When Eviction is a Good Thing: Helping Kids and Making Money with Jamie Bateman
Episode Details
Transcript
Hey, real estate investors! Ever been told that mortgage note investing will bring you easy, quick returns? But instead, you've found yourself dealing with unexpected challenges and struggling to see results? If you've felt the frustration of not getting the returns you expected, you're not alone. Let's uncover a better way to navigate mortgage note investing and achieve success without the unnecessary hurdles.
The episode for this week is a case study from our host Jamie Bateman. Jamie reviews this informative case study of an actual win-win-win note deal of his. He recently presented this moving case study on the Be The Bank Broadcast, with fellow investors Justin Bogard, Jay Redding, and Chris Seveney. Stay tuned to the end to find out how you, as a note investor, can positively impact real people. In this case, kids were rescued from an awful environment.
Jamie Bateman, the podcast's host and a seasoned real estate investor, brings practical insights into overcoming obstacles in the industry. Justin Bogard's expertise in mortgage note investing, alongside Jay Redding's strategic real estate acumen, and Chris Seveney's seasoned approach to investments, collectively offer a comprehensive understanding of navigating challenges in real estate. Their case study provides an in-depth exploration of real-life investment scenarios, delivering valuable lessons and strategic considerations for investors seeking to thrive in the real estate market.
"Mortgage note investing can have a fantastic social impact, human impact, changing lives for the better, while we're making money, doing well by doing good." - Jamie Bateman
"Kids were saved from an unsafe environment. Multiple exit strategies. Equity at purchase is key." - Jay Redding
"Not every investment will be smooth sailing. You can't control the borrower. You know, in a lot of... That's why it's like you just got to be okay with, especially with these NPLs." - Justin Bogard
Connect with Justin Bogard
Website: https://www.anbfunds.com/home
LinkedIn: https://www.linkedin.com/in/justin-bogard-64314012b/
Instagram: https://www.instagram.com/americannotebuyers/
Connect with Jay Redding
Website: https://www.jmjrealestateservices.com/
https://cassidyinvestments.com/
LinkedIn: https://www.linkedin.com/in/jayredding/
Connect with Chris Seveney
Website: https://7einvestments.com/
Facebook: https://www.facebook.com/christopher.seveney
https://www.facebook.com/7Einvestments
Instagram: https://www.instagram.com/chriseveney
https://www.instagram.com/chrisseveney
https://www.instagram.com/7einvestments
LinkedIn: https://www.linkedin.com/in/christopherseveney/
Integrity Income Fund:
https://investors.appfolioim.com/labradorlending/investor/submit_interest/5
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Labrador Mentorship:
https://labradorlending.com/investors/active-investors/
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Haven Financial Services:
Learn more: https://jamie.myfinancialhaven.com/
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Purchase Jamie’s Book:https://www.amazon.com/dp/B0CGTWJY1D?ref_=pe_3052080_397514860
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Speaker 0
In this episode of the From Adversity to Abundance podcast, we're gonna do something a little bit different. You're gonna get a chance to hear, a case study that I presented in a group of mortgage note investing experts that we do, monthly. We we have, it's called Be The Bank broadcast with Justin Bogard. And, I was able to present a case study showing how a few years ago through a mortgage note, purchase that we did, an investment that we made, we were able to not only make money, for ourselves, but also make money for our investor as well as rescue, not physically, but we were able to rescue children out of a an awful environment. As soon as we were eventually able to get into the house, child protective services were were instant or immediately called. And so I like to think of this as a win win win. It was a win for us because we made money. It was a win for our investor because they made money, and it was a win for the occupants of the home. So this shows how mortgage note investing can have a a fantastic social impact, human impact, changing lives for the better while we're making money. Doing well by doing good, if you will. So like I said, this is a little bit different, than your typical episode. And, I appreciate Justin Bogard for allowing me to share this on my podcast. And, I think this is this is one you're gonna really, really enjoy. And if you have any questions about mortgage note investing, whether as a passive investor, passive accredited investor, feel free to reach out. We have an integrity income fund, which aims to provide a an eight percent annual preferred return paid monthly. And we also have a mentorship program where you get one on one mentorship with me as well as Shante Duffy or Mark Blunden who are all three of us are experts in the space. So I highly recommend reaching out if you have any interest either as a passive or active mortgage note investor. Thanks, everyone. Enjoy. Speaker 1
Welcome to From Adversity to Abundance, the go to podcast for real estate entrepreneurs seeking not just to thrive, but to conquer with resilience and mental sharpness. Each week, join us as we dive into the compelling world of real estate through the lens of mental fitness, where challenges transform into opportunities. Get ready to transform your mindset and expand your understanding of what it takes to succeed in real estate. Let's explore these stories of triumph and resilience together. Speaker 2
Oh, goodness. I still got some issues with graphics here. Pretend like you didn't see that. Okay. We're back. Who's running this show, man? I don't know. I don't know. Somebody needs to be fired. Speaker 0
If it goes well, it's it's me. It's my case study. Speaker 3
But if Speaker 0
there are issues, Justin's running the show. Just kidding. Speaker 2
In in fairness to Jamie, I took his original case study, and I made some animations. So, Jamie, I'll do my best to kinda Speaker 0
See what happens. Speaker 2
With you as you do this. But, this is Jamie's case study, and I'll let Jamie kind of explain it from here. And I'll try to jump in with the rest of the guys too when we have questions because I'm sure that we will. Speaker 0
Yeah. Fire away. I don't think Chris Chris you're afraid to chime in, aren't you, Chris? Speaker 2
Is this note been was it bought as a performing or a nonperforming asset when you bought it? Speaker 0
It was performing. Yeah. So the the, I think the title was about can foreclosure be a win win win. Basically, Sorry. You know, sometime no. All good. But sometimes note investors get a and lenders get a a bad rap for for closing. You know? Like, we're trying to pick kick people out on the street, and and we're just Yeah. Speaker 2
The big bad bank. Right? We're Speaker 3
just trying Speaker 2
to take houses over. Speaker 0
That's not investors. We don't care about people. It's just all about the dollar. But, Speaker 2
Not true. This is not true. Speaker 0
No. You'll see through this one at least that, foreclosure can be a good thing really all the way around. It's a bit of a sad part of this story too, but but it it does have a, I think, a happy ending. So Speaker 2
I remember looking at this one. So I'm interested to see the story because I I do remember when this is available to purchase. I ended up passing on it. So Really? Yeah. Speaker 0
Well, I bought it a while ago. Well, December twenty nineteen. So Yeah. To answer your question, Justin, it was a performing contract for deed that I bought from someone on this call. Not Jake. Speaker 2
Well, lucky me. Wasn't me. It wasn't me either. Speaker 3
Well, it Speaker 0
was one of my you know, I I got into notes in twenty eighteen, and and I would say so it's probably a year and a half, two years into to notes at this point. So not brand new, but not, you know, I I still had, I hadn't purchased, you know, seventy five, a hundred notes, whatever. So, still had a lot to learn. So I was look I was looking for performing assets at that point only. So that's what this was, and it did have equity. You can you can go ahead. I did a joint venture. We don't focus too much on that in this in this case study presentation, but it was, actually a friend of mine. For those of you looking for partnerships or joint ventures, how whatever you wanna refer to it as, a friend who I've I've known for many years reached out to me because he saw some of the posts I was putting on LinkedIn, and we were we were actually lacrosse buddies back in college. And, so it wasn't some random person who I just took their money and ran. So but but he was the money person. Trusted person, and and, he was the quote, unquote money partner, and I was the operational partner. We're both making decisions together, big decisions, but I'm managing the day to day of the the asset. Speaker 2
Who who got what part of the split? Speaker 0
Well, because it was performing now, would I do this again? Probably not. But, in fact, I don't actually recommend joint ventures on performing assets, but, I got the twenty five. So, Speaker 2
K. Speaker 0
Yeah. So I had no money in the deal. Yeah. That's cool. Purchase terms, you can see them there. Chris ripped me off. No. I'm kidding. Speaker 3
You're a great price. Great price on that. Speaker 2
Now that we have a yield Speaker 0
to see Speaker 2
you call. Let's let's get you buying Speaker 3
a performing loan for thirteen percent yield today. Speaker 0
That's that's that was Speaker 2
That sounds impressive. Speaker 0
Yeah. No. It was it was Speaker 2
I gotta say, I know a couple places. Speaker 0
Yeah. And I think the property value on this slide is actually a little bit of a teaser. I mean, I think we actually initially thought it was higher than that. So, you know, on paper, there was more equity. But there's still plenty of equity in my in my view on this this deal, especially for CFD. Speaker 2
So what is this? A little little house in Michigan? What's it? A three two, three one? Speaker 0
Oh, man. That's a great I'd have to go back and refresh Just a guess. I think think of three two. It wasn't a, you know, a tiny Fifteen hundred. Hundred. Speaker 2
This is probably a old house too, like, four fifties? Speaker 0
Definitely an old house for for sure. Speaker 3
Okay. Speaker 0
And there was actually some acreage to it. But, Speaker 3
Three bed, three baths, eleven hundred square feet. Speaker 2
Thank you. You know, you remember that, or you looked that up? He's got so little. Speaker 3
I I looked that up. K. Well, you're It had big yard. I remember that. Speaker 0
It did have a big yard. Yes. Speaker 2
So what being your first this was your first note, you said? Speaker 0
No. No. It wasn't my first note, but I'd I'd I'd been doing first within the first ten. Speaker 2
What'd you like about it? Speaker 0
There was equity coverage. It was performing. I bought it from someone I trusted, trusted. Speaker 3
Yeah. That's the most transparent. There. Speaker 0
You still I still trust Chris. But, yeah, those were all all things that I liked about it. I mean, it was performing strong yield, strong coupon rate. You can see there Yeah. And and equity on paper. And and I actually did end up having equity. So Speaker 3
yeah. Yeah. Speaker 2
And your ITV is only fifty eight percent, so you got plenty of equity to protect you. Speaker 0
Yeah. And for those we we covered this a little bit with Jay's, case study, but contract for deed, we're not gonna go too far into that, but it's a little bit different than a note in mortgage or note in deed of trust if you're unfamiliar. Some nuances there. And, yeah. So, ultimately, we we were on title, and the borrower, even though they're not technically a borrower, the the buyer is is purchasing the property over time. So this was a contract for Dee. Just wanted to Speaker 2
It's in store. That was Speaker 0
Yep. Alright. So almost a year later, she stops making payments. Actually, there were two people on the on the contract. K. And so we sent a demand letter, you know, three months after that and, starts the for well, forfeiture process. Speaker 2
So was there communication at all with the borrower, or there's no communication? Speaker 0
So, you'll you you can go ahead. We'll we'll we'll get to it because so there was communication, to answer your question. Speaker 2
In in that time period in September of twenty twenty when I stopped making payments, was there communication about it? Speaker 0
There was. Yes. And she kept so what ended up happening was she got hooked on drugs. I mean, we didn't know this at the time, but you'll see some of the evidence and fall out of that. But, she would call up, the servicer and and kind of, you know, give a sob story and and literally cry on the phone. And, I mean, not saying that was fake or anything, but, so there was a an effort on our part to work with her. But, frankly, my inclination you know, a lot of people ask I still get questions like, when should I send the demand letter? It's like immediately. Speaker 3
That's how Speaker 0
you know? I don't wait at all. And but I'm still open to working with with people, but it's when you get a letter from an attorney, usually, that that hopefully, you know, makes you realize it's serious. And then, the whole point is to bring in my view is to bring the borrower to the table so you can have a a a discussion. And we did end up doing, as you see here, a loan modification, and we have the terms, later on here. So before the loan mod right at the point of the loan mod, this is these were the terms there, and then it will load the modification terms. So we forgave quite a bit, you see here. And, so total payoff was over sixty one thousand, and then what we did was raise the principal balance. So this is a little, I guess, tip for newer note investors is to if you can do a modification where you can raise the principal balance, but keep the p and I about the same or lower, not legal advice. I'm not an attorney. But that still should be considered not a new loan, not a refinance. So you should not have to requalify the borrower for their ability to repay. But if I can get her reperforming and now I have a UPB that's higher than what it was last week, so to speak, that adds value to the asset itself. So as as we all know as buyers of notes, the principal balance is a big factor in that. So we were able to get the loan modification executed with a higher principal balance. She's motivated to do it because her monthly payment comes down and her her total payoff comes down considerably. It resets her term, and she's now we're not we're not moving forward with the forfeiture either. So she's there's a lot of reasons why she's motivated to agree to this. Speaker 2
So she wanted to be current, and she needed twenty five dollars of grace per month in her monthly payment. Is that what this solution was? Speaker 0
Now pretty much. He did also put a thousand dollars down, which I guess we don't we don't have on this slide, but, oh, there it is. Speaker 2
It's on there. It is there. Speaker 0
Yeah. Yeah. Go back. Now would I do this exactly the same way again? Maybe not, but this is what we did then. So yeah. Speaker 2
Would you forgive the same would you forgive the eleven thousand again? Speaker 0
It well, it's Speaker 2
it's sort of Knowing what you know now. Exactly. Well, yeah. Knowing what you know now, hindsight is always twenty twenty. Yeah. Speaker 3
I think it would Speaker 0
have ended in this case, it would have ended the way it did regardless. But that's a lot to forgive. Mhmm. To answer your question. Go ahead, Chris. Speaker 3
One thing we've done is because we did this similar and then we kind of shifted a little bit where we defer it to the end of the loan so it's not interest bearing. But we also, in some cases, have said, if you make twelve consecutive payments on time, we'll knock a thousand off or two thousand. So it gives them incentive of, hey. Look. You have in this case, it would have been eighteen thousand dollars sitting out there. Hey. Look. If you make twelve consecutive payments, I'll knock three thousand dollars off. So if you pay for six years, it's wiped or, you know, something to give them some incentive that, hey. Look. I'm literally you know, three thousand dollars a year is two hundred and fifty bucks a month roughly. So I'm paying four hundred to get an extra two fifty knocked off. It's a pretty good score. Mhmm. But if they also go back in default, then that gets kicked back into play. So Yeah. Speaker 0
Yeah. Then I guess still Speaker 2
is legally collectible for you. Speaker 3
Yep. Yeah. Speaker 0
I mean, a lot of people do I never really I'm probably in the minority here, but, never really did the trial payment plan thing, only because I felt like it was so much work with the servicer to get that set up and then do the loan mod. And the way we present loan mods typically is three options. The more they put down in cash, the better their terms are gonna be. And but I just I guess it's also because I'm impatient, and, I just don't like to wait them out. But a lot of people will do a six month or twelve month trial payment plan and then and then do go to the modification. Speaker 3
Depends on the loan too. Like, a CFD in Michigan, there's no reason to do a t trial payment plan than a mod because it's really not hurting you. Where in Ohio, if you had to foreclose, it's a big difference because you're starting all over and it can make caution. Yeah. Speaker 0
And and Michigan's an interesting state. It's we did do a for a forfeiture, but you'll see that the timeline ended up being more like a a foreclosure. Foreclosure. Along the Speaker 2
lines of what Chris suggested or what he's done, the deferral method, I like that as well. And then, you know, what this does is note investors because most servicers charge a little bit more of a premium when it becomes nonperforming, when it gets that sixty, ninety day status. Mhmm. Speaker 0
And the Speaker 2
only way to get that kickback down, your monthly service payment that you owe as a lender is you can do one of these things, and that does help you. So, you know, the deferral I've just done deferral recently. That's why it stuck in my mind is that I went from, you know, paying ninety bucks a month or whatever and went back down to whatever my normal rate was. So the borrower got caught up and, they still owe the payments in the back end when they sell the house. But, yeah. So that helps you as the lender as well. A little bit of Yeah. Full of monthly fees there. Speaker 0
Yeah. So you can see we were trying to work with her. What ended up happening, the neighbors, and I think I got some voice mails, and I don't even remember screenshots from the neighbors. Speaker 3
Because you're on the Speaker 2
deed. I'm on the deed. Right. Speaker 0
Yeah. So so the township ended up contacting me because I'm on the deed. Mhmm. And because the neighbors had reported blight, they also just didn't get along with each other. And I think there are gonna be some pictures some extra pictures here on the the Blight once we get there. But, that's You you tell me when Speaker 2
to switch over to those. I have to switch to a different screen Speaker 0
to do that. Yeah. So she had as you can see possibly see here, there's, essentially, a mattress vomiting RV. And I say she, there were two people on the, on on the land contract. So, male and a female couple, presumably, but he'd, I think, left the picture. And so the neighbors reported this situation that they obviously didn't like. And, so one thing to say well, we we can move forward, Justin. I think I'll mention it Speaker 2
in a bit. I'm I Speaker 3
was What was the fetish with mattresses, did you know? Speaker 0
I have no idea. I What Speaker 2
did you say, Chris? Speaker 3
What was the fetish with mattresses if there were any Speaker 2
I thought you're gonna say who did anybody rip off the tag that they Speaker 3
weren't supposed to rip off? Speaker 0
I don't think that was the worst thing going on here. But, but, yeah, it's certain things. It's like certain certain situations I don't wanna know. I don't I don't ask questions. So I guess there was a demand letter sent, you know, in reference to, Speaker 2
So this this fifth wheel is on the site on the land? Speaker 0
Yeah. Yeah. Exactly. Correct. And so I guess this blight and then, again, this was several years ago. So some of it, I'm trying to remember, but I guess this blight gave us an option to essentially, you know, threaten her with eviction if she didn't clean it up. And, again, I'm gonna get fined by the township. Mhmm. So it's on me Speaker 2
to deal with. Likelihood of her getting it out of there is next to nothing. So Speaker 0
So eventually, she did, but it took quite, that you can see, you know, however many months that is, six months, five months. So it it happened over time. Actually, do you have that link, Justin? Let's just Speaker 2
I did. You wanna go to the slides right now? Speaker 0
The the Blight slides if you have that. Speaker 3
While you're going to those, I'll mention we have a loan in bankruptcy right now that is the same thing where they're getting blight because they have all this stuff in the front yard. So the city is trying to, basically fine us on the property because it was a CFD, and we are in bankruptcy. We had to get, like, motion from relief to actually go get the yard cleaned. And it's like, but what does that get us? Because we need, like, court permission to go clean the yard, but, like, well, can we get relief? Because he's not paying for it. And they're like, no. We're just giving you permission to go clean it. And I'm like, that that does mean no good. Speaker 2
And can you see the pictures that I'm going through? Yep. Speaker 0
Yeah. Speaker 3
Sorry. Just Speaker 0
no. That's good. Yeah. So this was just what some of what was in the yard, and then there was a violation. So, Speaker 2
In what is this? Speaker 0
What was nice about the this situation and this really depends on the on the person you are dealing with in the township. Speaker 2
Mhmm. Speaker 0
But this guy and I ended up kind of bonding a little bit, and and he was on our on our side. So, so now I've got kind of boots on the ground where he'll drive by and check out the situation. And as opposed to the township harassing me and and, sort of being against me, I showed him that I wanted it cleaned up just as much as anyone else did. And so I had an ally with the township and an ally with the neighbors as well. Speaker 3
How much did it cost to clean up? Speaker 0
I don't know. She got that she got this removed herself. Oh, Speaker 2
this was her? Okay. Speaker 3
Oh, wow. Okay. Speaker 2
That's impressive. Speaker 3
That's impressive. Speaker 0
She got that done. I don't know. Speaker 3
So she did that and you still Speaker 0
Well, good. Speaker 3
We Go ahead. Speaker 0
She didn't she didn't end up performing, so we can Yeah. Move forward to the next next bullet. Next slide. Yeah. So she I think she made one or two payments after the modification. I don't know exactly how many, but, we ended up moving forward with forfeiture. Took a long, long time, and I ended up you can go ahead, Justin, because I'm not sure Speaker 3
of the Speaker 0
exact Was Speaker 3
it due to COVID, or was it just overall? Because this is during Speaker 0
COVID during COVID times, and we we had a Zoom call. And that where it says the the boyfriend, attended court and, just should be borrower's, like, apostrophe. Possessive borrower's boyfriend. Anyway Okay. Speaker 2
Hang up, Jamie. Come on. Keep going. Speaker 0
Well, you're the wordsmith, the Deep Creek Lake guy. But so, Speaker 3
touche. Okay. Speaker 0
But the point was that I thought she was summoned they were both summoned to court, and we have this like you said, Chris, it was during COVID. So Zoom, you know, court hearing, I was sitting right where I'm sitting right now. And, the judge is there, and he shows up, this this guy in his truck. And, basically, he was just scared and just wanted to make sure he wasn't going to jail is what it boiled down to. I think he'd already moved out of the house. He wanted nothing to do with it, and he was like, no. I'm good. And she she didn't show up at all, so that didn't help her cause. So, the judge, a week after that court hearing, signed the judgment, and then they have ninety days to, you know, redeem. So the the ninety days really ends up, it's one of those things that's there to protect the borrower, to protect the occupant. But in this case, we're gonna go through some of the pictures. And, unfortunately, her kids were living in this really absolutely disgusting environment. And, you know, we're not able legally to get inside the property. We're not able to do anything, until until the redemption period ends. Yeah. And, child protective services apparently was called instantly, you know, as soon as they got got in there. So that's again why I I'm certain things. I just I I didn't ask further questions, but it was like no question about it. They just immediately called CPS, and I don't know, you know, what happened after that. I mean, I do know that you can go ahead, Justin. It took, five dumpsters and eleven thousand dollars for the trash out. And, again, that was after the blight cleanup, not including the blight cleanup. Speaker 3
Yeah. Speaker 2
Looks like a rental clean out. Yeah. Ten thousand. Yeah. Speaker 0
It says ten thousand. I know. I think it was, like, eleven thousand, but, five dumpster loads large dumpster, you know, full full size dumpster. Years. Speaker 2
Yeah. Forty year ears. Yeah. Actually, you wanna go to trash out pictures? Speaker 0
Yeah. That'd be good. This is why I don't touch CFDs anymore. Speaker 3
I think one thing, it doesn't matter whether it's a CFD or note, is understanding the conditions of these properties. You know, a lot of comps I've seen recently from sellers are as if it's a newly renovated or updated property that recently sold, and they're trying to use that as a comp. And you've got a loan that's two, three, four years behind, and this is most likely what the inside is gonna be more looking like. Mhmm. Yeah. And, you know, for example, we had one recently, about two years ago in one of my older funds that every website said the property is worth hundred thousand. PropStream, Zillow, Redfin, BPO, Driveby. I think it end up selling for, like, twenty two thousand dollars because the inside was so destroyed and gutted and so forth. It was basically, you know, starting over from scratch on on the thing or it should have been knocked down. And I think people need to understand that when they're dealing with these types of assets that this is more typical than being able to see the actual floor. Speaker 0
Yeah. And then Those Speaker 2
are small those are not that large of dumpsters. Speaker 4
Those are only twenty yard dumpsters. Speaker 0
Oh, really? Speaker 2
Yeah. They they make forties. We we cleaned one out here a year and a half ago that we took seven forty yarders out of it. Speaker 3
Alright. Speaker 0
So but, yeah, that's still a lot regardless. Speaker 2
Oh, they got Jumanji. That's cool. Speaker 3
Oh. Monopoly too. Yep. There's treasures Speaker 2
in there. You can see the coolest item when we go through the the hoarding. Speaker 0
The other thing to to Chris's point is, you know, when you're doing the modification or maybe you're doing a conversion from a CFD, that's a good time to at least get pictures of the interior potentially. You know, if the borrower is motivated to work with you Speaker 3
Mhmm. Speaker 0
Then you can ask them, you know, get their permission and get an interior inspection done. Oh, yes. Wow. Okay. So there's more than just the dump dumpsters there, Jay. Speaker 3
Tires. Never been disposed of. Speaker 0
That's right. I forgot about the tires, sir. Speaker 2
The tires are always a challenge to deal with those. Yep. I'm tired of this. Speaker 0
Oh my god. You are bringing a roller Speaker 2
night, Justin. Speaker 0
With the puns. Speaker 2
It must be the vitamin water. It must be. Well, you can tell they worked out. The treadmill kept Speaker 3
I didn't even realize that was a treadmill. Speaker 2
Hey. You can't because there's too much damn trash Speaker 3
on it. I was looking at the box. I said Kaplan. I'm like, oh, are they, like, a high high higher education scholar? You know, taking capital courses? Great. Speaker 2
Oh, wow. Yeah. The basement, I think, is Speaker 0
pretty this the basement gets pretty nasty. Is Speaker 2
that a Tempur Pedic? Speaker 0
It's like fecal matter and just yeah. Speaker 2
It is amazing to me that people are willing to live in that type of condition. It it just blows my mind over Well, Speaker 0
and that's really the that's really the point I wanna get to, Jay, is that look. When you're okay. And the part I forgot to mention is there were there were meth charges that came up. I don't know if that was on the slide. Speaker 2
But No. It wasn't. Speaker 0
You know, once once drugs take a hold of you, like, this is not this is not a presentation about stay away from drugs. This this is your brain on drugs. But she doesn't have any more control. You know? It's like No. She it's she's gone, and it's like someone has to step in and and save her and the kids from this situation. And I'm not saying I'm Superman and we swooped in and saved the day, but they weren't gonna this wasn't gonna fix itself. No. This problem. No. So I am I do feel good about getting the at least the kids and and hopefully her into a better situation than where they were. Speaker 2
Not to derail the the sad subject too much, but have you guys seen the series or or the front picture of the series called The Boys on Prime? No. No? This little happy face up there on the wall that looks kinda like Speaker 0
that Speaker 2
part of it. I wonder if you saw that movie. Sorry. I derailed this. This room isn't too bad. Speaker 0
You look Speaker 3
like a nice blank carpet. You see the carpet? Speaker 2
Like, is that a carpet that registered here? Speaker 3
No. Speaker 0
It's a question with this one in three thirty set in, sorry, Nightmare on Elm Street. Speaker 2
Yeah. Alright. Speaker 0
This is what Speaker 3
we're gonna do. Money on this? Wow. That's that's what I'm looking for. Speaker 2
How much money you're making on this baby? Oh, hey, Chris. You can use that water heater in your house. Speaker 3
Yeah. Well, I don't have a place for a full I only have tankless, so I have to find room. Speaker 2
The toilet's broken. Wow. It's hard to believe somebody actually lived in here. Like, how? How do you live in there? It's just crazy. Oh, yeah. Speaker 0
You guys see Well you would have done differently by Speaker 3
this point? I mean The only thing again, times today is different because back then, again, there was probably you're like, this might not be enough equity in this. I think the only thing I'd say I would have done is maybe, again, pause a little bit on the, you know, the, wiping out that extra it it didn't make a difference because you got the property back and Yeah. The forgiving component would probably be the one It was Speaker 0
a bit it was a bit Yep. Too generous. Yeah. Speaker 3
And big and premature. Speaker 0
I I would say. On that. Yeah. Yeah. Speaker 3
And it didn't impact your odds or your profits because you end up getting the property. You don't have to foreclose and spend more money and on it. So Speaker 2
I'd say, Jamie, I probably would have done the same thing being one of my first couple of notes, not what I know today. And knowing what I know today, I wouldn't even hesitate. I would I would be sending out the notices and Speaker 0
Mhmm. Speaker 2
Going as far as I can unless they can prove without a shadow of a doubt that they deserve to get a modification. If I would've known the situations like this and stuff with drugs and Speaker 0
kids and Speaker 2
stuff, I would've done done what I can to to protect the ones that he protected and, got this property back. Speaker 0
So we ended up listing When Speaker 2
it comes to drugs, it's just like it's that's that's Speaker 0
the It's not the same person anymore. Speaker 2
You might not be able to return from it. Speaker 3
Right. Speaker 2
You know? So they they she may never get right she or he, whoever it was. Right. Alright. So we get that So we ended up listing Speaker 0
a property, and we sold it, for sixty six k. Speaker 2
Oh, cool. Speaker 0
Nice. Speaker 2
So by this time, you've had you bought it for thirty four. You got at least eleven into it plus outstanding cost as well. So you're probably easily fifty to fifty five into this. Yeah. Speaker 0
I think we're gonna well, actually, there's Speaker 3
payment some payments. Alright? We got Speaker 0
we got a payment. But there's another. Okay. There we go. So here's another tip. Don't hesitate to file. I did not expect that to come through. We just filed. There was water damage from a pipe bursting. Speaker 2
Yeah. Speaker 0
I think it was actually two separate claims, but did not expect that, honestly. But it just they approved it. So Speaker 2
It helps your bottom line right there. I did the same thing recently with something a house not to this level, but it was it was a house in bad shape, and the water pipe broke during the winter, and it ruined some floors. And I got a few thousand dollars back from it Speaker 0
Nice. Speaker 2
For having an FBI claim. Speaker 0
I mean, I don't think there's a real big downside to Speaker 2
That's why you're paying for it. I mean, you're trying to protect the investment. Speaker 3
That's right. Speaker 2
Right. Speaker 3
The thing I find crazy is it's cheaper to insure a CFD than it is to lend or place insurance on a note. Speaker 2
Wow. I did not realize that. Speaker 3
Yeah. Speaker 2
I I'm not I'm not I I am I don't like CFDs. Okay? I if I'm gonna buy a CFD, I'm converting it. I don't want CFDs in my portfolio. I think I think this is a universal agreement on that. Speaker 3
Okay. Mhmm. Speaker 2
Or or I will make the seller change it over. I've got two right now, interestingly, in Michigan that are being changed over right now before I buy them. And I'm making Okay. The seller pay all of the cost to meet his obligations of the contract. Speaker 3
We've got one in a state right now where CFT, the borrower passed away. The daughter wants to keep it going, and we're like, well, because it wasn't also recorded, we're like, we can just put this in your name. Like, we don't I mean, just we can roll this right into your name and put it as a mortgage and note, and here you go. And it's like, please. It's like, I'm begging you. Like, she's like, you'd really do that for us? And I'm sitting there thinking, I would love to do that for you. Speaker 0
Well, I guess. Speaker 3
Yeah. Speaker 0
Yes. So you can see the total, you know, see the numbers here, FPI payout. So net proceeds from the sale was a little over sixty k. Insurance payout, eleven Speaker 2
Net help. Speaker 0
Eleven five. That was a big big bump. Just additional, you know, property taxes, holding costs, etcetera, were eighty eight hundred. The principal return means that's what my JV partner had put in. So, originally, we had a slide that had his whole breakdown of his return, but we nobody really cares about that so much. Speaker 2
What was the what was the whole timeline? Oh, two Speaker 3
and a half. Sorry. Two and a half Speaker 0
years. No. I I almost missed that too on the slide, but two point five years. So it did take a while. I mean, that's what people that's the other thing I wanted to mention. These people you know, CFDs are not necessarily a three month forfeiture, and you just have the property like many of the gurus might claim. Now she was paying for a while, so that was a good bit of that. Two and a half years was her paying. And then Yeah. Speaker 2
Because she paid for a year. Right? Speaker 3
That's right. Speaker 2
Then she stopped. So, really, you're eighteen months into the the default stage. Speaker 0
Yeah. Something like that. Yeah. So but it still was not you know, it's not a three three to six month process. I mean Speaker 2
Well, none of it is. I mean, let's just be realistic. You're not gonna get it back in two months. It's just not gonna Speaker 0
Right now. So we say total income, which includes, you know, profit, includes everything above. And that gross returns in the IRR there would be, you know, just to me, if I was using my own money, no no JV partner. You can you can say that my return was infinite, and his return was less than those seventy five percent of those numbers there, at the bottom. Speaker 3
Still one return. Speaker 2
Still one Speaker 0
one is Still good return for sure. Still good for him, for my JV partner. Good for me. I learned a lot. I made money. Good for the kids. Good for her. I would like to thank the borrower. And good for the neighbors, good for the township. I'm I I assume someone has fixed up the property, and it's in nicer condition now. So Knock it down. Yeah. But could quite possibly. Speaker 3
Should've sold it to you for more. Got a good deal on it. Too good a deal on that. Twenty something thousand dollars. Man. Speaker 2
Right. Well, if Speaker 0
we want I I have some other case studies for a few months from now. If you if you wanna see one or two I've lost money on. But but yeah. Speaker 2
So here Speaker 3
sell you one for, like, a hundred bucks bucks Speaker 0
that ended up being a Speaker 2
total load of money? Yeah. So Oh, Speaker 0
yeah. But I've also Include Speaker 3
that include that one and the other ones too, though. Speaker 0
I have it. I I have a YouTube video. It's how, like, how we turn two thousand dollars into eighteen thousand or Yeah. Twenty thousand or something. I bought that one from Chris for a hundred dollars. But, main takeaway is not every investment will be smooth sailing. You can fly through these, Justin. Can't control the borrower. You know? And a lot of that's why it's like, you just gotta be okay with especially with these NPLs. I didn't buy it as an NPL, but you don't know how it's gonna go. It's either gonna go through the borrower or through the property, but that could take on many forms. Mhmm. And you need to be okay with all of those. You can't can't control you you can't predict human behavior, especially if drugs are involved. So go ahead. I think, yeah, kids were safe from an unsafe environment, multiple exit strategies. Equity at purchase is key. Can't guarantee it, but when in doubt, file insurance claim and communicate often with our investors. We didn't touch on this, but I quarterly would update with a formal slide presentation, actually, my JV partner. And so the his money was tied up for two and a half years, which is kind of a long time when you're going into the deal. And, although it was supposed to be performing. But yeah. So communicate often. I mean, many times your your passive investors in a fund or your money investors, your partners, they don't necessarily want to be involved in the day to day, but they want to know that you know what you're doing and that they can reach you and that you're communicative and you're not gonna run and hide. Speaker 1
Thank you for joining us on From Adversity to Abundance. We hope today's episode has equipped you with valuable insights and practical advice to elevate your real estate journey. For more inspiring stories and resources, visit us at w w w dot adversity to abundance dot com. If this episode has inspired you, please share it with a friend who could also benefit from our conversation. Together, let's turn adversity into abundance. Until next time, keep building your mental fitness and your real estate empire. Speaker 0
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