The Note Investor Podcast

Most people set the terms on a seller finance note based on what the buyer can afford and hope it works out. I'd argue 90 to 95% of the seller finance loans getting originated are basically hot garbage, and you find out the day you try to sell one. In this episode I walk through how to originate a note by working backwards from the exit.   I build one example deal, a $180,000 home sold for $195,000 with $19,500 down and a $175,500 note at 9.5% over 30 years, and show how that same loan can sell for close to full value or for around $116,700 depending on how it was put together. I cover how note buyers actually price a loan, why institutional buyers will pay up for compliant paper while individual buyers want big discounts, and the levers you control at origination: rate, down payment, term, loan instrument and consumer compliance.   I also get into the Seller Finance Playbook, the course I built so new originators can learn this before their first deal instead of on it, and how the $600 course fee comes back as a credit on your first Call The Underwriter file.   A note built to sell is the safest one to hold Buyers price to a yield, so more risk turns into a bigger discount fast The 10-10-10 guideline is a starting point, not a rule A mortgage or deed of trust usually sells for more than a contract for deed Compliance is what keeps the best buyers at the table Most of a note's value is locked in before closing   Seller Finance Playbook: https://fusionnotes.zoholandingpage.com/sellerfinanceplaybook Free seller finance community on Skool: https://www.skool.com/creative-note-originators-5677   Note training: www.notelaunchpad.com Note buying: www.fusionnotes.com Note origination and underwriting: www.calltheunderwriter.com Mortgage broker / DSCR servicers in TX, SC and CO: www.callthemortgageguy.com

Debt-to-income ratio is the number everyone in mortgage lending uses, and it's still one of the easiest things to get wrong on a seller finance deal. A borrower at 60% DTI can be a safer bet than one at 50%. In this episode I walk through what DTI actually measures, how I calculate it, and how to use it alongside the other factors that tell you whether a borrower can really carry the loan.   I cover the formula (new PITI plus the monthly debts on the credit report, divided by gross income, never take-home pay), where the income number comes from for W-2, self-employed and fixed-income borrowers, and the expense ratios I apply to self-employed bank statement deposits. I also get into where DTI fits in Dodd-Frank ability to repay, why the 3-loans-a-year rule has nothing to do with it, and why we use 57% as a compliance anchor even though I don't want to lend anywhere near that with my own money.   Then residual income and compensating factors: down payment, cash reserves, housing payment history, job stability, and what to do when a borrower is marginal, including cosigners that actually reduce risk, paying off a car or a card to bring DTI into line, and using a lease option to give them time to clean things up.   Why you always use gross income, not take-home How self-employed and fixed-income borrowers get their income number The 57% compliance anchor vs. the DTI you should actually lend at Why residual income matters more than the ratio for fixed-income borrowers The compensating factors and levers that save a marginal deal Why barely compliant can still be a bad loan   Note training: www.notelaunchpad.com Note buying: www.fusionnotes.com Note origination and underwriting: www.calltheunderwriter.com Mortgage broker / DSCR servicers in TX, SC, FL and CO: www.callthemortgageguy.com

Seller finance compliance is simple once you know the rules, but it's convoluted while you're figuring it out. That gap is where a lot of bad advice gets passed around at meetups and REIAs. In this episode I run down eight myths I hear constantly from investors doing owner-financed deals. I cover why consumer rules like Dodd-Frank and TRID still apply to seller finance, why a borrower agreeing to illegal terms doesn't make them legal, and why a deed in lieu signed at closing won't let you skip foreclosure. I also get into why a sketchy borrower is never worth rushing for, why titling in an LLC doesn't get around owner-occupant rules, and why Dodd-Frank compliance is the floor for underwriting, not the finish line. Finally, balloons. I explain why they set owner-occupant borrowers up to fail, and why a well-underwritten loan gives you what I call the anytime balloon: the ability to sell the note and get liquid whenever you want. Which consumer rules apply to seller finance and when the carve-outs actually kick in Why deed in lieu at closing is a trap, not a shortcut The seller finance gap between Dodd-Frank minimums and bank standards Why balloons don't belong on owner-occupied loans How compliant, well-underwritten notes stay liquid in today's non-QM market Note training: www.notelaunchpad.com Note buying: www.fusionnotes.com Note origination and underwriting: www.calltheunderwriter.com Mortgage broker / DSCR servicers in TX, SC, FL and CO: www.callthemortgageguy.com  

Banks have underwriting departments, compliance teams, and doc prep staff. When you originate a seller finance loan, all of those jobs still have to get done. You just do not have anyone doing them. I talk through which back office functions you can rent, how to charge the borrower for them, and why the loans people rush through are the ones they can never sell. Note training: www.notelaunchpad.com Note buying: www.fusionnotes.com Note origination and underwriting: www.calltheunderwriter.com Mortgage broker / DSCR servicers in TX, FL and CO: www.callthemortgageguy.com

If I were starting over as a note investor today, this is the approach I'd take. I walk through the entire process—from getting training and finding deals to defining your goals, filtering and pricing loans, completing due diligence, and closing your first deal. I also cover common mistakes that keep new investors stuck and how to build a repeatable process that improves with every loan you buy. Note training: www.notelaunchpad.com  Note buying: www.fusionnotes.com  Note origination and underwriting: www.calltheunderwriter.com  Mortgage broker / DSCR servicers in TX, FL and CO: www.callthemortgageguy.com