Sign Alaska Banking IOU Secure

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[Music] hey everybody this is Troy Fuld with Pinnacle Investments and I wanted to just thank you very much for stopping by here at the propely oak Adam II I've been invited here by Darren and Ryan to impart some wisdom with you on you about real estate notes and mortgages now this is an industry that had been a part of for the last 23 years I've done over 15,000 transactions in excess of 1.7 billion dollars in transactional history so I got a few tricks up my sleeve and how this business works and how this industry works now my goal here in the next several how you say sessions is I want to teach you the basics of real estate notes now some of you may be beyond this and some of you may just be learning this and either way that's perfectly okay the goal here is to share with you what I call best practices in using real estate notes to build generational wealth for you your family and your company now one of the things that I often deal with or have to see I guess the pleasure of receiving is on the back side often times people will bring real estate notes to me after they're already done and I often find that there's a lot of mistakes in the real estate notes that were created the mistakes oftentimes affect the credit they oftentimes affect the yield they also oftentimes affect the returns there's challenges legal challenges that have been how to say forgotten or legal challenges that have been brought into the deal that didn't necessarily need to be brought into the deal and these are the kinds of things that we're going to be talking about but more importantly I'm going to spend the next session or the next several sessions anyways to talk with you about what I call best practices and if you put these things into practice in the note business aka if you're wholesaling notes or if you're using notes to buy real estate or if you're using notes to sell real estate's one of the more popular things to do actually it's so popular that it's a 1.7 trillion dollar industry now to give you an idea the entire residential mortgage industry is a ten trillion dollar industry okay so we're about 17% what I would call the government level or the institutional level being 10 trillion we're about 1.7 trillion so we're about 17 percent of all of the they say notes and mortgages that are created in the space now you're gonna hear me talk about a lot of different things but I want to clear up some things as far as the terminology that I like to use because I don't want to confuse anybody at any time when I say the word note or notes as in plural what I'm referencing is the entire transaction okay meaning that every real estate note transaction is a note which outlines the I say the financial agreement then you've got the deed of trust or the mortgage depend upon what state the property is in and that outlines the how you say the additional legal agreement meaning the property condition taxes and things of that nature and that document gets recorded and then you've got the warranty deed which actually transfers title from the seller to the buyer so when I use the word note I'm referencing all of that now another caveat here I want to put in is if I use the word notes or mortgages kind of one in the same to me it's kind of like you know they're between an apple one type of Apple versus an a Fuji apple versus a Honey Crisp Apple there's still an apple but they're different types of apples when I say notes as well we're also gonna be referencing land contracts agreement for deeds contract for deeds and things of that nature so although oftentimes those things are used and we'll get into more granular aspects of those later on down the road in the Academy but for today's video for day's purpose I want to establish the foundation I want to establish a baseline so that everybody understands exactly what I'm referencing that way we don't confuse anybody and we don't leave anybody behind because we don't want to do that at any level so with that being said notes being a tent or the commercial or institutional side of the business is a ten trillion dollar industry but the private seller financing side of the business is a one point seven trillion dollar industry now some people say it's 1.5 some people say it's 1.9 but for all intents and purposes let's just pick 1.7 to pick a happy medium what that means is that there's 1.7 trillion dollars worth of residential real estate okay residential real estate that is sold seller financing now what is seller financing what is a note well seller financing is easily explained as a glorified IOU okay as a glorified IOU I don't know if any of you were in elementary school I'm assuming you all were lord knows I was in an elementary school if I traded a candy but if I gave a candy bar to a buddy of mine he in turn would owe me how do you say 25 cents now I'm really dating myself when I say 25 cents because candy bars ain't 25 cents anymore but he would write me an IOU on his desk and he would give it to me in like the next day he would I would cash my IOU in for my 25 cents and there therein lies the payment of the candy bar notes are the same thing now the great thing about notes in the seller finance model meaning how you say you and me we're not in I'm not an institution you're not an institution meaning we're not a bank we're not Wall Street it's just you and me making an agreement is that when you and I write an IOU we can have it be anything we want it to be which is fantastic because it how you say opens up the door for creativity now the challenge with that is it opens up the door for creativity so it's a double-edged sword right across the board so it's kind of like hmm looking at art you know you and I might go into an art gallery and we walk through it and you like this type of an artist and I like that type of an artist so a.k art is subjective and so is notes but I can honestly say that if we both walked into an art gallery and we saw how do you say a Picasso we might look at that and both appreciate the entire the work that went into creating that Picasso and we'd have a tremendous amount of respect for everything that was done not to mention the Picasso goes up in value which is what you want to have your notes do you want to have them go up in value year in and year out and I'm going to show you how to do that by putting in place what I call best practices across the board so some of the things that I want to start with on best practices number one on the best practice is your interest rate okay on a note okay interest rate on a note you need to keep it between seven to nine percent okay interest rate down payment what I called down payment I would say you need to have at least ten percent down payment from your buyer your terms terms you want ten fifteen twenty or thirty year terms now that will change and I'll come back to that and I'm going to come back to each of these in just a moment and then last but not least credit okay credit you want to have it about six hundred or better credit score now these four ingredients and we they say terms conditions whatever terminology you want to use these four aspects are imperative for creating a good solid note deal now I'm talking about best practices and when I talk about best practices it kind of goes along with like a best practice in driving would be to wear a seat belt that would be a best practice in driving why well I don't plan on getting in and are in an accident and I'm sure you don't plan on getting in an accident either but if something happens outside of our control which can often happen I want to make sure I'm safe and I want to make sure that my loved ones are safe as well now I can choose not to wear a seatbelt and probably won't get in an accident as well so I understand both sides of the argument but what we're talking about here these are the different characteristics that will go into a note which is a legal finding agreement in every single state in the country okay so anytime you enter into a legal binding agreement and everybody signs on it after it's written up and everybody signs on it and it closes it's really hard to unravel that legal binding agreement why because that means everybody else has to come back to the table and how do you say renegotiate or re agree on the terms buyers of homes don't want to come back to the table after they've already purchased a house unless there's a Hollywood e call a massive benefit for them the massive benefit might be a lower interest rate you're not necessarily gonna give them money back and you can't maybe maybe change the terms a little bit but you can't really do anything about their credit so you actually end up taking a loss to do those kinds of things so number one let me see I'm gonna what I'm gonna do is I'm gonna break this down in the next session because I want to stay on track with what I'm thinking here so these are gonna be best practices in your business the key to all of this is when you're marketing a house or your how do you say working on I'm gonna assume that the majority of the audience here are rehabbers or I say seasoned or knew wholesalers whatever that may be the thing that you want to always keep in mind is that when you're marketing your product and you're marketing your properties I would say would be another word is you want to make sure that you're putting out marketing material that attracts the right buyer all the time okay you want to make sure that that buyer that's coming to you is one that can afford your payments and things of that nature and we're going to deep dive into all of that in the next session so right there is your basic understanding of real estate notes real estate notes are glorified IOU it's a huge industry you may be new to the industry you may try to be trying to understand what the industry is which is why I welcome you here to the Academy we're gonna how do you say slowly I say unravel this or unwrap this entire industry for you the next session and therefore by the time you get through the entire Academy on the notes section anyways you're going to have a really good understanding you're also going to have what I would call best practices in place and you're also going to have tools and resources that you can actually use to put notes in as a tool in your real estate investing toolbox so with that being said we'll see you back here on the next session session number two