and here's the way i do it if you tell me what it's worth that's it i've been paid as little as 150 and as much as seven pounds there you go but i i don't know how much it's worth if you call me up dave and i'll give you a suggestion and uh oh yeah how much is that worth i don't know yeah maybe a gift card you know yeah a little gift or something right yeah dude always i always cross people's phone with something even if it's a gift card so madame years ago now yeah yes so what do you what do you see going forward here tom what's your uh do you have a magic crystal ball let's see what's going down in my newsletter i do give an economic uh article because i am a good economist and yeah guys i i see storm clouds coming i mean the price of real estate is directly proportional to the financing available that's just an axiom sure and a lot of these uh fha and jennie mae are being bought up by the federal reserve in the june meeting they were discussing whether or not to start tapering off and if those go away what happens if those go away it does that does the price that real estate is directly proportional to the financing available what happens when the financing goes away real estate goes down right yeah and then is it seller finance that fills the void or how does that void get filled uh maybe maybe seller financing they fill the void yeah that i don't know see the reason i'm saying that yeah is 10 years ago you could plan on certain things happening sure you did not have to worry about what will congress do yeah this week what will they do this week i mean it's where they're republican or democrat yeah just uh you can't live in a business where you just constantly change it's it's just real hard i just say keep your powder dry and don't stick your head in the sand but uh be careful going out and using your home as a atm machine i i'm very surprised that that hasn't started yet right because that's what happened back goes six or seven and people's you know right before 506 is that people took out heloc's people took out second loans i know somebody in my own street doubled the of their house within a year and i i'm amazed that we don't hear more about that where the second space isn't getting where we're seeing everyone doing helocs maybe they're out there we're just not seeing it but we're just not i i i'm amazed that that maybe people didn't learn from last time hopefully they did but people are dumb right well they keep the banks they keep doing the same thing yeah yeah we're seeing the same cycle happening all over again it's just a matter of just a matter of uh about different people in there yeah remember they're not using their own money so yeah it's uh that's how you guys remember note one yep that's what happened to them they were really brokens okay they they had a hedge fund that they were selling to and they were buying notes at 92 with a credit score as low as 600 at closing wow and i was telling them hey guys this this is a bug looking for a windshield i don't know what they were selling them to hedge funds but when the hedge funds went broke they were left there with no worries yeah and i had a colleague who she had 15 notes entitled closing and closing with no one often they went under ouch yeah they had to put her on suicide alert oh she you know she's already had the money spent yeah wow her money is somebody that's probably somebody else's money as well yeah it's scary right now with you know with the government giving so much handout money that i think that's kind of holding things in tight right now and the curiosity what happens when it releases so uh again that's in my uh risk in the solutions that the different risk the note buyer takes and the solution uh but there's one solution the risk that i don't know the answer to and that's politicians changing the right but that being said unless you want to stick your head in the sand if you buy a good seller finance note i'm not a a non-performing note guru i mean so i don't know but you buy a good not a seller finance note especially on a partial that to me is the least risky investment that there is today yeah you know interesting i i we always tell people i don't see a lot of parcels for sale be honest with you we don't see them come through and it's definitely different channels but buying a partial for beginners you're right the best move because you're handcuffed to the seller during the entire process yeah well no not really you're not unless you buy half the payments so that's another way of buying a partial you're getting a thousand dollar a month payment in and updating that uh but i need 500.

okay i'll buy 500 a month from you for 60 months now i'm tied to you yes but if if i buy five years worth of payments period you're out of the picture baby what i'm saying is if it goes to fault it goes bad for a new investor typically the contract's written up that that that seller will either make you whole or bail you out or hold your hand that's what i mean by handcuff that don't help you if the milk goes bad yeah uh that's why you need an attorney i can help you on the on the uh investment side but you you need everybody ought to have their their attorney and your police stands notes not one that has that says they did you know you should punch those out there yeah and it sounds amazing you mostly buy your partials when you're wheeling and dealing these seller finance paper versus buying it from nathan or buying from me you're not typically buying a partial from us you're buying it from a seller finance owner yeah who said listen i don't need all the money i'm super some you know 10 grand 15 20 grand you know kind of money yeah yeah 10 grand 15 grand those are the smaller notes yep the person i talked about he needed 150 yep now what i'm doing now that and uh last year i was having a lot of success in it not so much this year as i was buying notes at closing and i'd get something like a 23 yield about 18 18 20 months worth of payments oh you buy a partial closing at closing and that would give the no that would give the seller the property some extra money and or if the buyer needed extra money to get into it it would give them extra money to get to them are you typically hooking up with like title companies to do that are you typically hooking up with title companies no i'm hicking up hooking up with the buyer and sellers before it happens before it happens they'll come to me and say tomorrow um most of them are investors i don't like i don't like dealing with mom and pop uh i like dealing with investors because let's put it this way you two guys cheat me you know i'll clap my hand or you're good you know but if you cheat mom and pop get rea i hope you've got good lawyers and and a bunch of them because you're going you're you're going to jail these investors will call me up you know hey i have a house here about 200 000 and i uh i'm giving them 10 down and but they want 20.

what can you do all right i'm giving another 10 000 and then i back into it you know and generally it's uh right around 23 percent yield that's important and the way i do that is output 18 yield and the amount of money i'm giving them and then i see how many months that is and nine times out of ten they'll have uh like 17.25 months okay i i'll round it up to 18 yeah and that jumps at you wow over 20. not spend time with 10 is a small number it doesn't take much of a discount to jump at you skydiving yeah yeah tom that's great it's amazing i encourage everyone you don't have connected with tom get connect with tom if you can get to the conference in san antonio get down there just being in the room and hearing this over again you start learning just how tom learned too right and as me nathan here comfort again it's get our wheels turning right it gets our brain thinking and be more creative being outside the box thinkers so i encourage you guys to hook up with tom on his website his email um and it's been a awesome friday um i'm taking the rest of the afternoon off to do some math and figure out some angles here um but i appreciate your knowledge your experience and how willing and giving you are it's it's been a pleasure yeah anything i could do to help you and lately you were talking about you didn't understand it if you get a deal call me absolutely yeah and we'll and i'll lead you by the hand and then uh where you feel comfortable with it and then i'll tell you what you're going to do you're going to go and it's so simple it's so simple once you get it then you get it yes yes yeah yeah just got to do it just got to do it so thanks so much for coming on tom that's great yeah and i enjoyed it guys all right guys thank you so much [Music] all right everybody dave fitz here from jkp holdings alongside me nathan turner good afternoon man you're doing very well very well as well is going with everybody else um i think you know we've done a lot with notes in the past um i think that we have shared a lot of information and i think summertime is tough for a lot of people nathan what has it been like for you in the last couple weeks for notes i think it's just kind of weird for you lately you know one of the toughest things about summer is just trying to find the balance of vacation and work and you know and then i've got extra things going on now that uh they're coming up i'm doing this fund and everything and some it's just all these different things coming together and just trying to keep everything balanced yeah uh but yeah you know you do what you can it's funny because you know summertime you want to get out there you want to do things with the family and the friends and whatnot at the same time we've got so many things coming on and going through and sales we're actually selling a couple assets ourselves um and we're looking to buying a small pool nothing big right now and we're going through that process so we're excited by that stuff but at the same time as you don't be tied to the chair looking at assets when your kid's outside running right so it's trying to block off the time so like for example next week tuesday wednesday thursday we're going out vacation we've got some camping we're doing like a tree obstacle course thing and all this kind of thing and and the temptation of course is to take your phone along and yeah keep checking in and stuff but no oh so if anyone tries to call me next week middle of the week i'm not going to answer everyone call nathan give him a call um well good for you man um and i just want to remind everybody um those who are looking to get into stuff like this we have a great youtube channel all our videos have been on there we do weekly recordings um we have a beginner series for those who are newer and we have also have an investment community where we weekly um to talk about networking and whatnot and it's so key in a time where we haven't been to a conference and feels for forever getting together with other like-minded people is essential so be sure to get on there um to you know like subscribe to our channel and catch up on all the different people we've had on now nathan we've talked about partials in touched upon these things and i'm going to say that most people felt really good about what we talked about yeah we we get into we start feeling real good about ourselves when we can figure out a financial calculator and figure out a couple of a couple of variables and then you and then you talk to tom tom yo may surprise you i surprised everybody right um it's interesting that we bring tom on i shared before we went on um time was someone i walked into the room sold a guy and says he'd been doing it forever i'm probably going to learn something yeah and then i did the point where i actually had to buy the recording of the conference just so go watch him again yeah so ellen i see you there's a semeko in the background hopefully it's fixed if what we've learned in that conference come across here you're gonna i'm gonna watch this video again the math that tom knows is ridiculous so tom how long you've been in real estate how did you get into real estate oh lord uh i bought my first note in 1980 uh this was back during the time when real estate well interest rates were 18 yeah and i wanted to get into real estate so at that time in texas all you needed to get your real estate broker's license was to have enough hours in certain subjects and you could go straight to your broker you didn't have to you didn't have to go through salesman so okay i submitted my transcript and they said yeah you can take the test and so i took the test and uh back then it was number two pencil handed in and they didn't grade it right there he had to send it off to austin texas wow yeah about a week later i got a little thing in the mail said pass and i don't know how i did on it because some of those we got all i know is they had some dumb questions yeah dumb and so i took my little letter to the number one brokerage here in dallas and said let me lucky i'm a broker and uh you guys are the best and i want to learn how to make a million dollars they said fantastic i'm glad you came this friday we had the speaker coming in and he is fantastic we've been waiting for him and uh so come see him and i when it was a high school gymnasium i mean it was and it was full yeah and i woke up down to the front of the road i'm sitting there and people introducing myself and they're introducing me and there's electricity in the air never said yeah he's finally here yeah yeah he walks in and standing ovation you know i thought the pope had walked in or something and he started talking and about 10 minutes in he said now when you have open house you want to have the coffee extremely hot so they won't drink it as fast and they'll stay longer and it will give the appearance of activity and i'm looking around and people are taking notes and i to this day i don't know what it was but i just i just get up and start walking down the aisle and walking back and everybody's watching me and my the broker who i talked to says where are you going where are you going and i said if this is what you're going to teach me i don't want to learn and i walked in and got my car and i said my god tom you just told the number one brokerage in dallas to bend over and crack a vertical smile and you know what are you going to do well at that time during the radio they had little interviews with people who who were in town and a guy by the name of ark hamill was going to be teaching a course on how to buy businesses with nothing down and just different creative ways to buy businesses and so i went to that saturday and my mom's just blown away and i told him what i was doing asking can you do this in real estate and he said yes you need to go to the creative real estate uh convention next week and so i go there and it was just mind-blowing uh i took a seminar there and i i smoked at the time i would get up and leave to smoke a cigarette and come back and i hadn't missed the thing because i did i still didn't understand what the heck they were talking about was changing and it was then i realized well i have all these degrees and this uh well rectal thermometers have degrees too it doesn't mean anything but i learned how to exchange real estate and they always were doing notes and it just went and i took another course and still quite didn't understand it and then i went up to salt lake city a guy with the name of john berlin and there were only 10 of us there and on my right does anybody know who robert allen is yeah yeah he was sitting on my right and behind me was john bailey b-e-h-l-e anything you can get from him he takes things to a different level he was behind me and i didn't know who robert allen was and bergen handed him his book and said would you autograph yesterday and i looked over at him and said wow you're as dumb as i am but there it all clicked in and i just got the calculator and i mean i was up all night my wife would say you know go to bed go to bed you know okay so i bought my first note and i did everything wrong with bike then i took a sanity test and i failed and that qualified me to be a note buyer [Music] that's about right david davier got you on mute man dave's on mute sorry for the distraction i'm trying to get the some of the audio it seems to be echoing off somebody i'm not sure who it is but they're saying they're they're having a big echo i don't know what it is so guys i apologize for the echo um we this is recorded but we're gonna try fixing it um i'm trying to fly around real quick uh micah yes appreciate it so hey you mind if i look up so i don't forget it at the end because people are going to want to know how to contact me yes yeah it's uh go to my website www.hp as in henrypaul notes in otes.com all right i'll put in the chapter for him um you know hopefully we got this the audio figured out or at least comparable uh for everyone i apologize for it don't know what's going on but tom some people get into notes and they say i'm gonna buy a performing note and i'm gonna make a million dollars doing it and then some people get into it like rentals and say i ran out of money i don't know what to do i can't do anything and then we walk into the room and you sit there and you see a gentleman talk numbers and share the information that you have and show how you can take a simple deal nine percent interest yielding asset and super size it is like best called it can you share a little bit about that for those who may be in a deal and just they're out of cash right they're both a couple performers they have no money and they're trickling with the dollars coming in oh they don't have any money they need to find i call it the deadbeat brother-in-law or an investor hey fellow no investor are you looking to learn the basics of note investing so you can get started however you don't want to spend a few hundreds or thousands of dollars and hours online on some training program have you thought about attending a notes conference however you don't want to spend the money or the time away from your family well we have a tremendous beginners video series of 20 different topics with each video being less than 15 minutes this means each video is less fluff and direct to the content visit slash www.jkpholdings.com dash series to learn more again www.jkpholdings.com slash beginner dash everybody's got somebody in their family that uh you know he's he's a deadbeat and he's not too bright and at thanksgiving uh your mother or father i said you know help him out you know your sister's in trouble help him out and so he does have money to invest that's what you need to buy investors or deadbeat brother-in-laws because they can uh uh oh they can make they can make you money to give you an example i'm going to start off with the 10 through 12 technique that's where you buy uh about 10 months worth of payments for the right to receive 12 months for example if your payments are a thousand dollars a month i'll give you ten thousand dollars for the right to receive 12 pounds your yield on that is 35.07 percent yield i don't care what the numbers are every time every time just just test it out now that's a concept it's not a technique the first one i used i was cultivating this investor who was he he had lots of money he was a multi-millionaire and he liked passive income and i was trying to sell him on notes and i take him to breakfast you know two or three times a month and he knew how to use the calculator and i knew what i was talking about finally and he said well yeah i'll entertain him well like the first note i got that i could take to him it was a million five and i think the payments were twelve thousand some odd dollars a month and the guy needed a hundred and fifty thousand dollars so i uh well he said what can you sell it for and i said well i'll do the ten for twelve that's that's 120.

and he said well yeah but i need 150. and this was another god thing and i don't know how i did it wasn't any mathematic i said okay i can do that i'll get you 150. i'm gonna need 16 payments and he said okay that was 43 and i'm shaking i mean uh let's put it this way if you were to fill my car up full of gas it would have doubled my network [Laughter] i didn't have any money but i had this investor so i told the the note seller listen let me go rearrange some assets when you hear that that means let me go find the money yeah well i talked to him and it was on some farmland and he knew all about it and now what you think about this this was a million five note he's going to be putting in 150 000 or he's going to take over first position is that safe yeah yeah if they quit paying you and you go to foreclosure are you going to get your 100 000 back oh yeah well he went for it the only thing is he said tom i trust you however you don't have anything in it so i said how about if i put ten thousand in he said that will make me feel better i didn't hit 1000 so i went to the bank and i borrowed ten thousand dollars for 90 days make a short story long i got something like 18 like 15 1800 a month for 16 months and we renewed it a second time and that was all knowing what to do as well as finding that investor if you don't want to use your own money you need to find passive investors that trust you and the way you get them to trust you is you say what you do and do what you say and if you can't do it tell them i can't do that it's uh it's only a rat race if you run with rats so you know just surround yourself with the people that you trust things like that 10 for 12 where did you learn that was that at a seminar i i don't know a lot of these techniques i wish i could tell you i thought of them i didn't but i it's been so long ago i don't know who taught it to me it i just don't know but it doesn't have to be 10 for 12 like when i turned it into a 10 16 uh mike mitchell uh he's abilene he did one i believe it was uh what uh 16 for 24.

he gets a 42 year you just start talking with him and then look it's there and people ask me where do you find these notes you don't find them they find you some of the best videos you guys got i bet you were out looking for something else and it just dropped in your lap is that right i mean how does that happen yeah put all these hands out there and do all this advertisement and something just drops in your lap and uh uh how many times you love rolls it's a learning curve now i don't suggest people quit their day job and start buying those now's not a good time i'm uh most of the paper i'm seeing now is what i call toilet paper uh it's it's i don't want it and neither does anybody else yeah which brings me to an accident if you get nothing out of this recording like this yields are not realized until you're paid [Music] it's so funny to say that i've talked to so many sellers that say listen this thing is performing for 24 months [Laughter] you know how many times you just change the lender and they stop paying for whatever reason they stop hands all the time that happens yeah yeah that uh sometimes i don't think they were paying to begin with that's the reason when i'm buying notes always have an exit interview by that i mean i'll call him borrow her up and dave i'm going to role play with you here sure i'm going to be buying you know now rest assured nothing's going everything's gonna remain the same the only difference is uh who you send the payments to and uh you know nathan's only the note and you'll be getting information from nathan i just wanna make sure we're on the same page i'm showing a balance of that right yes yes and you've been making payments yes then that makes me feel a little warm and fuzzy but you'll be surprised how many times you'll get well no i made a three thousand dollar extra payment last year that the balance is all up so i'm not saying the no seller lied that's uh i'm gonna use insurance terms they you never lie on your application you misrepresented yeah so tom has you know one of the situations you talked about is that this is a difficult time to be in notes you know for those people who are looking to get in are you saying they should avoid it or do you think that i don't know you need to learn and risk versus reward if i had to start small in small steps today because what's what are the interest rates going to be tomorrow right are they going to put a moratorium on foreclosures and evictions that's going on like obviously i mean do you understand what i'm saying yeah you can buy a note that's perfectly good and hey once these people realize they don't have to pay uh would you hey you don't have to pay hey honey go ahead and buy that big coat yeah yeah you know uh it's like what 2008 and people were telling uh borrowers to let their note go and be default and they could negotiate yeah yeah so i mean we've got one of those situations happening right now as we speak uh it's happening in washington right now where the eviction moratorium is supposed to run out tomorrow and now all of a sudden today they're saying well maybe we'll extend it maybe we'll send it and they're trying to pass something new right now as we speak so we'll see how that plays out yes in my seminars and uh i do also in in my newsletters most people think notes are discounted because of the time value of money well that's not true if that were the case if somebody offered you a 12 note and you you wanted a 9 yield you would pay over bar wouldn't you right matthew says yeah if you want to do that call me i will fill you up because what happens now if they pay off the next day yeah you've lost money there you go wow notes are discounted by the risk that a note buyer incurs proportionally so tommy you only you only buy stuff locally is that right just in texas i only buy in texas very rarely do i get out of texas and for the reason that it's hard enough keeping up with texas law much less keeping up with oklahoma utah california uh it's uh in fact i don't want to know california law i just uh it it takes as long as hard enough right and that texas law is usually pretty easy right it's one of the easier states in the country but then you get into other states where it's just ohio is just always uncertainty maryland always uncertain oh yeah and and new york we have uh mortgage states instead of digital trust with dodd-frank where you have to wait what uh 180 days or something for you foreclosed before that in texas i mean you could foreclose within 40 42 days lethal injection yeah we used to call it post them and toast them so you know being in the space you probably know as well we do you're always learning right it's always an illustration even if you have the same kind of deal the deal always teach you something new has there been anything recently that you can recall that just stood out to be different something that just was amazing that you just didn't know no not really that i didn't know uh the techniques that i teach somebody asked me how many ways can you buy can you think of divine note i don't know you give me a number and i'll add one more you tell me everyone that you can do it i'll add one more because you can combine these things in so many different ways uh it's a i i guess the most recent that i've used that i haven't used in a long time is the two note partial are you guys familiar with that i i don't think so some attorneys and other and say that buying a partial is immoral illegal or patent and that it's a security blah blah blah blah well you can i had one recently where i was gonna buy a partial of this note at closing just because they put so much down i generally don't buy notes at closing and she took it to her attorney and he said no i don't want him holding the note because i hold no that's what i don't like about services i'm sorry they want to hold a note and understand why but if they lose it it's my butt not there and all they can do is say i'm sorry so i formed two two note partial and basically what it was was for 60 months i put the interest rate in i wanted and then the second note was zero payments for that 60 months after 60 months kicked off was was through and my note was gone the second note would kick in and it's the same to the bar it's the same thing but now you have two notes uh there's two ways to do it two notes secured against one data trust if you if you're doing this if you're selling that and you want to sell maybe the first note talk to your institutional funder or your note buyer and ask them how do they want you to do it some of my institutional funders don't want two notes secured against one data trust they want a first note and then a second note and then you put in the language there the first goes bad in real contact the second and they can make it up and that sort of thing so sure is that clear as much this is going to be like taking a sip out of niagara falls i'm sure yeah that's interesting so so you got the first note and then once that you set an expiry date for whatever five years or something you say you're instead of buying a five-year partial you had one note for five years the second note was a remainder of what the first note was but no payments it was drawing interest all this time so that when you take it over it's the same thing as if it been amortized for five years oh interesting okay and why would you do that versus a partial what would be the advantage of that i uh one if the attorneys don't like it and uh you mean if you're selling a partial or buying a person if what's in between doing that and a partial why would you do that right with the partial like if uh you buy a partial for me i have to give you the note i don't like that okay i just i i don't don't do it so uh i don't mind giving you the first lean note and let you holding on to that and i'll keep it uh personally i do like partials when i'm buying them rather than the two no partial there's there's some moving parts in there that you got to send them oh my mind just went blank when they pay it off you gotta send them saying hey uh yes at least whereas partially it's to me is a lot smoother it's just a different way of doing it so partials what we're learning over our time meaning being together they're so we're used to the traditional partial it sounds to me is that there's a whole lot more different kind of partials out there can you share some ideas of how partials can be structured i think we saw an 84 return can you share some of the other techniques you've seen with partials oh yeah uh nathan do you know uh dude marquise don't you i don't okay if you see him you'll know him okay he's a colleague and he takes my newsletters and takes his taking my courses in my no professor notebook i have a section where if you buy half of the balance for half of the number of payments whatever the interest rate is on the note you double it so again yeah break it down all right let's say you have a a 360 month note and the uh it's a hundred thousand dollar note if i buy give you uh 50 000 for 180 months whatever that uh interest rate is you just double let's say it was for nine percent it goes to 18.

yeah okay what happens if you give a third for a third [Laughter] well in my newsletter this time i uh relayed one that duke did he did a third for a third and then he combined it with finding somebody he had an investor who uh uh put in 15 150 000 on it he had duke had to put six in 16 sixty six dollars or something and he ended up with a what a 93.04 yield good grady that's crazy i love america so you can't do this in russia no no so yeah you're you're really doing the third or third is crazy math right and i challenge people to take the time and do it you know i'll do it as well and just see how it works i saw it live and i didn't believe tom when i first saw him and then i realized i got to sit down and watch and just learn because it's the creativity i think that we lack as institutional buyers where seller finance notes you become creative you become outside the box thinking you know tom i know you've pretty much bought simplified have you bought institutional or mostly just seller finance paper just i just seller finance institutional uh they don't want to sell me their paper okay okay but they don't want the discount i don't buy a non-performing notes okay if you want to learn about non-performing notes by performing though very true yeah so i mean pretty much your guess is that most performing notes go bad for whatever reason right there's all kinds of and it could be intentional or non-intentional right things happen to people along those lines i've been doing this since 1980 and i've never had to foreclose jesus i've had him go bad so how do you avoid the foreclosure you just work out some kind of a modification exactly cash for keys like i'm going to role play with you nathan i you're you're behind my nathan you know you missed your payment this month uh you know i got to tell you this vlog says you know i'm attempting to collect the debt but what's the matter oh you lost your job and then uh that's terrible i'll tell you what i'll do i'll put your payment on the back end of the note and let's just see how you're doing next month ninety percent of the time see i've already interviewed them i know they're good people or i wouldn't have bought them no nine percent of the time they found a job or something but if they didn't i said nathan have you thought about where you're going to move i know it's tough and you're going to need uh some help moving uh yeah i'll have a moving van over there first of the month i'll pay for it and you're gonna need your 400 aren't you walking money uh yeah just keep the place clean and watch it and uh and we can get you out of there as famous as possible what do you typically do if the borrower doesn't respond you can't get all of them i've never had that happen wow i've never had the that's where if you do your if you do your exit interview that tells me right there but if i want to buy them a lot of that tells me sometimes i just i'll talk to the bar and the hair goes on the back of my neck and the dog starts yelping and everything i don't want any part yeah have you ever done that just talk to somebody and yeah and you can't put your finger on it yeah it's just uh no i don't think i want this one so that's when i send them off to my competitors okay and how many how many notes do you have at any given time i've had as many as a hundred and as few as oh lord when i started off i had one you know i don't know i don't keep track of all that stuff i guess i should i'm just not that anal to know hey i've got this much in my portfolio i've got this much i look at the cash flow coming in and cash flow going out and uh well that's just me i'm uh i work for the government uh right after i got out of college and i learned right then not to get caught in a paper trap where you're spending all your time doing statistics you're not doing any work you're doing you know how many people are doing do so uh i do keep track of my letters that i send out in their postcards how it's doing but uh other than that do you use a servicer for monthly mailings or do you not use them at all oh well i do for my monthly mailings i uh i move around and i buy my list uh from a from a person who sells lists of note orders okay and you get a meal between 10 and 12 cents and then you you you sell your mailers every month and then when you go to buy it you're having that conversation you're getting a feel for who they are and feeling out if it's something worth it for you what do you think that's a lot of processes because not a lot of them call you back i'm sure what do you think the typical response rate that you're getting right now not a lot of oh right now my response rate is uh it's not quite zero but it's it's approaching it i'm not even getting tire kickers wow and i've heard others are having the same problem and i switched my letters up i switched my postcards i switched everything up i'm just not getting the response and i know they're being sent out because i in my note service by noting this guy that's uh gives me the list i have some of my friends on there you know and they'll tell me if they got it or not you know that's your problem yeah i'm just gonna check them any ideas like any ideas on why there's no reason i had no idea that's so strange i i don't know are you guys having the same thing we're not doing the postcarding right we're gonna i'm gonna be starting it probably pretty soon but we're not doing uh we're typically buying either cfds or from no brokers or from you know funds directly or for other investors right we're not dealing with those small time mom and pop sellers so we're not having the same experience because we're getting the list sent to us of available assets oh you're aggressive buying cfds uh that's that's our buddy over here don't do it in texas no not in texas um but there are a lot of good states where they work well what do you do if uh uh they they come up and say you don't have jurisdiction you know you don't you can't vietnam you don't you're not it's never happened all right don't do it in texas they'll they'll say that every time you have a party you have no authority to evict me that's just it yeah so no i i don't ever buy them in texas for good reason you know why i don't buy outside of texas i know texas is long sure yeah yeah they're not usually available in texas but no so what is the typical asset you're buying are you buying the the larger assets fees you know 100 200 000 or do you have a box that you simply look for um i don't have a box i mean i threw away the box i look at each note uh you know i don't i bought a five thousand dollar note uh a few weeks ago okay yeah i mean hey i didn't do hardly any checking there he was a first man no wow yes i did and i gave him 2500 for it twenty five hu....