Amy Sayre, President of August REI, a Residential Loan Servicing - PowerPoint PPT Presentation

ACQUIRING AND MANAGING A MORTGAGE NOTE PORTFOLIO David Campbell, mortgage note investor / broker founder of Hassle-Free Cashflow Investing Kaaren Hall, president of uDirect IRA Services Amy Sayre, President of August REI, a Residential Loan Servicing Company.

Borrower Mortgage Servicer IRA Custodian Investor

Why mortgage notes? Passive Income High Cashflow Protect Equity From Market Security Simplicity Success david@HassleFreeCashflowInvesting.com

Get off the stock roller coaster david@HassleFreeCashflowInvesting.com

Compounding Effect Of A 10% Note Beats Stock Market Over Any 20 Yr Period david@HassleFreeCashflowInvesting.com

What is a mortgage note? Promise to Pay Secured by Real Estate AKA - Note and Mortgage AKA - Note and Deed of Trust AKA - Hard Money Loan AKA - Private Lending AKA - Seller Financing david@HassleFreeCashflowInvesting.com

Profitable If You’re Repaid PROMISSORY NOTE I PROMISE TO PAY HOLDER $100 PLUS 10% PER YEAR INTEREST david@HassleFreeCashflowInvesting.com

Profitable If You’re NOT Repaid DEED OF TRUST OR MORTGAGE IF I DON’T PAY THE PROMISSORY NOTE YOU CAN FORECLOSE ON MY REAL ESTATE Sometimes happier if you are NOT repaid… Loan to OWN david@HassleFreeCashflowInvesting.com

Ten Rules For A Hassle-Free Cashflow Mortgage Note (1) lender friendly state like Texas (2) 1st position Deed of Trust (not mortgage) (3) SFR with a min property value of $75K (4) Less than 75% loan to value (5) mortgage payments lower than equivalent rent (6) Borrower debt to income ratio < 45% (7) lender title insurance paid for by borrower (8) professional servicing paid for by borrower (9) professionally underwritten with due diligence available to investor (10) fully amortized no more than 15 years david@HassleFreeCashflowInvesting.com

Texas Is Lender Friendly No State Income Tax Low Foreclosure Rate < 2% Lender Friendly Foreclosure Laws: Fast and Low Cost Laws Are Landlord Friendly Cost to Own = Cost to Rent Upwardly trending population and property values Higher interest rates available Access to Legal / Rehab / Brokerage Team Destructive acts of a borrower are potentially criminal david@HassleFreeCashflowInvesting.com

Less than 2% of mortgages in TX go to foreclosure even during the great recession https://www.dallasfed.org/microsites/cd/epersp/2010/images/1c1.gif

Less than 2% of mortgages in TX go to foreclosure even during the great recession http://www.pamallison.com/wp-content/uploads/2013/03/Percent-of-Homes-in- Foreclosure-by-State.jpg

TYPICAL NOTE INVESTMENT OPPORTUNITY Case Study: Owner Occupied SFR 9.8% interest rate + 0.5% point to lender = 10% Yield To Investor INCOME EQUITY CREDIT Borrower payments 25% equity x min $75k Weaker or NO credit less than 45% of gross property value = $18,750 borrower means higher income & same as rent protective equity interest rate for lender DTI < 45% david@HassleFreeCashflowInvesting.com

14

SFR Construction Loans - Dallas, TX $95,000 10% Interest Rate $160,000 finished value 59% LTV 15

Note Buying Process Preliminary Review of Opportunity Ask Preliminary Questions Get Control the Deal Review Due Diligence Info Invest Note Servicing david@HassleFreeCashflowInvesting.com

How to Self-Direct Your Retirement Savings uDirect IRA Services, LLC is not a fiduciary and does not render tax, legal, accounting, investment, or other professional advice. If tax, legal, accounting, investment, or other similar expert assistance is required, the services of a competent professional should be sought.

What’s the Difference? Typical IRA Self-Directed IRA • Stocks • Rental Property • Bonds • Notes • Mutual Funds • Private Stock • CD’s • LLC’s • Tax Liens • Apartments • Raw Land • Private Lending

What Are The Limits? A Self-Directed IRA can invest in anything EXCEPT • Life Insurance Policies • Collectibles ‒ Artworks ‒ Coins ‒ Collectible Cars ‒ Antiques ‒ Gems ‒ Stamps ‒ Rugs

What if your funds 
 are with your current employer? Your plan will probably NOT allow you to self- direct • Must wait until you leave the company ‒ To rollover retirement plan ‒ You can request an “in-service” 
 transfer from your current 
 plan administrator.

Prohibited Transactions 
 (IRS Publication 590) • Borrowing money from the IRA • Selling property to it. • Using it as security 
 for a loan. • Buying property for personal 
 use (present or future) with IRA funds.

Disqualified Person • Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendant, and any spouse of a lineal descendant).

Qualified Persons • Aunts & Uncles • Cousins • Brothers & Sisters • Unrelated friends • Nieces & Nephews

Prohibited Transactions • Neither you nor any disqualified people may benefit from IRA • Cannot buy, sell or exchange property between plan and ‒ Self or ‒ Disqualified people • A disallowed person cannot provide goods, 
 services or facilities

Self-Directed IRA - Structure You Your IRA TPA Custodian

Types Of Self-Directed Plans IRAs Qualified Plans Other Plans Traditional 401K/ 457/ 403b Coverdell Roth Defined Benefit Health Savings Account SEP Profit Sharing Simple Individual K Spousal Inherited

How Do I Self-Direct? • Complete an application ‒ Provide copy of driver’s license ‒ Copy of statement • Fund your account ‒ Annual Contribution ‒ Transfer ‒ Rollover • Tell us what you want to invest in

For More Information Kaaren Hall, President uDirect IRA Services, LLC (866) 538-3539 KHall@uDirectIRA.com uDirect IRA Services, LLC 2522 Chambers Road, Ste 100 Tustin, CA 92780

Residential Mortgage Loan Servicing Servicing Your Investment Portfolio

How are the details taken care? Your loan servicing company setup the note for servicing as per the legal docs and lender’s instructions

How are the escrows handled? The pro-rated taxes (from January 1 st –to closing) are sent to your loan servicer. The loan servicer will pay the insurance and the taxes directly.

Insurance Best Standard: Borrower brings one year policy to closing. Free and Clear properties Lender listed as Mortgagee or their SDIRA and servicer as Interested Party


 My borrower wants to hold their own escrow- Regulation Z currently requires creditors (lender) to establish escrow accounts for higher-priced mortgage loans secured by a first lien on a principal dwelling. The rule implements statutory changes made by the Dodd-Frank Act that lengthen the time for which a mandatory escrow account established for a higher-priced mortgage loan must be maintained. (Five Years or 20% equity)

RESPA 
 AKA (Real Estate Settlement Procedures Act)

How do my borrower know where to pay? Your borrowers receive a welcome call and a welcome packet mailed to them. The welcome packet includes – a welcome letter, payment coupons and information regarding different payment options- online payments, ACH services etc.

Do they receive statements? Your borrowers received monthly statements either via email or regular USPS The statement including: Principal Balance Interest Rate Payment Breakdown Impound Account & Reserve Account Late Fee explanation Contact phone number and email for lender or Servicer

Sample Statement 


1098 and 1099 The servicer must provided the borrower/buyer must receive a 1098 for the interest paid for the prior year by January 31. The lender/note holder must receive a 1099 for the prior year for the interest received for the prior year by January 31 The 1098 & 1099’s must be reported to the IRS.

How do I receive proceeds? Your loan servicer will direct deposit funds into your bank account or send proceeds to your self directed IRA.

Payments to Self Directed IRA’s Servicers will send a check to your self directed IRA (SDIRA) monthly or quarterly as directed. The check will be made out to your SDIRA correctly as per regulatory standards. The payment will include a breakdown for each loan between principal & interest plus the principal balance of the loan.

Payments directly to Lender Funds to lender/note holder are direct deposited. An email is sent to lender letting them know they have funds coming to their bank account. This is called electronic notification of deposit which shows the note, P&I, principal balance and any late fees collected. info@AugustREI.com

Monitoring Notes Lender access online 24/7 Updated at the end of every business day All properties listed with the next payment due. Breakdown of each payment shown when payment issued. info@AugustREI.com

www.hasslefreecashflowinvesting.com/investor-education/ 43

http://www.hasslefreecashflowinvesting.com/ video/nuts-and-bolts-of-being-a-private-lender/

http://www.hasslefreecashflowinvesting.com/video/video- investing-and-tax-strategies-for-mortgage-note-investors/

http://www.hasslefreecashflowinvesting.com/investor-education/ hassle-free-cashflow-lending-ebook/

http://www.hasslefreecashflowinvesting.com/investment-opportunities/