Note Buying Workshop

Scott Carson’s ½ Day

What’s the Opportunity?• Nine Million Homes Underwater• Seven Plus Million Borrowers In Default• 95% of Inventory is Below $175,000 in Value• Defaults Averaging 18+ Months• 85% HAMP/HAFA Failing or Failed• 3-5-10 Year Time Frame

Where To Find These Deals• Banks• Hedge Funds• Servicing Companies• Auction Websites• Mortgage Bankers• Private Sellers

What Do I Do With These?

6 Different Exit Strategies1. Wholesale The Note2. Modify The Loan3. Loan Assumption4. Short Sale5. Deed In Lieu/Cash For Keys6. Foreclosure

Wholesaling Notes

Wholesale PoolsWholesale Individual AssetsFlat FeePercentageWhat the Deal Can Hold

Modifying The LoanReduce PrincipleReduce Interest RateForgive Past Due PaymentsLoan DefermentSome Down PaymentAdjust Rate

Hardest Hit Funds• 18 States + DC• State Incentivized Loan Mods• 24 Months of Payments• Some Past & Future Payments• $1,000 Avg Monthly Payments• Home Owner Must Qualify• Lender Must Forgive 25% of UPB

HHF Example• Borrower Owes $125K• Home Now Worth $60K• Investor Buys NPN For $20K• Borrower Signs Up for HHF• State Gives Investor (Bank) $24K • Bank Now Has Modified Loan + $24K

FHA 10-23 Loan• After Loan Mod, FHA Refinance Program• Borrower Must have 520 Fico• Borrower Must Make 3 Ledgered Payments• FHA will Refinance 97.5% of FMV of Property• Investor/Bank Gets Refinanced Out After 90 Days• Can Combine it With HHF

HHF + FHA 10-23• HHF Pays Bank $24K• Bank Has Modified Loan on $60K Property• Borrower Makes 3 Payments ($450 month)• FHA 10-23 Refinances Investor Out After 3 Months at

97.5% FMV• How Much Did Investor Make?

•$24,000 + $1,350 + $58,500=

•$83,850 = 419% ROI

Loan Assumptions

Swapping One Borrower For Another

Short Sale

You Buy Note And Become BankBorrower Lists Or Has Listed Home You Determine the “Short”House Is Sold Below UPBBut Above What You Paid For Note

Short Sale ExampleAustin Home Case StudyBank Was Owed $195K UPBHome Worth $150KPurchased NPN at $75KBank Approved Sale at $150KBank Netted on Hud-1 $135K

$60K Profits In 30 DaysWe Call This Short Papering 9016 Collinfield

Deed In Lieu/Cash For Keys• Borrower Gives Home Back To Bank• Bank Gives Borrower Cash To Walk Away• Debt is Forgiven• Home Becomes REO• Consent To Judgment if 2nd Lien In Place• Bank (Investor) can Sell, Rent, or Owner Finance • Borrower Walks “Scott” Free to Start Over• No Judgment/Late Pays/Credit Flaws

Foreclosure• Last Option for Investor• Can Ruin Credit for 7 Yrs vs 2 Yrs • Judicial vs Non Judicial States• 21 Days to 36 Months• Occupied Vs Vacant Property• $750 - $5000 to Foreclose• Can Still Sell Property at Auction

How Do I Find Funding?

You Need Cash!Private InvestorsIRA’sLines of CreditSome Funds Will Finance

Ways To Raise Private Money• Investment Clubs•Meetup.com• Self Direct IRA Club/Events• County Records For IRA Investors• Social Media/Crowdfunding• BiggerPockets.com

Social Media• Linked IN• Facebook•Google+• YouTube/Vimeo• Pinterest

Free Websites• BatchGeo.com• Postlets.com• ActiveRain.com•Meetup.com• REIClub.com

Questions

Why I Started Teaching

Anaheim Workshop• August 7-10th

•Hilton Anaheim Convention Center• 4 Days of Content-No PITCHES•Meet Hedge Fund Managers• 230+ Page Manual and Contracts• Build a “Real” Real Estate Business

Anaheim Workshop• 2 For 1• Includes Home Study Course• 30 Day Fast Start Program• Start Looking at Deals NOW!!!

•$799