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?

david@HassleFreeCashflowInvesting.com

Passive Income High Cashflow Protect Equity From Market Security Simplicity Success

Get off the stock roller coaster

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Compounding Effect Of A 10% Note Beats Stock Market Over Any 20 Yr Period

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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

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Profitable If You’re Repaid

PROMISSORY NOTE I PROMISE TO PAY HOLDER $100 PLUS 10% PER YEAR INTEREST

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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

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

Texas Is Lender Friendly

david@HassleFreeCashflowInvesting.com

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

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

Less than 2% of mortgages in TX go to foreclosure even during the great recession

Case Study: Owner Occupied SFR 9.8% interest rate + 0.5% point to lender = 10% Yield To Investor

david@HassleFreeCashflowInvesting.com

TYPICAL NOTE INVESTMENT OPPORTUNITY

INCOME EQUITY CREDIT

Borrower payments less than 45% of gross income & same as rent DTI < 45% 25% equity x min $75k property value = $18,750 protective equity Weaker or NO credit borrower means higher interest rate for lender

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

Note Buying Process

Preliminary Review of Opportunity Ask Preliminary Questions Get Control the Deal Review Due Diligence Info Invest Note Servicing

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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

• ther similar expert assistance is required, the services of a competent professional

should be sought.

How to Self-Direct Your Retirement Savings

What’s the Difference?

• Stocks
• Bonds
• Mutual Funds
• CD’s

Typical IRA

• Rental Property
• Notes
• Private Stock
• LLC’s
• Tax Liens
• Apartments
• Raw Land
• Private Lending

Self-Directed IRA

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 Custodian TPA

Types Of Self-Directed Plans

IRAs

Traditional Roth SEP Simple Spousal Inherited

Qualified Plans

401K/ 457/ 403b Defined Benefit Profit Sharing Individual K

Other Plans

Coverdell Health Savings Account

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 1st –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

• ptions- 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

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www.hasslefreecashflowinvesting.com/investor-education/

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/

Kaaren Hall KHall@uDirectIRA.com David Campbell david@HassleFreeCashflowInvesting.com Amy Sayre amy@AugustREI.com

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ACQUIRING AND MANAGING A MORTGAGE NOTE PORTFOLIO WE LOVE ANSWERING QUESTIONS!