Brian Lauchner (00:01):
Mailbox money. Is it really a thing? Stay tuned to find out
Brian Lauchner (00:17):
Well, welcome back to NoteSchool TV. We are here, live every single Wednesday at 11:05 Central Time. So we'd love for you to join us. This is your first time. Welcome. If you are a returning watcher, I guess. Hey, I'm glad you're back. If this video is you know, great content for you, it's valuable for you. We'd love for you to like these videos. If they're valuable to you, we'd love for you to subscribe to the channel so that you're getting in your feet a little bit more of the content that we're trying to push out every single week. And if you want the most engagement, you want to be able to talk with us and engage with us and kind of participate in the conversation. Simply click that bell notification, and that's going to alert you that we're going live.
Brian Lauchner (00:58):
And when we go live, you can jump on, you could type in the comments. We see them live here in the show, and we'd love to either do one of two things, address it during the show, or we'll save it for the after party, where after the show we stick around and hang out with our guests a little bit and kind of shoot the breeze and obviously talk to you and answer your questions and stuff like that. If you're new to notes or new to NoteSchool or new to NoteSchool TV, and you're just trying to figure out what's really next in, and what does all this world about? And you can learn a little bit more by going to www.NoteSchool.com/TV to figure out what that next step is going to be like for you. We've got a very special guest here, this for today's show and it's going to be a very fascinating topic, so stick around, but before we get too far into the details, I want to stop for a second and bring on Joe to talk about the news.
Joe Varnadore (01:56):
Joe Varnadore here. Brian, how are you?
Brian Lauchner (01:59):
I'm good, man. I want to know what's the hottest thing in the news right now.
Joe Varnadore (02:03):
Hottest thing in the news. Well, man, the news is blowing up as everybody knows. And you know, the headlines are just talking about all of this stuff that's happening, right? Housing Inventory down by 40%. And guess what Brian? Buyers are paying the price according to Black Night here. So, prices are continuing to plateau higher and higher and higher leading 40% fewer homes on the market, less than last year. And the second paragraph here is it's pretty interesting when it says, instead of making up the shortfall, new listings have also slumped this year as well, right? Year over year new listing volumes were down 16% in January, 21% in February, the March numbers are not out at this point.
Joe Varnadore (03:00):
So, I love the statement that been here says from Black Knight, he said any hope of 2021 bringing an influx of homes to the market and lessening pressure on prices appear to be dashed for now. So according to Black Knight, home prices in most big cities increase due to low inventory. That's kind of a dumb moment, right? Yes, that's exactly right. Inventory down, prices up in nearly three quarters of the largest 100 U S Markets, annual home prices grew more than 10%. Overall home prices grew 11.6 year over year in January the most, since 2005, which was that run-up that we all live through that led to 2008. Right? And so Brian, Eddie, we have been talking about this for a long time. So, I guess that this is totally real now, that The Wall Street Journal has published this Need a Loan? Good luck with Lenders Are Tightening Their Standards, right? Mortgages are going almost exclusively to borrowers with pristine credit histories and well with the best credit, the most money to put down and the best debt, income ratio. Eddie, you want to weigh in on that? Good morning, sir.
Eddie Speed (04:23):
Good morning. Yeah, no doubt. Now that the mainstream press has printed it, I've been saying it since last June, but now that they're printing and it's real Joe.
Joe Varnadore (04:35):
Absolutely. Right. So a great article from April 2nd and guys, it just is what it is. We know that Eddie, we talk about, you know, the people that are getting the loans or have a 750 plus credit score, they're putting an average of almost 20 like 19% down. And their debt to income ratio is really low or what they owe based on what they earn. So yeah, it's pretty interesting there, right?
Eddie Speed (05:07):
You know, our guest today has an awareness of this market condition and his awareness of this market condition makes him understand that there are still really, really good people that while you may not get a conventional mortgage today, the seller finance market is alive and well solving problems. And the story he has today is about buying somebody else's seller finance note. So it is very relevant to understanding that if there's a shortage of credit, seller financing can fill the gap.
Joe Varnadore (05:42):
Absolutely. So let's bring on Mr. Bob Bullinger.
Bob Bullinger (05:48):
Good morning guys. Good to see you.
Joe Varnadore (05:54):
Even though Bob is from Virginia Beach, Virginia. And this property Eddie just happens to be in Cartersville, Georgia, which is just a little bit North of Atlanta, right?
Eddie Speed (06:05):
So Bob, not in your backyard.
Bob Bullinger (06:08):
No, not at all.
Eddie Speed (06:11):
So, a little quick story. So, Bob and I met several years ago and so, he's been with NoteSchool a long time. So Bob, I would say you're a very seasoned NoteSchool veteran, and we got to go back down memory lane a little bit. Now you're still currently doing this. You are fully aware of this mortgage credit availability dropping, and you're chasing assets because of you understand the void and you understand exactly where to look, right? That's what you're doing right at the moment.
Bob Bullinger (06:45):
Correct.
Eddie Speed (06:46):
This was your first partial.
Bob Bullinger (06:49):
That's right.
Eddie Speed (06:51):
So this is a little bit look down memory lane and cause people think, well, I could never do this, some super seasoned student with Eddie and they've been doing it for years. Well, let me just tell you something, you weren't that super seasoned when you did this deal, right?
Bob Bullinger (07:07):
No, I was not, but I did get a lot of help, but and good advice.
Eddie Speed (07:15):
Well, I know Joe was particularly, because you were coaching student of ours and Joe was deeply involved in kind of helping you grind through this deal. And Joe, I think you did okay on this one pal.
Joe Varnadore (07:26):
Well, I think that, you know, Bob did great on this and he just, he did what we had taught him. Right? And here's the, you know, the cool thing about this is this case study. Yeah. Even though it was, you know, four or five years ago, whatever it was, it took almost four years for it to come to fruition. Right? I mean, to really, and we'll kind of unpack this as we go along here. So, but Bob, when you first went to, you saw Eddie, right? Tell us what, how that unfolded, right? A little bit.
Bob Bullinger (08:05):
Well, I'd been a investor in Oh, I don't know, 10 years prior to that, I guess. And it was a really good time to buy sub two, and I had a deal going and a group of investors from our area went down to visit and see Eddie speak in Florida. And he asked a question who has a deal going? And I raised my hand and he said, well, come up here and let me dissect that for you. And at that point, I was just buying and flipping, buying subdue, flipping nothing real, super special about that. But then he showed how to work the paper into the business and do a partial. And I was just about blown off the stool. And he had me sitting on in front of the class and I had no idea that there was that kind of power in doing that. And since I liked to use, utilize my Roth IRA, which is tax free and I'm of the age that I can, it's been open long enough, I can reach and have the deal done by my Roth IRA. Then I reach and pull my money out tax free. That's just extra icing on the cake.
Joe Varnadore (09:33):
So, Eddie, why don't you, you know, I think one of the things that Bob really was, you know, was an enamored with as well was something that, well, everybody's heard this term, right. Mailbox Money. So Eddie, why don't you and Bob talk about that a minute.
Eddie Speed (09:50):
Well, so pull the case, pull the slide back up, Joe. So people can just see a picture of the house. There's a picture of the house that was the loan was secured by that piece of property. Right? Bob?
Bob Bullinger (10:00):
Correct.
Eddie Speed (10:01):
That's the collateral. Right? So as we said, it wasn't in Bob's back door. Cause Bob, you didn't need to live near the property. Did you?
Bob Bullinger (10:10):
No. I've never been there.
Joe Varnadore (10:13):
Yeah.
Eddie Speed (10:14):
So, let's go to the next slide. You, buy this note. So they owed 161,000. It was 5% pretty long-term Bob. Like what is that? 27 years remaining. Correct. So a lot of people would say, I don't want a 27 year note. I don't, but you, and I know now that that loan is more likely to pay off early than anything else, right Bob?
Bob Bullinger (10:43):
Exactly.
Eddie Speed (10:46):
Yeah. It sounds like 27 years is scary, but that really usually never happens. Now, you know, there's always exceptions. So there's the note, you buy this note, they owe 161, you made a killer buy. You bought that note for 50 cents on the dollar.
Bob Bullinger (11:06):
That's correct.
Eddie Speed (11:07):
How'd you do that?
Bob Bullinger (11:08):
Well, there were certain factors in there that made that note, not as attractive as it could have been. It was being self-serviced, meaning that rather than having gone through a third party, I had to do a lot of additional verification. It's a very long-term and it had a very low interest rate, which if you look the time value of money, not getting real deep into that, it just wasn't worth what that whole loan balance was, is worth far less than that. And we agreed on the price in incidentally. I paid more than was offered by other people. I talked to the lady and I told her, I agree with you that I think it's worth more than a couple other loan buyers would offer. And I gave her what she needed. I asked what she needed. And she said she had a house that she was going to buy and she needed 81,000. And I gave her 81,500, and she was happy with that. And we struck the deal.
Eddie Speed (12:17):
So, just a quick explanation for the audience here. So Bob worked through us and we showed him a direct to seller marketing complaint pain. So you bought this note directly from the lady who owned the note, right, Bob?
Bob Bullinger (12:32):
Correct.
Speaker 4 (12:34):
And so, you negotiated with her and we went through sort of a talk off process of how to have that language with her and stuff. He did a great job of that. When you bought it, there were already 24 payments that had been made on the note, correct?
Bob Bullinger (12:48):
Correct.
Eddie Speed (12:49):
So, she had a pay history, she'd been collecting payments, and then you bought the right to receive the remaining. Just think of it in terms of guys, bought about almost 900 bucks a month, 895. He bought a payment of 900 a month for 27 years, 28 years. I mean, if I told that money up, it'd be out of sight. Right? And you bought it for a check, writing a check today for 81,500.
Bob Bullinger (13:21):
Correct.
Eddie Speed (13:21):
Right, now the remember the late, this, the housing market today or yesterday, it doesn't make any difference. The lady, that owner finances was the bank. She didn't own the house. Right? So she could, that's all she could collect. And the house went up in value. Didn't make any difference. You don't share your appreciation with your bank, do you Bob?
Bob Bullinger (13:40):
No.
Eddie Speed (13:42):
So, understand this lady was willing to sell it, but here's what you did really well. So there's your price and there's your cash flow. Tell us how you carved that up.
Bob Bullinger (13:52):
Okay. I was, I had a small meetup group going and I had talked about partials and other people. Like-Minded people investing and using their IRAs and everything. And one of the ladies involved in the meetup that we had, had some money that was available and she didn't have the full 81,500. She said, wow, I've got 70,000. I needed 81, 500. So I added the other 11,500 in there to come to the 81,500 to buy that entire note.
Eddie Speed (14:33):
So you bought, I'm gonna use my hands here. Right? I can talk really good with my hands. Right?
Bob Bullinger (14:38):
And you're not even Italians.
Eddie Speed (14:42):
Exactly, you bought the whole stream of payments for 28 years for 81,500. Then you took her 70,000 and you sold her the first 10 years of payments.
Bob Bullinger (14:53):
Correct.
Eddie Speed (14:54):
Which means after 10 years for 11,500 bucks, you own the back 18 years of this note.
Bob Bullinger (15:04):
Correct.
Eddie Speed (15:06):
Wow! That's a good investment.
Bob Bullinger (15:12):
I was looking at end in my Roth.
Eddie Speed (15:15):
Yeah. We have a little humor around here. We train a lot of engineer types and everybody always wants to know the, in yield on your $11,500 investment. And we, Joe put down there the technical answer.
Bob Bullinger (15:31):
I like those numbers.
Eddie Speed (15:34):
All right. So let's look at the next thing, because something magic happened here. Bob, talk about this.
Bob Bullinger (15:40):
Yes. After about four and a half years or thereabouts, the lady who owned the house who was making payments and consistently made payments needed to have some medical procedures. She needed the money. So she refinanced the house. And when she refinanced it, my investor who had been receiving payments for about four years, she had kept all those payments, but she was still owed money on her $70,000 investment. Well, she'd still do her balance of that, which is about $50,000. At that point, everything above and beyond that, the loan payoff amount was about 150. And I received the difference between what my partial investor got. And by the way, she got all her money before I got one penny of mine. And at that point I got just what was left over. I got the crumbs,
Eddie Speed (16:46):
The graph here, what you're looking at, this is just a graph from Excel. So don't get too, don't overthink this, hopefully, right? Just know that Excel can show you a graph of what a loan amortization looks like. So the orange line represents the principle balance of the loan for the remaining life of the loan. So, you know, four years into it, you just kind of click up there and go across. And the pay off on the loan was 150,000 bucks. Right, Bob?
Bob Bullinger (17:22):
Right? Yes.
Eddie Speed (17:24):
So I'm going to call it round numbers. Your investor, who would invest in 70, had gotten four years worth of payments. But their unamortized balance of their investment, like was stealing 50,000. So you had to give her 50,000 for her to get her proper amount of money.
Bob Bullinger (17:42):
Yeah. The investor always gets all their money first. Yeah, I get what's left over.
Bob Bullinger (17:47):
Okay. So you just think you got a barrel of money here of 150,000. You had the partial investor that didn't collect all the payments that they're owed yet. So they had to pay off, so that, their payoff is 50,000,150, 50,000 to your partial investor. And now you get a 100,000 bucks. Now you did something really smart here. You bought this in a Roth IRA account.
Bob Bullinger (18:17):
Correct.
Eddie Speed (18:18):
Meaning, that you'll never have to pay taxes on that. A hundred grand.
Bob Bullinger (18:23):
Exactly.
Eddie Speed (18:24):
So you invested 11,500 bucks and four years later, you turned into a hundred thousand dollars.
Bob Bullinger (18:34):
Correct.
Eddie Speed (18:37):
And in all fairness, this was your first deal.
Bob Bullinger (18:43):
My first partial deal.
Eddie Speed (18:45):
Yeah, no, you are a real estate investor and you had done other things, but here's the thing about it. I bet you, if we did a case study today, you could have, you could figure out that strategy and this, I mean, like all these little intricacies that we teach, but this ain't a bad first deal here, Bob.
Bob Bullinger (19:01):
I was happy. I was very happy actually.
Eddie Speed (19:06):
Joe, what do you think?
Joe Varnadore (19:09):
You know, I think that yeah, and you know, Bob would have been happy too, what if it didn't pay off early, right? Because he was investing in this for the long-term and he would have gotten what, a 216 payments, $895, which is a lot of money, right?
Bob Bullinger (19:27):
Yeah. That would be a good, nice retirement ongoing income.
Eddie Speed (19:32):
Yeah. Some of them will pay off early. Right? Some of them won't and, you know, once again, this is a duplicatable process. This isn't like you did this one time, one and done.
Bob Bullinger (19:42):
Exactly.
Eddie Speed (19:44):
I had a guy asked me yesterday he said, well, Eddie, you know, these deals from seller financing, he said, nobody's seller financing today. Have you not read the headlines? I mean, real estate is on fire. And I said, did you realize that in the past five years, they've created a hundred thousand seller finance transactions a year, every year hundred thousand seller finance transactions. And this year with the shortage of credit, the amount of seller financing is growing pretty substantially. Right? So Bob, we're not out of inventory, right?
Bob Bullinger (20:25):
No.
Eddie Speed (20:27):
And and by the way that people ask me, well, he bought her loan for 50 cents on the dollar. Was she mad at you? Tell about what you did with her later?
Brian Lauchner (20:37):
Well, actually we developed a relationship and I think that's a very important key. And she actually came back to me and asked her, asked me to help her sell her house that she was currently living in, in Tennessee.
Joe Varnadore (20:54):
Yeah. That Bob that, I mean, that just speaks volumes.
Bob Bullinger (20:58):
Certainly wrote me a very, very nice thank you letter.
Joe Varnadore (21:02):
Right.
Eddie Speed (21:02):
Yeah, she did.
Joe Varnadore (21:04):
And you know what? That just speaks volumes about you and the relationship that you develop. And I'll also say that the your partial investor would have came back to you as well and said, Hey, I, you know, I've got this money back now, can I jump into another deal? And we see that happen over and over and over, right?
Bob Bullinger (21:26):
Yes.
Eddie Speed (21:27):
I was going to talk to you one second about this passive investor, Bob.
Eddie Speed (21:34):
Most of the people that I assume do partials with you have had rental properties, right?
Bob Bullinger (21:39):
Many. Yes. They have.
Eddie Speed (21:42):
And so they, what they figured out was the rental property. When they look at the spreadsheet, it was going to make X amount of dollars, but somehow they got some invoices that were sort of a surprise. They didn't know,
Bob Bullinger (21:54):
Actually. Yes. I've currently got an investor with another partial different deal and she's got, they've got rentals and her daughter went to her and said, mom, I'm looking to buy these rentals here. And the mother said, no, why don't you think about the notes?
Eddie Speed (22:15):
You know, it must be easier to be the bank than being landlord, Bob.
Bob Bullinger (22:19):
Far fewer headaches.
Eddie Speed (22:21):
Yeah. All right, I know you're going to hang around with us for the after party, but anything that, any point in here you think we should have added?
Bob Bullinger (22:33):
The only thing is I need to do more of them. Those kinds of paydays were pretty nice.
Eddie Speed (22:42):
If you could, if you had the time, would you do one of those a week?
Bob Bullinger (22:49):
I need to work that in my schedule. Yeah.
Joe Varnadore (22:53):
Well now you've got, you know, everything, you know, you're getting caught up, you've got that house remodel that you're lit all of that stuff. Now you've got more time, right?
Bob Bullinger (23:02):
Yes. Yeah. Living through a remodel is not the most favorite thing I've ever done.
Joe Varnadore (23:09):
Well I get that and I've done that as well. So any, you know, so best advice, you know, for folks that are, you know, saying, Hey, you know, what do I, you know, is now a good time to get started? Well, I, yeah, I think I know your answer to that, but you can certainly share that with as well.
Bob Bullinger (23:28):
Well, I think that there's a lot of uncertainty right now and whenever there's uncertainty, there's also opportunity. I think that we are living in a time of great opportunity. I'm no great philosopher, but you know, Warren Buffet says, Get greedy when others are scared and be scared when others are greedy. Right now, a lot of people are scared. So I think that we can be creative and seek out a lot of this opportunity.
Joe Varnadore (23:58):
Yes. There is a saying that Eddie speed says, I don't know if you know him, but, you know, he says creativity is like water, right? It fills the shape of any cup that it's put into. I say, vessel, you know, he says cup, but there's no true words that have been said right?
Bob Bullinger (24:19):
I agree.
Joe Varnadore (24:19):
And Mr. Buffet's. Right. He does have a track record by the way.
Bob Bullinger (24:23):
I've heard that.
Eddie Speed (24:26):
Bob, you're awesome. We'll let Brian do his little segment here. And I hope you enjoyed that. Hang around. We've got to have a lot of comments today. We'll cover those in the after party. So great questions. And we'll be back when, before we have Brian address and talk about our sponsor.
Brian Lauchner (25:04):
Yeah, that's right. We do have a sponsor NoteSchool TV is sponsored by NotesDirect and The Feeding Frenzy Friday. And so if you're somebody who wants to be like Bob, and you want to find ways to buy notes and sell partials, there's probably not an easier way to get into the business than buying notes from NotesDirect. Each week we have a playlist called Feeding Frenzy Friday, and each week we take a note off of NotesDirect, and we break down the details of it. And we kind of talk about the pros and the cons to help you master the level of due diligence and confidence. You need to go out and absolutely make it happen. And ultimately end up in a spot to where you're like Bob, to where you've now secured a note. And now you can turn around and sell something like a partial.
Brian Lauchner (25:45):
And so, if you're somebody who's wanting to dig into some previous episodes, go to check out that playlist, that www.NoteSchool.com/FFF and learn a little bit more. Next week, we have a very special guess we're going to be talking about, hacking your note instead of making money now, how do we build wealth and make money later? And you're going to kind of start to see the similarities of how you can kind of, you know, like Burger King, have it your way. Right? So we'll kind of go into that a little bit more next week, make sure you're joining us live Wednesday at 11:05am Central Time. That's right. 11:05 Central Time where we're going to kind of dig into this a little bit more. And if you're still trying to figure out your head's spinning, you're like, hold on, wait, what happened? And how do I do this?
Brian Lauchner (26:27):
I need to learn a little bit more, the best next step for you is going to be going to www.NoteSchool.com/TV to learn a little bit more about, who we are and what we do and what NoteSchool teaches and all that kind of stuff. And you can get some great eBooks just by going to that link, you can download them, start into that content. And there's even a 90 minute training right there on that site that you're going to be led to. So that might be a great next step for you. If you're somebody who got a lot of value out of this, you see how this might be something for you, man, click that like button hit the subscribe channel. Subscribe to our channels so that you're getting more and more content that we're putting out. And as I always say, as always make sure you're clicking that notification bell so that you can jump on just like Matt and Helen and Theresa and Regal and all these other people who are with us today to engage with us and obviously make sure you're sticking around for the after party.
Brian Lauchner (27:18):
If you're somebody who's like your mind is racing and you need to get that question answered right away. There's this burning desire for this business need right now, go to www.NoteSchool.com and just click on the contact us tab to simply reach out. We'd love to engage with you, find out how we can help you take that next step, whatever that's going to look like for you. As always, you can check out previous episodes of NoteSchool TV, by going to this link that we're going to put up on the screen here. And this is a way for you to just get caught up if you want to. Right? But for those of you who can stick around, we always like to have a little bit of a hangout in after-party afterwards, for those of you who can't stay, we'll see you next week, for those of you who can stay, we'll see in the after party, we'll see you on the other side.
Brian Lauchner (28:09):
Awesome. So I'm going to bring back on everybody. We've got Bob and I know we had several questions that came in that I want to make sure that we're going to be addressing earlier on in the show, you were kind of going through kind of that transaction, that deal. And one of the questions that Matt Smith said, as he said, what interest was she getting? And I want to make sure this is really clear because there's really three numbers that are talked about. There's what the interest rate that the seller wrote the note at, right? The seller wrote a note at what it was 0% Bob?
Bob Bullinger (28:40):
Nope 5%.
Brian Lauchner (28:41):
Sorry. 5%. So that was 5% interest. That's the note, right? And then he secured the note and got a partial investor and the partial investor was getting a fixed return on investment.
Brian Lauchner (28:51):
And what number was that?
Bob Bullinger (28:53):
Nine.
Brian Lauchner (28:54):
9% return on investment to be passive partial investor. And then there's the yield, which would be the rate of return that Bob's getting. And we don't need to go into that because we've already decided it's enough, right? It's very high. And then those are the three numbers there. There was another question too from Helen Taylor that said, could you review, how you come to the amount owed to the investor please? And so I thought Eddie, if you would take a moment to talk about what an amortization schedule looks like and why that chart was looking like that?
Eddie Speed (29:26):
Yeah. So how on what we did is we just, we have built Excel tools to just take amortization schedules, like, so we took the note, the 5% note, and that was what you saw in orange. And that was just an schedule that Excel generated. And then we did a layover. So then we laid over the partial, which was in the blue, and that was the amortization of the investors, 70,000, investment at their 9% interest on their investment per year. And then obviously Bob in an early payoff situation gets the difference between the payoff to the partial investor and the pay off of the entire note. So we cover these, we really, if people progress in NoteSchool training where we really have time to show these numbers a lot and change the numbers and show what if they as, or what did that and stuff. And so people then find out fairly quickly that, you know, they can get a sense of it. And we're just utilizing tools, you know, financial tools.
Joe Varnadore (30:30):
And, you know, I wanted to point out too, that the investor, the partial investor, they did get everything. They did get their rate of return. They just got in early, yes, they invest in thinking they were going to, it was going to be a 10 year payback, right? They were just going to get 895 a month, but they got all their money back. And what we found is that when they do that, they're just ready to turn around and invest again. And that's kind of a way that whole picture works as you go through. So,
Eddie Speed (31:01):
This case study, the one thing about yield, as I have discovered, people will get drunk on yield, right? Bob sold this loan about six years ago and six years ago, 9% return was probably a good return,
Joe Varnadore (31:19):
Right.
Eddie Speed (31:19):
The return in the marketplace for rental properties and other investments has continued to go down. Right? So the return on that investment has declined. And today, Bob, I would guess it closer to about 6%. If you sell a partial day is about where you would be.
Bob Bullinger (31:39):
I would agree. Yes. Definitely.
Eddie Speed (31:41):
So that becomes more relevant to the market conditions. So, all great questions there. And once again you know, I will say this about yields and amortizations and stuff. Sometimes we're seeking kind of the punchline answer in there enough, it could be a little bit of a story before that punchline answer makes sense.
Eddie Speed (32:03):
Like it does to you now, Bob, but the answer is you bought the whole pizza, you sold less than half of the pizza, and you didn't know it was going to pay off early, but it did. And all of a sudden, it just made you got, you didn't get as much money as you would have gotten. And it paid out over time, but you got another lump sum of money of a hundred grand. Now your retirement, I count, grew from 11,500 to a hundred grand, and now you could go do 10 partials.
Joe Varnadore (32:34):
And that's all one transaction guys.
Bob Bullinger (32:39):
In fact, I did reinvest it.
Joe Varnadore (32:42):
But we know you did, right?
Brian Lauchner (32:46):
And for those of you who are newer. And you're trying to figure out why would someone take six or 7%? If they could have 9%, you got to understand market conditions like Eddie said, but the other thing is this, the thing you might've missed is the risk associated with the partial, right? This partial investor is truly passive. If anything was to go wrong, Bob is on the backside of this note. He doesn't get any of the payments until the partial investors is taken care of. And so he's going to mitigate that risk on their behalf and make sure this thing performs because, you know, Bob wants to get paid, right? And he wants this thing to go smoothly. And so this is another reason that the yield starts to come down as you, and you start taking more and more risk off the table. The rate comes down and how do we know this?
Brian Lauchner (33:26):
Because when you put money in a bank, do they pay you 5%? They don't, right? Because your risk is extremely low. So hopefully that kind of helps answer some of that stuff. There was something else that I wanted to talk about while we still got time is it was really about tracking Matt, ask if you're taking down the back half of the note, talking about Bob's part of the note, how do you track it, right? Or how do you track it if they stop performing? And you got to understand in the note business, the thing about it is, you want to outsource this portion, right? And this is what's called a third party, licensed and compliant note servicer. This is someone who's going to collect all the payments. They're going to make sure taxes and insurance are taken care of and all that kind of stuff. And they're going to make sure that when somebody wants to refinance their house, they're going to calculate the payoff. Right guys.
Joe Varnadore (34:12):
And just to understand this, that, so when Bob bought this loan, right? The investor or the person that sold the house, they weren't a sophisticated investor. Right? They were just, she was a lady that sold the house and she did what she understood when Bob bought this loan. Obviously he boarded it with a servicer, right? The third party license and compliance servicer. And then when the partial sold, the borrower still makes their loans to the servicer, the servicer, then just redirects that payment for, you know, the 120 months or until it pays off. Right? So, it's all very behind the scenes. And it's very, I hate to say the word easy, but it's very smooth. And there's no, not a lot of jerking around with that sound.
Brian Lauchner (35:05):
Yeah.
Bob Bullinger (35:05):
I don't want to have to be involved with receiving payments, dispersing payments at the tax, the legal ramifications. I don't want to mess with that. That's too much brain damage. I don't want to, that's not what I do.
Brian Lauchner (35:22):
Yeah, absolutely. And Theresa is asking a question, Bob, that I'd like you to answer. She says, but the first position investor, and she's referring to the partial investor here, gets all of the money, regardless of being paid off early, right? Like you're not short-cutting or short-changing your partial investors?
Bob Bullinger (35:39):
No, not at all. She received payments of $900, 895 a month for about four and a half years, five years, whatever it was. And at that, looking at the amortization schedule, it had paid down so far. And then the remaining balance of roughly 50,000, she got that whole thing in addition to all the payments that she got up here.
Brian Lauchner (36:07):
So the question I have for you, Bob, is when you, when she's gotten years of payments, and now you give her a big check back, she's got all of her money and the interest, does she say, thanks, let's never do this again. Or did she say, I like this, put it in another one.
Bob Bullinger (36:23):
She's still looking for that 9% return. And in today's market, when I tell her it's today's market is not 9%. Yeah.
Brian Lauchner (36:31):
But she's looking for that passive piece though. Right?
Bob Bullinger (36:35):
Absolutely.
Brian Lauchner (36:36):
Loved the fact that she didn't have to deal with the brain damage piece. And she was actually getting a paycheck every single week.
Joe Varnadore (36:43):
It's Mailbox Money for her as well.
Brian Lauchner (36:48):
Yeah.
Joe Varnadore (36:49):
I mean, that's what she was looking for. She had money in it. And I think, I don't know if remember her money was in a self-directed IRA, wasn't performing the way that she wanted it to perform. And she was just looking at, and you met her at a little meetup. Right? And that's the way you found this lady and she said, you just explained the deal. And she said, Oh, wow. That sounds great, Bob. Here's what I have. Can we do business?
Brian Lauchner (37:14):
Yeah.
Bob Bullinger (37:15):
I love that.
Brian Lauchner (37:16):
And I think this is a good segue because when there was several questions about learning different details or learning about paperwork. And I know Travis was asking about that. Travis, I'd encourage you to, to reach out to us, go to NoteSchool.com click that, contact us page and simply reach out. We'll try to point you in the right direction, either get you the resources you need or the education you need to use those resources. And I love what Micah says here, Brian, this only confirms that we need to sign up for NoteSchool. And obviously I, that's encouraging to hear and you know,
Bob Bullinger (37:48):
Hey, that's a cool avatar.
Brian Lauchner (37:48):
Yeah. A little scary looking there, but it is one of those things of, Hey man, this, you get a little bit of this knowledge out of Eddie. Speed's head you, get it into your head.
Brian Lauchner (37:58):
And it's amazing how much you can transform your business, right?
Eddie Speed (38:02):
Yeah, absolutely.
Brian Lauchner (38:04):
So, as we kind of wrap up the show here for the day, I just want to say things, I know there's so many questions that are coming in and we're going to go back to YouTube and Facebook and we'll try to get those answers in a timely manner, but listen, I want to appreciate our, let you know. I appreciate all of you for joining us here on NoteSchool TV. Thanks for sticking around in the after party, hanging out with us a little bit, make sure you're clicking that bell notification so that you're getting notified before we go live. So you can jump on early, get your questions answered and take that next step on your journey. Feel free, check out some of the links that we've showed you today. And we'll see ya next Wednesday at 11:05 Central Time. We'll see you all on the other side.
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