Post on 16-Feb-2017
transcript
Profiting from America’s biggest Note Opportunities
BUYING REAL ESTATE NOTES The Ultimate Investment Cash Flow
Death of REO’s
3 Core Things• Unprecedented
Market Conditions• Understanding The
Discount Note Industry
• Outsourcing the work!
STOCK MARKETYOUR MONEY
(ANXIOUS MONEY)
Where is it going?
XMarket Crash 2008
Source: NAR National Address
2013
5 Years
Only 4½ Million Sold
2008 2013
Sources: Reuters and ZeroHedge, Bloomberg 2013
Where is all the Inventory?Blackstone 45,000 SFH Carrington 25,000 SFHColony America 9,931 SFHSilver 5,000 SFHTricon Capital 4,000 SFH CA, FL, AZ
3,600 SFH AZ, house in last 5 yearsIL, CA, IN, NC, GA, FL
PLUS Billions more raised to buy SFH foreclosures and
REO’s
800,000 in the last 5 yrs
Who Are We?
© Copyright CFG, LLC 2014. All Rights Reserved.
© Copyright CFG, LLC 2014. All Rights Reserved.
What’s a Note?
1,000
Eddie SpeedP.O. Box 1234South Lake, TX
John Eddie signs a note for $1,000
John Doe 1,000
Sells the Note
John receives
$850
Check Cashing biz
receives $1,000
at a discount
Buyer
Ownership Deed
Seller
Mortgage NOTE
Mortgage Lender
WHY NOTES?The Surge of Growth Ahead!
NOTES
STOCK MARKETX
Mortgage LenderColonial
Toxic Assets
Market Crash 2008
With relatively little fanfare, the stock market has become expensive again.While the rest of economy has been growing frustratingly slowly for almost five years, stocks have been rising at a boomlike clip. An investment in the Standard & Poor 500-stock index would have doubled from early 2009 through early 2013 and then gained an additional 18 percent over the last year.Relative to long-term corporate earnings – and more in a minute on why that measure is important – stocks have been more expensive only three times over the past century than they are today, according to data from Robert Shiller, a Nobel laureate in economics. Those other three periods are not exactly reassuring, either: the 1920s, the late 1990s and in the prelude to the 2007 financial crisis.Wall Street, of course, can always come up with justifications for high stock prices. Remember: The Internet changes everything. Or: The business cycle has been repealed. Some of the current justifications even have a ring of reality to them.
Time to Worry About Stock Market BubblesMAY 6, 2014
Nobel Laureate in Economics: Stocks have been more expensive only three time in the
last century: the 1920’s, the late 1990’s and in the prelude to the 2007 financial crisis
Realtytrac, Bloomberg, Wall Street analysts and Bernanke projected waves of foreclosures starting in 2012 but it never happened:
1. Short sales2. Selling non-performing
loans
Short Sales Completed, REO Inventories & Primary Market Delinquent Notes
2008 2009 2010 2012 2014 50,000.00
1,050,000.00
2,050,000.00
3,050,000.00
4,050,000.00
5,050,000.00
NPLREOShort Sales
Source: Compiled information from Lawler, Calculated Risk, Realtytrac, Corelogic, Black Knight Financial Services
MAJOR SHIFT FROM REO TO SELLING NOTES
REO’s NOTESREO’sNOTES
What it Takes to Buy Notes
0
2
4
6
8
10
12
Knowledge
Minimum Standard
Leveraging Colonial’s Resources is KEY!
Interest Time
Two Types of Discounted Notes
Non-Performin
g Notes
Performing
Notes Seller FinancedRe-performing
Non-Performing
What Determines Note’s Value?
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Performing Notes
Re-Performing Note Cost 70% plus
Defaulted Note Cost 20%-50%
Non-Performing Notes
Paths to Property
This house represents all the houses in the United States that are on the REO housing market.APPROXIMATELY 400,000
For every REO, there are 25 notes in some stage of default behind the scenes.
REO’s vs. Notes
REO's vs. NOTES
400,000 REOs9 Million
Delinquent Real Estate Notes
Inventory of Opportunity
Buyer
Defaulted Note?Modify LoanDeed In Lieu
Foreclose
Buyer Stops Paying!
Non-Performing Loans
Non-Performing Notes
Modify Deed in Lieu Foreclosure
40% 40% 20%
©NoteSchool 2013
Non-Performing Notes
REO Property
Modify Deed in Lieu
Foreclosure
Re-Performing Note
Owner Finance or Cash or Rental
Non-Performing Note Case Study
Case Study
Property: Stone
Mountain, GACurrent Market Value:
$100,000FTC DISCLAIMER: While these case studies are REAL DEALS that my
students have closed recently, these results are NOT typical. As with all courses, you should not expect to make this much money or any money
with “how-to” advice.
Non-Performing Notes
REO Property
Foreclosure
Note or Cash or Rental
Modify Deed in Lieu
Own Note Without Having to Manage ItLoan Servicer
• Collects Pmts • Taxes / Insurance• Borrower Work-out • Foreclosure Mgt
Note Owner
Work done by Who??
Outsource!!
• 4/2, 1,800 sf • Rent $1,250/mo
“I didn’t need a calculator to pull the trigger on this one!”
Total Cost approx $30,000 Property worth $100,000…with creative financing
Waterfall
BUYERS BUY HOUSE
SIGN NOTE & MAKES PAYMENTS
PAYMENTS TO THE BANK
Successful Loan!
BUYER PAYS OFF MORTGAGE
IfNotpaid
PAYMENT DEFAULT
IfNotpaid
PAYMENT DEFAULT
BANK BUNDLES BAD MORTGAGES
Mortgage Information
HEDGE FUNDS CREATE TAPES
Mortgage Information
TAPES SENT TO INVESTORS
Agreed Upon Price
INVESTOR DUE DILIGENCE
SIGN CONTRACT WITH HEDGE FUND
New note owner
HEDGE FUNDS CREATE TAPES
New note ownerRe-Performing
Loan!
MODIFICATION = CASH FLOW
New note
owner
4 EXIT & PROFIT STRATEGIES
Seller Financing
“Performing Notes”
REAL ESTATE
Esta
blish
As-
IS V
alue
What % ?
Investment to Value Ratio = 50%
Investment to Value Ratio = 20%
Non-Performing Notes
REONon-Performing Loans 80%-90% of
Value
30%-50% of Value
Where do you make
More Money
with Less Risk?
Buyer
Mortgage NOTE
Mortgage Lender
Mortgage NOTEMortgage
NOTEMortgage
NOTE
Colonial
Mortgage NOTE
Colonial
Mortgage NOTE
Passive Investor Active
Investor
Hold In-House
STOCK MARKETX
Mortgage NOTE
One Note Many
Notes
More than just income today…Tax Free Income For Life
Performing Notes
Non-Performing NotesFormula for zero taxes in retirement:Notes + Roth IRA/401K = Tax Free Income for Life
Esta
blish
As-
IS V
alue
Price Note
Cost of Note
What % ?Investment
to Value Ratio
What Determines Note’s Value?
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Good Payment Record
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Bad Payment Record
Re-Performing Note Cost 70% plus
Defaulted Note Cost 20% - 50%
Performing Notes
Non-Performing Notes
Esta
blish
As-
IS V
alue
Price Note
Cost of Note
What % ?Investment
to Value Ratio
What it Takes to Buy
Series10
2
4
6
8
10
12
Minimum Standard
Knowledge Interest Time
Performing Notes
Owning Notes
Re-Performing Notes
Seller Financed
Notes
Learn to Be Your Own
Bank
Performing Note Case Study
Individual Notes
PERFORMING NOTECASE STUDY
Case StudyOwner Occupied
FTC DISCLAIMER: While these case studies are REAL DEALS that my students have closed recently, these results are NOT typical. As with all courses, you should not expect to make this much money or any
money with “how-to” advice.
Property:
Hallowell, KSCurrent Market Value:
$56,000
$34,616
158 Monthly Payments
Mortgage Note
at 9% interest
Monthly Payments of:
$374.69
You Pay
$31,233For This Note
$375
$375
$375
$375
$375
$375
Mortgage Note
$34,616.49 At 9% Interest
Pmt / $375 158 Mos Remain
$375
JAN FEB
$375
MAR APR MAY JUNE
$375
$375
$375
JULY AUG SEP OCT NOV
$59,250
158 Times!
11% Return
You Pay
$31,233
Valu
e $
56,0
00
Cost of Note Invest - $31,233
62% of Value Investment to Value ratio
Own Note Without Having to Manage It
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
Loan Servicer • Collects Pmts •Taxes / Insurance• Licensed & Compliant• Borrower Work-out
Work done by Who??
Outsource!!271 Months
Term of Note
Loan Servicer Monthly Pmts
Note Owner
one time fee = $150
*Industry average is around $25
Pmt.
Pmt.Pmt.Pmt.Pmt.Pmt.
Pmt.
JAN FEB
Pmt.
MAR APR MAY JUNE
Pmt.
Pmt.
Pmt.JULY AUG SEP OCT NOV
Payment minus Servicing fee*
Cash Flow with Real Estate Notes
Mortgage NOTE
YOUMortgage
NOTEMortgage
NOTEMortgage
NOTEMortgage
NOTEMortgage
NOTEMortgage
NOTE
10 notes x $600/ea = $6,000/month
BE THE BANK
How to Retire Tax Free Forever
TAX FREE!
AFTERTAX
$110
,000
Sal
eTerms of Sale
$110K Sales Price - $10K Down Pmt - $100K Seller 1st
LienDown Payment
= $10,000
1st lien Note= $100,000
Buyer’s Equity
Buyer’s Debt
$100,000
360 Monthly Payments
Mortgage Note
at 10% interest
Monthly Payments of:
$878
You Pay
$70,000For This Note
$878
$878
$878
$878
$878
$878
Mortgage Note
$100,000 @ 10% Interest
Pmt / $878 360 Mos Remain
$878
JAN FEB
$878
MAR APR MAY JUNE
$878
$878
$878
JULY AUG SEP OCT NOV
$316,080
360 Times!
14.8% Return
You Pay
$70,000
100,000 @ 10% Pmt / $878 30 year term
Loan Amortized
Jan 2014 Dec 2044
$878
$878
$878
$878
$878
$878
$878
$878
$878
$878
$878
$878
360 pmts
TIMELINEInvested with Self Directed IRA = $70,000
Yield = 14.8% annually
$70,000
360 Monthly Payments
Hard Money Loan
Monthly Payments of:
$878
What is the interest rate
for this Note?
14.8%
Pmt / $878 30 year term
Terms of Loan
Jan 2014 Dec 2044
$878
$878
$878
$878
$878
$878
$878
$878
$878
$878
$878
$878
360 pmts
TIMELINEInterest Rate = 14.8%
$70,000
Partials are Like Pizza Pies
$6
Partials are Like Pizza Pies
$2
$2 $2
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
360 pmts
Note Term Bought or Sold
Buy 30 yrs
Sell …
100,000 @ 10% Pmt / $878 30 year term
Loan Amortized
Jan 2014 Dec 2044
$878
$878
$878
$878
$878
$878
$878
$878
$878
$878
$878
$878
360 pmts
Roth Buys Entire Note for $70,000
$30,000
Note bought at discount
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
$Pmt
Most Valuable Portion Least Valuable Portion
360 pmts
Negotiate to Buy Entire Note $70,000
1st half 2nd half
100,000 @ 10% Pmt / $878 30 year term
Loan Amortized
Jan 2014 Dec 2044
$878
$878
$878
$878
$878
$878
$878
$878
$878
$878
$878
$878
360 pmts
TIMELINERoth Sells Front Endto Investor
Own Back-endin Roth Acct
Roth Buys Entire Term
100,000 @ 10% Pmt / $878 30 year term Loan Amortized
Jan 2014 Dec 2044
$878
$878
$878
$878
$878
$878
$69,900
11 yrs 19 yrs
$100
30 Years $70,000
Yield = 10% Yield = Enough!!!
$878
$878$878
$878$878
TIMELINE100,000 @ 10% Pmt / $878 30 year term
Loan Amortized
Jan 2014 Dec 2044
$878
$878
$878
$878
$878
$878
$878
$878
$878
$878
$878
$878
360 pmts
Roth Sells Front Endto Investor
Own Back-endin Roth AcctRoth Buys Entire
Term
Sell Partial & Own Back-End of Note
$69,900
$878
$878
$878
$878
$878
$878
132 PmtsSold to Investor
TIMELINE
$100 in Roth Acct$8
78$8
78$8
78$8
78$8
78$878
You Keep Remaining 228
Pmts
100,000 @ 10% Pmt / $878 30 year term
10% Return HUGE Return
THE NEXT STEP
Buy Notes, Be The Bank
2 Advanced
Note Classes
Big MoneyFrom bad debts
Tuition $2,000
3-Day Live Class
Family or Biz Partner FREE
You’ll learn how to . . . • How to get Note Sellers• Work-out Strategies• Government Funds Avaialble• Property analysis & determining the value• Different types of Defaulted Notes• Lien positions and title reports
Big MoneyFrom bad debts
On-Demand Training Course
14 Modules (3 days worth of training)
Learn easily At your own paceNon-Performing
Notes
3-day Live Class
Case Studies of Authentic Deals
Rich Rewardstm
In Real Estate Notes
You’ll learn how to . . . • Marketing To Attract More Clients• Create Alternative Cash Flows• Negotiations To Close More Deals• Steer Clear of Legal Issues• Math To Pocket More Profits• How Partials Work• Much More
Rich Rewardstm
In Real Estate Notes
On-Demand Training Course
Learn easily at your own pace
12 Modules (3 days worth of training)
Performing Notes
Each class has 12 + Events Annually
• Arlington, TX: Oct 3rd – 5th
• Charlotte, NC: Nov 14th – 16th
• Atlanta, GA: Dec 12th – 14th
• Ft Lauderdale, FL: Oct 10th – 12th
• Irving, TX: Nov 21st – 23rd • Los Angeles, CA: Dec 5th –
7th
Both Classes Combined for
$1,297
Either Class: $797
Gold in NotesOne-Day Workshop
Saturday Oct 11th Time: 9am – 4pm
• Members:– FREE . . . Must call Robyn– spouse $ …
• Non-Members: – $49 early bird– $79
Presented by: Joe Varnadore
Financial Deal Architect• Case Studies (from actual deals)• Building Cash Flows• Sourcing Capital• Creative Finance
Your IRA Buying Performing Notes • Building retirement acct as your own
mini-bank• Phenomenal leveraging techniques with
notes