Note Coaching Call: Texas Performing Note Bid Breakdown

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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.

Good morning, good afternoon, good evening everybody. Welcome to this episode of the Note Closure Show. As always, Scott Carson, excited to be here today with you. Today's episode is a little bit different. I'm not going to teach you something, I'm going to coach you on something. But what I'm going to do it is through the eyes of one of my WCN crew members. I've got, we've got a student, Cali, who's out of Canada who is part of our WCN crew monthly membership and he got, he reached out to me a little frustrated on some deals, trying to get some deals in from banks, stuff, making some offers and it being the end of the year, he's really wanting to work on something. I said, listen, go to a couple different websites and make some offers and go through the ask me. Well, he did. He emailed me back yesterday, said oh my God, I got two offers accepted. Can we jump on a call? I'm like, yes, let's jump on a call and work through it. Working through the due diligence. And so that's what this episode is all about, is me kind of walking Cal through the due diligence of how to what he needs to look at his numbers, calculating his roi. I'm really proud of him because he's done a great job in making offers and being coachable. He's also raised some capital from some of the marketing that we taught. So this episode is seeing us work through an asset in Port Art, Port Arthur, Texas. It's a performing note that was originated in April of this year and it looks like it's a pretty good deal for Cal based on where he's at right now, of course, pending due diligence and what he finds during that period. So I hope you enjoyed this episode. If you're listening to this, I'd highly probably take the time to watch the video. If you if you're watching this live on YouTube, great. That's awesome. Or on our channel's great. But if you're listening to it, you may want to click over and click on the link in the description or the show notes and watch the episode live and follow along that way. But thanks for listening and we'll see at the top. Stay tuned for Cal Ewing and this performing note case study.

This is the no Closers 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 pennies 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 notes, Scott Carson.

All right, well, hey everybody, we've got a very special guest today, one of our WCN crew students, Cal Ewing, who is from north of the border. What part of Canada are you living in, Cal?

I'm in Calgary, Alberta.

Calgary, Alberta. But you've just got. We talked this last week. You were kind of a little frustrated. You know, you're like, where do I get some off? Where can I find stuff that I make some offers on? And I know you're doing a really good job. I saw your video on LinkedIn about calling asset managers yesterday. You know the three reasons you like talking? I pay attention. You know what I mean? But I told you to go someplace, make a couple offers and lo and behold, you text me, email me twice. Oh my God, I got a bid accepted. Oh my God, I got another bid accepted. So congratulations on getting a couple bids accepted.

Thank you.

Now, exactly before we dive in, tell give me a little background again on experience. I know that you've done some wholesaling, you've done some overages. I mean, you live in Alberta, but you invest here in the United States as well. And you've been a WC in credit with for about, I don't know, four or five months, I think. Right?

Yeah. Yeah. So I've been investing in US real estate. Started in 2009. I was full time, so since 2016 or 17. So I've been mainly doing wholesaling and overages and done tax deeds and flips and lots of different stuff. But I wanted the cash flow and start building the passive income. So that's why I've been focusing more on, on notes and I got my feet wet. Owner financing. And I was like, wow, being a lender is kind of cool. And so that's what really got me wanting to do this.

Cool. Well, let's, let's dive into these two. Where the are these?

It's just one, actually.

Oh, just one. Yeah. Okay. All right. So, so when it is, was it a performing or non performing note?

It's a performing. And so I don't know, do you want me to share my screen or how do you.

Yeah, you feel? Yeah, feel free to share your screen with you. We can dive into the numbers and everything for everybody. If you're listening to this, we'll make sure you input the link to the video. Yeah.

And as far as this being a podcast, is it like, can I show you my source or like where I got.

Yeah, it's fine. It's. No, it's not going to be any, any secret and stuff. You've got it on the contract.

Yeah, no, but it's from, it's from paper stacks. I don't know if there's any rules.

That's fine. It's fine. Totally fine.

Okay.

Trust me, any, any type of advertising that they get, they're happy. They don't advertise their platform. Very good.

All right, well, I guess I'll go to the, the paper stack website first.

So first of all, what attract what so what attracted to the snow as you're looking at the 100 notes they have on there. Yeah, what attract. What was the thing that made you choose this note starting right off the bat?

Well, flexible in terms of their offer? Number one, Texas. I, I've. Most of my real estate career has been in Texas and so I know it well. I've got people on the ground that can help me out and obviously a fast foreclosure state as well. So those are a few things. This one was a performing note. The seller had about six or seven on there, so I made offers on as many as I can see at the time. And this is the only one that we were close on. He rejected my other offers.

Okay, so. So on this one in Port Arthur. Port Arthur is down in the valley. I've, I've seen this asset before. It's not a bad looking little house. And the great thing is. Yeah, the great thing, you know, we always look at, we jump online and look at photos. Now one of the great things about this, you got Zillow pulled up here. It's a three bedroom, two bath, two, you know, just under 20, 100 square foot house. The Zillow value is 181. You know, and this is my problem. That's where your problem is.

Yeah, I think it's not a deal now. So.

Okay, so, so let's first go through the numbers before you share that. So it's the, the value. They say 181 here.

Yeah.

And it looks like it was newly rehabbed.

So that's a good thing. It's performing.

Yeah. What are the taxes did you check taxes out on this?

Not yet.

Okay, that's fine.

Yeah. So, yeah, and then I pulled it up on Propstream and so the seller didn't provide a value like on the, on the tape that I downloaded off paper stack. A lot of the assets had at least the Zillow value. If they didn't have a BPO or a recent appraisal, this had nothing. And so I don't know, I was trying to fly through these as quick as possible possible. So I just looked at what the original sale price was because. Or the, the note value on the original note because it was, I think it originated in like October of this year, something similar.

So, so it's just, so it's just, it's, it's a year of payments or just a pretty new note.

It sold. Oh no. April of 2022. I'm in PropStream now.

Okay.

And yeah, I looked at the sale price which was 234, and I figured, well, okay, market. I mean, yeah, the market's changed a little. Well, in the last six months it's changed, but 234, I'll put that in as my property value for now and then I can worry about it later. So I ran my numbers with my value at 234 and that's when I made my offer. And then after he accepted it, then I went and started looking deeper and then I saw the Zillow value and Propstream then had it at 186 and there were no real good comps in prop stream. So I was like, oh no, I think I made a mistake.

Well, let's go, let's, let's, let's go to the information provided on the spreadsheet though, or the tape. Let's go through those numbers because here's the thing. If there's a ton of equity, a lot of times that value on the back end side doesn't mean a lot, especially if there's equity. So.

Yeah, and this is, I have for you is.

Yeah.

So we'll go through the numbers. Yeah, so it was a single asset. He just listed it. They're asking 166. 8. And we agreed to, I think we're at 147 right now. Is the price he agreed.

Okay, now $147,000. Let's, let's just, it's. So it's at what, a 9.9% interest rate, is that correct?

Oh yeah, 9.89.

The deed of trust, you know, so that's a good thing. 9.9 is a little higher. So what's the monthly P and I payment on this thing?

Sorry if I'm scrolling fast.

You're good. You're doing fine.

I have it over here in my actual calculator.

There you go. Total, totally monthly is at ah, the column. Ah, there for you. So yeah, yeah. So it's. What is.

Principal and interest is 1531.

Yep, there we go. Af. So 15. 15. 1530.86 times 12 months. Because you can calculate like this because it's a relatively new note, you know, it's a 30 year mortgage, right?

Yeah, so.

Yeah, so. So 18,370 is what the gross in 12 months. And you offered what again was it 1 147.

So I actually should put that back in. I was monkeying around to see what number might make it work in all my spreadsheets, So I offered 147.

Hang on, Cal, hang on a second. One second. All right, so the 18,000 divided by 147 that comes, if you figure that quickly, it's about a 12.49, 12.5% cash and cash return.

Yep.

Now we don't need to reinstate it because they're paying on time, right?

Yeah, this is just my, my calculator I use for, for both. So I'm going to ignore the 16 month reinstatement. That's you know, for non performing.

Yep, exactly.

Yeah. So that's what I'm looking at here. And then I've got my borrowing costs. So if I pay 6% to my private lender, if I pay 7 or if I pay 8, I've got that here.

Yep.

And so the reason I was okay with this offer price originally of 147 is because if I'm paying 8% to my private lender, which I had a guy yesterday actually committed to lending and he didn't balk at this amount.

So 5, 30 seconds. Hang on a second. That's a good thing here. Let's go through that. So you had somebody that you. How did you. Was this a postcard or.

No, it's another Canadian that I've been in touch with and he's seen some of my videos and things like that. And so he was looking for deals and so he was asking me about notes and I told him and he's like, okay, I want in. He's like, let me know if he gets something. And as long as all the exit strategies make sense, then I'm interested.

So you went straight to and pitched him say, hey, I've got a deal that I can pay 8% on.

Yeah, yeah.

And he's like, okay, great. Did he say how his money was performing otherwise? They're making nothing.

Well, he's done some flips in Ontario, Canada, and he said he's holding off because of the market. And so he's looking for some other ways. And I think ultimately he'd like to do 50, 50 deals. But I told him, you know, we need a minimum of 250,000, and maybe we can look at doing different splits that way once we have that kind of a commitment. I said, but I'm looking at one in Texas right now. The way these notes go, I could pay 6 to 8% in order to make them make sense.

And so, yeah, he was like, good. Okay. So you'd be paying him. I can't see your numbers there. So 8% is what you'd be paying him.

I'd be paying him 11, 9, 20 a year.

Yep.

I'd be making 6, 4, 50 a year. And then that monthly would be 537.53. And my minimum is 250. So that made sense to me.

Yep.

But my biggest question that I've had is then when I go and look at the other possible exits, so what if the borrower stops paying the day after I close and I have to foreclose and that's where I start stumbling.

That's normal.

I've got other.

So let's look at that real fast. So you're in. Your bid on this is at 147.

Yep.

And so I. What, What's. What, what do they say the UPB is on this?

UPB is 175. 175.

So let's do that. So let's just first of all figure this. So 147 divided by 175. Is that right?

Yeah, 175. 666.

Yeah. Yeah. So you're about it. You're about 84% of UPB, which is normal for a performing note. So let's look at this route. So you're in at 147. If you had to foreclose, Texas is really cheap. So it probably cost you 1500 bucks to foreclose. So then you're at that here. Yep, Yep. So that's at 11 was at 148. 5. So 148, 500. And let's just go conservative. Let's go low. Well, what was the. What was the UPV on this thing again?

175.

So if you take 148. 5, you listed the foreclosure auction, and the maximum bid you can list it at right now would be the 175. You know, that's not including any back payments. And they would need to have three months of back payments. Won't worry about that right now. Yeah, but the 175 you divide. If you minus the 145 from it, 175,000, that's 26,550 as a net profit at the foreclosure auction. And that would be less than six months, because three months of default and then really a month to foreclose. So if you sold at auction, 26. 5. Now, let's, let's go back here and discuss if it took six months on that, what are your money costs for six months?

Well, I have a year money costs.

But based on this timeframe.

Yeah.

Let's say it does sells at auction in less than six. Because let's, let's. I, I'm willing to believe that the value is above the 175 on this deal.

So my cost would be 55960.

Okay, so that means if you take the five, you know, basically just say six grand out of there.

Yeah.

Is that for six months or is that for 12 months?

Six months. Six months.

Okay, so six months from that, that means you still make about 20 grand.

But also. Okay, but first of all, the market's going down. Maybe Port Arthur, I don't know, probably is. So I. And if it's only worth 181is according to Zillow and Propstream, a buyer is probably going to want to buy it at a discount, maybe 80, 70, 80% of value. That's where. That's where I look like I'm losing money.

So here's the thing I want you to work at. That is the investor mindset. And they're worried about worry, worry, worry, worry just kicking in. It's good to think of that. I totally, I'm just walk. Let's let me walk you through my, my mindset on this. Okay.

Okay.

Because you've seen values from what to what on this asset online, right?

Around 180 to 186.

Okay, so we. Are we comfortable saying it's worth 186 then, or 180?

Yeah, I mean, there's not a lot of comps, so it's hard to tell at this point. But where I'm at right now. Yeah, 180 to 186. Right.

Now on PropStream, this sold for what did you. Did you did it say there how much is.

So it sold 234. But I know this guy's strategy because a lot of people do it in Texas. They owner finance for more than it's worth because they're offering financing with it. And that's what I think happened here.

Right. Well let's. I would possibly agree to that. The fact. But if you figure that let's just say 20%, say he has an 80% first. What's 234 times 0.8? What's that number? Oops.

Mike, our photos are in the way.

You're good. 234 times 0.8 is 187 and he's at 170 something. Yeah. So he's probably hearing a second of some sort on this. You got some down payment. Now let's go back to your spreadsheet. One of the things that you're going to want to do during your due diligence on this is this is the stuff to see what's going on is you would want to get a BPO to find out value the property. That's the first thing.

Yeah, yeah.

You know, I mean or call a local agent because if somebody's living it and the photos in there, we can assume that this property is in good shape because it's less than a year somebody moved in the business. The current photos on Zillow show the inside. So we don't really need to sweat about the inside. If somebody's paying on time, they're paying on time. Right. So your number one due diligence thing is obviously going to be review the collateral file but then also call a local agent just to pull a CMA for you, a comparative market analysis of where it's at. Or if you've got an agent, somebody you know who has accessed the MLS anywhere or is an NAR agent, National Associate Realtors, they could jump on narpr.com and pull that report for you for free. And I don't always, you know, I don't always appreciate that one especially it's if it's non performing or vacant, you always want to have a take a look at it. But NARPR would give you a pretty accurate value and where the market is. And one of the nice things about NAR is it would give you kind of a confidence score on how confident. So your number one thing on whether this is a deal or dude is that value aspect of things. Because if it is worth 234 and one of the things. No problem. Exactly right. It will sell at 181 because it's at 80, 85 cents on the dollar of value where stuff is. But even if it didn't sell, you take it back. What's the rent rate on this thing? What's market rent on this cow. Not that you want to want to own a rental, but let's just go to Zillow real fast. Let's just go to.

Yeah, so they've got it at 1500.

Let's go to. Let's go. Let's try another one. Let's try rentometer.com real fast.

I'm just going to copy this.

Yeah, exactly. Rentometer.com they like the guys from Boston wants to say it's Rentometer not rental meter. And I'm like it's rental meter. Okay. So just do one of your free ones. Just. Yeah, get started there. Okay. All right. So we dropped in the address and then it's a three bedroom, two bath, one and a half or more and hit let's. Yeah, that'll tell you what it is.

So not pretty close.

Well, it's it that varies because the average is 1200 the 70th. Can you go back up there? Scroll up a little bit there and type in 1500 of the rent because that's what Zillow said rent was up there. Let's try that. Type in 1500 and hit analyze again. Your rent may be too high. Yeah, right. 1300. So that's not really a desirable ROI to turn into a rental for the most part because then turning it into.

Another owner finance deal.

I think I don't like that.

Okay.

Because here's the reason your ROI is not going to be very good on it. You're tied up all this equity or tied up some equity in the deal and you can't tap into it for 12 months or 24 months if you need to sell it off again because then you got to go through a whole point of season again. I am not a fan of owner financing as an exit strategy for real estate. Now it's okay to buy on as an investor if you can get a property owner finance or you're buying a note like this at a discount. Those are not bad things. But I don't. I think it makes more sense even with days on market dragging a little bit to list it and get the damn thing slow because then you bring all the cash in.

Yeah.

Get your profits and versus tying things up that you can't tap into for 12 months. Okay.

Yeah. Yeah.

And so, and that's this. And that determining factor is going to be exactly what your cma, your comparative market analysis or the Realtor says the average days on market are there in Port Arthur. Okay.

Yeah.

Now, you know, now let's. Because right now I think so if you figure in, you know, that's a pretty good. If you sold it at the auction for the 180, you know, you net 25 grand in profit. That's a win. Or 20, you know, 26. And then you pay your investor there five or six grand. You made 20 grand in six months. That's a pretty good ROI, especially to your investor. It's not just an 8% return to him. I mean. Well, it is an 8% return. Exactly. Right. You. It's an infinite rate of return to you. Right.

Yeah. Yeah.

And, but let's, let's go this way. Let's say you foreclose and you don't sell it.

Yeah.

And you, and you list it for sale at 200. That's an even better profit margin for you on that because it's not going to really need if they do, you know, here's the things that you want to ask your seller. Let's make a list of what to go back to the seller for now. Have, have they provided any of the collateral files yet in the due diligence package? Okay. So let's make a list of what you gotta ask. They should have this stuff for you since this note was what was originated less than a year ago. It was April, is that right? Eight months, right?

Yep.

We're going to want to see the full collateral file. We're going to want to see the original sales contract title. Who's servicing the note? Is the borrower servicing this or is it with a third party company or are they self service it?

Yep. Don't know yet.

Because that money that's being paid monthly for servicing is getting deducted from your P and I. Unless they've set it up in the contract where the borrower pays the servicing. Okay. So we want to ask that. Let's. Why don't we do this? What county is Port Arthur Texas in? Is that Port Arthur County?

Yeah. Jefferson.

Let's go ahead and check taxes out on this thing because that'll be important because we want to make sure also to verify that the bar is paid. Yeah, just if you go to Netra online, just go to any online because that's always easier to go to Netra online. Yep. And then public records online.

Come on.

And change it to Jefferson County. All right, let's look at the tax office. Yep. Go to data online there and then it should pop up there. And it wants you to search by owner's name, which you do. So you have the owner name. I got address. Yeah, but the address is also work as well too. It search. Okay. So there it is. It's a. Yeah, Tim, that's it. Wait, can you go hit back there one button?

Yep.

So you see here's the thing that pops up. You see the property side address is 1621 Richmond. Right. That's our address. Right?

Yeah.

And the owner's name and address is a different address. So what address are we searching for? 1621 Richmond or the 1030.

1621 Richmond.

That's the property that we're talking about, right?

Yep.

That'S our. Yep. And so you. This looks like it's investment property then.

Yeah.

So let's. So make a note of 1030 18th Street. Let's look and see. Or let's do Zayas. Let's do a look for Elizabeth Zayas and go back. Let's go back and see how much other property they own in the area.

In. In this county.

Yep. Yep. Because we often find they probably will probably own more than one property.

Yeah.

So Zayas.

No, just that one.

Just that one. So it's an investment property for the most part, which is okay. All right, let's go back and look at 1621 Richmond real fast. Okay.

This is the same one current amount due 35, 2093.

So. So they just owe for this year.

Yeah.

Okay. So that would be one thing, you know, you would want to ask. Hey, is the borrower going to be paying taxes? We show that they're 3500 behind right now. So this is where you would like to add. I personally think it's better to escrow taxes and insurance if you're doing an owner finance deal to go ahead and have an escrow.

Yeah.

Because you don't run into issues like this where you know, when are they paying taxes because the current years are due, they need to pay them. All right. So this could technically might be an amount you could deduct from your bid. Hey, they owe for current year's taxes. Are they going to pay them? And then also I need proof of insurance and they should have that. Okay.

Yeah.

And those, those are two things to ask for. Besides the collateral file, you need to see the original loan sales agreement. If they put, you know, if they put 20% down, we got to make sure of that. Now here's one thing that I like to do as well. I like to run my bids by a third party on an owner finance note. Like to see what they would pay. So there's a bank here in, you know, in Michigan and they have a branch here in Texas, First National Acceptance Corporation. I sometimes like to write my performing note bids by them and see what they would pay and see how far off I am. Because usually though they might pay more, they might pay less and that would give you an idea. It's an easy way to take a look at what they consider risk.

How do you do that?

So if you go to. It's very easy. If you go to open up another browser and go to fnac broker.com fnac broker.com.

Oh, they might have a. No Canadian cloud.

No, it's, it's the next brokers. I'm sorry, add an SD in there. Fanacbrokers.com okay, there you go. And then just put in, it's really easy. Scroll down a little bit. Just put in broker fast quote and they'll usually get you a quote back within 2048 business hours. So if it's with this being Saturday we're doing this, you might have a bid back by late Monday or Tuesday. Okay.

Okay. All right.

All right. But I would, I, you know, so let's go, let's go back here to what we got to ask your.

Yep.

Seller once again, copy the original sales agreements. I need to see that was actually a down payment and not just a paper down payment. That's an important thing. Who's servicing a note. You need to get a updated payoff. Now if they're self servicing it, I actually devalue the paper a little bit because if they don't have accurate information like if they, if they don't have a third party servicing collecting payments that you can tap into like Madison or Covey Financial or something like that, then you need to see copies of the payments. Every payment cleared. You know, if they paid a check, you need to see canceled checks to make sure of the stuff. Okay, you see the down payment receipt? All right. Making sure it was actually a physical cash down payment versus paper. Paper. Oh, we're going to do it for 230 and we're going to give you credit for 20% down payment. Well that's not actually accurate. We've seen that happen. Like you mentioned before, some people, you know, sell a property more because it's offered under financing and just because they think it's worth more doesn't mean it's worth more. Okay.

Yep.

So. But that's this. I mean, honestly, this doesn't look like a bad deal. The most important thing of this is. What, Cal? What's the thing that you've learned the most from this already?

The value. Establishing value and then making sure that it's insured, that we've got down payment and we got servicing notes.

Well, let me tell you, that's great. My biggest thing is that you got a guy who's willing to lend you 8%. You know, you got somebody who's got 150 grand or more who's ready to put it to work for you. That's the most powerful.

I know it well. They both happen at the same day. So I was like, oh, this is perfect. Everything's lining up great. Because I wouldn't have had the money otherwise. So now.

So this guy had been following your videos, connected on LinkedIn or part of a rea club or how's that kind of work? Another group you're part of?

Yeah, just different Facebook groups. There's lots of. We got a little counterculture of Canadians investing in the US So we all kind of follow each other. Yeah.

You're Canadian.

Slowly. One property at a time.

One property at a time. That's awesome. That's good though. So, yeah, I mean, you're not so bad. So like, yeah, just, you know, the great thing, the bid that you're bidding it through, you know, if you go back with a comment, it's just, hey, I need to get these things, this list of things sent to me and go from there.

Can I ask a question about the next step in paper stack? Yeah, yeah, yeah, because so the status is he accepted the offer and now he approved the closing terms. Well, the closing terms. I've never done this on paper stack, so. Right. Right now it's January 1st. That's no good. We want what, a month to closer?

Well, I mean, that's. Yeah, I mean, that's. You look at that. What is it? Today's the 10th. That's literally like three weeks from now. Which is not so bad. You close by then because you've got the money lined up already in a one off note. It shouldn't be that bad. Okay?

Christmas and everything in between, that's the only problem, right?

Well, but, but here's the thing. If he's got all the collateral and he's got all the documents and you've got the money lined up already with a guy, that's not that big a deal. Three weeks to close on one single note is really not unheard of for the most part. You know, the thing I dislike is paying the freaking fee to paper Stack. That's the thing.

Right.

I'm not the biggest fan of. Because, you know, what is that? You know, if you jumped on, if you jumped online, you could probably find the buyer or the seller directly and contact him directly. But anyway, it is what it is and somebody there for you. So January 1st is not that bad. I, I think you can make this happen. What I. If you needed time to push back because of the holidays, I would just simply, you know, reach out to your funder and say, hey, could you be able to close this by January 1st if it works out and go that route? Because that's a great way to start off the year. Hey, close on our first deal January 1st of the year. You know what I mean?

Yeah. Good way to start it. This use escrow account, what's that about? Buyer wires. They just hold the funds until you close, I guess.

Yeah. Basically you wire the funds, the escrow and then everything is collected in there so that the seller should be providing a copy of the assignment of mortgage and the launch. And that's not. The money's not released till that's received.

Okay. So they. This can all go go down through paper stack. There's no need for a attorney or title company or anything like that.

Well, you'd still pull title. You would still like get with all the.

But as far as closing this transaction because I've never actually closed on a note.

So a note. So a note deal, you're not going to use a title company to close a note deal because title's not changing. The title is still in place from when they originated a year ago. So most of the time if you're wiring, you're dealing with banks. You're just. I'm just wiring directly to the bank. And then the bank is providing a copy or the note. So it's providing a copy of the bill of sale when the. Once the wire is received and then sending back a copy of the assignment of mortgage the next day or a week later. And then the collateral file shows up, you know, 30 days later, roughly.

Okay, what about a title policy? Would you ask to see that if there is one?

Yeah, you're. That's part of the whole collateral file is looking at the title policy. You're still going to pull a title update, which is a lot cheaper from Baldwin Advisory Groups, who I would recommend they can get seen a couple especially port Arthur, Jefferson county is a big enough county. You shouldn't. It should only take you a couple of days. So if you order an O and E, a title update from Dickey, you could probably, you probably have it by Wednesday or Thursday next week. You could have it in before Christmas and go that route, which is what I would do. But I think this is not a bad deal. I mean, you know, I like making deals. 15, 20 grand, worst case. And the cash flow on this, 573amonth is not a bad day. Yeah, it's over six grand a year. I mean, you know, one of the things that I know that you have because you, you follow stuff is you've probably got, you know, what are your goals for you? Is there a monthly number you're trying to hit in the next 12 to 24 months? As far as residual cash flow, like you talked about beginning, like, as a.

Cash flow side, 5 grand is my first goal, and then 10 would be the second. So.

So this would be a great way because you'd be one, you know, over one tenth of the way there with your first performing note deal there for you.

Yeah, yeah, for sure. That's.

That's a good thing to look at. Now, the one thing on this thing with it being performing that you got to look at, too, is if, if it's performing for a while, how long does your investor want to stay in the deal? Does he want to stay in the deal for two years or three years? Or how long would he. Like, how long would it be comfortable tying that money up? It's that 8%.

That's something we got to talk about. Yeah.

Because that's important to keep in mind right now. Most that. That principal and interest is interest coming in. And the great thing is you're. You're at 147. Let's just say 150, because you're gonna have to be at 150 with a feed, a paper stack, and some other.

Yeah.

So. And they're at, what was it, 187 or 175?

175, I think. Yeah.

So you get, you want to make sure. And take. Now the great thing. I mean, they're at 9.9% interest. Okay. Even a year ago, you'd want to almost make sure that you pull the borrower's credit. And this is why it would be good to run through fnac because they can do that for you. They can do a soft pull and tell you if the credit score is 620 or higher. Okay. Because that because here's the thing, you're at basically 175 or 176, whatever the balance is that's getting paid down a little bit each month, right? You're borrowing the Money though, the 150 at a flat interest only loan, right? So your balance isn't going down, right?

It's not going down.

So you got to pay that 150 back to the investor at a period of time. So what you'd want to do is run an amortization table, which is pretty easy to do. Just put the information and you know, set it for when the first payment was made and just run your amortization table and then see, okay, is it, you know, how, how far in the, in the future is it where that balance of the borrower owes gets near my 150 that I'm borrowing, right. It's probably going to be at least seven years, probably because most of its interest off it. But, but take a look at that because that'll give you a time frame. Okay, I know I need to get my investor money out. I want to be able to do that. Now of course, if the seller refinances out with a new mortgage at a lower interest rate, it's not a big deal before that because you get paid off and then you're making you pay, you know, paying your investor off the 150 and you're making, you know, what's ever above 150, which is, which is the back end of the deal. This isn't just going to pay a, you know, 66, you know, 573amonth, which is what? Which is 6,800 a year. It will pay. There's a lump sum on the back end here when it refinances or you sell the note off and you just got to look at what it is there for you. So make sure you leave it plenty of room when you run that amortization table between the 30 year principal interest payment reduction and then your interest only because you want to make sure and leave a buffer in there. So that would be the one thing I would look at before you talk to your investor about how long we want to tie this up and if they want to do it for 12 months, okay, that gives you some time to, you know, keep this ball rolling. And this is also why you would ask like see what Fanac would pay for the note. Because if after 12 months, I mean, they're not going to buy this note probably right now because of the less than 12 months of seasoning.

Yeah.

But in another 12 months, that's over almost two years, they may be willing to buy it. And then you can see how. Okay, if I need to in a year, if I'm buying this at 150 and they would pay me 164. Well, I know that I can sell this note in a year for ten grand more. You know what I mean?

Okay, so if we get close to that point where you're saying the amortization is getting close to what I borrowed, you would just want to sell that to someone that's just going to be putting their own money in and so they're okay with the principal pay down because they're just getting paid back.

That's exactly. They're getting a nice. And they're getting a nice ROI on their money at, you know, at 9.9% or greater, you know.

Okay, so they wouldn't care buying it that, you know, seven years in, because they're just looking at the return on their own cash.

Yes, exactly. Okay.

Never thought of that. Gotcha.

Okay, cool. Yeah, you can, once you stop sharing your screen here. So we're not looking at just a black screen real fast there for you. So you made, you made how many offers total on paper stack?

I think like 15, something like that. And I got more to make here this weekend. I found. Saw some more on there. Cool.

And so you've had this one and another one countered or one was canceled or they didn't accept your offer. And the two that you submitted offers.

On this same seller. I made four offers. And he replied, can you go higher on any of these? But. And maybe I can look at them again now. I just kept getting hung up on that foreclosure, like profiting if we have to foreclose, you know, the cash flow look great on all of them, but the foreclosure number never didn't look good.

Well, here's a great thing about Texas. Texas is probably one of the safest secure places to own real estate. We don't see a lot of loss, you know what I mean, on stuff. It may lay flat for a couple of years, but it'll bounce back. And, you know, that's the thing to take a look at. Why don't we go to Zillow real fast? Can you click back over and reshare your screen and look at the property on Zillow because it'll kind of show you the value, the trending of. Of real estate. Obviously we've been in a peak there. Yeah, scroll down there a little bit.

Is there a graph probably?

Yeah, there's usually a graph of where it goes.

Well, Propstream had a good one. I don't know if that works.

Yeah, yeah, that's fine. So there you go. So what does that. What's that say?

I can't see the three years, one year, six months current.

So what's the three year say? What was the value three years ago?

It says it was 55,000. That might have been before for a remodel, though.

Yeah, it's probably before. Remodel airport.

Yeah. Then a big jump a year ago, obviously. Yeah, Everyone did.

Well, there we go. But you can see that's kind of been level for the last six months. It's gone up a little bit, but not gone down.

Yeah, look at his flood zone just while I thought of it just now because we are near the coast, so.

Well, yeah, you're not on. On Port Arthur is not really going to be a flood unless it's a hurricane. So you're. You may see a hurricane there for it. But that's why you want to take a look at the insurance.

Yeah.

To see what the interest is being paid on that, for the most part.

Okay. All right. So my only. I guess my question again on the foreclosure thing, because, like, these performers, a lot of them look really great for cash flow. And originally you said you want to try to make 15 grand when you foreclose. So the way I've calculated, I've been calculating 80% of as is value or the note payoff, whichever is the lowest. Right.

Because you're only gonna. Right, but we already discussed this. So you look at this.

I know. I just want to hear it one more time.

That's fine. The value is above this. You're at 85% of UPB, which if you figure if it's at 230. 147. Let's just say 150.

Yeah.

Divided by. Let's just say. Well, let's just say 200.

Yeah.

75% on a low value of 200. Now. Now, if. If it's. The value isn't 200, when you pull your comps and stuff like that and it comes back at, you know, 1 below 200, then you need to fade your bid then at that point.

Yeah. Okay, so you still always want to have that around 10, 15,000.

I prefer 15 to 20, but I think you're. You're. I think you're. Based on your numbers here, you're a little conservative on the value on stuff like that. I think your numbers. What's. What's b. What's by 11. What do you have? What's. Or what did you have? Your. The. So you have the dean lose sales price at 158. Your numbers are way low. That's the reason. Your numbers. You have your numbers.

I use the 181.

Yeah, but that's not accurate. The 181 is the UPB and the value, and this is above this. So you. You would go.

Ozillo says it's 181. That's why I use it. D, you can use 175.

Right. But just this is why. This is why the number one due diligence is looking at value. Yeah, your value. Your CMA is going to determine everything. Whether it's a good is a go or it's a no, if it's a deal or a dud.

So even if it's so, you're going to look at every note the same. As far as foreclosure, even though they're not behind, it's a performing note. You're still going to assume that it could happen and. And still try to get that 15 grand if you foreclose, even.

Yeah. I mean. Yes. Yeah, pretty much. Exactly. I mean, the lower values, you definitely got to be. It might be a little bit less, but you want to see that 15, 20. Because there's costs. Yeah.

Okay.

You know, put a new AC unit in or new paint job, new carpet, clean out, stuff like that. Okay.

All right.

Good stuff, Cal. Very proud of you, brother. Keep it up.

Thank you.

Good work.

It's working. I've been following the steps, getting offers accepted. I got money coming in. I talked to another guy in Maryland that wants to maybe fund deals in Maryland from my letters I sent out. So it's working.

So you sent out letters to IRA investors like I tell. Like I teach.

Yeah, yeah. I'm getting. I mean, you send out yesterday as well for that.

How many did you send out? Your first batch. Is this the first time?

You're now on my second batch. So I'm at 500 now. First one batch of 250. Now I'm on my second batch of 250.

So here's. Here's what I would recommend. I would not add new ones. What I would do is work that. Work that 500. So go back with a postcard to the round.

Well, I've done four to my first 250, four mailers. And then I thought I would start another 250 now, is that what you're gonna say?

Yeah, yeah, that's exactly what I say. So look at these people that called you. Where do they come from? From the first 250 or the second 250? Do you know?

Yeah, I got three from the first 250 and one from the second 250 now.

So just. Yeah, keep what that touch and base 80 of sales made after the fifth contact. So one of the great things is you could even say use this as an example, you know, go to Vistaprint and create, get you a postcard or something or E card or something like that with the picture of the Port Arthur property. Our investor is make, is going to make 8% of this deal. Are you right? You know, something like that. Even though if you don't close on it, you've got the funder lined up to do this and it's a clean property. It's, you know, we're funding at 150. The balance on this is 175 values over 200, you know, and it looks nice.

That always helps people aesthetically if it.

Looks nice, you know, as I say, a picture is worth a thousand words or a, a case study is worth thousands in private capital. Yeah, good stuff, Cal. Well, keep up the good work, but keep us, let me know what's going on with this and then I'm sure when you get a CMA back, you'll be like, hey, Scott, what I do now, we're glad to jump on a call with you as well. All right, buddy.

Yeah, man. So I can accept the escrow then or the closing terms on paper stack then?

I think, I think so.

Yeah.

Yeah, I would go ahead. I mean if something pops up because the holidays actually pull that back up. See if it allows for you to make any comments on that.

Okay. Paper stack. So you can change it here, but you can just approve it or else you can message the seller.

So message the seller. Let's go ahead and message the seller.

Yeah.

Okay. I'm willing to accept the January 1st closing if you have these items and then I would list those items.

Okay, I'll do that when we get offline then.

You know, because it's Christmas. I mean, yes, you have a thing with Christmas and the holidays and people traveling and you never know. Some of these owner finance, you know, originators, they've got clean collateral files, others don't. So the biggest thing on this is ask. I need servicing information update, payoff. If you don't have a third party servicing, I'm gonna need copies of the canceled checks on each of the. On each of the payments and see how organized he is. Because he's not organized. I mean, and here's the thing. Put a pressure on. Say, hey, I'm going to need all these items within the next seven days to be able to close by January 1st. Okay?

Yeah. All right.

Good stuff, Cal.

All right. Thanks, Scott.

You're welcome. Talk to you later.

Love to see you.