Note Case Study - Lake Travis, TX NPN Deal

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 Note Investors. So you want to dive into the world of note investing but no know how to get started or you don't want to pay 30, 40, $50,000 for a one on one coaching program that just completely does not deliver the deals or the funding or the access that you need to take your note business to the next level. That's why we have our one on one coaching program. I'm Scott Carson. I've been buying notes for 20 years. I've helped thousands of investors buy their first note direct from banks using either their own funds or other people's money to buy non performing, reperforming or performing notes yielding them an above average return. Now what's involved with my one on one coaching program? It's unlike anybody else's because guess what? You're working with yours truly. Not some paid student, not looking at some recycled list of stuff. Now what we do is differently than anybody out there and that's why we have such a huge success rate with our one on one coaching program. What's involved? Well, once you take in our three day class or not Buying for Dummies workshop, sign up for our coaching. You get 10 weeks of one on one coaching calls. These are on zoom in the morning, the after the evening. What works best around your work schedule. We accommodate this to help you start looking at stuff. And during those 10 weeks we focus on finding deals, making offers, getting your website, your social media stuff set up so that you are a lean note buying machine after spending 10 weeks of Zoom calls with yours truly. That's right, live not somebody else will spend two days one on one. And usually people come to Austin, Texas to hang out with us on a Thursday, Friday or Saturday, Sunday. And those two days are focused on whatever you are still lacking and need the most amount of work. One Sometimes it's making offers like Larry came In, we made 50 offers that he got 20 approved in a weekend. Other people came in to raise capital so we help them find IRA investors to fund their deals so they're able to raise hundreds of thousands if not millions of dollars for their note deals and other investing stuff. We're also going to give you a list of asset Manager contacts for you guys to dive into. That's right. This will be your LinkedIn profiles, emails, phone numbers, names, all for you to start reaching out to people. No, you don't need to buy notes directly from me. We're going to show you how to go to banks and contact them directly. We're also going to make introductions to our top 12 hedge fund managers that send us deals on a weekly or monthly basis. That's right. You go straight to the front of the line and guess What? There's no 10, 20 or 30,000 upcharge for the deal you buy direct from the hedge funds. Because we make the introduction, that's why. Because. Why do we do this? Because we know not, we believe, we know there are more than enough deals to go around. And yes, we make most of our money from buying note deals for ourself. Some people say, oh, you're creating competition. No, because there's plenty to go around. All right, we're also going to give you a one year membership to our WCN membership for one year. That's $97 a month. Usually that's going to allow for you to continue support weekly coaching calls along with access to our base camp group for other things, other tapes, other resources for our coaching students. We're going to help you with raising private capital, putting your pitch deck together, putting sample deals together, or your case studies that we've done, other students have done, or that you're doing so that you help raise capital or help you find IRA investors in your local market or the markets you're looking to buy in, you're going to also basically for you, plus your partner, spouse, person you're going through this with, you're going to have VIP access to me. That's right. Whether you need to jump on a quick phone call, a text message, a quick zoom call to go through tapes or notes that you're making offers on for us to review your bids or help answer a question. When it comes to loss mitigation, foreclosure, bankruptcy, what it might be about a deal you're working through, get VIP access to me most of the time. Come on now, everybody. We're also going to do a six month follow up day after you spent two days with me, six months later, if you want to, we can do a half day, a full day, zoom follow up just to see where you're at, what are you dealing with, where you're looking to go. Because within six months you should have already closed on several deals the way that we teach them. Because we will help you find your first deal and then some. We've had students have closed on their first deal in 30 days. We've got others who closed on six deals in their first 35 days. Other people closed on 100 deals in their first year. We are here to help you because guess what ladies and gentlemen, there is plenty of inventory out there. We're not going to focus on owner finance notes. We're going to focus on how to get people calling you with their deals or how to get banks sending you lists on a regular basis that you can cherry pick and show you how to raise all the capital that you need. Our one on one coaching program is the most complete program out there. That's why you have such a high success rate and it's cheaper than most of the others out there. And we also give you the biggest bang for the buck by helping you make the introductions, looking at the tapes, helping you bid if you're coachable. Now, not everybody's coachable. Not everybody can afford this. But what we can do is we can set up payment plans and different options for you. I encourage you to either book a phone call with me@talkwithscottcarson.com and we can talk about it. See if you're a fit and not everybody's a fit and that's a okay. But go to talkwithscottcarson.com, book a call on my schedule and we'll gladly talk about our one on one note coaching program to see if you're a fit. One of the very requirements is we do require people to go through our three day class but that whatever you've paid for that three day class is applied to the tuition for your one on one coaching. And we also have a third party provider who's willing to finance this and.

Carry financing for two to three years to help you paid off.

But we're going to work with you until you get your first deal closed. We want to help you make your money back in the first six months, if not sooner. So check us out. Pick up the phone, give me a phone call. Talkwithscottcarson.com that's talkwithscottcarson.com book a call and let's see if you're fit to take your business next level. Sometimes all we need is just a hand up to take you to the next step to show you the way. This is not a blow smoke up your tail, give you the crappy tapes left over or upcharge you 10, 15, $20,000 per asset? No, we want you to buy direct.

And we've always found if you can.

Show a man how to fish, you'll.

Feed him for a lifetime.

So let's get started.

You being a note investor for the rest of your investing lifetime. Good morning, good afternoon, good evening everybody. Welcome to this episode of the Note Clothes Show. This is a special case study episode. Something that's hot off the press, something I'm working on literally today. And I'm excited about this. Now you guys know that I talk about buying outside of Texas because we just don't see a lot, especially Austin, Texas, you know, highest, one of the highest real estate markets still. We've got a little bit of a cooling down over the last six to 12 months, but still very hot. And whenever I get a listing of notes from a bank or a hedge fund or seller, the first thing I look at, hey, what's in Texas? I do that to see if A, I've seen the tape before and then B, is there anything in my backyard that I could pursue? I mean I love Texas, great state, fast foreclosures, good values, you know, fast as it. But if I just buy it in Texas, I'd probably gone back up a long time ago looking for notes. So when I saw something in Texas and then let alone in Travis county and out by Lake Travis on the north side of town, I was like what is going on here? And so I have been working on this deal and wanted to share it with you because I guarantee you guys would probably start thinking some of the things that I would have thought and then breaking down and sharing why this is a deal or not a deal. Maybe it's a dud, who knows. But anyway, this is, it's an actually out in Lago Vista, Texas, which is you can literally see Lake Travis from the driveway of this house and give you some details about it. We'll just go through some of the facts first and foremost for you so you guys know what I'm talking about. So it's a nice big house, you know, it's a, you know, it's a first lien and non performing note. So five bedroom, three and a half bath, 4533 square foot. It sits on one, just over 1.6 acres. Now I could only see really the front side. It was built in 2001. Different values, anywhere from 1.6 million all the way up to 2.4 is what the BPO came in. The broker price spinning came from, from the hedge fund that sent me the list over But I think they're BPOs from last year. So I'd be willing to conservatively 1.6 million dollar value. Okay, now it's not on the water. Actually I had a little bit hard time finding this asset because it's the Google maps showed it on the one side of the street was actually a block down the street because the numbering is a little bit different off with these large acreages. But it's supposed to got a spot. It's got attached, you know, garage with it here. But it's like, oh, hey, this is actually a decent looking property out in this neck. It was not a, you know, not a crappy house, which is what we often see the stuff here in Austin, Texas, bottom of the barrel stuff. But this one is actually pretty decent. Now give you some the background on it. Now the borrower only owes. They have an unpaid principal balance of 275,000. Okay. So they only owe just a little bit. Their payoff is 311,000. Okay. They haven't made a payment in a while. Their last payment was actually April of 2021. So technically they haven't made a payment in two years. You know the thing that I like to look at too is like, okay, what happened with it? Well, we know what happened in 2020. So the first thing I looked at is like, okay, if their, their principal interest payment is 3600 and it's only at 3.75%, that's pretty cheap, right? I was like, okay, why isn't their payoff closer to 360, 350, 380. And it because they were in a loan forbearance agreement for a little while. Well, when the loan forbearance agreement stopped last year, that's what we have here. So that's why the payoff's only 311. Now the reason obviously because of COVID I thought when I first got the interest, the information on the spreadsheet or the tape from the seller, it should decease borrower. I was like, oh, is this a reverse mortgage? No, it's not a reverse mortgage. A traditional 30 year mortgage. The a husband and wife that own this house. He actually passed away in December of 2020. He's been, you know, passed away. What would it make it almost, you know, two and a half years ago. But it tells you that they were making payments for a few months and then Covid delayed it. Now they only owe basically just over a year in back taxes. They owe $16,000 in back taxes. So it's not too Bad. It means they've been making their tax payments the last couple years because taxes are still been due. You know what I mean? It is occupied. When I drove by the property, I don't know if you could tell here the actual. They didn't clean up the yard. That was the one thing. These, all these dead branches that you can see in the photo here are from February of this year when we had the horrible storms, ice storms here in Austin, Texas. Trees fall down. Well, these are been around for a while. The yard needs a little bit of maintenance, but obviously they're not paying. Now I asked the hedge fund, what are they looking for? They came back, oh, we, since there's all this equity, we probably want 90% of the payoff, which is 239,000, which I'm like, no, I don't want to make a 10% return before I got to pay money out costs. Right? So if you use your own Money, if you're 279 sitting around and you end up foreclosing on the deal, it costs you a little bit to foreclose. I don't think it's going to go the foreclosure route, but potentially you're the only. Your highest bid of the auction will be 311 because that's what's the total payoff. And if it bid a beyond that at auction, which it probably would because it's all this equity, it's worth 1.6 million, conservatively, you're only going to walk with 3 11. So it's potentially $32,000. If you foreclose now, what happens? The bar start paying on time? Well, they just started making their 30$600 payment a month. That's not a bad ROI for a little period. It's 11.47%. I'm sorry, it's 11.47%. If you foreclose now, that's annualized. So if you could, if you foreclose in less than six months, that'd be a pretty decent. If you pay somebody 12%, you give them a little bit of money and you'd make a little bit of money out of that as well. Okay. Now if they paid you off, that's. That would be a nice way. Right? Still getting the same thing. If they paid you off in a timely or fashion versus having to foreclose and drag this thing out, they're probably not going to pay you off. But the real ROI on this is to get the borrower to reinstate the loan. They make up their rearranges they pay the year of payment and start making their monthly payment and tell you the reason for that. Okay. Why do I think that's the route they're going to go? And I'll tell you in a second here, but if they make up their payment since 2021 and they start paying on time, it becomes a 28 ROI return on investment. If they reinstate us before your servicing costs, it's before taxes are paid. We're just going to assume that they're paying taxes. That's year one, 28, because you're getting all that extra income from the reinstatement and then the monthly payments. But year two and beyond would be roughly about a 15.5% return on investment afterwards. Now, I didn't have the terms of the loan when it was written. They are the original owners of this property was built in 2001. Okay. And I, you know, their original mortgage wasn't this. It was a lot higher. They've paid it down. They, the couple on this, which is kind of interesting is they're married for 25 years. Before the husband passed, the husband worked at IBM for 46 years. Now, I don't know anybody that works at IBM for 46 years that doesn't have a huge amount in the IBM 401k or the retirement plan. Okay? And that's why it makes me think, like, why aren't they paying? Maybe they're trying to drag this out. I get having a deceased husband, your husband's passed away, you're stressed out a little bit. And I don't know, they may not have a good financial situation. But when I was researching, I searched the borrower's name, I found his obituary. I found a lot of. He's very active in his church. And, you know, anybody works for a company for 46 years, you gotta be doing something right, Stuff like that. So I'm like, he's got, They've got to have some money. Why aren't they paying? Maybe they're trying to sell the house. Well, there's no for sale sign. This house has never been listed for sale since they bought it originally back in 2001. Now, I did get a note from the hedge fund as I'm exchanging information, and I literally drove out. It's literally about a eight, just under, just over eight miles from my house. So I drove out there. Took me about 20 minutes to get out there. I only took a picture or two because I didn't want. I, you know, I don't want to alert the bar of any sort the hedge fund told me that they've served the. The, the widow plus the three heirs and none of them responded back. Which I just don't get that why they would respond back to try to do something. Because here in Texas you foreclose quickly. The they sending out a demand letter. They basically the thing that's been dragging us out why they haven't foreclosed yet, which is since April of last year, is because there was an assignment of mortgage missing from the original lender to the new hedge fund. Well, they got the assignment in about a month ago and now I've expedited the process to start the foreclosure process again. So there's no way this bar can sell the house in less than 60 days or less than 90 days. That's what makes me think they'll do either do a temporary restraining order and either file bk, which I don't think they could qualify for BK if they've got the assets, but maybe they will. People can file it and have it discharged after 30 days. And that's why I think that this would be a decent deal to reinstate. But just paying 90 cents on the dollar, you gotta have really. Either using your own funds or really cheap money and. Or if it doesn't, you know, if they don't reinstate, you've gotta be willing to foreclose on this thing and hopefully you get paid at the auction because you know, if you don't, if it doesn't outbid you and you end up taking this property back, which would be a complete, complete one off analogy because this is going to sell for something above 311 with it being worth 1.6. There's people that show up to foreclosure auctions in Travis county. This, but this is literally go to auction in the next 60 days. And why they never, you know, and Austin still got a decent hot housing market, but it's not the same as it was where things were selling. In less than a month, it's still an average of 45 to 60 days to sell to complete the sale of an asset. And while this house is exactly the picture I took, I didn't fade it or anything, you know, or filter it. It might need a new roof. You know, I don't know what the condition on the inside is, but it could still be in pretty, it could be in pretty good shape. Even if you had to rehab it, it could still be a win for it. But I honestly don't think the borrowers will file bankruptcy. I think they'll either show up with some cash and either reinstate this thing or maybe paid off cash out of 401k or something like that. Who knows what's going on. But they probably dragged this out as long as they can and waiting for that other shoe to fall. So my question to you is, what would you do? What would you hope for? You know, what would you pay? Now, don't tell me you're going to come in all for 50 cents on the dollar. There's no reason the bank would ever take that. The lender. As I say, bank. In this case, they're a lender. They're not a bank. They're a hedge fund in California we deal with there's in a good position. They don't really need to take less than 90 cents a dollar because it's Texas. They can foreclose quickly and probably get paid off of the auction themselves. And I don't know what they paid for the note, but I guarantee they paid less than the 279, you know. And will I make an offer? Yeah, I'll throw an offer at them at 250 and see what they say. Now what would I do? Well, I. That's what I was expect. I would if I could get it at 250. I'd go out and knock on the door. This isn't a gated community. But the gate was wide open, no security guard. So I just drove right on and drove around the neighborhood. It's all beautiful houses. 1.2 to 2.5 million. You know, houses out there not on top of each other because they've all got these one to two acre lots out there. But that's what I did. Go knock on the door. Hey, what's going on? I'm here to help. Can you make a payment? Can we get you back on track? You know, you're not gonna just make three. 600 payment. I'm not going to accept that. You've got to bring a chunk to the table and if you want to sell it, that's fine, but what can you bring to the table? And listen. And I called my listen. You have a realtor you're going to use if you don't. A realtor? I have somebody who's going to use that. I would immediately call my buddy Boyd to be the listing agent. And then he'd be like, happy to give me a big sloppy kiss because it'd be a nice $1.6 million listing for him. But anyway, so this is a deal in Lake Travis, Texas. Lago Vista, Texas. It's a number one first lien. Like I said, there are some opportunities. I really think by looking at what I researched on the bar and the family, it's probably going to turn into a reinstatement or a cash payoff settlement. I'm not going to, I wouldn't take a lot. It wouldn't do a short on this because there's all this equity. Worst case, somebody could go get a hard money loan. One of the sons or the daughters are going to get a hard money loan to refinance mom out and be an investment property, not a homestead that would make that work. But mom who's not going to be able to get a hard money loan on a primary residence here in Texas. But you know, there should be some sort of cash settlement, especially if the bars, if the husband's been gone for three and a half or two and a half years, you know, there's got to be some money out there to tell them to take care of this. And 3, 600amonth is not that bad for, you know, I think normal rents on something like this would be 6, 6000, 7000 alone on a monthly basis. So with it being that many bedrooms, there's some things you can make happen up there. The only really downside to this house is it kind of sits away. You don't have a lake view from the actual house. You might have it from the top window and then you actually have to walk up the driveway a little bit to the, to the peak and then you can see Lake Travis kind of peeking out from it. Other spots in the neighborhood have really great views of this, but this house doesn't have that big a view of the water view, but still good. Gorgeous house. It was really hard to find photos online of this house. The actual photos I found of the address actually were not the actual address. And so, you know, sometimes you can find a deal and this if you've got like, you know, said 270, 280, and you want to buy and make a 15 return in 90 days, this, that could be a really good annualized return for you if you annualize over time for you. So hopefully you enjoy this. We're going to plan on doing more of these case study deals of either current deals we're working on or deals that we've done in the past going forward. As always, thank you for listening to the no Closer show. Make sure you hit subscribe button and like and leave a review and share with somebody else too. So go out, take some action everybody, and hopefully we'll see you at the top. Bye, Sam.