Session 5 - Advanced Note Deal Analysis: Profiting from Foreclosures and Understanding Asset Value

All right, everybody, we're gonna dive into some more notes as well today. See, some folks that said, oh, light bulbs, I happily would do those deals. They're been enlightened by it. That last case study, stuff like that, that's kind of what you do. You're arbitraging. You're bringing on somebody else's money to fund your own deals. If you don't have the funds now, don't we Wrong. If you have your own money, by all means. Great. All right. Phenomenal. There's nothing saying you couldn't have sold that last note off at year two. Year three, if you found a buyer to come in and pay above the 110, which you probably could have, you could have sold. If we go back here, one last thing. Here we go. Let me show you something here. Let me show you something. Okay, Remember, our balance is 110 right there, right? We know we have 1496amonth coming in, right? We know that's coming. Now, currently we're paying half that to our money partners, either in 8 to 12%. Now if you've got 1496amonth coming in, and that's coming in times 12, that's 17,952 a year. Now, if you were going to sell a note to somebody, they cash flow and they wanted to make 8%, divide that by 0.08, you know, that's $224,000. That's all. It's a little bit different on that. I can't be. That is right at 8%. Okay? So you sell it to somebody at a 15 yield. I don't. I. Sorry. I got my numbers. I just goofed up my numbers. Did I do that right? Oh, yeah, I did. There we go. So there you go. You could sell it to them. Remember the balance. You, you bought you the Note balance is 149. Okay, 149. So you could sell that note to somebody, come over, get a 15 yield at 120. All right? At let's just say year two. Let's look at back at our amortization tables. Where does it hit 120,000? So there you go. 120,000 would be at share screen. Right there at year 3030. So four and a half years, okay? That give us, you know, a year and a half between one night 120 and our 110. So there you go. It's bringing in fourteen hundred dollars. Sell it at a good return to somebody to cash it out of the deal that they're just Buying the whole note themselves. And that's the thing, you could offer that up to your investor, say, hey, how would you like to make more money? But hold this note for the next 10 years by yourself. Okay, pay me 19 grand, 680, because you only borrowed 10 grand from them or 110. Give me, give me a $20,000 payout or 19,680 payout and the notes all yours. Now you're not making quite as much, but you're in and out of the deal. And rock and roll. It's a 15 yield based on cash flow right there. 119 they owe at that point, like I said, 121. You know, there you go. Question here. And it's a chunk of money up front. What do you mean by chunk of money up front from. Well, no, I'm saying you're still getting cash flow. Three years, Judy. So you offer them 119 to pay you out of the deal before it hits the end of the time. So you still get your cash flow. Three years of cash flow of that split, and then they're paying you 19 grand to stay in the deal the rest of the way. So now I just got to go do it again. Right, and that's the thing. You're going to be recycling money. You know, if that investor comes back to you, says, hey, I got some more money, well, great. Well, let's put you, you're not, you're at, you're at 8% or you're at 12. I can do, let's do 10 because I'm gonna make sure you're taking care of on the deal. The best I can do is 10, depending on what interest rates are. Okay. All right, let's move on here. All right, so this is just, you know, I, I share this the way because you can take a look at paper stacks, see what's on there. You gotta a lot of times go through stuff to find a lot of stuff to find some of this a decent junk. And, and chunk of your deals will die on here anyway because they won't have all the information. It's not service. Right. Their values are over inflated. You know, you end up finding out it's not exactly what it is because you got a lot of individual folks on here selling stuff. Now, the most valuable asset actually isn't the actual listings, but this list right here, the sellers. You can go on Google these people, find out who they are, you know, and see about reaching out to them directly. Okay. Someone will have more offers than None. Some are selling notes quite a bit. Some are just one off sellers. Okay. So it's okay. I mean there are worse things to look at when you start. They just used to do a lot better job marketing their assets and had a whole lot more because they were marketing. All right, so let's move on. So I never get blocked down and worry about. I actually let me just go ahead and save it. Hit cancel. Let me save this in case some of my students want save as let's just say November25, no buy for dummy paper stack sample. Numbers. Okay, so we'll save that. All right, so let me close this one down now. What we ultimately are doing, I saved it, okay. Is we're looking for other tapes. So like I said before, I've got one fund that sends me tapes daily. I mean I literally look at stuff all the time. Now you're going to see a variety of different listings from different people that mean different things. Like if you start seeing lists of notes come in and say they've got S and D loans, okay? S and D stands for scratch and dent loans. Means they're usually newly originated. Notes have been around for a little bit and they've got an issue or two with them. Not usual payment history. It might be collateral file history. Because ultimately what you're really buying, ladies and gentlemen, you can see this, you're buying this collateral file. This is truly what you're paying 110,000 for or 105 or 45 or in this case, I paid, I paid $27,000 for this one $110,000 asset. Okay? And part of that outreach is, I mean like scratching dent loans you're not going to waste your time on because they're going to probably want something at 80, 90 cents on the dollar. We'll talk a bit more about pricing, probably a little bit more on Sunday. But if you've got notes, you're going to see notes that either a, they're underwater, where they owe more than the property's worth. And I always say, especially if you're cherry picking a deal, you're probably going to make an offer somewhere around 65, 70 cents of the fair market value. Okay? The as is value, not arv. ARV does not after repair value does not exist in the notes. Space is all about as is value provided that they owe more than the properties worth. So you're gonna do like I said, 60 to 70 cents on the dollar of value. Now if they've got equity, means they owe a lot less than what the Balances of the mortgage, I mean, sorry, than the fair market value. You're going to probably go. If it's a sizable chunk, you know, they have 20% equity above the payoff balance, then you're probably going to be coming at 80, 90 cents on the dollar, the legal balance, when they have a ton of equity above the balance and the property's worth a whole lot more. Okay. Now you're going to see, we've started to see more and more legacy assets. Now. What does legacy assets mean? Legacy assets are when a bank comes in and buys another bank, okay. Another lender buys another lender's portfolio out and the legacy means it's the original loans, the loans that were the previous bank the bank acquired. They're usually smaller balance. They may be performing or non performing. It may be just that they're kind of the, I won't say bottom of the barrel because it gives a big, a bit of a negative annotation, but it may be the bottom of the barrel for that lender. They like focusing on higher value loans and maybe smaller balance notes they can take a look at. Okay. And we find we've made a lot of money in the years off the legacy assets, smaller balance stuff. Because what's happened over the years, the values have gone up, right. Appreciation has risen. People have a lot of equity in these assets. They don't want to lose no foreclosures. So they could be pretty good assets if the borrower is paying on time. If they're not paying on time, it can be a great way to get into non performing note and either a get the bar back on track because you're serious about foreclosing now or if you do end up foreclosing, you end up, can often end up taking an asset back with a lot of equity that now you own the asset. Now you're never going to always own up. And this is one big thing. When you buy a note and go to foreclose, you're not always going to or buy a note. You're not always going to put the property, you're the lender, you're not the property owner. This is a big mistake that a lot of people make coming in the note business. They think, oh, I'm just going to end up with the property. No, you're not. If somebody outbids you at the auction and outbids you means that you are only, you're only going to bid up to the legal balance of the property. Right. You're only gonna build the legal balance of the property, what's owed to you as the bank, once it goes beyond that, it doesn't. The property isn't gonna come back to you. It's gonna go to the highest bidder. Any amount over what you are owed is gonna go either to the second lien holder or go to the borrower. Okay. But you're gonna get paid in full, and that's where you base it off your bidding to make sure you're paid full. There's some assets that I'm working on right now. There's a lot of equity above. I'm buying them at like 90 cents on the dollar. I might only see a 10 to 15% difference between what my bid is at and what the balance is. And if it sells, it sells at auction. I'm only going to make a little bit of money. Not a lot of money. My investors can be taken care of, but I'm hoping that they don't sell at auction because if they don't sell at auction now, I'll own the asset. I'll own the reo. Now I can fix those assets up and sell them and make a ton of profit because I'm buying them a cheaper price. Okay, so how do you come up with as is value? That's a great question. Do you do repairs? Do you. You factor in repairs and links. Okay? As is value is not hard. What's the freaking Property worth today? 30 day quick sale price. Not repairs. Just what's it sit. As is. Now here's the thing, ladies and gentlemen. You're not going to get into interior inspections. Most of the time you're not going to get inside the house. Okay? This is why we like occupied assets better than vacant assets. Occupied assets are usually going to be in better shape. Somebody's living them. Somebody's keeping the H vac on, not ripping the power out. You know what I mean? The plumbing's working now. Every house is going to need paint and carpet, but that's not usually a big deal. May need some updating. That's not a big deal. We're not talking about replacing walls and full complete rehabs. Me. Wrong. I've run in that as well, too. That's why we put force place insurance to cover our assets in case of mold or something like that. Let's see here. Can you use that note? Okay, so question paid or ask a question here. Can you use that note to keep it from going to foreclosure and taking over the physical property to rehab? It's in my what property? Talking about it's in my local market, the one we just went through, Pedro, that was out in Caldwell or somewhere else. Okay, so general question. So no. Okay, you, you, you have to separate owning the property from owning the note. Okay? If you buy the note, you're the bank, not the borrower. Okay? You're the bank. The property is worth this. If the borrower is not paying you, you have to foreclose. If there is. If they owe 160 and the house is worth 250, you only can bid 160 at the auction. As the lender, you don't own the property. The whole goal is here, is that you bought that note that they owe 160 on. At 100. 120. So if it does sell at auction, you make 40 grand. 40 grand on $120,000. Investment's a pretty good day. Now if it doesn't sell, you bid at 160 at the auction because that's the lender. Okay. And it doesn't sell your bid 160 to a credit bid. Now you take the property back. Nobody bought it out. For now you own the asset. Okay. If the owner's giving it back to the bank, yeah, of course the owner can deed it over, you can negotiate a cash for keys, a deed in lieu with a bar. But we're going to get to exit strategies later on, okay? So let's stick more to exit strategies later on the weekend. Not right now. Where I want to go with for you, okay? I'm just trying to give you a little bit of a breakdown on a little bit of price and stuff like that. But what we like to target, I think is the biggest bang for the buck, you know. Let me take that back. It depends on where you're at. Everybody's got their own goals. Some want cash flow, some want to be more passive returns. They don't want to do any work workouts. You know, they don't want to have to foreclose on things. They just want performing notes. Great, you can do that. Okay. There's plenty of performing or owner finance paper or reperforming stuff that you can move that you can buy with your own funds or other people's money, depending on what the returns will be to make things happen. Okay? Now one thing that I've always liked is non performing because I can get it at a bigger discount. So if we go back over here, here's a spreadsheet, Here's a list of notes that came in yesterday. Actually, they were out last week. We made an offer on them on some of these yesterday. Okay. Now it's a smaller tape but it's from one lender. It's 46 assets. Okay, 46 assets. Now let me give you a bit of an idea. One of the things I always like to do is I like to map them to see. Okay, where are they at? What's the geographic? Yeah, there's in a variety of states. Here we go over to a service called batch geo. Dot com you can copy paste over a spreadsheet as long as you're using the headers. Okay. And let's make a map. Okay. Save and continue. Save map. Map is saved. He's going to send me an email with it. Oh but going back to the liens. Let me go. Repairs and liens. The only liens that you're going to pay would be the, the tax liens. You pay some water liens. But there's a second mortgage behind you. Skyline, you're going to wipe that out. The foreclosure auction, okay. You just have a realtor pull a BPO for you. You have a Comparative Market Analysis, a 30 day as is sales price and you're buying at a discount. You're buying below that market value. So you're buying if it's at values at a hundred and they owe 110. You're going to bid 65 to 70 grand on that deal. All right. Knowing that if you foreclose on it, hey, it sells at auction you're making money. If it doesn't sell now you have an asset back. Now you can look at your arv. Okay. Upgrading it and doing some stuff will make it worth 150 now versus as it is at 110. Does that make sense for you? Okay, so we close this, we're going to go over here to. And view the map. So this gives you a better picture of kind of let's. There you go. Of the geographic of this tape. Okay. It's kind of all over the east part of the United States is pretty normal. Okay. It's got some stuff down in, you know, one in Texas, one in Kansas but the rest are going to be kind of the east coast of one in Florida. Stuff like that. The great thing about Bashto, it works with your Google Maps aspects. If we look at this one, let's go down here to Daytona Beach. All right. And let's do. Where's our overhead? Can we drag our little guy there or not? Oops, we go back here. That's not right. Yeah, That's right. Hang on here Go back here. Okay, Close this down. There we go. Now let's drag our little guy here. This allows you for you to do some due diligence quite a bit. Okay, so this is our prop, the red little one right here. This photo in Daytona beach was taken March of this year. Okay. No trespassing. No trespassing. That looks like it's occupied. Is that a converted garage or what around the neighborhood? Yeah, kind of normal neighborhood homes, but probably needs a new roof. Yeah. Now if there is major repairs inside the property, that's why you get force place insurance. So that if you foreclose and take the asset back and it's got mold without or water damage, you can file an insurance claim and protect your investments that way and get those paid for. All right, so it's occupied. Somebody's living. It's not the greatest of condition. I don't know if those that's on there. If it's an older person that lives there, they still have that from hurricanes of last year. I don't know. So let's go back to our spreadsheet, look at the numbers on this thing. All right. Give you an idea. So let's filter this for state. So we have. All right, let's look at Florida, Daytona Beach, 1620 N. Patrick Court. Okay. Now this loan was originated back in 2001. I'm being one of it. Says original 100 balance. The current balance is 95. That's just the current UPB, not legal balance. Okay. Fixed rate, first position, conventional mortgage, 30 year, 248 month remaining 218 months. PNI payment 680amonth. Original score is 543. Currently it's got some. It's owner occupied, single, family unknown. This is as valued at 160 as it says. So when somebody gives you an appraisal BPO, you have to go. Okay, so they pulled it November 7th of this year. So they pulled it two weeks ago. When they pulled these numbers. I doubt they pulled the praise. I'd be willing to bet that they just pulled Zestimates and Zillows. Okay, so it was originated in 2007. They paid first November. They paid through February of 2017. So they paid for 10 years. They haven't paid in eight and a half years. Almost nine years. Okay. Why have they not foreclosed on this damn thing? Okay, so let's look at this. Let's see there. Any other changes on here is delinquent. Yes, it's delinquent. Well, it's. That's what happens With a lot of these legacy assets, they're smaller balances compared to the bank. Okay. All right, so let's go back to the numbers here. It's worth 160, as they say. Current balance is 95. I don't think. I don't think it's. They paid on it for. Yeah, there's still a long time. I don't think. Exactly. I don't think they're currently 6%. Well, I mean, it would have been back then. Okay. But if you're figuring their monthly. Let me look at this. Original upb. I mean, original monthly P O. Yeah, I'm sorry. P and I payment. Well, getting tongue tied over here. All right, so let's go back here. Sorry, guys, I'm just trying. I must have missed this somewhere. Loan term, loan age. 680 bucks a month. Okay, 680. And what was your last payment made? February 1st of 2017. So three. So eight years, nine months. So that's 72, 81 months. Okay, 81 months times there. 680. That's 55 grand on that. Okay. Now I don't think they got their balance down below where they're at based on it. So 55, I think that's their. Their legal balance is gonna be a whole lot more than the 95 that they owe. Okay. All right. Yes. It's going to be like 145, you know, so if they owe 145 and the house is worth 160, there might be a little bit equity, but I'd be willing to bet. Let's do, let's do this. Let's look at all our good old buddy Zillow. All right. I doubt Zillow gives us a favorable value on this. Zillow says. It's a two bedroom, one bath, 1450 foot. So you can see they just ran Zillow values. 161. Okay, so on something like this, they haven't paid nine years. Okay. Really? Realistically, nine years. Okay. Eight times 12. Oh, no, I get. I get that wrong, didn't I? I completely miscalculated. Whatever they owe more than the property's worth. I'd be willing to bet, I bet the as is value on this is not 160 because Zillow is going to pull this off of pretty much things that. Now they may have converted the garage, it may be a third bedroom, but that one's kind of a rough asset. And for me, I would say no to this just based on that. That's an ugly ass Asset, you're gonna have to do a full rehab on that. Can we agree to that, ladies and gentlemen? Heck, yeah. It's owner occupy, but it makes no sense to do it. So here's one thing that we like to do. All right, let's go back over here. Let's go back to our spreadsheet. So on something like this, I like to run numbers before I start diving into the individual assets and start going that route. So let's, let's go back here. All right, so same thing. We got all 46, 46 notes on here. Okay, so. So let's do this. Let's look at those that are owner occupied. Says, actually, let me take a. Let me take a. A survey here from those that are joining us here live either on Zoom or YouTube. What are you looking for? You looking more for cash flow or are you looking for. To take the assets back? Okay, if you're wanting cash flow, just give me a dollar sign. If you're looking for property, just say P for property. Put that in the chat. Roll the comment sections there for you, and we'll go there. Because most of these, as you can see, these loans are original cash out refi. So I don't really feel sorry for closing on something. A lot of these were unknown. Okay, so we got. Okay, not a mixture. I get you say mixture. Give me just an idea what you're looking for me now because I know your answer. Judy's cash flow. It's not a mixture. Okay. You're looking for some stuff that could generate some cash flow. Let's not. We don't have to be politically correct. Okay. Okay, so we got pp. We got like a mixed bag. Property, cash flow. Okay, we're going to do this tape like we're. If we're going to do both. But what we're going to do first. Okay, first we're going to treat it like we're going to buy it for cash flow. Because what we want to do, if we don't have the money ourselves to go buy this stuff, it's easier to buy stuff that could potentially cash flow. Okay, so what we're going to do now, thank you all for answering. I appreciate it greatly. For those that did not. You don't get a gold star because you're not playing. All right, so let's. What we're going to do, let's custom sort this. And so you can kind of see the custom sort it. And let's just look at the last paid date, Paid through or next due date. And we Want to do newest to oldest. Okay, so we go over here. Let's see when the most recent one is. Okay, so some of these are not too bad. Look at these. Okay, next pay date. They're due 2024. 2024, 22, 21, 20 now 2019. Now here's one covet covenant that I have. Okay. If it's an owner occupied property and they were delinquent before COVID and didn't get it back on track during COVID and are still behind on Covid a shame on them. They don't deserve a get out of jail card because they had all the opportunities in the world. Most of the time, 99% of the time they don't deserve a second helping second hand. They should be foreclosed on. And yeah, they've been living for free. Now shame on the lender bank for keep them in the property. But we all know that banks will look at their bigger portfolio first. The smaller stuff they don't care about sometimes. Okay. You also see some lenders who have bought a lot of stuff and they don't have the money extra to go after the lower balances and stuff. And that's okay. It makes opportunities for you and me to come in and a live off the Crohn's. Okay. All right. But the ones that have on, if you look back at these next paid date is after co here. So we got next pay date 2024. 2024. But they're all like this is a year plus. So we'll go down to. Let's go to 2021. Okay, so that gives us 17 notes on that. So what I'm going to do is I'm just going to hide the rest. We'll get to those in a second. Now, do I think 2021 is going to get back on track? Probably not. But for the sake of today's homework, sake of today's learning, we're going to say that. Now what we're also going to do is look at DC if the occupancy on there. So if we know the occupancy. Cash at refi. All right, so these are all mostly owner occupied, unknown multif family. Might be a duplex. All right, okay, so let's sue. So they're all year behind. Okay, so let's do this. What I like to do is dive into. All right, so let's do this stuff. So like I do. Since we don't have pitis, I'm not worried about that. Let's do insert some columns here. All Right, So P and I, that's principal and interest. So let's take that times 12 months. P&I. Okay, that's equal to 483 monthly P&I payment times 12 months. So this is what would be if we got the bars just to start making payments on time. Well, now all these are at least a year behind. So we're going to want them to bring some more to the table. We want those two cha ching, we want some extra skin. The game of four months at least, plus the full year payments. Cha ching. Okay, so two paydays. We'll also get a third cha Ching on the back end of either A when they refinance or sell the house off or foreclose if they don't pay on time. Okay, so what I like to do is just do 16 months. P and I. Okay, because here's the thing. If they start paying on time for 12 months, you could turn around and resell this note off as a performing note, which would be pretty good yield. I'll show you that reason in a second here. Okay. All right, so let's figure this number times 16 months. So it's 12 months plus 4. Right. So control C, we're gonna run that down. All right, so now we have 12 months of P and I. 16 months of P and I. Right, but understand that pretty simple formula. The P and I payment times 12 months or the P and I payments times 16 months. Okay, so now let's figure equity. Insert another column and we're going to say is there equity amount? Now we don't know their payoff amount because they haven't given us this. But for these, we're just going to look at something here real fast. So what we're going to do is we're going to take their Zillow value, Appraised BPO value and subtract what the balance is. All right, so we'll, let's go there. I want to make sure this right. $44.94 they owe, is that right? They said the original BPO was 50,000. Okay, that's back in the day. Or that's today's value. Hang on. Sorry. Yeah, that's Today's value is 50 grand. See, some of these are lower valued stuff. All right? It's okay. You can make money in lower value stuff. That's what due diligence is for. This one is what in Louisiana? Oh, Shreveport. Okay, so worried about Shreveport. Salemville, Ohio. Okay. Morgan City, Louisiana, east of Illinois, Cozad, Nebraska. Shreveport, Louisiana. St. Louis, Missouri. Snowville, Georgia. Robbins, Illinois. Muncie, Belton Harbor, Indiana. Oh, Muncie, Indiana. Okay. Belton Harbor, Michigan. Memphis, Louisville, Baltimore, Chicago. Okay, so let's just assume. Yeah, I know I don't really like Chicago, but let's just run through some numbers here. So they got original balance, current balance. This is not taking. And consider any late fees or their legal balance. We're just going off what we have here. Okay, so they've got a little bit of equity, not much. All right, so let's change that to a dollar amount. Yeah. Okay. And this, let's format these. Format cell. All right, so 26, 24,000. These are all positives. Only $45. I only have that less than that. Okay. So I'm willing to bet that if they looked at the BPOs and stuff that most of these have. Well, let's do this. Let's just be. Let's be smart about this. Next paid date. Let's insert a column in here. Month that's due. This is going to be equal to 13, 11 months. 11 plus 5 is 16 months, 18 months. No, it's more than that. 12 plus 21 months. 32 months. Is that right? We're coming up on two year. Yeah, two years. No, it's not 32. It is 20. 24 is 9, 10, 11. So 26 months. Don't know why it took me so much. 26 months. That is three years. So 36 months. 36, 41 months. 45 months. 47 months. 51 months. 54 months. 54 months. And three. So 57 months. And that's going to be 57 months. Okay, so now we got to kind of try to figure our legal balance on that stuff. Okay, so if we go over here back to where it says the balance, we need to, we have to readjust the equity amount. Okay, so. Insert back payments. Is equal to their P and I payment. Times the number of months they're behind on. Okay, so that's better. Copy the whole form now. So that gives us an estimated. There we go. All right, so now we can figure out, okay, better full legal balance. Insert estimated legal balance. So go to back payments plus current balance. That's better. Now we figured out a better number to work with. Okay, now, now we can figure the equity, the heavy. Okay, equity amount is actually going to be. Is going to be the appraised value, what they give the prick Zillow value minus our legal balance. There we go. That's better. Now we should see better numbers here. Okay. All right, so, yeah, so you got Some that have a negative equity or upside down. Some have a little bit. Not much. Some have a lot. Okay, that's fine. Negative, negative 19, 9000. And I think the appraisals are off there, so let's do this. All right, so they're upside down. Let's figure our quick offering price. The negative equity means they owe more than the profit's worth. So let's just take this and say since these are low balance stuff, let's just sense it's equal to the value. 50,000. I get a value of 50,000. Let's just multiply it times 0.55. You know, all these have lower values for the most part, I think, right? Yeah, they got a couple that have higher values, but most of are under 100,000. So 50,000, that's probably our lowest 250s. The rest are all going to be like 65. Okay. Since it's at 50,000. All right, and same thing, Control C, we'll copy that from the negative and the small number there, E. All right. All right, so the rest. Yeah, let's just do that too. The rest we would say, since they've got about 20 grand in equity, is this is going to be equal to 80% of the legal balance. Since they have equity. So we're going to go off the lower of the two. So we're going to take legal balance times 0.8, because the legal balance on the rest of those are pretty low. Control C, we're going to copy that down. Control V. Control V. And Control it means. Control V is my foremost. Okay, so this would roughly be our offering. And we're just gonna put in here like roughly 55 to 80%. The ones that have negative equity, it's 55 because they're low, low value assets. If it's got some equity or it's above, it's at 80%. That's kind of ballpark. We're just running some numbers there, so don't get so overthinking. It'll come together. What I'm showing you here, in a second. Okay, so that was our offering. Let's figure what our yields would be and let's insert a couple columns. All right, so if we do 16 months. Roi. So basically what I mean by that, if we get Cha Ching with four months on the front end and a year of payments, what's our yield base if we get our offer accepted, the 27 5. So let's go over here. So where do we have that at? 16 months? P. And I divide that by what our offer price is, there's a 28% cash and cash return. Okay, let me just copy those down. Now do I think the ones that are 50 months behind, 60 months behind or whatever are going to reinstate, modify. Probably not. Okay, I'll probably have to go ahead through and foreclose those. But I don't let the numbers, I let the numbers dictate. Like this one. Okay, that's a pretty good. If I allowed to reinstate, right. These at 6% don't make any sense to reinstate. They probably don't make any sense to keep their low yields. All right. Doesn't make any sense. Just off of this loan, if I'm going to get on to bring four months to the table, plus 12 months of on time payments, that's a performing note. Then at that point, right, I got to have a good cash flow for my yield. So let's do this now, now that we have that in here. Because I'm not gonna, I'm not gonna let these people reinstate and just start paying again. They've got to bring some skin to the table. Okay, now these that are getting down here, that get higher, I'm gonna probably want them to bring 24 months to the table, especially get beyond. Let's see here. Let's look at some of these. Appraisal date, months past due. Yeah, 36 months. No, you're gonna have to bring 24 months to the table. They're two years behind. Yeah, they start getting here. Let's just do this. Let's go Change this to 26. Yeah, they're gonna have to bring more than this. The 12, the 16 months, they're gonna have to bring a sizable chunk to the table. Okay, equity amount 16. So we're gonna adjust this to 24. Now we're going to copy that formula way down. You're going to bring a year of payments to the table. You're behind by three, you're behind by four. All right, so now that's 16 or 24 months. There we go. Bring a year of payments on the front end, someone may not be that much. If you can't pay that, then we're going to foreclose. Now we start seeing what would make sense for us potentially to keeping as cash flowing assets. All right, so let's now resort this custom sort and we're going to say 16 month ROI. Let's put that in there. And we're going to do high largest to smallest. All right. Now so now since we figured that, okay, they're Going to bring at least 12 months to the table. It could be a pretty good deal. So we're looking. Let's just take these 16. All right, let's get rid of these other five on here. No, those are all foreclosures. So we want, if we're just looking for cash flow for our own rigor mortis. Cash flow. Now we have one. So we've got eight notes. Okay, so let's take these eight notes. Okay, so let's sum them up. Summation x2 to x40, 683,000. Is that right? I don't think that's right. No. 316. He jumped another number in there. Okay. Escape is equal to sum. 316. Okay, so if we got him to bring this much in cash flow, see hit control C and control V. So if we get them to bring anywhere from four on the lower on the, you know, ones that are less mature or less behind up to a year payments and then lend cash flow, stay in their house in May on time, that would bring in just $75,776 in the first year. Okay, in the first year. So that would be. Roughly a 24% cash and cash return in the first year. Now what's it going to be after year two or after year one? Well, let's go over here and add this up now. Control C, Control D. So it's going to drop after year after we get that extra skin in the game to 42,000, which is equal to that divided by that there's a 13 cash and cash yield there based off the payment history. Okay, now obviously we got to do something. We forgot to do this. 1, 2, 3, 4, 5, 6, 7, 8. Time. Okay, so is that minus, let's just say 300 for servicing because you can put them. There we go. That's better yet. Okay, so it still keeps it at roughly 13% yield. Now let's go back here like we Talked about earlier. $316,085 seems like a chunk of money. Anybody like to say yes, it's a chunk of. It's just basically 34,000, 27, 30, 27, 39, 41, 44 and 71,000. 1, 2, 3, 4, 5, 6, 7, 8 investors to fund your deal. Okay. Or 1 investors or 2 investors or 6. You could mix it up and have them all on individual aspects. Because if you're paying somebody an 8 to 12% return, you've got plenty of cash flow here for the 16 month for sure. So here's what My goal would be, all right, here's ultimately the goal that I would want to have happen. All right, I'm borrowing 316,000. Okay. Now what's the balance on these? Let's go back here to the balance. Control C. So the balance on this is at 423,000. So that number means is equal to that. Where are we buying these at $0.80 on the dollar, approximately, probably 70 something. We are buying them at $0.75 on the dollar. Okay, Got a bit of. Oh, we didn't look at values, did we? Values on this stuff. Yada yada, 574,000. Okay. So it means we're technically buying these at 60 cents on the dollar, give or take a little bit. If I'm right, $0.55 a dollar. So we're buying this portfolio of eight notes at $0.55 on the dollar of value, 75% of balance. Okay. All right, so our first year of payments, we got 75 grand coming in. Okay. Now if they do pay on time, then what we could do, if they paid on time, brought some skin in the game. They paid on time. It's considered reperforming note for 12 months. What we would do is we would modify the loans, adjust the balances to figure in and put their legal balance, what have they even paid back off to the back end of the note. Okay. And so let's do this here. So, So let's just say the balance is this. 423 times 0.9 is 381. Sally, sell them at 90 cents on the dollar. The cash flow they're generating, the 12 month cash flow is 417 31. All right, so this is going to be equal to 47. This is going to be actually here. So we'd label these year two cash flow. Year one cash flow. Right. So if we sell these. All right, so we sell, they're generating 47 31. So if we were to sell these at 90 cents on the dollar, which is 30. There you go. That's 90 cents of 90% of estimated legal balance. Where we modify them, that's the full balance owed. Okay. Wouldn't be hard to do. Just recast alone. We'll redo it for another 10 years or 15 years. Add a little bit balance to it. It's not hard to do. It's like what Covid did, what they did in Covid, we wouldn't adjust it, we wouldn't extend the terms and drop the payment. So we leave the payment be, then just add a few years, the back End, but keeps the same balance. You're saying everybody. So now if we take that cash flow that we're getting in an annual basis, that third at 41, and divide it by what we say, somebody at 381, that'd be a 10.9% cash and cash return to them. 11%. To note buyer. All right, so now if you figure this, let's run the numbers through here. Okay? It's bringing in 75 grand in cash. All right? Oh, one thing we didn't figure. Let's do this. All right, so we're offering this at 316. Okay? So let's do the same thing. 8%, 10%, 12%. All right, this is equal to that times 0.08 is equal to that times 0.1 is equal to that times 0.12. All right, this is what your money costs are to be your, your funding partner right here. Okay, so let's just figure this, okay, your borrowed 12% for a year, okay. Because you're working to get them modified. And if they pay off, they refinance. Well, let's just do a year and a half cash flow going forward. Okay? Yeah, yeah. All right, so let's do say 18 months. There we go. Okay. So we're doing this for a year and a half to 12 months of money costs. So if we have 12 months of money cost, it's going to be 75 plus the 41. Okay, there we go. That's not so bad. So 12 months or 18 months of money is equal to. That. Was. This one divided in two? So there we go. So 75 plus 40 is 90. Yeah, that 40 and 17. So we bring in 96,342 in our first 18 months. 12 months to get back on track. Right. Plus the skin, the game and six months of cash flow while we market these to sell as a reperforming note. Right. And these are our money costs here. Okay, so if we're taking this and you're paying your money partners back at the 8, 10 or 12. Right. And this is 18 months. So your net profit on these is going to be equal to this minus this or is equal to your 18 months of cash flow minus your money costs. That is equal to that minus your money costs for 18 months of holding. So that's what you're making in 18 months on these three. We're going to highlight these and we're going to put these in green. Now, you also bought them at 316 085, right? Now if you're selling Them and then that's going to be equal to. If you sell them at 80 cents on the dollar because their balances are 90 cents on the dollar minus what you borrowed, you brought in another $65,000 on the note sale. Boom. So you would make anywhere from 65. So you make $105,000. In these eight notes by gain some skin in the game. If they perform, then you hold them for 18 months or you hold them for 12 months. Start to market, takes you 6 months to move them. You tie your money partners up for two years, but pay their money back at 18 because you sell these off at a pretty good yield at $0.90. Now let's, let's just say you sell them at $0.80 of the dollar. Let's go back over here. Is that times 0.8 you're not going to make as much 338. You're only gonna make 22 grand because you bought 316. Okay. But the yield is going to be pretty good to that person because they're gonna then get a 12% return on their money that just blowed. So the idea here is these eight that have the mustard nine that have the most desirable reperforming amount of either a paying 4 to 12 months of back payments plus 12 months of on time payments. All right, you hold it for 18 months of cash flow, selling them 18 months of payment history. Now if they're not paying on time, you're not going to sell the performing note. You're not going to cash out at that point. You're going to then go to the foreclosure route to foreclose. Okay. And you still got some room to foreclose. Now values, that's part of your due diligence process. Do I think the Zillow values are accurate, the one we looked at? No, they're not. Okay, but you're always going to put, you're going to always have realtors look at the property full time. We'll go through more due diligence stuff tomorrow. But we're just assuming, okay, there's Zillow values. What they give is value our assets. If the values come back higher, great, It's a bonus. They come back lower than we counter or cancel the bids. No penalty, no harm, no foul to cancel the bids. The values come back lower, I just scare everybody off. I mean we're talking pretty basic stuff there. All right, now some of the balance is going to be a little bit lower. Yeah, they bring more. That's great. You got more. More. That Profit, the back end side, I mean, their interest rates are anywhere from three and a quarter. You're not going to modify that up to 10%. Okay. And always say, listen, let's pay. Let's have you pay on time for 12 months. I'd be willing to bet. Here's another thing. I'd be willing to bet that the previous borrowers are not reporting these people's credits to the credit bureaus because that costs money for a lender to do that. So they're probably not showing that they're three or four years behind. So the only one that's not going to refinance is that three and a quarter one they've already modified at some point. Looks like it went from nine to three and a quarter. The rest. Great, let's get you back on track. The five isn't probably, but the nines. The nines and the tens would refinance and you could probably get full payoff on those. They're refinanced out. So same thing. Once again, you want to make sure that these properties make sense for you. If they look trash and you don't want to own something in Shreveport, then don't buy anything in Shreveport. Let's look at this one. Let's. Let's go over to the map and look at the ones in Shreveport real fast because there's two in Shreveport just for the heck of it. Okay. Oh, they're not too far from either. And they're. That's kind of nice. They're close to each other. Anything here? Well, maybe not so. May not be the greatest, but we'll take a look here. All right, let's look at this one in sh. Port here. Not a bad looking neighborhood. It's not that house. It's this house right there. And this one is vacant. It said unknown. All right. And this photo is taken November of this year. So you're not going to get this bar back on track. So easy way till it's vacant when you have these notices in the. The. When you like it. So this is more of a foreclosure. Okay. So west canal of a little large. We're not going to be doing that one. Let's go back to the other one. Okay, This one's going to corner a lot. Purple guy off there. There's a tree. This is it right here on the right side. Let's go out here a little bit further. Somebody sitting on the porch. This photo is taken as of November of last year, so it's occupied. Somebody's living in the house and they got some. What is that? You get some stuff. Is it ducks or it's. Oh, that's just ceramic glass. They got a window unit there. Okay, not a big deal. Roof. They're living in it. We want to make sure their insurance on it. Got a little older person with the thing going down there, but that's okay. But it's, you know, it's not a bad looking little cookie cutter house and little neighborhood like that. So there you go. See, you probably have some good counts on that one. All right. All right, let's do this. Let's take a quick little break. I need to get fresh glass of water and something like that to my quench, my throat, part of my parched throat. And we'll come back at 20 past in 10 minutes. Good stuff. It.