SHOW NOTES FOR EPISODE 103 – BUYING AND SELLING NOTES AND DEEDS

Susan Lassiter-Lyons has dedicated her life to helping people gain control over their finances by teaching familiar and little-known investing strategies to create multiple streams of income.  In this episode, Susan shares how investing in notes or deeds of trust is in an excellent method to generate significant and consistent streams of cash flow.

What You Will Learn

• What is a deed or note?
• Different Types of deeds/notes
• How deeds/notes can create consistent monthly cash flow for you
• Where to find deeds/notes and how to buy them at a discount
• Using an outside servicing company to make monthly payment processing even easier
• How working with debtors can really help people out and generate faithful customers
• Why community banks are one of the best sources for deeds/notes

About Our Guest

Susan Lassiter-Lyons

Susan is a returning guest and was interviewed on the Old Dawg’s REI Network Podcast on June 27, 2016, in episode #009 & 010 – Finding the Money for Your Real Estate Deals, Part 1 & 2.

Susan Lassiter-Lyons is the #1 Amazon Best-Selling author of Getting the Money: The Simple System for Getting Private Money for Your Real Estate Deals. She began investing in real estate in 1994 by forming a small syndicate, the Lien Lords, to pool $2,500 in capital to purchase tax liens at auctions.  Since that modest start, she has participated in more than 600 transactions as an investor, broker, lender, syndicator and advisor.

Defining Trust Deeds

• It is simply investing in loans that are secured by real estate
• Short-term
• One-to-one transaction
  • You want to buy a property and, instead of going through the bank, you solicit an investment partner to fund your purchase of the property
  • The investor becomes, in fact, the bank
  • An example:
    • You have a property in Ohio you want to buy for $50,000
    • Your friend Jim has the money to invest
    • Jim gets a promissory note for $50,000 that outlines the terms
    • Jim’s name is down as the lender on the mortgage documents
    • You will make a monthly mortgage payment each month to Jim

Different Classes of Trust Deeds

• Pooled Mortgages (Bigger Banks)
  • When multiple loans are pooled together and sold in bulk to the highest Wall Street bidder (an investment bank)
• Portfolio Lenders (Small Community Banks)
  • They keep their loans in-house and service the loans in-house

How to Invest In Trust Deeds

• Hard money lenders, individual investors and community banks can auction-off or sell-off mortgage notes (the notes can be current or in various states of default)
• People can bid on and purchase these notes and start receiving payments from the borrowers
• You would become the bank and can service the loan yourself or hire a third-party servicing company that also deals with late pays. FCI is a company Susan has used that can charge as little as $15 per month or .5-1%, per loan.  Can also handle property taxes and hazard insurance remittances
• How to Bid
  • FDIC.gov website
    • Look at most recent quarterly balance sheet that lists liabilities for any bank that is associated with FDIC insurance
    • Can see how many residential and multifamily loans
    • Can check the status of loans (30-60-90-120 days past due), pre-foreclosure
    • You can contact the bank directly to see if you can bid on those notes – can bid less than face value of loans
    • Smaller community banks are best to deal with
    • Larger banks like Chase may ask you to put down $100K plus just to be on their list to be considered to bid
    • Ask the smaller community banks to send a spreadsheet (called a tape) of all deeds of trusts that are 90-days past due and can be bid upon. The spreadsheet says all the details (principal balance, monthly payment, property address, fees, etc.)  You can bid on the entire list of “cherry pick” the deeds you want
    • All deeds are backed up by the property. You can also research to determine the value of the property
    • Ask the bank for a list of all their performing and non-performing notes up for bid
    • If you are interested in cash flow, you target discounted notes for notes that are past due (60-180 days past due) – the discount is on the principal balance of the mortgage (can sometimes get for 20 cents on the dollar)
    • If you want to buy actual properties, she teaches a course called “Bulk REO Secrets” on how to purchase
      • Gives you strategies for buying bulk REO properties in bulk
      • If you’re going to buy REO properties, these are properties that the bank already foreclosed on – Deeds are pre-foreclosure
    • Example:
      • Fives houses valued at $200K each
      • Principal loan balance of $150K each – $750K cumulative loan balance
      • All loans are 90 days past due
      • In note investing, you are looking for yield (your return on investment)
      • Look online for a “note yield calculator” to help you estimate how much to purchase the note for to get a certain percentage yield.  Here is one online that you can use: http://noteyieldcalculator.com/
    • Online Note Exchanges
      • Online note marketplace
      • Note sellers list notes they have and you can buy
    • Colonial Funding Group
      • Gives access to their platform of performing and non-performing notes
    • Working with debtors
      • Sets up a fund
      • Restructures loans to get them paying again
      • In many cases she forgives past missed payments
      • Recasts the loan. Adjust loan amount due (and sometimes rate) and terms to actual value of the home
      • People are so grateful that they are remain committed to paying that loan payment faithfully

How to Reach Susan

• Blog website: TheInvestorInsights.com
• Facebook:  https://www.facebook.com/InvestorInsights/

This Episode Brought to You by HealthIQ.com

This episode is brought to you by Health IQ, a very special life insurance company that gives health conscious individuals the best life insurance rates and quotes.  Learn about what they can do for you specifically at HealthIQ.com/olddawg.

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