At the end of thirty years, what's his yield gonna be? It sounds so incredible to pay $50,000 for a UPB, a bow a note with a balance of $147K. That's 30¢ 33¢ on the dollar. Right? And he's still only making not even 12 and a half percent yield on that.

Isn't that nuts? Well, it's a family situation. So, basically, Welcome to Property and Paper Live. This is Dawn Rickabaugh, owner of notequeen.com, and here is where we talk about real estate, seller financing, and note investing because they're all just different sides of the same thing, different edges of the same gem, so to speak. So, I really like bringing the holistic viewpoint where we just don't have real estate investing.

We just don't have known investing. We we talk about this dance between property and paper and how we really make that work into a very holistic community model, particularly is my favorite to talk about. But, anyway, you when you understand seller financing and the secondary market for notes, there's almost nothing you can make happen. So whether you're a real estate agent and you wanna know how to close more deals, I just got an email today. I think the headline was something like, you know, the the market is, like, officially frozen.

Buyers are refusing to show up and all these things. So there's some areas of the market where, my goodness, if you don't have some of these tools and you don't know how to do it correctly, legally, compliantly, I don't know how you're gonna make the market go around. People, it's us in these rooms, are the ones that are gonna make the market go around when liquidity stops, when, you know, all these different market factors are just making it impossible. So I would highly suggest that you tune into this conversation. Maybe even hire me for a one on one.

If you've got a particular situation right in front of you right now or you're a landlord and you wanna sell to your tenant or you're a tenant and you wanna ask your landlord to carry paper for you, boom. You know? An hour with me will make or save you thousands. I can guarantee guarantee that. It's much, much cheaper than the price of a real estate commission.

But not to not to do real estate commissions because I am an agent now, and I've hooked up with Megan LoPresti in Carson City, and we're gonna be teaming up together. So that's that's fun. So if you haven't already and you're listening to this on YouTube or podcast, please subscribe and like. That's what I'm supposed to say. But go over to notequeen.com and sign up and become a citizen of the realm or just tap in.

There's a lot of emails that I send out that will just give a little insights and and usually discounts to things. And and today, because we're focusing on a note deal that I bought off of Craigslist, the special discount that I'm gonna have today is gonna be on my let me share this right now. Note investing for newbies. So if you're new to notes and the secondary market for notes, I would suggest that you come over here, and you're gonna get a 50% off discount, by the end of this call. But it's just a great place to start, and it's where I talk about, hey.

You know what? I have bought notes off of Craigslist, probably three. Not a ton, but, you know, it's alright. Craigslist was free. Right?

So so, anyway, you I'll have a temporary discount for this book, but it's it gives a lot of fun for even people. I kinda tried to make it fun and sort of funny so that if if all this language is really tough to get through, I I think this will be a a very friendly way to to start. So just that. So let me I'm going to share my, bring up my calculator if I can find it because it hides once I'm on here. So alright.

So this was a deal. So how did I find it on Craigslist? I set up an automatic search so that if any of that wording comes up, I automatically get notified into my email. So I was at the gym. I just, like, got to the gym at 07:00 in the morning, and I worked out ten minutes, got that thing note.

You know, and I said, I didn't get my workout done because, boom, I went and bought a note. Right then. It was on a a mobile home, a a little one. This isn't the one I was gonna talk about, but this is a good one. It was I I only paid 7,000 for this note, and I think it turned out to be a 15 or 18% yield.

And it turned out to be a a great little situation, and I ended up owning the mobile home for a little bit then reselling it to somebody else who they got a good deal, and I kept getting more of a good deal. Just little bits of money can go a long way if you're the dealmaker. Right? It wouldn't have made a lot of sense for me to try to bring someone in with 6,000, so I only had to put down 7,000 or something like that. I had a conversation about that with someone.

It's like, yes. You can find deals where you can put a very little bit of money and make it go a long way in the note business, but you have to kinda be the dealmaker, which is in itself a whole a whole business. This other one, I saw it come through. And here here's the way that and and and this was pre pre COVID. This was might have been 2016 even.

My god. Ten years? Nine so September ago. And so the price of this mobile home on land, but it's right in Carson City, right, in one of our just couple miles from anywhere we are in Carson City. And it was probably worth 100 to 120, something like that.

And the note was for this, $1.47 $5.05 5. This was the note. And it was sticky because it was a family situation. So what had happened is this person who got this note got a thirty year note that looked like this. Yep.

You see that? So the the the loan amount was $1.47 $5.05 5 on something that was worth maybe a 100, And the balloon payment due in thirty years was $1.04 $7.05 $5.05. So what does that tell

you? Interest only.

Interest only. So it's a very you know, number one, it was upside down in terms of equity position. And number two, it's a really small payment, monthly payment. And all that, you know, that balloon, you have to wait a really long time for, and the interest rate is also very low. So let's just say this was a brand new note, and we're not gonna talk about all the other issues that we normally would.

But if you just got this note right here and and the cash value of the property was a 100,000, tell me what you pay for this note. How how much of a yield what what's the most you're gonna pay? First, we always go, what's the maximum investment to value that that our risk? We figure out our risk because we want return of our principal even more than we want return on investment. Right?

So based on a $100,000 cash's value of the property, what's the most that you would risk against this asset?

Was the the land is included. This isn't

is included. Mobile home secured. It was secured. I wanna say it was. Yeah.

There wasn't a separate title.

Mhmm. I mean, myself, I would I would figure about 50¢ on the 50¢ of the of the 50% of the value of the property.

Okay. So

Simply because the the the mobile home part is gonna depreciate fast.

Right. And there hasn't like, we're we're not needing to go into the weeds on this, but as it happens, you know, there was no maintenance. There's lot of deferred maintenance, right, on this property. Alright. So $50,000.

That's before he goes, how much do I wanna make? What's my yield? He's not he's not even gotten there. He got there. 50,000 is the most I'm going to to risk against this property.

So that's the most he can pay. So if he bought the whole note and he gets for $50,000, he gets 360 of these for $91.85, and he gets one payment of this, $1.47 $5.05 5 at the end of thirty years, what's his yield gonna be? It sounds so incredible to pay $50,000 for a UPB, a bow a note with a balance of $1.47. That's 30¢ 33¢ on the dollar. Right?

And he's still only making not even 12 and a half percent yield on that. Isn't that nuts? Well, it's a family situation. So, basically, this was basically the the borrower, the owner of the property said, well, this is my inheritance, and I know you ain't gonna kick me out, so I'm not gonna pay. So he wasn't paying.

He wasn't even paying the $4.91 85 because he's like, you owe me this. You I'm your heir and beneficiary. You're not gonna foreclose on me. Right? So after five years of this business anyway, they're saying we're sick of him.

You know, all the the family dynamics were messy, and they say, we're gonna sell this note because I know we are not gonna foreclose on it, but someone might. So, basically, I bought it for I did I did this. I did 55,000. But as it was, there wasn't thirty years left. It was already I think he'd paid part of it, but we weren't even going to reclaim past interest that he hadn't paid.

We were just taking it face value going forward. That was part of the agreement with the note seller. Also, said, hey. If this pays off in the next three years, can you bump us an extra 5 or $10 on this? And I go, okay.

That's fair enough because I'd still do alright. Right? If I got a payoff of $1.47 somehow within and I could afford to give an extra $10. Right? So that was the deal.

Hey. If by some miracle, he sells it and goes away. So we just made the deal work for everybody. Turns out, it it ran a while. And and what did it have?

It it paid on seventeen years since it had been going on. So I came in with, I think, thirteen years left to go, so times 12. So I think there was a 156 payments left, and I paid 55. So to get a 156 of these payments at $4.91 85 each, and at the end of a hundred and thirteen years, I was supposed to get this. What was my yield there?

Okay. A lot better. Why? I'm paying just I'm paying more than David said he would just pay. So why is my yield almost 15%, and David's was only 12 and a half?

What made the difference?

The remaining years.

Yep. Because I'm a lot sooner to that balloon payment of $1.47 $5.05 5 than David was assuming we had thirty years to go. So you can see that time value of money that the farther away a payment is due to come in, the the less it's worth.

Is I'm curious. The $1.56, does that include the months that weren't paid?

No. This is when I took it over. It's like this was what he owes me. So my job, I went Oh,

I gotcha.

To, like it was just such a you know, there was no professional servicing. There was no this

Right.

That and the other. It was just like, here's messy. Just see if you can start collecting on it. And so you can imagine someone who feels entitled to the property and hasn't had to pay a penny towards it except for taxes and insurance, and insurance was debatable. Do you how happy do you think they were to get my phone calls?

Yeah. That actually brings up another question. You mentioned insurance. So as soon as you bought it, did you put your own insurance on it?

No. Actually, you know what? I don't remember. But if I had to, I would have placed forced place insurance. But with mobile homes, it's kinda like somewhat debatable.

I know, like, the land value was more than 55,000.

Okay.

You know what I mean? Like, okay. You get insurance on these old mobile homes and, like, what's it really worth? You know, what are they really gonna pay out? It's kinda like, but I I think I must have gotten that going because I know I didn't do forced place insurance, so I must I must have made him get it.

I I just don't remember this point. But Yeah. That's a great question. Very good question. So, anyhow, he feels entitled to the property.

This this was his de facto, like, inheritance in his mind. Right? And nobody's gonna foreclose on me anyway. So I say, I get this. And keep in mind, I had to deal with so I'm basically front running in a very awkward situation for for this family.

So they still have a remainder interest potentially, right, if it would have paid out in a certain period of time. But that's very common where people are like, this is sticky. This is messy. I can't be the one to to be the bad guy in this. And so in situations like this, okay, I'm gonna be the bad guy.

But I'm fronting for the people in the back who are still, you know, have something to get out of it, but nobody's the wiser. Right? The borrower doesn't know that I have a private agreement to to give the note seller more or remainder interest or something like that. So it's it's a very good use case in general just to think of, like, why take a ginormous a ginormous discount on something if you can pay someone or partner with someone like me or other people you may know to say, hey. You know?

I've I've even said with some situations that were nonperforming, hey. I'll just buy the next two years worth of payments, and then all that remainder interests is yours, but I'll be the one to do the the dirty work, so to speak. Right? I think we talked about this probably just two times two times ago or something. But anyhow so I'm getting on a plane, and I remember how he's so angry.

You can't, you know, you can't buy this note because it's nonperforming, you know what? This property isn't even worth it. And I go, okay. Anyway, so we we had these contortions, and then he got a letter in the mail, and then he decided it was worth paying the $4.04 $91.85. So that went along and went along and went along, and I think so that must have been it it if that was $20.16 ish, I wanna say this paid off in 2022.

So my yield was a lot better than that. Right? So I only had to wait what would that have been? Help me with the math real fast, guys. If this is thirteen years if this is thirteen years so it only went six six years.

So 72 payments. Okay. So it was about six years of payments somewhere like this that I got 72 payments of this and then one big payment of this. And by then, what had happened? The property was not worth 100.

What was it worth? $21.22? It was it was worth 200 north of 200,000. So now did I have protective equity? Yep.

So the guy couldn't even get me on a short sale. Alright? So my yield turned up to close to 24% on this deal. And that was just Craigslist and being there and having a presence. Oh, here's my website.

Site. You know? It's you know? So it's legitimizing. You look like a real person.

People like to see that you've been around a while, that you're trustworthy. And, ultimately, you can come in and and get these really messy situations that aren't really that messy for a neutral third party but are very awkward for for families and friends and things like that. So that's basically how that worked out. I I remember that I was trying what I was trying to do when I first because I didn't wanna wait thirteen years for all my money. Because even fifteen fifteen was fine, but remember, in in the early times, I'm going, I really am upside down, so I would like to incentivize this guy.

I would like to incentivize him to pay me more. And so at some point, I said, look. I'll drop the I I was gonna do something. I wanna say it was either I'll reduce the principal amount owed If you'll pay if you'll pay something like 1,200 a month, I was I was gonna drop the interest rate and drop the principal. So by the kinda by the end let me see if I did it over ten years, if this makes sense.

I fully amortized it. It might have been something real close to this where I said, look. I'll drop your principal amount. I'll drop your interest rate if you'll pay $1,200 a month for ten years instead, or it might have been a little more. Yeah.

That's probably more like it. Right? If you if you can pay 1,200 a month, right, I'll fully amortize it. You won't have that nasty balloon hanging over your head. And he said, no.

Go stuff it. And I wonder what would I have made if he took that offer if at my 55,000. What would I have made? Well, shoot. Turned out to be about the same, 24% return.

Isn't that interesting? But, anyway, that's just a story from the realm. Any questions, comments, just on this before we move on?

Did you go look at it at all or just

did the saw I drove by. I drove by. Mhmm. I didn't go in. I didn't knock on the door.

Yeah. Yeah. Okay.

He's he's a big man. I did Yeah. And his voice is very gruff.

Yeah. Oh

my goodness. Need to meet you in person. Because

That would be

my fault. In, it was land value.

Yeah.

Right?

Yeah. No. I understand what you're saying. Yeah.

Yeah. I I love that. Yeah. And it's just like in my backyard. So Yeah.

Things that I wouldn't I wouldn't maybe, I don't know, if I would do the exact same thing. There's things I will do in my backyard market that I wouldn't necessarily do halfway across the country.

Yeah.

Anyway and then my son ended up getting right next street over in the same subdivision. I ended up getting an owner finance deal for a mobile online, luckily pre COVID. And so, basically, every he was just one street over on the cul de sac, and so I was like, oh, you can look out your back fence and keep an eye on this property for me. Yeah. I got my son into that with just $2,020,000 down, which he had because he followed my advice.

I got him into a mobile home first, and he he did everything I told him. You're gonna learn you're gonna learn to be an owner, to take care of things, and you if you do everything that I tell you to do, it will work out well for you. And so then he was able to sit sell his mobile home, had appreciated a lot. So his 2,000 he put down and gave to me turned into a 20,000 down payment by the time he sold his mobile home in a park and got into this mobile home on land. And, you know, yes, I helped him, you know, get into it, but he fully qualified himself by being responsible and doing everything I told him to do.

Lucky for him because, you know, his p n I PITI is is half what they could you could rent a one bedroom apartment for right now. It's crazy. Right? Or two two bedroom. But anyway

You gotta give them credit for listening to you.

Yes. Yeah. Like, when does that happen?

I don't know. That must happen after to you? Must happen after eight their teenage years.

Yeah. So he turned he'd he'd scrimped on I gotta hand it to him. He wasn't he he on on his his budget, minimum wage budget, he just he made it he saved up he saved up $8,000 on a minimum wage budget, and living in an apartment sharing it with three guys.

Yeah.

You know? They put up cardboard walls to share the know what I mean? Whatever it took. You know? Stamping or you know?

Fluffing off the the roaches from the plates so he could eat his dinner. You know? I don't know. It's just kinda one of those things, but he did it. You know?

He was on his own.

That's great.

Put together $8,000, and I'm like, dude, that's impressive. So, yeah, put down 2,000 on this mobile home. That was back in the day when I was doing that big project over in on Kunz Lane. For those that are local. I brought a bunch of mobile home old older mobile homes down from Lake Tahoe where they were, shutting down a big park up there, and I filled up a bunch of spaces in a local mobile home park, and I sold one of them to him on terms.

It was a fair price. He got below market interstate, I will tell you that. But, anyway, he he learned to be an owner, and that 2,000 turned into 20,000 owner carry on a on a deal. So that was really great.

So so you bought the mobile homes from that park at Stateline?

They paid me to take them away.

That's what I thought. Yeah. Yeah. So you're did you get them all

or or or just No. No. I wish I had had the pick. There was I was not the first to get the pick of a cream of the crop, but I brought down 16 of them. Okay.

Brought down. They paid me to get them away, and then the park paid me. They reimbursed me for all the moving costs when I was done. Okay. And they didn't charge me any space rent.

I I was wondering who ended up with with some of those.

Yeah. I the the best ones went to somebody else, not me, but I got ones that were some were better than others.

So so somewhere in the back of my memory, Jack Miller was involved in that park at one point in time.

Really?

He had property at Incline, and I remember a conversation at one of his seminars about that park.

Wow, that's really

I don't know if he that that was the time I asked a question, and Jack and I asked some question, and Jack Miller said

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