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Specializing in seller financing, Dawn is a visionary real estate professional who gets families into (or out of) homes and investments in a way that empowers and enriches them, as well as the communities in which they live… with or without banks and regardless of market conditions. Dawn is the antidote to America’s addiction to Wall Street’s financial opium. She makes the powerful, non-bank, strategies usually reserved for sophisticated investors accessible to everyday people, making or saving them thousands and instilling hope as she illuminates hidden opportunities. As a seasoned note investor intimate with seller financing and the secondary market for private mortgage notes, she provides mission-critical expertise that is extremely rare in today’s marketplace. Sellers: know what your note will be worth before you create it. "Landlord Liberation", "Buyers: The Seller is Your Bank" and "Note Investing for Newbies" are key gateway books for those wishing to engage with The Realm. Visit www.NoteQueen.com.
And so I thought, well, I'm just gonna be an investor. I'm doing the note thing, the seller financing, but I wanna connect with real estate agents that maybe can play with me in this space. Right? I'm trying to figure out. I'm in a new place, everything.
Dawn:How am I gonna start playing in this market? So I started talking to realtors, every single one of them. You know, that that doesn't happen here. Seller financing doesn't happen here. Not in this market.
Dawn:Well, over the next few years, I proceeded to buy two personal homes. And in this area, at least a couple of investment properties just in this local area with owner financing and without a realtor because they're a liability unless they have have their lights turned on. Right? You you actually can't see what you don't believe is possible. It's weird like that.
Dawn:Welcome, everybody. This is August 4, the first property and paper live of, this month, and I can't believe how fast the year is going. And I wanna make an announcement. And a lot of you know me already, don@noqueen.com. I started that back in 2008, that that brand or maybe even earlier, 2007.
Dawn:But this is where we talk about owner financing, real estate, and note investing, and those all go together. Right? They all connect together. But most professionals and most people aren't aware of it. And even if they understand the mechanics of seller financing, they almost never know that there is a secondary market for notes, for private notes, the same way that the bank sell their loans, right, up to Fannie and Freddie.
Dawn:There's a private market for these, and lots of professionals, even very sophisticated real estate investors actually don't know that they're they don't put together in their mind a seller financing and note investing. Like, there's this market that goes together. And even if they do know that, unless people buy and sell paper notes, deeds of trust, mortgages for their own portfolio, they really don't know what that note is going to be worth on the secondary market or how to reverse engineer the numbers to optimize the financial outcomes. And tonight, I'm I'm focusing on what I'm calling the landlord liberation method. And, actually, as announcement, I'm going to be shifting there's gonna be one property and paper live per month, and there's gonna be one landlord liberation method because there's a lot of interest and a lot of people that need the very most basic of concepts around this tax exit playbook.
Dawn:Right? It's it's a tax advantage. It's a way to reduce and or defer capital gains so that you can have the best possible chances because people, they're they're just sick. They might be sick and tired of managing their properties, but they're not gonna write a check to the IRS for the third of what they've built. They're just they're they're gonna look at the number.
Dawn:They're gonna go, okay. We'll just grind on another year because there's no other way. We're not gonna sell and take that tax hit. They never hear most people never hear about the installment sale, about selling over time. That's the piece that I just wanna raise awareness.
Dawn:And so, I've been doing a little bit of a a campaign, and there's a lot of interest in this. There's a lot of tired landlords out there that really are looking for a solution. Taxes and insurance are up. Maintenance is up. They're getting older.
Dawn:The wife doesn't want the her husband climbing on the roof anymore, things like that. And and so I've had a few conversations as I've gotten the word out. I invite people to to schedule time with me to talk, and they're kind of like, oh, wow. I never even heard this existed. So I'm gonna share one of those conversations or the results, his situation, and, you know, kind of what we determine.
Dawn:Of course, I am not an accountant as tax adviser or CPA, but there are certain generalities where I can use, basically, AI to say, let's just get close. Right? Let's get an idea. If if this person sold for cash, what would their tax liability be? And if they sold with, let's say, 20% down and use the installment sale, what would their capital gains be?
Dawn:It's my belief, and correct me if I'm wrong, that depreciation recapture, there's pretty much no way of getting around that in the first year of the sale even if you do the installment sale, but it's the capital gains that we're talking about. And I was just starting to say before I announced the recording, and this call is that, you know, when I first moved to Carson City here in Nevada fourteen years ago, I let my license go, because I was a broker in California for a number of years. Just with myself, I didn't have employees. And so I thought, well, I'm just gonna be an investor. I'm doing the note thing, the seller financing, but I wanna connect with real estate agents that maybe can play with me in this space.
Dawn:Right? I'm trying to figure out. I'm in a new place, everything. How am I gonna start playing in this market? So I started talking to realtors, every single one of them.
Dawn:You know, that that doesn't happen here. Cell financing doesn't happen here. Not in this market. Well, over the next few years, I proceeded to buy two personal homes. And in this area, at least a couple of prop investment properties just in this local area with owner financing and without a realtor because they're a liability unless they have have their lights turned on.
Dawn:Right? You you actually can't see what you don't believe is possible. It's weird like that. And me, since I'm a freak and this is my whole world, I see everything as, oh, this is seller financing. This is terms.
Dawn:This is something creative. Right? And so I'm really, like, blown away that most people so because I believe in it, I find it, and I see it. And as an example, I'm getting ready to help a longtime client sell two properties and exchange it, not exchange, but move into another personal home, a a bigger, nicer one in a nicer neighborhood. And, apparently, I I wasn't the one that presented the offer to the seller.
Dawn:It was another agent that he's worked with, has given him a lot of landscaping work. And so she said, okay. Let me she was unsuccessful in getting a listing from the guy, but she, you know, made a buyer broker agreement with my landlord, my landscaper guy and submitted an offer. Well, he rejected it flat without even a counter or anything. And so I was like, hey.
Dawn:You know, they have their their legal arrangement there. I don't really wanna get in the middle of it. But then he told me later, okay. I said, well, what happened? Did you get the you get the property?
Dawn:And he goes, no. And, anyway so come to find out, I just let me let me have his phone number. Right? Let me have his phone number. I'm gonna call him.
Dawn:I'm gonna call the seller. And so we probably talked for an hour this last weekend. And I said, so what's going on? You know, what are you really doing? And you really wanna sell?
Dawn:Because, you know, I'm just curious. I know this guy really wants to buy your property, and he's a good buyer. He's a strong buyer. He you only have one side of commit you only have two and a half percent commission. He's not gonna ask you for repairs.
Dawn:He's not gonna ask you for a credit. He's not gonna ask you for 2% to buy down his loan. Right? I said, it's not he goes, well, I just think I can get more. And I said, are you kidding me?
Dawn:He goes, well, what do you think? I said, when I looked at it, I think you could get 8 or $8.50, somewhere in that range. Well, the other person, she told me I could get 900 to 1,000,000, and so I was offended when they just dared to offer me, you know, 800,000. I go, that's a great net offer. I anyway, so since I wasn't really looking for a commission, we were just having this really frank conversation.
Dawn:I'm, like, hitting ups him upside the head with the two by four going, dude, it is not the selling price. It's what you walk away with. You've got a mortgage on this place. It's vacant. You're not coming back.
Dawn:You tell me you wanna buy, exchange into something for your kids down in San Diego so they can have cheaper rent than they're paying now. So, like, what what is it? And he goes, oh, anyway and I said, well, are you open to the Owner Carry? And he goes, yeah. That was the interesting thing is that when you texted me, I looked up your name, and I found out I found your Note Queen site.
Dawn:And he goes, so you're all about that seller financing. Right? And I go, yeah. I mean, that's kind of the world I the lake I swim in. And he goes, yeah.
Dawn:I was really wondering about that because maybe I'd wanna do that. You know? Because if he can only come up with such and such, maybe I'd be willing to to carry the last 1 or 200,000 or whatever he needs to get me my price on so I was like, here's somebody that you would think, no. He said no to everything. He didn't counter.
Dawn:Nobody asked him, but just because he knows what I'm into. So, like, every person I call, that's fun to me. Anyway, just just an example of please just I'm I'm just trying to create more awareness of that there's options out there. And, actually, if he doesn't do a ten thirty one, he wants to do more of an installment sale with at least part of the funds, or he said, gosh. I'm even willing to leave the loan in place.
Dawn:And provided it's a good loan, that's another option as well. Although I doubt the other agent would probably be comfortable with that. Any questions, comments so far? Okay. No.
Dawn:Alright. So Done. Who's the who's the other agent? Are you saying the one that had it listed? He didn't give her a listing, so she just I think she might she's a property manager, and I'm not sure if, she was managing his property or not.
Dawn:But since he was getting ready to sell, she sent him over to give a bid on the irrigation system. And instead, he goes, well, what if I just buy it from you instead? You know? If my quote's too high for you, just sell me the property instead. I'd be really interested.
Dawn:Has the big work barn garage thing that you know, big big work area, and that would be perfect for him. Park his vehicles, his work vehicles, and all that. But, anyway, she she's the one that's couldn't get the listing from him, and plus she kinda shot herself in the foot because she did what most agents do is they, like they tell someone that they can list their property for more than it's worth just to get the listing. So by the time she brought the offer in at 800 after telling him, oh, if you list with me, I can get you 9 or 900 to a a million. And, like, what's he gonna do?
Dawn:Of course, he's like, oh, you're lowballing me at 800. And I'm going, no. I dude, I think if you gave me a if I was coming to you with the listing, I would I would go between 800 and $5.08 50 for you. That's where I think it's fair. So now she has no contract to anyone except, you know, if he buys anything for the next six to nine months, you know, she's gonna get a commission on it.
Dawn:So but he does she doesn't have any deal with the with the seller. Mark, did you have your hand up?
Mark:Yeah. I did. So real quickly, again, I'm you haven't heard on some things, but a lot of things of what you're talking about, I agree. And so some cases, when the agent says there's an issue, I say, well, what if that you said about the leaving the loan in place. Right?
Mark:How about if they did a lease option initially, but the, agent still got some of the compensation, then the rest would be if it could be because when you're saying leaving the loan in place, you're talking about doing a wrap, you're talking about doing subject two. What are you talking about?
Dawn:Since I would be rooting for him, and I'm not I don't have any agency relationships.
Mark:Right.
Dawn:You know, I'd really try to make it where he's just doing it sub two. Or, you know, what I would like to do is take a small amount of money and wrap it myself. That's what I would like to do just as a third party.
Mark:Yeah. You'd in the middle and wrap it with you in the middle of making the spread. Yeah. That's only
Dawn:but, you know, I I I doubt I don't wanna muddy the waters. I I just want him to get the property that he wants.
Mark:Yeah.
Dawn:But he you know? Yeah. That is a great idea because then the agent is a little but still, if he closes on the property you say, like, close in a year, but the the point is the guy wants most of his cash out for helping his kids buy another property in San Diego, but that's a great that's a great
Mark:When you say most, like, how much we talking there approximately? 200,000 more or
Dawn:what? Yeah. He only has a $200,000 loan, so he's looking to walk away with $600 or so. Because I'm helping him sell sell his other two houses, and he will easily have that.
Mark:Okay. Yeah. Well, it makes a big difference with 600,000 versus 200,000 or 100,000, whatever. Because, of course, my goal is always getting light. Getting light makes
Dawn:Oh, yeah. Lot lots of leverage. You know? They just don't like you know, he's he pays off his properties quickly. He likes a 100% equity, and no more
Mark:I I especially the older you get, the better. I think that's the way to go. Yeah.
Dawn:Yeah. He keeps he keeps just buying more things. He always got a big bank fat bank account ready for any opportunity. You know? So
Mark:Well, there you go. Well, my my argument then to the to the, realtor is, come on. The guy's putting 600,000 down. What are you concerned about? If there's a problem, he'll just pay off the loan.
Dawn:Oh, yeah. It's the realtor's not a problem yet.
Mark:Yeah.
Dawn:Because she's not listing the property. She's representing him as the she has a buyer broker agreement.
Mark:Oh, okay.
Dawn:But, anyway, I don't wanna get I appreciate your comments on that. I really like your thinking on that. I wouldn't have thought of that, honestly. I like putting that in in my tool in the
Mark:I just I've had, for whatever reason, the realtor was more comfortable and even sometimes the seller that we started out with a lease option. I proved myself with the payment history, and then I had built in upon payment of five, six, ten, twelve on time payments, then automatically the paperwork's there with the attorney to have it transition from a lease option to a subject to or a wrap. And that was appealed
Dawn:And and at that point, it's past the the I guess, probably, the buyer broker. I don't think he'd owe a commission at that point, or maybe that would be part of
Mark:the next even built it in that we still paid the commission, but you got a part now and part way.
Dawn:No. Yeah. Yeah. That makes sense. Yeah.
Mark:But, anyway, it's just a thought based on some of what I've done. I'm always learning. I appreciate how like minded you are to how I think. Because Jimmy Jimmy Napier was my main guy, and that was got the guy that got me thinking paper and wait. Wait.
Mark:I can go play both sides, then I can do the debt side and the collateral side and play both sides? And some
Dawn:and and some deals let you do both in the same one. You can do you can make money on the real estate and the note in the transaction.
Mark:And I love that. I love that.
Dawn:Okay. Thanks. That's my favorite. Thank you so much. So, just in case everybody came or people that are listening to this to say, where's the where's the tax the landlord tax exit playbook you promised?
Dawn:So in getting the word out, I've had a few people schedule calls with me, and, one of the first one was a guy named Christopher, and he is in Pennsylvania. And he's like, so how would this really work? So the first thing I'd ask people is, so do you have a CPA where you could run numbers and scenarios with? Okay? And so I asked him that, and then one other person yesterday, both of them said, I have kinda grumpy CPAs.
Dawn:They don't like me asking them questions. They don't like doing any planning, and I'm like, wow. I need to help you know, not only do if if they're gonna list their property across state lines out of Nevada, not only do I need to find them an agent if they wanna do the solar financing, but can and will do their broker will let them do it, and they will work with me as a consultant. I've gotta find that. And I was like, I need to build a list of of tax advisers that can help these people because, oh my gosh, if you can't even do, like, can you give me a scenario of what my tax liability would be with a cash sale versus installment?
Dawn:I mean, that's pretty slim services right now. So then I'm, like, thinking, but when I'm talking to people and they're kinda going, like, so what would the difference be? So I I start explaining how it works, and they're going, wow. That would be cool. So then the one guy says, well and and here's a scenario.
Dawn:I'm just going to read it. So I just had, basically, Claude work this up for me. Right? And and I'm starting to just maybe maybe I'm re reinventing the wheel here, but I'm just like, make me a little Excel spreadsheet so that I can give people a general ish idea of things to go and take to a qualified licensed person. So in his situation here, he had several rentals, and the one that he was brought to me for thinking about is one that he bought for $50,000, and now it's worth 250,000.
Dawn:And the tenant has been asking for years to buy the property from him. But he said, you know, I sold the property last year, and I'm not about to pay those taxes again. So I learned my lesson. But then, you know, you made me curious. So, you know, what could it be?
Dawn:So this is what Claude came up with. If a cash sale, the gain would be 250 less the basis of 50. So 200,000. Okay? And the federal long term capital gains, he was as this the Claude was assuming, 75,000 other income, just an average 15% tax bracket.
Dawn:So the federal tax would be 26,000 and change. The Pennsylvania tax would be 6,000. Total tax at closing, 33,000. Net proceeds, 216,000. If he put that in a 4%, CD or something, that would be about $8,600 a year.
Dawn:And if instead so let's see. 33,000. Instead, if he did a 20 percent down and we reverse engineered it so that, you know, the person could could really, afford it. And, actually, he would even make something like $500 a month more. Right?
Dawn:$500 a month a month more, maybe a little bit maybe $600 a month more than he was collecting in rent. What what that he was netting in rent. Okay? So the payment would still be really great for that tenant slash borrower. Maybe they could even pay a little bit more because they're getting the mortgage write off and all of that.
Dawn:So he's like, wow. You mean I could pay less taxes, and I can get 5 or $600 a month more, and I don't pay property taxes, I don't pay insurance, and I don't get tenant calls or have to have surprise repairs, you know, for big maintenance issues. No roof, no sewer main, no toilets, no water heater, nothing like that. So, anyway, if he were to take 20% down, so $50,000, his total tax at closing would be what would you guess? It's not that that hard to figure out, but it's $3,600.
Dawn:So it's, like, 10%, 12% of the tax out of his pocket. So his net cash at closing would be 46,000. Of course, we're not dealing closing cost commissions and all those sorts of things. But if they just did this deal together, if it sold for cash, you pay $33,000, and you have 216 to put in some other investment. If he took 20% down and carried the rest at 5%, it was just very moderate.
Dawn:Only has to pay 3,600 in taxes, gets the net cash at closing, 46,000. And, of course, you can do something with that. You can pay down debt. You could buy hard assets. You could diversify.
Dawn:And and then what he would get on the interest is a little bit less, 7,400, but the the remaining 160,000 of gain, right, stays deferred in inside the equity inside the house. So, basically, that get that got a little wordy, but, because I'm trying to read through Claude's, all the things. So that's $30,000 not paid to the IRS and earning interest instead. And, of course, a 4% that's just paying you interest only, that's not giving you back any of your principal. Thank you for engaging with my content.
Dawn:If you'd like to hear the rest of the replay, please go over to citizensoftherealm.com and join our free community. If you'd like to participate live, be sure to subscribe at notequeen.com. And if you have a situation where you could use some one on one help, check out notequeendeepdive.com and schedule a private consultation. I guarantee that one hour with me will either make or save you thousands. Take this information and go out there and create financial solutions just one mom and pop to another.
Dawn:See you next time. Take care, everybody.