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NOTE INVESTING
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
Market
$91 BILLION LOST
OUT OF STOCK MARKET IN 2
DAYS
STOCK MARKET YOUR MONEYWhere is it going?
September 29, 2008Market Crashes
Xwww.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
Past Year
Forever
Stock Market Volatility Creates Anxious Money
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
www.DistressedVolatility.com
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
What’s Next??
Stock Market Fears
Do You Want to Feel Like This at 50+?
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
What do you want in an investment in 2016?
• Return- growth competitive with long-term stock investing• Stability- predictability of monthly payments• Security- backed by solid asset• Security- backed by experience • Security- doesn’t go away if the economy
tanks or you do (and we all do)
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
Seller-financed note investing does all this and more!• Return- Range of yields based on details of specific investments, but range
from 5% on a short-term front-end partial to greater than 10% on a 20-30 year performing note.• Stability- payments made by the buyer of real estate, occupant, pay history
and emotional equity.• Security- backed by real estate. You become the bank in this investment and
are secured by the full value of the collateral (the borrower’s house).• Security- in partnership with Equity Funding of Washington, LLC- experience
real estate investors since 2003.• Security- people will always need a place to live, even when the economy
tanks and you pass ownership of the note in your estate.
What is a Note?
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
Loan Amount: $100,000
Term: 390 mos. Payment: $878
TERMS OF AGREEMENT:
Interest Rate: 10%
Signed:
Home Buyer
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
Buyer Seller
Down Pmnt: $10,000
$100,000Note Mortgage
Lender
Loan: $100,000
Total Purchase Price: $110,000
Investor
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
Joe LaCountRogers, MN
Note Investor
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
Current Market Value:
$42,000
Case Study: #1
Ocala, FLManufactured Home – Double-wide with Land3Bed/2Bath, 1,368 Sq Ft.
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
Valu
e $4
2,00
0
The Property
1st Lien NoteSecured
by the Property
Buyer’s Equity+ 37 Payments
MORTGAGE NOTE
Original Loan Amnt: $33,000
Interest Rate: 10%Term: 240 months
Monthly Pmnt: $318.46
MORTGAGE NOTEPurchased For
$31,312Payments Remaining
203
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
$318
$318
$318
$318
$318
$318$318
JAN FEB
$318
MAR APR MAY JUNE$3
18
$318
$318
JULY AUG SEP OCT NOV
$64,554203 Times =
Effective Annual Interest = 10%
MORTGAGE NOTE
Purchased For$31,312
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
You can buy either the whole note or a partial• Why buy an entire note?• Higher yield• More involvement/control/work?• Longer term• More upside if things go wrong
(foreclosure, rental property, etc.)
• Why buy a partial?• Lower investment to value ratio
(ITV)- more headroom.• Equity Funding of Washington
makes our profit after you get all your payment stream. We’re behind you and watching constantly to make sure our (that’s right, OUR) borrower is paying and ready to fix it if you want us to.
• Less “involvement” or worry or WORK.• Great yield- 5-10%
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
$318$318
$318
$318
$318
$318
$318
$318
$318
$318
$318
$318
Buy Long Term (203 Pmts)
Sell Front (120 Pmts) Held By SellerMotivated to be Paid Remaining 83 Pmts
Front–End Investor Pays
$24,063
10% Annual Interest
Smaller & Short Term
Investment
Seller “Backs”The Front-End Investor
Collects 120 x $381
= $38,160
Entire Note
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
120 Pmts
Partial Purchase—amortization schedules
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
Partial Investor Gets = $14,984Plus $318 x 60 mos = $19,080
$34,064
$26,673
$14,984
5 yrs
Interest = 10%
Early Payoff or Default
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
You can buy either the whole note or a partial• Why buy an entire note?• Higher yield• More involvement/control?• Longer term• More upside if things go wrong
(foreclosure, rental property, etc.)
• Why buy a partial?• Equity Funding of Washington
makes our profit after you get all your payment stream. We’re behind you and watching constantly to make sure our (that’s right, OUR) borrower is paying and ready to fix it if you want us to.• Less “involvement” or worry• Great yield- 5-10%
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
Seller-financed note investing does all this and more!• Return- Range of yields based on details of specific investments, but range
from 5% on a short-term front-end partial to greater than 10% on a 20-30 year performing note.• Stability- payments made by the buyer of real estate, occupant, pay history
and emotional equity.• Security- backed by real estate. You become the bank in this investment and
are secured by the full value of the collateral (the borrower’s house).• Security- in partnership with Equity Funding of Washington, LLC- experience
real estate investors since 2003.• Security- people will always need a place to live, even when the economy
tanks and you pass ownership of the note in your estate.
Questions?
www.EquityFundingofWashington.com © 2016, Equity Funding of Washington, LLC
Other Topics• Tax-Advantaged investing through your
Self-Directed IRA
• Performing vs Non-performing Notes
• Partials (buy just the front-end of a Performing Note)
• Non-performing Notes as your response to the Mortgage Crisis
• Note Manufacturing- Selling Property with Seller Financing