The Private Lender podcast

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Sisällön tarjoaa Keith Baker. Keith Baker tai sen podcast-alustan kumppani lataa ja toimittaa kaiken podcast-sisällön, mukaan lukien jaksot, grafiikat ja podcast-kuvaukset. Jos uskot jonkun käyttävän tekijänoikeudella suojattua teostasi ilman lupaasi, voit seurata tässä https://fi.player.fm/legal kuvattua prosessia.

State Secrets: Inside The Making Of The Electric State

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Family Secrets: Chris Pratt & Millie Bobby Brown Share Stories From Set 22:08

23 päivää sitten22:08

Toista Myöhemmin

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22:08

Host Francesca Amiker sits down with directors Joe and Anthony Russo, producer Angela Russo-Otstot, stars Millie Bobby Brown and Chris Pratt, and more to uncover how family was the key to building the emotional core of The Electric State . From the Russos’ own experiences growing up in a large Italian family to the film’s central relationship between Michelle and her robot brother Kid Cosmo, family relationships both on and off of the set were the key to bringing The Electric State to life. Listen to more from Netflix Podcasts . State Secrets: Inside the Making of The Electric State is produced by Netflix and Treefort Media.…

The Private Lender Podcast

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The show that shares practical advice and know-how for new and seasoned lenders: from private mortgages on single family houses to joint ventures on commercial projects, and beyond. Discover details about investment vehicles that you won’t find at your local bank or online broker. Listen and learn from private lenders and real estate investors, as well as from professionals and entrepreneurs as they share the details, strategies, and the insight that allows for successful and prosperous lending. This podcast is geared towards those who command and demand more from their investments. Now, get ready to increase your ROI !!!

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#Trading #Business #Real Estate #Society #Conversations #Keith Baker #Podcasting Education

The Private Lender Podcast

updated 4 vuotta sitten

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#Trading #Business #Real Estate #Society #Conversations #Keith Baker #Podcasting Education

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The Private Lender Podcast

1
PLP – 139 Know The History Of Your Property With Title Insurance With Rachel Luna 44:18

4 years sitten44:18

44:18

When you buy a property, you want to be sure that it's free of any debt and lien. This is where title insurance comes in. You don't want to wake up one day, and your pool is torn down because it was built over a utility easement. Or the heir of the seller comes in and reclaims what is theirs. Title companies prevent these things from happening. Join your host, Keith Baker, and his guest, Rachel Luna , on the importance of title insurance. Rachel is the Agency Development Manager of Patriot Title . As The Texas Title Queen, she drops a ton of knowledge and discusses the parts of a title policy, what is covered, what is not covered, and why you need title insurance when you purchase a property. Learn the schedules of a title property and why title insurance is a must. If you're a lender, you better listen to this episode. --- Know The History Of Your Property With Title Insurance With Rachel Luna The Texas Title Queen Breaks It Down For Lender Nation I would like to thank you for sharing your time with me. If you're looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place. If you want to learn from my mistakes so that you can both avoid them and profit from them, then pull up a chair and pour yourself a drink, my friend, and take some notes because this show is for you. I'm dedicated to giving people, like you and me, the knowledge and confidence for successful and profitable private lending. In this episode, I sit down and talk with the Texas title queen, Rachel Luna from Patriot Title Company , who has graciously agreed to come on this episode and drop a ton of knowledge around the topic of title insurance, what it covers, what is not covered and where to find things in the policy. Before we get to the heart of this episode, first, a little bit of housekeeping, number one, I'm about to lose my voice. The kids had a soccer tournament. They won the first two games and lost in the third. However, it was exciting. It was a blood pressure event. It was a good tournament. I’m proud of the kids but I shot my voice. I threw it out. Rather than waiting, I figured, “I'm going to make everybody suffer with me.” That's the first bit of housekeeping. The second bit of housekeeping is, have you joined the Private Lender Podcast Facebook group? If you haven't, why the hell not? Simply search in Facebook Groups for Private Lender Podcast , click on Join. Answer a few questions to let me know that you are a private lender and not looking for deals or looking for money and not looking to boost up your groups, but going to help add value to the community. Answer those questions, I'll let you in and then let you get started. While you're at it, head on over to PrivateLenderAcademy.com and click on Apply Now to learn more about putting the power of the banking system into your investment accounts or get some one-on-one time with me, I can answer your questions and show you my mistakes. That's PrivateLenderAcademy.com/apply . The housekeeping is finished and now it's time to get to the heart of this episode. Our guest has been providing title insurance and escrow services for Houston area investors for about as long as I can remember. I caught up with Rachel Luna at the FlipCo Financial Meetup and was excited that she agreed to come on and talk about title insurance. For the simple reason, everyone, including me that says that you must have it, but very few people understand why you need it. I'm going to let Rachel answer that for you. I think you're going to enjoy this. She is dynamite. She is Miss Personality. She has a pistol, a load of fun, is very energetic, knowledgeable and smart. I'm going to let her get down to the brass tacks of this episode and let's get to the interview with Rachel Luna from Patriot Title. --- Lender Nation, I want you to buckle up because we're going to have a fun conversation about a boring topic. Our guest is coming and is going to bring all the enthusiasm and the excitement into something that nobody or very few lenders even think about and that is title insurance, exceptions, exclusions and endorsements. Welcome to the show. Rachel Luna here from Patriot Title . It's going to be an amazing show with some amazing information with some boring topics. I can't thank you enough. You are the perfect person to come on and talk about this because you're going to bring life to it. You already have just started with this. Let's talk about you for a moment before we get into the doldrums and the coffee stuff. Tell us about you. How did you become the Rachel Luna? [bctt tweet="Title insurance is there to protect you from legalities that will forbid you from your goal." username=""] The Texas Title Queen, as they call me or The Title Queen. I started this business many years ago. I was passionate about it and being able to help people grow their business in real estate and help along the way people accomplished one of the biggest dreams and purchases of their life. If it's not investing, it's purchasing their home for the first time or transacting a sale. Being able to be the end part of that transaction at the title company, helping people protect their investments, but also be a part of their investment. I believe that as a title company and what we do is it's a very important piece of the whole puzzle. I love that being that piece and I love how every transaction is different. Every single day is different. Every client is different. This business has been nothing but learning and that's why I'm here. They call me the queen because I’ve self-educated, learned, evolved with this business and come out with solutions that can help all parties and all professionals in the real estate business in general, to help grow in their knowledge in real estate, but their knowledge and title and why it's so important. That's why we're here. We only met in person after the COVID thing, but I have seen you around in the Houston area for years helping investors and homeowners. In fact, Rachel has a new branch, so they're expanding. Is business good? Business is good. I'm expanding in Woodlands. This is going to be our Woodlands location. We're off of Sawdust over here and 45. We're in a conference and there's not much going on in here because we're setting up IT and getting phones implemented. We have a new conference room. We're getting this set up. There are computers over here on the floor. We're setting up stuff. It's a new shop, but it's all a process. I'm excited. I love opening up a new location to service and expand for our customers out there who need us in other areas of town. Congratulations. That's good news to hear. Let's start off with what is title insurance? I demand it as a lender. I always demand a lender policy. Explain why am I crazy? [caption id="attachment_3198" align="aligncenter" width="600"] Title Insurance: Title insurance exists to protect your investment. If you're someone purchasing a property, you want to know what is on that property. It protects you from many other different variables.[/caption] No, you're not crazy. You're being a smart man. I advise all to do the same. Title is protecting your investment. We do our due diligence from the sovereignty of a property. If you're a lender and giving money out to someone or if you're someone purchasing a property, you want to know what is on that property. Just because you see the person who signed the contract is the person that's registered in the CAD or the tax records and their name is on that. Let's use Harris County, Montgomery County, or Tarrant, it says, “XYZ person.” They're on the tax roll there and they're on the CAD and they signed the contract, it doesn't mean they're the only person that's entitled to that property or there are not any other issues. What it does is protect the consumer, the lender and all parties of the transaction because you don't know what exactly is going on with an individual, their personal finances or if they're filing for bankruptcy. There are so many variables I can go on and on why you need title insurance to protect yourself. Your money or investment or purchase could be in legality that will forbid you or not allow you going forward to sell the property, do a refinance cash out on that property because there might be some other encumbrances that prevent that in title that was not caught because there was no insurance and due diligence done prior to. It protects you because there are so many variables. In Texas, especially because it's a community property state as well. That's another wrench in there but there are so many variables of why a property can get. It could be an insurable, number one, but it could also be a bad investment when you thought it was a good investment. That's preventing bad investments. Why do you get titles? It’s to prevent a bad investment, is the bottom line. Texas being a community property state, that divorce may not be final. That spouse may have a legal right of 50% of that property or a son or daughter. The black sheep of the family could come back all of a sudden say, “That was granddaddy's house and I'm entitled to something from it.” “There's an interest that belongs to me. Where is it? Why didn't I get paid? Who sold this? Where's my money?” Go to the title company, but no. If you don't have title insurance, you're like, “You owe me money,” and then there could be the whole legality. That was what, at the end of the day, ended up being a bad investment that could have been prevented. At the end of the day, if you're asking me, why do you need title insurance? It’s to prevent you from making a bad investment. For one, I don't pay it. The borrower does. That's better, but it is a small price to pay to avoid letting your money be held hostage. Getting into that, we've got to clear up this title. It's going to take the lawyers a couple of years, “No. I only loaned it for six months.” I can foreclose all I want. It doesn't matter. I won't have clear title to that property if I have to foreclose. For me, it's avoiding holding your money hostage. You want to make money on your money, not have it tied up in legalities because of not being informed or not doing your due diligence. Not allowing a third party, like the title company to do the due diligence to protect your investment, to protect you so you can get your money to be in and out and move onto the next project, borrower or whatnot. That's the beauty. If there is something that's missed, that’s why there is title insurance. It’s to remedy the situation and make everybody whole. [bctt tweet="A property should be clear of debts and liens for the new consumer." username=""] That's why the title company does its job. In the case that there is, you're insured, protected and that's why the title companies have underwriters. That's why they're an insurance company. That's why you pay them to protect you and then fix the wrong. It gives you the mind. For everyone, a title company is no different than any other insurance company. They're going to be regulated by the state, whatever state they're in. They're going to have to follow the rules. They're probably going to have standard forms from that state that they use, at least to get started and then things change and go in all other areas. That's what we're going to go into all other areas. When my borrower finds a property and I agree to borrow, he opens the title. He begins the title search with Patriot Title and then we get a title commitment. That title commitment is going to talk about any exceptions that won't be covered in insurance. There are exceptions and also exclusions. Anyone who has an auto policy or a home owner's policy is going to know that certain things are going to be excluded. Radioactive waste coming from your garage would be excluded from a homeowner's policy, for example. When you get a title commitment, the title company had gone through, done their research and due diligence and said, “We can trace it all the way back to sovereignty,” which I like to say is when we stole it from Mexico or the Indians, either way, you want to look at it. Whenever we say, “We're putting a fence around this land and I'm calling it mine.” You go all the way back. You get a title commitment and there are certain things that the title won't cover. If somebody hasn't paid back taxes, for example, the title doesn't come in and step into that. As part of the closing process, the title company ensures that those taxes are paid or deferred, however, credit is given to the buyer. The bottom line is those taxes are going to be handled at closing such that exceptions will come into play. Before we got on the line, I had a bit of a thought about this. It's like, “The property is being conveyed clear of debts and liens for the new borrower.” The title company at closing will ensure and assure the lender and the new purchaser that the property that they're receiving is going to be free and clear of debt and lien and not to exclude taxes, HOA, any other underlining lien holders that might be on the title, or that might have any derogatory authority to foreclose that would affect the new owner. We make sure that all debts and liens are paid in full so the new borrower who's getting the property is receiving it with only their new lienholder or obviously as a free and clear investment to pay in cash. We do ensure that all debts are paid in full upon conveyance. Conveyance is transfer title. Conveyance means a transfer of title from one party to another or one person to another or entity. Another example is conveyance or the right of possession if the house is sold, and let's say there's a tenant or a renter in it. That new owner has to honor the lease that the tenant is under until the completion of that. However, if there's a problem with that title that is like, “It has nothing to do with the title of the property. That's the property.” That is an exception to anything as well. Tenants, anything with the physicality of the property in reference to being a landlord type of situation. Our insurance is only to protect the title, the actual debt in the lien, the conveyance of a predecessor-to-predecessor, owner to owner throughout the years, to make sure that every owner conveyed that property without any debt or lien or clouds in the title. A conveyance is a very clean and clear pass-through of the owner to owner throughout the years. We're here to ensure that no one from many years ago was going to come and have some right to your property that you purchased here many years later. We make sure that all of that is a clear conveyance of title throughout the years for you, the end buyer and owner, to have a good title. In reference to somebody living in the shack behind the house, we have nothing to do with it. That's something that's negotiated in the contract process. We are here to show the history, the debt and the ownership conveyance. The ownership lineage of title now in reference to who lives there and how or damage that’s contract stuff. You don't care about the use of the property. It's just the conveyance of the title. Also, the deb. That there's nothing there that's going to come back and the paperwork. Wells Fargo is not going to come back and say, “We're going to foreclose now. I don't care if you just bought it.” That's not going to happen. [caption id="attachment_3199" align="aligncenter" width="600"] Title Insurance: The person who signed the contract is the owner of the property. Someone who isn't the owner can't sell it, so look at schedule A to know who the owner is.[/caption] We made sure Wells Fargo got paid off in full. That's what we do. Some exclusions are he's talking about this vision, which would have been landlord stuff, but it would be some of the city stuff. Some of your exclusions to title would be city easements, some right of ways that the property might be backed up to a utility right away. Those are some of the things that are excluded in the title because of the fact that the utility districts and the counties have the right to do what they need to do for the community. If your property happens to fall in an easement, then that would be excluded from your title. We cannot ensure that the city won't come in on your property and dig up an easement or something to put new pipes or new fiber optics that might affect your property. That would be considered an exclusion. Those are usually on Schedule B. I’m discussing Schedules, A, B, C, and D. Let’s run through the schedules of a title policy. As we left off, you open the title, then we get the title back. The title commitment is ready from Patriot Title, and we send you out your title commitment. Your title commitment is ready. Here's a copy of the tax certificates, the preliminary taxes of what we've found. These are all our findings. This is what we do. This is our due diligence. The commitment I consider was like your Bible of what we do in due diligence. It's going to have everything on that commitment and the tax certs. This is what we're based on in our due diligence. This is all our research available now. Schedule A is going to show you basically who is purchasing it. That would probably be yourself or your client, who the lender is, who's lending the money. If they ask us to put it on that front Schedule A and what their loan is going to be for based on the contract that you provided us. At the very bottom, it's going to disclose who the vested owners are. Why that's so important is that it has to be the same person who signed the contract. Why? Because someone who signs a contract has to be an owner of the property, let’s say Gerald Jr. signed it, but it's Gerald Sr. who's the owner of the title. Gerald Jr. is not the owner. Gerald Sr. is, so Gerald Jr. should not be selling this property or doesn't have rights to sell that property as it states in the title at this point. There could be some variables that may be Gerald Sr. died and now he's an heir. We're going to a whole different spectrum of things. It's important that you look at Schedule A because it tells you who is the seller and if that person who sold it is the same person that signed your contract and/or is there someone else that's on the ownership as well as the person that's under contract?...…

The Private Lender Podcast

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PLP – 138 Utilizing Real Estate Books For Lead Generation And Beating Competition With Max Keller 45:51

4 years sitten45:51

45:51

Writing a book can help you attract private money lenders and motivated sellers so you could win the marketing game in real estate. Today’s guest, Max Keller , proves that. Max Keller is a real estate investor, best-selling author, and business coach. In this episode, he joins Keith Baker to discuss utilizing books as a lead generation technique and how to get prospective sellers to trust you so you could stand out among competitors. He also shares the two ways to get deals through hunting and trapping. He explains how he gets deals through the use of different methods giving them a network of people. Tune into this episode so you could have the opportunity to build great relationships and make your business grow too! --- Listen to the podcast here: Utilizing Real Estate Books For Lead Generation And Beating Competition With Max Keller Max Keller Utilizes Books To Get Sellers To Know, Like And Trust Him I want to thank you for sharing your time with me. If you're looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place but if you want to learn from my mistakes so that you can one, avoid them and two, profit from them, pull up a chair and pour yourself a drink because this show is for you. This show is dedicated to giving people like you and me the knowledge and the confidence for successful and profitable private lending, the most passive form of real estate investment known to man. [caption id="attachment_3186" align="alignleft" width="200"] Home To Home: The Step By Step Senior Housing Guide[/caption] In this episode, I sit down and talk with Max Keller , who’s up in the North Texas area, the Dallas-Fort Worth Metroplex. Max is using a very unusual strategy for finding his deals and that is to use books to get his sellers to know, like and trust him. Before we dive into the heart of this episode, I got to do a little housekeeping and need to ask you, have you joined the show’s Facebook group? Why the hell not? Simply go to Facebook Groups and search for Private Lender Podcast . Answer a few quick questions so that I know you’re serious and can follow instructions and you will be let in. You’ll get to hobnob and mingle with private lenders from all over this great country of ours. We may be divided but it’s still a great country. If you want to get your private lending off the ground for possibly some opportunities to bounce a few ideas off of me or perhaps we could even go down the coaching road if you like, please go to PrivateLenderAcademy.com and click on Apply Now. It's time to get down to the brass tacks of this episode. Max Keller was recommended to me by someone I held dear in the podcast industry. Julie Houston, thank you. She has helped me out in ways, mindset, technical, process, things that I wouldn’t think of. She hasn’t charged me a dime for it. All of her advice has been for free, maybe a lunch or two here or there. Considering the value that I’ve received from Julie, I’m in the deficits. Julie, thank you. A big shout out to you. Thank you for introducing me to Max. This has been a game changer in many ways for me. Thinking about this helps expand the mindset into what’s out there. I’m babbling already. It’s best to get to the interview, let Max discuss and describe how he uses books and how he’s helping his students to get some solid leads, generating some nice leads for some nice property acquisition. Let’s go ahead and jump into the interview with Max Keller. -- Lender Nation, I am pleased to have Max Keller on the show, who was formerly a teacher and now is a full-time real estate investor but more importantly, he can teach you how to write a book. Max, welcome to the show. It’s good to be here. Let’s go. You come highly recommended from a friend of mine. That gets to the door but the fact that you were a teacher, that's something I've always wanted to do. Hence with the Private Lender Academy, I'm finally coming to get to that point. My path is a little bit reversed from yours. Tell me what brought you to this moment here on the show. How'd you get to the world of real estate and books? [bctt tweet=" If you don't know what’s working, you can't duplicate it. " via="no"] I hear that phrase, “Overnight success, lifetime in the making.” That's the way it feels. Everything that I did build on itself. Before I was in real estate full-time, I was an Algebra teacher at a Title 1 school. I coached football, basketball and track. I taught algebra and I loved it. The only thing is I wanted to make more income. My goal was to take a more passive approach and get maybe 1 or 2 rentals a year. If I stayed on that pattern, then at the end of finishing up teaching and retiring, I'd have a nice little nest egg. Going in real estate, I started realizing that it's a great way to increase your active income and start doing more deals. I left my job years ago. The day after Memorial Day, I told my principal, “I wasn't coming back.” It was a tough decision but it's been great. I've flipped about 130 houses lately because of where the prices have been. We'd done mostly wholesaling but deals in Texas still cashflow, especially mobile homes and things like that. I've been doing investing. On the borrowing side, I did the normal progression. My first deal was a self-funded whole tale. I took it down with a line of credit. The houses were a lot cheaper than in 2015. I cleaned it up a little. I sold it. I made $15,000 and that was cool. I wanted to do it again. The next deal, I took it down with that same line of credit but then once I had another deal, I couldn't keep doing that. My credit was good. That helped. It's funny. My credit was so good because I never used it. It's like, “What a weird system?” It was fine. I went to a community credit bank like credit union kind of thing, local bank and that worked good. I did a couple of deals like that. I was running out and they wanted me to jump through a lot of hoops. I went hard money. I did hard money for my flip deals for a while. I got involved and started meeting some local private money lenders. I love working with them. It was fun. I got to show them my deals. Some of them had a lot of experience. Some of them didn't have very much at all. Being a teacher, which has the teacher mindset, I'd say, “Come and check out. Let's not rush. Come and see one of my properties over here in Hearst. I'm doing this one. Check it out. I've got one over here in Irving.” I explained to him how it worked. It was hard because I'm a people pleaser. I liked my hard money lender. It was expensive. It wasn't as much flexibility and I wanted to have more long-term stuff too. I knew private lenders were looking to find good people, good deals and make good rates of return. I started using books and things like that. That was a total unknown but I started using books as an education piece to attract more private money lenders and motivated sellers. The overall model of how I got here is I taught before I got in here and I still do. That's the best way to build relationships, help people and make the business grow. I'm glad that I still get to do that. It's fun. I'm glad to know that, one, you taught algebra. God bless you. What grades? I'm curious. It was the eighth if they were ahead and then ninth on grade. I had one group of kids that were two years behind. They should have been juniors. It depends on how you are as a student. Let's say it like this. When you go to teach and you go to the job fair, there's elementary, middle school and high school. The elementary line, there are 400 people in it. All these people who've been waiting their whole lives to be kindergarten teachers. You go to high school line. Those are people with a lot of experience. They love their subjects. In middle school, junior high, there's nobody. If you have middle school kids of your own or cousins, you'll know but I liked it. What I liked about working with kids is the same thing I like with the people that I work within real estate. I like working with people that tell the truth. Kids, believe it or not, they almost always tell the truth. I remember one time I went to class. My hair spiked up. I thought I was looking cool and on trend. The kids shut that down in three seconds like, “Mr. Keller, we can see all the way through to your scalp.” That's the way kids are. Adults aren't always like that. From my own experience, it's important that I get to know the people I'm working with. On the other side, your readers, it's super important that they understand what's a good deal and what's not a good deal before they invest in it. Are they getting in with the right person? There's a lot of sleek talking people. Adults aren't always truthful. We got to find who's telling the truth. Who's doing what they say they're doing before we invest in the deals. That's a piece of teaching that I bring we’ll never forget. To your point, I would say real estate investors are very persuasive and passionate people. I tell students do not fall in love with the investor's passion or enthusiasm for the project and be the one to tell them, no. Have your brands. This is where you lend. Don't be afraid to say no. I bought Tim Grover 's new book. He coached Kobe and Jordan. I heard him on a podcast. There was a guy who was trying out for the NBA and Tim Grover told him, “You're not NBA material. You can play for a long time. You can make a lot of money but the NBA is not your game.” The guy was upset, offended by Tim's honesty. [caption id="attachment_3187" align="aligncenter" width="600"] Lead Generation Through Books: The traditional marketing methods are going to be obsolete because of Wall Street. They have a big appetite for single-family homes. They have a lot of data, technology, and resources. With that, they can pay more than most people are willing to pay.[/caption] Years later, he sees him at an all-star game. The guy's not playing in the NBA. He goes, “You're the only one who told me the truth.” Everyone else bolstered him up, “You can do it.” Tim was like, “You're not there.” I don't remember if it was a talent or a mindset thing but he could see. He’s like, “You're a great athlete but NBA is not for you. Go to Europe, you'll kill it.” He wasted his time. That honesty of youth with the children telling exactly how it is, I believe into following that. I have to ask this because we're coming out of the COVID situation. This is the middle of 2021. You spoke that you're wholesaling. You're up in the Dallas-Fort Worth area. How crazy is the market up there? Bidding wars, above ask, what are the metrics that are going on? For most people, that's the way it is. For us and for the deals that we do, it's not like that but it's because the way that we market is totally different. We started marketing very different back in 2017. For most people, it's tough. I got a call from a lady, Diana. It's another exclusive deal. We're getting a lot of exclusive deals but it's because the way that we're reaching out to people is so different. We're leading with value and education. Not that other people don't have that too. Most folks are marketing for deals. In my opinion, it’s totally wrong. The way that they're marketing for deals within a few more years is going to be totally obsolete. The traditional marketing methods are going to be obsolete. The reason is because Wall Street, big hedge funds, have a big appetite for single-family homes and in our neck of the woods. They're still cashflowing. They have a lot of data, technology, resources and can pay more than most people are willing to pay. It was by accident and it worked out good. A little context, back in 2017, I was on track to do about 30 deals for the year but I felt like every house I was going into is like what you're saying. I was interviewing for the deals and taking number. I remember going to this one house in Grand Prairie. There were literally twenty investors in the house. When you're doing deals like that, I call them a win lose. The homeowner wins because they get a price that they wouldn't have gotten 2 or 3 years ago but you lose because you're taking on the same amount of risk but you're not covering that risk. If you have a private lender on that deal and you're doing these skinny deals, their money has more risk. It's a real situation that's going on. How we've circumvented, it is two ways. One, I found a niche that I like to work with. I made a list of all the deals that I had done. I was up to about Deal Number 50 in 2017. I made a list of the deals. I put the criteria of the people I wanted to work with. For me, it was pretty simple. I want to make a good profit on a deal because it takes me about the same amount of time to flip a house and make 40 than it does to make 20. I was like, “I need to stick with the better deals.” [bctt tweet="Lead with value and education so people can trust you." via="no"] The other one is, I didn't want to work with people when I make an offer. They couldn’t resist. It was like a tug of war like, “No, my house isn't worth that much. What are you talking about?” I’m like, “I'm the expert. I do this all day.” This is what I'm talking about. I want to work with people who saw me more as their consultant and trusted advisor. I want to have fun. I didn't want to work with people that I had to go bail out of jail and they were yelling at me on the phone. All the things that went with my traditional motivated seller marketing. What happened for me were two things. One is when I looked through my deals, most of them didn't meet all three criteria but the ones that did were all seniors. I was like, “Seniors?” I started to peel back. I was like, “I want to work with more senior homeowners. What marketing is helping find those folks?” I found out that my traditional marketing wasn't where they were coming from. I was getting people by accident. They see us in the neighborhood. Their family members would call us. They would close a lot higher rate. I found they were like slow to trust. When they did trust you, they were very loyal. They wouldn't go behind your back for $100 or Redfin's going to give $2,000 more dollars. I was getting these deals and making an offer. Somebody else was $10,000 more and they were still taking my offer. I didn't know why. There are times in our business where things are working but we don't know why they're working. You don't know why you can't duplicate it. I was like, “I need to know why. I don't want to lock into stuff.” I called up one of the sellers and I asked him, “Remember me, Max Savior Home Buyers?” That's our home buying business. He's like, “Yeah.” I said, “You had a higher offer. Why don't you take that?” He said, “The reason is because we trusted you. You seem like you genuinely cared about our family and making the right decision. You were telling us about stuff that didn't even relate to you but it was good for us. Ultimately, that was more important than just the money.” That was the big a-ha moment number one. I started learning more about senior housing. My big a-ha number two, how we market is totally different and what makes it a lot easier to keep doing business in DFW. I was at an appointment with the adult child of a senior home owner. We bought their house. They said, “You've helped our family out a ton. You should write a book about this stuff.” I was like, “No. I'm a math teacher. I'm not an English teacher.” It's a big difference. Let's face it. I thought about it and I was like, “It's a good idea.” At the time, I was known in my area, my suburbs that I bought houses in as the guy who knew a lot about senior housing but I could be the guy who wrote the book on senior housing. I had a real unscientific approach. If anybody on here who’s trying to write content, do an eBook, write a book or write a blog, I've got a gift that I'm going to give you at the end that can help you do that and save a lot of time but I didn't have that at the time. I wrote down all the questions that the seniors were asking me, all the questions they should ask me, pros and cons of all the different options. I took care of my grandma growing up. If you look at my pictures of my birthday and stuff, it's my grandma, all of her friends and my friends too. I've always been around seniors. I liked working with them. I like kids and seniors. You got to have a lot of patients to be around both. I like kids because they tell the truth and they're hilarious. I love seniors because they're so wise. It's amazing, the greatest people. I wanted to do that more in my business. When I finished this book, it was done. I thought it was pretty good. I started giving it out to my prospects and friends. I printed out 100 copies. Every time somebody call our office, instead of saying, “We're going to come over to the house.” I say, “Have you gotten a copy of our book?” They're like, “Your book?” The other people buying houses don't have books. I said, “Yeah, I'll send you a copy of it. Chapter Three is all the ways to sell your house, pros and cons of each. It's a big decision. I don't want you to make a big mistake. Can you read Chapter Three before I come over?” They're like, “Yeah.” It did a couple of things. One is when we went over there, they read Chapter Three, but they read the other chapters too. They got to know us. They felt like we were credible and trusted because we put the time into it to write a book. What else was cool is most of the time, there was nobody else. Why would they call other people when they already have the person that wrote the book on the subject? That's how we get deals. We use a lot of different methods. We have a network of people all over, investors, agents and brokers that license our content. I'm buying right here in DFW. I'm not buying in Florida or Houston. We have people who use the books. We did the same thing on the private lending side. There's an education piece behind that. You're doing an amazing job coaching people up on that. We give people our book. It's been cool. I call it share and attract. We share what we're doing with people. We attract the people to us that want to work with us. It’s like hunting and trapping. Some people love hunting people down. They love the thrill or the chase. I never liked that. I never liked hard closing techniques. It felt unnatural. Trapping is where you set out the date. This is what the opportunity looks like. If they come to...…

The Private Lender Podcast

1
PLP-137 Is This The New Normal? 10:18

4 years sitten10:18

10:18

Is This The New Normal? Hello Private Lender nation and welcome to episode 137 of the Private Lender Podcast, I’m your host, Keith Baker and I’d like to thank you for sharing your time with me today. Love the show? Subscribe, rate, review, and share! Here’s How » If you’re looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place. But do you want to learn from my mistakes so you can both avoid and profit from them? Well then pull up a chair and pour yourself a drink, my friend. Because this podcast is just for you, as I am dedicated to giving people just like you and me the knowledge and confidence for successful and profitable Private Lending. In today’s episode, I will bore you and discuss some very recent conversations I had while on a trip to San Francisco and the Bay Area, and I heard some interesting insights from some friends of the show. But before we get to the heart of the matter, first I need to do a little housekeeping. 1 - Have you joined the Private Lender Podcast Facebook group? Well why not? Head over to the show notes for the link or simply search Facebook groups for the Private Lender Podcast. Private Lender Podcast Facebook Group 2 – And, please head over to PrivateLenderAcademy.com and click on Apply Now to learn more about how to get your Private Lending off ground and for opportunities to receive coaching from me. Apply – Private Lender Academy OK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: Are we normal? I took a short trip and flew to San Francisco earlier in August and spent a few days catching up with some friends of the show as well as a few dear old friends who call the Bay Area home. And I caught an A’s game against the Rangers, so I’ve now ticked 3 Major League Ball parks off my bucket list. I’m glad I was able to take the trip before the government tries to lock us down again, which brings me to the question I have for you, dear listener: Are we in the new normal, or are we simply in a bubble in the housing market cycle? I won’t name any names yet as I haven’t’ asked whether I could mention names (you know, in case they are wrong) and I had the idea for today’s topic and wanted to get this episode recorded and distributed so here we go: One position I heard, especially in the case of the Austin, Texas market, is that we are in the new normal. Austin will mimic housing in the Bay Area historically speaking, which means high prices are here to stay (at least in the Austin area) and they will only continue to rise. Then, I heard the belief that we are long in the tooth for this market and a correction is coming – a very popular opinion that many investors share. Especially those investors who lived through 2008 and the mortgage crisis. In the case of the Houston area, I did a little reading and have found the following: Average house price up 14% 1 month of inventory (6 months is considered a stable market) 500,000 people move to TX every year Construction material shortage, lumber up 250% Days on Market are almost non-existent So, which side are you on? Are we in the new normal with prices continuing to increase? Or is there a correction looming? Connect with me on social media and let me know: Private Lender Podcast Facebook Keith Baker on LinkedIn Or email me: keith@privatelenderpodcast.com. OK. Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at iTunes, Google Podcast or whatever platform you are using to hear my voice. It doesn’t take that long and it’s a small price for the value I try to provide. That’s gonna do it for Episode 137 and just a few final thoughts: 1 – Join the Private Lender Podcast Facebook Group 2 – Remember to head over to http://privatelenderacademy.com/ for more information. And to be eligible for discounts and other pre-launch goodies like group coaching calls, then click on “Apply Now” So, as I sign off I’d like to say in addition to self-awareness and mindfulness, I wish you safe and prosperous Private Lending. I’ll catch you on the next episode. -k Love the show? Subscribe, rate, review, and share! Here’s How » Join the Private Lender Podcast community today: PrivateLenderPodcast.com Private Lender Podcast Facebook Keith Baker on LinkedIn Private Lender Podcast Twitter Private Lender Podcast YouTube…

The Private Lender Podcast

1
PLP-136 George Salas On Getting Long-Lasting Revenue Through Short-Term Rentals 32:38

4 years sitten32:38

32:38

Most people flip houses, become a landlord, or purchase properties to get the most returns in real estate. But for George Salas , he found an incredible opportunity in short-term rentals, where a lot of people don't even consider. He joins Keith Baker to delve into how rent arbitrage increased his ROI significantly. He shares how he acquires his financing and puts together ample funding to keep the ball rolling. George also explains how he deepens relationships with the people that he trains, eventually building joint ventures. --- George Salas On Getting Long-Lasting Revenue Through Short-Term Rentals Learn How Rent Arbitrage Can Increase Your ROI If you're a regular reader to this show, then you know that I do my best to keep the topics of the interviews either strictly private lending-related or at least interesting from a different investment or personal perspective. The topic of the episode is no different as guest George Salas is flip and crushing it in the short-term rental space. I met him at a Mastermind in Key West and I'm happy that we connected. I got on the plane to fly to Key West. I did not want to go. It had extremely limiting beliefs and yet is one of the best things I've done. I love to know stories of innovators and how people pivot when times change or when they get bad, and given the recent COVID scamdemic and the current bubble and the retail housing market. It's a real disease. All that stuff is over 99% survival rate. It's a flipping scamdemic. We are in a bubble. I'm calling it. Greenspan said, "You can't see a bubble until you're beyond it or it's burst." I'm calling it a bubble. More than $50,000 above ask in the market is a bubble. You can bookmark this show and can come back to it and give me grief or cheer me on when I'm proven right. I couldn't think of a better time to introduce you to my guest and his business model. The best thing of all is that George Salas is crushing the short-term rental game right here in Houston, in H-Town, which makes my smile a little bit bigger. Let's go ahead and get down to the brass tacks of the show and straight to the interview with George Salas. --- George , welcome to the show. Thank you very much, Keith. It is an absolute honor to be here. I'm looking forward to you to explain your business model. That is, you don't flip, landlord, own or finance but you do short-term rentals. I'm going to give you the floor. Tell us how you got into real estate, short-term rentals and the basic mechanics of your business. My journey started when I was six years old. I'm sitting in the living room of my parents' house. My mom and dad pulled my brother and me aside and said, "Guys, we need to talk to you. You're going to go to your grandma's. You're going to stay there for a little bit." This is from a city by the name of Lima in Peru, the capital. We moved to a small town. It was just my mom. It was an environment where I get to stand by my dad. We left that city into a small little town and then the town was 20,000 people. I didn't get to see my father for nine years but he came back again into my life. We were moving here to the US. I came when I was fifteen. I wouldn't get to say bye to him twice and it affected me my entire life until I realized that I didn't need to be better for my dad. I didn't need to be in a place I’m good enough because I felt I wasn't good enough. I felt that because my father was never a great provider. We moved here. All through my young 15, 18 to 20, I was a grocery stacker. I worked at Kmart. Then I got into the nightlife and I invested in a nightclub. I was in the nightlife for ten years. I was the number one top promoter in Houston for 7 or 8 years. [bctt tweet="Bad decisions aren't as bad if you learn from them. Turn everything around and make something completely drastic." username=""] All of a sudden, I had the opportunity to invest in a club. I had a bunch of money saved up. I did invest in the venue and then I ended up losing everything. Here I am in the city. I had invested $400,000 into a club that I didn't have control over. I didn't have knowledge about real estate. I lost every penny of it. I'm sitting in the living room of my apartment at the time and I don't know what to do with my life. I'm literally lost. My buddy Ben Franklin called me. We go to his property in Flint. We spent 3 to 4 hours there and something clicks in my head with all of this inspiration. That was a life life-changing phone call. I started training, taking courses, going to seminars. I went to a seminar in January of 2019. Four months later, I got my first flip. I did start flipping. I want it to be this real estate guy. I wanted to do a lot of deals and build an impact on real estate without knowing that you needed to have a lot of money to invest in real estate if you want to buy, fix and flip. You need $50,000, $60,000. For DLS, you do what we do. At the time, we didn't have the resources or knowledge to do it. I made $46,000 on my first flip in 2018. Then six months later, I figured out what wholesaling was. By the end of that year, I had brought $98,000 of wholesale fees and used that cash. This is from the $5,000 in my pocket keys. I use that cash to put into my first twenty rental arbitrage, Airbnb that had cashflowed me $2,500. It's little apartments, studios and I started with those. Since then, until now I've been able to build a six-figure business a month. Our short-term rental business does $150,000 a month. I've done 50 real estate deals in two and a half years. I've got an amazing network of friends like yourself and in the know of all of the real estate community here in Houston. I'm in the best time of my life. I'm happy, fulfilled, fulfilling my destiny. It all started with that phone call and making those bad decisions. Sometimes bad decisions aren't as bad if you can learn from them. If you can turn everything around and just make something completely drastic. Look for that thing that you're wanting to find, which was a success in real estate and then I reached out to short-term rentals. That's pretty much a breakdown. It's compelling because I find it funny that I had to go to Key West and meet you, even though we're right here in Houston. I've seen you come up on Facebook back in the good old days when we went to REIA meetings in person. I'll even throw John Jackson in there in Dallas. I'll include him. It is a very good supportive network. The event, it's the same as I. It makes all the difference when you have people that you feel have your back or going to shoot you straight on something. To your point, if you mess up and you have a loss, it's either have a win or a lesson. That's the way it is. As long as you own the loss, then it's a lesson and you keep moving forward. You get into the typical way. You've wholesaled. By wholesaling, you know how to analyze a deal and see where the spread is and the margin, “What's the rehab going to cost this stuff?” As we were talking in the pre-show, you're buying single-family residences, condos or studios. The SFR, the single-family concept but you run them not like your normal rental. If you get $300 cashflow positive a month, you're doing well. You're bringing the apartment cashflow syndication model and that's what the short-term rentals do. When you acquire, how are you financing? Are you using a bank or private money? What mechanisms and cash are you using to acquire your property? When acquiring, we have a few strategies. I'm going to talk about purchase strategy and non-purchase. We use a method called rental arbitrage keys. This method breaks down like this. You go to a landlord, rent the property and ask them to allow you to sublease it on short-term rental platforms for 3, 4, 5, 6 to 30 days. That's one method and it doesn't require you buying the property. Utilizing this big real estate. I'm talking about 3,000, 4,000, 5,000 square foot homes without having a buyer. If they bring in anywhere between 5, 7, 8, 10, we've got several houses doing $15,000 up a month. I'm talking about that method. What we've purchased, which we also do, I would say 60% of our portfolio is rental arbitrage, 20% is purchased direct and about 20% is purchased joint ventures. [caption id="attachment_3170" align="aligncenter" width="600"] Short-Term Rentals: Short-term rentals allow you to do a lot of deals and impact real estate without having to invest a huge amount of money.[/caption] We've got a few. We purchased via subject-to, partnerships, joint ventures and our corporate program. What we do for subject-to is we're taking over the payments, taxes, HOA fees and commitment with these wholesalers or landlords or sellers. We're taking the deed over to our property, and we're staging. For example, we have a property in Hawthorne, Texas, which launched in December of 2019 and it consistently brings in an average of $7,500. We just have a $50,000 reservation for 62 nights. Before what we did a little bit under $7,500 but it averages $7,500. Our mortgage is 60, 48 and that's PITI all in. We do our cleaning and everything. We're all in for about $2,500 max utilities, $400 or $500 cleaning supplies, $2,500, so that's an $800 or $900 on top of our mortgage. Anything above $2,500 is profit. That's what I meant. Do you have any questions about that one? It was different of words. I was going to ask when you say rental arbitrage is that you get a master lease on the property. You lease it from the landlord, sublet it nightly on the short-term VRBO or Airbnb model. The master lease might not be the right word but you lease the house, pay the monthly, you divvy it out and book it. That's a very clean model. I create financing but I like to keep the numbers simple. To me, that keeps it simple. This is how I started. I needed cashflow to build a business. I didn't have the money to buy it. Even though I got into purchases several and we own about ten, we did not have the capital to buy a bunch. That was just the method. We don't use master leases but a master lease would speak, in a sense, more of a triple net lease, a commercial lease. It's closer to that when you control everything you take of the maintenance. Master lease, you take care of everything. You're taking care of your maintenance and all of that thing. With houses which is our method now, we don't go off with apartments anymore because the houses are ten times more profit. I'm just being very conservative. We utilize these residential leases. We do 2, 3 to 7-year leases with initial terms of a minimum 2 to 3 and second terms where we create that option for us. "We have to take care of your property. Let's do a six-year term but I'm going to come in and rent your property for three years.” In our next two years, let's figure out, what is it that you need for rent increase? Most people right now are getting the max ever the rent. Rents are up by 20% here. We negotiate that second term and the rent increases as low as possible. It's got to be favorable for both parties and we would just focus on these longer leases. Everybody makes fun. That's your rental arbitrage. When you purchase, you get them sub-to. That's smart. I assume you leave it as long as you can in that original name. Do you put it into a trust? When we purchase sub-to, we put them into a trust immediately and one of my LLC is the trustee LLC. Then I've got a separate LLC that is the beneficiary. Then we just leave it there. Not saying that you don't run into issues. This is a creative finance strategy. Sometimes if the wholesaler doesn't do a good job explaining all of the little points that you've got to touch, all the disclosures, sometimes we run into an issue that is very unlucky that the seller falls for bankruptcy. Then it complicates the whole entire transaction. We're figuring this out with one of our sub-tos, but if you do it the right way, the only problem is that you can call the note due if they wish to. Most of the time, 95%, 97%, maybe 90%, it doesn't happen. I've never had a seller file bankruptcy but I did have a tenant one time in my failed Baytown rental property. The judge gave him four months of rent-free living. The bankruptcy is going to probably get messy before it gets clean. I would like to know about how that turns out for you? I know that you like to partner with your students. [bctt tweet="Buying profits is one thing, but buying properties with someone you're teaching is another." username=""] You offer coaching strictly in the short-term rental arena. I liked the model because you bring them up and then you become business partners with them. You got to be careful. A lot of the wholesalers, the first three deals you got to split with me. Once you train these folks up and you go into a JV, what does that look like? What we're doing is we're internally launching and we've launched it already. Nothing is out in the known yet in the community. What we do is we train these folks which our students are real estate investors because our focus is helping real estate investors get to that six-figure short-term rental cashflow. Sometimes some of these real estate investors are busy with their wholesaling business, realtor business. They're busy with their subject to creative finance business fix and flip or landlord. They have a lot of properties. What we do is we give them the option. There's no, "You have to partner. We come and train you." If you have too much on your plate, we give that only the students that have been qualified. Meaning, you've got to have an X credit score, pre-qualify, X amount of funds to be able to do that, because if we launch and buy properties. Buying properties is one thing but buying properties with someone you're teaching and making sure you do this on a consistent basis than others because you ran out of money and that messes the whole entire thing up. We do the option and our methods are very precautionary. I've called it location process frequents. We party with them 50/50. We go out there, find the deal and rehab it. The studio will purchase it in their LLC or their name or whatever. We use the student's cash or credit. The students bring into cash or credit and they bring into private money. In a sense, we teach them every step of the deal as if they were doing it because we're doing it together as partners. We teach them as far as so, the students come to the property with us to do the analysis of making sure that the property's numbers are going to work. We meet there to assess the rehab with the contractor. Then we also take them there. We deal with the rehab and we're showing them exactly the back end, the front end how the entire properties have staged the sign. They're not doing it themselves. We're doing it together. My team is providing the labor, the steps. They're seeing all the steps. Everything is getting executed and they're learning. Most people learn what they do. They're doing with us. Then we turn around and refine the property and deed it over onto our partnership LLC or limited partnership. We all make money. Go home. We have the process in the back. They can do whatever they want and pick the same process and then just rinse and repeat. In an average ballpark deal, how much does a student need to bring in private money? With sub-to, it’s going to be less but if you're getting in, what was the average buy-in? If I was going to fund one of your students, how much and how long would it need to be out? The average buy-in depends on the property but we estimate with the down payment costs, as we buy correctly, which is always 75% to 80%, 82% because you can't find anything above that. We're closing with a property this first week of June and this one is pretty much at 78%. They're putting up $40,000, $50,000 on the down payment side of the short-term loan. On the refinance, if all things work out, our appraisals are coming back, so I'll find out. After figuring out and seeing all the comps we're estimating, you never know what the place was, though but the market is fairly high right now. We're estimating anywhere between 4 or 25 for this deal, maybe 4 or 50. We're going to be in cash out of pocket 30 to 40 max, maybe even less. [caption id="attachment_3171" align="aligncenter" width="600"] Short-Term Rentals: Through rent arbitrage, one can lease the house, pay the monthly, divvy the finances, and then book it.[/caption] That includes the short-term loan, the rehab loan and all that. They're going to be cash out of pocket. Then after that, they are all refinanced but they are all carry across, which some tax could roll a little bit above or beyond if things get complicated. All the refinance there are costs for staging. For example, this property is 5,000 square feet but it's going to bring in about $15,000 to $20,000 a month. We are estimating about $25,000 to $30,000 on the furnace sheets and about $5,000 to $7,500 on the labor, maybe a little lower. You're putting 3540 plus 3540. Maybe a miscellaneous, we estimate 80 to 100 per deal but then you turn around and bring back in an average after the 50/50 split on this deal, our projections for the partner on that 80 to 100 is $3,000 to $4,000. If you do the Math times twelve, that's about 48% annually over a period of five years, which is our term. That's about 200% to 250% of IRR. When you bring it into the refi, are you going with community banks that are providing your refinancing? It's going to be either your credit union, an investor loan or just a regular type of financing. One of those three, depending because 80% cash-out refi and we're at 80% on the refi LTV, then we're good. You're not going to Freddie or Fannie to refinance these. What it means is that if you go to a traditional bank, you're going to get a lot of flak trying to refinance. When I've been refinanced out of bridge loans or acquisition loans, it's never been with the bank I'm familiar with but in some credit union or a community bank and they'll take it all day long because it's backed by real estate and the big banks won't touch it. I was curious. You are getting biz mortgages to refi. Let me just run through the timeline. You buy it, rehab it, appraise it. You're refinancing the short-term money for 3 to 6 months before you refi it? Up to six. Do you have a five-year term on that? Five-year term after we refi. That's when we decide, "We're going to sell or not." The market should be up. There is going to be a certain small cost you're going to have to do in five years. I understand that you are considering trying to put some money together for a fund so that you can have an ample supply. This is not an…

The Private Lender Podcast

1
PLP-135 The Fifth cure to a Lean Account Balance 12:59

4 years sitten12:59

12:59

Hello Private Lender Nation!!!! If you’re looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place. But do you want to learn from my mistakes so you can both avoid and profit from them? Well then pull up a chair and pour yourself a drink, my friend. Because this podcast is just for you, as I am dedicated to giving people just like you and me the knowledge and confidence for successful and profitable Private Lending. In today’s episode, we will continue with our monthly lesson from the book by George Clason's the Richest Man in Babylon. Today’s lesson is the 5 th cure for a small account balance, which is simply: Make your house a profitable investment , or in other words, own your own home. but before we get to the heart of the matter, first I need to do a little housekeeping. 1 - Have you joined the Private Lender Podcast Facebook group? Well why not? Head over to the show notes for the link or simply search Facebook groups for the Private Lender Podcast. Private Lender Podcast Facebook Group 2 – And most important of all, the Private Lender Academy still needs some work before I introduce her to the world and therefore I’m departing from the original plan in hopes of getting the course to life. However, on August 17 th at 7:30pm CST, I am holding a webinar/Facebook Live where I will begin to teach the principles of the academy. The purpose of the webinar is to get 10 committed people to opt-in to group coaching where I teach you everything I know about originating private loans. As a result of participating in the group coaching, you will help me refine the PLA and receive a free copy of the course once it is complete. I am looking for 10 students to form this focus group that will help refine the course over a 4-week period beginning in late August. So head over the www.PrivateLenderAcademy.com and click on Apply Now Apply – Private Lender Academy OK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: the 5 th cure for a lean account. And like so many lessons in life that we should heed, the principle is quite simple, but sometimes we humans seem to have trouble with the execution. Let’s get down to the brass tacks and listen to what Arkad tells his students: Make your house a profitable investment. A. K. A. - Own your Home "If a man sets aside none parts of his earnings upon which to live and enjoy life, and if any part of his nine parts can be turned into a profitable investment without detriment to his well-being, then so much fast will his treasures grow." So spoke Arkad to his class at their fifth lesson. "All too many of our men of Babylon do raise their families in unseemly quarters. They do pay to exacting landlords and liberal rents for rooms where their wives have not a spot to raise the blooms that gladden a woman's heart and their children have no place to play their games except in unclean alleys. "No man's family can fully enjoy life unless they do have a plot of ground wherein children can play in the clean earth and where the wife may raise not only blossoms but good rich herbs to feed her family. "To a man's heart, it brings gladness to eat the figs from his own trees and the grapes of his own vines. To own your own home and to have it a place he is proud to care for, puts confidence in his heart and greater effort behind all his endeavors. Therefore, I recommend that every man own the roof that shelters him and his family. "Nor is it beyond the ability of any well-intentioned man to own his own home. Has not our great king so widely extended the walls of Babylon that within them much land is now unused and may be purchased at sums most reasonable? "Also, I say to you, my students, that the money lenders gladly consider the desires of men who seek homes and land for their families. Readily may one borrower to pay the brickmaker and the builder for such commendable purposes, if one can show a reasonable portion of the necessary sum which you yourself have provided for the purpose. "Then when the house is built, you can pay the moneylender with the same regularity as you did the landlord. Because each payment will reduce the amount you owe to the moneylender, a few years will satisfy his loan. "Then will your heart be glad because you will own in your own right a valuable piece of property and the only cost will be the king's taxes. "Also, will your wife go more often to the river to wash your robes, that each time she returns she may bring a goatskin of water to pour upon the growing things. "Thus come many blessings to the man who owns his own house. And greatly will it reduce his cost of living, making available more of his earnings for pleasures and the gratification of his desires. This, then, is the fifth cure for a lean purse. Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at iTunes, Google Podcast or whatever platform you are using to hear my voice. It doesn’t take that long and it’s a small price for the value I try to provide. That’s gonna do it for Episode 135 and just a few final thoughts: 1 – Join the Private Lender Podcast Facebook Group 2 - Head over the www.PrivateLenderAcademy.com and click on Apply Now Apply – Private Lender Academy if you would like to be part of the group coaching focus group. As I sign off I’d like to say in addition to self-awareness and mindfulness, I wish you safe and prosperous Private Lending. I’ll catch you on the next episode. -k…

The Private Lender Podcast

1
PLP-134 Mindful Money: How To Make Better Money Decisions With Jonathan DeYoe 1:02:16

4 years sitten1:02:16

1:02:16

How does the state of our mind affect the way we make money decisions? You came to the right place to find out. Keith Baker’s guest today is Jonathan DeYoe , founder and CEO of Mindful Money . Jonathan explains to Keith Baker how mindfulness creates a space between the external stimulus and your response. It’s that moment of calm you need to make the right decisions based on facts instead of emotions. When you adapt mindfulness in your finances, you start making better decisions. How can you practice mindfulness? Tune in to find out! --- Mindful Money: How To Make Better Money Decisions With Jonathan DeYoe Investing In Your Happiness I'd like to thank you for sharing your time with me. If you're looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place. If you want to learn from my mistakes so that you can both avoid and profit from them, then pull up a chair and pour yourself a drink because this show is just for you. I'm dedicated to giving people like you and me the knowledge and confidence for successful and profitable private lending. [caption id="attachment_3155" align="alignleft" width="194"] Mindful Money: Simple Practices for Reaching Your Financial Goals and Increasing Your Happiness Dividend[/caption] If you're looking to join a community of private lenders then head over to the Private Lender Podcast Facebook group to connect with other private lenders and to share experiences, stories and opinions. While you're at it, head on over to the PrivateLenderAcademy.com to learn more about the forthcoming course on private lending and click on Apply Now to register for pre-launch discounts and other goodies. I was a little skeptical when I first learned about our guest. I wasn't sure he'd be a good fit for the show at first because I didn't spend a whole lot of time digging too deep, but after speaking with him for a minute, I knew he had to be on the show so we booked it. I'm happy to share Jonathan DeYoe with you and hopefully introduce you to him. As I've shared in previous episodes, I am on a bit of a mindfulness journey. I like to sign off wishing you mindfulness from every episode. Given that life has happened to me in the last few years, divorce, etc., I'm happy that someone has applied the mindfulness approach to money. As I look back, I wish I would have applied mindfulness years ago especially to money because at least in my case, with the relationship with my ex, money wasn't a huge issue but it was large enough. If we both had been mindful about it, maybe things would have been different, at least on the money front. I’m not saying I'd still be married but the awareness and the understanding would have been a lot better. Such an approach can eliminate a lot of the money pains and ill feelings that couples have. Let's go ahead and get down to the brass tacks of this episode and get straight to the interview with Jonathan DeYoe. --- Lender nation, I am throwing a curveball to you because we're not going to talk about private lending and all but we will be talking about money. Our guest has an interesting approach to money, one that I certainly want to use this platform to get out into the world and more people to learn and that is mindfulness. Early on in my practice, unfortunately, mindfulness was not court-ordered for me so I'm doing this on my own little by little. Jonathan DeYoe , welcome to the show. I'm excited to be here, Keith. Jonathan has nothing but good reviews on Yelp and whatnot. He is in the Berkeley, San Francisco Bay Area if you want to get in touch with him. This whole mindfulness thing, I don't have the words but you do. This is what you do on a daily. Let's start with your practice, your financial advising and how you bring that mindfulness element to the complete lack of financial literacy that is taught or the vacuum that is teaching financial literacy in the United States. Jonathan, the floor is yours. [bctt tweet="Mindfulness is when you create a space between the stimulus that the world gives and your response. " via="no"] Maybe a little background makes a lot of sense. In a brief nutshell, I'm a seminarian. I came to California to study at the Lutheran Seminary, turned Buddhist academic, turned financial advisor. The concept of mindful money comes after a long journey of self-discovery, comparative religion, philosophy, psychology and trying to figure out how people work and the decisions we make. I started in 1996 and wrote the book in 2007. After 10 or 11 years in the business, I had this semi-epiphany that it's the decisions we make that create our problems or our successes. The question is how are you making your decisions? If you have a space between “Oh my god,” or, “Yay,” and a decision where you can think, you can make a better decision. That's where mindfulness comes in. It’s creating that space between the stimulus that the world gives us and our response. Mindfulness has been studied and practiced for thousands of years, specifically to resolve this issue of our over-reactivity to the stuff that's coming at us from outside of us. It turns out in finance, there's a lot of that. Putting those two things together became exciting and became something that I was like, “I figured out. This is my mission. This is what I want to share with the world.” Before we got on, I sat on my stairs for a few minutes. I didn't meditate but I started noticing my breath. I’m trying to bring it in and give some of that space. When ADD was going around and all the rage in the late ‘70s and early ‘80s, my father was convinced I didn't need any medicine. I just needed a good ass whooping. That's all. I missed out on that boat so to speak. Had I gone down that route, my life would have been a little different in terms of disidentifying the news media, Instagram hits and all the stimuli that are coming in and molding decisions. I sat there, trying to find that space and not try to attach to any thought, which is hard. This interview was a guided meditation for me. You talked about that space and where this is all coming from. You are a seminarian which is awesome. It's funny because Friedrich Nietzsche was also studying to be a Lutheran minister before he went to the University of Bonn. You had a personal journey then you got to this point. You’ve been doing it for many years now. You have got to be the one lone voice in the darkness talking about mindful money. How do you convince people? How did you lead that horse to water? [caption id="attachment_3156" align="aligncenter" width="600"] Mindful Money: Don't take from the ‘serious money’ to refill the 2% money.[/caption] I almost didn't want to name the firm, Mindful Money. In 2001 when I started my own firm, I named it DeYoe Wealth Management until 2019. A couple of years ago, we changed the name. My book was published in 2017 and that's when I put it all together, mindfulness with money, why that's important and how to use those two things together. I was the only person talking about it and I thought that if I brought it out there, my peer group would say, “That's soft. That's silly. How can you say that? You're full of crap,” that kind of stuff and I would feel small. I discovered how much I'm afraid of not being believed in. I need people to trust me and to believe in me. If I don't have that, I don't value myself as much. That's a deeply personal thing. I'm coming to realize some things about myself after years and years of working too hard, trying too hard and all kinds of stuff. The fear of not being accepted in my industry where this philosophy or this belief system drove me to turn away from it for years and years. Finally, I said to my team, “This is what I want to do.” I girded myself for the barbs and they're like, “That's what you believe. That makes a ton of sense. Let's do this thing.” Now we're all together and doing this thing in the world. It's cool. We're not entirely alone. There are 3 or 4 books that are entitled Mindful Money . Years ago, somebody won a Nobel Prize for behavioral finance. Daniel Kahneman has a new book and I recommend this book, Noise . He used to talk about how we have all these biases and our biases are problematic. In my opinion, the benefit of mindfulness is it enables you to get over some of the biases. If you're aware of the biases and you're aware of your experience of the current environment, you can go, “I'm having an emotional response I don't need to have.” His latest book is all about noise. In our social media world, there is so much noise and there's much overwhelm. Our amygdala doesn't know how to deal with it. There are lions coming out of the bushes every step and we don't know what to do with us. Our bodies and our minds are not designed for this continuous constant threat and stress so we just react. Mindfulness becomes more and more important. Because there's an academic saying, “The benefit of an advisor isn't stock selection or investment selection, market timing.” Planning, education and behavioral support to help you do the right thing at the right time, not do the wrong thing at any specific time, not react. Act based on a plan. Stop reacting based on markets or something somebody said on a peer set or on the water cooler or whatever. We act based on a plan. We don't react to what the world is doing to us. The best illustration I have in my head for that is we ran out of toilet paper for a virus for the respiratory system. Not Kleenex. It’s not for sneezing and coughing. I was at the grocery store. There was a run on toilet paper. It’s herd mentality. I was right there. I'm one of the bad people. I admit it. I've instituted a par system so I don't have to worry about that. I used to work at a bar. Each bottle of liquor or each beer had a par. You always had to have ten bottles at any one time or the high-end scotch, you just had one. The cheap well vodka, you had twenty. [bctt tweet="The benefit of mindfulness is it allows you to get over biases. " via="no"] Being here on the Gulf Coast, we're used to hurricanes and being without things for a while. I keep updating my hurricane list. I don't do it just from June through November. It's a year-round thing. When Hurricane Harvey hit, my wife at the time was like, “How can you be so calm?” I'm an insurance adjuster so I deal with risks and bad things all the time. I told her, “This is an act of God. We've prepared as much as we can and we're fully insured. I confirmed all insurance premiums have been paid like flood and windstorm. We're good. We've done everything that we can.” She got mad at me when I threw a party to watch the pay-per-view fight right in the middle of Harvey because I was calm. I didn't have to react. I was prepared. It went a long way of trying to confirm. What you're saying resonates and hits home. This is a story that my dad told me. This is the Cold War era. He's in the Navy. There was this guy on the plane that was always calm and he was very analytical. If there's ever an issue, turbulence or something was happening, my dad would look at the guy and he would say, “Is he calm? If he was calm, we're steady and we're good.” There was this period where they were to land in Iceland but an engine blew. They're like, “What's going to happen? Are we going to be able to make it back? Are we going to go into the ocean?” They’re not sure what's going to happen. They were doing reconnaissance. They were looking for submarines from the air. That engine blows and they're trying to get back to Iceland. He's looking at the guy and the guy's like, “We got this. We're fine.” He's calculating and figuring it out. The other engine blows and they're like, “We have to start ditching stuff into the ocean. We have to start pushing stuff out the door so we have enough lift. We got to stay above so we can get to the coast and land this thing.” He keeps looking at the guy and the guy is calm. They pushed some things out the door and the guy is totally calm. He goes, “Now we get it. We have to lose another 300 pounds. If we can lose 300 pounds, we're going to make it all the way.” No engines. They're just soaring. He keeps looking at a guy. The point of the whole story is we need the guy. In Hurricane Harvey, you were the guy. We need to have something to look at that is calm and collected because if we don't have that, we all lose our minds if we don’t have somebody that's like, “Wait. Back up a second. This is normal. It's an act of God. These things happen. We prepare the best we can and we go forward.” Be the guy. Welcome to Houston. I don't know what to tell you. We do have good weather for about two weeks a year and it's not humid. It's pleasant. We get a lot of snowbirds coming down for the winter and whatnot. I don't want to throw my parents under the bus but a little peek inside of things. On a Sunday morning, I went to my mom's house. My dad passed away so we're going through the stuff. I'm making sure mom’s all right. My sister lives close to her and my nephew is with her so that's all good. My dad had a Master's in Chemistry and I was like, “There's his thesis. I'd like to keep that.” That's a trinket that I'm cool with. I'll dust it every week. We got to this and mom started laughing. She's like, “From 1967, here’s a certificate of completion from a financial education class.” My dad was not the best with money so we started laughing about how funny it was that he took financial education literacy class. I started thinking, “He didn't die in debt. He was in the black. He wasn't in the red.” I started thinking about that and I was laughing about it. You don't have to be good. You just have to be consistent. Having that background of money and being that middle-class aspiring like, “Do you want to be rich and famous?” “No. I want to be rich. I don't want to be famous. I don't want people to know I'm rich.” When it comes to being mindful with money and budgeting, I can definitely see where if you can give yourself a little bit of space and get quiet, you're budgeting your allocation to retirement, vacation fund and all that. I would imagine once people get into that, your job is easy at that point. [caption id="attachment_3157" align="aligncenter" width="600"] Mindful Money: The first rule of investing is to manage your risk.[/caption] The most difficult thing we have and we do this with all of our clients is we walk through the planning process. In the planning process, we remove the crazy. For example, like a Bitcoin. We remove the investment that would act like a GameStop or an options trader. We remove the expectation of the upside and the downside. We look at averages, long-term, cashflows, spending and making decisions based on things that give us higher probability outcomes. By removing the crazy, we create ground rules on how people work with money. Whenever stress occurs, they’re like, “What is the plan you told me I’m supposed to do? I'm supposed to save this much every month, invest this way every month and rebalance on a regular basis. Keep it simple.” If you keep it simple, you end up getting the things that you want out of life. If you get sucked into the crazy, which there's plenty of crazy to get sucked into, you lose out on the higher probabilities that you're hoping for. You lose out on the probability of the kids going to school without debt, their retirement income you can't outlive and the legacy you want to live behind. By going into the crazy, you lose out on the higher probability path to get where you want to go. We talk about the plan and the meditation. You sit down and you focus on your breath. You sat in the staircase before we got on here and you focused on your breath. You're in, out. That focuses and desensitizes you to everything's going on around you. In personal finance, your plan is your breath. It is the thing you focus on. When all the world is going crazy, you go, “What are those four simple things I'm supposed to do?” That's the benefit of planning. Once you have a plan in place and you have a portfolio that reflects the plan, we're not portfolio wizards, we admit it. No one's a portfolio wizard. Everyone is either lucky or unlucky. We are allocated and diversified. Thank you for being the first in the industry to admit that. There are no wizards. No one can predict the future. No one can guess what's going to happen next but there's still a way to build a portfolio. There's still a way to strategize on finance. We use those ways and then we're patient and we're disciplined and the plan enables that. When somebody says, “What about this thing?” I say, “Let's go look at the plan and see what the plan says about that.” Keep it simple. That's how we get from where we are to where we want to go. My dad showed me a video on how Post-it Notes recreated at 3M and the research scientist had 3%, 5% or whatever their annual budget was supposed to be dedicated for whatever they want. This guy wanted something to mark pages in this hymnal when he's singing in the church choir. It’s simple things like that but I always think you should always have that gambling money. When Bitcoin does come along, it's like, “We got the fear of missing out,” which only puts you into a state of lack and wanting and is not great. If you still want to scratch that itch, I'm a firm believer in, “Fine. Take that 0.5% or 1% of whatever you've allocated in your plan and know that you're going to lose it anyway.” It's like going to Vegas. “I'm going to take $1,000 to Vegas and piss it away. I'm coming home.” To me, that mentality is a healthy part of what we call asset allocation. [bctt tweet="When you keep it simple, you end up getting the things you want in life. " via="no"] Back when Steve Jobs was accepting an investment from Microsoft in the late ‘90s or early 2000s, Apple’s on the ropes. Apple is dying. They are not going to survive. They need capital. We had a couple of clients that said, “It looks like Microsoft's going to make this investment. Apple's got great products.” If you're an Apple user, you are an Apple user. You've got the phone, the watch, computer, iPad or laptop. You've got...…

The Private Lender Podcast

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PLP-133 The Fourth Law of Wealth 8:27

4 years sitten8:27

8:27

The Fourth Law of Gold Hello, Lender nation and welcome to Episode 133 of the Private Lender Podcast! I’m your host, Keith Baker and I’d like to thank you for sharing your time with me today. I hope everyone is enjoying their 4th of July observance the day this episode goes live, and to the other 194 countries not named the united states of America, then I hope you have a good Monday! Love the show? Subscribe, rate, review, and share! Here’s How » If you’re looking for practical tips and advice on Private Lending and how to keep your money safe, then you are in the right place. But if you want to learn from my mistakes so you can both avoid and profit from them, well then pull up a chair and pour yourself a drink my friend, because this podcast is just for you! Today we continue with the lessons taken from the book The Richest Man in Babylon: the fourth law of wealth. This is but one old-world principle that has remained relevant and true through the centuries, no matter the currency, and no matter the political climate. But before we get to the brass tacks, I would like to perform the housekeeping: 1 - Have you joined the Private Lender Podcast Facebook group ? Well, why not? Head over to the show notes for the link or simply search Facebook groups for the Private Lender Podcast. Private Lender Podcast Facebook Group 2 – And most important of all, the Private Lender Academy is launching in just a few weeks and if you would like to get on the list for pre-launch bonuses like discount codes, then head over to PrivateLenderAcademy.com and click on “Apply Now”: provide some background on your investing experience and goals Apply – Private Lender Academy The Private Lender Academy is slated to launch after July 4th, 2021. OK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: the 4th Law of Wealth (Gold). In the book, the Richest Man in Babylon, there are 7 cures for a lean purse, and 5 laws of Gold (wealth) and today we will discuss the 4th law of wealth, which is simply: “Gold slips away from the man who invests it in businesses or purposes with which he is not familiar, or which are not approved by those skilled in its keep.” “To the man who has gold, yet is not skilled in its handling, many uses for it appear most profitable. Too often these are fraught with the danger of loss, and if properly analyzed by wise men, show small possibility of profit. Therefore, the inexperienced owner of gold who trusts to his own judgement and invest it in businesses or purposes with which he is not familiar, too often find his judgement imperfect, and pays with his treasure for his inexperience. Wise, indeed, is he who invests his treasures under the advise of men skilled in the ways of gold.” The lesson here is simple: seek the advice from those who have a successful track record of investing theirs, and other people’s money, to help ensure your success. Gather opinions and seek counsel from proven investment strategies. Do not get caught up in the swell of a bubble market when “everyone is doing it” or “it’s so easy, why aren’t you doing it?” Do not bet your treasure on the shiny object. But rather seek friendship, fellowship, counsel, and advice from those skilled in successfully handling and investing money. Let them help guide you beyond the wolves and the hype of speculation. Remember, you’re net worth is equal to your network. No go out and find such people to help stay safe and invest with logic rather than emotion. Ok, the sermon is over. Thank you for listening. Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at Google Podcast, Spotify or whatever platform you are using to hear my voice. But it would mean the world to me if you could leave an honest rating and review over at iTunes, because it's apple and they're still the benchmark. It doesn’t take that long and it’s a small price for the value I try to provide – for free. And if you are looking to create your stable of private lenders, or know people who have money but don’t realize the power of private lending, please, please send them a text, an email, a DM, and introduce them to me and the Private Lender Podcast so they can develop the skills and confidence to become a successful Private Lender. That’s gonna do it for Episode 133 and I’d like to provide you with a few final thoughts: 1 – Join the Private Lender Podcast Facebook Group 2 - Remember, the http://privatelenderacademy.com/ will launch in July 2021. Head over to http://privatelenderacademy.com for more information. And to be eligible for discounts and other pre-launch goodies like group coaching calls, then click on “Apply Now” So, as I sign off I’d like to say in addition to self-awareness and mindfulness, I wish you safe and prosperous Private Lending. I’ll catch you on the next episode. -k Important Links: Private Lender Podcast Group – Facebook PrivateLenderAcademy.com March 2021 Due Diligence for Private Lenders – Previous episode Google Podcasts – The Private Lender Podcast Spotify – The Private Lender Podcast iHeartRadio – The Private Lender Podcast SoundCloud – The Private Lender Podcast iTunes – The Private Lender Podcast Love the show? Subscribe, rate, review, and share! Here’s How » Join the Private Lender Podcast community today: PrivateLenderPodcast.com Private Lender Podcast Facebook Keith Baker on LinkedIn Private Lender Podcast Twitter Private Lender Podcast YouTube…

The Private Lender Podcast

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PLP-132 Guiding The Lender: Sarah Montes On RMLOs 39:09

4 years sitten39:09

39:09

Once you become a lender and you're looking for people to purchase your property, how do you find the buyer? How do you make it look affordable? How do you know which rules and regulations to follow? An RMLO or a residential mortgage loan originator will do just that. Learn from Sarah Montes who is the President of Texas Pride Lending on why you need an RMLO. Joining Keith Baker, Sarah explains how an RMLO guides the lender on the payment process. Listen in today on how Texas Pride helps lenders in this regard. --- Guiding The Lender: Sarah Montes On RMLOs I would like to thank you for sharing your time with me as well as your consideration. If you're seeking practical tips and advice on how to increase wealth without cheap banks or unpredictable Wall Street through private mortgage lending, then you are in the right place. If you want to learn from my mistakes so that you can both avoid and profit from them, then pull up a chair and pour yourself a drink because this show is for you. This episode has been more than four years in the making. It has got a bit of a story behind it. Before we get to that, I want to encourage you to join the Private Lender Podcast Group . It is a public group, but I personally vet the applicants to ensure that it truly remains a group of just us private lenders. After years of empty threats and promises, the Private Lender Academy is finally launching in July 2021. You have the opportunity to get in when the doors open as a founding member, which means you won't be charged full price and you'll receive founder pricing on additional courses in the future. Go to PrivateLenderAcademy.com for more info. Click on that Apply Now, fill out some information, tell us a little bit about yourself, and you'll be on the list for the founding member. It is time to get down to the brass tacks of this episode. It's when my best borrower switched his business model from buying and converting into owner-financing notes using private lender money as the underlying lien. He streamlined his business and went more into a wholesaling model, which means he didn't need a private lender. He also went into a small apartment complex, which was way above what I had to offer. He did me a favor and introduced me to his friend, Landon Rothstein , who has been on the show. I initially was Landon's private lender before coming as his partner in Asset REI in 2017. At that time, Landon was a student of Mitch Stephen . He was looking to use my money as a first position and then wrap it with seller financing with an additional lien. He explained that we would use an originator to keep everything legal and above board. Since this came from Landon, I was skeptical and decided to investigate things myself. Ultimately, I came to the conclusion that Landon wasn't BS-ing me. He was indeed accurate, right, and correct. Before we put an owner-occupant inside a house with my money providing the lien, we used Texas Pride Lending, which took the end buyers' application, financial information, records, and everything that a bank or loan officer would take. They confirmed that the borrower could reasonably be expected to make the mortgage payments based on their finances, how the note was structured and the length of the note. It would be reasonable for the borrower to be expected to make these under the federal guidelines, Freddie Mac and Fannie Mae. It was during this process when I met our guest, Sarah Montes. She took care of everything and made the process extremely easy for me as a lender. If I had a question in the morning or afternoon, it was answered with the package, documents, or whatever was requested. The lender is quick and customer service-oriented for me. After I started this show, I begged her to come on the show and talk about Dodd-Frank. Why do we need RMLOs? Why do we need a loan to be originated? Our schedules never aligned. I hadn't reached out to her for over a year. I sent an email, "How are you doing? Here's a link to my recording schedule. I still want to get you on. I would love to interview you." [caption id="attachment_3145" align="aligncenter" width="600"] RMLO Lending: The main thing the RMLO does is to make sure that the buyer can afford the payment of the lender.[/caption] She booked it and replied almost immediately. That was the universe or God's way of telling me, "The time wasn't right before, but the time is now." Speaking of that, the time is now for you to pay attention. If you've ever thought about having your first mortgage wrapped or you're an investor looking to utilize seller financing as an exit strategy, which I suggest you do, then you need to read and take notes because Sarah is about to educate all of us. She takes a complicated federal law and breaks it down to where somebody like me can understand it easily. Without any further yip-yap from me, let's go ahead and get to the interview with Sarah Montes of Texas Pride Lending . --- I have a very special guest for you. This is the first RMLO on the show and only so far and for a good reason, you're about to find out why. Please help me welcome Sarah Montes to the show. Sarah, thank you so much for coming on. Thanks for having me. A little background with everyone. I've gone on ad nauseam about my foray into lending and into owner finance with my partner, Landon. That's how I was introduced to Sarah. Landon was using her Texas Pride Lending for RMLO. What is RMLO? It stands for Real Estate Mortgage Loan Originator. That's what we're doing. We're originating the loan on your behalf, the private lender/owner finance. We've been doing originations for Landon for years. Thanks, Landon, for introducing us. I always tell people never to loan to an owner-occupant because it's no longer a business loan at that point. Now, you're in the consumer world. There are a lot of protections that are in place for the consumer and some obstacles to do business with them that we have to comply with. If you are going to loan to an owner-occupant, or in this case, my loan is going to be wrapped to the owner finance model like Mitch Stephen and Landon use, then it has to go through the RMLO process. People ask me, "Why do I want to go through the RMLO process? It's an extra step and cost." I like to twist a quote from Chuck D and tell them that, “The reasons are several and all of them are federal." I'm going to let you go into that part of it, why we need the RMLO, and all that fun stuff. The floor is yours. [bctt tweet="Your debt-to-income needs to be at least 50% to buy a house." username=""] If you're going to be loaning to the consumer, to the end buyer, if you're an investor, you're going to do your fix-and-flip or whatever you're going to do to a part of that property. Once it's finished, you're going to be a lender. You're going to lend money to a person to purchase this property. If you're acting as a lender, you have to follow the rules as a typical lender like the banks would because now, you're acting as a bank. That's where the rules and regulations come in. It's to make sure that you're following all the guidelines and not taking advantage of the buyer. They put some guidelines in place in 2014. The guidelines are good because they are pertaining to a small creditor. We have guidelines for the big banks and then for the little people like us that are going to do a few a year. We're going to be lending under $1 million. What we need to do is make sure the main thing on Dodd-Frank rules and regulations is to make sure that the buyer can afford that payment. That's where we come in. The RMLO will gather all of the proof of income. The lender, seller, and RMLO, we're not putting that buyer in a situation where they're not going to make that payment. It's going to be common sense underwriting. Does this person, after he pays his car payment and credit card bills, is he still going to have enough money after paying his house payment to live? It's all the whole DTI, Debt-To-Income ratio, but I want to say it’s common sense underwriting because we're not looking at their credit. We're not doing any of that like a bank. The main thing is the ability to repay that loan. That's one. The reason why also that you use an RMLO is because if you ever have to foreclose on that person, if they default and you go to court, you want to be able to say, "I checked the financials. I had a third-party RMLO check their financials to make sure that they could afford this payment." If you don't do that, they can come back to court and say, "I couldn't afford that payment and they still gave me that loan." If that happens and the judge on their side, then you would have to pay back all the interest that you ever earned on that loan and pay their attorney costs. It's going to cost you more in the long run than doing everything you need to do now. In the beginning, do it right and be compliant. The other compliance side of that is to make sure that the buyer has disclosed all the loan terms. Whatever the loan terms are going to be, for us, we send out the loan disclosures in writing. They sign off on it. If you have to go to court, they can't say, "I didn't know that was my interest rate. I didn't know this or that." Here it is. It’s all in writing in a pretty little package for you. It goes to one of our core values as a private lender. There are two ROIs. One is the return of the investment first. If you're going to loan $100, make sure you get your $100 back. The second one is a return on that investment. If I have to go to court, I would not want a judge to say, "I'm sorry. You're going to have to pay everything back." I'm a stickler for this, especially with my money go through the RMLO process. Depending on what state you're in, make sure you're under usury as well because you don't want your loan invalidated in court. The other thing that we do with your RMLO is we know all the laws, regulations, and thresholds for you to stand there. This is where we come into is to guide you to say, "These are your terms, but let me suggest this because of the thresholds that we have as small creditors." That's another great reason to use an RMLO that knows the laws for a small creditor. An RMLO is a licensed loan officer. The majority of them out there are trained in the conventional world. They're only going to know the big predator regulations. They're not going to know the small creditor regulations like Texas Pride does. You provide services in Texas. Do you go out of state as well? No, we're only licensed in Texas, but we are opening up other states in 2021. I was a little ahead of the curve. That's fine and good to hear. I want to add. Everybody asks me all the time, "Why can't you do other states? There's so much need out there." We have so much going on here in Texas that it's hard this whole time that we've been doing it. That's what's kept us back from doing it. [caption id="attachment_3146" align="aligncenter" width="600"] RMLO Lending: A qualified mortgage is that the buyer has the ability to repay the loan terms. To make sure that there are no risky features in the loan terms, that you're under the thresholds for a small creditor.[/caption] I'm in the same boat. I don't even have to leave Houston, let alone Texas, to put my money to work. Unfortunately, I run out of my own money. It's not like I have a whole lot, but I do try to put it out there. People say, "Why don't you lend here?" I'm like, "Why?" I have a lot of private investors do that come from out of state. They specifically want to loan in Texas because they know the market is so hot. I look forward to seeing what states you guys do pop up in. This isn't just, “I'm bringing somebody on.” I've used Sarah and Texas Pride myself. This is like a testimonial coming from me. We're Dodd-Frank compliant. You've provided all the documents to protect me, the lender and/or real estate investor, for doing owner finance. We're compliant there. What are some of the other benefits on the backend of having the RMLO go through the loan? At the end of our processing, underwriting, we'll give you a full underwriting package for you to keep for your files. If you ever decide that you want to sell that note, later on, you have this compliant underwriting package that says you have a qualified mortgage. It's a stamp of approval that you have a qualified mortgage. Note buyers typically will pay a lot more when you have a qualified mortgage. That's probably one of the biggest reasons too why you should if you're planning to sell that note later. Even if you say, "I'm not interested in selling my note," you never know. Later on down the road, maybe you package them up. You have ten, sell the whole portfolio, cash out, and start all over again. That's another reason to have an RMLO package in your files for each property that you do. I tend to hold my notes until the end. However, that's not to say that I might not get in a bind or need to sell 1 or 2 years' worth of a note that income stream. Maybe you have another opportunity you want to go after. I need to recapitalize to go off into something bigger and better. I'm only teaching and coaching on residential, but in my personal lending, I've gone out into multifamily and commercial as well. There's a whole other set of underwriting and everything else beyond that. To circle back, let's define a qualified mortgage. A qualified mortgage is you have made sure that the buyer is qualified through the ability to repay. That there are no risky features in the loan terms that you're under the thresholds for a small creditor. The interest rate has to be under 6.5% plus time. That number is continuously fluctuating every week. We have to check it and see where we're at. Whatever the prime rate, plus 6.5%. That's your max threshold for the interest rate. As far as the terms, you can't go over 30 years. You can't do a 45-year mortgage or something like that. There are all these little different things that we need to do to make sure that the terms are within the threshold to call it a qualified mortgage. Once we run everything, we'll give you a qualified mortgage report that says, "Check, it's passed." Another thing is points and fees. You can't charge over 3% in points and fees. It's different things like that we make sure. As we RMLO, I'm the one that's going to make sure to keep you within those thresholds and guidelines to make sure that you have a qualified mortgage. [bctt tweet="Keep your purchase price payment affordable." username=""] I'm used to hearing points and fees. If I lend out of my self-directed IRA, those fees that I pass onto the borrower would be included in that 3%? That's right. It has to be under 3%, but those are the lender fees, the fees that are going to hit the APR. It's not title fees and escrow reserves. Is it 3% points in junk fees? Yes, just lender fees. It’s anything that you're going to tax the buyer with origination fees, funding fees, and transaction fees. Anything that's going to be paid directly to the lender, that's where you're capped. Thank you for clarifying. If you're paying the title company or an attorney, it's not in that. Normally, when I've done owner-financed notes or wraps, we don't even charge points to the end buyer as long as they've got a big enough down payment or whatever threshold Landon has set. Whoever has got the most money when we do these things, he's the one with the boots on the ground doing it. Ninety-nine percent of the lenders do not charge origination fees. We're trying to help someone who's unmortgageable get into a house with a mortgage. Let's roll back here. I'm curious and know I can Google all this. I tried to Google what the prime is but I didn't get the prime rate is what I'm looking for. I was trying to search the prime rate now. I usually go to Bankrate.com . It will say conventional, FHA, VA, and all of that stuff if you just do a conventional loan. It's typically right around 3.5%. Now, the interest rates are super low. You might see 3.2%. It goes for the week. Every week, it changes. It's hard for us to charge higher interest rates. We're about at 9.25% since we don't know what the future holds and when these interest rates will start rising again because we used to be at 9.99% or 10%. We're struggling with that because of the low prime rate. What I would suggest is to do a five-year ARM, Adjustable-Rate Mortgage, so that you don't have to guess what's going to happen in five years. You can start off at whatever it is now and then you say, "In five years, I'm going to add the 6.5% to prime, whatever the prime is at that point." As interest rates start going up, so does yours as well. You're going to be with the market. You're not going to be left behind. As interest rates go up and your threshold is up to 13%, you're kicking yourself. It's another way to protect yourself when it comes to interest rates. Correct me if I'm wrong. In Texas as the consumers, you got to be under 10% or no higher than 10%? It's based on the 6.5% plus time. Back to the consumer side of things, DTI, Debt-To-Income. I like to give people quick stuff like, "Average guy or lady on the street wants to buy a house." What kind of DTI do they need? For quick, fast numbers, I would always say 50%. Say, "How much money do you make? The 1% rule for the payment is a good tool for you." I always say, "One percent of the sales price is typically your mortgage payment that includes taxes, insurance, servicing fees, and everything." If you use 1% of your sales price, then that will give you what your estimated payment would be. It's easy numbers. If you have a $100,000 house, your payment is going to be $1,000. Maybe that's a bad scenario. If you have a $200,000 house, your payment is going to be $2,000 a month. That person has to make $4,000 monthly to afford that payment. You're out in the field, walking the property with a client for fast, quick numbers that you can put in your head, say anything under 50% would qualify the buyer. I...…

The Private Lender Podcast

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PLP-131 Three Strategies for Private Lending with Less than $50,000 9:50

4 years sitten9:50

9:50

Hello Private Lender nation and welcome to episode 131 of the Private Lender Podcast, I’m your host, Keith Baker and I’d like to thank you for sharing your time and your ears with me today. Love the show? Subscribe, rate, review, and share! Here’s How » If you’re seeking practical tips and advice on how to increase wealth without banks or wallstreet through private mortgage lending, then you are in the right place. But if you want to learn from my mistakes so you can both avoid and profit from them - well then pull up a chair and pour yourself a drink my friend, because this podcast is just for you! In today’s episode, we’ll go over 3 ways you can start lending with less than $50,000. But before we get to the heart of the matter, first I need to do a little housekeeping. 1 - Have you joined the Private Lender Podcast Facebook group? Well why not? Head over to the show notes for the link or simply search Facebook groups for the Private Lender Podcast. Private Lender Podcast Facebook Group 2 – And most important of all, the Private Lender Academy is launching in just a few weeks and if you would like to get on the list for pre-launch bonuses like discount codes, then head over to PrivateLenderAcademy.com and click on “Apply Now”: provide some background on your investing experience and goals Apply – Private Lender Academy The Private Lender Academy is slated to launch in mid-July, which is still after July 4 th weekend, so I’m not a complete liar. Look, it’s a lot more than I thought it would be, but I will bring it across the finish line: come hell or high water. OK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: 3 ways to lend with less than $30,000. 1 – REIT - Real Estate Investment Trust: A company that owns, operates, or finances income-producing properties Pay a minimum of 90% of taxable income in the form of shareholder dividends each year · Modeled after mutual funds – most publicly traded on public exchanges – provides liquidity · Do not provide much capital appreciation · Usually target a specific asset class/sector Multi-Family Commercial Mobile Phone Towers Hotels Data Centers Retail Timberland Warehouse Most are equity REITS Some are Mortgage REITS which lend to operators or purchase mortgage-backed securities 2 – Real Estate Fund Think - hard money loans on Single Family Residences: o Fix and Flip o Buy and Hold o Commercial/Multi-Family · You provide capital at an agreed interest rate · ~ 1 year minimum · Quarterly interest payments · ~ 90 notice to receive return of principle Episode 43 with Tom Berry from Investor Loan Source. Great way to see due diligence (loan packages) while someone else does all the work 3 – Lend to Owner Finance investors Provide the purchase capital in the first position Your lien is “wrapped” by a second mortgage from your borrower to the end- buyer 3 – 5 years 8% Mitch Stephen perfected this model of investing. So, let’s recap these first 3 strategies for lending with less than $50,000: 1 – REITs 2 – Real Estate Funds 3 – Owner Finance OK. Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at iTunes, Google Podcast or whatever platform you are using to hear my voice. It doesn’t take that long and it’s a small price for the value I try to provide. That’s gonna do it for Episode 131 1 – Join the Private Lender Podcast Facebook Group 2 - Remember, the http://privatelenderacademy.com/ will launch in July 2021. Head over to http://privatelenderacademy.com/ for more information. And to be eligible for discounts and other pre-launch goodies like group coaching calls, then click on “Apply Now” So, as I sign off I’d like to say in additional to self-awareness and mindfulness, I wish you safe and prosperous Private Lending. I’ll catch you on the next episode. -k Love the show? Subscribe, rate, review, and share! Here’s How » Join the Private Lender Podcast community today: PrivateLenderPodcast.com Private Lender Podcast Facebook Keith Baker on LinkedIn Private Lender Podcast Twitter Private Lender Podcast YouTube…

The Private Lender Podcast

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PLP-130 The Fourth Cure For A Small Account Balance 9:10

4 years sitten9:10

9:10

The Fourth Cure for A Lean Account Balance Hello Private Lender nation and welcome to episode 130 of the Private Lender Podcast, I’m your host, Keith Baker and I’d like to thank you for sharing your time with me today. If you’re looking for practical tips and advice on how to keep your money safe as a Private Lender, then you are in the right place. But if you want to learn from my mistakes so you can avoid them, well then pull up a chair and pour yourself a drink my friend, because this podcast is just for you! In today’s episode, we will continue with our monthly lesson from the book the Richest Man in Babylon. Today’s lesson is the 4 th cure for a lean account, but before we get to the heart of the matter, first I need to do a little housekeeping. 1 - Have you joined the Private Lender Podcast Facebook group? Well why not? Head over to the show notes for the link or simply search Facebook groups for the Private Lender Podcast. Private Lender Podcast Facebook Group 2 – And most important of all, the Private Lender Academy is launching in just a few weeks and if you would like to get on the list for pre-launch bonuses like discount codes, then head over to PrivateLenderAcademy.com and click on “Apply Now”: provide some background on your investing experience and goals Apply – Private Lender Academy The Private Lender Academy is slated to launch after July 4 th weekend! OK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: the 4 th cure for a lean account. And like so many lessons in life that we should heed, the principle is quite simple, but we humans seem to have trouble with the execution. The 4 th cure for a lean purse points precisely to the first Core Value of a Private Lender: ROI1 - Return of Investment. Let’s get to it, and listen to what Arkad tells his students: “Misfortune loves a shining mark. Gold in a man’s purse must be guarded with firmness, else it be lost. Thus it is wise that we must first secure small amounts and learn to protect them before the Gods entrust us with larger ones. Every owner of gold is tempted by opportunities whereby it would seem that he could make large sums by its investment in most plausible projects. Often friends and relatives are eagerly entering such investment and urge him to follow. The first sound principle of investment is security for your principle (Return OF Investment). Is it wise to be intrigued by larger earnings when your principle could be lost? I say not. The penalty of risk is probable loss. Study carefully, before parting your money, each assurance that it may be safely reclaimed. Do not be misled by your own romantic desires to make wealth rapidly. Before you loan it to any man assure yourself of his ability to repay and his reputation for doing so, that you may not unwittingly be making him a present of your hard-earned money. Before you entrust it as an investment in any field acquaint yourself with the dangers which may threaten it. My own first investment was a tragedy to me at the time. The guarded savings of one year did I entrust to a brickmaster who was traveling over the far seas and in the city of Tyre agreed to buy for me the rare jewels of the Phoenicians. These we would sell upon his return and divide the profits. The Phoenicians were scoundrels and sold him bits of glass. My money was lost. Today, my training would show me at once the mistake I made of entrusting a brickmaster to buy jewels. Therefore, I advise you from the wisdom of my experiences: do to be too confident in your own wisdom by entrusting your wealth to the possible pitfalls of investments. It is by far better to consult the wisdom of those experienced in handling money for profit. Such advice is freely given for the asking and may readily possess a value equal in gold to the amount you consider investing. In truth, such is its actual value if it saves you from loss. This, then, is the fourth cure for a lean purse, and of great importance if it prevents your purse from being emptied once it has become filled. "Guard your wealth against loss by investing only where your principal is safe, where it may be reclaimed if desirable and where you will not fail to collect a fair rental. Consult with wise men. Secure the advice of those experienced in the profitable handling of money. Let their wisdom protect your wealth from unsafe investments. ” Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at iTunes, Google Podcast or whatever platform you are using to hear my voice. It doesn’t take that long and it’s a small price for the value I try to provide. That’s gonna do it for Episode 128 and just a few final thoughts: 1 – Join the Private Lender Podcast Facebook Group 2 - Remember, the Private Lender Academy http://privatelenderacademy.com/ will launch in July 2021. Head over to http://privatelenderacademy.com/ for more information. And to be eligible for discounts and other pre-launch goodies like group coaching calls, then click on “Apply Now” So, as I sign off I’d like to say that in addition to self-awareness and mindfulness - I wish you safe and prosperous Private Lending. I’ll catch you on the next episode. -k Important Links: Private Lender Podcast Group – Facebook PrivateLenderAcademy.com PrivateLenderAcademy.com/apply Google Podcasts – The Private Lender Podcast Spotify – The Private Lender Podcast iHeartRadio – The Private Lender Podcast iTunes – The Private Lender Podcast…

The Private Lender Podcast

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PLP – 129 Jill Underwood On How Various Market Cycles Of The Past Shaped Today’s Real Estate 40:36

4 years sitten40:36

40:36

Looking back at history is always a great way to discern how we got into the present. Joining Keith Baker to reflect on the previous market cycles of real estate is Jill Underwood . Together, they discuss the implications of the different crises and crashes the country has faced. Jill explains how the platforms of US Presidents directly affect the growth - or decline - of the real estate market. She details how the nation's debt plays a role in keeping rates low, which is pretty clear with today’s pandemic-hit society. The two also discuss the new tax credit policy rolled out by the Federal Reserve System and the right approach to these free money situations. --- Jill Underwood On How Various Market Cycles Of The Past Shaped Today's Real Estate Jill Underwood Discusses The Current Market Conditions And Compares Them To Previous Cycles I'd like to thank you for sharing your time with me. If you're looking for practical tips and advice on private lending and how to keep your money safe, then you are in the right place. If you want to learn from my mistakes so that you can both avoid them and profit from them, pull up a chair and pour yourself a drink, get a notepad and a pencil, take some notes because this show is for you. I'm dedicated to giving people like you and me the knowledge and confidence for successful and profitable private lending. If you're looking to join a community of private lenders, then head over to the show's Facebook group to connect with other private lenders, to share experiences, stories, and opinions that are not political, sexual, or religious. Simply go to Facebook groups and search Private Lender Podcast Group . I hope everyone is doing well since summer has officially begun. We are into the month of June 2021, the back end of the second quarter. There's a lot of fun stuff coming out. The Private Lender Academy is going to launch in July 2021. Stay tuned to PrivateLenderAcademy.com for more information on that. I'm looking forward July 6th, 2021, July 7th, 2021 launch date. Go to PrivateLenderAcademy.com/apply to go ahead and get on the list for your chance to get some goodies like discounts or pop-up Facebook coaching calls. You will be able to participate via Facebook. You'll have to come in through Zoom. Get on the list for those early-bird discounts and goodies. Before we get to the brass tacks of this episode, I wanted to say that I have not had a retail mortgage loan officer on the show yet on purpose. One has been on my list but I wanted someone that could bring a little more. It's not that I haven't been approached. I have several friends that are loan officers but unfortunately, I didn't feel that anyone clicked or stood out as someone who could provide something different and unique to the audience here. This episode’s guest is different because I sought her out, asked her to come on this episode, and share her experience with us for two reasons. One is her driven spirit and can-do attitude. She'll find a way. She'll figure it out. No problem is too big. I liked that. Also, her experience. She has so much experience with several market cycles. Our guest has been in the mortgage industry since she was 21 years old. She began as a receptionist, quickly rose through the ranks and became a loan officer. She's been through and survived the savings and loan crisis that started in 1986 and went into the 1990s, the dot-com bubble of 2000, and the Great Recession or global financial crisis of 2008. She didn't just survive these. She thrived through them. Let's get to the heart of the matter and to the interview with Jill Underwood . --- Please help me welcome Ms. Jill Underwood to the show. Jill, welcome. Thank you. I'm so happy to be here. I'm excited. There are so many reasons that I wanted you on the show. Let's tell the audience exactly the biggest of the reasons. You are a loan originator, a loan officer. Tell us about what you do for your clients. [bctt tweet="The more that the country stays in debt, the lower the real estate rates will be." username=""] My tagline is that I help people make great decisions about their home financing. There have been many years in my industry where people didn't make great decisions but I'm still here making you and helping you to do the right thing. You should never ask a woman how old she is but you've been doing this for a while. You're still here. You've seen some market cycles. You go back out. Your mom was a realtor, correct? Yeah. I got into the mortgage business in 1981. I've seen a lot. I've seen many recessions. I've seen some very serious market changes as well and I'm still here. My mother was a real estate agent when I was growing up. I have a lot of older brothers and sisters. By the time I became a teenager, being a sponge of information, they were mostly gone. I got mom all to myself. I would seriously follow her around and hang out at the real estate office. She taught me how to talk to people. She taught me about negotiating and how to keep everybody happy with negotiations. She taught me about things like equity. A 13 or 14-year-olds shouldn't know what equity means but I did. I was twenty years old and broke as hell. She was a top producer with Century 21 at the time. There was a big Century 21 convention in Vegas, their top producer convention. At the last minute, my dad didn't want to go so she took me. I got my first taste of a real estate convention when I was twenty years old in Las Vegas. It was awesome. That's got to be quite the experience. It was pretty cool. That was your first seminar/conference. It was my very first type of seminar or conference. My mom and I were really tight. We at one point thought that we wanted to open a real estate office together. I went to college. I have a degree in real estate. I am still degreed in my industry but it never materialized for us to open our own office together. What happened is when I took the real estate finance class in my college courses, it has clicked with me. It was like, "That's it." The law class, forget it. I didn't understand a word that man was saying. The real estate finance clicked with me because she was already teaching me how to talk to people and the math was a breeze. [caption id="attachment_3120" align="aligncenter" width="600"] Market Cycles: Back then, everybody got a loan. There were a lot of stupid loans back then too, because that's when it all started with the stated income loans.[/caption] There's a lot of math involved, a lot of algebraic equations that I do. I ended up in the mortgage business. I started as a receptionist at Fort Worth Mortgage in Richardson, Texas. I went to assistant to the processors, processor, senior processor, assistant to the loan officer, and then loan officer. I've stayed on the front lines because I do enjoy being on the front line helping people. Now, I negotiate with underwriting. That's what we do. It's a big deal. That's a little bit about my history, my background, and how I got to where I am years later. Congratulations. You don't get this far at that age without doing something right. In your story, you've seen so much. There's so much continuity in years in your head of the real estate and mortgage market, whereas most folks that I talked to get in and out at some point. They will talk to you about '08 all they want but they're not going to talk to you about the S&L crisis back in the '80s because they weren't there. They weren't around when the dot-com boom broke or whatever correction drop. I haven't had a loan officer on this show for a reason. This is private lending and not retail. For most of my loans, I don't go through RMLO. I don't have to. It's not a retail loan. It's not subject to Dodd-Frank. It's a business loan from one investor to another. There's a difference there but at the same time, I want to avoid the confusion between the loans. [bctt tweet="Jill Underwood helps people make great decisions about their home financing." username=""] What does the real estate market follow? It's the retail market. Buyers and sellers, all that, it's all rolled into one. I got to the point where I'm like, "I'm doing a disservice by not having loan officers on," speaking about the retail side because we follow it and then right out of the gate, 40 years. Can you put this wire in your head and download it onto this old hard drive right here? The '08, '09 was caused by the mortgage. A lot of people making stupid loans, collateralizing them, selling them off, and then buying insurance products that didn't even credit default swaps. That's the technical. We've been through that. Let's go back to around 2000, the dot-com. Everyone was becoming a millionaire. It sounds familiar. Take us back there. Do you see any differences and similarities between 2020 and 2000, for example? We've got two decades in between. Back then, everybody got a loan. There were a lot of stupid loans back then too because that's when it all started with all the stated income loans. We did a lot of those with people who probably didn't qualify. There have been so many times in this industry where things just ebb and flow. A lot of it has to do with where rates are. A lot of it has to do with who's president at the time. Some presidents will come out and their platform is, “Everybody gets a home loan. Everybody gets the American dream.” Other presidents will come along. They've got to clean up the mess and things tighten up. I have seen so many swings of the pendulum from far left to far right in underwriting guidelines. Every time something bad happens, we all get called in. We all get retrained on whatever it is. There have been so many times. Every ten years, something changes and swings back in the other direction. I like how you tie it to the platforms and that's a great segue. Coming out of the '90s, we had Clinton. In my opinion, not to get political, Clinton wasn't a Democrat, in my mind. He was on the Democratic Party. He was certainly to the left side but business-wise, I never considered him a Democrat. However, everyone gets a piece of the American dream. He was the first one. Back then too, it was like, "Those lenders are discriminating." We all got called in and had to go through discrimination training again. We went through that. It took me eight years to go through college. I'm no dummy. I was coming out of that when the dot-com boom hit. With my first sales job, it didn't last long. It was horrible. I was selling window tint. They put me in these brand-new neighborhoods with these huge houses. Everybody was a seed investor for whatever dot-com. It was crazy, the housing market and then it dried up. We get eight years of Bush. Bush was more Democrat than he was Republican in that sense because it was bubbling and the gates opened. Can you fog a mirror? I remember those times. We were busy as could be. It didn't matter how much money you made. Just write down a number. [bctt tweet="When everybody is highly leveraged, then you're toast if one small thing goes wrong." username=""] Freddie and Fannie bought this. They allowed this. We should back up and explain that a little bit. When you sell a loan or a loan is underwritten, it is done in conformance with the Freddie and Fannie guidelines so that the loan can then be sold to another lender. For some reason, Wells Fargo keeps buying my mortgages. I try to get away from them but I can't. That is the standard by which loans are underwritten. What I'm getting at is you're pulling out some anger in me for Freddie and Fannie for allowing that. I do that a lot. I'm good at that. Think about my side of mortgage lending. A traditional mortgage lender who's going to sell our loans to Fannie Mae or Freddie Mac, which is ultimately the government or even our FHA and VA loans. All of those are ultimately sold to the government. On my branch of lending, an underwriter's sole job is to make sure that we have a loan that we can sell on the secondary market, which ultimately means that this loan is going to be a security on Wall Street. It takes about four months after closing for this note, this paper to be a security on Wall Street. Leading up to the '08 crisis, it was like, “Everybody gets a loan. Let's make 125% of your value loan.” We were doing loans where you could buy investment properties like a rental property that was zero down. You could seriously get an 80% first mortgage, 20% second mortgage and buy rental properties with nothing down. It was crazy. Where is that now? With all of those, there was so much going on because everybody thought, “This bubble will never burst.” That's what they did on Wall Street. At the time, I had clients who worked for a company where they're buying securities. They would call me and say, "Jill, what are you selling on the front lines?" They would know that in four months, they're going to be selling it on Wall Street. They always had the end of what was going on out on the front lines because they'd call me and ask me. They kept going. They kept rolling. Everything rolled and rolled, Fannie Mae, Freddie Mac, everybody. If you can fog a mirror, if you've got a social security number, you can have a lot. "Job? It's good. Did you get one? We'll give you a loan. Do you want to buy rental properties? Here you go." They were handing out the money and as we all know, you can't do that forever. Some things got to stop but for the people on Wall Street, there is a problem with 2008. Nobody thought it was going to stop. Everybody thought this was going to go on forever and it doesn't. It can't. Nothing can. It’s like our run-up and values. The difference between the crash of 2008 and where we are is that in 2008 leading up to that, everybody was highly leveraged. Everybody owed 100% if not more of the value of their home. As soon as everything crashed and remember the Countrywide Option ARM, “It's 1% interest rate.” No, it's not because it was negative amortization. Instead of your loan balance paying down every month, your loan balance went up. That's sure to implode at some point. Back then, there wasn't the same amount of equity in properties. There was little, teeny, tiny equity in properties if any at all. In this world, everybody's made good decisions. Everybody's got fixed-rate mortgages and a lot of equity and I think that's the difference. I don't see that we're going to have any kind of bubble burst or crash. Will values level off and maybe come down a little bit? Absolutely. My crystal ball says that will happen in about 18 to 24 months. I'm always happy to get out my crystal ball. I was talking to one of my dad's friends’ advisers that work Wall Street stuff. I was equating. I don't see '08 coming again. That was a perfect storm. There were ARMs. There was the Wall Street bit, which fueled it. I don't see a repeat of that or coming. I see your typical Wall Street 10% correction. To knock the party down enough, maybe we need to tighten up a little bit. I'm thinking maybe that 10% somewhere in there. 18 to 24 months, I hope you're wrong. I hope it's sooner because I want to put some money to work as an investor. If that happens, it's good for you and bad for me. Nonetheless, I hope for a shorter time horizon but I don't think you're wrong. This one's going to play out. I don't think crypto is going to be direct with it but a lot of folks are looking at crypto. They're going to say, "Real estate, what are you going to do?" A friend of mine got outbid with four houses. It's crazy. My niece, they're buying a house. They're moving. I was like, "Go sign a two-year lease and sell your house now,” because it's already worth $100,000 more than they got it on the contract for when it was being built. Pocket that $100,000. When somebody messes up, you slide that into that REO, get that foreclosure, and then you can get it priced right. I'm the old uncle, so that's not fun and cool. They've been renting since they got married years ago. I told her that and she's like, "I want my own place." I'm like, "That's what you could do but if you want my advice, I'd sell the damn thing." We don't have the ARMs like we used to. Is that even a product for sale? Do you still sell it? [caption id="attachment_3121" align="aligncenter" width="600"] Market Cycles: It's not going to be a hard market crash where everybody falls on their face because there's a lot of equity in homes today.[/caption] It's starting to make a comeback. They're different than they once were. I haven't done an ARM, an Adjustable-Rate Mortgage, product in years probably since '08, '09, 2010. They're coming back. They are starting to pop up. I've heard some other lenders starting to quote them. It used to be like, "Your rate is fixed for five years." Beginning in year six, it's going to adjust once a year. They're taking that down to now. It's going to adjust every six months as opposed to every twelve months. I found that interesting. The fact that they're coming back, I'm no Nostradamus but come on. History repeats itself. Here's the thing about an ARM versus fixed. The fixed rates are still so low. We are so spoiled with interest rates. I had somebody be like, "My rate is 3.5. That's so high." No, it's not. Eighteen, that's high. Ten percent, that's high. It was in 1983, I believe it was. They built a subdivision behind me. It seemed like, within one weekend, the foreclosure notices went up. These people bought homes with 14% and 15% brand new homes. I'm glad you brought that up because that's one of my questions towards the end. We're over a decade of artificially low-interest rates. They've been kept. With simple supply and demand, at some point, they've got to snap back. Even with the Fed with this "inflation" which I don't know how you throw trillions of dollars into the market and not expel inflation. Back to the point of rates, let me ask you this. Do you fear rates increasing any? Not at all. Here's my crystal ball on interest rates. I think that we're going to have another good two years of lovely rates in the range that we are. We've already hit bottom but I will say this. Interest rates are a quarter lower than they were years ago. Rates are still super good. Inflation is bad for rates and nobody likes that. I think that Fed is going to keep things under control. They watch inflation very closely. There's an inflation report coming out. The other thing...…

The Private Lender Podcast

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PLP – 128 Memorial Day Tribute with Charles Bukowski’s the Genius of the Crowd 8:39

4 years sitten8:39

8:39

Hello Private Lender nation and welcome to episode 128 of the Private Lender Podcast, I’m your host, Keith Baker and I’d like to thank you for sharing your time with me today. Subscribe, rate, review, and share! Here’s How » If you’re looking for practical tips and advice on Private Lending and how to keep your money safe as a Private Lender, then you are in the right place. But if you want to learn from my mistakes so you can avoid them, well then pull up a chair and pour yourself a drink my friend, because this podcast is just for you! Today will be another quick episode, but I give you full permission to get off the treadmill or elliptical as soon as this episode concludes in just a few minutes. But before we get to the heart of the matter, first I need to do a little housekeeping: Join the Private Lender Podcast Facebook Group Make sure you visit www.PrivateLenderAcademy.com to learn more and sign-up for pre-launch bonuses like group coaching calls and discounts. Today’s episode is airing on Memorial Day 2021, and as such it is in honor of those who perished while serving this great country of ours. But this episode is also in honor of the family members that were left behind, as well as the survivors who continue to battle years after their service is over. So in the honor of all those mentioned above, I would like to read The Genius of the Crowd, by Charles Bukowski "there is enough treachery, hatred violence absurdity in the average human being to supply any given army on any given day and the best at murder are those who preach against it and the best at hate are those who preach love and the best at war finally are those who preach peace those who preach god, need god those who preach peace do not have peace those who preach peace do not have love beware the preachers beware the knowers beware those who are always reading books beware those who either detest poverty or are proud of it beware those quick to praise for they need praise in return beware those who are quick to censor they are afraid of what they do not know beware those who seek constant crowds for they are nothing alone beware the average man the average woman beware their love, their love is average seeks average but there is genius in their hatred there is enough genius in their hatred to kill you to kill anybody not wanting solitude not understanding solitude they will attempt to destroy anything that differs from their own not being able to create art they will not understand art they will consider their failure as creators only as a failure of the world not being able to love fully they will believe your love incomplete and then they will hate you and their hatred will be perfect like a shining diamond like a knife like a mountain like a tiger like hemlock their finest art" OK. Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at iTunes, Google Podcast or whatever platform you are using to hear my voice. It doesn’t take that long and it’s a small price for the value I try to provide. That’s gonna do it for Episode 128 and just a few final thoughts: 1 – Join the Private Lender Podcast Facebook Group to connect, learn, be inspired and interact in the discussions 2 - Remember, the www.PrivateLenderAcademy.com will launch in July 2021. Head over to www.PrivateLenderAcademy.com for more information. And to be eligible for discounts and other pre-launch goodies like group coaching calls, then click on “Apply Now” So, as I sign off I’d like to say in addition to self-awareness and mindfulness, I wish you safe and prosperous Private Lending. I’ll catch you on the next episode. -k Love the show? Subscribe, rate, review, and share! Here’s How » Join the Private Lender Podcast community today: PrivateLenderPodcast.com Private Lender Podcast Facebook Keith Baker on LinkedIn Private Lender Podcast Twitter Private Lender Podcast YouTube…

The Private Lender Podcast

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PLP-127 The Third Law of Wealth 10:19

4 years sitten10:19

10:19

If you’re looking for practical tips and advice on Private Lending and how to keep your money safe as a Private Lender, then you are in the right place. But if you want to learn from my mistakes so you can avoid them, well then pull up a chair and pour yourself a drink my friend, because this podcast is just for you! In today’s episode, we will continue to explore the lessons found in the book “The Richest Man in Babylon”. Today we will be discussing the 3 rd Law of Wealth. Today will be another quick episode, but I give you full permission to get off the treadmill or elliptical as soon as this episode concludes in just a few minutes. PLP Facebook group: Private Lender Podcast (public) The Private Lender Academy is launching in July. Go to the new website for more information and to sign up for early-bird discounts, group coaching calls, and other pre-launch bonuses. www.PrivateLenderAcademy.com Today’s topic is another lesson from the Richest Man in Babylon written by George Samuel Clason. You can go back and catch up on the first four installments in: Episode 114: First Cure for a lean account – save 10% of everything you earn for the future Episode 116: First Law of Wealth - Wealth comes to those who reserve AT LEAST 10% of their total earnings towards building their future financial independence/fortune. Episode 118: Second cure for a lean account – control thy expenses Episode 120: Second Law of Wealth - “work hard for your money, but then make your money work harder for you Episode 123: Compound Interest the 8 th wonder of the world Today is the sixth installment in which we will be discussing the 3 rd Law of Gold (wealth). And like so many lessons in life that we should heed, the principle is quite simple, but we humans seem to have trouble with the execution. Let’s get down to the Brass Tacks of this Episode and discuss the 3 rd Law of Wealth, which state: Gold clings to the protection of the cautious owner who invests it under the advice of men wise in its handling. And then the book goes on to say: “Gold, indeed, clings to the cautious owner, even as it flees the careless owner. The man who seeks the advice of men wise in the handling of gold soon learns not to jeopardize his treasure, but to preserve in safety and to enjoy in contentment its consistent increase” If you follow the lesson sequence from the book, you are saving 10% of your income to invest, you are controlling your expenses – living below your means, looking to make your money work hard for you and now we come to seek advice from people who are wise in the handling of money: People who know who to Protect Money (Return Of Investment) and people who know how to make it multiply (Return On Investment). Those just happen to be Private Lender No. 1 and 2 Core Value Rodan (the spear maker) visits Mathon – a seller of jewelry and fine fabrics, also the gold lender of Babylon. “Seek to associate yourself with men and enterprises whose success is established so that your money may earn liberally under their skillful use and be guarded safely by their wisdom and experience” · Loan to flippers to flip · Loan to landlords to accumulate rentals · Make acquisition/bridge loans to owner finance sellers · I like to look for grey hair, but I have and will continue to lend to experienced youth · Never lend money to somebody who “needs this deal” · Don’t lend to somebody or a deal a hard money lender won’t finance I don’t charge money to produce this show, but I would be extremely grateful if you would help me get the word out and increase awareness by leaving me an honest rating and review over at iTunes , Google Podcasts , Spotify , iHeartRadio , or whatever platform you are using to hear my voice. It’s a small but quick request that will pay us both dividends. It earns a bigger following for the show and you get to erase some negative karma. It’s true! (prolly). Try it. And if you are looking to create your stable of private lenders, or know people who have money but don’t realize the power of private lending, please, please send them a text, an email, a DM, and introduce them to the PLP. That’s gonna do it for Episode 127 and just a few final thoughts: Please join the Private Lender Podcast Facebook group to connect, learn, inspiration and get involved in discussions. . . PLP Facebook group: Private Lender Podcast (public) www.PrivateLenderAcademy.com So, as I sign off I’d like to say in addition to self-awareness, I wish you safe and prosperous Private Lending. I’ll catch you on the next episode. -k Important Links: Facebook Group – Private Lender Podcast iTunes – Private Lender Podcast Google Podcasts – Private Lender Podcast Spotify – Private Lender Podcast iHeartRadio – Private Lender Podcast…

The Private Lender Podcast

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PLP – 126: Avoiding Huge Debts In Your Equity Contracts With Matthew Sullivan 31:08

4 years sitten31:08

31:08

Buying a new home is truly exciting, but every owner dreads one thing: debts. Most homeowners who want to get their hands on equity contracts turn to credit or reverse mortgages when acquiring a new property. Unfortunately, these only push them deeper into debt. Thankfully, Matthew Sullivan found a solution to this problem while boosting property ownership. Joining Keith Baker, he explains their work at QuantmRE that gives homeowners access to a portion of their home equity. Therefore, they are not only saved from debt but also tedious monthly payments and interest. Keith explains how this helps homeowners more than just saving money, innovating real estate transactions today. --- Avoiding Huge Debts In Your Equity Contracts With Matthew Sullivan How QuantmRE Boosts Property Ownership This is the only place to be if you're looking for practical tips and advice on private lending and how to keep your money safe. If you want to learn from my mistakes so that you can both avoid and profit from them, then pull up a chair and pour yourself a drink because this show is designed just for you. It's dedicated to giving people like you and me the knowledge and confidence to participate in the most passive form of real estate investing there is, which so happens to be private lending. If you're looking for a shortcut to go ahead and get started private lending, then head over to PrivateLenderPodcast.com/ink to learn how you can put your money to work for you by investing in real estate back loans right here in the Houston area. Also, make sure to join the show's Facebook group to connect with other private lenders and to be a part of the growing community. You can search Facebook for Private Lender Podcast group. On past episodes, we have discussed that 95% or more of my private lending is done out of my self-directed IRA, but there are other ways to get money to loan out that belongs to you without borrowing it from somebody. You can borrow from yourself. For example, you can borrow from your life insurance policy. Certain whole life policies have cash values you can borrow from and arbitrage the interest. The same thing with a home equity line of credit or a home equity loan. If you go to Bank of America and borrow money for 3%, yet you can loan it back out in six-month intervals to flippers for 13% or 12 points. You've arbitraged that 3, 4, to 12 so you're making 8% of that money even after you pay off the loan. It's a pretty neat deal. Our guest has a very interesting take on the same thing. His company provides homeowners a contract on that equity that they don't have to pay back, except when the house is sold. It's like a home equity line. You're giving up a certain percentage of your equity for cash now that will be realized later on. I'm probably not describing it very well. Why don't we go ahead and get down to the brass tacks of this episode and go straight to the interview with Matthew Sullivan ? --- I have a very special guest with a very interesting topic. Please welcome Matthew Sullivan to the show. Matthew, welcome aboard. Thanks for coming on. Keith, thank you for having me on. I can tell you're from East Texas. Why don't you tell us a little bit about your accent there? Where are you from? Alabama. I'm originally from outside of London in England. We can't call it Europe anymore because it's not. I moved over here a few years ago. I landed in Orange County and moved to Salt Lake City in Utah. I find the blazing daily sunshine of California far too decent. I felt I needed to get cold again. I might be heading back to California pretty quickly. [bctt tweet="#NeverTrustAlwaysVerify - remember you must perform your own due diligence prior to investing any money." via="no"] English bloods are calling out saying you needed some gray skies and some cold weather. It was great to move. We've got the wanderlust. I was flicking through the advertisements for trailers and RVs. Goodness knows what's going to happen. I hope it all goes well with you. I don't feel sorry for anyone who can live in Orange County. It's not as nice as my neighborhood, but I don't pity anyone in my neighborhood at all. You do have much better weather. I'll give you that. You may have a very interesting concept. You've started QuantmRE.com . It’s better if you can explain it than I try to bumble it. Please explain what it is that you do. We have a solution for homeowners who have equity and want to access that equity but don't want to go into debt. It's quite a big problem because there's over $18 trillion of equity in residential homes in the US. Nearly sixteen million homes have 50% or more equity. There were some reports that came out showing that equity in homes has hit an all-time high. If you're a homeowner and you want to get your hands on your equity, the problem is you've got to go to the bank and borrow money. You can borrow money through a cash-out refinance or a second position mortgage. You can increase your existing mortgage. You can get a home equity line of credit. You can get a reverse mortgage. All of those are debt-based products. That means that you end up owing money, which is secured against your equity, but you don't get any of your equity. You're just getting deeper into debt. That's fine as long as you can afford it or if you qualify. There are millions of people out there who want to try and access their equity but cannot because they don't qualify for loan, they don't have the income, they don't have the credit score, or the debt-income ratio is wrong. We have a solution for all of those people. We can allow them to unlock up to $500,000 with no monthly payments ever. There's no interest and there's no additional debt. They can use the money for whatever purpose they want. How does one go about doing that? Talk about the mechanics of this. [caption id="attachment_3099" align="aligncenter" width="600"] Equity Contracts: If your house goes up in value, QuantmRE takes a share of some of that appreciation.[/caption] First of all, the important thing is to describe what it's not. It's not a debt product. If it's not a debt product, it's an investment product. In other words, we have investors who want to participate in some of the future appreciation of your home. The way they get paid rather than charging you an interest rate is to say, "If your house goes up in value, we'll take a share of some of that appreciation. That'll be the return on the investment for us.” They take a longer-term view and because it's not a loan, that means there are no monthly payments but the investor does get the return. When you sell the property, what normally happens is you will give them back the original investment that they made together with a share of the appreciation. That share of the appreciation gives them a solid return on their investment. That keeps them happy. In the meantime, as the homeowner, you have been able to unlock equity. It doesn't matter in most cases if you don't have the income. We can work with people that have a much lower credit score. You get to tap into your equity without having to borrow money. You touched on people with poor credit or low credit scores. Who is your ideal seller of equity at this point? Who are your homeowners? What demographic are you looking for? There are a number of states. We're restricted at the moment by the number of states that we operate in. We work either with our capital or with other partners in nineteen states. It's not available across the UK. There are some states like Texas where it doesn't work. That's because of certain regulations around homesteads. I wouldn't say ideally because everyone is slightly different in terms of what they want the money for. Normally, we're looking for someone who has a home that's worth $200,000 or more up to a maximum of $5 million. That's the range. Most people that we work with, the average house value is around $600,000 to $700,000 or something like that. We're also looking for people that have at least 30% to 40% equity in their property. There's a maximum combined lien-to-value, which means if you take your existing loans, whether that be a mortgage or a HELOC, if you add those together and then if you want to add our investment to that, all of that together must be less than 80% of the current value of your home. That means you still have 20% equity. It means that there's a big enough cushion to make sure that you stay incentivized as a homeowner. There are a few numbers that we work with. Depending on the state, we can unlock under 40% of the current value of your home. In most states, that figure is over 20%. We make an exception for California because there tends to be more equity in the properties there. This would be a great strategy when the coasts see the real estate market's decline. [bctt tweet="There are so many parallels in both of our lives in terms of who you work with. It's about changing attitudes or changing views." via="no"] Also, when the markets appreciate, that's good for the investor. When the markets start getting a little difficult to forecast, we saw that with COVID. What COVID showed us was that homeowners immediately became more willing to explore alternative funding strategies the moment they thought that their home equity was not the sure thing. It's interesting when markets do change and the confidence in markets alters, then people tend to be much more willing to look at these types of alternative funding. The way the agreements work is because they're quite long-term agreements. Over the average duration of an agreement, the investor probably will make a pretty good return. From the homeowner's perspective, they've got that lump sum of cash that doesn't have any monthly payments, so they can use it. We have people that use it to pay off expensive credit cards but also, they use the money to invest in other things, whether it be stocks, bonds or as a down payment on another property. If you've got hundreds of thousands of dollars locked up in your equity and here's a way to get that without any monthly payments or if you can do better than your home equity or better than the cost of the agreement, then it makes sense for you to diversify out of your home, which is your single most concentrated asset. I'm curious on this agreement. You talk about lien-to-value. With private lending, Texas is a Deed of Trust and a promissory note state. This was an investment vehicle, not a dead vehicle like a private mortgage would be. What's the paperwork? What's the minutia? How it's done with the counties and the contract? It depends on county by county. The language is slightly different but it's very similar to a trustee. We refer to it as a performance Deed of Trust. It's not a trustee because there is no loan involved. What it does is describes the performance of the agreement. In other words, what is due when the property is sold or if the agreement comes to an end. In language, that is similar to a Trust Deed. One of the challenges over the last few years has been getting various counties and cities to understand what this is. The good news is that these types of agreements have been around for many years. A lot of those early teething problems have been sorted out. The investor in this case is you. Do you give a certain percentage of money? Is this a one-time payment to the homeowner? It's a one-time payment. On average, it's up to 20% of the current value of your home. We have different durations of agreements. We have some agreements that run for ten years. Those are fine for people that want short-term capital. You can use them for bridging purposes. You can pay the agreements back within months if you want and there's no prepayment penalty in most cases. These agreements run for either 10 years or 30 years. There are two flavors. The way that we calculate the equity share is slightly different. The way that it works is that the investor put some capital in exchange for the right to participate in the future value of your home when you sell it or when you buy the agreement back. [caption id="attachment_3100" align="aligncenter" width="600"] Equity Contracts: With COVID-19, homeowners immediately became more willing to explore alternative funding strategies when they became unsure about home equity.[/caption] The investor has the option. It's structured as an option agreement in most cases. I say most cases because we have our own agreements that are structured as an option. We also work with a number of the other players in this space. There are slightly different variations on their agreements. Some of them work as option agreements. Some work almost like a purchase option where we have the right to purchase your property at a certain value. All of those are variations on the theme. None of those are loan. The important thing is they steer clear of any language or any obligations which would make this fall into the bucket of being a loan. Just playing a devil's advocate being in the insurance industry for so long. Back to your lien-to-value, I assume that there are going to be some provisions where if I've sold a piece of my equity off to you or done the option or if I refinance, it takes advantage of some lower rates. I’m sure there's a provision there that as long as it’s all-in and it's still at that 80% threshold, then I can do what I want. It's just if I go over that, then there's a problem. The position is an equity holder. We've got to be quite careful to make sure that you don't diminish or dilute that position by taking on more debt. We're always going to be in a junior position in terms of the order of play with the liens. Having a lien, if you want to refinance your existing mortgage, you would need to get a waiver from us or from whoever the investor is, allowing the lender to remain in a senior position. Having a lien on the property does give us that protection, which means that it makes it more difficult for you to add additional debt without us knowing about it. I don't live in the world of startups like you do, but I've been a part of one. Once the parent company came in and wrote a big check to help, you can't get any loans. You can't open any more credit and you can't dilute shares. That position had to be protected at all times, which is funny. As you know, when you're starting up, you need a photocopier or fax machine and you have no credit. The great thing about this is it doesn't increase the leverage on your home. If you're using the money to fund a startup, one of the things that you don't want is additional monthly payments. It's part enough paying for stuff as it is. These are great instruments if you've got equity, to use that equity and get the business off the ground to the point where it has a credit score or where you have some income. You can buy these agreements back at any point. You're not locked into it for 10 or 30 years. It's flexible. There's no seasoning period. With some of the agreements, there's an incentive to pay these agreements off early. What we do in some cases is cap the maximum return that the investor can get in the first two years. If you pay these agreements back quickly, then there's a benefit to you as the homeowner. There's a benefit to us because we can get that money back. We'll get a good return on it and we can then invest that out again. The more times we can do that, the more return we're likely to make. [bctt tweet="Depending on the state, 40% of the current value of your home can be unlocked. In most states, that figure is over 20%." via="no"] We walked through two scenarios. One, it's a ten-year agreement and I'm the homeowner. I get 20% of my equity paid to me. In 1.5 or 2 years, I get transferred, whatever the case may be. Now I'm going to sell the house. I'm assuming in that performance deed, at that point in time, you as the investor have to make the decision whether or not to exercise your option to participate. What happens is the option is triggered by the sale. Part of the process is that option becomes due in those. We are able to exercise that option when certain events happen. The sale of the home is one of those events. In that scenario, you've got two agreements, a 10-year agreement and a 30-year agreement. Both of those will be triggered when you sell your homes. If you decide to sell your home, when the sales proceeds come in, they would get distributed to us through the escrow process as one of the lien holders. You gave an example of $200,000 loan, 20% is $40,000. In the course of two years, I'm going to have to give back more than $40,000. If I use this as a loan, for example, I get some quick cash. Business goes well and I pay you off in 18 to 24 months. Obviously, you're not doing this for free. That's the important thing. Everyone needs to understand that the investors do make money out of this. Otherwise, you step firmly into that too good to be true territory. The way the investor gets paid with the 10-year agreement is a straightforward discount. For every 10% that we invest, when you sell your property, we will get back 16.7% of the value of your property at the time that you sell it. If you unlock 20%, that means that we get 33.4% of the value of your property when you sell it. If your property remains the same price, let's say it's $200,000, then in exchange for giving you $40,000 when you sell your property, we will get $66,000 approximately out of the sales proceeds. If you sell your property earlier than that, there's a cap on the return of 18% per annum that kicks into play. If you sold your property after six months, we would not apply that multiple. We would say, "What is the lowest figure? Is it 18% per annum over six months, which would be 9% or is it that multiple?" What we have is a cap to make sure that if you pay these agreements off early, you don't have to pay the full multiple. There's a ceiling to the amount that you can pay. That's the same for the 30-year agreement. There's a cap, which is the maximum in the case of the 30-year agreement, that can be as low as 12%. If we look at the 30-year agreement, because that's a longer duration agreement, we have to calculate the return in a different way. Otherwise, what happens is the return would decay over that 30-year period…

The Private Lender Podcast

1
PLP-125 Announcing the Private Lender Academy 10:07

4 years sitten10:07

10:07

Show Notes Coming Soon

Tervetuloa Player FM:n!

Player FM skannaa verkkoa löytääkseen korkealaatuisia podcasteja, joista voit nauttia juuri nyt. Se on paras podcast-sovellus ja toimii Androidilla, iPhonela, ja verkossa. Rekisteröidy sykronoidaksesi tilaukset laitteiden välillä.