Industry sign banking new mexico warranty deed fast
hello everyone and welcome to another episode of the forever cash life real-estate podcast where we talk about cash flow how to create it how to manage it and today we're gonna talk about how to service it alright we're gonna talk about Loan Servicing and all in escrow and all those things around that with our guest expert where it's been in this industry for over 35 years all right stay tuned we'll start in just a second welcome to the forever cash life real estate investing podcast with your host jack and michelle Bosh together let's uncover the secrets to building true wealth through real estate and living a Purpose Driven Life alright so we are back right now and first of all I want to well introduce our guests our guests Terry white terry white lives in new mexico has been in the Loan Servicing in the escrow business for how long Terry enough for about 32 well I was in the title business before this so about 32 years and four years in the title business so 36 years so Wow so first of all welcome to the show thank you so terry has been has quite a quite a resume on there he is currently on the you can tell us whether you're on the on any cover are like an association on the board you've been the government or governor of New Mexico has put you different things tell us your story tell us well yeah it's it's a long story because I'm an old guy jack but basically I started the escrow company about thirty two years ago and that for those of you you guys probably know because you're in the in the cash flow business but it's just a servicing mortgage servicing for owner financing so we service about 4,500 to 5,000 loans and then about 15 years ago I started a trust company which we handle strictly handle self-directed IRAs so you might want to talk a little bit about that as we go along because yeah they can buy buy a you know debt in their IRA which is a may be a great investment for them and then the association I'm involved with is the is called Rita the retirement industry trust Association so I'm on the board of that association and that's just an industry association of other trust companies that handle self-directed IRA so I've been served on that board for about six years and then I served on the Mexico Finance Authority board for the state of New Mexico for about six years but I my term ran out in 2016 so I haven't done that for a while all right so you're only doing eight things now instead of Hannah yeah typical entrepreneur right true entrepreneur yes tell me about that same exam over here so tell me about a couple of these things so let's first where do you want to start you want to start about the escrow business sure they get into that and and how does it work tell me tell me a couple of things well how does how does one out as an individual investor get into it is that what you're or how did I get into it tell us what do you guys do you serve as loans so in other words somebody has a loan which actually fits perfectly because obviously we are the land guys we teach Acela financing on land lots of students all over the country - who buy and sell land land and sell it with seller financing so our students are generating hundreds of notes if not thousands of notes a year and you're one of the companies that actually services them absolutely so so yeah you guys already know exactly what we do but basically when your seller is acting as the bank which is basically what they're doing we will service that for them so the buyer of this property will make their monthly payments to Sunwest escrow and we keep track of the principal and interest and do the whatever government reporting is required and then we send the money on to the seller or wherever the seller tells us to do that so we see and this may be what you do or what you what you talk about doing is we see a lot of situations where if someone might go out and buy 10 acres and then divide it into four two and a half acre parcels and and sell those off on owner financing and that's where we step in then we take that owner financing document whether it be a land contract a note mortgage dida trust or here in New Mexico real estate contract and then we service that according to the terms of that agreement wonderful and the nice part about the real estate contract also as it's often referred to a land contract that in several states including New Mexico Arizona Nevada and several other ones probably yes you don't actually do have to do the fork instead you can that the the this contract follow us a different protocol if somebody stops paying right yeah yeah what is that protocol for example in New Mexico well yeah I'm not sure about other states but New Mexico I know very well because I've owned and created lots of contracts so in New Mexico we have a thing called a demand letter so if someone's payment is not made let's say they're payments due on the first and they don't make the payment by closed a business of our company which is five o'clock on the first the the seller on that real estate contract and have a demand letter sent which basically gives the buyer a period of time in which they can cure that demand they can make that monthly payment there's no statutory amount of time but in New Mexico through case law and stuff we've basically determined it has to be at least 30 days so typically the demand letter and what we call the cure default period is typically 30 days so your your buyer once the seller sends that demand letter the buyer has 30 days to cure that default and make the payment if they don't which you know 90% of them do but if they don't then the seller will present to us what's called an affidavit of default basically saying you know we had this contract they didn't make the payment I sent a demand letter and the time ran out and now I want the property back and in New Mexico we hold when a contract is created we hold a warranty deed and a special warranty deed the warranty deed gets released if the buyer fulfills the terms of the contract and they own the property that gives them clear title to the property and if they don't in this demand situation that I just outlined and they present the affidavit we would then release the special warranty deed to the seller they would record that and that gives back to them all interest right and titled that the buyer had so in other words so in other words this is very cool when when when the buyer comes and the seller meets with a buyer whichever way virtually or in person the buyer does not just sign a deed that's not just sign the sale agreement but the buyer also signs a back to the to the seller and the seller signs a deed to the buyer and you guys hold both of those deeds in your files in escrow and depending on what situation occurs the payoff or the default with proof of it you then record one or the other yeah exactly wonderful that's beautiful yeah so it makes that it makes that the we call it a termination not a foreclosure but it makes the termination easy it also makes you know in the event the seller passes away or something before the buyer pays it off we still hold that we still have that warranty deed so once the buyer pays it off regardless of whether the money's going to the heirs or whatever we can give them clear title to that property yes that is beautiful and that's so that's a wonderful way that's that's great and it shows the importance of having somebody professional like you do it doing that part because that's why we tell everyone that we teach like go use a loan servicing company that knows what you're doing in the process so that exactly those things can happen now again state by state is different so they're free wanna as a land flipper or I was prefer or not creator or buyer you want to inform yourself about the differences in these states because if I can just lay out quickly how it works in Arizona in Arizona you actually don't have to do that but the keeping the deed from us would be a good idea just in case if I pass away you still have it but then in court but the foreclosure deed you don't actually have to have that because there's a statutory process that's called a for feature so it's in that in the Arizona supervised status is exactly says depending on how much equity they have gained in the deal already you have to wait a certain time period and then you have to file a document similar to your demand and if you don't pay three weeks later you file a completion of the forfeiture and then you're done and that automatically reverts reverse the ownership back to you so there's no need to file that that special warranty deed but that's how every state is different but the nice part is that's that you're except you show it very beautifully and in my example hopefully - is that that there are states where you don't have to go down the six months judicial for Bossier to $3,000 so the attorneys are whatever the fees may be but there's ways that you can get it done much much faster exactly exactly that's interesting about Arizona I wasn't aware of that so once you file that completion of the process whatever document that is that that makes the title revert back to the original seller exactly right and that's and that's entered in the Arizona revised statute so it's not some policy or somewhere that it's it's actual part of the statutes yeah is that only at the right wording and with the with the exact wording that actually even the letter that you have to send them the exact wording is in a sentence yeah yeah then that's the same way it is here the demand letter and stuff has to be has to be the same the same way so that's that's very interesting that's that's a it's always interesting how they do it different in every state and again like you said I'm sure you have listeners all over the country and it's very important that they take some time and do their own research and make sure they know how it's handled in their in their state now do you now happen the history of these land agreements or these real estate agreements or is it because I I've always tried to figure out kind of like how did they come about this is just something that to keep things easy or I you know I don't know I I mean my dad was in the building business I've been in the real estate around the real estate business all my life and and I know you know I mean the older I get it's like maybe 60 70 years ago my dad was selling properties he was a contractor and he was selling properties and he would carry back a second position contract on a house so in other words you know the buyer would go and get a mortgage but back in those days you had to have 20% down to buy a house and so they would get an 80% mortgage and then he might carry 15% back in a second real estate contract so that's been happening here for for years and years now one thing I was curious about Arizona is does that document only apply to vacant land or does it apply to to a home also in the place of the home but once we get into the home you get into dodd-frank and I am NOT an expert in dodd-frank so I wouldn't know what that of a sudden plays a role in but I would assume that as long as you follow the dodd-frank rules off of income verification and ratios and all this kind of stuff that we as LAN PD let people don't have to deal with you you once you as long as you follow them you could still use the land contract as a matter of fact actually I met an attorney to very adamantly from a well-established law firm who very adamantly made the case that you could use that real estate agreement the land contract for houses and because of that you would actually operate outside of thought Frank in the first place so there seems to be some loopholes but again this is you gotta check with your attorney on there but it's definitely possible to I'm from that part of you it's definitely possible to use it for houses too it's interesting and this whole dodd-frank thing it doesn't it's difficult for anyone to really understand how that applies to what we're doing because you know when they created that legislation in Washington they were only really aware of a conventional type mortgage so you kind of have to almost try to read between the lines to figure out how that's going to apply to an owner financing situation but I think people just need to be careful here in New Mexico you know we feel like that if you do less than three or five a year that you don't fall under the dodd-frank and they and the what is it we're that reg Z and all that stuff but you know if you do more than more than three I think is what we've kind of settled on then you really need to do the truth-in-lending disclosures and all that kind of stuff and we're in the land side of things we have found that our legal advice tells us that we actually outside of thought Frank because dodd-frank refers to everything as dwelling and so anything that is under dodd-frank is it swelling in a land even if you put a tent on there it's not a dwelling yeah so so therefore we don't have to worry about it we can do as far as I know over like a thousand a year and we still wouldn't have to fall under that category yeah very interesting very cool again very good good I'm enjoying this so so now let's talk a little bit about the self-directed IRA how did you get into that and how this does play with one or the other and tell us tell us how this all came well like I said they started the escrow company in 1987 and then about 2000 you know in the 2000s early 2000s I like to say if you could fog up a mirror you could get a mortgage and so a lot of people were out getting mortgages and they were paying off real estate contracts so you know where we used to set up you know we might set up 200 accounts a month and we'd lose 50 you know so we'd net we grow every month during that period of time we set up maybe a hundred accounts a month that we lost 300 accounts a month because everybody was refinancing because it was easy to do and rates were lower so we had to figure out something else to keep my business growing and I had some experience in the trust business I'd started another trust company back in 1995 and so I decided to start a trust company and so that's what we did and we specialized strictly in self-directed IRA so we don't do any traditional type trust business we strictly handle act as custodian for self-directed IRAs and so what a lot of people don't know most people don't know is that a self-directed IRA you can invest in anything but life insurance and collectibles right so that's what we allow we don't deal with a lot of accounts that invest in stocks marketable securities and bonds and mutual funds and stuff that we leave that to the other big brokerage houses but what we specialize in is allowing people to invest their individual retirement accounts in real estate and land in promissory notes in precious metals you know just about anything you can think of excluding life insurance and collectibles people can invest in right that gold I think is limited right yeah certain kinds of gold certain purities and that kind of stuff yeah great so so yeah I mean I think my audience is somewhat familiar with the concept of self-directed IRAs but but in essence perhaps you can just just summarize the basics of it just one more time for the occasional person that for this for whom that is the first time they hear about that okay so so most people you know what we see is most people get their self direct get their IRA first of all every IRA is self-directed it's just a matter of the custodian what the custodian will allow you to invest in so even if you have an IRA at your bank its self-directed in the in the meaning that you can choose what CD you want to buy and you know you can choose to link the term so you direct what you're going to invest in but with companies like mine we allow you to invest in those non-traditional type things so if you were to go to your bank or you're broke you're Charles Schwab or somebody like that and say I want to buy a piece of real estate in my IRA they would say they might say you can't do that they would they would definitely say we don't do that so you would probably say you can't do that it's not allowed to because their people are they don't even know they're actual employees and I've had th
t conversation most them don't even know such a thing like a outside like self-directed IRA in the concept that we talking about it even exists absolutely and they you know they'll say either well that's way too risky you don't want to do that or you can't do it I mean we have CPAs calling Us Weekly saying you know I have a client that wants to do this and I'm telling him that it's illegal you know but he won't listen to me and we have to explain to the CPA know it's not illegal you know look at Internal Revenue Code section 4975 and it explains to you that you can invest in anything other than life insurance and collectibles now the other thing that you're so so we've established that you could take your IRA and invest it in anything so the people that you listen to you they can take their IRAs and invest it in land and turn around your own and buy that land and subdivide it or whatever they decide to do and turn around sell it and all of that money stays inside the IRA and and it grows either tax deferred or tax-free depending on the type of IRA they have and so that's always exciting to people because they say so you mean I can go buy this piece of land for ten thousand subdivide it sell it for twenty five thousand and the fifteen thousand dollars I make is tax-free and and the answer is yes if it's in a Roth account then it's tax-free if it's in a traditional IRA it's going to be tax deferred you don't pay taxes on it until you until you start taking it out the only other thing you have to be weary of is so anything but life insurance of collectibles and then you have to watch who you invest with there are people called disqualified parties and if you invest your IRA with a disqualified party that becomes a prohibited transaction and could cause your IRA to be disallowed and which means you'd have to pay all the taxes and penalties and all that kind of stuff on it so the disqualified parties are yourself so you can't you can't have your IRA buy a piece of land from yourself and you can't and then your family is disqualified so it's interesting to me though the IRS defines family as a sentence and descendants so your parents grandparents kids grandkids your brother your cousin they are not defined as family so you could actually have your IRA do business with those people a quick example of that which was one of my favorite stories is we have a we have a client I've never met her I've talked to her on the phone several times seems like she's an elderly woman you know and I found out this last week when I was in when I was at a read a meeting that elderly now is defined as 55 and older so I don't think I appreciate that very much but anyway this lady's probably in her 70s and her nephew buys and flips houses and so she uses her IRA to lend money to her nephew to buy these houses her nephew pays her a better rate of return than she could get by putting it in the bank maybe 6 8 % and the nephew is getting a better return than he could get from a hard money lender or something so it works out very well for both of them but that nephew is not defined as a family member according to the IRS so that works fine yes wonderful so basically the definition so you set up usually what people do and for example we also what the other thing we do is we invest in large apartment complexes we syndicate them and we have investors invest from their self-directed IRA with us in these apartment complexes as as passive investors so and the what typically happens is they have a job they have an IRA and they can roll over the parts that that they didn't accrue while with that investment will if that employer so if they're five years ago switch from one employer to another and that 15 years prior worked for another employer all that money that they rolled over from there to the new guy they can use that and push that over into a self-directed IRA and then start investing in different deals with that start using it for fuel and deals start using that to invest in passively you let's say in an apartment deal etc etc and that's usually the explanation we given and as you said when they call Charles Schwab and Vanguard and the sizzling they always get like you have to fight quite a fight to to get access to their money because obviously they don't want to give it up exactly and that takes but it can usually happen I mean you could set up an account and get it funded with us and typically about two weeks what usually happens is people call us and they they got a deal that they have to get done yesterday and so it's it never works you need to your listeners if they decide to do something like this they need to plan I would say conserve you know give themselves enough time and maybe plan a month that it's gonna take to get the money rolled over what you described from the 401k is called a direct rollover and so that's gonna take you know that could take two or three weeks to get the money from the existing 401k rolled over into the new custodian I would also encourage your listeners to do their due diligence about the custodian that they're going to use on every custodian charges a fee for our service we have to because we don't earn any commissions or anything on the transactions like like a bank or a brokerage house does so we charge a fee for service so they need to look and determine number one if the custodian they're looking at will allow them to invest in whatever they wanting to invest in let's say real estate at this point time then they want to look at how the fees are charged and and find the custodian that they can work with that that have the most advantageous fees for them some custodians charge a fee per asset that you have in it some charge more for real estate purchases so they just have to do some research and figure out which is the best one for them all right the second and so now having said that like what typically what what fee structure do you have well our fee structure is very basic I mean we charge 50 dollars to set up the account and we charge 275 dollars a year regardless of the number of assets you have in your account or the size of those assets now the only other additional fee well there's probably two additional fees one would be we charge you a $10 check-writing fee every time we need to write a check out of your account you'd request a check for something and then if there are fees like if you want to have your money wired to someone then we'll just pass on to you whatever the bank I think it's $25 the bank charges us for a wire so we've has on third party fees you charge any transaction fees that we did well the $10 is the only transaction fee but that's only for outgoing checks if you let's say you have one of these apartment deals and they pay you monthly or quarterly dividends we don't charge for the money coming in to your account what do you charge for the if they make the decision to use to invest let's say $100,000 with with us or somebody else and you help them because obviously you're automatically your signature goes on there because the way for the listeners for the way this this works is that it's almost like you have your money it's your money but it's it's kind of like the custodian you hear Terry is in charge not of investing the money but it is taking your instructions on what to do with the money otherwise it just sits there if you don't tell them what to do right and and and and if there's like subscription documents in many cases the actual custodian needs to sign description or cosign them with the actual investor so that because it's it's like it's almost like a different it's not almost it is a different entity that you own but that somebody else kind of writes the chainage or they manages for you yeah so therefore some some companies charge and quite a few actually charge a fee for every investment placement so if they say we're gonna invest $100,000 because they have to review the paperwork and there's work and labor involved they also charge a fee for that yeah well so so let's say you moved over a half a million dollars into your IRA with us so at that point in time the account is set up and it's and it's set up as Sunwest trust as custodian for Terry White's IRA so Sunwest actually holds idle to the asset in this case cash for the benefit of the individual IRA account owner right now then you direct us to invest a hundred thousand dollars with you we would we would take a hundred thousand a hundred thousand and ten dollars out of your account and make that hundred thousand dollar investment now if there are documents and there will be documents that we need to sign as oh as the owner of that asset Sunwest trust as custodian for the the IRA we don't charge anything for signing those documents so if they're buying there's quite a few companies that actually do charge so that's a really good right there competitive benefit did you guys have well the one thing you know what we try to do and I've looked at some of my competitors fee schedules and I'm in this business I've been in this particular business for twenty years and I can't figure out what my fee would be after a year with with these other companies with Sunwest you go and you'll know that you're gonna get a bill from us next year on your anniversary date for two hundred seventy-five bucks period that's it and as you make transactions we're gonna take ten dollars when we cut checks or or you know are then we're gonna take twenty five dollars if we send a wire that's it but at the end of every year you're gonna get one bill from us for two hundred seventy-five bucks and that's if you have ten thousand dollars in your account with one investment or you have a million dollars in your account with five investments it doesn't matter if all that is really good I have to say I mean happy with having been faced with all of custodians when when investors bringing money to us that is one of the better offers that I've seen so what is the company name so how can be Sunwest trust we are Sunwest trust our website the website is Sunwest trust calm okay and if people are interested at Sunwest IRA on youtube we have I think I have about 235 videos or something like that they talked about various aspects a lot of them talk directly about real estate and they're just you know five to seven minutes long doesn't take a lot of time and you can you can really get a lot of information I also offer a free book if anyone's interested they can go to our website at Sunwest trust calm and either get the e-book or they can fill out a request form and we'll mail them a physical book a lot of phone all right well that's really good so thank you very much I enjoyed our conversation about no it's perhaps the last question about now its betrayal trying back going back to that one what do you typically seize the number one mistake people do with four days seven-day or in that note generating business where before they said or as they send you the notes for our mistakes in the paperwork or just any kind of mistakes have you dealt with lots of sellers there being a bank yeah you know that's a great question because the the problem answering that question is every every single note is unique you know because people come up with something different in every one I think the most important thing is to make sure that the and again I don't know how it works in Arizona but some of the problems we run into here is the buyer doesn't realize that they're responsible for the taxes for the property taxes and they don't realize that we don't you know we don't know what the property taxes are until they bring us a bill and so they have to bring us the property tax bill so then we can pay it if we're if we're holding for taxes on land there wouldn't be insurance necessarily but if we're if we're s growing money for the taxes we have to have the bill the other thing is I think is from a buyers point of view in Arizona and New Mexico the buyers need to understand that they could lose that property pretty quickly if they're not making their payments on time and so sometimes people misunderstand that they also misunderstand if there's a grace period from the time the payment's due until the late charge kicks in sometimes here in New Mexico they think that that means a demand letter can't go out until that grace period kicks in but that's not the case if your payment's due on the first it's doing the first regardless of whether you don't have a late fee until the 15th or something a seller can send a demand letter any day after the first and start that cure default period okay wonderful yeah that's some good points I want to perhaps add one from the sellers point of view the biggest mistakes we have made is not asking for enough down payment because particularly in the land side the foreclosure rate shoots up like crazy if you are below a certain dollar amount which again are in our lower rate five ten twenty thirty thousand dollar kind of love it's like if you below that let's say definitely below the thousand dollars is like a mistake because you'll get half of the like no not half but 25% ultimately don't pay if you let them do a very minimal downpayment and obviously that goes up as the price goes up but that's one of the things that I love sellers to rom so whatever well and as a as a I buy debt all the time that's how I actually got in this business back in 85 I bought a real estate contract forms I bought the sellers interest in a real estate contract and you know I typically won't even look at a real estate contract to purchase unless there's 10% down and those are typically on on homes not just on vacant land yeah I think that's a great point is you know if people don't have skin in the game as they say it's easy for them to walk away and especially if it's just vacant land you know they they can walk yeah if it's a house that they're living in it's a little more difficult and they're a little more diligent about making their payments but if it's just land that they hope to build on one of these days or they hoped would go up in value or something it's easy the less money they have in it the easier it is for them to walk away absolutely well with that thank you very much enjoyed that thank you very much Terry thanks for being on the show and with that that concludes another episode off the forever cash real estate market forever cash live sorry I can't sprout the same the name of my own podcast anymore the four-hour cash life real estate podcast if you create cash flow and you use the proper resources like Terry's Loan Servicing company you brah you can use Orcs office the custodian account the trust account that you can use to invest in in land deals like that not only can you create you can you create cash flow that lasts for a long time you also can build up your retirement nest egg and therefore be have a much much better chance to be one of those currently only 4% of the population that can retire in style so with that thank you very much if you enjoyed this give us a 5-star rating on toons if you're watching the YouTube give us a thumbs up share it with your friends and so we can share this message with more people thank you very much bye bye enjoy this episode then make sure you like subscribe and post your comments and questions below the video we're looking forward to hearing from you
