How You Can create a Passive, Full-Time Income in 90 Days or Less by Investing in Real Estate Notes

Eddie Speed - NoteSchool

Presented by Eddie Speed

Ten Thousand Dollars

This is packet of one hundred $100 bills, it is less than 1/2" thick and contains $10,000.

One Million Dollars

This little pile is $1 million dollars,100 packets of $10,000. You could still carry it.

One Hundred Million Dollars

$100,000,000 is a little more respectable. It fits neatly on a standard pallet.

One Billion Dollars

$1,000,000,000 fits on 10 pallets.

One Trillion Dollars

$1,000,000,000,000 – notice those pallets are double stacked…

We Are in an Unprecedented Time in our Financial History• The perfect financial storm

• Banks and lending institutions are selling off real estate notes at HUGE discounts

• Opportunity for an individual to buy these notes and use them to create a full time income, very fast

• There is a huge availability of money in the marketplace that can be used to purchase these loans

What This Presentation is All About

• Taking advantage of this opportunity and buy real estate notes at huge discounts

• Creating a passive income with real estate notes

• For land lords who are tired of dealing with their properties (“tenants and toilets”)

• For anyone who is looking for a better investment with their money than the stock market or bank CDs

• Those looking to build a long lasting successful business

Who This Is Not For

• Not the “opportunity seeker”

• Not someone who wants to “get rich quick”

• Not for anyone who is looking to take advantage of anyone else

• Not for anyone looking for“business opportunity” (biz-op)

The Good News

• Following these methods, you CAN build a passive, full-time income in your spare time

• No need to be a financial genius or have any special education

• Only comes down to 4 simple steps

• No need to have lots of money to be successful

• If you do have money, I can show you how to really ramp up your business

Before We Go Any FurtherRegulation dictates that I need to

address a few things, and I’m happy to comply

• My results are NOT typical

• I am not implying that you or anyone will make money with this information – I don’t know your situation, so it would be impossible for me to really know what is possible for you

Before We Go Any Further

• - My Students’ results are not typical

• Unfortunately, most people that try any “how-to” information, never make any money…. sad, but true.

• All businesses entail risk

• I am merely showing you what is possible in this business and what is working TODAY for me and my students.

By the End, You Will…

• Know what a note is, and understand why you can get them at such deep discounts

• Know how to build a large passive income investing in notes

• See why owning a note is MUCH easier than owning a property

• Know where to find these notes and how to close on them• Know what your next steps will be• Know how you can get my help to close your next deal

History…Bank Early 2000’s vs.

Bank Lending Dept

Loss Mitigation

Dept

With Today’s Mortgage Environment

Mortgage Lenders

$ Trillions in under-performing status

HistoryTODAY

Loss Mitigation Dept

Bank Lending Dept

Note

Note

Note Note

Note Note

Inventory

Toxic Assets

The State of the Market

• The Government’s “big check” came in to try and fix the problem

• Banks have an overwhelming amount of bad loans on their books

We Didn’t Cause This problem, but We Can Help Fix it!

• Wall Street’s terrible lending practices got us in trouble

The State of the Market

• “Bank of America, the country’s number 1 mortgage lender, battling to fix or get out of more than 1 MILLION past due home loans, put at least $1 BILLION of toxic paper on the block” Source: New York Post

• U.S. Treasury Secretary Timothy Geithner said that the help of the private sector was critical to get toxic assets off banks balance sheets and help resolve a credit crisis.

That’s Where You Come In!!

Buying Notes and “Becoming the Bank” May Sound Complicated…But it’s Not

• If you’ve ever bought a Certificate of Deposit from a bank, you became a lender

• If you’ve ever purchased municipal bonds, you were a lender then too

• If you’ve ever made a deposit in a bank – You became a lender

• When you “Become the Bank”, it isn’t complicated. You don’t necessarily need to manage the loan, you just sit back and collect checks

• It’s very simple and VERY passive!

Why the Opportunity? Traditional Lenders

Toxic AssetsAnxious Money

2011: 38%2010: 34%

2010 2011

4.19MM Homes Sold

34% CASH

Approx. 1.4MM

4.26MM Homes Sold

38% CASH

Approx. 1.6MM

In 2 years….

3 Million Homes!

Perfect Financial Storm

This Unique Condition of Supply (Toxic Assets) and Demand (Anxious $) has created the Perfect Financial Storm!

This is the best opportunity I’ve seen in my 32+ years in this business!

If We Haven’t Met Before…• My name is Eddie Speed, I’m the

founder of NoteSchool• I originally got started in the note

business in 1980• When I started I was just a young kid• I had no money or no special education

(just a degree in Ranch Management)• I had a mentor that was a pioneer in the

industry

Fast Forward 32 Years

• I am honored to say I am one of the leaders in this great industry

• I was the 2006 recipient of the Note Industry Achievement Award

• I am a husband and father of three great children

• I’ve closed well over 30,000 note deals

Buyer

Ownership Deed

Seller

Mortgage NOTE

Mortgage Lender

What’s a Note ?

Mortgage Note Debt Instrument:• Interest Rate• Monthly Pmt• Pays over time

Note Owner gets

Jan 2012 Dec 2042

$Pmt

$Pmt

$Pmt

$Pmt

$Pmt

$Pmt

$Pmt

$Pmt

$Pmt

$Pmt

$Pmt

$Pmt

3O yrs of Pmts

CASH FLOW

Buyer’s Equity

Mgt Co

Down Payment $10,000

Mtg Lender Extends

Note

$90,000

Sells for $100,000

Down Payment $10,000

Mtg Lender Extends

Note

$90,000

Sale Price $100,000

Mortgage

Note

Buyer’s Equity

90,000 @ 10% Pmt / $790 30 yr amortized

Straight Amortized

Jan 2012 Dec 2042

$790

$790

$790

$790

$790

$790

$790

$790

$790

$790

$790

$790

360 pmts

TIMELINE

Buyer

Mortgage Lender

Buyer Stops Paying!

#1 Industry Myth:Note Investing Too Complicated & For Big Companies Only

• It’s true that huge companies and Billionaires like Warren Buffet are actively buying up discounted loans right now because they understand the opportunity, but that doesn’t mean that there isn’t room for the solo-investor to buy up some deals

• Pretty soon, I’m going to show you how simple this industry can be, but for now, let me introduce you to one of my extraordinary students named Justin who is closing deals all over the country from his home in Ohio…by himself

JustinLives in Ohio

Case Study

Why Quick and Easy?

Nice Little Property• Loan was a charged off• Last Pmt made over 2 yrs ago

Non-Performing Note Case Study

Property: Near Columbus, OH

Non-Performing Note Case Study

Quick Sale BPO

Price Paid for Note

Delq Taxes

After Repaired Value

$29,000 $7,500.00 $2,161 $60,000 to $80,000

Loan Details – 1st Mortgage

Seller’s Story: •Hedge Fund buys large pools – then they re-sell them•Willing to sale for non-paying Notes a huge discount of ‘quick sale’ BPO value

Reta

il Val

ue $

60,0

00

$12,000 Price for Note

Cost: Note + Expenses

Investment = 20% Investment to Value ratio

Case Study Profit

Cost of Note + Expenses after . . . : $12,000

“Quick Sale” Profit: $17,000

$7,500 / Note + back taxes & foreclosure $4,500 = $12,000

The Simple 4-Step Process to Closing any Note Deal

Find Deals$

Who Sells “Toxic” Loans? Lenders

Banks Credit Unions Mortgage Originators

Mortgage Service Companies Auctions On-line listings Hedge Funds

Who Sells Loans?

Who Sells Loans?

Set UpLinkedInAccount

Who Sells Loans?

Join LinkedInGroups

The Go-To Person! What’s important? Who you know What you know Timing Credibility

Must have . . . zero percent chance of embarrassment

Setting Up Your BusinessSound like a 10 story company

Have a “Store Front” name Colonial Funding Group LLC

Look like you’re in Business Email 800 #s Business Bio / Resume

Presenting Yourself

Business Bio• Similar to a resume but . . .

•Relevant to finance or real estate• 3 business references or

testimonials

Sell yourself: only in the dictionary does business come before marketing!

$Price Deals

What Determines Note’s Value?

Other factors :

#3 Buyer’s Equity

#1 Buyer

#6 Paperwork#4 Terms of the Note (interest rate, term/time)

#5 Seasoning

#2 Collateral


Buyer

Credit score• Sub 625• 675 ++

Loan ApplicationVerifications• Income• Employment • Down Payment


“Unique” Property• Rehabber Houses• Mobile Home & Land• Land Only


Mainstream real estate vs just unique


Commercial / Industrial


• Down PaymentLTV and CLTV• Max LTV = 80% - 85%

• Cash down = buyers credit• 625++ = 5%• sub 625 = 15% - 25%

$100

,000

Sal

eTerms of Sale

$100,000 Sales Price $5,000 Down Pmt $95,000 Seller 1st

5% down pmt

95% 1st lien Note

Buyer’s Equity

Buyer’s Debt


Interest rate• rate less 7.5% . . . discount

Term • Max 360 amortization• Balloon = 5 yrs

• Terms of the Note• Interest rate• Term / time


1 to 12 months• 625 credit • Rehabbers ??

12 months or more• sub 625• Rehabbers

• Seasoning

Esta

blish

As-

IS V

alue

Discount

Price NoteCost of Note

Potential Profit

Cost of Foreclosure What Expense ?

What % ?

$100

,000

Val

ueProperty Value = $100,000 - - Pay for Note = $30,000

Discount Equals Equity

Price Paid for Delinquent Note

Buying Non-performing Notes

Cost of Note

Potential Profit

Source Money$

Close Deals &

Profit$

Four Ways to Build Wealth

• Property Flipping ($ Today)

• Buy and Hold / Landlord ($ Flow)

• Note Flipping ($ Today)

• Own the Note ($ Flow)

Workout Options The payor’s story Sell delinquent loan Modify loan with customer Short sell

Tom and DebbyLive in Wisconsin

Re-Performing Case Study

Very Nice Property

Comments: Husband lost income but reinstated

Property: Near Houston Tx

Loan was behind but payor started paying again

Re-Performing Case Study

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2008 NA NA 0% 200

%100% 100% 100% 0% 100% 100% 0% 100%

2009 100% 0% 0% 0% 0% 0% 200% 117% 0% 140% 140% 100

2010 100% 100% 100%

Payment History of Borrower

Payment History: Owner had gotten behind due loss of job.

Story…

Hedge Fund bought huge group of loans – modified this loan & they started paying again

Case Study

Student bought Note $247,000Flipped to Investor $265,000Student Made Profit: $18,000

Hedge Fund buys pools of 100’s millions in

“Toxic Notes” then re-sells