3 F’s Of Note InvestingProsperity Real Estate Networking & Case Studies

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Who Is In The Room

What Does Your Biz Look Like?

• Real estate investor since 2002• Buying and selling NPN’s since 2007• President of Inverse Investments LLC• Creator of Note Buying For Dummies class• The “Love Connection” of ugly paper by Investor’s

Business Daily/Wall Street Journal• 2014 Note Educator of the Year!

Who Is Scott Carson?

• How to FIND NPN’s from banks/hedge funds

• How to FUND these deals with OPM• How to FLIP notes and other Exit Strategies• How We Focus On Rehabbing The Borrower!

• Help You Build A Blueprint For Success• Create Win-Win-Win Situations for you, the banks, and the home owners!!!

What We Will Cover

Investing In Notes…The 411• There Are Over 7 Million Homes Still Underwater Today• 90% Below $150,000 Values• You Step Directly Into Banks Shoes When Buying NPN’s

• 85% Of Loan Modifications Fail From Banks• Pricing Ranges from 25% to 75% Depending On Market

• You Have a Variety Of Exit Strategies and Government Programs

Why Non Performing Notes• No Headaches – No Toilets Or Tenants Drama• Avoid The Crowds – We See Deals 6-12 Months Ahead of Others

• Systems – Attorneys, Servicers & Vendors Handle Work

• Multiple Exit Strategies – 8 Different Exit Strategies

• Recession Proof? – Low IVT Hedges Against Bubble Bursts

• We Don’t Have A Deal Flow Problem

Where To Find These Deals• Banks• Hedge Funds• Servicing Companies• Auction Websites• Mortgage Bankers• Private Sellers

YES and NO! (Don’t bother with Big 5-BOA, Chase, Citi, GMAC, WF)

Hedge funds have pools and pools of notes that they want to move YESTERDAY

Commercial loans versus residential notesBanks are selling SFR, Condos, Townhomes, Apartments, Self

Storage, Hotels, Motels, Mobile Home Parks, Medical, Industrial, Mixed Use, etc!

Deal with smaller, regional banks and some of the smaller lenders SUCH AS….

Are Banks Letting Notes Go?

 

What Does Junk Look Like?

8 Different Exit Strategies1. Wholesale The Note2. Reinstate The Loan3. Modify The Loan4. Loan Assumption5. Cash Payoff6. Short Sale7. Deed In Lieu/Cash For Keys8. Foreclosure

• $100,000 FMV Condo• 2/2 1050 sq ft• Fort Lauderdale, FL• Rents for $1200 Month• $165,000 UPB• 24 months in default• 12 months to foreclose• What would you pay for this note?• I Paid $33,000 For It!

Money Finds Good Deals

Raising Private Money• We Target IRA/SD IRA Investors• Local County Appraisal Website• SD IRA Trustee “Quest”, “Equity Trust”• Gives You List of SD IRA Owners!• Own Real Estate In Their SDIRA!• Search FBO Investor For Other Assets• Mail Letter/Skip Trace For Phone Number

Small Notes Can Be Found Nationwide As Well$130K 1st lien, no payments for 18 months!$110K ARV (needed $30K in repairs) $55K FMVWhat would you pay for it????

Ugly Notes Need Love Too!

Took deed in lieu from property owner.Listed our REO online.Sold in 30 days for $25,000 to cash buyer!

I never walked property, swung a hammer, collected rent, or showed up to closing!

3 hours of work for us from 1,000 miles away!

$3,750 turns into $17,150

Meet Jamie and Lanny(Taylorsville, NC)

Bought Charlotte Condo NoteUPB was $37.5K, Worth $50KPaid $17,500

Did Loan Mod for owner22% MONTHLY returnSold Asset for $45K

Make Money Holding Note

Modifying The LoanReduce PrincipleReduce Interest RateForgive Past Due PaymentsLoan DefermentSome Down PaymentAdjust Rate

Special Programs To Modify• Hardest Hit Funds• 18 States + DC• State Incentivized Loan Mods• 24 Months of Payments• Some Past & Future Payments• $1,000 Avg Monthly Payments• Home Owner Must Qualify• Lender Must Forgive 25% of UPB

Hardest Hit Fund Example• $125,000 1st Mortgage• No Payments For 3 Years• FMV of $60,000• Purchased Loan at $20,000• HHF Paid Me $24,000 to Modify• Modified Payment from $750 to $450• Took 3 Months For Borrower To Qualify

FHA 10-23 Program• After Loan Mod, FHA Refinance Program• Borrower Must have 520 Fico• Borrower Must Make 3 Ledgered Payments• FHA will Refinance 97.5% of FMV of Property• Investor Gets Refinanced Out After 90 Days• Can Combine it With HHF

Who Wants To Make 419% ROI?

• HHF Pays Bank $24K• Bank Has Modified Loan on $60K Property• Borrower Makes 3 Payments ($450 month)• FHA 10-23 Refinances Investor Out After 3 Months at 97.5% FMV

• How Much Did Investor Make?•$24,000 + $1,350 + $58,500= •$83,850 = 419% ROI

The Law Of Averages• If You Buy 10 Notes

• 3-4 Will Modify• 3-4 Will Deed In Lieu• 4-6 Will Be Foreclosures (REO)

• Strategy Should Be To Modify to DIL To Foreclose To REO

800 Clubhouse Dr, West Palm Beach, FL6 Unit Apartment Complex worth $240KBorrower owes $430K (July 2010)

Purchased for $175k.

We sold it 8 months later atFC Auction for $310K!

The Bank Called Me!

2 Week Closing!

WIN FOR THE PROPERTY OWNER!

• Offer Homeowners Deed In Lieu• No Deficiency Judgments• No New Late Pays on Credit• No Foreclosure on Credit• Cash For Keys• No Promissory Notes

How Do We Create Win-Win’s

WIN FOR THE BANKS• They Get Rid of Bad Debt Killing Their Books• Settle in a Fraction of Time• Banks HATE REO’s“Pretend and Extend” Mentality on Commercial

How Do We Create Win-Win’s

WIN FOR US AS INVESTORS

• Very little competition• Awesome deals!!!!• Very little overhead• Close residential and commercial deals• Nationwide Investing• YOU CAN DO THIS WITH NONE OF YOUR OWN MONEY!!!!!

How Do We Create Win-Win’s

Why I Started Teaching

Rock Island, IL• 1st Lien of $49,000• FMV of $58,000• Purchased Note For $5,000• Took DIL From Estate• Sold For $43,000• NO REHAB! AS IS!• 6 Month Time Frame

Cape Coral, FL• $110,000 1st Lien• No Payments in 24 months• Purchased Note for $45,000• 9 Months to Foreclose• $1,000 Cash For Keys• $5,000 in Repairs• Sold for $125,000

Lehigh Acres, FL• First Lien of $125,000• 3/2 1,600 Sq Ft with Pool• Foreign Borrower• 12 Months To Foreclose• $7,500 Payments In Escrow!• Worth $140,000+• Needs $15K in Repairs• Purchased Note for $50,000

Topeka, KS• 1st Lien of $75,000• Market Value of $65,000• Purchased Note for $15,000• BK Chapter 13• $500 Month Payment• $2,000 Down From Borrower• $3,500 in Escrow With BK Trustee• 76.7% ROI 1st Year 40% ROI Year 2 Until Refinanced Out

Chicago 10• 10 Hard Money Loans• Rehabbed Properties 2 & 3 Plexes• Southside Chicago Near Obama’s Library• FMV of $2.1 Million• UPB of $1.7 Million• Purchased Notes for $843,000• 12 Month Time Line• Expected to see 40% ROI

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•www.WeCloseNotes.com•Scott@WeCloseNotes.com•512-585-3810