Manage episode 200480527 series 2124446
I love the BawldGuy note fund. It allows my clients to remain safe and secure while adding a stand-alone source of retirement income.
Transcript: I have the BawldGuy Note Fund, and it sounds very simple. But the average investor in America really doesn’t know what buying a discounted note really means. They’re a little bit fearful of it, and I understand, because we all are fearful of anything we don’t completely understand. I know I am. Let’s start out with notes 101 here today. All a note is is what you sign when you bought a house, when you buy a car that you finance. It’s an IOU. I sign a piece of paper that says, “Jeff owes money to this lender.” That’s all a note is, an IOU. Now, in real estate, those loans are secured, so in case somebody … the borrower doesn’t make the payments, they’ve got that security, which is almost always real estate. What do they do? There’s another document. Now that document sometimes is called a trust deed, sometimes is called a mortgage. They’re pretty much interchangeable. They have different meanings in different states on the margins, but all it is is evidence that there’s a piece of real estate. For our discussion needs today it’ll be a house, a simple house that the borrower’s going to move into. He signs an IOU pledging that house as collateral. In case he doesn’t pay, they can take that house from him. Now he has a grant deed or a warranty deed, or any of the other flavors of deeds in the 50 states. It’s his property as long as he pays his monthly payment. Now, if that note somehow goes into default, that borrower loses his job or some other … it’s usually some other cataclysmic event. People aren’t deadbeats. Things happen. Right? That’s why we have the bumper sticker. The bank then may be forced to take it over, but what’s happening now is that groups like my BawldGuy Note Fund take massive amounts of capital, in my case, millions, and they go to lenders all over the United States, we’re in about 27 states so far at least count, and we take these loans off their hands at a deep discount. Now, they’re not performing. Okay? That means, in plain language, the borrower is not making payments and hasn’t made payments for several months, usually at least three. We buy that for pennies on the dollar, usually 20, 30, 40%. Sometimes less, but usually in that range. Then what happens is, the fund manager, which in this case is PPR Note Company … It’s founder is David Van Horn. They have a staff of almost two dozen full time specialist. Their whole mission in life, from eight to five, every single work day of the year, is to rehab these notes such that they’re … the borrower is making payments again. Now, do they bat 1000? Not even close, but the ones that they are successful in returning to performing are then available to buy by the people that are inside the fund as members and investors. Now we call those people accredited investors. It’s not complicated. The definition is twofold, and you don’t have to qualify for both, just one, either as a single person you make $200,000 a year, or married you make $300,000 household income. If you don’t qualify under those, then you go by net worth, $1 million, not counting your primary residence. That includes cars, everything you own, any silver and gold, your paintings, your 401s, your IRAs, you name it, it has value, it’s part of your net worth. Okay?When you buy a note, you’re buying a bank’s IOU that John and Mary Smith signed, and now it’s re-performing again, and you’re paying probably 55 to 80 cents on the dollar. If you have $100,000 to buy notes and you’re an accredited investor, you can be inside the BawldGuy Note Fund. Now, we’ll talk about that note fund later, and the warranty that comes with those notes, at a future date.
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