Brian Lauchner (00:01):
Will sellers are really agree to a terms that a bank would never agree to? Stay tuned to find out.
Brian Lauchner (00:17):
Yes. Well, welcome back to NoteSchoolTV. Once again, we're here on Wednesday at 11:00 AM. Central time live in person coming across your screen across the internet. As we kind of dive into some of these topics right now, we're really getting into more of the creative financing break down, or we're going to talk about that question of what a seller agreed to something that a bank would never even consider giving to me as an investor. And so before we do that, I would love to encourage you to simply hit the like button. If these videos are of value to you, right? If you're getting a lot out of some of this stuff, make sure you're subscribing to the channel so that you're getting the most up-to-date content as we push it out, since we're doing it live. And especially for this show, the NoteSchoolTV, make sure you're clicking the bell notification so that you're notified on your device when we go live so that you can jump on and participate and engage with us. Bring your questions, bring your comments. We'd love to hear from you. We'd love to see you participate as well. Let's kind of jump into it before we get into much of the detail. I'd love to bring on the one and only Joe Varnadore to work for the news.
Joe Varnadore (01:33):
Well, good morning, Brian, how are you? My friend?
Brian Lauchner (01:35):
I am doing well. I'm glad we've got you up here. How are things going out there in Florida?
Joe Varnadore (01:42):
Well, in Florida, they are going very well. We have had a cold snap the last few days it's gotten down into the low forties. Right. And but it's been absolutely beautiful.
Brian Lauchner (01:57):
I love it.
Joe Varnadore (01:59):
What's going on in the Dallas Fort worth area, my friend?
Brian Lauchner (02:01):
Well, not too much. I'll say this, that for those of you who are kind of joining us, as you know, Joe's in Florida, we've got people tuning in all across the country. One thing I didn't mention earlier was if you're brand new to NoteSchool, you're brand new to NoteSchoolTV, and you're trying to learn a little bit more about who these characters are. Make sure you're going to www.NoteSchool.com/TV to learn a little bit more about who we are as NoteSchool and really what we talk about and some of the content that we push out. And so that's really what's going on in the Dallas area as we've gotten NoteSchoolTV going on. So Joe let's kind of get in what's happening in the market.
Joe Varnadore (02:36):
Well, let's jump into the news guys. So today, well, other than inauguration day and happy inauguration day, guys, everyone. So active listings plummet to a historic low. This is according to M report is reporting this, and this is from Redfin and this is for the four week period ending January 10.
Joe Varnadore (03:00):
So guys, here's the crazy thing, right? Listing Redfin determined that there were 547,725 active listings for the last period, which is down from 815,901 from the same period last year. So if people wonder why prices go up well, it's supply and demand and right, Brian? As demand or as prices as demand goes up, prices go up as well, right? Because there are fewer of that item. So new listings were down by 3% marketing and the first decline in since July in actually the number of new listings that come up. So very interesting times, second news story for today is a home buyer bidding Wars continue to rage, right? So the traditional year-end slowdown in home buying didn't happen this year. And it was not evident in December. Redfin reported that 49.7 50% of a home offered written by agents were involved in bidding wars. Right? So although December's rate was down from the revived rate of 55% in November, almost 56%, it was also the eighth consecutive month where nearly half or more of Redfin offers encountered competition. Guys and it's no matter if it's in the $200,000 price category up to the million and a half dollar category. Bidding wars are out there. So we're seeing less and less inventory and buyers still have the urge to buy. So that's the news as it was today.
Brian Lauchner (04:58):
I love it. That's so great. Yeah, the market's definitely an interesting topic right now for the sole reason of obviously there's a pandemic still going on, there's still the same number of people who want to buy and want to sell, but there's all this shadow inventory. If you're unfamiliar with that term, go back and check out some of the other videos that we've done on really where the hidden inventory is in the market and why it's not being listed. And kind of transitioning onto that topic of how to do more deals and get more accomplished. We've got a special guest with us today. Don't we? Joe,
Joe Varnadore (05:32):
We absolutely do, live in direct from Coeur d'Alene Idaho, formally from Seattle Washington, Ms. Marishka Pilch good morning Mariska.
Marishka Pilch (05:42):
Good morning, gentlemen. Good to see both of you. Thanks for having me here.
Joe Varnadore (05:47):
Well, we're happy to have you this guys, this young lady is a, she wears many hats in the real estate and has been doing it a little while, right. For a few minutes anyway, Marishka. So tell us a little bit about yourself.
Marishka Pilch (06:07):
Well let's see. I was born at no.
Joe Varnadore (06:11):
At a very early age, right.
Marishka Pilch (06:15):
So, yeah, so I guess I got my start in real estate, you know, actually truly at an early age, my dad was a builder and so I was kind of grew up around real estate and when I was in my twenties, I worked as a mortgage loan originator. And and then, you know, I left that and went into healthcare for a while, but my husband and I started investing in about 2010 and we had always done creative deal strategy. It's actually Eddie Speed was one of the first people that we ever met. And that just kind of resonated with us doing notes, but, you know, the note business was very different back then. And we were just doing a lot of different things than we are in this market. And then we kind of moved into doing a lot of lease options and that was really the mainstay of our business you know, from about probably 2012 to about 2016, 2017 and just, you know, doing a lot of lease options.
Marishka Pilch (07:10):
And then we kind of fell back into the note business. We actually ran into Eddie speed one time and he said, you guys need to take another look at what's going on in the note business. And it took us a while to kind of do that. And then when we did, we said, Oh, wow. And we jumped back in, but along with that, I decided about a year or so ago. I guess it would've been a little more than that to get my real estate license. And so I'm also a realtor. So,
Joe Varnadore (07:36):
So Marishka, we've all been there. You know, I've had mortgage brokers licenses and you know, the real estate brokers, license, sales and license, and don't have any of those anymore. Let them all go, but I get it right. And and you know, you're, you were in a hot market you and Larry just and by the way, Larry Gale nourished, his husband is going to be our guest on February 10th. And he's going to talk about marketing and using, you know, to properties once you've got them under a bought with a sub two and wrap and ready to market those to a penalty box buyer. So Larry's going to be our guests here in a couple of weeks. So yes, so you guys moved, you relocated, you were in Seattle and you just decided you wanted to change of view. So you moved to another beautiful place, right?
Marishka Pilch (08:27):
We did. And you know, that's the beauty of this business, right? It's totally virtual. And we were visiting here in the early summer. And we said, what on earth? You know, it was kind of on our five-year horizon. And we said, what on earth is keeping us? And then the question became, how quickly can we do this? So in a matter of just a couple months, we up and moved in there and correlated and loving it.
Joe Varnadore (08:51):
Well, I was talking to you one day and the next time I talked to you, right. But you've invested all over the United States in your business. I mean, you've invested in Ohio and Indiana and Michigan and you know, everywhere in between. And that's the beauty, right? That's the beauty of being in the NoteSpace, being the bank, right?
Marishka Pilch (09:10):
Absolutely. The bank doesn't really care where you are. I mean, as long as it's not, you know a slum area or something like that, and even there's strategies for that too, but that's just not what I prefer, but you can invest anywhere you want. Because the technology is available, the resources are available. If you have a computer and a phone, you can do it from anywhere.
Joe Varnadore (09:32):
Amen to that. So, Marishka, you've got a little deal here that I'm going to pull up here real quick and we're going to talk about this. So let's, yeah, it's right there, it's actually a deal you did there. So I'm going to pull that up. And so let's see there we go. So Mariska let's, this was a deal in, you said this was your hometown, right?
Marishka Pilch (09:58):
It's actually, yeah.
Joe Varnadore (10:02):
Say it one more time.
Marishka Pilch (10:04):
Puyallup.
Marishka Pilch (10:04):
Puyallup, Okay. Very good. I didn't want to mess that. So, Marishka and I were, we were talking about this, Richard, Brian and I say, okay, a $325,000 house. We were talking about Seattle and Richard says as well. It's really not in Seattle. I remember I was out there with you guys, you and Larry here. Gosh, it's been a couple of maybe two and a half years ago. And you were kind of showing me around and property prices and all that. And we drive by a lot. That was probably a 5,000 square foot. Lot. It may not have even been that big. And you said, yeah, that just sold for $690,000. And.
Marishka Pilch (10:46):
And that's the biggest thing, you know, when I talk to people you know, locally in my area about buying notes and I have to kind of educate them that other parts of the country are not quite so inflated. And it really is possible to buy a note say in Michigan or somewhere else for $50,000, not $500,000. So,
Joe Varnadore (11:05):
Well, you can kind of, you know, you can invest where you want to invest Seattle, you know, beautiful, great market. And you're just, it's going to be a little more, right.
Marishka Pilch (11:15):
Yeah.
Marishka Pilch (11:15):
Marishka. So, let's talk about this a little bit. So this was a house that kind of a friend of a friend of a friend had for sale. And you were, you played several, you played a role in this and we call we have a designation kind of not, you know, in NoteSchool, that's deal architect, right. And a deal architect is just somebody that can dive into a deal and put it together and structure, right. And you played the, what we call the designated hitter role inside of this as well, where you, you used your years of expertise in the business to kind of help marry two people together that were, you know, they never knew each other. And it was kind of a series of events that brought this to you. Right. So I'm going to pull the deal points up and we can kind of talk about that.
Marishka Pilch (12:08):
Yeah.
Joe Varnadore (12:09):
So the seller had the house for sale, right?
Marishka Pilch (12:15):
Well it wasn't listed for sale. She wanted to sell it, however. She was in her eighties. I actually mostly worked with her daughter, although I talked with the owner of the property a few times as well by Zoom, but mostly talked with her daughter who had power of attorney, but yeah, they wanted to sell the house because Mom just really couldn't live there by herself anymore.
Joe Varnadore (12:36):
Right. And really her goal was she wanted to, they wanted to do some seller financing because really they wanted the monthly income to take care of over time assisted living.
Marishka Pilch (12:51):
That's right. They actually didn't really know what they wanted when they first came to me. They talked about doing a lease option. I don't know if they had come to that idea on their own, or if the person who referred them to me had mentioned that because, you know, they knew that that's what I did. But in talking with them and finding out what their goals were. I said, you certainly could do a lease option, but, you know, seller financing might be a better fit. And as we talked about the pros and cons of both of them and what their goals were, they said, you know, seller financing just really makes more sense for us.
Joe Varnadore (13:24):
And, you know, Marishka, this brings me to a point here, and that is in the NoteSchool world. We always talk about. And by the way, guys I'll make sure that you get the book, the COVID edition of the Moneyball book. Scott's going to put the bellowed on the screen there. And this is what we talk about in that book, if you haven't already gotten it. But you know, we talk about the story, right? We need to know It's all about talking to the seller and seeing what that, what they really want out of this. As you said, most sellers, 99% don't know what they need or don't know what they want. Right.
Marishka Pilch (14:09):
They only know what they've heard, and what you know. And so most of them think that we have to do a traditional sale where we bring in a bank and they get cashed out, and now they have to figure out what to do with the money and potentially with the capital gains.
Joe Varnadore (14:22):
Right. So meanwhile, back at the ranch, no, meanwhile, there was another buyer out there who was I think he, you said he worked for worked with Boeing.
Marishka Pilch (14:33):
Yeah.
Marishka Pilch (14:33):
And he was furloughed. This was back in May. So we were what, three months into the pandemic.
Marishka Pilch (14:39):
That's right.
Marishka Pilch (14:39):
And pre-approved to buy another house. But what happened with that, Marishka?
Marishka Pilch (14:46):
Yeah. Well, it kind of blew up. He was getting, he was just a couple of weeks away from closing and his company furloughed him. And so he, you know, he said to himself, gee, I'm an able-bodied young man. I'm not just going to sit around and collect unemployment. I'm going to go out and get a job. So we went to home Depot, which of course was hiring and he was getting overtime and everything. And and then when they went to check his employment again, prior to closing, they said, Oh, you're no longer working in the aerospace industry. We can't call, you know, you no longer qualify for this loan. And he'd been approved at like 3% or whatever the, you know, great rates were back then. And you know, he was like, but I'm making just as much if not more money.
Marishka Pilch (15:31):
And they said, you know, too bad, it, you know, you just, you're not in the same industry. We can't approve you. So we kind of just brought these two together. They actually liked this other house better than the one that they were previously planning to buy. And we just worked out the terms so that it just made sense for both of them. They had, you know, they had excellent credit. He had a good down payment. You know, it was a make sense deal. And we knew that he was going to go back to work eventually, you know in his other career. But even if he didn't, he was still working and making great money. So,
Joe Varnadore (16:08):
So when you, so you had this just kind of in your circle of influence that you've developed and talking to people and doing what we all do in the business every day. And so you kind of stepped in this guy that couldn't buy that house. It fell through and Marishka, we're seeing that happen over and over and over and over again today, you know,
Marishka Pilch (16:32):
Oh my goodness. Yes. Earlier about, you know, the low inventory, which is very true and things are getting bid up, but just because there is low inventory, but we're also seeing a lot of deals coming back on market. And it's because are people are falling out and as you know, at closing
Joe Varnadore (16:51):
Well, and we know that of the folks that could get a loan in February, well, 35% less are these just missed. And again, this guy was a good buyer. He had money to put down you guys use an RMLO, right. Or Residential Mortgage Loans Originator.
Marishka Pilch (17:08):
Uh huh.
Joe Varnadore (17:08):
You put out, you brought all of those pieces together. That's what you did in this deal, you structured the deal, you were the deal architect, the designated hitter. And so you put it together and the seller gets a great rate of return. We'll talk about that in just a second. Now, Brian mentioned it, the first part of this in the teaser, he says you know, will banks, will sellers really agree to things that banks won't well, Marishka, you have the first right of refusal to buy this note at a discount at some time in the future. Right.
Marishka Pilch (17:46):
That's correct.
Joe Varnadore (17:47):
The seller wants to sell will the bank sell their note, typically?
Marishka Pilch (17:51):
No, It depends, good luck finding them.
Joe Varnadore (17:51):
Yeah, exactly. So let's just talk quickly here about just some of the deal points. So the property value, property's worth 3.5, as we spoke about. The borrower did have an underlying lien of 70 grand, right?
Marishka Pilch (18:10):
Correct.
Joe Varnadore (18:10):
So let's flip down here. The buyer had a down payment of a nice big down payment of about $50,000, which is a little less than 20% and of fuse an RMLO, to put this thing together. So what, so kind of what happened with this underlying $70,000? I know that the seller was saying, should we pay this off or should we keep it? And if we kept it, there wouldn't be a product. They kept it, it would just be could do a subject to and then wrap it. Right. So what did the CPA say or the seller CPA tell the seller about this?
Marishka Pilch (18:50):
Yeah. Well I was a little anxious. It was actually their financial planner, and sometimes they've been known to blow deals up. But they went to him and said, you know, should we pay off this loan? You know, they had the money out of you know, in savings or in some other, not, not the savings, but in some other type of investment account. And you know, they looked at the numbers and said, Oh, well, gee, this underlying loan is at 8%. Your investments are giving you a yield of about 3% and you're going to be getting five and a half percent, and it'll be secured by real estate. Yeah. That makes sense all day long. This is what you should do. So they just paid off the underlying loan. And so there's just a straight first mortgage with no rep.
Joe Varnadore (19:31):
So let's look at the numbers on this. So the sell price was 325. And so house for market value the borrower had was, you know, a borrower that, you know, had good credit solid down payment qualified debt to income ratio was all good ability.
Marishka Pilch (19:53):
All of that was good.
Joe Varnadore (19:55):
So we've got a 275 loan. And so it was a 25, 5.5% for 25 years with a P and I payment of 1689. Now you made a different recommendation than the 5.5, didn't you?
Marishka Pilch (20:12):
Yeah, I did. I actually wanted them to come in with a little bit higher interest rate. And the seller said, I just don't feel comfortable doing that. And so, you know,
Joe Varnadore (20:25):
The seller said they didn't.
Marishka Pilch (20:26):
That's right.
Marishka Pilch (20:26):
We got seven, but they were great with 5.5.
Marishka Pilch (20:31):
They were great with 5.5. And the key was from the borrower's standpoint is they said, we just want to keep our all in monthly payment to around $2,000.
Marishka Pilch (20:41):
Right.
Marishka Pilch (20:41):
So we just backed into the deal and said, okay, well, if we are at five and a half percent, you know, you did 25 years, that'll give us a payment of 1689. We had taxes and insurance and boom they're at like 1998 or something like that. So.
Joe Varnadore (20:56):
Exactly. And you know, we talk about this, you know, Eddie and I, and Brian talk about this all the time. We take the exit, how are we going to exit this deal? And then we back into it as to how we're going to craft this thing, right. How we're going to put it together so that it works for both parties, because, you know, we're not interested in doing seller financing or showing people how to do seller financing on junk properties with not great buyers. Right.
Marishka Pilch (21:21):
Right.
Joe Varnadore (21:21):
We want a loan that's going to pay either our bank or the seller's bank in this case for a long time. And in this case, it's 25 years.
Marishka Pilch (21:32):
Absolutely.
Joe Varnadore (21:32):
You could have done this differently, but let's look at a note here real quick. So this seller, she is 80 years old and some people would say, well, Oh my goodness. They went 25 years, but that's okay. Right. It doesn't matter that they went 25 years. And there is and, you know, Mom may live to be 105 years old right.
Marishka Pilch (22:01):
In their family. But, you know, we talked about that. I said, just as a house is inheritable a note is inheritable. So if you want to take the note and get the payments, that's fine. If you decide you need the cash out at some point, Hey, I'm happy to buy it.
Joe Varnadore (22:15):
Yeah. You got the first right of refusal to do that.
Marishka Pilch (22:19):
That's right.
Joe Varnadore (22:19):
And we'll talk about what that looks like. You're. So, Marishka you did this a little bit differently. You could, you made a $10,000 profit on this deal and you just kind of, you were the deal architect the designated hitter, you just stepped in and you just took the puzzle and you just put the puzzle pieces together for these.
Marishka Pilch (22:37):
Correct. And I just made sure that, you know, even though they're not subject to Dodd-Frank, this is a one-off deal. I said, you know, let's do the RMLO, let's make sure that we have servicing, that's going to make your life easier. Plus it'll make your note more valuable, you know? And so we're just trying to cover all the bases and just make sure that they had a good quality product that was going to take care of Mom
Joe Varnadore (22:59):
And, you know, Marishka that we talk about this, you know, often, and you and Larry and I, and Eddie and Brian, and also talked about this together. And, you know, there is the deal after the deal, right. At some point in time, and we would say, you know, some probably within the next five to seven years, that you will end up buying this note at a discount, right?
Marishka Pilch (23:24):
Yeah.
Joe Varnadore (23:25):
A very, very high probability. And so what does that mean for a seller? Well, it means that at some point in time, they make something may happen to Mom or the grandmother, but we hope that it doesn't, or they may have a different need. And so got the first refusal to pick this note up at a discount in a few years. And if you do, there's different exit strategies, you guys could keep it for income yourself, but you bought it at a discount, probably a $50,000 discount off the balance or you could sell a partial, you know, and things like that. So there are many, different exit strategies that you can do with this. And so again, but you could have bought this subject to, from the seller, and then you could have sold it on a wrap note to the buyer, and you could have made some money now and then money over time. But again, this is a one off deal for you. And let's get you back. I'm gonna get myself back up on there. So I'm going to take my PowerPoint down.
Brian Lauchner (24:27):
And Joe, let me kind of jump in here too, because you know, one of the things that came up in the comments a minute ago was how did she make 10 grand? And let me be very clear about this. This is not a, we've tried to show you so many different ways to go out and accomplish the deal. And she's going to make $10,000 because of what she has between her ears, right? She has the specialized knowledge to be able to structure a deal, and she gets paid a fee for doing that. And in this case, she's essentially stepping in as what we call a designated hitter, right? And baseball designated her to plays one role and it's to hit a home run when they step up to the plate. Well, they, somebody brought in Marishka and said, Hey, we need you to help us do this deal.
Brian Lauchner (25:06):
And she puts it together and is able to generate a fee for doing that. Now, let me be very clear. We're not saying that you can go out and just represent anybody there. You know, we're not going to sit here and tell you there's legal advice coming across the screen, make sure you learn the right way to do this. The point is this, that as a designated hitter, or by being the subject matter expert, you could be doing this with none of your own money. Marishka didn't need to use her credit or anything else to be able to go out and do this. She simply learned how to acquire the skillset and then goes out and puts it into place. And one of the biggest things is she helps someone in her community sell a house, and she helped someone acquire a property when the banks were not willing to be friendly and were not willing to consider some of their income at that time. And there's a lot of people hurting right now in our communities that are in situations like that. And so it's a really cool way to see Marishka help multiple, multiple people, all because of some knowledge that she put inside of her head.
Joe Varnadore (26:01):
So Marishka closing thoughts here.
Marishka Pilch (26:04):
Yeah. Well, I think Brian summed it up really well. I mean, our guiding philosophy is always whenever we're doing a deal, it has to be a win-win. We don't want anyone to be a loser in the deal. And if you acquire the knowledge and you, you're always trying to think, how can I make this a win for everybody? I mean, the buyers walked away feeling like they were winners, the sellers walked away feeling that they were winners. I made a fee, you know, for my efforts, you know, plus, you know, there's potential future income down the road. So I mean, that's really, if you go into it with that mindset we can do a lot of good.
Marishka Pilch (26:40):
And there's just so many opportunities now with banks, just their credit is just, you know, the rates are great right now, but the credit market is so tight. And so there's so many makes sense deals out there that just aren't getting done.
Brian Lauchner (26:56):
That's so good. Thanks. Very good.
Joe Varnadore (26:58):
Marishka Is one of the smartest ladies I know. And so, we've known each other a little while now. So, thank you so much for being here.
Marishka Pilch (27:12):
Oh, It's my pleasure.
Marishka Pilch (27:12):
Why did I want to come out to Coeur d'Alene here, in the future, for a little vacation.
Brian Lauchner (27:15):
That's awesome.
Joe Varnadore (27:22):
Take us home, brother.
Brian Lauchner (27:23):
You got it. Well, thanks again, Marishka. And thank you, Joe. NoteSchoolTV, our goal is to provide as much content as we possibly can. And as our sponsors allow us to, we want to thank them. And so Notes Direct I'm sorry. NoteSchoolTV is sponsored by NotesDirect and the Feeding Frenzy Friday.
Brian Lauchner (27:58):
That's right. As the Jaws theme music kind of rolls out a Feeding Frenzy Friday is a playlist that we have where me and a veteran of 25 years break down a note that is on NotesDirect. And we kind of talk about due diligence and really how to master our decision-making process to really better understand how to go out and acquire a note that makes the most sense with our preferences reduces our risk as well as increase our return on investments. And so make sure you're checking that out on NotesDirect as a platform, obviously where you can via a performing or a non-performing note, as easy as you would buy something on Amazon with a click of a button. The key is you got to know what you're buying. And so come check out those playlist. Again, if any of this is a value too, we'd love for you to like the videos, it does a lot for us.
Brian Lauchner (28:45):
It means a lot. We'd love for you to subscribe to the channel as well. That's going to help us, but it's also going to inform your other friends on your social platforms that maybe they should get involved. Right. and if at any point in time, you want to jump in the conversation, click that bell notification so that you can jump in and be notified when we go live. So you can get those questions out, bring them to the table, let's get you set up there. For those of you who are like, okay, I saw you made money, but I'm not really sure how to do this. How do I, like, what is this whole NoteSchool thing? What is the notes? How did you do that? Go to www.NoteSchool.com/TV to learn a little bit more about NoteSchool, get involved. We teach classes here and there to really kind of bring you up to speed to where that didn't make a ton of sense, but you want to make that kind of money. That's a great way to do it as always. We're going to be here on Wednesdays at 11:00 AM central time. So if you are available come join us next Wednesday. We'll be here, live ready to dive into the content have a great rest of your week and we'll see you on the other side.
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