Explained: Master Notes Program (7/12)

Hey everyone, Dannielyn here with Freedom Family Investments. In this video we are going to be talking to you about masternotes, one of our most popular investment vehicles. I encourage you to stay on till the end to hear some stories of real estate investors who have been working with over the years and sharing their experiences with you.

Hi everyone, Danni Lynn here with Freedom Family Investments. And in this video I'm going to be talking to you about our masternote program. Our masternode program is when you loan Freedom Real Estate Group, our entity, an amount of money that can be used for real estate or for funding our business growth and operations. What we do is when you invest in this program, we open up a separate bank account that is just for your funds. And those funds go into your bank account and depending on where we're using it, our financials team will track it. So let's just say that it's going to be used on 123 Main Street. They're going to lend it on 123 Main street and just put it in the tracker that this is where those funds are being used and they track the money to the penny and it always stays in your account or in the investment of choice. If it's going to be lent to our family of companies for our business growth and expansion, then it's typically used for operations in some way. It might be used for buying materials, it might be used for funding the growth of one of our new expansions or arms of our business. And depending on what that is being used for, that's where the funds will go. There's a business note that is from Freedom Real Estate Group to whoever is using the money for operational growth and so that it's tracked for our CPAs and for you, if you ever have questions about where the money and how the money is being used. So this is a very flexible program. Therefore it offers higher returns and a lot of ways that it can be customized. So let's talk about what that return is. So the return is going to be anywhere from 10 to 12%. The length of time is going to be anywhere from one to five years. What that looks like is it's a five year auto renewable note.

So every single year it's just going.

To automatically renew unless you say, hey guys, I'd like to go ahead and cash out and, and then you give us the notice that's required by the note and then we will cash you out at the time of your choice. So that's why it's one to five years makes it super simple for you. So what if you invested $100,000 at a 12% return? Well, that return is going to give you for just one year. It's going to be $12,000. How is the disbursement being handled? It's being handled quarterly. So every single quarter you're going to get $3,000. Do you need to be accredited? No, you do not need to be accredited.

Many times we're asked the definition of an accredited investor or what is the difference between an accredited investor versus a sophisticated investor. Because the SEC can change their guidelines at any given time. We are going to post a screenshot of the current guidelines as of the recording of this video. But we encourage you to go to the SEC's website and check the current guidelines as of the time you are watching this video. One quick tip is to make sure that you are looking for more than just the financial requirements. Being accredited means that you are open to many more investment opportunities. And one way to achieve accredited status is not the financial requirements, but it's simply to pass a test. So check for licensing, check for LLC requirements or any other additional guidelines that the SEC has provided.

Will this investment allow compounding? Yes, it will. We're going to talk about what that means in just a second. What is this investment backed by? It's backed by either the piece of real estate that the funds are being used on or it's being backed by the businesses themselves. So, meaning the businesses that we're growing is. It's all the assets that we have in the business and the cash that we have in the business. That's what a masternote is backed by if it's being used on the operational side of things for our growth. So I'm going to put real estate or biz, it could be both, depending on how much you have with our company and where we're using the funds at any given time. There has been times where we've used 100% of masternotes for our growth. There's been times where we've used 100% of moutherotes for real estate because we just paid it all back. As we continue to grow, so there may be a situation where you've got $100,000 and maybe 25 is being used on real estate and 75 is used on the business. It just kind of depends. Our financial teams tracks everything and there's paperwork that shows the stream of money and where it's going at all times. And you can always reach out to us if you have any questions about that. There was one Investor. That actually was the reason we created the masternote program. He asked for the ability for his money to be put to use for real estate, for our growth. And he wanted it to be compounding. He wanted to be able to invest and forget it. And so we created this with an attorney for him, and it became very popular. But we do close it down when we don't need these types of funds because we do offer very high return, very customizable features, and that's not always scalable. We have investors that are just passing four years with us. So compounding, I said, let's look at that.

On $100,000 investment, if you had it.

With five years, then you would have made $60,000 at the 12% amount on that $100,000 investment. That's simple interest. That means you took your distributions. That means every quarter you got paid $3,000, and that went into your bank account. Let's just say that instead you said, danny, I don't need the money. I want it to compound. So you've had your investment with us for five years, and you opted to have it compound. That means instead of $60,000, you actually made $80,611 over that five years. So I would say over 50% of our investors choose the compounding option. They don't want the disbursements. They see the power, they eighth wonder of the world of compounding. And so that's the option that they choose. It is entirely up to you in this program. You also have the ability to change it at any point in time. So if you're in the masternote program and you've invested with us for a year and you say, hey, next year I'd like to compound, I don't need the distributions anymore. You can do that. If you already compounded and you wanted the distributions the next year, you can get the distributions the next year. So some of our other investments vehicles are more scalable. So this one is not always open. If you do have questions about it, go to chatwithfreedom.com and talk to our investor relations team, and they can tell you more about this particular program and if it's open or not. This is a very popular program. I wanted to very clearly explain to you how that works. So for this one, will you get cash flow? You will. If you choose to receive your disbursements on a quarterly basis. Is there diversification?

There is.

When we're using your funds for both. If we're using your funds only for real estate, then there's diversification if we have it dispersed amongst 2, 3 properties depending on how much you have invested with us, is it passive? Yes. Once you invest, like I said, we have investors over the four year mark now with us, they don't. One in particular is compounding. I, I don't think we talked to him about this investment except for when he's doing his taxes and he said, hey, can I get a report on how much is with you and the interest and we send all of the information that he needs for his cpa. So it's very passive. But you're always welcome to reach out to us if you have questions. Does it have the option of compounding? It absolutely does. We talked about that. Is it liquid? For the purposes of liquidity, anything that you can take out in one year or less, I say is liquid. Most people who are investing choose to invest long term. They don't want liquid investments. But for people who are looking for that benefit, then one year or less is typically their benchmark as well. So I'm going to use it too. In this case because the length of time is one to five years. Again, it's a five year auto renewable note, meaning it's going to automatically renew every single year. But if you ever want it out, you just give us the notice with the appropriate timeline that's in the note itself and then we will cash you out at that time. So I'm going to say yes to liquid. So again, this is our masternote program. Again, it's the most customizable. It's offered to both accredited and non accredited investors. It is held in a separate bank account that is just for your funds and it's tracked by our financial team and you can reach out to us anytime if you have any questions about that. If you'd like to learn more about our masternote program, it is not always open. We have other funds, we have other private lenders that lend on real estate. All of this is customizable. It's customizable because this is the most flexible program that we have because we use it and create separate bank accounts. It just allows us to do different things as opposed to other vehicles that I'm going to be talking to you about in future videos. Thank you again for watching this video. I hope it helped you understand this program and I hope all of this answered your questions. If you would like to ask more questions that I haven't answered in this video, please feel free to go to chatwithfreedom.com, scroll down to talk to our investor relations Team jump on one of their calendars, and they will be happy to answer any questions that you have.

Well, I hope you enjoyed the video. Now it's time to get real. We're going to share with you some stories from real investors who are going to share their experiences with you so that these examples can come to life. Hey, Vinny, it's so glad to have you here. Thank you so much for spending a little bit of your time this afternoon with me. I wanted to talk to you about Freedom Family investments and what you've done with us thus far. When you and I are talking and exchanging ideas over the years, you have been so incredibly kind and proactive about saying, hey, Danny, what about this? Hey, I'm an investment.

I'd really like this.

So I just thought people hearing from you and what we've done together over the last four years would be really beneficial. So maybe from the beginning and just talk to us through your throughout your journey.

Sure. So, you know, I actually found you when I had read an article you had written for Forbes Business Online. And I had read through the article. It was about real estate investing. And at that time, I was pretty naive to it. I. I think, like, most people thought, oh, well, you make money and you put it in the stock market, and sometimes that works out, and sometimes it doesn't work out very well. And real estate was something that I have really never heard anything negative about. I just didn't really understand the process at all. I didn't know where to start. And I saw at the very bottom of that article, it said your name, and it said Freedom. And then it said Dayton, Ohio. And I said, oh, well, hey, this person's close to me. I want to see what this is about. So that's when I went to the website. I kind of read about what you do and some. Some of the offerings you could have. And I reached out, I just sent an email to you guys, and you got back to me in less than 24 hours. And I was. I said, hey, you know, I am kind of naive. I don't really understand this a lot. And even though you do this day in, day out, year after year, you said, hey, come down. We'll have a meeting. Whatever works for you. And that. That kind of astounded me, to be frank, because, you know, I have mutual funds with Vanguard, I've worked with, you know, in some private investment bank kind of thing, and no one really generally has that kind of time or says, hey, sure, you know what? If you don't understand, we'll help you understand. If this works for you, great. If not, you know, everything doesn't work for everyone. And I drove down and I think we met for maybe an hour, hour and a half. It was, it was, yeah, it was, you know, kind of. Right, right at headquarters there. I met with you in Flip and you talked to me about the company, how it grew, what you're doing now, what you're looking forward to. And I was very impressed by that. I felt very comfortable as someone who basically has no real estate knowledge.

Right. Yes. And I love when investors actually come to our office. Right. It's actually just as rare for investors to want to come to our office, which surprises me, honestly. I'm like, come, we're here. You know, we're real people. You know, we want you to see us meet the team if you're there on a weekday. So I love that we got the opportunity to meet. And that was back in 2019. So talk to us about your journey from what you invested in and why you chose those particular investments.

Yes, that was fall of 2019 is when we first met. And one of the things that made me feel very comfortable, besides the transparency, you giving me the time to help me understand, is that I remember meeting with you at that time and I said, what is your five year plan? And you had it laid it out. I mean, it wasn't even something, oh, let me go look this up over here, or I don't know, or shuffling around or I'll get back to you. You said, this is what it is. And kind of how I personally operate as well, for me is I'm always planning this year, but what's next and what's next and what's next? And particularly when anyone but myself as well, when you're working with an unknown. I mean, you and I have now been working together for several years, but at that time it was an unknown to know, okay, this person has plans. I don't think they're going to go bankrupt in the next six months or what they're telling me doesn't sound crazy. It all sounds realistic. I think you actually even, you didn't say the words. But I'm pretty sure you, you use the smart system of goals where they were smart, you know, you, you, they're, they're time specific. You can measure them. And so I came back and I, you know, spoke to my wife and kind of thinking about things. We talked about some different offerings and I believe, I don't think I was by any means the first person but you had started to do masternotes at that. And that is what was interesting to me because I still, you know, I'm not someone who said, oh, I'm just going to buy a property or try to flip it or, hey, I bought this and can you renovate it? I said, okay. I felt most comfortable with knowing that in the market, meaning the stock market. Right. We. We have no guarantees. We have no idea what's going to happen. And the returns I was able to get and we were able to talk about based on what I had available to invest was very appealing, particularly because, you know, for me, I'm a physician, I'm very busy. I know a lot about medicine, which is great. I've spent the past 20 years practicing medicine. But, you know, my medical knowledge and my investment real estate knowledge are not at the same level.

Right.

So in June of 2020, that's when we did our first investment together, where I invested $100,000 into one of the Master Notes.

Awesome. And then as we've grown, I believe you've done syndications as well.

Yeah, you're right. That was just kind of like my little baby egg that, that I came over at that time. And yes, it has grown since then.

Yeah. So of the Master Notes, I think we had this discussion. Remind me if you remember the same thing. But we had talked about private lending as one of the options. Right. That we had at the time. And private lending required you to go in and out of deal. Right. So you're going to invest in the.

Deal, and then you're going to get.

Your money back, and then you're going to sign a mortgage release or release a mortgage, and then you're going to fund the next deal. And it meant some. Some of your money was back in your hands for maybe a couple of weeks or a couple months, depending on how long it took for the next deal. And you, as a physician who's busy, also had to go review, packet wire the funds, you know, and review the paperwork. And so I believe the convenience of the Master Note was largely part of. I get to invest my money, and now it's going to sit and I'm going to get quarterly disbursements or I'm.

Going to allow it to compound.

Are those the things that attracted you to the masternode program?

Yes, exactly. Because, you know, at that time, you did say, and I think you had more private lending than masternodes. I think maybe that was something that was newer at the time.

Yes, yes.

And for me, I think, you know, one of the things that we talked about is that if you're doing private lending, then when your money is kind of in between projects, it's sitting there.

Yes.

And I wanted my money to be working for me at all times, 24 hours a day, seven days a week. And I think the second thing and, and this is where, where the trust comes in and where you have to understand someone, their business model and their expertise is that, yes, you have deals you can look at, and there's a lot of people that do private money lending. But, you know, I can sit and read a deal or do whatever. I think I'm never going to know as much as this as you are. You have a team of, you know, you have decades of experience doing this. You have a team of people who looks at this. You know, if I sit down and say, oh, I read a blog or I read this book, well, great, you know, we should do that. But I'm never going to get to that level. So when I felt I had that trust and realizing, yeah, I could look at these deals, but I mean, what am I really going to know? That made me say, you know, I don't want to go over them because I'm not going to know one way or another, is this good? Is this bad? Take this, help me work for it. And I think we even had the conversation kind of jokingly saying, well, you know, as long as you're not doing anything illegal with it, then, you know, whatever, you don't have to tell me what you do with it. That's your business.

Right.

And we also, I think, kind of laughed about it that, you know, people, when they go to a bank, they'll put their money in the bank. The bank never tells you what they do with your money.

That's right.

But people believe. Fine with that, that premise, saying, you know what, the bank's giving you 1%. Okay, well, that's fine. They don't tell you what they do. I mean, it's, it's a, it's about trust and saying that's the kind of return I want.

I shifted to more of a passive investment. I've had money here, freedom. It's been a great experience. I was a part of the masternote here. A few thousand dollars, not a lot of money, but it paid back the dividends as it was agreed to. I think I was paid back quarterly. And then I think there's a reinvest option as well. Now that was, I don't think it was offered at the time, but it is now there and then on. And part of my decision with that, because I was relatively new to the company when I started doing this, was, you know, I'd been familiar enough with our products to know, like, okay, well, you know, Danny, you'd always said, like, we always pay our investors, like the company itself will take a negative position on a property in order for the investors to win. And for me, that just resonated. I was like, okay, well, I've never had anybody I've talked to say, hey, listen, I will take it on the chin myself before I let you. You lose. And so I was like, hey, we're going to do that thing. And now that I've been here, know, four years and I've talked to our investors, I've talked to some of our private money people that outside properties, and they all have great experiences. That's. That's always where my head's at. Now I've done deals outside of Freedom with other people and I've had kind of hit or miss, right? Some of them are great. The deals work really well. Sometimes they're bad property buys, so that kind of restricted a little bit of that, the dividend, that interest. And I had some that were slam dunks that paid out like three months early. And I had a larger chunk than what was promised and it was perfect. But I will say that everything I've done here and anybody I've talked to at Freedom, it's been, it's been a great and pleasant experience.