How You Can create a Passive, Full-Time Income in 90 Days or Less by Investing in Real Estate Notes
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How You Can create a Passive, Full-Time Income in 90 Days or Less by Investing in Real Estate Notes http://noteschool.com http://facebook.com/noteschool
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How You Can create a Passive, Full-Time Income in 90 Days or Less by Investing in Real Estate Notes
- 1. Eddie Speed - NoteSchool Presented by Eddie Speed
- 2. Ten Thousand Dollars This is packet of one hundred $100 bills, it is less than 1/2" thick and contains $10,000.
- 3. One Million Dollars This little pile is $1 million dollars,100 packets of $10,000. You could still carry it.
- 4. One Hundred Million Dollars $100,000,000 is a little more respectable. It fits neatly on a standard pallet.
- 5. One Billion Dollars $1,000,000,000 fits on 10 pallets.
- 6. One Trillion Dollars $1,000,000,000,000 – notice those pallets are double stacked…
- 7. We Are in an Unprecedented Time in our Financial History • The perfect financial storm • Banks and lending institutions are selling off real estate notes at HUGE discounts • Opportunity for an individual to buy these notes and use them to create a full time income, very fast • There is a huge availability of money in the marketplace that can be used to purchase these loans
- 8. What This Presentation is All About • Taking advantage of this opportunity and buy real estate notes at huge discounts • Creating a passive income with real estate notes • For land lords who are tired of dealing with their properties (“tenants and toilets”) • For anyone who is looking for a better investment with their money than the stock market or bank CDs • Those looking to build a long lasting successful business
- 9. Who This Is Not For • Not the “opportunity seeker” • Not someone who wants to “get rich quick” • Not for anyone who is looking to take advantage of anyone else • Not for anyone looking for “business opportunity” (biz-op)
- 10. The Good News • Following these methods, you CAN build a passive, full-time income in your spare time • No need to be a financial genius or have any special education • Only comes down to 4 simple steps • No need to have lots of money to be successful • If you do have money, I can show you how to really ramp up your business
- 11. Before We Go Any Further Regulation dictates that I need to address a few things, and I’m happy to comply • My results are NOT typical • I am not implying that you or anyone will make money with this information – I don’t know your situation, so it would be impossible for me to really know what is possible for you
- 12. Before We Go Any Further • - My Students’ results are not typical • Unfortunately, most people that try any “how- to” information, never make any money…. sad, but true. • All businesses entail risk • I am merely showing you what is possible in this business and what is working TODAY for me and my students.
- 13. By the End, You Will… • Know what a note is, and understand why you can get them at such deep discounts • Know how to build a large passive income investing in notes • See why owning a note is MUCH easier than owning a property • Know where to find these notes and how to close on them • Know what your next steps will be • Know how you can get my help to close your next deal
- 14. History… Bank Early 2000’s vs. Bank Lending Dept Loss Mitigation Dept
- 15. With Today’s Mortgage Environment Mortgage Lenders
- 18. The State of the Market • The Government’s “big check” came in to try and fix the problem • Banks have an overwhelming amount of bad loans on their books We Didn’t Cause This problem, but We Can Help Fix it! • Wall Street’s terrible lending practices got us in trouble
- 19. The State of the Market • “Bank of America, the country’s number 1 mortgage lender, battling to fix or get out of more than 1 MILLION past due home loans, put at least $1 BILLION of toxic paper on the block” Source: New York Post • U.S. Treasury Secretary Timothy Geithner said that the help of the private sector was critical to get toxic assets off banks balance sheets and help resolve a credit crisis. That’s Where You Come In!!
- 20. Buying Notes and “Becoming the Bank” May Sound Complicated…But it’s Not • If you’ve ever bought a Certificate of Deposit from a bank, you became a lender • If you’ve ever purchased municipal bonds, you were a lender then too • If you’ve ever made a deposit in a bank – You became a lender • When you “Become the Bank”, it isn’t complicated. You don’t necessarily need to manage the loan, you just sit back and collect checks • It’s very simple and VERY passive!
- 21. Why the Opportunity? Traditional Lenders
- 23. 2010 2011 4.19MM Homes Sold 34% CASH Approx. 1.4MM 4.26MM Homes Sold 38% CASH Approx. 1.6MM
- 24. Perfect Financial Storm This Unique Condition of Supply (Toxic Assets) and Demand (Anxious $) has created the Perfect Financial Storm! This is the best opportunity I’ve seen in my 32+ years in this business!
- 25. If We Haven’t Met Before… • My name is Eddie Speed, I’m the founder of NoteSchool • I originally got started in the note business in 1980 • When I started I was just a young kid • I had no money or no special education (just a degree in Ranch Management) • I had a mentor that was a pioneer in the industry
- 26. Fast Forward 32 Years • I am honored to say I am one of the leaders in this great industry • I was the 2006 recipient of the Note Industry Achievement Award • I am a husband and father of three great children • I’ve closed well over 30,000 note deals
- 28. What’s a Note ? Mortgage Note Debt Instrument: • Interest Rate • Monthly Pmt • Pays over time
- 29. Note Owner gets Jan 2012 Dec 2042 3O yrs of Pmts CASH FLOW
- 31. Down Payment $10,000 Mtg Lender Extends Note $90,000 Sale Price $100,000 Mortgage Note Buyer’s Equity
- 32. 90,000 @ 10% Pmt / $790 30 yr amortized Straight Amortized Jan 2012 Dec 2042 360 pmts TIMELINE
- 34. #1 Industry Myth: Note Investing Too Complicated & For Big Companies Only • It’s true that huge companies and Billionaires like Warren Buffet are actively buying up discounted loans right now because they understand the opportunity, but that doesn’t mean that there isn’t room for the solo- investor to buy up some deals • Pretty soon, I’m going to show you how simple this industry can be, but for now, let me introduce you to one of my extraordinary students named Justin who is closing deals all over the country from his home in Ohio…by himself
- 35. Justin Lives in Ohio Case Study Why Quick and Easy?
- 36. Nice Little Property • Loan was a charged off • Last Pmt made over 2 yrs ago Non-Performing Note Case Study Property: Near Columbus, OH
- 37. Non-Performing Note Case Study Quick Sale BPO Price Paid for Note Delq Taxes After Repaired Value $29,000 $7,500.00 $2,161 $60,000 to $80,000 Loan Details – 1st Mortgage Seller’s Story: • Hedge Fund buys large pools – then they re-sell them • Willing to sale for non-paying Notes a huge discount of ‘quick sale’ BPO value
- 38. RetailValue$60,000 $12,000 Price for Note Cost: Note + Expenses Investment = 20% Investment to Value ratio
- 39. Case Study Profit Cost of Note + Expenses after . . . : $12,000 “Quick Sale” Profit: $17,000 $7,500 / Note + back taxes & foreclosure $4,500 = $12,000
- 40. Find Deals Price Deals Source Money Close Deals & Profit The Simple 4-Step Process to Closing any Note Deal
- 41. Find Deals
- 42. Who Sells “Toxic” Loans? Lenders Banks Credit Unions Mortgage Originators Mortgage Service Companies Auctions On-line listings Hedge Funds
- 43. Who Sells Loans?
- 44. Who Sells Loans? Set Up LinkedIn Account
- 46. The Go-To Person! What’s important? Who you know What you know Timing Credibility Must have . . . zero percent chance of embarrassment
- 47. Setting Up Your Business Sound like a 10 story company Have a “Store Front” name Colonial Funding Group LLC Look like you’re in Business Email 800 #s Business Bio / Resume
- 48. Presenting Yourself Business Bio • Similar to a resume but . . . • Relevant to finance or real estate • 3 business references or testimonials Sell yourself: only in the dictionary does business come before marketing!
- 49. Price Deals
- 50. What Determines Note’s Value? Other factors : #3 Buyer’s Equity #1 Buyer #6 Paperwork#4 Terms of the Note (interest rate, term/time) #5 Seasoning #2 Collateral
- 51. What Determines Note’s Value? Buyer Credit score • Sub 625 • 675 ++ Loan Application Verifications • Income • Employment • Down Payment
- 52. What Determines Note’s Value? “Unique” Property • Rehabber Houses • Mobile Home & Land • Land Only
- 53. What Determines Note’s Value? Mainstream real estate vs just unique
- 54. What Determines Note’s Value? Commercial / Industrial
- 55. What Determines Note’s Value? • Down Payment LTV and CLTV • Max LTV = 80% - 85% • Cash down = buyers credit • 625++ = 5% • sub 625 = 15% - 25%
- 56. $100,000Sale Terms of Sale $100,000 Sales Price $5,000 Down Pmt $95,000 Seller 1st 5% down pmt 95% 1st lien Note Buyer’s Equity Buyer’s Debt
- 57. What Determines Note’s Value? Interest rate • rate less 7.5% . . . discount Term • Max 360 amortization • Balloon = 5 yrs • Terms of the Note • Interest rate • Term / time
- 58. What Determines Note’s Value? 1 to 12 months • 625 credit • Rehabbers ?? 12 months or more • sub 625 • Rehabbers • Seasoning
- 59. EstablishAs-ISValue Discount Price NoteCost of Note Potential Profit Cost of Foreclosure What Expense ? What % ?
- 60. $100,000Value Property Value = $100,000 - - Pay for Note = $30,000 Discount Equals Equity Price Paid for Delinquent Note Buying Non-performing Notes Cost of Note Potential Profit
- 61. Source Money
- 63. Four Ways to Build Wealth • Property Flipping ($ Today) • Buy and Hold / Landlord ($ Flow) • Note Flipping ($ Today) • Own the Note ($ Flow)
- 64. Workout Options The payor’s story Sell delinquent loan Modify loan with customer Short sell
- 65. Tom and Debby Live in Wisconsin
- 66. Re- Performing Case Study Very Nice Property Comments: Husband lost income but reinstated Property: Near Houston Tx Loan was behind but payor started paying again
- 67. Re-Performing Case Study Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 NA NA 0% 200 % 100% 100% 100% 0% 100% 100% 0% 100% 2009 100% 0% 0% 0% 0% 0% 200% 117% 0% 140% 140% 100 2010 100% 100% 100% Payment History of Borrower Payment History: Owner had gotten behind due loss of job. Story… Hedge Fund bought huge group of loans – modified this loan & they started paying again
- 68. Case Study Student bought Note $247,000 Flipped to Investor $265,000 Student Made Profit: $18,000 Hedge Fund buys pools of 100’s millions in “Toxic Notes” then re- sells