Month: July 2018

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Note Investing Tip #2

Turn your borrower (who has gone through bankruptcy) into an investor?
What the heck could this mean!
A good percentage of my borrowers have gone through bankruptcy. When someone goes through bankruptcy, their entire financial life is made public on the Public Access to Court Electronic Records, better known as pacer.gov
Many people have some form of retirement plan, IRA 401K etc, which is listed in the voluntary petition.
When I see this I go right into the conversation with the borrower “How are your returns in your retirement account?”
I have never once been asked how I knew they had one, they were too fired up to tell me about the losses they have incurred over the years.
Instead of the pity party they were expecting…

…I tell them how they can get an immediate 50% return on their investment using the equity in their home.
They are all ears at this point!
I tell them “every 1 dollar they give us toward their mortgage, we will give them $1.50 in pay down of their debt which translates into equity in their home!” This is only offered once and they have 15 days to fund this deal.

At this point they are scrambling to figure out how to pay us which is a good thing!
$10k in payment 15K in payoff, 20k payment 30k payoff – We offer them this deal, as the bank.
Who else is offering them this type of deal!!
Enjoy!

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Note Investing Tip #1

Creating Growth Through Brokering

This happened on the way back from the beach this morning! Anyway, I am rolling out a new series of Note Investing Tips for your enjoyment, let me know what you think in the coming weeks! I want to help you all experience growth in this business.

As you know, we invest in non-performing residential mortgage notes. The main part of our business is to get these non-performers turned around and into performance status.

Example:
-Purchased a note at $10,500
-Unpaid Principle Balance $34,000
-Borrower gave us a small chunk up front $2,000 and starting making payments of $375 per month
-Number of payments total: 137
So that's a typical deal..... but wait there's more!

I now find an investor that would be ecstatic with an 8% return and sell 60 payments (5 years) of $375 for $18,495.
The investor would in total receive $22,500 for a nice growth play in their IRA and I take the $18,495 and buy another non-performing loan and repeat the process.

There are all kinds of fancy ways to structure this transaction but I like to keep it simple, I just make this into a personal loan of $18,495 paid back over 5 years with a personal guarantee.
Simple enough?
I know of a great guy out there teaching RE Investing and his motto "there is not a deal out there that I can not over complicate"... I don't need to be that guy I am not that smart! Ha!
So what happens at the end of 5 years? I get the cash flow back and...you guessed it, take another swing.

This process creates financial growth in my life, you can scale this business from different ways!

Thanks for reading, folks! Check back soon for Note Investing Tip #2!