Note Buying as easy as 1-2-3

Welcome to Get Real, The Real Estate Investing Show. For the rest of us, I’m Judson Voss.

And I’m Lynn Vos. And today we’re really excited. We have Donna Bauer with us, and Donna’s nickname is the note buyer. And part of the reason we’re excited is because we’ve actually used Donna’s information and made money off it, so that’s pretty cool too.

I think we mentioned last week on the show that we just doing short sales that Donna gave us information for how to do it. We’ve made as much in the last year that we made in our job the year before. So that’s a good little testimony there. But we’re gonna cover it a little bit more than just short sales.

Today we’re gonna, we’re gonna talk to Donna about cashing in on the pre foreclosure market. There’s so many, especially around here, so many houses going into foreclosure, that it’s just a, it’s a market. Even if it’s tapped, there’s still so much of it left. And we’re also gonna talk about how we can buy properties at a discount, but not always having to actually buy the house itself.

But buying the mortgage instead, which is, it’s a little bit of a different way to do things than you might normally hear about. Donna, you there?

I’m here. Good.

How are you doing today?

Wonderful, thank you. Excellent.

We gave a little bit of a background and we talked a little bit last week on the show about what you do, but can you let everybody know just a little bit of a brief history about yourself and how you got into investing?

Sure. I actually started about 20 years ago, and at that time I was babysitting nine little kids, or believe it or not, a dollar an hour for kids. Oh my God. Wow. Four of those were my own and I didn’t get paid for them. , They were freebies. Yeah. But needless to say we were really scrounging just to make ends meet, and one day I just had a wake up call and I thought, I can do better than this.

I’m not gonna live this way. I deserve better, My family deserves better. And I just said, I’m gonna find a way to make money without going to work. I It would’ve been real easy for me to go out, get a regular job like everybody else. But I was really determined to be a stay at home mom.

And about three months later, closed my first deal, made over $5,000 on it. Wow. So that was the beginning of where I am today. , that, that would’ve been a lot of babysitting. . You’re not kidding. . You’re not kidding. It was a life changing event for me. It’s, I always talk, when I go out on, on my speaking engagements, I always tell about that deal because it really did change my life.

Yeah. To go from a dollar an hour, be having over 5,000 in cash. That was almost 20 years ago, so that’s probably like 50,000 today. Sure. Yeah. , and it’s neat because I’m, I. I’m living proof that one, you don’t have to have money to make money. . What you need is knowledge. And I really was blessed because it just so happened that I came across an attorney who did mortgages and he had set up a private investment company for buying and selling mortgages. Yeah. And he taught me the business. I had actually approached him. What I was gonna do was start a property management company.

Okay. And he said, Hey, I’ve already got all my properties. I’m selling them off cuz I’m investing in notes and mortgages, and would you be interested in learning this? And so that’s how I got into the business. That’s how I learned everything, and that’s how all my documentation evolved and whatnot.

So I really was blessed, but it has totally changed my life. It enabled me to be at home with my kids. Now they’re all grown. My youngest is gonna be 21 this month, . But it not only gave me the money to change my life, more importantly, it gave me the time to enjoy the money. Okay. That’s a key.

That’s important. You’re not kids ,

there’s a lot of people out there that make pretty decent money, but they have no time to do anything with it.

I have friends who have millions of dollars of real estate. What gets us to do you have $5 million worth of properties if you can’t take a vacation because you don’t have anybody to manage the properties while you’re gone, right?

Yeah, exactly. You And when you do mortgages, the great thing is you have all of the security of the real estate, because the fact is if they don’t pay you, you can foreclose and take the house back, but as long as they’re paying is agreed, then you never lift a finger. All you do is just take the money to the bank.

That’s the extent of your quote work, right? You never deal with tenants, you never deal with with termite that the four Ts, the tenants termite and trash as they say, . Yeah. With mortgages you become the. Okay. And it’s much easier to be the bank than it is to be a landlord.

Sure. The banker goes on vacation. Vacation. You’re not kidding. .

So now for some of the folks that are new, and actually probably a lot of investors that have been doing this for a while might not know anything about mortgages. It’s always about, it’s about getting a mortgage and not ha creating one.

Can you give us a little bit of an idea of how you do that? How you acquire proper. With the mortgage and a discount.

Okay. There’s actually two different areas of investing in mortgages. Okay. And I actually teach two totally different strategies. Why don’t we start out talking about the seller carryback mortgages.

Okay. Because actually that’s where I started myself. And then once I learned that business, when the market changed and we started having all of the foreclosures, then I got really into the pre foreclosures and the short sales and buying defaulted notes. Okay. So I know we were talking about doing the reverse, but let’s start with the seller Carrybacks.

Okay? Sure. Sure. Basically what we’re dealing with are people who have owned their own house free and clear, and they went to sell it. And they might had a few people looking, but nobody serious until, let’s say, Oh, along comes bill buyer. And Bill really wants to buy their home, but perhaps Bill maybe had a medical problem or was in a car accident for one reason or another.

His credit is not up to par and he can’t go get a bank loan. Okay. Okay. So he says to them, I’ve got $20,000 that I can give you is a down payment. Perhaps he sold his own house, maybe inherited money. Maybe he won the lottery. I don’t know. , He came up with this cash. Okay. Okay. . And he tells Sam, if I give you the $20,000 in cash, will you let me pay you the remaining hundred thousand dollars, say over the next 10 years?

Okay. And he says, Sam, I’ll give you 10% interest. That’s good. Isn’t that a great deal for Sam? Yeah. Yeah, sure. Do you realize that most people when they sell their house, unless they’re buying another house, usually that money goes into the bank at one and a half percent or something like that.

, right? So here’s an opportunity for them to keep their money invested in their house and make a great return, and it’s all secured by the very house that they owned. So they know that it’s a nice, safe investment. . Okay. So they may strike a deal, and let’s say that Bill moves into this house, brings his family in two years, go by, the hundred thousand dollars mortgage is paid down to $87,000 and everything’s going just like clockwork.

Everybody’s happy. And Sam wakes up and he gets a call from an old buddy of. And this buddy says, Hey Sam, you know the business we were gonna start. I got all the ducks in the row, the patents are filed, everything is ready to go. All you need is $70,000. And man, you’re gonna be a multimillionaire. . Okay?

Sounds good. Yeah, Does sound pretty good. The only problem for Sam is guess where a 70,000 is? It’s in his house. Exactly. . It’s still tied up in that mortgage. He has to wait another eight years to collect this money. And the thing is that he needs money today. It just so happens that Sam got a letter from Donna dealer here, , that says, Dear Sam, I understand that you’re receiving payments on a mortgage and I pay cash for mortgages.

If you call me, I’ll tell you how much cash I’ll give you today for your mortgage. So if you were Sam, do you think you’d call me? Oh yeah. Oh yeah. In a hard fee. Definitely. So Sam calls me up and he tells me the whole scenario, and it sounds like a great deal to me. So I give him the $70,000 in cash that he was looking for, and I basically buy him out.

. So he has his 70,000, He goes off, he starts this other business and he never has anything to do with the mortgage or his old house again. He’s totally out of the picture. Okay. So basically what I have done is I have bought Sam’s interest, I have bought the right to collect the remaining $87,000 that is owed on that mortgage.

But the really cool thing about it is I bought the right to collect 87, but I only paid 70.

So there’s a lot of wiggle room in there, .

You’re not kidding. And that wiggle room causes me to get a 16 and a half percent return on my money. Okay. Even though Bill is only paying 10% interest, I’m making 16 and a half because I don’t have 87,000 of my money out there.

I only have 70 invested. And since I have less money invested, but I’m still receiving the same payment that Sam was getting based on 87,000, then that makes my rate of return go up. Okay. Makes sense. . So that’s the whole premise for making super high rates to return on seller carryback mortgages.

Okay. look for people and it’s not hard to find them because the fact of the matter is people’s situations change. They go into this thinking, Okay, I’ll collect these payments over the next 10, 20 years, whatever. But they may get married, they may get divorced, they wanna travel, they wanna go to school, they wanna start a business.

And the fact of the matter is very often, sometimes as little as six months into it, maybe a year or two into it, they decide they don’t wanna wait another 10 years to collect their money. They wanna cash out today. Makes sense. So you wanna be in a position where you can give them cash when they need cash.

And the best part of all is it doesn’t even have to be your cash that you give them . That’s even better. Yeah, that’s, You’re not kidding. So that’s how you make money is because you’re gonna go find somebody’s somebody else’s cash to give them. So let’s go back to our example. , Sam says that he is gonna sell this mortgage to us for $70,000.

, And you’ll use my note purchase agreement that I’ve got in my course, and you lock him into selling you this mortgage for 70,000. Okay? And I always put in a period of time so that I can do my due diligence. You know what due diligence is? Your title report and appraisal and that kind of thing.

So during that time, I’m gonna go. Call one of my investors. Now I get my investors from the local real estate investors club. People think you’ve gotta have lots of investors. That’s not true. For my personal investing, I just use four or five people from the local group. Wow. Okay. Which by the way, those groups are invaluable.

It’s real important. And that’s why I think it’s so cool that you’re doing the podcast and everything , because it really does help to keep people educated and it really fine tunes their investing skills and everything. Thank you, , but it’s important because without that, I’d never be where I am today.

I, if it weren’t for other people that were assisting me and in teaching me all along the way, but I was involved with the Cincinnati radio group, and so let’s say I, I meet a lady Irene investor, okay? And let’s say she’s looking for a 14% return on her money. What happens is that, The two are inversely proportional.

The less you pay for a discounted mortgage, the higher your rate of return. So that’s why when I bought the mortgage from Sam, because I paid less for it than what was owed, I bought it for 70 instead of 87. That made my rate of return go to 16.5%. Okay. All I have to do is find somebody who wants a lower rate of return than what I bought it for.

. And since they’re inversely proportional or opposite one another, that means they’re gonna pay more than what I did. Okay. So what happens is I’m buying at 16 and a half. All I gotta do is find someone who wants less of a return. Irene tells me she wants a 14% return. That means she’s gonna pay more than 70,000.

So I’ve got it locked in that I can buy it for 70. And it just so happens that at a 14% return, that means that Irene would pay $76,000 for it. Okay. So I’m gonna buy it for 70, I’m gonna sell it for 76. And I just made $6,000. I never owned the property, never dealt with a tenant, never did a rehab. Never even used my own money. Wow. Isn’t that pretty cool? That is pretty, That is.

So how easy it define these

kind of deals? Oh it’s the easiest way to find the seller carrybacks is with direct mail. That’s how I got all of my leads. And nowadays it’s so much easier than when I started, I literally used to go to the courthouse.

And look up the names on the microfish, ah, . But now, I mean that, that was literally a pain in the neck. that, lemme tell you, , I came back for there and I, the first day I had the worst headache . But do you know, I came back with six names and I thought, this is a waste of time, but I got these six names and by golly I’m gonna send a letter to ’em.

And my first deal came from one of those six names. Okay. Wow. Isn’t that something? That’s awesome. So the fact is that if you do your direct mail, you can get some pretty stunning results from it. So what you wanna do is buy a mortgagey list and there’s all kinds of list providers today, and you buy the list and I’ve got some really great marketing letters that are in my system.

Okay. And you just send out the letter. And what’ll happen is I always put my business card in and sometimes they’ll throw away the letter, but they keep the business card. Sure. And even if they don’t call right away, they know now that you are their source. When they’re ready to cash in and they, they want money instead of monthly payments, they wanna lump sum of money, then they’ll get call.

So it, it works out great. So that’s a real easy way to do it. Now in my system, I got 20 different ways to find notes, but that’s actually the easiest way to jump in and get started if you’re brand new. Okay,

keep your hands clean that way. It’s a pretty easy process.

Oh, it’s wonderful. And the best part of all is that you just, you don’t have to deal with the properties.

It amazes me because when I travel around, people have this false impression that note buying is for the elite. And Yeah. And they’ll say, I’m new to real estate investing and, once I’ve done a couple properties, I know I wanna get into notes. And I’ll see then and learn how to do this.

And I’m thinking, my gosh, what do we do? And in this example we made $6,000 and we never even had to deal with the property. We didn’t learn you need to learn any tenant landlord laws. We didn’t have to show the house. We didn’t deal with rehab or any of that, right? , right? And I’m thinking, isn’t this a lot easier than buying your property?

Why would people wanna wait until they learn how to do real estate investing? They gotta do this first because if they tip this first, they’d probably never do regular real estate investing. Yeah, I think you’re right, , But you know what it is. I will tell you exactly what it is. The experienced investors, they may start out buying and selling properties because that’s the common thing to do, but they get smart.

And they realize that there’s a better way to do it. So if you talk to people who have been in the business for years, usually they, a good part of their portfolio is involved in mortgages or deeds of trust, depending on, they may be in a deed of trust. State works the same way, even if you’re buying a de of trust.

And so people have that feeling that, oh once you’re experienced, you do notes. No, it’s once you get smart, you do notes. , .

Now that was a, that’s a deal. That was a really a good paper deal that the mortgage wasn’t behind. How does this work with delinquent paper?

Oh, now this is my favorite part. I’ll tell you.

You can get phenomenal profits with the bad paper . The bad paper would be the pre foreclosures. Okay, now, And as the market is just rampant right now with pre foreclosures and people say everybody’s doing them. You know what? There are so many of ’em, they’ll never run out of ’em.

And actually I think there’s gonna be a whole lot more. I think this is just the tip of the iceberg. Tell the truth. We’ve talked

about that on the show. We agree.

You’ve seen them. Sorry, are, Excuse me. Go ahead. ,

As you say, with the adjustable rate, mortgages just now started to notch up is just gonna, I think it’s gonna explode.

That’s exactly what I was gonna say. Oh, okay. The adjustable rate mortgages and people can’t afford the payments anymore and you’re seeing a lot of that out in the California area right now. That’s a fantastic market to be in, but it’s really all over the country, yeah. So it doesn’t matter where you are, but most people do the pre foreclosures as short sales.

Okay. , and it’s only because they don’t know about note buying. I truly believe that note buying is one of the best kept secrets of real estate. But I teach both because some banks only do short sales and some banks only do note purchases. So it’s important to know both strategies.

Okay. But why don’t we go over basic short sale first, Okay. Okay. So let’s say that you come across this homeowner and they’re behind on their mortgage. Let’s say their house is worth a hundred thousand dollars. The homeowner could even owe 115. Sure. They owe more than the house is worth.

You could typically buy that property for say, $70,000. Okay. Now, normally that would be unheard of. Yeah. I don’t know if you remember before short sales were common. When you were looking to get deals, you always looked for properties that had equity in them. Yep. Yep. Short sales and defaulted note buying allow you to buy properties that are over financed and have little or no equity in them.

So what happens is this homeowner, they may respond to an ad you put in the paper or one of your direct mail pieces, but they call you up and you are basically gonna be their advocate to the bank. You’re gonna be an intermediary. Okay? Okay. So you get what’s called an authorization to release information, that you had to use those on your short sales.

Yeah. Yeah. And you fax that over to the bank and then you negotiate with the bank. And you explained to them, Hey, are you aware that this house needs a new roof? And do you know of all the deferred maintenance, these folks, they haven’t, not only have they not been able to make their mortgage payment, but they haven’t kept the house up and it needs over $30,000 in repairs.

And did you know that this market is declining there? And they’ve got three houses on the street for sale that haven’t sold. And you present your case, right? . Okay? And I teach you how we, I feel funny telling you this cuz you already know . But for the benefit of Lister listeners, I teach you how to put a package together.

To give to the bank and when you present that to the bank, that is, I would say is the main reason that our, or the main thing that will allow you to close these deals for huge discounts. People who were having trouble doing short sales before, cuz the bank wouldn’t accept their offer once they started putting the packages together.

Like I, I teach in my course now, they’re closing deals right and left.

Yeah. And I can attest to that. I. when we first started, before we had any of your information , we tried a couple short sales and it was really just a, here’s an authorization to release please sell me this out.

in the bank for whatever reason, didn’t really wanna talk to us that much, not so receptive to that, but when we started sending in their pack the package and did things like putting digital pictures in there and that kind stuff that turned things around and we learned that they really, they want you to like just build a case for it and to give to them.

That is so true. And you would not believe the number of people that I’ve talked to who have done short sales for years, and when they started putting the package together, like I taught. Then all of a sudden they’re closing so many more deals than they were ever closing before. . And now there are some banks that prefer everything to be digitized.

They want you to fax everything over. But even if you’re faxing it, I teach you how to put a complete package together in exactly what the bank is looking for and how to organize it and present it in a way that I make it a no brainer that when the bank reads your letter in, all your supporting documents, it’s like, Oh my gosh, we should just get rid of this right now.

Yeah.

Why are we trying to get more out of this than what they’re offering? Let’s just go with it.

Did you know that banks are required to put monies in reserve to cover their defaulted loans?

Yeah. I’ve heard a lot of different figures as to how much.

You know what I, I found out cuz I heard the same thing.

I would talk to one banker and they’d say five times and another would say twice as much. , the most I’ve heard is eight times. Wow. The amount of the loan. Okay. And what I found out is that they, that hud I’m almost positive at HUD and someone told me you could go to the Hud wa website and get this information.

I looked and could not find it. But HUD rates the banks on their ability to mitigate losses and to work out problems with the homeowner. Oh, okay. And based on that rating, that’s what determines how much cash they need to hold in reserve.

Okay. So the multiplier’s different based on the bank and their mitigate inability.

Got it. Okay.

That’s why you’ve heard so many different numbers. Yeah. Yeah. You, and

you

That makes perfect sense because we were talking about it on the show three weeks ago about. Somebody had asked the question, Should I try to do a short sale on a house that has private mortgage insurance?

And I said, I can’t figure out why. But here’s what I can tell you is I’ve bought a house on a short sale at 50% of what was owed or what the house was worth, which was actually less than 50% of what was owed. And they still took it even though it had PMI on it. And so this is why, because they’re trying to mitigate that.

They’re trying to balance that score they’re getting with hu. To make up the difference. Okay.

Okay. Because now talking about PMI real quick, personally, I don’t care to deal with the PMI deals. Okay. And the majority of the deals that come your way will be what they call nonconforming loans. , So they don’t have pmi.

PMI is the private mortgage insurance. And usually the PMI is gonna be on on a your conventional loans where the people have good credit and they’re packaging those up and selling them to Fannie Mae. Okay. So typically those don’t go into default. Or an FHA will hit, will be federally insured.

But most of the people that will answer your ads or answer your letters they don’t have PMI on it. But the reason I don’t like to deal with it. Did you find it a hassle or did they just automatically go ahead and negotiate and get the PMI. To agree to it the insurance company to agree to it.

They got the insurance company to agree to it. It was a longer short sale for us, so I think it was a good three and a half months. Yeah. Which was a little longer than normal, but you were

still able to buy the house for half of what it’s worth?

Yeah, they were they were way over on the loan and so I don’t know if the insurance company was trying to, I don’t know, get outta something as far as not making it known.

They had the mortgage company had missed by a long shot when they refinanced the house. They refinanced it for, I don’t know, 35% more than what the fair market value really was. Oh, no wonder. Yeah. So I don’t know if the mortgage company said to the insurance company, let’s work it together.

and get out of it.

That is probably what happened. And probably they do what’s called a partial claim where the insurance will pick up part of it. Okay. But the mortgage company picks up the rest, and that’s probably what happened in your case. Okay. But the few that I have worked on with the pmi I, this is not worth it.

I make four or $5,000 for, like you said, three months of work and went, Wait a minute, , there’s better deals, there’s too many other deals out there where I can make 50 grand. Why would I wanna put all this into it to make five? Sure. Sure. So I particularly stay away from the PMI deals.

It’s not that they can’t be done. And I’m glad that you had that example because if somebody is working a Pmmi deal, it shows that they can’t make money on it.

And the other side of it is a house that we bought last week, which it was a VA home. And so the VA was covering 80% of what was owed, but because of the price of the house, We actually paid more than the 80% of what was owed and still had a very healthy equity in it because there was more zeros behind the number.

Yeah, there you go. So we didn’t mind doing that. And the bank of course loved us because we got ’em out above the, above their insurance.

So that was, A lot of people think that, like for instance, if it’s a real strong market, that’s another time when this comes into play. For instance, we were working a deal in Phoenix and at that time Phoenix was just booming.

And the bank would sell us a note for 95 cents on the dollar. Okay. Which, that doesn’t sound like a very hot deal. Yeah. But the missing piece to that, that you need to know is because that was such a strong market, that house actually was worth a buck 50 on the dollar. . So we could buy the mortgage first to say 95 when the house was worth 150.

Yes. So indeed I’m still getting it at a 66% loan of value. Sure. Yeah. So even though you may pay almost full price for the mortgage, or even pay full price, if you are gaining control of a property that is worth way more than that’s what really counts.

That makes sense, Yeah. So you and a lot of people don’t realize that Yeah.

You don’t care about what the mortgage is, you care about what it’s worth today.

Exactly. And by buying the mortgage, that’s what allows you, it puts you in a position of control that no one else is in. We, I think we let’s talk about how to buy the note. Yeah. Okay. We’ve covered how to do the short sale, but a much, much better way to do a deal is to buy the defaulted note from the bank.

And you do that you, your leads still come from the same way your direct mail pieces or your ads. And I have a complete marketing program set up in, in the course. Okay. But, so somebody calls you up and you get them under contract so that they’re locked in to sell to you. You con now they’re gonna sign the contract that they’re gonna sell the house to you.

. . But actually what’s gonna happen is instead you’re gonna buy the note. Okay? They only sign the contract just so that you are locked in or they are locked into you so that they don’t turn around and go try to sell the house to someone else while you’re working the deal with the bank.

You got it. That’s important, . Yeah, absolutely. But once you buy the note, the contract is irrelevant because let me tell you how it works. You’re gonna call the bank and I always start out like I’m doing a short sale just because that’s what the bankers are familiar with. . And I’ll say, I’m working with Harry and Helen homeowner, and as they’re in default on your loan.

And the problem is, this house is not worth. , what they owe on it or there’s no way that I can, I’d like to buy it, but there’s not enough room in this for me to pay you the full amount that’s owed. And I was wondering if you would consider a short sale. And then once they say yeah, they usually say We gotta fax you over some documents and, send me in your offer.

And I’ll say, Hey, wouldn’t it be a lot easier if I just bought the note? And if they know how to sell a note, they will always jump on it because it is so much easier to buy a note than it is to do it with short sale. It’s a much easier transaction. So let’s say they agreed to sell this $115,000 note to me for 70,000.

Notice the numbers are still the same as a short sale. . The bank has a bottom line and they don’t care how they get it, whether it’s a no purchase or a short sale, it’s their bottom line, . So I can, basically what I’m doing is becoming the bank. I am buying the bank’s position.

So I now have the right to collect the hundred and $15,000 that is owed by Harry Helen. Now your listeners are probably thinking, I’m probably crazy . Why in the world would I wanna buy a note that somebody’s not making payments on? Yeah. It’s bad paper. . Let them just keep thinking that, because that means those deals will be left for me.

and me . Exactly. . But the thing is that I’m using the note in mortgage. As leverage to acquire the property. Okay. And basically I’m just adding an extra step in. When I buy the note, Harry and Helen now owe me $115,000, right? Now I could foreclose, I could step into the bank’s position and I could go ahead and finish the foreclosure.

truth is you guys know me. I’m pretty foreclosure . I could not foreclose on somebody. , . It’s just not my nature. And if any of your listeners choose to foreclose, that’s fine. I’m not saying, if somebody owes you the money, you certainly have the right to foreclose and protect your interest.

But I already know it’s not my nature to do that. When people tell me that they’re behind on their mortgage payment, I have the inclination to go buy ’em groceries or something . So that’s why this works out so nice for me because I can create a win-win situation before we close. So that I don’t have to foreclose on anybody.

Okay? So what I do, I, if I’m not gonna foreclose, which I don’t, what I always do is I get a deed in lieu of foreclosure from the homeowner. Okay? Explain that a little bit. Absolutely. a deed in lieu of foreclosure, that used to be a confusing term to me until I realized what it was. It’s saying, Okay, I owe you money and I can’t make the payment to you instead of foreclosing to take my property here in lieu of foreclosure.

Here’s the deed, Okay? Instead of foreclosing in lieu of foreclosure, here’s the deed. In other words, when some, when a bank is foreclosing, their objective is to get the deed to the house, right? So a deed in Lou just says, Hey, you don’t even have to go through the foreclosure. I will just give it to you.

Okay? Now the cool thing about that is, A deed in lie can only be given to the bank or the lender. And if you buy the bank or you buy out the bank’s position, now you are the bank. Okay. Okay. So once you buy that note, you can get a deed in lie from the homeowner. So basically all we’re doing is adding an extra step in the process.

When you do a short sale, the deed goes directly from the homeowner to you and there’s nothing extra there. When you buy the note, the bank sells you the note and then the homeowner gives you the deed in loop. So you’ve just added an extra step. But the advantages of doing that are huge. Any day of the week, I would always rather buy the note than do a short set.

So what are some of the, we talked about the ease of getting through there. What are some of the other

advantages? Oh, there’s lots of them. First of all, it’s a lot easier to buy the note. When you do a short sale, you ha as you have to gather up all of the homeowners information. Yeah.

You need pay stubs, tax returns, bank statements a hardship letter. You need all of their personal information. When you’re buying the note, you don’t need to do that. Your package to the bank is a very simple package that is basically an offer. Oh. And the only time I even include pictures is if I’m trying to get them to come down on the price.

Okay. Oh,

okay. That’s huge. I think we should focus on that too for if people that haven’t done short sales before, getting the information from the folks that are going into foreclosure can sometimes be a lot worse than dealing with the bank. Oh yes. It could take forever. We’ve got some right now where we just can’t get the information from this young lady.

She’s going into foreclosure. It’s gonna go to auction in October September.

And it’s not that they don’t wanna give it to you, half the time they can’t find it. Yep. Yeah. And or they haven’t filed tax returns. How can they give you a tax return when they haven’t even filed it yet?

Or, the other thing is they don’t understand why they have to give you all this information. If they’re in default, that it, the process to them is backwards. Just to get them to understand sometimes as

a challenge, it, they need to understand that if the bank is going to accept, let’s say a $45,000 loss because if they owed 115 and they’re accepting 70,000 as a payoff, the bank is basically taking a ride off. Of $45,000. . And so if that’s the case, the bank wants to look and make sure that in fact the people can’t afford to pay it. We’ve had people that want us to do a short sale and they make a hundred thousand dollars a year

Yeah. They just have elected not to make a mortgage payment. Yeah.

Yeah. We’ve met some of those people. ,

And the banks not gonna approve that. They wanna see that the homeowner really has a legitimate hardship. That’s why that hardship letter is so important. When I first started doing these, I thought that, what difference does it make?

Why they got behind? Here’s the numbers. The fact is they are behind. Let’s do a deal. And then I happened to, one time I was speaking, and when I got done, this gentleman comes up to me and he says, I wanna thank you for telling people how to put a package together to send to the. He says, I’m a lost mitigation officer.

can you believe that? Here he was sitting in my talk, And so I said, I gotta buy you lunch. I gotta buy you lunch. Pick your brain. I know that was exactly right. And we have since become good friends. But I took him out to lunch and we talked for several hours and I wound up, up actually doing an interview of him.

In fact, I have the bonus CD for the people who decide to get my course today. I’m gonna give him a CD of me interviewing him. That’d be cool. Yeah. It, oh, once I talked to him, it changed completely how I dealt with the bank. Okay. Because I, I learned how to think like the bank thing, I learned what they were looking for, what motivated them, what did I need to do in order to get them to accept my offer.

Okay. And one of the things was that hardship letter, and he flat out told me, he said, Don, We look to see if they had a real hardship, If they’re just some typical deadbeat that, has lost two or three houses, filed bankruptcy twice, is just out, doesn’t know how to manage their money, they won’t do a short sale.

If, See, I would’ve never thought that.

Yeah, it figures the bank. They don’t care about emotions,

But they, if it’s someone who is just trying to take advantage of the bank , they will not do the deal. And so they want the hardship letter. They wanna know what caused the person to get behind, and they want to look at their bank statements, their tax returns, and confirm that in fact they don’t have the money to pay soon as they do that, they’re good to go. But they do need those documents to make those decisions. So that’s why that’s important, But going back to why it’s easier to buy the note . Or why it’s better to buy the note. The biggest thing about buying the note, It puts you in control.

Okay. If you think about your short sales, I’m sure you guys have had short sales that have been turned down. Yeah. One or two . Oh yeah. Come on. I know it more than that’s certainly before you got my course. You had more than that turned down. That’s right. .

We’ve had more turned down than we’re accepted.

, that’s normal. Honestly, Lynn, that is totally normal. It was so funny because one of my students called me up and she says, I have tried three deals and they did not go, I want my money back. And I said, You’ve tried three deals and they cannot go through. It’s and I didn’t even wanna argue with her.

I thought she doesn’t belong in this business. , I would say on the average one outta three deals close. That sounds too bad. Is that what you found? Something like that.

I think it gets about, it’s about that. It’s probably close to that. Yeah. But one outta three is more than enough to keep you busy, . Oh

yeah.

A absolutely. But every deal that you get is not necessarily a good deal. Yeah, and so if I could give one thing, one reason of my success, I think one of the biggest things is persistence. Okay. Because where everybody else would’ve walked away, I looked at people that were success. And I said, If he can do that , I can do

Even though it might take me 10 times longer to do it, it was like, bye golly, I’m not quitting until I get this right. And so I learned the hard way, just to have the persistence because that’s what it takes. But, I felt sorry for the scale because if she had stuck with it, she might have gotten the next two deals, right?

Yeah. But if she couldn’t even stick in for three deals, I wasn’t gonna waste my time with it. , . But the fact is that when you buy the note, you become the bank. The bank is the one that makes all rules. Okay. Isn’t usually the bank that mixes your deal. Yeah. Yeah. When you think about it, if you want the homeowner to stay in the house, you wanna give the homeowner cash back.

The deficiency judgment issues, we can, we’ll go through these one at a time, but there’s so many things. That, that will cause a short sale not to go through. And it’s all because the bank won’t let it. Okay. If you wanna avoid that, you simply become the bank . I would much, I don’t wanna be at somebody else’s mercy.

I wanna be the one in control that calls the shots, and that’s why I love to buy the notes. Okay. So first of all, for some of your people, they’re gonna be dealing with houses that might have a lot of equity. I’ve been talking about houses that have no equity. But if you’re in a strong market, you might be sitting on working with a house that has a half million dollars worth of equity.

Okay. And the funny thing is, banks take huge discounts on the million dollar properties. You wouldn’t think that No. Because you think, oh, there’s lots of equity. It’s a strong market. Wait to the contrary, because it takes longer to sell the million dollar property. Oh, okay. And so a lot of times they take a larger discount on the more expensive homes.

So let’s say you’re dealing with one of these and the homeowner says, Look, I’ll gladly let you take this, but I need 50 grand for moving money, or, down payment on another house or whatever. If the bank’s taking a hit on that mortgage, I guarantee you they’re not gonna let the homeowner walk away with $50,000.

That’s not gonna happen. . No, definitely not. But sometimes if it works into your numbers , and you would like to give them the money back, you could never do that on a short sale. No. But if you buy the note and you become the bank, you can give them as much money back as you want to. Okay.

So that’s a biggie right there. That comes up quite often. Another thing is that typically one, one thing we really didn’t get into that we should have is how to do these deals without your own money. Yeah, that’s a good question. . Okay. And this is where the bank can step in and really mess up a short sale.

So let’s say that you strike a deal with a bank, and we’re going back to our short sale example with the hundred thousand dollars house, and Harry and Helen owe 115, okay? And the bank agrees you’ve presented your package to ’em. They check everything out and they go, Yep, you’re right. If we can get $70,000 or a whole lot better off to take this 70,000, Okay?

So they agree to take 70,000, but you don’t have 70. So you just find a tenant buyer or an investor and you sell it to them. So you’ve got this under contract to buy it for 70,000. You can sell it maybe for 90,000. Okay. And you’ve just paid 20 grand. . Now, one thing that people need to realize is your profit is directly related to who your end buyer is, if I don’t know if you usually wholesale your houses. No we keep ’em, we hang out to ’em or we retail ’em. Good for you, . That’s way Get money now. . Now see I have so many investors that I typically, if I’m not gonna hold onto it and my role of thumb is if it’s close to me, I’m gonna hold it.

Okay. But I get properties all over the country and I don’t wanna own properties all over. Normally I wholesale mine out to an investor just cuz I can do that with an email. I’ve got so many investors all over the country. Yeah. But an investor obviously is gonna look for a good deal.

So your investor might wanna buy it for 80. So you’ve bought it for 70, you sold it to them for 80 to made 10 grand. . On the other hand, like you’re doing, if you’re retailing it out, you might sell it for the full hundred thousand and make 30 grand on the deal. Okay? So I’m using 90 just as a middle of the road.

Okay? So you’re gonna buy for 70, you sell for 90. Now the normal way that you would do that without your own cash is with a simultaneous close. . . Now let me explain what that is for folks. Okay. A simultaneous close is where the investor or your tenant buyer wires their money into the title company.

And the title company is going to prepare two closings. The first one will be Harry Helen selling you the house for 70. The second one will be you selling the house to your investor for 90, right? Okay. And a simultaneous close is when you do these two closings back to back and you use the money from the second closing to fund the first one.

Okay. Okay. So any wires is 90,000 into the title company. Title company prepares the two closing document packages. . And they’re preparing the one and they say, Oh my gosh, when Donna sells this to Eddie, she’s gonna get $90,000 and lower and behold, shoot, Eddie’s already wire is the 90,000 right into our escrow account.

So is there any need for her to call me and tell me to wire 70,000 in from my first closing? No. No, Because she knows as soon as they close on the second one, I’m gonna pick up 90,000 from Eddie. Yeah. So they take 70 of Eddie’s money and they go ahead and use that. To pay off Harry and Helen, they pay off the bank.

Now I have now bought that house from Harry and Helen and I haven’t even used a dime of my own money. Okay. And so then they immediately turn around and they do the second leg of the closing. . And that’s where I sell the house to Eddie. And that’s where I picked up my $20,000 profit. So that is called a simultaneous close.

Okay. Now the problem with doing that, basically I have just quote flipped a house. The proper way to proper terminology for that. Now is wholesaling a house? . Okay. . But the problem is, and I used to own a title company for three years. Oh, okay. And the title companies nowadays are hesitant to ensure properties or the title on properties that have been closed with a simultaneous closed.

and the reason is because of all the mortgage fraud. , you’ve heard of all the predatory lending and all that kind goes on? Yep. Typically those type of deals involve a simultaneous close. Okay. So the title companies have made it a blanket rule that they will not do simultaneous closes. Now, this isn’t all over, but in a lot of areas.

Okay. So now you’ve got an issue where you wanna close this deal and you can’t do it. Yeah. You’ve got a short sale lined up, you’ve got your buyer lined up, and you can’t even do it because you can’t get anybody to close it for you. That’s my, that. The next thing to do is an assignment of contract.

Have you guys ever done one of those?

No. We usually do a double close or simultaneous closing. Okay. .

Okay. The way around the simultaneous close if that’s a problem is to do an assignment of contract. So you would have Harry and Helen sign the purchase contract selling that. That says that they’re gonna sell the house to you for 70.

. Okay. You just have Eddie Ann Byer write you a check for 20 grand and then he steps into your position and he goes ahead and buys the house from Haring Helen for 70. Got it. Okay. So you’ve got your money and he’s got the same amount tied up, 90,000 total. But it’s just a matter of how you did the documents.

He’s

just buying the contract from you instead of buying the house from you. He’s buying the house from them. Okay.

But the problem is that a lot of the banks won’t let you do it. An assignment, a contract. Yeah. Have you run into that then? It seems

like we’ve seen that

somewhere. Anytime we put and or assigns on our contract, Kick it back out.

Yeah. So this can be a real problem. A lot of the banks say whoever’s name is on that contract to purchase. That’s the only person that will put on the deed. No one else got it. Okay. So now you’ve got problems because how are you gonna buy this house and use somebody else’s money? You can’t do a simultaneous clothes and he can’t do the assignment of contract.

, another problem that comes up is if your end buyer is gonna go out and get a loan, even if it’s an investor investors, oftentimes if they’re not cash buyers, they may go get a loan. , have you run into the 90 day seasoning issue?

No. The only host we have wholesale, we’ve had cash buyers.

Okay. You’re lucky that’s a good way around that. But for folks that are, have buyers who are getting a loan, a lot of the banks say, Okay, whoever you’re buying it from, they need to be on title for at least 90 days. If you do a simultaneous close, you’re gonna be on title for 90 seconds.

Yeah. , not 90 days . So that can be a real problem. . So you’ve got multiple issues here. You’ve got wanting to give the homeowner cash back. We haven’t even talked about staying in the house. That’s a whole nother issue. But another thing that I definitely wanna cover is about the deficient judgements.

Okay? Okay. Let’s talk about now on my contract, when I sign that with Harry and Helen, I tell them that I’m going to try to negotiate that the bank will not get a judgment against them for the amount that’s written off. Okay? So see sometimes the bank will say, Okay, we’ll let you buy the house for 70,000, but we’re taking a $45,000 hit here.

. And we are gonna get a judgment against the homeowner for that. And that judgment will be out there for two years. So if the, if they bought another property, that judgment could attach to another house that they bought. Okay. All right. That can be a real,

It depends state to state, right?

Certain states are deficiency judgment states, certain ones aren’t. Did I understand that correctly?

Or do they all have some 10 99 states, or is they just

depend on the bank? No, the, that’s a different issue. Okay. There are some states, like in California you cannot get a deficiency judgment on certain types of loans.

I don’t wanna get into all the various they lost. Yeah. But some states don’t allow you to, If it was a purchase money mortgage, where they were borrowing the money to buy it, then the bank cannot get a deficiency judgment. Gotcha. Okay. But the majority of states, the bank, the banks can get a deficiency judgment.

Okay. It is a federal law. That if they do not get a deficiency judgment, the banks are supposed to send out a 10 99, which means when the homeowner gets that, it’s gonna show this $45,000 write off as income to the homeowner. Okay, perfect. Now, everybody’s always afraid of that and they think that will blow their deal.

What they don’t know is all you have to do is tell the homeowner that if they get a 10 99, they need to see their CPA or someone knowledgeable about tax preparation. Okay? First of all, they may not owe any taxes if they’ve lived in their residence for two outta five years and they qualify for an exclusion for selling their own home.

Okay? Okay. So it might be a moot point anyway. . . But there’s also a form that’s called a 4 9 82. And basically if the homeowner is insolvent, if they have no funds right, then they’re not going to owe that tax on it anyway. Okay. Okay. And very few people know about that. Okay.

So the fact is that 10 99 is never an issue because normally the homeowner doesn’t have to pay the taxes. Okay. But the banks by law are supposed to either get a judgment against them or send them a 10 99 for what is written off. Lots of times the banks will say we’ll take your 70,000, but we are still gonna get this judgment against the homeowner.

It’s totally up to the bank what they wanna do.

I gotcha. So I see where you’re going here. If you’re the bank, .

Exactly. . If you’re the bank, you decide. On a short sale, if the bank says, Nope, we’re getting a judgment. There’s nothing you can do about it. But if you buy the note, then you can say, Heck, I’m not getting a judgment against you.

that cool. I think that’s really neat. Yeah, that’s because it really does allow you to help the homeowner, and that’s my whole thing. I, one reason that I like to do these deals is because it gives me a good feeling to know that I’ve helped somebody. There was actually a time when I was gonna get out of this business because so many of the people had such bad reputations and I was on a radio show once and this guy called up and he said, I don’t see how you can look yourself in the mirror.

You’re taking advantage of people who are down and out and, you’re such an ogre and all this . And I thought, you know what? There are a lot of unscrupulous people out there that try to steal homeowners equity from them and that kind of thing. Not at all what I do. And I realized I was, I really was gonna get out of the business and I thought, somebody needs to be out there helping the homeowner and being an advocate for them.

They need to show the world that not all investors are out to steal homeowners equity. , we’re not all . Yes. Thank you. . But the thing is what people need to realize is that the bank is the one that, that basically allows you to make a profit. The homeowner never pays me a dime. I do not take any of their equity.

I’m getting my discount from the bank and it’s all because of the time value of money that I’m able to get these huge rates of return. , and I’m not even ripping off the bank because it’s in the bank’s best interest to sell me the note. We started to talk about that and I think we got off on a tangent.

Let’s go back to that business of the cash reserve For the bank? Yeah. The banks, if they are rated on their ability to do workouts with the homeowner, and I’ve seen it as high as eight times the amount of the loan. So if they have a bad rating and they have a hundred thousand dollars mortgage or deed of trust, that is in default, that bank may be required to hold 800,000 of their good lending money and just stick it over here in a reserve account.

They can’t loan it out, they can’t do anything with it, and that $800,000 just sits there until the a hundred thousand dollars defaulted loan is off their books. Okay.

So they wanna get it off their books, . Oh

yeah. They can’t wait to get it off their books. And that is the main reason that the banks will take a discount and the lost mitigation officers will be very upfront and they’ll just tell you, we, we need to free up those reserves.

, or we don’t want this properties to sift through the winter. We don’t wanna have to winterize it. We don’t want, we know we won’t be able to sell it till spring. That would tie up our reserves for six months, , And so what happens is deal that you would never think that the bank would accept, they do in a heartbeat.

And it, it primarily has to do with the reserves or with cleaning up their books. Like your best deals come from the bank when, like right before the end of their fiscal year or right before their auditors come in. , we had a deal, my son and I were doing together. And he had been negotiating a short sale on this little property and he was holding out to get it for 37 5.

Now, I know in some places, 37 5 would even buy a dog out , but no, that these principles work. Doesn’t matter what the value of the property. The only thing is I if you’re in, in, in a, a $3 million area just to add a zero to your property, , , it doesn’t matter what the value is, they still work.

But he was holding out for 37 5 and he was trying to get him to do a note purchase and they said they do a short sale, but they couldn’t come to an agreement on the price. Okay about six months later he gets a call from this bank and they wanna know if we’re still interested. Being the son of, who year all of a sudden 37 5 was not a very good price anymore.

Six months down the road. , I have trained you .

I just don’t have the cash available at that price right now. I think we’re gonna have to talk about the price again. Yeah,

exactly. I know, exactly. That was six months ago. I already spent that money . And you’ve got more deterioration, six months older.

That house has been sitting empty for six months, And so anyway, he got them to take 30,000 for the house. Wow, cool. This time it had to be a note purchase. . They would not do a short sale. Really? Wouldn’t you hear why? Yeah. This is really cool. The bank had foreclosed on the lady and the lady, or excuse me, the bank did not show up at the sheriff’s sale.

Oh. So it, it totally messed up their whole foreclosure. Yeah. So now they can’t go back and negotiate a short sale with homeowner. And the thing was, there could have been a hundred investors wanting to do that deal. I don’t know how many there were, but because the bank knew that the only way they could do that deal was to sell the note , and they remembered that Ben was wanting to buy the note

So that’s why I called my son. So we bought that for 30,000. We’re just finishing up the rehab on that. It’s about $15,000 worth of rehab. So at 45 in it. And we’re gonna market it for 85. Cool. There you go. Very cool. And then I just bought a this is one of my students deals. We bought a $60,000 house in Columbus last week for 20 grand.

Wow. The deals are out there and most people just do not realize it. , but that one we’re gonna sell to an investor probably for 40 to 45. They can put five or 10 in it and probably sell it for 80, okay. The cool thing is that there’s room in it for everybody to make some money. Yep, that’s true. That’s why I like doing this business because I can really help the homeowner. These people send me thank you notes, , because they’re just trying to stop the foreclosure. I can help them to avoid bankruptcy. That’s probably one of the biggest things that I can offer them.

because most of the attorneys are telling them to file bankruptcy to stop the foreclosure. I can step in and without them filing bankruptcy, stop the whole thing. So that’s a big thing. But I can help the homeowner. The bank is happy because they’re getting out of a bad deal.

I’m making money, My investor’s making money. It really is a win-win situation all the way around the table.

That’s cool. And you’re talking about the cash, and people would think that’s crazy. Why would you wanna give cash back? Maybe it’s not a, an awesome deal. It, once you start doing short sales, you realize the folks that you work with very rarely are at high points in their lives.

That’s true. And having at least something that you can give ’em on the way out the door, at least you feel like you’re helping out in some way. So

that’s Now if it’s a matter of they need a security deposit, for an apartment or something like that. Yeah. In my course, I have a bill of sale.

Okay. And what you can do is you can buy like some furniture from ’em. Or an old car or washing machine out of the Yeah. And you can do that as long as you document it and you’ve purchased personal property, now you really gotta do it. Don’t let them accidentally run off with it.

That would be lying. Yeah. But more and more of the banks though, are starting to have you sign an affidavit saying that you have not done any side deals like that. Oh, okay. But assuming that it’s not one of those banks, you can give them some money back by buying some personal property.

Or Another thing that I use is I’ll do a little contract with them to clean the house. Okay. know, And I just write it up that if you will carry out all the trash, steam, clean the carpets, wash the windows at 8 22 North Oak Street, I’ll pay you $2,000. . Okay. And that’s another way you can give them some cash back.

Okay. But if you don’t want that to be an issue, simply buy the note and you can give ’em back as much money as you want.

Then you get to decide everything. .

That’s cool. Another reason that you would wanna buy the note a big thing that comes up on the short sales is if there are two mortgages on the property, right?

, you have to negotiate discounts with both of them. Oh yeah. , you’ve been there, .

Actually no, but I’ve heard lots of stories about people having to do it. We’ve been fortunate that ours only usually

have a first, oh, that’s good. That makes it a lot easier. Oh, definitely. I had one student who negotiated 17 discounts on one property,

Oh my God. Wow. She definitely should get a trophy. Yeah, definitely. I’ve never done that many on one property before, but what happens is sometimes. The second mortgage will hold out and they want more than what the first will let them get. , because remember we said it’s the first mortgage holder that makes all the rules.

, right? So let’s say they say, Okay, we’re taking a $45,000 hit here. The most, the second half can have is a thousand dollars. But the second says, Hey, we’re not gonna agree to this unless we get at least 5,000. Okay? I have had people come to me when I had my title company and they wanted me to do all kinds of things, make.

Payments on behalf of the homeowner that would be held in escrow. And if the deal doesn’t close, give the money back. But if it does close, then you know, say that it was made the week before. all this . You guys, this is fraud. Yeah. Don’t even come to me with that. I don’t wanna be part of Exactly.

The thing is, there’s a legal way to do it. All you have to do is buy the note, then you make the rules. Yeah, you buy the note. Now you could buy the first, in which case you could say, Hey, give the second however much you want. But in this case, you buy the second, you buy the second for $5,000. Okay. They’re happy.

They don’t care whether they get a payoff or whether they get bought out. They’re looking for five grand. So you say, Okay, I’m gonna buy your position from you. Here’s $5,000. Now you own the second mortgage. So you said, we say, Okay, twist my arm. . All right. A thousand, You’re only gonna gimme a thousand.

Okay, I’ll take a thousand. , go ahead and let the deal close. Okay. And all because you knew to buy the note. Now, I’ll tell you, I’ll bet you 99.9% of the average investors walk away from those deals on short sales cuz they don’t know how to close them. It’s all about buying the note most of the time.

It’s gotten to be a big joke at my office if we’re working a deal and we can’t figure out, we run into an obstacle and we can’t get it closed. I’ll just tell you a secret. When you run into an obstacle, you should ask yourself what would happen if I bought the note? Because normally it totally eliminates the problem.

Okay? Something keep in mind .

So that’s the very first thing of course should ask is can I buy the

note? I start out like I’m doing a short sale, but I always try to convert it to a note purchase. Yeah. Gotcha. So the truth is that you can make a ton of money in pre foreclosures whether it’s on short sales or note purchases, but because some banks only do short sales, it’s important for you to know how to put a good package together and how to negotiate and get your short sale done.

. But it’s also important to know that any time that the bank will let you buy the note, you’re always better off to buy the note. It’s better for you, it’s better for the homeowner. Your deal is easier. It just puts you in control that your typical obstacles that come up on a short sale, they begin become completely, I.

Got

it. And this is probably important, You’re talking about putting the package together and everything and even on the note side, you still have to have some information and we do the show and we talk about a lot of things, but it’s all, we can never get more than a cursory glance at and what we’re talking about when you start talking about short sales and note purchases it’s, while it’s easy enough to learn, it’s a little more complicated.

You can’t just go and decide you’re gonna do it on your own. That’s personal opinion in my minds that you can’t do that, that you really need some type of system to, to work off of.

I totally agree because it, when I started out, even though I had this attorney teaching me, what happened was I, he had me to buy various different courses.

And they would tell me enough, like to wet my whistle and go, Hey, I can make a lot of money at this . But they didn’t. Isn’t that true? You know that’s true. Yes. But they don’t give you the nitty gritty on how to do it. Yeah. And so I spent years developing forms that allow me to get all my information in one place and that simplify my transactions and organization is huge when you’re dealing with, this is called the paper industry , and it’s called that for reason,

Yeah. My files could be two inches thick, so it’s important for you to use my system. You use my checklist and everything. And that’s what enables me to handle 40 or 50 deals at a time. Wow. Because I have everything systematized. I’ve made it as easy as 1, 2, 3. I have all of the, both the administrative documents as well as your legal forms for doing your deal.

Those are things that I’ve had to develop over the years. And these come from real deals where I’m sitting in the office trying to figure out how I can close this and there’s an issue. Oh my gosh, I could buy the note and then get the Dean Lou and do this and that and that all comes into play because I really am in this business, and these are real deals and they’re real documents that I’ve used to help students put deals together and to do my own deals.

And so it’s important to have a system. Now I’ve put together two different systems. , where the first one is my note buyer’s master guide. Okay. Now that is about a 500 page manual or 400 pages, I think. But the cool thing about it is I realized how important it was to have something that was easy to use.

So I have a very detailed table of content. So whatever it is you wanna learn, you flip to the table of content, just go right down with your finger. You wanna know how to use a calculator, how to structure a deal, where to market for pre foreclosure, or excuse me that’s in a different book. Yeah. Where to market for good paper.

How to do this in your ira, whatever it is you wanna learn. And I have index tabs in my book. Most people don’t put index tabs in their courses. . No. But to me that then makes it so easy to use, , it

is a lot easier. , you can get to what you

need to in a hurry, right?

Absolutely. So you can just flip to that section and read stats section. And then I have that entire book. I also have the CDs that go with it. I have a library of forms. I have a hard copy manual, plus I have the forms on this. And in these forms I might add I’ve never seen a note purchase agreement like what I have.

I worked with this attorney to develop be best note purchase agreement out there. and especially when you start doing some of my advanced techniques of buying part of the note and that kind of thing. , if you don’t have a good note purchase agreement, you’re gonna wind up in trouble to be quite honest.

Okay. So it’s important that you have the right documentation. All of that is included. I also have a D V D presentation, an hour and a half presentation of me talking about good paper. Ok. So that entire system is 9 99. Okay. Okay. Now that’s good pay, That’s what I was talking about the first part of the call, the seller carry backs where they’re not in default.

Right? . And if I get to throw something in, when you’re talking about the good paper and the in the note buyer’s master guide we didn’t, because we just don’t have time today. Go through all of the stuff when you were talking about calculating the interest rate and right? To knowing how much to sell it for and how much you’re getting on a rate return and all that kind of,

You, you do go through that. And I’m an accountant, but I’ve sat there with folks that aren’t like, like Lynn, and

watch it.

Watch it. And the way that you lay it out, it’s your bootcamp. You do a whole day. We haven’t been there, but you do a whole day on working with the calculator in the book.

You step through it and you tell people, you press this button to do that. And that’s not something you can just pick up on your own. That whole section is really valuable. Just to understand

that. I’m glad that you said that because I hear it from people all the time that they had tried to learn the calculator and they couldn’t.

But when they picked up my course, because I do break it down step by step. , and then, they go, Oh my gosh, I can do this . It’s like, how do you need an elephant? One bite and a five, . But ju I do have to add this in. Defensive Lynn. Okay. , there’s lots of folks out there that don’t like to use the calculator.

Now, I do think that if you’re doing the good paper, I think it’s nice to be able to use the calculator and I’m, I like to calculate, I don’t care what investment I’m doing, I wanna know what’s my rate of return, so I can compare each and every one. Yeah. But if you’re like Lynn, And she brings a deal home and she’s just made $50,000

Are you gonna be upset with her cuz she couldn’t calculate her rate of return? No, not at all. I think

we’ll get past it. Donna, I just wanna, in my defense, I just wanna say that right now with the financial calculator, I’m better at it than JU is. So he’s talking a whole

bunch of crap there.

Cool. It is true.

I know how to use Excel and it took me a while to get back to the calculator, but I’ll tell you the calculator’s a lot easier. Standing in somebody’s living room and you’re trying to figure something out. ,

If you wanna learn the calculator, you just go to that section. And I do make it real easy.

. But for those folks who never wanna pick up a calculator, the way I look at it is, if you’ve made 50 grand on a deal, what is your rate of return? Who cares? , you know it’s enough. And while everybody else is still trying to figure out the calculator. You’re laughing all the way to the bank.

Exactly. Exactly. Because you’ve already done your deal and made your money and you’re under the, Never let that be a hang up. I just, I like I love numbers and to me it’s a big game and I love to figure out, which one is gonna give me the best rate of return, if I hold it for two years and then sell it, or if I raise the price and do it this way.

And I think that’s fun. Yeah. But I’ve got people who hate numbers. So what they’ve learned is you buy low. You sell high and you make money. Exactly. And they could not tell you what their rate of return is, but by golly, they’re making 11 off of them. , works for me. So the point is go do it. It works.

Exactly. Doesn’t matter about your rate of return , but but going back to the courses I have, Yeah. If you want to learn pre foreclosures, then the ultimate short sale book that I have is the book to get, it’s called Note Buying, the Ultimate Short Sale. And that teaches you everything about doing both the short sale and buying the defaulted note from the bank.

And again, it’s important to know both because some banks only do one or the other. And in that the packaging that you guys were talking about, I’ve got the sample package in there. I talk about how to negotiate with the. I’ve got my 10 favorite ways to find defaulted deals. It’s really everything A to z everything you need to do, both the note buying and the short sales.

It’s a good book. Thank you. I appreciate that. , I, this is a new book now that, that actually just came out in November. I had another book that I used to use. It was cashing in on delinquent mortgages. So if any of your listeners have that, they need to upgrade because this is way, way better. It’s got a whole lot more information in it and a lot of new forms that I’ve developed.

Like I said, just in working with different deals, one thing we didn’t talk about was the homeowner staying in the house. Yeah. Can’t do that on a short sale. But that is something you can do on a note purchase, but you have to have the right documents to do it. And that’s something that is included in the ultimate short sale book.

Okay. Okay. So that system is 9 99 and then I have a monthly conference. I am a firm believer that you need to have that regular support. I am committed to helping my students to learn how to do this. , and too often you hear of people, they invest in, in a course and then they never talk to the instructor again.

Quite to the contrary. You’re gonna get to listen to me every month. . I don’t know if you guys have been on any of my calls. Have you been on any of my monthly calls

yet? Yeah, listen, I listened in every month. Last month’s you were on vacation, but that’s true.

and I’m sorry I missed that.

I was gonna do it from vacation and I could not get a decent line to call in on, so that’s why we just said it canceled that one. Yeah, that makes sense. But we do

listen. Yeah. And let, just to let everybody know too, that they can listen in on the conference call or, because obviously if they’re listening today, they’re into podcast

You, you’ve recently, you’ve set that up so that they can listen to it later through a podcast.

I have my own podcast that I do. Yeah. So I have the monthly conference call. And what I do is I choose one topic and I gauge it by when people are calling in, what are they asking, . And so I might do how to structure a deal, where to find defaulted loans, where to find good paper, how to negotiate with the bank, how to negotiate with the homeowner, how to find money. It, whatever topic I feel is pertinent at the time. And I spend a whole hour and a half just on that topic, so you get all the nitty gritty details and everything.

And people have really complimented the calls and said how much they’ve learned off of ’em and how much it’s helped ’em. If you get the other two systems I include the conference call, that’s a $600 value. Okay. You get all of those things. You get the main course the master guide, that’s 9 99.

The ultimate short sale course is 9 99 and the conference calls are 600. Now, what I’m gonna do, cuz I I, I know we talked about doing a special offer for you. , if a anybody invests in the Note Buyer’s Master Guide for 9 99, what I will do for your listeners, I will give them the ultimate short sale book.

Ooh, cool. You’re gonna buy one, you get the other one free. That’s pretty cool. And I will throw in the conference calls. That’s awesome. Oh, okay. For 9 99, your listeners can get the Good Paper Course and the Bad Paper Course, , so they’ll be able to buy, sell, or Carrybacks. They’ll be able to do short sales, and most importantly, they will be able to buy defaulted loans from the bank.

And that’s the big thing that very few people know how to do. Very cool. Now, so you get all of that for 9 99. Okay. I also wanna stress that as a student, . I have a program. I call it my easy as one, two, three. If you are a student of mine, then what you do is you go to the section on marketing and I have all the marketing all laid out for you.

The ads are already created. I would recommend one thing. , you should probably change the phone number on me, , if you don’t want to, That’s okay. I’ll make your deal. The field, the calls, huh? Yeah. . I won’t feel them. I’ll keep , but I’ve got all the marketing done for you. The ads are done. Flyers.

I’ve got a really unique the three part marketing program for the pre foreclosures. Everybody has just raved about it. Have you used my From the Heart letter at. I don’t think we have yet. No. Okay. But from the heart letter it was actually one of my employees who, who helped to write that.

And it is, it’s just a really unique way of getting locked into the homeowner. Like when you read it he just conveyed so much compassion and feeling in it, and everybody who uses it says that their results from their direct mail had gone up significantly. In fact, I was in Connecticut Saturday and one of the gals that was working the table stepped in to the room when she heard me talking about it.

And they had been doing short sales previously, but she said they pulled out my letter when they got my course and they started using it. They did 15 deals off of my letter last. I guess we’re gonna have to start incorporating that letter. Yeah. , you’ve got a little gold nugget there that you don’t know about.

Yeah. You need to pull that out. Gotta tap

back into that, I think.

Yeah. I had another fella once he was on my conference call last year and he chimed in. This was before they got so big that I used to let everybody talk and keep an open mic, but I can’t do that anymore. . But he says Donna he said, I just wanna say I have been using your from the heart letter.

And he said, I get six to seven leads a week off of it. Wow. And he said it’s phenomenal. I’m like, a month later in New York City and I said, Were any of you on my conference call? Did anybody hear James on the call? This guy raises his hand from the back of the room. , he.

I’m James . How lucky can you get, yeah, definitely. The Lord put him there. Let me tell you, . He says, I’m James, and he says, That’s absolutely true. He said I’ve got all these programs. I use Donna’s almost exclusively. I use her marketing and I have been sending out the direct mail letter or her from the heart letter.

He says, I get six or seven deals a week off of it. He said he had, or excuse me, leads a week. , said, I have closed 10 deals in the last year. He said, Donna Bower has made me a million . He’d made over a hundred grand on each deal. Wow. Holy

cow. That’s quite the testimonial. .

I know. was all on my From the heart letter.

Okay. And then what I do is I’ve got a three part letter. So you send out one letter and then I’ve got two follow up. Okay. I’ve got another student and he said that 70% of his deals come from the second and third letter, and he has quite a pipeline 20, 25 deals in his pipeline right off the bat.

Okay? So all the marketing, everything you need is already done. You, whether you send out your letters or the flyers, whatever, when a homeowner calls you on my, I’m going back to my 1 23 program. , you fill out the information on my data sheet and you get a few pieces of information, your authorization to release information, your hardship letter, and I like to have the financials on the from the homeowner.

You fax those over to my office. From that point on, my staff will walk you through the deal. That’s what we, full time, I have just hired a lost mitigation officer to negotiate my students deals. . Yeah. We were pretty excited about

that. .

Yeah.

Lynn and I were talking about that because we’re so big on, we keep talking about focusing on what we’re good at.

And we’re okay with the paperwork and stuff, but we don’t like sitting in there doing it. And we were just saying, we need this at this. We need to change our pipeline and route everything through your office. Especially now that you have somebody like a lost minute negation officer. ?

Vicky worked at a bank for seven years.

Wow. And I’ll tell you when I first hired her, I’m used to working with people who have never done any deals before. Yeah. And she says, Look, I just need to get into your head on a few things, , cause she needs to get on the other side of the fence, and as soon as she picked up what I was trying to do, she says, I got it.

I got it. She picked up the file and she calls the bank and she’s negotiating. I’m going, Oh my gosh, this is so cool. . And she can talk there lingo and everything, that’s one of the advantages of being a student of mine. That’s a huge advantage. Yeah, absolutely. You can submit deals to me and then you have to be the liaison.

You’re the one that, that meets with the homeowner. Okay. Gathers up the documentation and makes sure, to get it back to me and everything. . But we’ll call the bank. We put the package together and if you don’t have cash, we even use my investors. I’ve got investors all over the country.

I also have Wall Street backing, and they’re calling every day saying, How much can you get? How quick can you close? They’re ready, willing, and able to buy. So you don’t even have to worry about cash. Now, when we do those deals, we split 50 50. Okay. It’s a super way where you can learn the business.

, and at the same time be making money on the deal. Yeah. That’s

awesome. That’s awesome. That’s like almost like putting a safety net under there if you’re just getting

started. . . That’s a good way to put it. That’s a good way to put it. It sounded better

than holding in my hand.

Yeah. I hold people’s hand.

Donna, for that, all that they’re getting for 9 99, what will they be getting back? How soon can they see that return on their.

If they start right away and they get their marketing out there, most deals you can usually close a deal in, in, I’d say an average of three weeks.

Okay. And that’s, I have some that take eight months , but if you jump in, and the thing is the loss mitigation officers want to close by the end of the month. So if you’re starting at the beginning of the month, you can probably expect to close at by the end of the current month. Okay. So what I have found is that on your average deal it’s usually, I’d say three to six weeks.

Some of them take longer but realistically if a person were to start doing their marketing right away and they got that over to us by the end of the month they could be putting. Typically my average student makes $50,000 on a deal. It’s amazing that, that’s like a magic number.

It, whether they get 50,000 in equity or 50,000 in cash, that seems to be the average profit on a deal. And if you are, if you decide to go into this full time, I would expect to close one to two deals a month.

So for that 9 99, what would be your rate? On rate of return

down for 50

cares. Got

you. Got me. The thing is that for most people they make on their first deal, a lot of times enough, like you mentioned, more than what you made in a year’s salary. Yeah. Yep. Yeah. I had one student he closed his first deal within three months. Now this was a performing note. It was a seller carryback.

And this guy was from Denver. Okay. He bought a 2 million note with none of his own cash sold. It made $395,000. Holy cow. That was his first deal. I can almost live in that. Pardon me? I can almost live on that in a year almost. Yeah. . And then he turned around and did another little deal, made 40,000 and he’s just off on a roll.

Wow. So the thing is, it doesn’t matter whether you’re looking for cash, if you’re wanting to replace an income or you can do it part-time and supplement your income, or a lot of folks, they may, maybe you’ve worked at a job or profession for 20 years and you’ve got a whole bunch of profit sharing that you wanna roll over into your IRA and you can invest that safely, all secured by real estate and get super high rates of return.

So basically, it doesn’t matter what your. Position is you can tailor make your own game plan, whether it’s lump, a lump sum cash, whether it’s a monthly cash flow, whatever it is, you simply tailor make your note buying strategy to fit whatever you’re trying to accomplish. But the thing is, so for only 9 99, you get both learning systems for good paper and bad paper.

You get the conference calls and you get my 1, 2, 3, easiest 1, 2, 3 program. That is it is a way, if you’re really serious about learning and you want more than just a book to read, you want an entire system with all your documents and everything. So it’s just a matter of jumping in and doing. If you’re looking for someone that will be behind you all the way and even help and actually negotiate the deals with the bank, put packages together and get your deal closed, then you wanna call right now in order the system.

That’s the bottom line. That’s

very cool. And what we’re gonna do is we’re gonna have it out on the website. Oh cool. If you go to www.getrealrei.com we’ll have a spot right there. People will be able to find it.

It’ll be the link to go through our site to get there. Yeah, to order it.

Thank you so much, Donna.

Thank you for having me on the call. It was my pleasure.