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Transcript of Jeff Armstrong’s Secrets of Paper 2010 The definitive source for information and education on the...
Jeff Armstrong’s Jeff Armstrong’s
Secrets of Paper Secrets of Paper 20102010
The definitive source for The definitive source for information and education on information and education on the Discounted Real Estate the Discounted Real Estate Note BusinessNote Business
Presented by Armstrong Presented by Armstrong CapitalCapital
Secrets of PaperSecrets of Paper
800-845-3055818-865-2322
PO Box 6517Westlake Village, CA 91359
Secrets of PaperSecrets of Paper
Why Learn From Jeff Learn From Jeff In the business since 1991In the business since 1991 Current Practitioner in the business Current Practitioner in the business Closed over 1400 individual note Closed over 1400 individual note
transactionstransactions Consistently ranked top brokerConsistently ranked top broker Requested Speaker, Instructor & Master Requested Speaker, Instructor & Master
BuyerBuyer Author of several best selling industry books Author of several best selling industry books
as well as a multitude of articlesas well as a multitude of articles Assisted countless individuals to succeed Assisted countless individuals to succeed
with notes and in the note businesswith notes and in the note business
Secrets of PaperSecrets of Paper
Previous LifePrevious Life
- College- College
- Grocery Store - Grocery Store
- Entrepreneur - Entrepreneur
- Real Estate- Real Estate
Secrets of PaperSecrets of Paper
Rental Properties
- Tenants & Toilets & Termites- Management & Maintenance- Property Taxes & Insurance
Secrets of PaperSecrets of Paper
Current Life
- Broker Notes- Bass fishing in my backyard- Buy Notes- Go on vacation- Broker Notes- Fish Tournaments
Secrets of PaperSecrets of Paper
Facts on the Note Facts on the Note IndustryIndustry
$350 billion in private real estate notes $350 billion in private real estate notes currently existcurrently exist
Of that total, $100 billion are private Of that total, $100 billion are private residential mortgagesresidential mortgages
1 out of 13 houses sold in the U.S. has 1 out of 13 houses sold in the U.S. has some kind of seller financingsome kind of seller financing
Growing at a rate of $4 billion per yearGrowing at a rate of $4 billion per year
Secrets of PaperSecrets of Paper
The Note Business
Also referred to as The Paper Business, is Also referred to as The Paper Business, is the secondary marketplace for privately the secondary marketplace for privately held notes and mortgages. It includes:held notes and mortgages. It includes:
- The buying and selling of privately held - The buying and selling of privately held sellerseller
financed notes.financed notes.
- Broker the notes or purchase them - Broker the notes or purchase them yourself.yourself.
Secrets of PaperSecrets of Paper
DefinitionsDefinitions Private Mortgage Note
- A debt instrument created when a property seller, not a bank,
finances the sale of real estate.
Purchase Money Mortgage- A Note and Mortgage carried back
by the seller of the property to facilitate the sale of the property.
Secrets of PaperSecrets of Paper
Beginning DefinitionsBeginning Definitions
TWITATWITA
That’s What I’m Talking About! That’s What I’m Talking About!
TWITA! TWITA!
Secrets of PaperSecrets of Paper
Why individuals use Seller Financing
Properties can be offered to a much larger pool of buyers
Help Seller receive his or her full price Help sell property faster; even in a slow
market Help sell difficult properties Less fees and costs
Secrets of PaperSecrets of Paper
Why Individuals Sell Their Notes
Didn’t want to carry the note in the first place
Want to invest in another property, business, stocks or other venture
To go on vacation, buy a car, pay for college
Have a WANT or NEED
Secrets of PaperSecrets of Paper
The Note Business is forThe Note Business is for Individuals Looking to Start a Real Individuals Looking to Start a Real
BusinessBusiness
- Not a get rich quick business- Not a get rich quick business
- Time, effort, and money for marketing- Time, effort, and money for marketing
Real Estate ProfessionalsReal Estate Professionals
- Real Estate Agents and Brokers- Real Estate Agents and Brokers
- Real Estate Investors- Real Estate Investors
- Mortgage Brokers- Mortgage Brokers
Secrets of PaperSecrets of Paper
Individuals Individuals Looking to Start a Looking to Start a
Real BusinessReal Business
Secrets of PaperSecrets of Paper
ExampleExample
$100,000 Sales Price$ 20,000 Down Payment$ 80,000 Seller
Carryback
30 years at 9% interest for $643.70 month
Secrets of PaperSecrets of Paper
Example
Pay Price $75,000.00
Seller Accepted -$70,000.00
Broker Fee $ 5,000.00
Secrets of PaperSecrets of Paper
Note Note Brokering as a as a BusinessBusiness
FFind ‘emind ‘em
EExpose ‘emxpose ‘em
EEducate ‘emducate ‘em
SSupport ‘emupport ‘em
FEES
Secrets of PaperSecrets of Paper
The 7 StepsFind ‘em 1 – Marketing Expose ‘em 2 – Gathering
Information 3 – Submit For Pricing
4 – Obtain Offers (Determine pricing)
Educate ‘em 5 – Subtract Fee (Allow for costs) 6 – Present Options
Support ‘em 7 – Follow up (Assist with closing)
Secrets of PaperSecrets of Paper
What You Need To You Need To KnowKnow
Find ‘em Marketing
- Direct Mail- Referral Sources- Classified Ads - Reverse Ad Marketing
Secrets of PaperSecrets of Paper
What You Need To You Need To KnowKnow
Expose ‘em Gathering Information
- What to say on the first call- Filling out the Worksheet- Finding the need
Submit for Pricing Obtain offers (Determine Pricing)
Secrets of PaperSecrets of Paper
What You Need To You Need To KnowKnow
Educate ‘em Subtract Fee (Allow for Costs)
- How you make $ Present Offer
- Positive Presenting - Negotiating
Secrets of PaperSecrets of Paper
What You Need To Know You Need To KnowSupport ‘em
Follow Up- When to follow up- What to say
Assist with Closing- Gathering copies &
Submission- Due Diligence Process- Closing Documents &
Procedures
Secrets of Paper Secrets of Paper – Real Deal #1 - Note Brokering – Real Deal #1 - Note Brokering
Albuquerque, NMAlbuquerque, NMTransaction Information
Note Holder/Seller: Miller
Property Buyer/Payor: Coleman
Type of Property: 1993 DW Mobile + 2.5 acres
Sales Date: August 15, 2009
Sales Price: $ 83,996.12
Down Payment: $ 30,000.00
First Lien: $ 53,996.12
Secrets of Paper Secrets of Paper – Real Deal #1 - Note – Real Deal #1 - Note Brokering Brokering
Albuquerque, NMAlbuquerque, NMTransaction Information
Date of Note: 8-15-2009
Amount: $53,996.12
Term in Months: 180 fully amortized
Interest Rate: 6.0%
Payment Amount: $455.65
Secrets of Paper Secrets of Paper – Real Deal #1 - Note – Real Deal #1 - Note Brokering Brokering
Albuquerque, NMAlbuquerque, NMTransaction Information
First Payment Due: 9-15-2009
# Payments Paid: 10
# Payments Remaining: 172
Current Balance: $52,484.51
Next Payment Due: 5-15-2010
Payor’s Credit Score: 612
Loan To Value: 62.48%
Secrets of Paper Secrets of Paper – Real Deal #1 - Note – Real Deal #1 - Note Brokering Brokering
Albuquerque, NMAlbuquerque, NMPurchase Information
Note Purchase Started: February 9, 2010
Note Purchase Funded: April 19, 2010
Funding Source Full Purchase Price: $ 38,430.65
Seller Accepted: $ 34,000.00
Armstrong Capital Fee: $ 4,430.65
Secrets of Paper Secrets of Paper
Regulatory IssuesRegulatory Issues
• CA DRE Licensing
• SAFE Act
• HR 1728
• etc…
Secrets of PaperSecrets of Paper
Note Buying and Note Buying and
Brokering For Brokering For
RE ProfessionalsRE ProfessionalsRE Investors and Realtors can benefit RE Investors and Realtors can benefit
from the Note Business by buying, from the Note Business by buying, brokering and using notes themselves brokering and using notes themselves as well as encouraging property sellers as well as encouraging property sellers
to consider Seller-Financing.to consider Seller-Financing.
Secrets of PaperSecrets of Paper
What You Need To You Need To KnowKnow
Advantages of Seller Financing
Properties can be offered to a much larger pool of buyers
Help Seller receive his or her full price Help sell property faster; even in a slow
market Help sell difficult properties
Secrets of PaperSecrets of Paper
What You Need To You Need To KnowKnow
Suggested Sale and Note Structures
Residential Properties Commercial Properties Land Properties
Secrets of PaperSecrets of Paper
What You Need To You Need To KnowKnow
How to Create-A-Note
Terms Interest Rate Down Payment Credit
Secrets of Paper Secrets of Paper – Real Deal #2 - Create a – Real Deal #2 - Create a NoteNote
Lakeville, MNLakeville, MNSale and Note Structure
Property Seller/Note Holder: FreemanProperty Buyer/Note Payor: SchreckType of Property: Single Family Home Owner Occupied
Potential Sales Date: July 1, 2010Asking Price: $770,000.00
Down Payment: $ 77,000.00Seller Held Note:$693,000.00
Secrets of PaperSecrets of Paper – Real Deal #2 - Create a – Real Deal #2 - Create a NoteNote
Lakeville, MNLakeville, MNSale and Note Structure
Amount: $693,000.00Term in Months: Amortized for 360
Balloon in 84
Interest Rate: 8.5%Payment Amount: $ 5,328.57Balloon Amount:$645,037.80
Secrets of PaperSecrets of Paper – Real Deal #2 - Create a – Real Deal #2 - Create a NoteNote
Lakeville, MNLakeville, MNTransaction Information
# Payments Paid: 1# Payments Remaining: 83Current Balance:$692,580.18
Next Payment Due: 8-1-2010 Payor’s Credit Score: 765Loan To Value: 89.95%
Secrets of PaperSecrets of Paper – Real Deal #2 - Create a – Real Deal #2 - Create a NoteNote
Lakeville, MNLakeville, MNNote Purchase Information
Educating Started: May 4, 2010Note Purchase Funded: August 7, 2010
Funding Source Purchase Price: $637,173.77 (92%)Seller Accepted:$625,000.00Armstrong Capital Fee: $ 12,173.77
Secrets of PaperSecrets of Paper – Real Deal #2 - Create a – Real Deal #2 - Create a NoteNote
Lakeville, MNLakeville, MNNote Purchase Information
Seller Receives: As a Seller As a NB
Down Payment: $ 77,000.00 $ 77,000.00
First Payment: $ 5,328.57 $ 5,328.57
Note Proceeds: + $637,172.77 $625,000.00 Total Proceeds:$719,502.34 $707,328.57
If Sold Traditionally:Sales Price: $770,000.00Realtor Commission 6%: $ 46,200.00Closing Costs 3%: -$ 23,100.00
Total Proceeds: $700,700.00 MAYBE (time)
Secrets of Paper Secrets of Paper – Real Deal #3 - Note – Real Deal #3 - Note
Buying Buying
Tuscon, AZTuscon, AZTransaction Information
Note Holder/Seller: Scott
Property Buyer/Payor: Murphy
Type of Property: commercial ( 2 unit retail)
Sales Date: January 28, 2010
Sales Price: $ 219,000.00
Down Payment: $ 55,000.00
First Lien: $ 164,000.00
Secrets of Paper Secrets of Paper – Real Deal #3 - Note – Real Deal #3 - Note Buying Buying
Tucson, AZTucson, AZTransaction Information
Date of Note: 1-28-2010
Amount: $164,000.00
Term in Months: 240 w/3 year Balloon
Interest Rate: 5.5%
Payment Amount: $1,128.14
Balloon Amount $149,301.41 due 1-2013
Secrets of Paper Secrets of Paper – Real Deal #3 - Note – Real Deal #3 - Note Buying Buying
Tucson, AZTucson, AZTransaction Information
First Payment Due: 2-28-2010
# Payments Paid: 3
# Payments Remaining: 33
Current Balance: $162,865.41
Next Payment Due: 5-28-2010
Payor’s Credit Score: 676
Loan To Value: 74.37%
Secrets of Paper Secrets of Paper – Real Deal #3 - Note – Real Deal #3 - Note Buying Buying
Tucson, AZTucson, AZWhat do we have to purchase?
Current Balance: $162,865.41
33 Payments of $1,128.14
1 Balloon payment of $149,301.41
What OPTIONS can we give?
Full Purchase $126,394.99
~16% yield, ~ 78 cents on the dollar, ~ 58% ITV
That’s a nice investment… But…
Secrets of Paper Secrets of Paper – Real Deal #3 - Note – Real Deal #3 - Note Buying Buying
Tucson, AZTucson, AZOther OPTIONS?
1) Full Purchase: $126,394.99
~16% yield, ~ 78 cents on the dollar, ~ 58% ITV
2) Split Purchase: $142,000.00 ($71K NOW + 71K of B)
~22% yield, ~ 90 cents on the dollar, ~ 32% ITV
3) 33 Payments: $23,426.00
*seller keeps balloon ~ $149,301.41 + 23,426.03 = 172,728.03
~ 36% yield, ~ 107 cents on the dollar, ~11% ITV
Secrets of Paper Secrets of Paper – Real Deal #3 - Note – Real Deal #3 - Note Buying Buying
Tucson, AZTucson, AZPurchase Information
Note Purchase Started: March 12, 2010
Note Purchase Funded: April 16, 2010
Split Purchase: $142,000.00 ($71K NOW + 71K of B)
~ 90 cents on the dollar, ~22% yield, ~ 32% ITV
Secrets of PaperSecrets of Paper
What You Need To Know You Need To KnowHow to Buy a Note
Risks Yields Minimum Discount ITV Credit, Appraisal, Title from a note
buyers perspective Purchase Options (partials, splits,
etc.)
Secrets of PaperSecrets of Paper
““To get what you’ve never To get what you’ve never had,had,
You must do what you’ve You must do what you’ve never done!”never done!”
(Fish)
Secrets of PaperSecrets of Paper
What You Can Do Today
Invest in Jeff’s beginning audio package to get your base note business
knowledge TODAY!
Secrets of Paper 101Secrets of Paper 101 (4 Disc Audio Package with over 6.5 hours of content)
$30 Members, $40 Non-$30 Members, $40 Non-membersmembers(regularly $99)(regularly $99)
Secrets of PaperSecrets of Paper
How You Can Learn MoreAttend Jeff Armstrong’sJeff Armstrong’s
Secrets of Paper 301Secrets of Paper 301The Definitive Note Workshop SeriesThe Definitive Note Workshop Series
A live hands on workshop focusing on Advanced Note Brokering (keeping a piece of the action), Note Investing (how to buy a note for yourself) and
Product Knowledge (the many different ways to buy a note).
Los Angeles, CA September 25-26, 2010
Two Day Workshop Only$697.00 (+$497 for spouse/biz
partner)
Secrets of PaperSecrets of Paper
Secrets of Paper 301Secrets of Paper 301The Definitive Note Workshop SeriesThe Definitive Note Workshop Series
A live hands on workshop focusing on Advanced Note Brokering (keeping a piece of the action), Note Investing (how to buy a note for yourself)
and Product Knowledge (the many different ways to buy a note).
Los Angeles, CA - September 25-26, 2010
For ICW members ONLY $447.00
Non-Members $497.00
PLUS you take home the SOP 101 audios for free!
TWITA!