Jeff Armstrong’s Secrets of Paper 2010 The definitive source for information and education on the Discounted Real Estate Note Business Presented by Armstrong.

Jeff Armstrong’s Jeff Armstrong’s

Secrets of Paper Secrets of Paper 20102010

The definitive source for The definitive source for information and education on information and education on the Discounted Real Estate the Discounted Real Estate Note BusinessNote Business

Presented by Armstrong Presented by Armstrong CapitalCapital

Secrets of PaperSecrets of Paper

800-845-3055818-865-2322

Fax [email protected]

PO Box 6517Westlake Village, CA 91359


Why Learn From Jeff Learn From Jeff In the business since 1991In the business since 1991 Current Practitioner in the business Current Practitioner in the business Closed over 1400 individual note Closed over 1400 individual note

transactionstransactions Consistently ranked top brokerConsistently ranked top broker Requested Speaker, Instructor & Master Requested Speaker, Instructor & Master

BuyerBuyer Author of several best selling industry books Author of several best selling industry books

as well as a multitude of articlesas well as a multitude of articles Assisted countless individuals to succeed Assisted countless individuals to succeed

with notes and in the note businesswith notes and in the note business


Previous LifePrevious Life

- College- College

- Grocery Store - Grocery Store

- Entrepreneur - Entrepreneur

- Real Estate- Real Estate


Rental Properties

- Tenants & Toilets & Termites- Management & Maintenance- Property Taxes & Insurance


Be the BankNOT

the Landlord !


Current Life

- Broker Notes- Bass fishing in my backyard- Buy Notes- Go on vacation- Broker Notes- Fish Tournaments







Facts on the Note Facts on the Note IndustryIndustry

$350 billion in private real estate notes $350 billion in private real estate notes currently existcurrently exist

Of that total, $100 billion are private Of that total, $100 billion are private residential mortgagesresidential mortgages

1 out of 13 houses sold in the U.S. has 1 out of 13 houses sold in the U.S. has some kind of seller financingsome kind of seller financing

Growing at a rate of $4 billion per yearGrowing at a rate of $4 billion per year


The Note Business

Also referred to as The Paper Business, is Also referred to as The Paper Business, is the secondary marketplace for privately the secondary marketplace for privately held notes and mortgages. It includes:held notes and mortgages. It includes:

- The buying and selling of privately held - The buying and selling of privately held sellerseller

financed notes.financed notes.

- Broker the notes or purchase them - Broker the notes or purchase them yourself.yourself.


DefinitionsDefinitions Private Mortgage Note

- A debt instrument created when a property seller, not a bank,

finances the sale of real estate.

Purchase Money Mortgage- A Note and Mortgage carried back

by the seller of the property to facilitate the sale of the property.


Beginning DefinitionsBeginning Definitions

TWITATWITA

That’s What I’m Talking About! That’s What I’m Talking About!

TWITA! TWITA!


Why individuals use Seller Financing

Properties can be offered to a much larger pool of buyers

Help Seller receive his or her full price Help sell property faster; even in a slow

market Help sell difficult properties Less fees and costs


Why Individuals Sell Their Notes

Didn’t want to carry the note in the first place

Want to invest in another property, business, stocks or other venture

To go on vacation, buy a car, pay for college

Have a WANT or NEED


The Note Business is forThe Note Business is for Individuals Looking to Start a Real Individuals Looking to Start a Real

BusinessBusiness

- Not a get rich quick business- Not a get rich quick business

- Time, effort, and money for marketing- Time, effort, and money for marketing

Real Estate ProfessionalsReal Estate Professionals

- Real Estate Agents and Brokers- Real Estate Agents and Brokers

- Real Estate Investors- Real Estate Investors

- Mortgage Brokers- Mortgage Brokers


Individuals Individuals Looking to Start a Looking to Start a

Real BusinessReal Business


ExampleExample

$100,000 Sales Price$ 20,000 Down Payment$ 80,000 Seller

Carryback

30 years at 9% interest for $643.70 month


Example

Pay Price $75,000.00

Seller Accepted -$70,000.00

Broker Fee $ 5,000.00


Note Note Brokering as a as a BusinessBusiness

FFind ‘emind ‘em

EExpose ‘emxpose ‘em

EEducate ‘emducate ‘em

SSupport ‘emupport ‘em

FEES


The 7 StepsFind ‘em 1 – Marketing Expose ‘em 2 – Gathering

Information 3 – Submit For Pricing

4 – Obtain Offers (Determine pricing)

Educate ‘em 5 – Subtract Fee (Allow for costs) 6 – Present Options

Support ‘em 7 – Follow up (Assist with closing)


What You Need To You Need To KnowKnow

Find ‘em Marketing

- Direct Mail- Referral Sources- Classified Ads - Reverse Ad Marketing



Expose ‘em Gathering Information

- What to say on the first call- Filling out the Worksheet- Finding the need

Submit for Pricing Obtain offers (Determine Pricing)



Educate ‘em Subtract Fee (Allow for Costs)

- How you make $ Present Offer

- Positive Presenting - Negotiating


What You Need To Know You Need To KnowSupport ‘em

Follow Up- When to follow up- What to say

Assist with Closing- Gathering copies &

Submission- Due Diligence Process- Closing Documents &

Procedures

Secrets of Paper Secrets of Paper – Real Deal #1 - Note Brokering – Real Deal #1 - Note Brokering

Albuquerque, NMAlbuquerque, NMTransaction Information

Note Holder/Seller: Miller

Property Buyer/Payor: Coleman

Type of Property: 1993 DW Mobile + 2.5 acres

Sales Date: August 15, 2009

Sales Price: $ 83,996.12

Down Payment: $ 30,000.00

First Lien: $ 53,996.12

Secrets of Paper Secrets of Paper – Real Deal #1 - Note – Real Deal #1 - Note Brokering Brokering


Date of Note: 8-15-2009

Amount: $53,996.12

Term in Months: 180 fully amortized

Interest Rate: 6.0%

Payment Amount: $455.65



First Payment Due: 9-15-2009

# Payments Paid: 10

# Payments Remaining: 172

Current Balance: $52,484.51

Next Payment Due: 5-15-2010

Payor’s Credit Score: 612

Loan To Value: 62.48%


Albuquerque, NMAlbuquerque, NMPurchase Information

Note Purchase Started: February 9, 2010

Note Purchase Funded: April 19, 2010

Funding Source Full Purchase Price: $ 38,430.65

Seller Accepted: $ 34,000.00

Armstrong Capital Fee: $ 4,430.65

Secrets of Paper Secrets of Paper

Regulatory IssuesRegulatory Issues

• CA DRE Licensing

• SAFE Act

• HR 1728

• etc…


Note Buying and Note Buying and

Brokering For Brokering For

RE ProfessionalsRE ProfessionalsRE Investors and Realtors can benefit RE Investors and Realtors can benefit

from the Note Business by buying, from the Note Business by buying, brokering and using notes themselves brokering and using notes themselves as well as encouraging property sellers as well as encouraging property sellers

to consider Seller-Financing.to consider Seller-Financing.



Advantages of Seller Financing

Properties can be offered to a much larger pool of buyers

Help Seller receive his or her full price Help sell property faster; even in a slow

market Help sell difficult properties



Suggested Sale and Note Structures

Residential Properties Commercial Properties Land Properties



How to Create-A-Note

Terms Interest Rate Down Payment Credit

Secrets of Paper Secrets of Paper – Real Deal #2 - Create a – Real Deal #2 - Create a NoteNote

Lakeville, MNLakeville, MNSale and Note Structure

Property Seller/Note Holder: FreemanProperty Buyer/Note Payor: SchreckType of Property: Single Family Home Owner Occupied

Potential Sales Date: July 1, 2010Asking Price: $770,000.00

Down Payment: $ 77,000.00Seller Held Note:$693,000.00

Secrets of PaperSecrets of Paper – Real Deal #2 - Create a – Real Deal #2 - Create a NoteNote

Lakeville, MNLakeville, MNSale and Note Structure

Amount: $693,000.00Term in Months: Amortized for 360

Balloon in 84

Interest Rate: 8.5%Payment Amount: $ 5,328.57Balloon Amount:$645,037.80


Lakeville, MNLakeville, MNTransaction Information

# Payments Paid: 1# Payments Remaining: 83Current Balance:$692,580.18

Next Payment Due: 8-1-2010 Payor’s Credit Score: 765Loan To Value: 89.95%


Lakeville, MNLakeville, MNNote Purchase Information

Educating Started: May 4, 2010Note Purchase Funded: August 7, 2010

Funding Source Purchase Price: $637,173.77 (92%)Seller Accepted:$625,000.00Armstrong Capital Fee: $ 12,173.77


Lakeville, MNLakeville, MNNote Purchase Information

Seller Receives: As a Seller As a NB

Down Payment: $ 77,000.00 $ 77,000.00

First Payment: $ 5,328.57 $ 5,328.57

Note Proceeds: + $637,172.77 $625,000.00 Total Proceeds:$719,502.34 $707,328.57

If Sold Traditionally:Sales Price: $770,000.00Realtor Commission 6%: $ 46,200.00Closing Costs 3%: -$ 23,100.00

Total Proceeds: $700,700.00 MAYBE (time)



How to Buy a Note

Secrets of Paper Secrets of Paper – Real Deal #3 - Note – Real Deal #3 - Note

Buying Buying

Tuscon, AZTuscon, AZTransaction Information

Note Holder/Seller: Scott

Property Buyer/Payor: Murphy

Type of Property: commercial ( 2 unit retail)

Sales Date: January 28, 2010

Sales Price: $ 219,000.00

Down Payment: $ 55,000.00

First Lien: $ 164,000.00

Secrets of Paper Secrets of Paper – Real Deal #3 - Note – Real Deal #3 - Note Buying Buying

Tucson, AZTucson, AZTransaction Information

Date of Note: 1-28-2010

Amount: $164,000.00

Term in Months: 240 w/3 year Balloon

Interest Rate: 5.5%

Payment Amount: $1,128.14

Balloon Amount $149,301.41 due 1-2013


Tucson, AZTucson, AZTransaction Information

First Payment Due: 2-28-2010

# Payments Paid: 3

# Payments Remaining: 33


Next Payment Due: 5-28-2010

Payor’s Credit Score: 676

Loan To Value: 74.37%


Tucson, AZTucson, AZWhat do we have to purchase?


33 Payments of $1,128.14

1 Balloon payment of $149,301.41

What OPTIONS can we give?

Full Purchase $126,394.99

~16% yield, ~ 78 cents on the dollar, ~ 58% ITV

That’s a nice investment… But…


Tucson, AZTucson, AZOther OPTIONS?

1) Full Purchase: $126,394.99


2) Split Purchase: $142,000.00 ($71K NOW + 71K of B)


3) 33 Payments: $23,426.00

*seller keeps balloon ~ $149,301.41 + 23,426.03 = 172,728.03

~ 36% yield, ~ 107 cents on the dollar, ~11% ITV


Tucson, AZTucson, AZPurchase Information

Note Purchase Started: March 12, 2010

Note Purchase Funded: April 16, 2010

Split Purchase: $142,000.00 ($71K NOW + 71K of B)

~ 90 cents on the dollar, ~22% yield, ~ 32% ITV


What You Need To Know You Need To KnowHow to Buy a Note

Risks Yields Minimum Discount ITV Credit, Appraisal, Title from a note

buyers perspective Purchase Options (partials, splits,

etc.)


Ask yourself

How Can I…?


““To get what you’ve never To get what you’ve never had,had,

You must do what you’ve You must do what you’ve never done!”never done!”

(Fish)


What You Can Do Today

Invest in Jeff’s beginning audio package to get your base note business

knowledge TODAY!

Secrets of Paper 101Secrets of Paper 101 (4 Disc Audio Package with over 6.5 hours of content)

$30 Members, $40 Non-$30 Members, $40 Non-membersmembers(regularly $99)(regularly $99)


How You Can Learn MoreAttend Jeff Armstrong’sJeff Armstrong’s

Secrets of Paper 301Secrets of Paper 301The Definitive Note Workshop SeriesThe Definitive Note Workshop Series

A live hands on workshop focusing on Advanced Note Brokering (keeping a piece of the action), Note Investing (how to buy a note for yourself) and

Product Knowledge (the many different ways to buy a note).

Los Angeles, CA September 25-26, 2010

Two Day Workshop Only$697.00 (+$497 for spouse/biz

partner)


Secrets of Paper 301Secrets of Paper 301The Definitive Note Workshop SeriesThe Definitive Note Workshop Series

A live hands on workshop focusing on Advanced Note Brokering (keeping a piece of the action), Note Investing (how to buy a note for yourself)

and Product Knowledge (the many different ways to buy a note).

Los Angeles, CA - September 25-26, 2010

For ICW members ONLY $447.00

Non-Members $497.00

PLUS you take home the SOP 101 audios for free!

TWITA!

Jeff Armstrong’s Secrets of Paper 2010 The definitive source for information and education on the Discounted Real Estate Note Business Presented by Armstrong.

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