Investing With Small Funds: $10K Note Invesing Case Study

Foreign.

This is the no Closer show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property. For panties on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now here's your host CEO of We Close Nodes, Scott Carson.

Hey real estate investors.

If you have ever wanted to dive into the sexy side of real estate and become a note investor and not just somebody that owner finances properties or buys and sells on terms, but somebody who's actually buying debt from lenders, mortgage bankers, hedge funds on distressed real estate on both residential and commercial properties. Now is the perfect time. And guess what? We have our upcoming three day workshop here in just a few days on July 25th, 26th and 27th. That's right, that's a Friday. Saturday, Sunday. You can join me live on Zoom and our Note Buying for Dummies workshop. We'll go through the Fs of how to find fund and flip non performing notes at huge discounts without having to use your own money.

And we'll show you all the different.

Ways you can make money being a note investor. Day one's all about how we find these deals from banks, hedge funds and how you can automate the process of connecting with these people and get tapes and listen to you over and over again. Day two is all about raising capital and marketing. We'll show you how to tap into thousands of IRA investors who are looking for deals to fund and how to communicate and how to contact them and get them to fund your deals. And day three is all about the flip the exit strategies putting deals together. We'll mix in due diligence. We'll mix in the marketing side along with the structure side. So much stuff in three days live on Zoom with yours truly, the note guy, Scott Carson. Make sure you get signed up by going to Note buying for dummies.com or click on the three day workshop tab on our workshop. Get signed up today as we're still running discounts and you too can soon become a no buyer.

Foreign Good morning, good afternoon and good evening everybody. Hey. Welcome to this episode of the Note Closure Show. And this episode is dedicated to all those folks out there that want to get into note investing but they haven't. They're brand new, they don't have a lot of money saved or retirement accounts. They've got some, but not a lot or they haven't developed any private capital resources. And this is a great deal. A Case study that's actually in the works right now. Bid was approved for from one of my coaching students. John and Veronica got it approved last night. It was working through one of their coaching calls. We were evaluating the tape of performing and non performing. These guys are kicking ass and taking names. They've already got five performing that's they get ready to close on. This can be the first non performing one. So just absolutely jacked up at what they're working through. So but this one give you example. We came across it, we're looking through it. A lot of people would overlook it because it is a smaller balance note. But there's some great details to it. So let me, let me bring up a picture here. If you're watching on video, you can kind of see what it looks like. I mean it's not, you know, you're not going to get rich on this asset, but it's a great ROI for your retirement account or small Roth. But like I said, it's In South Carolina. Three bedroom, two bath, about 10 square foot. Is owner occupied. Borrowers lived in it for a while. It's a five year loan. Let me give you some details on the transaction. Pull that up here real fast. Borrower hasn't paid in a year. Okay. And we pulled numbers on it. Value came in at 69,000. All right. The payoff on this borrower only owes 18,200. All right. It really, I mean they owe a little bit more than that's the payoff. I think UPB is roughly around 14:5. They're one year behind. Right. At 12 months behind their monthly payments, only 328.56amonth. All right. The foreclosure has started. The existing lender, who's another note investor, says he's in the final financial field has already started the foreclosure process. Like I said in South Carolina it'll take about a year. So we're still waiting to see how far along in the foreclosure process is. But if it does, it'll take oh a year to foreclose in South Carolina if it's at the very beginning and probably cost John, veronica about another 2,500 to 3,000. Maybe a little bit more than that. But we'll just say the beauty of this is they got it under contract at $7,500. That's a purchase price for the note. Now let's go through the strategies. Now if you're the borrower and haven't paid in a year, maybe you're out of Work or something like that. I don't know what's going on. Death in the family. The 328. 328amonth isn't that bad, right? You only owe 18,000 on $69,000 asset. I mean you're literally at what, 30%? Just under 30%. 25 and a half percent. Yeah, about. Well, not quite a fourth. But the great thing on this thing is there's that ton of equity. I mean there's 50, roughly about $51,000 in equity there. Now if John and Veronica have to foreclose, they may not get that 51. What are they going to get? Well, they're going to get the $18,200. That's the payoff. That's what their highest bid at the auction can be, 18,200. So if they get it sells at auction, great. If they are into it for 2,500 and foreclosure costs purchase price, they just made 8 grand on their $10,000 investment. Is that a bad deal? Hell no, it's not a bad deal. If it takes a year for a small amount of 10,000 bucks, that's really good. Right now it could be less because maybe the existing lenders already paid the foreclosure costs up front. I don't know exactly. We'll know that more in the due diligence aspect of things. But it's owner occupied. Their big goal if they're buying this note is to go to the borrower and say, hey, could you start paying again? Right. You don't have to be a rocket scientist. Now that, that's not a bad deal for them. 328, 56 times 12 months. If they just started paying on time again, right. That's 3942. So they're a year behind. All right. So if they make up that payments, if they haven't start making double payments times two, they can, they will get $7,885 in the year. If they start making double payments to get caught back up, that's 100% cash and cash return. Actually better than 100% cash and cash return. Right. It's about a 52% cash and cash return. If they just start paying the 328amonth to them, that's phenomenal. Right? That's great. Now this is not a 30 year mortgage. It's a five year term on it. So they've got about 51 payments left. And so they made about nine months of payments and then stopped paying for some sort of reason. Now here's the thing. It's not in the biggest of town, but it's in a decent sized town. If they go to the foreclosure auction and nobody outbids them and the foreclosure takes place and then they take the property back, guess what, they just take over a $69,000 asset. Now of course they're gonna have to evict, probably do a little upkeep maintenance of the property. Obviously we, we haven't ordered the BPO drive bys yet, but this is a current photo behind me this year online. So what do they get now? Well, for 25, 100, foreclosure costs $2,500 for the purchase price they're in at 10K. They take over a $69,000 asset that they could turn around, sell in the MLS or offer owner financing to somebody on terms. Or guess what, it's a rent market. Rent on this property is 974amonth. That's a pretty good rent return. Now I'm not a big fan of rentals, but you know, that's all the different options laid out for them. And so this is a true win win win bar doesn't do anything. They foreclose, it sells at the auction. Guess What? They made eight grand. Bar reinstates are making 52% of their month on their ROI and their money first year. If they make anything extra it could be, if they get caught up in the first year, guess what, boom. It's 100% return cash and cash to them. I don't know what they paid for the note. If they end up selling it or don't sell it, foreclosure, take it back. They just basically walk into 60, you know, $59,000 roughly in equity. Potentially that could be $40,000 in profit with a little bit of upkeep, cash closing costs, whatever, stuff like that. So this is a great little deal for less than 10k. Their holding costs are gonna be the foreclosure servicing cost. It's not gonna be that bad. I would literally have it with a servicing company and just have them, if it's already in the foreclosure process, just not have them do any servicing, have anything, go to the attorney. But if the bar does come back to the table, then you would set up a servicing and it's going to be 95 bucks a month for non performing for at least three or four months and then it's going to drop to 15 to 25 from there. But this is a great little deal. Like I said, got less than 10k. We see these types of deals pretty often and it's a great way to get your feet wet, get everything rock and rollin and go from there and truly be a win win. There's a win win win no matter which exit strategy it goes. So I just wanted to share this episode with you guys. There are opportunities out there if you know where to look. You know this is one of the things that we do with our high end coaching program is help people put money to work. John Brown can use their own funds from this deal. They've got other investors that fund some stuff but this is a great little deal that they want to keep in their eye because the ROI so good, so phenomenal deal TR true win. And I, I like little this isn't gonna get, this isn't gonna get wealthy thing but this is a great single double or potentially triple depending on which way it goes. So I love little deals like this. They make the world go around and if you can help keep them in their house, great. If you, you know you can even cash for keys to walk if they can't make payments and avoid a foreclosure to speed that up, that's another thing that they could look at. Dude, I didn't even talk about doing offer em three to five grand to do cash for keys or walker and go from there so and do a devalue friendly foreclosure. So anyway guys that is going to do it for this episode. Like I said, if you got a little bit of money feel free to reach out. If you're not one of our coaching students we can help you find something but there's, there can be some cost to it. Obviously we're going to get a placement fee and commission for helping you find a deal. But reach out to us easyscotclosenotes.com or schedule a callender@talkwithscottcarson.com but go out, take some action buddy and we'll see at the top. Bye Sam.