Manage episode 200480526 series 2124446
The BawldGuy Note warranty is something you just don’t get on the street.
Transcript: When you go to the BawldGuy Note Fund and buy a note, what you’ll be happy to learn is that these notes come with warranties. The warranty says this. It doesn’t guarantee that the note is going to perform like a champ. What’s going to happen is this. If per chance the borrower defaults, and you decide, for your reasons, it doesn’t matter what the reasons are, that you don’t want to foreclose yourself … Listen, foreclosure, in my experience, a lot of times, you end up with more money than was actually owed. There are times that when I foreclosed because frankly it was foreclose or lose everything I had in it … You have to do what you have to do. However, with a warranty, that’s not the case anymore. What happens is this. Let’s take an example of a note, let’s say a $75,000 note that the investor paid $50,000 for. He sails along for a while, and before he knows it, it’s been two years. He’s collected … let’s just make up a number … $10,000 in payments. However, the borrower defaults, doesn’t want to foreclose. That warranty then, if they can’t rehab that note again goes to the warranty which says: You’ve rehab $50,000, you’ve received $10,000, we’re going to give you, at your option either fund credits to buy another note, which you’ll use if that’s what you’re going to do anyway, or just tell us where you want us to wire $40,000 cash, we’ll give you that. What that really means is they’re going to keep you whole. You spent $50,000. You got $10,000 in cash flow, here’s $40,000. We’re not there to cover any other losses that you would have made. Those aren’t really losses. Yes, you might have made more money if you would have gone here instead of there. That’s true in every investment. There is no investment I know you’re not going to buy anything where they say look, you’re going to end up with the same amount that you put in. That’s what the warranty does on these notes. It replaces your principal. You put X in, you get Y amount of payments, and the warranty will cover the difference between what you put in and the payment you received. It’s just as simple as that.
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