April 17, 2024 • 45 mins
Unlock the door to financial independence with the extraordinary insights from Tracy Z, a titan of the real estate and note investing world with three decades of experience. We navigate the untapped potential of seller finance markets and how they could revolutionize your investment portfolio. Our enlightening discussion delves into the latest data, revealing a staggering $28 billion in UPB last year alone and how you can leverage this to build a robust stream of passive income.
Immerse yourself in the subtleties of seller financing, where Tracy and I dissect the burgeoning trends in the industry. We expose common myths about down payments, emphasize the necessity of equity to reduce default risks, and scrutinize the evolving role of technology in accessing courthouse data—a game-changer for market analysis. This episode is a treasure trove for anyone looking to understand the complexities of mortgage loan originations, typical loan-to-value ratios, and the enigmatic lifecycle of a note that could significantly influence your investment yields.
To wrap up, we reflect on the power of mentorship, the pursuit of workplace gender equality, and the art of mastering empathy and persistence in the realm of business. Hear from Tracy about the trials and triumphs of being a woman in a predominantly male space, and why placing people above profits is not just a noble pursuit but a strategic business move. This isn't just a conversation; it's a masterclass in navigating the ever-changing landscape of real estate wealth creation, ready to fuel your journey towards financial mastery.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Narrator (00:20):
Thank you in real estate to create real wealth and
passive income for you and yourfamily.
He'll share stories of realestate investments done right,
walk you through the process ofowning a real estate note and,
most importantly, educate you soyou can be the bank this is Be
the Bank brought to you byAmerican Notebuyers.
Now here's your host, justinBogard.
Justin Bogard (00:46):
Hey, hey, listener, welcome back.
Thank you for joining us againon the Be the Bank podcast.
This is season six, episodenumber eight.
Today I have my friend, tracy Z, that's going to be on the show
and we're going to be talkingabout all the seller finance
data that has been created overthe last year so you can have
the numbers in mind of what downpayments are and kind of how
(01:09):
this is breaking down, so youcan see how big the market is.
It may surprise you on some ofthe numbers.
Stay tuned, tracy Z.
Tracy Z (01:30):
Hello Justin, hey, congratulations.
Season six, that's.
Impressive.
Justin Bogard (01:34):
I know, thank you .
I was thinking about the otherday and I know that you and I
were on a live broadcast lastnight on our broadcast that we
do once a month and I think Imentioned it on there.
But I've been doing like thislive stream and about a podcast
format for I think about six,six and a half years now and I
(01:54):
think I've only missed like twolive episodes before during that
run.
So it's just like that's pretty, that's a lot of content.
Tracy Z (02:02):
It is and it's commitment.
You know you just do it overand over and it builds up over
time.
And that's like sellerfinancing.
I've been doing that for 30years.
It builds up over time.
So I know we both have apassion for node investing with
a niche down into sellerfinancing.
So excited to be here today totalk about it.
Justin Bogard (02:19):
Yeah, thanks, and you've been on one of my
iterations of this podcastbefore I've been through.
I think this is the thirditeration that I've had it
started off with.
It's called the Super E&Jpodcast.
So my good friend ElizabethSickles she likes to be called
Super E, so we know her as SuperE and so she is just very
passionate, she's super smartand she got into the short-term
(02:42):
Airbnb space and so we wouldalways stay connected since we
both got in this stuff around2015 to 16.
And we'd be havingconversations and we're like,
wouldn't that be fun if somebodywas a fly on the wall just
listening to our conversations,of our challenges and what we're
going through and stuff.
So then we started that and thenwe blended it into a different
format called the two wealthshow, and then she basically got
(03:03):
too busy for me, so so she had,she went off and, yeah, well,
no, she didn't mean it in a badway.
Kudos to her.
She's just, she's one of thosesuper entrepreneurs that uh, uh,
I can't say enough good thingsabout her.
She's just a good person to bearound.
She's.
She's always got the best, bestthing in mind for her customers
(03:24):
and clients.
Tracy Z (03:24):
Yeah, those people that leave you feeling good after
you talk to them.
That's my goal.
I know it's your goal too.
Justin Bogard (03:30):
Yeah, yeah, but I like doing this sort of thing.
I guess when I first started Idon't know if you felt the same
way, but I was a little bit moreshy and didn't really know how
to present myself and what I do.
And then I start gettingcomfortable with it and I kind
of like the style of not reallyteaching, I guess, just kind of
(03:50):
presenting my experience to theaudience.
And so, luckily, a few peoplefollow me and, you know,
hopefully I've changed, you know, some people's perspectives or
at least made them some money.
Tracy Z (03:59):
So absolutely to both.
Justin Bogard (04:02):
So Tracy?
Where are you at today?
Absolutely to both.
So Tracy, where?
Tracy Z (04:05):
are you at today?
I currently primarily reside inCentral Florida.
I'm originally a WashingtonState gal and moved here in 2000
.
And we travel quite a lot.
It's one of the great thingsabout note investing you have
some freedom of where you wantto be.
So we've spent some time inGuatemala, nicaragua, italy, and
I always get back to thePacific Northwest in the
summertime to visit all myfriends and family, usually like
(04:27):
Florida as the home base in thewinter.
Justin Bogard (04:31):
I don't know if you knew this about me, but I
actually lived in a camper for ayear.
I tried to be a nomad, so I didI did recently actually and so
I was always filming and stuffinside the camper and so I would
have this whole process of I'dhave to take the dining room
table and like, convert it intolike some sort of space that
worked for the camera and thelighting, and I'd always have to
(04:52):
make sure I'd have a goodeither a cell reception or wifi
that I could get a good signaland it was quite interesting.
But back to what you're sayingabout the freedom of being
virtual or not being tetheredgeographically with what we do,
it's just a really cool feelingthat you can just go anywhere
and we're international.
Really.
Tracy Z (05:09):
Yeah, absolutely.
You know, I read this recentlyand I'm like, ah, this resonates
.
Controlling your time is thehighest return money pays and
you know that's why I got out ofinstitutional note investing in
personal note investing isbecause I wanted more control
over my time.
That takes different iterationsas you go through life, so at
(05:30):
first I wanted to spend moretime with my daughter, as she
was growing up and then I wantedall this flexibility to travel
and live anywhere.
Now I really love it because Ihave this opportunity to share
people knowledge and experiences, that maybe they'll gain
something and they can get someof that freedom and control over
their time, because that's evenbetter than the yields we get.
(05:50):
On note, investing is thatfreedom over our time.
Justin Bogard (05:54):
And thanks for saying that and I've finally
learned that over the past fewyears that the return on time is
much more valuable than whatyou're trying to look for on
your investment.
Especially as an entrepreneuror someone that's doing this
full time, you really want tomake sure you have that
flexibility when you want, whichis why we can create our own
schedule.
So I know you and your husband,fred, are both in this business
(06:15):
and you kind of grew up in thisbusiness since, I think, the
late 80s and you talked a lotabout that.
Gave us a good history of thatlast night on our live show.
So if you guys want to checkout that, I highly encourage you
to go to the AmericanNotebuyers YouTube channel and
check out the April 10thbroadcast that we did last night
and Tracy Z was on there alongwith Chris Sevigny and Jay
Redding.
But, tracy, what kind ofstarted you in the note space to
(06:42):
begin with?
Did you just run across it bybeing in real estate or what?
Tracy Z (06:46):
Yeah, I was fortunate to find it, to discover it,
because I grew up in a ruralarea up on the Washington, idaho
, canadian border kind of cornerand I knew about seller
financing, so that in ruralareas you'll see some seller
financing.
That's where the seller ownsthe property, they sell it to
buyer and they allow the buyerto make payments to them instead
(07:07):
of going out and getting a bankloan.
So the seller is truly allowingto make payments over time.
Some people call it ownerfinancing, some people call it
installment sales.
You might have here a contractfor deed, but the seller is
allowing the buyer to makepayments to them instead of
getting a traditional bank loan.
So I was aware of that.
I used to work for a titlecompany, an attorney and even an
escrow servicing company.
They had all three of thosethings in an office and somebody
(07:30):
would pay us to go in and lookat the microfiche.
I'm dating myself here.
Narrator (07:35):
Yeah.
Tracy Z (07:35):
To pull up the courthouse recordings where the
seller sold and took backpayments because they wanted to
market to those sellers and buytheir notes Different than bank
loans.
So these are individuals, right?
Not banks, not Wells Fargo,Bank of America, any of that.
So I was exposed to it, but Ididn't really think much beyond
that.
And then I had a big change inmy life and I moved to the big
(07:59):
city I say that in air quotes asa joke of Spokane, Washington
and there was a company therethat was buying seller finance
notes and they'd been doing itsince the 1950s.
So here I come in 1988 and I'mlike, wow, that's cool.
So I went to work for themdoing closing and real documents
and somebody introduced me tothe financial calculator and I
(08:19):
was hooked.
I'm like whoa you're doing this,you're buying at a discount,
you're getting these kind ofyields.
So I worked with them and movedmy way up into underwriting and
due diligence and marketing andwas a vice president with them
and helped them turn them intomortgage backed securities,
which hadn't been done withseller financing notes before
Wow.
So all of that led to 1997.
(08:40):
I also met my husband, fred,through the business.
I also met my husband, fredthrough the business 1997, we
started our own note investingcompany and we're at
noteinvestorcom and we've beenbuying and selling real estate
notes for ourselves since then.
So got an education on someoneelse's dime.
Thank you very much.
I so appreciate that and nowget to apply it for myself and
share that knowledge with others.
Justin Bogard (09:05):
How often were you seeing seller finance
transactions when you're workingfor that title company Like?
Out of however many comethrough in a day like or a month
like, what percentage would youjust throw?
Tracy Z (09:12):
out.
Where I was up, there was, youknow, an average of three.
We used to say average of threeto 6%.
I think that's a little bithigh.
Perhaps it really depends onyour state.
Some states have more of it andothers have less, as we'll look
when we talk about the datatoday.
Justin Bogard (09:28):
So, speaking of the data, every year everybody
gets excited to see thesenumbers because well, at least I
think so I get excited for it.
I'll just say that much.
I won't.
But you get to post like justjust snippets of information and
you have a special presentationthat I know that you do, and
you have a great slide deck thatyou show.
(09:48):
These numbers are much moredetailed.
If you guys want to see thosenumbers in greater detail on a
PowerPoint, check out ourYouTube stream we did last night
on the April broadcast on theAmerican Opirus YouTube channel.
Basically just talk about howyou come up with these numbers
and when you started doing that.
Tracy Z (10:07):
When I worked for that institutional investor we paid
some people to do some marketresearch, but it was really hard
to get ahold of courthouse datawithout sending somebody to
courthouses all over the UnitedStates.
So, fast forward to today.
We don't have to use microficheanymore.
Justin Bogard (10:19):
Thank God right.
Tracy Z (10:21):
Thank goodness yeah, I love technology and that we've
embraced it and so many countiesacross the United States have
all of their recordings aspublic data and you can go look
that information up.
So we work with a data providerthat scrapes that data so we
don't personally have to go lookit all up and he pulls down all
(10:43):
of the seller finance dealsacross the United States.
I think he's got about 2200 plusstates or, excuse me, counties,
not states and I think there'sover 3000 counties, but he's got
most of the big, large county.
There's still some countiesthat are not online or there's
not enough sales to make itworth it to go pull the data
(11:05):
line or there's not enough salesto make it worth it to go pull
the data.
So we use that data and then werun it through a whole series
of different calculations tokind of come up with some
interesting stats and the one Iwant to start us off with in
2023, so I know we're in April2024, but it takes some time for
all this data to get compiledand get recorded and get
downloaded.
So last year we had 28 billionwith a B of seller finance
(11:28):
transactions across the UnitedStates and that adds up to over
125 billion in the last fiveyears.
So sometimes people aresurprised to hear it's that
large of a number.
Justin Bogard (11:39):
Yeah, the loan amounts are pretty high, and
when I talk about sellerfinancing to people in general
that are either in real estateor not in real estate, they just
assume that you know maybe oneperson in their lifetime that
they know actually does it andthey don't realize how
collectively across the country,how big it actually is and how
few of us are in the space thatactually buy it on the on.
(12:00):
You know our secondary marketthat we're kind of creating, and
so the opportunities are justtremendous.
To where and we talked aboutthis last night to where we
don't really run into each othertoo often as far as, like you
know, fighting over assets orwhatnot, because there's just so
much of it out there.
So you just have to know how tomarket to it.
Tracy Z (12:18):
That's very true.
And what's interesting is thatseller financing you know it's
always been around.
It kind of goes up and downdepending on what's happening in
the market, and right nowwhat's happening in the market
is leading to an increase inseller financing.
So we track the dollars and wealso track the count, like how
many transactions, and thedollars went up about 24% over
(12:38):
2022.
And the transaction count,which was about close to 90,000,
went up 7.3%.
So we're seeing right now, inthis current market, an increase
in seller financing.
Justin Bogard (12:50):
That's incredible .
That's incredible.
And then you also last nightbroke it.
We're able to break it down bystate, which was even neater to
see, because you may makeassumptions that your state may
do a lot of transactions butthen it may not do a lot of
seller finance transactions.
So what are the off the top ofyour head?
I know that you may not knowthis off the top of your head,
(13:10):
but what are the top five?
Tracy Z (13:12):
So the top five, texas has always been number one.
So Texas is number one withalmost 25% of the transaction
volume when we look at it bycount, and that's just been true
as long as we've been trackingit.
They have a lot of sellerfinancing in Texas and number
two and three kind of tradespots.
(13:32):
Number two this year wasFlorida and number three was
California but sometimes theyswap around.
And then number four last yearwas North Carolina and Georgia
was number five.
So those are the top fivestates.
The top 10 states actually makeup about 67% of the volume.
So there is, and then all theother states kind of trickling
(13:53):
behind that.
Justin Bogard (13:58):
Yeah, they're significantly smaller.
Texas is such a profoundlystrong seller finance state that
they actually double their morethan double their transaction
and loan volume amount comparedto the second place state, which
was Florida, correct.
Tracy Z (14:12):
Yep, that is exactly correct.
Justin Bogard (14:14):
Yeah, so what?
What's the average down paymenton these seller finance
transactions?
That you're, that, you're, thatyou're that you're.
Tracy Z (14:22):
Yeah, now, that one always surprises people, and it
surprises me sometimes too,because you have this
preconception that, oh, sellerfinancing, is all these zero
down, or?
Justin Bogard (14:31):
500 down.
Tracy Z (14:34):
Now we certainly see some deals like that but,
overall seller financing.
Actually, the average loan tovalue on residential was 74%
last year and so that means thebuyers put down 26% and so the
average no size is about 248,000.
That's gone up over the lastfive years.
(14:56):
It used to be significantlylower, more in the 150, 170
range, but as the real estateprices have gone up in general
and as seller financing getsmore prevalent, we're seeing
that that average goes up.
But yeah, there's a big amountof down payment that we see on
these seller finance deals,which is good.
It's good for the seller, it'sgood for the buyer, it's good
for the investor.
Justin Bogard (15:16):
Absolutely.
The buyer excuse me, theborrower needs to have skin in
the game.
They have some sort of equity.
So the FHA program I don't knowwhat it currently is, the
number 3% sticking in my head,but I think 3% down is what that
home buyer is, the minimum theyneed to put down, I believe, to
get a loan, possibly today.
(15:36):
And it just fascinates me howthose loans get created and I
get it.
You know, everyone deserves achance to buy a home and I'm all
for it.
But you have such a highpropensity to fail in that, in
that mortgage situation, whenyou don't put enough skin in the
game, because it's kind of likewhen you rent it's like, okay,
yeah, I put down my deposit, I,you know, if I threw away a
(15:57):
thousand or $2,000 and just walkaway from this, like you know
I'm, I'm not really out thatmuch and that's kind of what I
feel like borrowers are doing inseller financing.
If you were to create sellerfinancing with extremely low
down payments, like you know,$500 or maybe a couple percent
down.
But when I hear those numbersthat you say, it makes me happy
too.
That 26% down payment on$100,000 sales price, I mean,
(16:21):
that's $26,000.
That's some serious money thatsomebody put into it that they
probably wouldn't want to losevery easily.
Tracy Z (16:28):
Very true and I agree with you, I think, about 10%
down payment.
I like to see that, or more, orI like to see some seasoning,
meaning they made some paymentsover time.
If you don't have that downpayment, they built up some
equity.
We do see some of these deals,too, that have like 10% down and
a 10% second, and so the firstwould be 80%.
So these stats are based onthat first position lien, that's
(16:52):
$30,000 or higher.
It could be wraps if the sellerstill owed some debt and wrap
that with an all-inclusive.
And it doesn't include anycontract for deeds that aren't
recorded.
If they've been recorded, itincludes them.
It doesn't include things likeprivate hard money loans,
because those aren't sellerfinance, those are just private
people lending.
(17:12):
So you know it's a niche withina niche, uh, but it's it's a
great niche and it's really agreat time for people to
understand seller financing Ifthey're buying property or
selling property, not just to bea note investor.
I mean, we hear a lot right nowabout subject to and wraps and
creative financing, and so thisis part of the reason I also
believe that the numbers aregoing up is just more people are
(17:34):
being active in this market inthese higher interest rates,
seller financing can make sense.
Justin Bogard (17:40):
Yeah, and they're learning how to be more
compliant and to do things theright way because of people like
myself, tracy Zee and all theother folks that we know in the
industry that have an outgoingvoice on some sort of platform
like this that can help educatethem on what to do.
Because, honestly, and I'm sureyou run into the same thing
some of these newer sellerfinanciers or originators, they
(18:01):
just don't know what they don'tknow.
Originators, they just don'tknow what they don't know, they
just they.
They remember like, oh my, mybuddy, you know, did this back
in the eighties with this landcontract thing, you know, doing
air quotes here, cause in theMidwest where I'm at, that is
the the good old boys is what wecall them.
That's how they did stuff.
They said do a land contract,don't record it, have them sign
the, the D, back to you atclosing, but just don't record
(18:23):
it.
And they had all thesetechniques that they did because
it worked back then, becausethat's how they got away with it
.
Today it doesn't work like that, because if you take a
unrecorded land contractcontract for deed to a judge and
you're trying to forfeit theperson out of there and they see
that they've made a fewpayments or they put some sort
of equity into it sorry, we willneed you to record that and go
(18:44):
through a foreclosure payments,or they put some sort of equity
into it sorry, we will need youto record that and go through a
foreclosure.
So it's, it's becoming a goodthing that judges are putting
the hammer down on this, becauseI'm feeling that a lot of
people are understanding, likethe note, mortgage note need to
trust is the proper way to go,as opposed to the the old school
way of doing things with.
You know, the contract for D,land contract type of type of
instrument that you hear.
Tracy Z (19:05):
I would agree with that .
Justin Bogard (19:06):
Yeah.
So thank you for delineatingexactly how this data is derived
, because you were leading medown to my next question, which
I'm glad that you did, becauseyour numbers are actually very
conservative.
So when you were saying thatthis is specific to $30,000 or
(19:29):
more in unpaid balance, this isspecific to first lien and it's
specific to the fact thatsomebody has to own the property
and that owner has to resell itto somebody and carry back the
financing.
So that is even more of aspecific part of the pie there.
So there's a whole shadow ofinventory that's not including
(19:49):
this data.
So who knows what it could be?
It could be double the numbersthat you say right now.
We don't know, but at least weknow it's a minimum and that
minimum is pretty impressive tobegin with.
Tracy Z (20:00):
Well, it's been enough.
For at least 30 plus years I'vebeen in business.
Justin Bogard (20:06):
So I think it'll continue to be enough.
Yeah, the interest rateenvironment question is
something that always investorspoke me on and they try to
figure out and they makeassumptions just on negative
connotations about okay, if theinterest rate raises and you've
bought a note that maybe waswritten at 6% before, they just
assume in their head that youknow that doesn't make sense,
(20:27):
why would I buy that deal if theinterest rate's changing?
But they don't understand theconcept of time, value of money
because they don't realize howmuch of a discount that we got
on that 6% note that we bought,you know, a few years back and
that there's, I mean, interestrates, would have to be
astronomical for us to, you know, feel like it's going to be an
issue for us on that investmentwe made maybe four or five years
(20:49):
ago.
Tracy Z (20:50):
Yeah, very true.
So if we want, if we wanted a10% return IRR over time, time
value of money on a 6% note, wejust have to figure out what we
can pay in today's dollars forthat.
And you know, if people pay offearly and we bought at a
discount, our yield actuallygoes up.
And you know most notes do payoff seven to 10 years.
It was happening much quickerwhen people were refinancing at
(21:12):
very low rates.
I think we'll go back to thatseven to 10 year average now.
But it's not just residentialthat this is on, it's also on
commercial property land.
There's tons of business notefinancing that does involve real
estate that aren't in thesenumbers.
I mean, we interviewed abusiness note buyer and they buy
(21:35):
a ton of these seller financenotes that don't involve real
estate, all the stuff thatdoesn't qualify for SBA.
We see all these mobile homesand mobile home parks that are
seller financed.
None of that data is in herebecause that's not considered
real estate, right, it'sconsidered property.
So just to validate your pointyeah, this is just a small
specific piece of that pie.
Justin Bogard (21:57):
Okay, so of the pie that, we're showing, the
data on the 90,000 transactionsthat were created in 2023, the
$28 billion of loan.
Balance Of that, what isresidential commercial land?
And we'll call it miscellaneous.
Tracy Z (22:14):
Yeah, that's a great, great question.
So we like to look at that.
So we look at it both on thecount and the dollar amount.
So residential was about 50% ofthe dollar and about 63% of the
count, so it was the lion'sshare.
And then commercial was about33% of the dollars and 17% of
(22:34):
the count, so they're biggertransactions.
And land was about 13% of thedollars and 16% of the count.
Keeping in mind you had thisgreat point last night keeping
in mind that people think, oh,there's a lot of seller,
financing and land, but when wesay 30,000 or more, we probably
got rid of a lot of land.
Justin Bogard (22:54):
Yeah, we did.
Tracy Z (22:55):
We got rid of a lot and I thought it was very
insightful when you said that.
And then we have this littlebucket of of uh, uncategorized
because the counties don't tellus, but we figured it it.
It averages out about the sameas those other three categories,
so it does include all of those, if they were seller financed,
because all of that's consideredreal estate.
Justin Bogard (23:14):
What was the average balance on commercial
seller carryback data that youhad?
Tracy Z (23:21):
Yeah, that was 613,000 as the average seller finance
note and that was up 41% fromthe prior year.
So we're seeing a lot morelarger dollar commercials.
Turning to seller financing,and I just think that's an
indication of what's happeningin that commercial market.
It's a lot harder to getfinancing on commercial deals.
(23:41):
It's harder to get financing ona residential home as well.
When we talk about the mortgagecredit availability index
excuse me, mortgage creditavailability index that we're
seeing it's a lot tighter to geta home loan for a property you
want to live in and we also knowon the commercial side it's a
lot harder to get a loan oncommercial property.
(24:03):
So we see more seller financinghappens.
Justin Bogard (24:06):
That's impressive .
So in 2022, they had numbersand then in 2023, the commercial
market.
I don't really recall off thetop of my head if it was good,
bad or ugly.
As far as raising in propertyvalue, I think it was starting
to be stagnant to starting tofall.
But thanks for bringing thatpoint up about the banking
(24:27):
system on commercial, which isprobably why we're seeing such
an influx of seller financingcommercial, because people, they
don't have any other choice andthey don't have another choice.
Seller financing becomes themost prevalent way to get the
deal done because typically theydon't have the a hundred
percent cash to pay for thatcommercial property, nor the
bank's lending on it.
So I, I am seeing it, I'mfortunate enough I I am helping
(24:51):
with a big trade desk right nowand for my own stuff that when I
see this stuff it's veryballoon heavy within five years
and and so that tells me thatyou know, people are banking on
the fact that the rates aregoing to be coming down or just
be more palatable for commerciallending and then the banks will
(25:11):
be able to start really be morewhat do I say friendly to
commercial borrowers to be ableto refi that loan.
Tracy Z (25:20):
Yeah, you know, justin, people hear this data and you
probably get this question a lottoo.
They're like oh, this is reallycool, you can create your own
notes.
And they're like we're justgoing to go out and create.
We got this commercial loancoming due with the balloon and
we can't get it refinanced atdecent rates.
Or people are revaluing whatthey think the property is worth
(25:42):
.
There's all kinds of problemsgoing on in the commercial
lending.
We'll just write our own noteand go sell it.
Well, that's not a sellerfinance note.
There's got to be someconsideration.
So the consideration is eitheryou've sold property and allowed
the buyer to make payments toyou, or, if you're truly making
a loan, that's not a sellerfinance deal.
That's truly originating a loanand you have to loan somebody
(26:03):
the money in order for them tohave to pay you back the money.
So you know, people say I'mjust going to create my paper
and go out and sell it.
Just remember it has to beconsideration.
Either you're selling theproperty and taking back a note,
or you're originating a notebecause you're lending somebody
the money.
Justin Bogard (26:19):
That's a great distinction.
I never thought about thatanalogy before.
But if you're physically givingsomebody money to go buy
something, that is not a sellercarryback situation.
Seller carryback situation iswhere you're gifting them, I
guess, a loan, if you will, andno true money physically is
changing hands.
Tracy Z (26:37):
Yes, and it's different because different laws apply,
especially when you talk aboutresidential, if it's seller
financed or if it's a loan, andwhat kind of licensing you have
to have and what kind ofdisclosures have to be done.
So it's important to know thedistinction and whether that
matters on your transaction, andthat's definitely more true of
residential owner occupied thanis commercial or investor deals.
Justin Bogard (26:58):
And, by the way, as a little side note for those
of you listening to this awesomeepisode today, don't try to do
this yourself.
If you don't really know whatyou're doing or haven't asked
the right questions, you need totalk to a professional like
myself or Tracy or whoever is inthis business that's promoting
what they do, because there areso many things that you will do
wrong that you don't realizeyou're doing wrong or not
(27:19):
compliant that you just wannapay to have somebody do it.
You wouldn't go to WebMD onlineto diagnose you know you're.
If you think you had cancer,right, you would actually go to
an oncologist and, you know,have them properly diagnose you.
So that I would just saystrongly, use a no professional
to help you and they'll guideyou to the proper you know
attorney or person that candraft the documents for you, so
(27:50):
that question doesn't get askedenough by uh I want to say uh
amateur seller financiers.
Tracy Z (27:52):
Yeah, they don't know.
The saying is you don't knowwhat you don't know.
So that's why we do thesethings to provide information to
people, not to scare them,because there's plenty of
opportunity to go around.
Just make sure you understandwhat you're doing and use
professionals.
A lot of us use uh mlosmortgage loan originators when
we're doing in use professionals.
A lot of us use MLOs mortgageloan originators when we're
doing in the residential spaceor even in the land and
commercial, because they helpyou put together a nice package
(28:13):
and be sure that borrower, buyerdepending on how you're looking
at it seller financing, yourbuyer of the property is your
borrower, right?
So we sort of use thatinterchangeably a lot.
But you want to be sure thatthey have the income and the
credit history to repay you,because you don't want to sell
them a property and not get paidand then get it back and it's
not in good condition.
(28:33):
So you want to make sure toprotect them and to protect you
that they have that ability tomake those payments.
Justin Bogard (28:40):
All right Land.
What's the percentage of landas far as down payment and loan
to value?
Ah yes, and the average balance.
Tracy Z (28:48):
So you know you like I have seen land notes written so
many different ways.
But we talk about the average.
The average is a 70% loan tovalue, which means 30% down last
year and the average note sizewas $263,871, which is about six
and a half percent up from theprior year.
Justin Bogard (29:08):
On the note size A land note.
Tracy Z (29:10):
Yeah, that's pretty big .
I see so many small ones.
How about?
Justin Bogard (29:14):
you A lot of small ones, probably typically
45K and under, and the parcelsare probably, you know, under
eight acres.
I would say.
Tracy Z (29:22):
Yeah, yeah.
Justin Bogard (29:24):
So a $267,000 loan on a piece of land that's
probably got to be a decenttrack, or maybe an area that's
more affluent that has a higherproperty value.
Tracy Z (29:34):
Yeah, the problem with those land deals there's a lot
of big ones and they skew thosenumbers.
So we probably should do a meanon that than a true average
right, just because you throwout the big and throw out the
little.
One thing I like about land isI like to see that down payment.
I like to see that it has compsthat are not just in that same
(29:58):
development that the developercreated.
I like to see that borrowerthat they have good credit
history on other trades.
That's even more important onland and I like to do partials
on them.
So I like to buy hey, let's buythe next five years.
If that pays well, well, maybeI'll buy the rest or I'll buy
another five years.
So it keeps you and that personwho created that note kind of
(30:19):
in the deal, especially ifthey're creating multiples of
them.
So I'm a big fan of the partialpurchase, where you just buy
the next certain number ofpayments and then, when it pays
well, you buy some more.
So that works really good onland deals.
Justin Bogard (30:32):
I'm absolutely on the same page with you on that.
I would much rather just buyall partials and it just
mitigates your risk so much asthe lender because you're going
to be in the first position ofthe first position note, so to
speak.
You know you're getting thatfirst entitlement coming to you,
30% down on an average of$267,000 loan.
What's that?
(30:53):
80, 80,000.
I'm just doing some rough mathin my head Like that's, that's
pretty sizable.
So it it happens and I I likethat.
I like the fact that land hassizable down payments.
It is a little bit more riskybecause it's not typically
somebody's primary residence.
So they probably have their ownmortgage, they have their own,
(31:14):
you know, liabilities and stuffthat they do.
That's higher on the prioritylist.
So we do tend to take a littlebit more discount on land deals.
But I tell people you know, thebest deal I can see out there
is 50% down, 50% financing.
That's where.
What's that?
Tracy Z (31:33):
Yeah, I would wish.
I wish all our deals were that.
Justin Bogard (31:35):
That'd be sweet Well especially with land,
because I feel like you know,you got to have some skin in the
game Like you can't.
You know dirt doesn't goanywhere but it doesn't.
You know, lose value that much.
It doesn't go anywhere but itdoesn't, you know, lose value
that much.
But at the same time you knowit's if it's not in a great area
, you know it's.
It's going to be hard pressedfor you to be able to move that
because not a lot of buyers arein that arena, so to speak.
(31:58):
So I always tell people youknow the single family home in
the Midwest area is the absolutebest loan to get If you want to
make sure you have a ton ofexits out of it if it goes bad.
But land is a little bitdifferent.
Tracy Z (32:13):
So we do take a little bit more discount.
Yeah, and you want to avoid thedesert and the swamp?
Justin Bogard (32:23):
Yeah, that's true .
Yeah, yeah, I've been guilty ofthe swamp Some swamp land in
Florida I bought.
Luckily, I noted my way out ofthat and I actually came out
ahead a little bit.
But for the longest time Iwasn't using my seller finance
brain and I just I bought theparcel and like a small IRA I
had, and just kind of forgotabout it and I tried to sell it
for cash and I realized like, ohmy God, like I am not getting
cash offered anywhere near whatI have into this.
(32:44):
And so when I started usingseller financing promoting it, I
was just like why did it takeme so long to figure this out?
I'm in this business and I havemy own inventory that I'm not
even taking advantage of likethat.
Tracy Z (32:56):
So yeah, Well, people ask about inventory and I always
like well, the best place tostart.
Do you have any property youwant to sell and create a note?
That's the best way to createyour own inventory.
If not, then you can start goout marketing like we do direct
to sellers.
You know, networking peoplewith IRA money, all of those
great things.
Justin Bogard (33:16):
Cool Tracy in your lifespan of being in the
real estate and specifically thenote space, being female in
this business is probably moremale dominated.
I'm just making the assumptionand if you think it's closer to
equal then let me know.
But I feel like it's moremale-dominated.
Is that the case?
Tracy Z (33:35):
Yes, there are more females in it now than there
used to be, but I mean therewere many times those first 10
years.
I was like the only female.
Justin Bogard (33:45):
You felt like one of the two.
Tracy Z (33:47):
Yeah, but I've seen a lot more women get involved with
it as women get more involvedin real estate investing and
they like the note side of itbecause it's not as hands-on but
it's good with thedetail-oriented paperwork and
running the numbers, and so menand women can both excel at it.
But yeah, I would definitelysay finance over the years has
(34:07):
traditionally been a maledominated field.
I was mentored by a gentlemanback when I started at the
institution and I appreciatethat very much for him doing
that and one time I actuallythanked him and he goes well.
I have a daughter about yourage and I hope somebody would do
the same for her someday.
So there's a lot of greatpeople out there, male and
female.
I know there's a lot of badstories out there too, but I
(34:29):
mean, unfortunately I have somegood ones.
So it's it's nice toacknowledge those people who've
done a nice job mentoring alongthe way and now you get to pay
it back or pay it forward.
Justin Bogard (34:37):
Yeah, no, I'm glad to see, and I'm a firm
believer of, you know, havingequality across the board in any
industry.
I don't, I don't think thereshould be a designation because
of one gender or another for,like you know, pay scale and
opportunities and stuff.
So I'm sure you've seen this.
I'm just making the assumption.
But, as there've been manychallenges or many things that
(34:58):
you think, like you know, I wentto that person to try to get
this opportunity, to get thisdeal done and I I feel like I
got treated differently because,you know, I'm a female in this
industry and maybe this was, youknow, back a couple of decades
ago or a decade ago, versus youknow today, like did you run
across that and someone else wasable to get in and get the same
thing done, but you try to doit and you just got.
(35:20):
You were, you were unable to dothat because of the obstacle.
Tracy Z (35:43):
I think that you have to just keep knocking on those
doors.
I think that you have to justkeep knocking on those doors and
fortunately, I'm a stubbornperson and I got the lines of
credit.
You know that always can be alittle bit more challenging.
I mean fortunately.
I mean, let's just be honest,as my husband was also in the
business there are someadvantages to that and he always
jokes.
(36:03):
you know, when people asksomething, he's you know and
they'll look at him and he'slike I don't know, ask her.
She's the detail-oriented one.
He's super smart, he knows thenumbers, he's great at marketing
, but you ask him to go througha due diligence file and he's
just like ugh.
Justin Bogard (36:17):
His eyes start crossing.
Oh my God.
Tracy Z (36:20):
So, yeah, I mean I am not diminishing what anybody's
ever been through and I justalso want to encourage people to
just keep challenging thatstatus quo, just keep making it
happen.
I think there's ways to find itout.
And what's kind of refreshingfor me now I go to these
conventions, we have amembership group and I'm seeing
(36:42):
probably not quite half yet, butwe're closing in on it.
I mean we're at least a thirdnow of ladies doing this as well
, as part of why I started WiseWomen Investors, just so people
could get that confidence to seethat, hey, they can do it too.
And I work with a lot of menand a lot of women and I agree
with you.
I mean, when we don't have totalk about it anymore, I guess
flat wings were truly equal anduntil then, we have to talk
(37:05):
about it, do something about it,right?
Justin Bogard (37:07):
no, I'm glad.
Thank you for all those thanksfor bringing it up.
Tracy Z (37:10):
Not not very many people to ask me that question
over the years and you didn'tforewarn me, so I'm like how do
I want to answer that?
Justin Bogard (37:15):
it's a good question oh, you know, I just
kind of off the cap.
I'm just kind of curious ofwhat challenges people go
through.
I'm, I'm, I consider myselfempathetic and I like to be
inclusive and I, like peoplethat you know maybe don't have
the same um, I want to sayadvantages or opportunities as
others.
I just don't think that's right.
(37:35):
I want to see everyone have astriking chance, because I want
the best of the best to be doingwhat they do so we can all
learn from it or, um, you know,excel from it, and I'm just a
believer in that.
So I just always, you know,admire somebody that didn't have
the same opportunities maybe asme and, just you know, commend
them for, for sticking to it andhaving the tenacity and the.
You know, I think stubbornnessis actually a good quality
(37:58):
because it allows you to havethick skin and, just, you know,
doing the, uh, the brushing theshoulder here, wiping the haters
away, so, uh, yeah, I thinkit's awesome.
Tracy Z (38:11):
Yeah, and I think empathy is good in this business
.
Uh, listening is good.
So if I deal with a mom and popseller who maybe they've only
taken back one note their wholelife, um, you know, I want to be
approachable.
I want to understand whatchallenge they're trying to
overcome in selling their noteor what opportunity they're
seeking.
So, by listening and not beingoverbearing and demeaning to
(38:35):
them, I think that can be anadvantage, and so I think you
can be that way, whether you'rea man or a woman, but it's
something that you need tocultivate, especially when you
have a whole lot of knowledgeand they don't.
Don't make them feel like that.
You have to instill confidence,but you want to be approachable
, that you're there to help.
There's been times I've toldpeople selling me your notes not
the best thing to do.
(38:55):
Here's some other things thatwould be better for you to do,
and if that doesn't work out,then yeah, let's talk.
Uh, but not always.
You're there to solve and toserve and not just to make a
buck, and I know that's hard todo when you're trying to make a
living, but I think you'vealways got to put the people
first, and it took me a while tohonestly realize that because,
(39:18):
just like everybody, when you'restarting out your eyes are more
focused on the dollars, but youfind that they follow if you
put the people in the bestsolution first.
Justin Bogard (39:26):
Absolutely, that's very well said if you put
the people in the best solutionfirst.
Absolutely, that's very wellsaid.
I think that industries ingeneral not just what we're in,
but a lot of industries I seethere's very stereotypical silos
of groups of people.
You know you got the we'll say,the older generation of people.
We'll say like older men, youknow they may have this type of
(39:47):
mentality or they're perceivedas having this mentality, and
then you have, you know, a groupof women that are trying to get
into that industry, and youhave younger men, professionals,
and you have, you know,different races.
Unfortunately, it's been thatway to where people you know
maybe aren't giving that personthe respect they deserve.
And I feel like in our business, especially since I've been in
it since about 2016 full time, Idon't see that.
(40:07):
I don't see any any gender, Idon't see any race issues.
I see everyone, just as long asthey have the knowledge that
they're all equal, even a newerperson, versus somebody that's
been in the business for 30 or40 years, and I just think
that's really cool, and not alot of industries today I don't
think can say that.
Tracy Z (40:25):
I agree, yeah, and we're kind of the main street
approach and I think that makesus more real and down to earth,
because we're having to findsolutions to problems that the
banks and the Wall Street peoplehaven't.
And maybe that just by nature,that by default or that way,
maybe it's a good question.
Justin Bogard (40:41):
We're all in this cave together.
We got to figure out how to getout to the light on our way
through it.
Tracy Z (40:46):
I will also say I've met a few people over the years
who did not have other people'sinterests at heart.
So I would also say you knowthe whole trust, but verify if
you're doing business withsomebody.
Go out and search them on theinternet.
It's real easy to find out ifthey've got lawsuits or
judgments or cases against them.
So I'm not here to sayeverybody has your best
interests at heart, but I thinkyou can find those that do
(41:07):
pretty quickly.
Justin Bogard (41:08):
Yeah, and we you and I could probably won't do
this on the show right now, butwe can probably count them on
our hand, the people that youdon't want to do business with,
because it's such a smallcommunity that those of us talk
and and and believe me, ifyou're out there listening, we
do talk to each other and belike, hey, I had this deal and
it went sideways, or this persondid this to me.
I'm just letting you know, andwe all let each other know, like
, hey, this is happening, thisis a person that you want to
(41:30):
just kind of make sure youdefinitely follow through with
some due diligence and make surethat everything is up to code,
if you will.
Tracy Z (41:40):
Yeah, and you know it's a great business.
We see some people are mom andpops doing that one note in 12
months.
That's about 86%.
We've got people that are doingtwo or more.
That makes up the other about14%.
So there's plenty of room foreverybody in there.
I hope that if people startlooking at seller financing,
they do what you mentioned andthey get the advice and they use
(42:01):
good professionals to make surethey write that paper correctly
, because there's no betterposition to be in than a first
position loan.
I mean, look at the banks,that's why they all do it and so
there's no reason a personcan't do it, or an entity, or
your self-directed IRA or yourLLC, and maybe it's just a piece
of your business.
But as rental rates, cap rates,all these things happening on
(42:23):
rental properties, we're seeingmore people moving over to notes
because one you can get bettervelocity, it can happen quicker,
faster, I can manage more notesand I can manage properties and
I don't have all thoseheadaches of the tenants toilets
, trash.
I can take the opportunity thatis presented by these higher
interest rates we've got goingon right now with not as much
work as a rental, so I thinkit's a good time for people to
(42:46):
hear about it.
I'm glad you have this podcastso people can learn more about
it.
If anybody wants to hear aboutme, we're at noteinvestorcom.
Feel free to visit there, andyou can even download a copy of
the stats that you mentioned.
Justin Bogard (42:58):
Tracy, thank you so much for your tutelage that
you've given me over the years.
Thank you so much for your timetoday on our show.
Thank you for being on ourbroadcast last night.
You and Fred are awesome.
Happy belated birthday to Fred.
Tracy Z (43:11):
He's on a birthday trip right now.
He's out fishing in the Keys.
I want to live his life.
Justin Bogard (43:17):
He always has a cigar and he's fishing.
He's doing his cool stuff.
I want his life.
I am living vicariously throughFred right now.
That's right.
Tracy Z (43:30):
Thank you, Justin, for what you do and thanks for
having me on the show and thanksthe other day for helping me
out on a deal up in your neck ofthe woods.
Just to say that we're acommunity.
I appreciate that.
Justin Bogard (43:38):
Yeah, you're welcome, and Fred Tracy also do
the big online event every yearcalled the Cash Flow Expo, so
that'll come around nextFebruary.
So look out for the marketingfor that.
You definitely want to jointhat.
It's free and then you can buythe recordings and the videos if
you can't stay and watch theshows.
I think you guys are three dayslong now on.
Tracy Z (43:58):
We went four days.
I talked Fred into four days.
I don't know if he's forgivingme yet.
Normally it is three.
You're right, but we had somany good speakers, yourself
included, that we just had to goto four days.
And if anybody missed it, theycan actually still get the
recordings.
It's all very timelyinformation.
Justin Bogard (44:14):
Yeah, it's cool.
You can jam pack it all intoone day and you might get it so
big.
Now you might have to do itlike one a month for a couple of
months.
You know, do a session, do acouple hour session on this day
of the month and then you know,next week you're doing these.
So people catch you live.
Tracy Z (44:31):
We'll take that under advisement.
Justin Bogard (44:34):
I'm no, I'm no way.
Tracy Z (44:35):
I'm still forgiving me for the four days, so yeah.
Justin Bogard (44:38):
I'm sure it's a lot of work.
Thank you for doing that.
Thank you for providing thedata that you do, tracy, you're
awesome.
Thanks for being my friend aswell.
And, guys, this is episodenumber eight with Tracy Z,
season six on the Be the Bankpodcast, and we will catch you
guys on the next episode.
And thanks, tracy.
Tracy Z (44:54):
Thank you, Justin.
Justin Bogard (44:56):
Bye.
Tracy Z (44:57):
Bye.
Narrator (45:02):
Thanks for listening to Be the Bank.
We hope you learned somethingfrom today's show.
If you enjoyed this episode,please rate and review us.
Plus, check out our channel onYouTube and follow us on
Facebook and Twitter atBeTheBank, and on Instagram at
BeTheBankPodcast.
Bethebank is sponsored byAmerican Notebuyers.
Thanks again for listening.
Thank you in real estate to create real wealth and
passive income for you and yourfamily.
He'll share stories of realestate investments done right,
walk you through the process ofowning a real estate note and,
most importantly, educate you soyou can be the bank this is Be
the Bank brought to you byAmerican Notebuyers.
Now here's your host, justinBogard.
Justin Bogard (00:46):
Hey, hey, listener, welcome back.
Thank you for joining us againon the Be the Bank podcast.
This is season six, episodenumber eight.
Today I have my friend, tracy Z, that's going to be on the show
and we're going to be talkingabout all the seller finance
data that has been created overthe last year so you can have
the numbers in mind of what downpayments are and kind of how
(01:09):
this is breaking down, so youcan see how big the market is.
It may surprise you on some ofthe numbers.
Stay tuned, tracy Z.
Tracy Z (01:30):
Hello Justin, hey, congratulations.
Season six, that's.
Impressive.
Justin Bogard (01:34):
I know, thank you .
I was thinking about the otherday and I know that you and I
were on a live broadcast lastnight on our broadcast that we
do once a month and I think Imentioned it on there.
But I've been doing like thislive stream and about a podcast
format for I think about six,six and a half years now and I
(01:54):
think I've only missed like twolive episodes before during that
run.
So it's just like that's pretty, that's a lot of content.
Tracy Z (02:02):
It is and it's commitment.
You know you just do it overand over and it builds up over
time.
And that's like sellerfinancing.
I've been doing that for 30years.
It builds up over time.
So I know we both have apassion for node investing with
a niche down into sellerfinancing.
So excited to be here today totalk about it.
Justin Bogard (02:19):
Yeah, thanks, and you've been on one of my
iterations of this podcastbefore I've been through.
I think this is the thirditeration that I've had it
started off with.
It's called the Super E&Jpodcast.
So my good friend ElizabethSickles she likes to be called
Super E, so we know her as SuperE and so she is just very
passionate, she's super smartand she got into the short-term
(02:42):
Airbnb space and so we wouldalways stay connected since we
both got in this stuff around2015 to 16.
And we'd be havingconversations and we're like,
wouldn't that be fun if somebodywas a fly on the wall just
listening to our conversations,of our challenges and what we're
going through and stuff.
So then we started that and thenwe blended it into a different
format called the two wealthshow, and then she basically got
(03:03):
too busy for me, so so she had,she went off and, yeah, well,
no, she didn't mean it in a badway.
Kudos to her.
She's just, she's one of thosesuper entrepreneurs that uh, uh,
I can't say enough good thingsabout her.
She's just a good person to bearound.
She's.
She's always got the best, bestthing in mind for her customers
(03:24):
and clients.
Tracy Z (03:24):
Yeah, those people that leave you feeling good after
you talk to them.
That's my goal.
I know it's your goal too.
Justin Bogard (03:30):
Yeah, yeah, but I like doing this sort of thing.
I guess when I first started Idon't know if you felt the same
way, but I was a little bit moreshy and didn't really know how
to present myself and what I do.
And then I start gettingcomfortable with it and I kind
of like the style of not reallyteaching, I guess, just kind of
(03:50):
presenting my experience to theaudience.
And so, luckily, a few peoplefollow me and, you know,
hopefully I've changed, you know, some people's perspectives or
at least made them some money.
Tracy Z (03:59):
So absolutely to both.
Justin Bogard (04:02):
So Tracy?
Where are you at today?
Absolutely to both.
So Tracy, where?
Tracy Z (04:05):
are you at today?
I currently primarily reside inCentral Florida.
I'm originally a WashingtonState gal and moved here in 2000
.
And we travel quite a lot.
It's one of the great thingsabout note investing you have
some freedom of where you wantto be.
So we've spent some time inGuatemala, nicaragua, italy, and
I always get back to thePacific Northwest in the
summertime to visit all myfriends and family, usually like
(04:27):
Florida as the home base in thewinter.
Justin Bogard (04:31):
I don't know if you knew this about me, but I
actually lived in a camper for ayear.
I tried to be a nomad, so I didI did recently actually and so
I was always filming and stuffinside the camper and so I would
have this whole process of I'dhave to take the dining room
table and like, convert it intolike some sort of space that
worked for the camera and thelighting, and I'd always have to
(04:52):
make sure I'd have a goodeither a cell reception or wifi
that I could get a good signaland it was quite interesting.
But back to what you're sayingabout the freedom of being
virtual or not being tetheredgeographically with what we do,
it's just a really cool feelingthat you can just go anywhere
and we're international.
Really.
Tracy Z (05:09):
Yeah, absolutely.
You know, I read this recentlyand I'm like, ah, this resonates
.
Controlling your time is thehighest return money pays and
you know that's why I got out ofinstitutional note investing in
personal note investing isbecause I wanted more control
over my time.
That takes different iterationsas you go through life, so at
(05:30):
first I wanted to spend moretime with my daughter, as she
was growing up and then I wantedall this flexibility to travel
and live anywhere.
Now I really love it because Ihave this opportunity to share
people knowledge and experiences, that maybe they'll gain
something and they can get someof that freedom and control over
their time, because that's evenbetter than the yields we get.
(05:50):
On note, investing is thatfreedom over our time.
Justin Bogard (05:54):
And thanks for saying that and I've finally
learned that over the past fewyears that the return on time is
much more valuable than whatyou're trying to look for on
your investment.
Especially as an entrepreneuror someone that's doing this
full time, you really want tomake sure you have that
flexibility when you want, whichis why we can create our own
schedule.
So I know you and your husband,fred, are both in this business
(06:15):
and you kind of grew up in thisbusiness since, I think, the
late 80s and you talked a lotabout that.
Gave us a good history of thatlast night on our live show.
So if you guys want to checkout that, I highly encourage you
to go to the AmericanNotebuyers YouTube channel and
check out the April 10thbroadcast that we did last night
and Tracy Z was on there alongwith Chris Sevigny and Jay
Redding.
But, tracy, what kind ofstarted you in the note space to
(06:42):
begin with?
Did you just run across it bybeing in real estate or what?
Tracy Z (06:46):
Yeah, I was fortunate to find it, to discover it,
because I grew up in a ruralarea up on the Washington, idaho
, canadian border kind of cornerand I knew about seller
financing, so that in ruralareas you'll see some seller
financing.
That's where the seller ownsthe property, they sell it to
buyer and they allow the buyerto make payments to them instead
(07:07):
of going out and getting a bankloan.
So the seller is truly allowingto make payments over time.
Some people call it ownerfinancing, some people call it
installment sales.
You might have here a contractfor deed, but the seller is
allowing the buyer to makepayments to them instead of
getting a traditional bank loan.
So I was aware of that.
I used to work for a titlecompany, an attorney and even an
escrow servicing company.
They had all three of thosethings in an office and somebody
(07:30):
would pay us to go in and lookat the microfiche.
I'm dating myself here.
Narrator (07:35):
Yeah.
Tracy Z (07:35):
To pull up the courthouse recordings where the
seller sold and took backpayments because they wanted to
market to those sellers and buytheir notes Different than bank
loans.
So these are individuals, right?
Not banks, not Wells Fargo,Bank of America, any of that.
So I was exposed to it, but Ididn't really think much beyond
that.
And then I had a big change inmy life and I moved to the big
(07:59):
city I say that in air quotes asa joke of Spokane, Washington
and there was a company therethat was buying seller finance
notes and they'd been doing itsince the 1950s.
So here I come in 1988 and I'mlike, wow, that's cool.
So I went to work for themdoing closing and real documents
and somebody introduced me tothe financial calculator and I
(08:19):
was hooked.
I'm like whoa you're doing this,you're buying at a discount,
you're getting these kind ofyields.
So I worked with them and movedmy way up into underwriting and
due diligence and marketing andwas a vice president with them
and helped them turn them intomortgage backed securities,
which hadn't been done withseller financing notes before
Wow.
So all of that led to 1997.
(08:40):
I also met my husband, fred,through the business.
I also met my husband, fredthrough the business 1997, we
started our own note investingcompany and we're at
noteinvestorcom and we've beenbuying and selling real estate
notes for ourselves since then.
So got an education on someoneelse's dime.
Thank you very much.
I so appreciate that and nowget to apply it for myself and
share that knowledge with others.
Justin Bogard (09:05):
How often were you seeing seller finance
transactions when you're workingfor that title company Like?
Out of however many comethrough in a day like or a month
like, what percentage would youjust throw?
Tracy Z (09:12):
out.
Where I was up, there was, youknow, an average of three.
We used to say average of threeto 6%.
I think that's a little bithigh.
Perhaps it really depends onyour state.
Some states have more of it andothers have less, as we'll look
when we talk about the datatoday.
Justin Bogard (09:28):
So, speaking of the data, every year everybody
gets excited to see thesenumbers because well, at least I
think so I get excited for it.
I'll just say that much.
I won't.
But you get to post like justjust snippets of information and
you have a special presentationthat I know that you do, and
you have a great slide deck thatyou show.
(09:48):
These numbers are much moredetailed.
If you guys want to see thosenumbers in greater detail on a
PowerPoint, check out ourYouTube stream we did last night
on the April broadcast on theAmerican Opirus YouTube channel.
Basically just talk about howyou come up with these numbers
and when you started doing that.
Tracy Z (10:07):
When I worked for that institutional investor we paid
some people to do some marketresearch, but it was really hard
to get ahold of courthouse datawithout sending somebody to
courthouses all over the UnitedStates.
So, fast forward to today.
We don't have to use microficheanymore.
Justin Bogard (10:19):
Thank God right.
Tracy Z (10:21):
Thank goodness yeah, I love technology and that we've
embraced it and so many countiesacross the United States have
all of their recordings aspublic data and you can go look
that information up.
So we work with a data providerthat scrapes that data so we
don't personally have to go lookit all up and he pulls down all
(10:43):
of the seller finance dealsacross the United States.
I think he's got about 2200 plusstates or, excuse me, counties,
not states and I think there'sover 3000 counties, but he's got
most of the big, large county.
There's still some countiesthat are not online or there's
not enough sales to make itworth it to go pull the data
(11:05):
line or there's not enough salesto make it worth it to go pull
the data.
So we use that data and then werun it through a whole series
of different calculations tokind of come up with some
interesting stats and the one Iwant to start us off with in
2023, so I know we're in April2024, but it takes some time for
all this data to get compiledand get recorded and get
downloaded.
So last year we had 28 billionwith a B of seller finance
(11:28):
transactions across the UnitedStates and that adds up to over
125 billion in the last fiveyears.
So sometimes people aresurprised to hear it's that
large of a number.
Justin Bogard (11:39):
Yeah, the loan amounts are pretty high, and
when I talk about sellerfinancing to people in general
that are either in real estateor not in real estate, they just
assume that you know maybe oneperson in their lifetime that
they know actually does it andthey don't realize how
collectively across the country,how big it actually is and how
few of us are in the space thatactually buy it on the on.
(12:00):
You know our secondary marketthat we're kind of creating, and
so the opportunities are justtremendous.
To where and we talked aboutthis last night to where we
don't really run into each othertoo often as far as, like you
know, fighting over assets orwhatnot, because there's just so
much of it out there.
So you just have to know how tomarket to it.
Tracy Z (12:18):
That's very true.
And what's interesting is thatseller financing you know it's
always been around.
It kind of goes up and downdepending on what's happening in
the market, and right nowwhat's happening in the market
is leading to an increase inseller financing.
So we track the dollars and wealso track the count, like how
many transactions, and thedollars went up about 24% over
(12:38):
2022.
And the transaction count,which was about close to 90,000,
went up 7.3%.
So we're seeing right now, inthis current market, an increase
in seller financing.
Justin Bogard (12:50):
That's incredible .
That's incredible.
And then you also last nightbroke it.
We're able to break it down bystate, which was even neater to
see, because you may makeassumptions that your state may
do a lot of transactions butthen it may not do a lot of
seller finance transactions.
So what are the off the top ofyour head?
I know that you may not knowthis off the top of your head,
(13:10):
but what are the top five?
Tracy Z (13:12):
So the top five, texas has always been number one.
So Texas is number one withalmost 25% of the transaction
volume when we look at it bycount, and that's just been true
as long as we've been trackingit.
They have a lot of sellerfinancing in Texas and number
two and three kind of tradespots.
(13:32):
Number two this year wasFlorida and number three was
California but sometimes theyswap around.
And then number four last yearwas North Carolina and Georgia
was number five.
So those are the top fivestates.
The top 10 states actually makeup about 67% of the volume.
So there is, and then all theother states kind of trickling
(13:53):
behind that.
Justin Bogard (13:58):
Yeah, they're significantly smaller.
Texas is such a profoundlystrong seller finance state that
they actually double their morethan double their transaction
and loan volume amount comparedto the second place state, which
was Florida, correct.
Tracy Z (14:12):
Yep, that is exactly correct.
Justin Bogard (14:14):
Yeah, so what?
What's the average down paymenton these seller finance
transactions?
That you're, that, you're, thatyou're that you're.
Tracy Z (14:22):
Yeah, now, that one always surprises people, and it
surprises me sometimes too,because you have this
preconception that, oh, sellerfinancing, is all these zero
down, or?
Justin Bogard (14:31):
500 down.
Tracy Z (14:34):
Now we certainly see some deals like that but,
overall seller financing.
Actually, the average loan tovalue on residential was 74%
last year and so that means thebuyers put down 26% and so the
average no size is about 248,000.
That's gone up over the lastfive years.
(14:56):
It used to be significantlylower, more in the 150, 170
range, but as the real estateprices have gone up in general
and as seller financing getsmore prevalent, we're seeing
that that average goes up.
But yeah, there's a big amountof down payment that we see on
these seller finance deals,which is good.
It's good for the seller, it'sgood for the buyer, it's good
for the investor.
Justin Bogard (15:16):
Absolutely.
The buyer excuse me, theborrower needs to have skin in
the game.
They have some sort of equity.
So the FHA program I don't knowwhat it currently is, the
number 3% sticking in my head,but I think 3% down is what that
home buyer is, the minimum theyneed to put down, I believe, to
get a loan, possibly today.
(15:36):
And it just fascinates me howthose loans get created and I
get it.
You know, everyone deserves achance to buy a home and I'm all
for it.
But you have such a highpropensity to fail in that, in
that mortgage situation, whenyou don't put enough skin in the
game, because it's kind of likewhen you rent it's like, okay,
yeah, I put down my deposit, I,you know, if I threw away a
(15:57):
thousand or $2,000 and just walkaway from this, like you know
I'm, I'm not really out thatmuch and that's kind of what I
feel like borrowers are doing inseller financing.
If you were to create sellerfinancing with extremely low
down payments, like you know,$500 or maybe a couple percent
down.
But when I hear those numbersthat you say, it makes me happy
too.
That 26% down payment on$100,000 sales price, I mean,
(16:21):
that's $26,000.
That's some serious money thatsomebody put into it that they
probably wouldn't want to losevery easily.
Tracy Z (16:28):
Very true and I agree with you, I think, about 10%
down payment.
I like to see that, or more, orI like to see some seasoning,
meaning they made some paymentsover time.
If you don't have that downpayment, they built up some
equity.
We do see some of these deals,too, that have like 10% down and
a 10% second, and so the firstwould be 80%.
So these stats are based onthat first position lien, that's
(16:52):
$30,000 or higher.
It could be wraps if the sellerstill owed some debt and wrap
that with an all-inclusive.
And it doesn't include anycontract for deeds that aren't
recorded.
If they've been recorded, itincludes them.
It doesn't include things likeprivate hard money loans,
because those aren't sellerfinance, those are just private
people lending.
(17:12):
So you know it's a niche withina niche, uh, but it's it's a
great niche and it's really agreat time for people to
understand seller financing Ifthey're buying property or
selling property, not just to bea note investor.
I mean, we hear a lot right nowabout subject to and wraps and
creative financing, and so thisis part of the reason I also
believe that the numbers aregoing up is just more people are
(17:34):
being active in this market inthese higher interest rates,
seller financing can make sense.
Justin Bogard (17:40):
Yeah, and they're learning how to be more
compliant and to do things theright way because of people like
myself, tracy Zee and all theother folks that we know in the
industry that have an outgoingvoice on some sort of platform
like this that can help educatethem on what to do.
Because, honestly, and I'm sureyou run into the same thing
some of these newer sellerfinanciers or originators, they
(18:01):
just don't know what they don'tknow.
Originators, they just don'tknow what they don't know, they
just they.
They remember like, oh my, mybuddy, you know, did this back
in the eighties with this landcontract thing, you know, doing
air quotes here, cause in theMidwest where I'm at, that is
the the good old boys is what wecall them.
That's how they did stuff.
They said do a land contract,don't record it, have them sign
the, the D, back to you atclosing, but just don't record
(18:23):
it.
And they had all thesetechniques that they did because
it worked back then, becausethat's how they got away with it
.
Today it doesn't work like that, because if you take a
unrecorded land contractcontract for deed to a judge and
you're trying to forfeit theperson out of there and they see
that they've made a fewpayments or they put some sort
of equity into it sorry, we willneed you to record that and go
(18:44):
through a foreclosure payments,or they put some sort of equity
into it sorry, we will need youto record that and go through a
foreclosure.
So it's, it's becoming a goodthing that judges are putting
the hammer down on this, becauseI'm feeling that a lot of
people are understanding, likethe note, mortgage note need to
trust is the proper way to go,as opposed to the the old school
way of doing things with.
You know, the contract for D,land contract type of type of
instrument that you hear.
Tracy Z (19:05):
I would agree with that .
Justin Bogard (19:06):
Yeah.
So thank you for delineatingexactly how this data is derived
, because you were leading medown to my next question, which
I'm glad that you did, becauseyour numbers are actually very
conservative.
So when you were saying thatthis is specific to $30,000 or
(19:29):
more in unpaid balance, this isspecific to first lien and it's
specific to the fact thatsomebody has to own the property
and that owner has to resell itto somebody and carry back the
financing.
So that is even more of aspecific part of the pie there.
So there's a whole shadow ofinventory that's not including
(19:49):
this data.
So who knows what it could be?
It could be double the numbersthat you say right now.
We don't know, but at least weknow it's a minimum and that
minimum is pretty impressive tobegin with.
Tracy Z (20:00):
Well, it's been enough.
For at least 30 plus years I'vebeen in business.
Justin Bogard (20:06):
So I think it'll continue to be enough.
Yeah, the interest rateenvironment question is
something that always investorspoke me on and they try to
figure out and they makeassumptions just on negative
connotations about okay, if theinterest rate raises and you've
bought a note that maybe waswritten at 6% before, they just
assume in their head that youknow that doesn't make sense,
(20:27):
why would I buy that deal if theinterest rate's changing?
But they don't understand theconcept of time, value of money
because they don't realize howmuch of a discount that we got
on that 6% note that we bought,you know, a few years back and
that there's, I mean, interestrates, would have to be
astronomical for us to, you know, feel like it's going to be an
issue for us on that investmentwe made maybe four or five years
(20:49):
ago.
Tracy Z (20:50):
Yeah, very true.
So if we want, if we wanted a10% return IRR over time, time
value of money on a 6% note, wejust have to figure out what we
can pay in today's dollars forthat.
And you know, if people pay offearly and we bought at a
discount, our yield actuallygoes up.
And you know most notes do payoff seven to 10 years.
It was happening much quickerwhen people were refinancing at
(21:12):
very low rates.
I think we'll go back to thatseven to 10 year average now.
But it's not just residentialthat this is on, it's also on
commercial property land.
There's tons of business notefinancing that does involve real
estate that aren't in thesenumbers.
I mean, we interviewed abusiness note buyer and they buy
(21:35):
a ton of these seller financenotes that don't involve real
estate, all the stuff thatdoesn't qualify for SBA.
We see all these mobile homesand mobile home parks that are
seller financed.
None of that data is in herebecause that's not considered
real estate, right, it'sconsidered property.
So just to validate your pointyeah, this is just a small
specific piece of that pie.
Justin Bogard (21:57):
Okay, so of the pie that, we're showing, the
data on the 90,000 transactionsthat were created in 2023, the
$28 billion of loan.
Balance Of that, what isresidential commercial land?
And we'll call it miscellaneous.
Tracy Z (22:14):
Yeah, that's a great, great question.
So we like to look at that.
So we look at it both on thecount and the dollar amount.
So residential was about 50% ofthe dollar and about 63% of the
count, so it was the lion'sshare.
And then commercial was about33% of the dollars and 17% of
(22:34):
the count, so they're biggertransactions.
And land was about 13% of thedollars and 16% of the count.
Keeping in mind you had thisgreat point last night keeping
in mind that people think, oh,there's a lot of seller,
financing and land, but when wesay 30,000 or more, we probably
got rid of a lot of land.
Justin Bogard (22:54):
Yeah, we did.
Tracy Z (22:55):
We got rid of a lot and I thought it was very
insightful when you said that.
And then we have this littlebucket of of uh, uncategorized
because the counties don't tellus, but we figured it it.
It averages out about the sameas those other three categories,
so it does include all of those, if they were seller financed,
because all of that's consideredreal estate.
Justin Bogard (23:14):
What was the average balance on commercial
seller carryback data that youhad?
Tracy Z (23:21):
Yeah, that was 613,000 as the average seller finance
note and that was up 41% fromthe prior year.
So we're seeing a lot morelarger dollar commercials.
Turning to seller financing,and I just think that's an
indication of what's happeningin that commercial market.
It's a lot harder to getfinancing on commercial deals.
(23:41):
It's harder to get financing ona residential home as well.
When we talk about the mortgagecredit availability index
excuse me, mortgage creditavailability index that we're
seeing it's a lot tighter to geta home loan for a property you
want to live in and we also knowon the commercial side it's a
lot harder to get a loan oncommercial property.
(24:03):
So we see more seller financinghappens.
Justin Bogard (24:06):
That's impressive .
So in 2022, they had numbersand then in 2023, the commercial
market.
I don't really recall off thetop of my head if it was good,
bad or ugly.
As far as raising in propertyvalue, I think it was starting
to be stagnant to starting tofall.
But thanks for bringing thatpoint up about the banking
(24:27):
system on commercial, which isprobably why we're seeing such
an influx of seller financingcommercial, because people, they
don't have any other choice andthey don't have another choice.
Seller financing becomes themost prevalent way to get the
deal done because typically theydon't have the a hundred
percent cash to pay for thatcommercial property, nor the
bank's lending on it.
So I, I am seeing it, I'mfortunate enough I I am helping
(24:51):
with a big trade desk right nowand for my own stuff that when I
see this stuff it's veryballoon heavy within five years
and and so that tells me thatyou know, people are banking on
the fact that the rates aregoing to be coming down or just
be more palatable for commerciallending and then the banks will
(25:11):
be able to start really be morewhat do I say friendly to
commercial borrowers to be ableto refi that loan.
Tracy Z (25:20):
Yeah, you know, justin, people hear this data and you
probably get this question a lottoo.
They're like oh, this is reallycool, you can create your own
notes.
And they're like we're justgoing to go out and create.
We got this commercial loancoming due with the balloon and
we can't get it refinanced atdecent rates.
Or people are revaluing whatthey think the property is worth
(25:42):
.
There's all kinds of problemsgoing on in the commercial
lending.
We'll just write our own noteand go sell it.
Well, that's not a sellerfinance note.
There's got to be someconsideration.
So the consideration is eitheryou've sold property and allowed
the buyer to make payments toyou, or, if you're truly making
a loan, that's not a sellerfinance deal.
That's truly originating a loanand you have to loan somebody
(26:03):
the money in order for them tohave to pay you back the money.
So you know, people say I'mjust going to create my paper
and go out and sell it.
Just remember it has to beconsideration.
Either you're selling theproperty and taking back a note,
or you're originating a notebecause you're lending somebody
the money.
Justin Bogard (26:19):
That's a great distinction.
I never thought about thatanalogy before.
But if you're physically givingsomebody money to go buy
something, that is not a sellercarryback situation.
Seller carryback situation iswhere you're gifting them, I
guess, a loan, if you will, andno true money physically is
changing hands.
Tracy Z (26:37):
Yes, and it's different because different laws apply,
especially when you talk aboutresidential, if it's seller
financed or if it's a loan, andwhat kind of licensing you have
to have and what kind ofdisclosures have to be done.
So it's important to know thedistinction and whether that
matters on your transaction, andthat's definitely more true of
residential owner occupied thanis commercial or investor deals.
Justin Bogard (26:58):
And, by the way, as a little side note for those
of you listening to this awesomeepisode today, don't try to do
this yourself.
If you don't really know whatyou're doing or haven't asked
the right questions, you need totalk to a professional like
myself or Tracy or whoever is inthis business that's promoting
what they do, because there areso many things that you will do
wrong that you don't realizeyou're doing wrong or not
(27:19):
compliant that you just wannapay to have somebody do it.
You wouldn't go to WebMD onlineto diagnose you know you're.
If you think you had cancer,right, you would actually go to
an oncologist and, you know,have them properly diagnose you.
So that I would just saystrongly, use a no professional
to help you and they'll guideyou to the proper you know
attorney or person that candraft the documents for you, so
(27:50):
that question doesn't get askedenough by uh I want to say uh
amateur seller financiers.
Tracy Z (27:52):
Yeah, they don't know.
The saying is you don't knowwhat you don't know.
So that's why we do thesethings to provide information to
people, not to scare them,because there's plenty of
opportunity to go around.
Just make sure you understandwhat you're doing and use
professionals.
A lot of us use uh mlosmortgage loan originators when
we're doing in use professionals.
A lot of us use MLOs mortgageloan originators when we're
doing in the residential spaceor even in the land and
commercial, because they helpyou put together a nice package
(28:13):
and be sure that borrower, buyerdepending on how you're looking
at it seller financing, yourbuyer of the property is your
borrower, right?
So we sort of use thatinterchangeably a lot.
But you want to be sure thatthey have the income and the
credit history to repay you,because you don't want to sell
them a property and not get paidand then get it back and it's
not in good condition.
(28:33):
So you want to make sure toprotect them and to protect you
that they have that ability tomake those payments.
Justin Bogard (28:40):
All right Land.
What's the percentage of landas far as down payment and loan
to value?
Ah yes, and the average balance.
Tracy Z (28:48):
So you know you like I have seen land notes written so
many different ways.
But we talk about the average.
The average is a 70% loan tovalue, which means 30% down last
year and the average note sizewas $263,871, which is about six
and a half percent up from theprior year.
Justin Bogard (29:08):
On the note size A land note.
Tracy Z (29:10):
Yeah, that's pretty big .
I see so many small ones.
How about?
Justin Bogard (29:14):
you A lot of small ones, probably typically
45K and under, and the parcelsare probably, you know, under
eight acres.
I would say.
Tracy Z (29:22):
Yeah, yeah.
Justin Bogard (29:24):
So a $267,000 loan on a piece of land that's
probably got to be a decenttrack, or maybe an area that's
more affluent that has a higherproperty value.
Tracy Z (29:34):
Yeah, the problem with those land deals there's a lot
of big ones and they skew thosenumbers.
So we probably should do a meanon that than a true average
right, just because you throwout the big and throw out the
little.
One thing I like about land isI like to see that down payment.
I like to see that it has compsthat are not just in that same
(29:58):
development that the developercreated.
I like to see that borrowerthat they have good credit
history on other trades.
That's even more important onland and I like to do partials
on them.
So I like to buy hey, let's buythe next five years.
If that pays well, well, maybeI'll buy the rest or I'll buy
another five years.
So it keeps you and that personwho created that note kind of
(30:19):
in the deal, especially ifthey're creating multiples of
them.
So I'm a big fan of the partialpurchase, where you just buy
the next certain number ofpayments and then, when it pays
well, you buy some more.
So that works really good onland deals.
Justin Bogard (30:32):
I'm absolutely on the same page with you on that.
I would much rather just buyall partials and it just
mitigates your risk so much asthe lender because you're going
to be in the first position ofthe first position note, so to
speak.
You know you're getting thatfirst entitlement coming to you,
30% down on an average of$267,000 loan.
What's that?
(30:53):
80, 80,000.
I'm just doing some rough mathin my head Like that's, that's
pretty sizable.
So it it happens and I I likethat.
I like the fact that land hassizable down payments.
It is a little bit more riskybecause it's not typically
somebody's primary residence.
So they probably have their ownmortgage, they have their own,
(31:14):
you know, liabilities and stuffthat they do.
That's higher on the prioritylist.
So we do tend to take a littlebit more discount on land deals.
But I tell people you know, thebest deal I can see out there
is 50% down, 50% financing.
That's where.
What's that?
Tracy Z (31:33):
Yeah, I would wish.
I wish all our deals were that.
Justin Bogard (31:35):
That'd be sweet Well especially with land,
because I feel like you know,you got to have some skin in the
game Like you can't.
You know dirt doesn't goanywhere but it doesn't.
You know, lose value that much.
It doesn't go anywhere but itdoesn't, you know, lose value
that much.
But at the same time you knowit's if it's not in a great area
, you know it's.
It's going to be hard pressedfor you to be able to move that
because not a lot of buyers arein that arena, so to speak.
(31:58):
So I always tell people youknow the single family home in
the Midwest area is the absolutebest loan to get If you want to
make sure you have a ton ofexits out of it if it goes bad.
But land is a little bitdifferent.
Tracy Z (32:13):
So we do take a little bit more discount.
Yeah, and you want to avoid thedesert and the swamp?
Justin Bogard (32:23):
Yeah, that's true .
Yeah, yeah, I've been guilty ofthe swamp Some swamp land in
Florida I bought.
Luckily, I noted my way out ofthat and I actually came out
ahead a little bit.
But for the longest time Iwasn't using my seller finance
brain and I just I bought theparcel and like a small IRA I
had, and just kind of forgotabout it and I tried to sell it
for cash and I realized like, ohmy God, like I am not getting
cash offered anywhere near whatI have into this.
(32:44):
And so when I started usingseller financing promoting it, I
was just like why did it takeme so long to figure this out?
I'm in this business and I havemy own inventory that I'm not
even taking advantage of likethat.
Tracy Z (32:56):
So yeah, Well, people ask about inventory and I always
like well, the best place tostart.
Do you have any property youwant to sell and create a note?
That's the best way to createyour own inventory.
If not, then you can start goout marketing like we do direct
to sellers.
You know, networking peoplewith IRA money, all of those
great things.
Justin Bogard (33:16):
Cool Tracy in your lifespan of being in the
real estate and specifically thenote space, being female in
this business is probably moremale dominated.
I'm just making the assumptionand if you think it's closer to
equal then let me know.
But I feel like it's moremale-dominated.
Is that the case?
Tracy Z (33:35):
Yes, there are more females in it now than there
used to be, but I mean therewere many times those first 10
years.
I was like the only female.
Justin Bogard (33:45):
You felt like one of the two.
Tracy Z (33:47):
Yeah, but I've seen a lot more women get involved with
it as women get more involvedin real estate investing and
they like the note side of itbecause it's not as hands-on but
it's good with thedetail-oriented paperwork and
running the numbers, and so menand women can both excel at it.
But yeah, I would definitelysay finance over the years has
(34:07):
traditionally been a maledominated field.
I was mentored by a gentlemanback when I started at the
institution and I appreciatethat very much for him doing
that and one time I actuallythanked him and he goes well.
I have a daughter about yourage and I hope somebody would do
the same for her someday.
So there's a lot of greatpeople out there, male and
female.
I know there's a lot of badstories out there too, but I
(34:29):
mean, unfortunately I have somegood ones.
So it's it's nice toacknowledge those people who've
done a nice job mentoring alongthe way and now you get to pay
it back or pay it forward.
Justin Bogard (34:37):
Yeah, no, I'm glad to see, and I'm a firm
believer of, you know, havingequality across the board in any
industry.
I don't, I don't think thereshould be a designation because
of one gender or another for,like you know, pay scale and
opportunities and stuff.
So I'm sure you've seen this.
I'm just making the assumption.
But, as there've been manychallenges or many things that
(34:58):
you think, like you know, I wentto that person to try to get
this opportunity, to get thisdeal done and I I feel like I
got treated differently because,you know, I'm a female in this
industry and maybe this was, youknow, back a couple of decades
ago or a decade ago, versus youknow today, like did you run
across that and someone else wasable to get in and get the same
thing done, but you try to doit and you just got.
(35:20):
You were, you were unable to dothat because of the obstacle.
Tracy Z (35:43):
I think that you have to just keep knocking on those
doors.
I think that you have to justkeep knocking on those doors and
fortunately, I'm a stubbornperson and I got the lines of
credit.
You know that always can be alittle bit more challenging.
I mean fortunately.
I mean, let's just be honest,as my husband was also in the
business there are someadvantages to that and he always
jokes.
(36:03):
you know, when people asksomething, he's you know and
they'll look at him and he'slike I don't know, ask her.
She's the detail-oriented one.
He's super smart, he knows thenumbers, he's great at marketing
, but you ask him to go througha due diligence file and he's
just like ugh.
Justin Bogard (36:17):
His eyes start crossing.
Oh my God.
Tracy Z (36:20):
So, yeah, I mean I am not diminishing what anybody's
ever been through and I justalso want to encourage people to
just keep challenging thatstatus quo, just keep making it
happen.
I think there's ways to find itout.
And what's kind of refreshingfor me now I go to these
conventions, we have amembership group and I'm seeing
(36:42):
probably not quite half yet, butwe're closing in on it.
I mean we're at least a thirdnow of ladies doing this as well
, as part of why I started WiseWomen Investors, just so people
could get that confidence to seethat, hey, they can do it too.
And I work with a lot of menand a lot of women and I agree
with you.
I mean, when we don't have totalk about it anymore, I guess
flat wings were truly equal anduntil then, we have to talk
(37:05):
about it, do something about it,right?
Justin Bogard (37:07):
no, I'm glad.
Thank you for all those thanksfor bringing it up.
Tracy Z (37:10):
Not not very many people to ask me that question
over the years and you didn'tforewarn me, so I'm like how do
I want to answer that?
Justin Bogard (37:15):
it's a good question oh, you know, I just
kind of off the cap.
I'm just kind of curious ofwhat challenges people go
through.
I'm, I'm, I consider myselfempathetic and I like to be
inclusive and I, like peoplethat you know maybe don't have
the same um, I want to sayadvantages or opportunities as
others.
I just don't think that's right.
(37:35):
I want to see everyone have astriking chance, because I want
the best of the best to be doingwhat they do so we can all
learn from it or, um, you know,excel from it, and I'm just a
believer in that.
So I just always, you know,admire somebody that didn't have
the same opportunities maybe asme and, just you know, commend
them for, for sticking to it andhaving the tenacity and the.
You know, I think stubbornnessis actually a good quality
(37:58):
because it allows you to havethick skin and, just, you know,
doing the, uh, the brushing theshoulder here, wiping the haters
away, so, uh, yeah, I thinkit's awesome.
Tracy Z (38:11):
Yeah, and I think empathy is good in this business
.
Uh, listening is good.
So if I deal with a mom and popseller who maybe they've only
taken back one note their wholelife, um, you know, I want to be
approachable.
I want to understand whatchallenge they're trying to
overcome in selling their noteor what opportunity they're
seeking.
So, by listening and not beingoverbearing and demeaning to
(38:35):
them, I think that can be anadvantage, and so I think you
can be that way, whether you'rea man or a woman, but it's
something that you need tocultivate, especially when you
have a whole lot of knowledgeand they don't.
Don't make them feel like that.
You have to instill confidence,but you want to be approachable
, that you're there to help.
There's been times I've toldpeople selling me your notes not
the best thing to do.
(38:55):
Here's some other things thatwould be better for you to do,
and if that doesn't work out,then yeah, let's talk.
Uh, but not always.
You're there to solve and toserve and not just to make a
buck, and I know that's hard todo when you're trying to make a
living, but I think you'vealways got to put the people
first, and it took me a while tohonestly realize that because,
(39:18):
just like everybody, when you'restarting out your eyes are more
focused on the dollars, but youfind that they follow if you
put the people in the bestsolution first.
Justin Bogard (39:26):
Absolutely, that's very well said if you put
the people in the best solutionfirst.
Absolutely, that's very wellsaid.
I think that industries ingeneral not just what we're in,
but a lot of industries I seethere's very stereotypical silos
of groups of people.
You know you got the we'll say,the older generation of people.
We'll say like older men, youknow they may have this type of
(39:47):
mentality or they're perceivedas having this mentality, and
then you have, you know, a groupof women that are trying to get
into that industry, and youhave younger men, professionals,
and you have, you know,different races.
Unfortunately, it's been thatway to where people you know
maybe aren't giving that personthe respect they deserve.
And I feel like in our business, especially since I've been in
it since about 2016 full time, Idon't see that.
(40:07):
I don't see any any gender, Idon't see any race issues.
I see everyone, just as long asthey have the knowledge that
they're all equal, even a newerperson, versus somebody that's
been in the business for 30 or40 years, and I just think
that's really cool, and not alot of industries today I don't
think can say that.
Tracy Z (40:25):
I agree, yeah, and we're kind of the main street
approach and I think that makesus more real and down to earth,
because we're having to findsolutions to problems that the
banks and the Wall Street peoplehaven't.
And maybe that just by nature,that by default or that way,
maybe it's a good question.
Justin Bogard (40:41):
We're all in this cave together.
We got to figure out how to getout to the light on our way
through it.
Tracy Z (40:46):
I will also say I've met a few people over the years
who did not have other people'sinterests at heart.
So I would also say you knowthe whole trust, but verify if
you're doing business withsomebody.
Go out and search them on theinternet.
It's real easy to find out ifthey've got lawsuits or
judgments or cases against them.
So I'm not here to sayeverybody has your best
interests at heart, but I thinkyou can find those that do
(41:07):
pretty quickly.
Justin Bogard (41:08):
Yeah, and we you and I could probably won't do
this on the show right now, butwe can probably count them on
our hand, the people that youdon't want to do business with,
because it's such a smallcommunity that those of us talk
and and and believe me, ifyou're out there listening, we
do talk to each other and belike, hey, I had this deal and
it went sideways, or this persondid this to me.
I'm just letting you know, andwe all let each other know, like
, hey, this is happening, thisis a person that you want to
(41:30):
just kind of make sure youdefinitely follow through with
some due diligence and make surethat everything is up to code,
if you will.
Tracy Z (41:40):
Yeah, and you know it's a great business.
We see some people are mom andpops doing that one note in 12
months.
That's about 86%.
We've got people that are doingtwo or more.
That makes up the other about14%.
So there's plenty of room foreverybody in there.
I hope that if people startlooking at seller financing,
they do what you mentioned andthey get the advice and they use
(42:01):
good professionals to make surethey write that paper correctly
, because there's no betterposition to be in than a first
position loan.
I mean, look at the banks,that's why they all do it and so
there's no reason a personcan't do it, or an entity, or
your self-directed IRA or yourLLC, and maybe it's just a piece
of your business.
But as rental rates, cap rates,all these things happening on
(42:23):
rental properties, we're seeingmore people moving over to notes
because one you can get bettervelocity, it can happen quicker,
faster, I can manage more notesand I can manage properties and
I don't have all thoseheadaches of the tenants toilets
, trash.
I can take the opportunity thatis presented by these higher
interest rates we've got goingon right now with not as much
work as a rental, so I thinkit's a good time for people to
(42:46):
hear about it.
I'm glad you have this podcastso people can learn more about
it.
If anybody wants to hear aboutme, we're at noteinvestorcom.
Feel free to visit there, andyou can even download a copy of
the stats that you mentioned.
Justin Bogard (42:58):
Tracy, thank you so much for your tutelage that
you've given me over the years.
Thank you so much for your timetoday on our show.
Thank you for being on ourbroadcast last night.
You and Fred are awesome.
Happy belated birthday to Fred.
Tracy Z (43:11):
He's on a birthday trip right now.
He's out fishing in the Keys.
I want to live his life.
Justin Bogard (43:17):
He always has a cigar and he's fishing.
He's doing his cool stuff.
I want his life.
I am living vicariously throughFred right now.
That's right.
Tracy Z (43:30):
Thank you, Justin, for what you do and thanks for
having me on the show and thanksthe other day for helping me
out on a deal up in your neck ofthe woods.
Just to say that we're acommunity.
I appreciate that.
Justin Bogard (43:38):
Yeah, you're welcome, and Fred Tracy also do
the big online event every yearcalled the Cash Flow Expo, so
that'll come around nextFebruary.
So look out for the marketingfor that.
You definitely want to jointhat.
It's free and then you can buythe recordings and the videos if
you can't stay and watch theshows.
I think you guys are three dayslong now on.
Tracy Z (43:58):
We went four days.
I talked Fred into four days.
I don't know if he's forgivingme yet.
Normally it is three.
You're right, but we had somany good speakers, yourself
included, that we just had to goto four days.
And if anybody missed it, theycan actually still get the
recordings.
It's all very timelyinformation.
Justin Bogard (44:14):
Yeah, it's cool.
You can jam pack it all intoone day and you might get it so
big.
Now you might have to do itlike one a month for a couple of
months.
You know, do a session, do acouple hour session on this day
of the month and then you know,next week you're doing these.
So people catch you live.
Tracy Z (44:31):
We'll take that under advisement.
Justin Bogard (44:34):
I'm no, I'm no way.
Tracy Z (44:35):
I'm still forgiving me for the four days, so yeah.
Justin Bogard (44:38):
I'm sure it's a lot of work.
Thank you for doing that.
Thank you for providing thedata that you do, tracy, you're
awesome.
Thanks for being my friend aswell.
And, guys, this is episodenumber eight with Tracy Z,
season six on the Be the Bankpodcast, and we will catch you
guys on the next episode.
And thanks, tracy.
Tracy Z (44:54):
Thank you, Justin.
Justin Bogard (44:56):
Bye.
Tracy Z (44:57):
Bye.
Narrator (45:02):
Thanks for listening to Be the Bank.
We hope you learned somethingfrom today's show.
If you enjoyed this episode,please rate and review us.
Plus, check out our channel onYouTube and follow us on
Facebook and Twitter atBeTheBank, and on Instagram at
BeTheBankPodcast.
Bethebank is sponsored byAmerican Notebuyers.
Thanks again for listening.
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