November 1, 2023 • 30 mins
Have you ever wondered how a 30-year conventional mortgage at an 8.04% interest rate impacts the real estate market? Join Richard Thornton and I for a lively discussion where we navigate the impact of this interest rate on the real estate market. We'll peel back the layers of this complex industry with humor and insights, leaving no stone unturned.
We then transition into the realm of foreclosure and property equity. Imagine a borrower halting loan payments, a lender reaching out for help, and the role of property equity as the lender's safety net. We reflect on the importance of understanding property equity and how it protects lenders from potential losses. We also tackle the complexities of property selling, eviction, and potential fraud. Don't miss this enlightening conversation where we shed light on the many facets of real estate investing.
About the Host:
Justin Bogard – Note Investor specializing in performing Residential Real Estate Debt. He finds deals and acquires them for his own portfolio as well as educates investors while walking them through the process of owning a Real Estate Note!
Connect with the Host:
Facebook - bethebank
Twitter - bethebank1
Instagram - bethebankpodcast
American Note Buyers - https://anbfunds.com/
Monthly Broadcast - https://youtube.com/playlist?list=PLzc944w1xydt5aLDrrEPHJhdJeDkBjjD4
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Narrator (00:01):
Interested in real estate.
How about wealth?
Well, they go hand in hand, andhere you'll learn all about it.
Welcome to Be the Bank, apodcast where we discuss and
debate the topics centeredaround real estate investing.
Your host, justin Bogart,shares insights into investing
in real estate to create realwealth and passive income for
(00:22):
you and your family.
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 toyou by American Note Buyers.
Now here's your host, justinBogart.
Justin Bogard (00:45):
Hey, hey, welcome back to another episode, number
22.
In fact, of season five on theBe the Bank podcast, I am Justin
Bogart.
Today I will have RichardThornton on again and we got
some topics we're going to begoing over as it pertains to the
rising interest rate and whereit's at today, as we're
recording, and how the all thewar across the Middle East and
(01:11):
Ukraine and what the Fed isdoing, how this all kind of ties
together.
We're going to have aconversation about that and give
you some updates on some recentArreo sales slash foreclosures
that Richard and I are goingthrough right now.
So stay tuned, richard Thornton.
Richard Thornton (01:40):
Mr Bogart.
Justin Bogard (01:42):
I see you have your AirPods in today.
I do.
Richard Thornton (01:46):
I'm somehow, for some reason, my system is
not liking my internal speakers,so I can use my normal mic, but
I need to hear through myAirPods.
Justin Bogard (01:56):
I don't know if anybody listening to this
podcast does their ownpodcasting, but it does make a
big difference, at least for meand since you're experiencing it
today with, actually, you know,earbuds or headphones in, but I
find it's easier to hear what'sgoing on, because sometimes the
ambient noise around you know,in your studio where you're at,
kind of can distract yousometimes.
(02:16):
So do you notice a difference?
Richard Thornton (02:19):
Yeah, usually I just guess at what you're
saying, I have no idea and Ijust I just sort of respond, you
know, and it seems to work sowell, my, my friend here is an
idiot, so I'll just, I'll justrespond, I feel necessary.
I mean it seems to work.
You haven't questioned it thusfar.
Justin Bogard (02:37):
So I guess I didn't realize you weren't
paying attention this whole time.
The flow has been pretty wellyeah.
Richard Thornton (02:44):
So, yes, it does block out the ambient noise
.
Justin Bogard (02:48):
As we're recording this, this is so I'm
going to say yeah, it isWednesday, wednesday, october
25th 2023.
It's a very chilly day, windyday.
It's not chilly, I'd say it's acool day.
Here in Indianapolis, I didn'tget out to play some golf
yesterday, which was nice.
We actually hit Richard 78degrees at the at the hottest
(03:10):
point yesterday, oh my gosh.
It was really nice and the sunactually came out for a little
bit.
So I think I got my last niceweather round of golf in for the
year yesterday.
Richard Thornton (03:20):
Well, we yeah, we went from 90 degrees this
weekend to 55 degrees right now,and cold and blistering, like
you said, and so we're getting alittle bit of the same thing.
Justin Bogard (03:29):
It got 90.
Got the 90.
Richard Thornton (03:32):
It got up to 96 on Saturday.
Justin Bogard (03:35):
Is that unusually warm for a petal?
Richard Thornton (03:36):
Yes, this is.
We've had an unusually longIndian summer.
We didn't have much of a summer, but we're having hell of an
Indian summer.
Justin Bogard (03:49):
So go figure.
All right, my friend, we've gotsome more drama happening.
The drama is unfolding with theinterest rates, with the Fed,
and does the Fed correct me ifI'm wrong has it changed the
rate or have the meeting everymonth, or is it every quarter?
Richard Thornton (04:08):
I think it's every quarter, but I could be
wrong.
Justin Bogard (04:10):
Okay, I feel like it happens often, so I was
wanting to get confirmation.
I forgot to look this up.
If it happened every month, orif they have planned, planned
times when they meet and theyand they get together, you would
think it'd be like on acalendar schedule, but perhaps
it's not so.
Current interest rate nationalaverage interest rate, as I
looked it up before we startedrecording this, richard, was
(04:31):
8.04% for a 30 year conventionalmortgage and I believe that's
been the highest in last 23years, I think since 2000, 1999.
You still got me, so the Fedmeets eight times a year.
Richard Thornton (04:52):
Oh, okay, yeah , fed meets eight times a year.
Justin Bogard (04:56):
Eight times.
Richard Thornton (04:56):
Okay, I was busy.
Justin Bogard (04:57):
I was busy.
I was busy.
You are also a producer in thebackground, looking up
information on the fly.
Richard Thornton (05:06):
Yeah, you're doing a podcast.
I was busy, come on.
Justin Bogard (05:10):
I was talking Again, you weren't listening to
what I was saying.
You were just responding.
Richard Thornton (05:16):
What you talking.
What you talking?
Did you ever watch the seriesKim's Convenience?
Justin Bogard (05:21):
No, but I have seen like advertisements for it.
Oh my.
Richard Thornton (05:24):
God, it's just hilarious.
I think it's on Netflix fromAmerica.
It's this Korean family inCanada, and so they speak sort
of a little bit broken Englishand the husband keeps saying to
the wife she talks to him andshe says what you talking, what
you talking.
Justin Bogard (05:42):
Anyway, it's quite yeah.
Richard Thornton (05:45):
We digress.
Justin Bogard (05:46):
Interest rate keeps coming up.
The Fed keeps raising it, sowhat's giving your spin on how
you see this affecting what'sgoing on?
Richard Thornton (05:59):
Well.
Justin Bogard (05:59):
I'm there it goes again.
You're bat the thousand this.
Richard Thornton (06:02):
I'm done.
Yeah, the phone.
Justin Bogard (06:05):
So I apologize to the listening audience.
That's right.
Richard Thornton (06:10):
The half of the duo is working here and the
other half is just falling apart.
I mean, it's got a head cold,his speakers won't work, his
phone's coming in, he can'tconcentrate.
I mean, come on, get your acttogether, dude.
Ok.
Justin Bogard (06:26):
All right.
Richard Thornton (06:27):
Oh, I got it.
I mean it's right, I got toturn my phone off, All right.
So that was true.
So the term I would use iswonkiness.
Justin Bogard (06:41):
I mean I think Wonkiness, I like that.
Richard Thornton (06:43):
Yeah, I think and that's a technical term I
think that the all of theprognosticators are kind of
broken if you look at what'sgoing on out there.
The Fed keeps increasinginterest rates, hoping to slow
down the economy.
Well, economy is not roaring,but it's roaring away.
(07:06):
But it's not really respondingto what they're doing.
So they want to keep raisingrates, the market rate.
I'm sorry.
The job market is just thumbingit's nose at the Fed and saying
we're going to remain strong,nanny, nanny, nanny, and we're
going to keep rolling ahead here, so we don't care what you do.
And this is all in spite of thefact that we have a new
(07:31):
outbreak in the Middle East.
The Wall Street seems to besaying looking at that and going
, yes, this is serious and yes,I'm sorry.
I don't want to diminish thisbecause people are dying and
things like that, but in termsof an actual capitalistic point
of view, it's a non-event.
There's always tumultuousnessin that market.
(07:54):
We've already priced that in.
And yes, there is Ukrainethings going on in Ukraine that
is increasing the oil pricesbecause OPEC and other groups
are playing fun with that andsaying, hey look, we can make
more money.
And if we restrict production?
So that's what they're doingbecause Russia isn't producing
(08:17):
as much oil.
But all in all, the markets justaren't doing what they're
supposed to be doing andtraditionally what they would do
if you pull one lever.
If you pull to the right, itgoes to the right.
If you pull to the left, itgoes to the left.
Well, this pulling to the leftand it goes to the right.
So I get a lot of my investorssay well, can I get higher rates
(08:40):
on my private mortgage notesBecause yields are going up, or
I market uncertainty, and I gono, it doesn't quite work that
way.
We're in a different area.
So it's more of a commentary,more of a.
You have to sit back and sortof a zen sense and look at it
and go all right, this is justCrazy.
Justin Bogard (09:03):
I like what you said about describing it as
wonkiness, because after youstarted giving your your spin on
it, it makes sense, right.
It's just, it's just odd, likewhen you expect one thing to
happen with historical data andhistorical events that has
happened, like what the Fed does.
I'm going to do this because Iknow what's going to to pull
back in a different direction.
It's like it didn't move, itdidn't do anything.
(09:24):
Right, it raised the rates andit didn't do anything.
It kind of made it worse.
You know, to a certain sense,and yeah, that's why I agree
with you.
It is.
It's just really odd and I don'tthink anyone has the right
answer, the solution.
I think they're just going tohave to try the things and maybe
lower it back down and see whathappens, maybe raise it up a
little bit more.
We don't really know what'sgoing to happen.
Everybody keeps saying andeverybody really believes the
(09:46):
path is going to be to startlowering it eventually, and it
feels like we were talking aboutand at the end of 24, we were
going to see a significantchange, but it's probably going
to be more like the 25 when westart seeing it closer to maybe
five and a half percent andmaybe that's the flat line of
where we're going to stay forquite some time and be the new
normal.
Richard Thornton (10:07):
Yeah, I'd say I agree with that.
I mean, the tsunami of defaultshas not happened, as we have
said, because of governmentalprograms and because equity is
up.
I may have mentioned on thisprogram that, uh, and so here's
another another wonkiness right,rates are up, people should not
refinance.
(10:27):
I've got more refinancing goingon in my portfolio right now
than I've ever had.
I now have four properties thatare being sold or refinanced.
Um, I don't like that.
Justin Bogard (10:40):
Now it doesn't make sense.
Now let me jump in here realquick about that because that's
interesting.
So do you think it's, or do younotice in your portfolio of
those loans that are happeningthat it's because they have a
lot of equity and they're tryingto tap into it?
Richard Thornton (10:54):
Well, I think it's two things.
These, these have been steadypayers, okay.
So I think these people have,uh, finally gotten on their feet
and been able to prove to uh,either some interim or some
regular lender, some local bankor something like that, that
they are credit worthy.
Um, they can, you know, theycan say, look, I've, I've got a
(11:17):
payment history here of threeyears.
So that's number one, okay.
Number two is you've got hugeamounts of equity, like the one
I mentioned to you this morning.
I've got a $47,000 mortgage onit and the property is now worth
$160,000.
Well, you know, you can.
You can lend to somebody who'sonly got a 650 or 675 credit
(11:40):
rating, because they've beencreeping up more than they were.
If you're only at 30% loan tovalue.
Justin Bogard (11:47):
Right yeah, this risk is significantly lower.
Once you have the propertyvalue is going to buy it I
totally agree with that.
Richard Thornton (11:54):
I mean, even if you've got a huge deflation
in the market come on, it'sinteresting.
Justin Bogard (11:59):
You say that I'll .
I'll do a quick little sidebarbecause it's an interesting
little case study.
That kind of happened today andso there is someone in our kind
of American note buyers sphereof influence type of network
that reached out to me and wasasking me questions about a
foreclosure and they had litmoney on a rental they had in
(12:19):
Florida.
I'm not sure where it's out inFlorida, but the person was able
to bring significant cash tothe table to basically pay off
his underlying mortgage.
I think it was like a hundredor 150 K type of mortgage, so
that property, I think, was youknow over 200 at the time.
So they brought a bunch of cash, they paid down his mortgage,
so he owned a free clear andthen, he care, he still carried
(12:42):
back like um, I know, I think itwas like a 90 K, and so the
person was supposed to be payingyou know um, their payments
monthly and then a bloom came.
It was going to happen after afew years to owe the rest.
So what happened was, afterabout uh, three or four months
(13:04):
of payments, the person stoppedmaking the payments because what
I remember from thisconversation from earlier was
that they just couldn't affordit at the moment, and so they
got about four or five monthsbehind and so he was trying to
ask me questions.
You know what?
What do I do in the situation,or where do I go from here?
And when I started asking himquestions and getting this story
involved, I was thinking, oh mygosh, like this person, the
(13:27):
borrower put down significantcash and they owe.
You know, to your point, whenyou're talking about a lots of
equity in there, like if thehouse is worth maybe 300 K today
, as is, and they only owe,let's say, you know, 80 plus the
juice on it, so let's call it85 and 90 on it, I mean, that's,
(13:48):
that's like less than a thirdof the property value you know
so why couldn't they just go tothe bank?
And that was my first question.
I was like, why can't they justgo to the bank and get a loan
to pay you off?
And if this seems so simple?
So I was thinking this, the guythat was concerned, the lender.
I was just trying to tell him,like you are in a great position
(14:09):
here because there is so muchequity here that you're hoping
it goes to foreclosure, becauseyou're going to get definitely
full value for what the judgmentis, you know at that time.
But you know it would be niceif the borrower was able to, you
know, keep the property and,you know, go get some sort of
loan.
Richard Thornton (14:31):
Yes, I mean.
And so what beyond that are youdrawing from that?
Justin Bogard (14:38):
That, I think, the inexperience of the person I
was trying to help.
They were overly concernedabout the situation because of
how you put it, the big D right?
It seems ominous, it seems bad,it seems negative.
But when I was trying to spendthis for them and I said you
don't own anything on thisproperty, so why does it matter
if it takes six months or a yearand a half to go through
(15:00):
foreclosure Like you're notlosing any money, right?
You're going to get that moneybecause, basically, you have an
Apple iPhone worth $1,000 andyou got $250 into it.
You're going to be able toresell this thing and get plenty
of money back and plus profit.
So I think after they heard thatand they were reassured about
(15:23):
hey look, you know, becausewhat's going to happen in
Florida is, honestly, if theyhave to foreclose, it may take a
year or two to foreclose, ifyou know there's pushback from
the borrower just because it'sthings can be slower in Florida.
But you know it doesn't reallymatter because property values
are coming up so much andthey're going to continue to
rise even more that the propertymay be worth Richard 330,000 by
(15:45):
the time it's done, you know,through foreclosure.
So it's just, it's just reallyinteresting how you come across
these deals and they end upgoing a little bit sideways
because things aren't going wellin the economy.
A lot of people are juststruggling to because everything
is more expensive.
But us as lenders, you know ifwe're buying these things right
and we're getting good loan tovalues when we originate them or
(16:07):
when we buy them from somebody,I mean you're still sitting
really, really, really well andappreciation is helping that
even more.
Put you know, more protection,it's more safety net for us
lenders.
Richard Thornton (16:19):
That's true, and you might get an iPhone
right.
Justin Bogard (16:22):
I might get an iPhone.
Yeah, it just happened to beright in front of me as I was
trying to think of what'ssomething.
I can compare it to, eventhough we know the iPhone
doesn't appreciate in value.
But that's true, but but yeah,and I think a lot of people,
especially when they're novices,they don't take that they don't
(16:42):
know what they don't know, andthat was smart of this person to
try to contact somebody like me.
I'm glad that they couldcontact me because they actually
are from, you know, close towhere I live here in Indiana, so
I was a local person to them.
But yeah, they got reassuranceof like hey, look, man you're,
you're sitting really well, it'snot like they owe you $90,000
and the property is worth 95.
(17:03):
Like you know then, then youkind of have a problem.
Richard Thornton (17:06):
And I'm glad they contacted you, Justin,
because you're so smart.
Justin Bogard (17:12):
Yes, yes, I am.
Richard Thornton (17:15):
We, we, we kibbutz with each other.
We have fun.
Justin Bogard (17:21):
Well they're.
They're thinking I'm so smartbut I'm thinking like man.
There's like 12 other people Iprobably would have called he
got the.
He got a short end of the sticktoday.
Richard Thornton (17:33):
Yeah, yeah, short end, which is a good segue
into the other thing we weregoing to talk about, right?
Justin Bogard (17:37):
Yeah, this is your, your foreclosure that you
got going on.
Richard Thornton (17:41):
Yeah.
So I mean, I'm not getting theshort end of the stick, I'm
getting what I'm owed.
But yeah, the reason that wethought this was worth bringing
up just a little bit is thatI've got another note that's
being paid off is because Imentioned earlier and it's a
hundred and sixty thousanddollar house.
It's a forty seven thousanddollar note and I've gotten four
(18:05):
calls today and yesterday fromthe title company Because they
can't believe I'm selling thishouse for $47,000 and it's got
$160,000 value and they areconcerned about fraud.
They have had DocuSign fraudtwice and gotten stung twice on
(18:26):
the title and had to come upwith insurance funds.
So they've called me on mybusiness line.
They've called me on my mobileline.
They've asked all sorts ofquestions about my articles of
incorporation and gee, why wasone signed in 2017 and another
document was signed in 2020.
These are documents regardingthe formation of my company.
Justin Bogard (18:48):
Yeah.
Richard Thornton (18:50):
Blah, blah, blah.
I don't think I've ever beengrilled for over an hour.
Justin Bogard (18:58):
That's like the two businesses I would never get
in real estate would probablybe a title company and a loan
servicing company, because thatjust seems like a lot of chances
for failure.
Richard Thornton (19:09):
Yeah, we have a loan servicing company that
I'm not sure is going to make it.
Justin Bogard (19:15):
I know we don't need to talk about names, but
Well, there's actually a lot ofloan servicing companies out
there.
Some of them are state specific, like they may work in just one
state or a couple, and some ofthem work almost every state.
Right, it's a tough business.
Richard Thornton (19:32):
I think it's a very tough business for very
low margins.
Justin Bogard (19:35):
And you've got to deal with people like Richard
Thornton.
Richard Thornton (19:37):
That's right.
It's right.
Who can't think keeps thingsstraight.
Justin Bogard (19:43):
If you guys want to check out the video feed that
we do on this podcast, pleasego to our American Notebuyer's
YouTube channel.
You can check out the playlistcalled Be the Bank.
You can see all of ourrecordings of the podcast we do
for the last five seasons.
Richard Thornton (19:57):
Right, I've got a really quick another, just
anecdotal thing, that's aquestion.
Another property I'm selling.
I'm buying this one.
Actually, this is going fromself-directed IRA to
self-directed IRA, being sold bya self-directed IRA and I'm
buying it by self-directed IRA.
Well, we've got the Elanj andall the other, the assignment
(20:19):
and blah, blah, blah, blah.
Hold on.
I've shown all that to mycompany.
My company is saying we want tosign docs before we'll fund the
sellers.
Ira company is saying no, wewant you to fund before we send
you the signed docs.
Justin Bogard (20:37):
You've got two people pointing in different
directions.
Richard Thornton (20:40):
Yeah, I don't have resolution yet.
I'm still working on this one,folks.
To be continued.
Next podcast.
Justin Bogard (20:46):
It's almost like you have to have an escrow
company in between so that thesigned documents can go to the
escrow company, the funds can goto the escrow company and they
hold it until they show bothparties Look, it's all legit
here.
Richard Thornton (21:01):
But I get it.
Justin Bogard (21:03):
You bring up a good point about the potential
title fraud and how diligentthey have to be with verifying
who you are, because that stuffcan get messed up pretty easily
nowadays, because it's so easyto manipulate things
electronically, becauseeverybody's trying to go to
online stuff only Everybody'strying to do online closings,
only virtual closings, becauseit's just a lot more efficient.
Richard Thornton (21:24):
Yeah, yeah, I don't know about you, but I
think there's somehow that thebad guys figure out that we're
using DocuSign or whatever.
I'm not that technicallyoriented, but I get a lot of
DocuSign requests and closingrequests that are total phishing
(21:45):
scams that look very much likeDocuSign.
So you do have to be verycareful.
Justin Bogard (21:52):
Yeah, if I don't recognize the name, I just
delete the email.
That's been my habit for a verylong time because I see a lot
of those invoice blah, blah,blah.
It's like invoice.
I don't even recognize the name, so I just delete it and if
they want their money they'llcall me.
I made a mistake and be like,hey, okay, I deleted it and they
understand.
But I haven't had an issue withthat as far as after I delete
(22:15):
some of that stuff, somebodycalling me because typically
you're already dealing withsomebody and they you know you
recognize the invoice or thecompany that you're working with
.
So you do it to be careful.
Richard Thornton (22:26):
If you start to date somebody named Sally
Invoice, you're in real troublebecause you're going to be
deleting their emails.
Delete, that's right.
Justin Bogard (22:34):
That's right.
All right, richard, there waswhat else happened.
Okay, here we go.
That was揪三。.
So I've got an eviction.
I had a note in Michigan and Iforeclosed on this loan because
I had basically no response fromthe borrower.
The borrower is still living inthe property after I foreclosed
(22:57):
on it, so I was required thento go through an eviction
process and then so.
I submit to the courts thedocumentation or my attorney
does, and then they have a courthearing and then the person
dwelling there did not show up.
So then the judge delayed it byanother week to have another
hearing.
The person didn't show up againand then they ordered the the
(23:19):
writ, and then the sheriff gotthe order from the judge to say,
yes, you can go get them out ofthere.
And in this particular countyin Michigan they actually go in
and can remove all the stuff andthrow it away, because by this
time the person has been warnedto get their personal belongings
.
And so they had severaldumpsters full of junk in the
(23:44):
house, in the basement, in thedetached garage, and they
actually cleaned it all out forme.
However, they did not changethe locks.
Oh no, they said, well, it'sopen.
And I said, well, I guess I'llbe getting somebody out there to
change the locks ASAP.
So that was kind of funny.
(24:06):
But I've got the eviction partdone.
But I think this process hastaken.
It's been over a year since Ihad to start foreclosure.
I think I started in.
I want to say July of 22 iswhen I started the process, and
then it's taken circle all theway back to now, almost a year
and a half, with going throughthe foreclosure you know all the
(24:28):
all the proper things and thengoing through the eviction.
The eviction actually took acouple of months.
Some of the delays actually wereon the attorney side for not
getting the stuff to the courtsyou know for a couple weeks.
Richard Thornton (24:39):
It's interesting, though, that they
did the complete clean out,because my experiences, I've had
to do the clean out myself, sohow much did they charge for
that?
Justin Bogard (24:48):
I haven't gotten the bill yet, but I suspect it's
gonna be between four to fivethousand dollars.
Richard Thornton (24:53):
Ouch it was just a clean out.
Justin Bogard (24:56):
Yeah, and it's to my understanding it wasn't a
negotiation.
It's like this is what happens.
This is what happens when yougo through eviction.
I was like, okay, well, youknow, it is what it is.
But they did leave a hot tubbecause they said the hot tub
was too heavy to move, so thiscould add value.
(25:16):
So, anyways, I'm able to putthe property in the market today
and I think I'll be able tosell it for twice as much as I
have into it.
So I'm still okay.
Richard Thornton (25:30):
So you have to wonder.
I mean, I think that we allsort of get quizzical sometimes
about a lot of the propertyowners, but you have to wonder
what was going on with thatperson.
I mean they really they had anasset, whether there was
perfectly good asset.
(25:50):
They somehow let it go in thetoilet, but it but still was
worth so much more and basicallythey're walking away from how
much money.
Justin Bogard (26:02):
I think they probably.
They probably could have mademaybe ten thousand dollars after
paying off the full judgment.
They probably could have hadsome money in their pocket.
Yeah, so I do know thesituation about this and we can
talk about this because it was a.
The original borrower actuallystopped living there because
their parents passed away whenthey were paying us the mortgage
(26:26):
and so then he moved into hisparents house, which was nearby
to where this house is, where wehave the mortgage on.
Are you saying?
Richard Thornton (26:35):
that somebody stopped making their mortgage
payments after they died.
Justin Bogard (26:40):
No, no.
So the borrower has parentsthat have a separate state in a
separate house.
So they passed away.
So he moved into their house,so he put his son into the house
that we have the mortgage on.
So his son was supposed to bepaying him the mortgage payment,
so then he could pay themortgage payment, and so then
(27:00):
that stopped happening and theson just pretty much squatted
there for rent-free,mortgage-free, for over a year.
Wow, and the original borrower.
It was actually his childhoodhome.
So he was telling me on thephone this was.
You know it was, this was anemotional thing for him, that to
keep the house.
But you know he was not able tomake the payments and he was
(27:26):
unreachable as well.
But yeah, there again they walkaway from money that they could
have had for whatever reason.
Richard Thornton (27:34):
Money and memories, and it's.
There's a lot of disconnects inthis business.
Justin Bogard (27:41):
Yeah, it's amazing to me how many
reach-outs there were to theborrower and the person dwelling
there about hey, you know youneed to pay this, you're going
to lose your house.
We have to evict you now.
Do you need your belongings?
Like I mean, obviously I'vebeen telling you.
It's been going on for over ayear.
It's like I mean, times aretough.
(28:03):
I get it, but at the same timeI think I'd want some of my
belongings, or at least try tofigure out how to how to salvage
my you know childhood home, tosave it.
Richard Thornton (28:12):
Yeah, yeah so anyways.
Justin Bogard (28:15):
So that's.
That was one of the more recentthings.
That's just kind of it stinksnot getting the cash flow At the
same time.
You know, we do always want totry to figure out, like, if the
borrower wants to stay there,like let's figure out a solution
, but when they're just non,they just don't communicate and
they don't respond.
After many, numerous times ofreaching out through email,
through phone you know multiplephone numbers and sending out
(28:39):
people to the house or sendingletters in the mail, like it's
just like, what do you do beyondthat?
Richard Thornton (28:44):
Yeah, yeah.
And if you've got an investoron the deal and you're having to
keep them whole, then you'resort of getting a double burn.
Justin Bogard (28:54):
Yeah, and we would kind of move their, their
protection to a different asset.
This one didn't have aninvestor on it, this was just
our money.
So you know, there you have it.
Richard Thornton (29:08):
Okay, well, this has been a a broadcast of
sort of everyday experiences andthings that we're going on in
our our lives.
Justin Bogard (29:20):
The bad is not so bad at the old cliche.
At the end of the day, we'restill making money, and we're
still actually making more moneythan we would if this, if these
people were paying for the pastover over a year.
So I'm actually going to bemaking more money.
It's just I had a dead time ofno cash flow for over a year.
Richard Thornton (29:38):
Yeah, and can you?
Can you survive that period?
And you know, in my case, thesepayoffs, I can complain about
them.
One is one reason I wouldcomplain about them I'm just
losing the cash flow.
But the bigger reason is mostof them are partials, so I
actually don't have anything inthem.
As a matter of fact, I've gotminus basis because I made money
(30:00):
on selling the partial, yes,but there was 10 or 15 years of
income that was going to hit ina year or two here that I'm not
going to get, so bummer.
Justin Bogard (30:13):
All right, there you have it.
Richard can lend out money now.
Richard Thornton (30:16):
That's right.
Justin Bogard (30:17):
That's right.
This is episode number 22 onthe Be the Bank podcast.
He's number five.
I'm Justin Bogard here withRichard Thornton and we will see
you guys on the next episode,take care.
Richard Thornton (30:28):
Stay tuned.
Justin Bogard (30:29):
Yeah.
Narrator (30:34):
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 at Be theBank, and on Instagram at Be the
Bank podcast.
Be the Bank is sponsored byAmerican Note Buyers.
Thanks again for listening.
Interested in real estate.
How about wealth?
Well, they go hand in hand, andhere you'll learn all about it.
Welcome to Be the Bank, apodcast where we discuss and
debate the topics centeredaround real estate investing.
Your host, justin Bogart,shares insights into investing
in real estate to create realwealth and passive income for
(00:22):
you and your family.
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 toyou by American Note Buyers.
Now here's your host, justinBogart.
Justin Bogard (00:45):
Hey, hey, welcome back to another episode, number
22.
In fact, of season five on theBe the Bank podcast, I am Justin
Bogart.
Today I will have RichardThornton on again and we got
some topics we're going to begoing over as it pertains to the
rising interest rate and whereit's at today, as we're
recording, and how the all thewar across the Middle East and
(01:11):
Ukraine and what the Fed isdoing, how this all kind of ties
together.
We're going to have aconversation about that and give
you some updates on some recentArreo sales slash foreclosures
that Richard and I are goingthrough right now.
So stay tuned, richard Thornton.
Richard Thornton (01:40):
Mr Bogart.
Justin Bogard (01:42):
I see you have your AirPods in today.
I do.
Richard Thornton (01:46):
I'm somehow, for some reason, my system is
not liking my internal speakers,so I can use my normal mic, but
I need to hear through myAirPods.
Justin Bogard (01:56):
I don't know if anybody listening to this
podcast does their ownpodcasting, but it does make a
big difference, at least for meand since you're experiencing it
today with, actually, you know,earbuds or headphones in, but I
find it's easier to hear what'sgoing on, because sometimes the
ambient noise around you know,in your studio where you're at,
kind of can distract yousometimes.
(02:16):
So do you notice a difference?
Richard Thornton (02:19):
Yeah, usually I just guess at what you're
saying, I have no idea and Ijust I just sort of respond, you
know, and it seems to work sowell, my, my friend here is an
idiot, so I'll just, I'll justrespond, I feel necessary.
I mean it seems to work.
You haven't questioned it thusfar.
Justin Bogard (02:37):
So I guess I didn't realize you weren't
paying attention this whole time.
The flow has been pretty wellyeah.
Richard Thornton (02:44):
So, yes, it does block out the ambient noise
.
Justin Bogard (02:48):
As we're recording this, this is so I'm
going to say yeah, it isWednesday, wednesday, october
25th 2023.
It's a very chilly day, windyday.
It's not chilly, I'd say it's acool day.
Here in Indianapolis, I didn'tget out to play some golf
yesterday, which was nice.
We actually hit Richard 78degrees at the at the hottest
(03:10):
point yesterday, oh my gosh.
It was really nice and the sunactually came out for a little
bit.
So I think I got my last niceweather round of golf in for the
year yesterday.
Richard Thornton (03:20):
Well, we yeah, we went from 90 degrees this
weekend to 55 degrees right now,and cold and blistering, like
you said, and so we're getting alittle bit of the same thing.
Justin Bogard (03:29):
It got 90.
Got the 90.
Richard Thornton (03:32):
It got up to 96 on Saturday.
Justin Bogard (03:35):
Is that unusually warm for a petal?
Richard Thornton (03:36):
Yes, this is.
We've had an unusually longIndian summer.
We didn't have much of a summer, but we're having hell of an
Indian summer.
Justin Bogard (03:49):
So go figure.
All right, my friend, we've gotsome more drama happening.
The drama is unfolding with theinterest rates, with the Fed,
and does the Fed correct me ifI'm wrong has it changed the
rate or have the meeting everymonth, or is it every quarter?
Richard Thornton (04:08):
I think it's every quarter, but I could be
wrong.
Justin Bogard (04:10):
Okay, I feel like it happens often, so I was
wanting to get confirmation.
I forgot to look this up.
If it happened every month, orif they have planned, planned
times when they meet and theyand they get together, you would
think it'd be like on acalendar schedule, but perhaps
it's not so.
Current interest rate nationalaverage interest rate, as I
looked it up before we startedrecording this, richard, was
(04:31):
8.04% for a 30 year conventionalmortgage and I believe that's
been the highest in last 23years, I think since 2000, 1999.
You still got me, so the Fedmeets eight times a year.
Richard Thornton (04:52):
Oh, okay, yeah , fed meets eight times a year.
Justin Bogard (04:56):
Eight times.
Richard Thornton (04:56):
Okay, I was busy.
Justin Bogard (04:57):
I was busy.
I was busy.
You are also a producer in thebackground, looking up
information on the fly.
Richard Thornton (05:06):
Yeah, you're doing a podcast.
I was busy, come on.
Justin Bogard (05:10):
I was talking Again, you weren't listening to
what I was saying.
You were just responding.
Richard Thornton (05:16):
What you talking.
What you talking?
Did you ever watch the seriesKim's Convenience?
Justin Bogard (05:21):
No, but I have seen like advertisements for it.
Oh my.
Richard Thornton (05:24):
God, it's just hilarious.
I think it's on Netflix fromAmerica.
It's this Korean family inCanada, and so they speak sort
of a little bit broken Englishand the husband keeps saying to
the wife she talks to him andshe says what you talking, what
you talking.
Justin Bogard (05:42):
Anyway, it's quite yeah.
Richard Thornton (05:45):
We digress.
Justin Bogard (05:46):
Interest rate keeps coming up.
The Fed keeps raising it, sowhat's giving your spin on how
you see this affecting what'sgoing on?
Richard Thornton (05:59):
Well.
Justin Bogard (05:59):
I'm there it goes again.
You're bat the thousand this.
Richard Thornton (06:02):
I'm done.
Yeah, the phone.
Justin Bogard (06:05):
So I apologize to the listening audience.
That's right.
Richard Thornton (06:10):
The half of the duo is working here and the
other half is just falling apart.
I mean, it's got a head cold,his speakers won't work, his
phone's coming in, he can'tconcentrate.
I mean, come on, get your acttogether, dude.
Ok.
Justin Bogard (06:26):
All right.
Richard Thornton (06:27):
Oh, I got it.
I mean it's right, I got toturn my phone off, All right.
So that was true.
So the term I would use iswonkiness.
Justin Bogard (06:41):
I mean I think Wonkiness, I like that.
Richard Thornton (06:43):
Yeah, I think and that's a technical term I
think that the all of theprognosticators are kind of
broken if you look at what'sgoing on out there.
The Fed keeps increasinginterest rates, hoping to slow
down the economy.
Well, economy is not roaring,but it's roaring away.
(07:06):
But it's not really respondingto what they're doing.
So they want to keep raisingrates, the market rate.
I'm sorry.
The job market is just thumbingit's nose at the Fed and saying
we're going to remain strong,nanny, nanny, nanny, and we're
going to keep rolling ahead here, so we don't care what you do.
And this is all in spite of thefact that we have a new
(07:31):
outbreak in the Middle East.
The Wall Street seems to besaying looking at that and going
, yes, this is serious and yes,I'm sorry.
I don't want to diminish thisbecause people are dying and
things like that, but in termsof an actual capitalistic point
of view, it's a non-event.
There's always tumultuousnessin that market.
(07:54):
We've already priced that in.
And yes, there is Ukrainethings going on in Ukraine that
is increasing the oil pricesbecause OPEC and other groups
are playing fun with that andsaying, hey look, we can make
more money.
And if we restrict production?
So that's what they're doingbecause Russia isn't producing
(08:17):
as much oil.
But all in all, the markets justaren't doing what they're
supposed to be doing andtraditionally what they would do
if you pull one lever.
If you pull to the right, itgoes to the right.
If you pull to the left, itgoes to the left.
Well, this pulling to the leftand it goes to the right.
So I get a lot of my investorssay well, can I get higher rates
(08:40):
on my private mortgage notesBecause yields are going up, or
I market uncertainty, and I gono, it doesn't quite work that
way.
We're in a different area.
So it's more of a commentary,more of a.
You have to sit back and sortof a zen sense and look at it
and go all right, this is justCrazy.
Justin Bogard (09:03):
I like what you said about describing it as
wonkiness, because after youstarted giving your your spin on
it, it makes sense, right.
It's just, it's just odd, likewhen you expect one thing to
happen with historical data andhistorical events that has
happened, like what the Fed does.
I'm going to do this because Iknow what's going to to pull
back in a different direction.
It's like it didn't move, itdidn't do anything.
(09:24):
Right, it raised the rates andit didn't do anything.
It kind of made it worse.
You know, to a certain sense,and yeah, that's why I agree
with you.
It is.
It's just really odd and I don'tthink anyone has the right
answer, the solution.
I think they're just going tohave to try the things and maybe
lower it back down and see whathappens, maybe raise it up a
little bit more.
We don't really know what'sgoing to happen.
Everybody keeps saying andeverybody really believes the
(09:46):
path is going to be to startlowering it eventually, and it
feels like we were talking aboutand at the end of 24, we were
going to see a significantchange, but it's probably going
to be more like the 25 when westart seeing it closer to maybe
five and a half percent andmaybe that's the flat line of
where we're going to stay forquite some time and be the new
normal.
Richard Thornton (10:07):
Yeah, I'd say I agree with that.
I mean, the tsunami of defaultshas not happened, as we have
said, because of governmentalprograms and because equity is
up.
I may have mentioned on thisprogram that, uh, and so here's
another another wonkiness right,rates are up, people should not
refinance.
(10:27):
I've got more refinancing goingon in my portfolio right now
than I've ever had.
I now have four properties thatare being sold or refinanced.
Um, I don't like that.
Justin Bogard (10:40):
Now it doesn't make sense.
Now let me jump in here realquick about that because that's
interesting.
So do you think it's, or do younotice in your portfolio of
those loans that are happeningthat it's because they have a
lot of equity and they're tryingto tap into it?
Richard Thornton (10:54):
Well, I think it's two things.
These, these have been steadypayers, okay.
So I think these people have,uh, finally gotten on their feet
and been able to prove to uh,either some interim or some
regular lender, some local bankor something like that, that
they are credit worthy.
Um, they can, you know, theycan say, look, I've, I've got a
(11:17):
payment history here of threeyears.
So that's number one, okay.
Number two is you've got hugeamounts of equity, like the one
I mentioned to you this morning.
I've got a $47,000 mortgage onit and the property is now worth
$160,000.
Well, you know, you can.
You can lend to somebody who'sonly got a 650 or 675 credit
(11:40):
rating, because they've beencreeping up more than they were.
If you're only at 30% loan tovalue.
Justin Bogard (11:47):
Right yeah, this risk is significantly lower.
Once you have the propertyvalue is going to buy it I
totally agree with that.
Richard Thornton (11:54):
I mean, even if you've got a huge deflation
in the market come on, it'sinteresting.
Justin Bogard (11:59):
You say that I'll .
I'll do a quick little sidebarbecause it's an interesting
little case study.
That kind of happened today andso there is someone in our kind
of American note buyers sphereof influence type of network
that reached out to me and wasasking me questions about a
foreclosure and they had litmoney on a rental they had in
(12:19):
Florida.
I'm not sure where it's out inFlorida, but the person was able
to bring significant cash tothe table to basically pay off
his underlying mortgage.
I think it was like a hundredor 150 K type of mortgage, so
that property, I think, was youknow over 200 at the time.
So they brought a bunch of cash, they paid down his mortgage,
so he owned a free clear andthen, he care, he still carried
(12:42):
back like um, I know, I think itwas like a 90 K, and so the
person was supposed to be payingyou know um, their payments
monthly and then a bloom came.
It was going to happen after afew years to owe the rest.
So what happened was, afterabout uh, three or four months
(13:04):
of payments, the person stoppedmaking the payments because what
I remember from thisconversation from earlier was
that they just couldn't affordit at the moment, and so they
got about four or five monthsbehind and so he was trying to
ask me questions.
You know what?
What do I do in the situation,or where do I go from here?
And when I started asking himquestions and getting this story
involved, I was thinking, oh mygosh, like this person, the
(13:27):
borrower put down significantcash and they owe.
You know, to your point, whenyou're talking about a lots of
equity in there, like if thehouse is worth maybe 300 K today
, as is, and they only owe,let's say, you know, 80 plus the
juice on it, so let's call it85 and 90 on it, I mean, that's,
(13:48):
that's like less than a thirdof the property value you know
so why couldn't they just go tothe bank?
And that was my first question.
I was like, why can't they justgo to the bank and get a loan
to pay you off?
And if this seems so simple?
So I was thinking this, the guythat was concerned, the lender.
I was just trying to tell him,like you are in a great position
(14:09):
here because there is so muchequity here that you're hoping
it goes to foreclosure, becauseyou're going to get definitely
full value for what the judgmentis, you know at that time.
But you know it would be niceif the borrower was able to, you
know, keep the property and,you know, go get some sort of
loan.
Richard Thornton (14:31):
Yes, I mean.
And so what beyond that are youdrawing from that?
Justin Bogard (14:38):
That, I think, the inexperience of the person I
was trying to help.
They were overly concernedabout the situation because of
how you put it, the big D right?
It seems ominous, it seems bad,it seems negative.
But when I was trying to spendthis for them and I said you
don't own anything on thisproperty, so why does it matter
if it takes six months or a yearand a half to go through
(15:00):
foreclosure Like you're notlosing any money, right?
You're going to get that moneybecause, basically, you have an
Apple iPhone worth $1,000 andyou got $250 into it.
You're going to be able toresell this thing and get plenty
of money back and plus profit.
So I think after they heard thatand they were reassured about
(15:23):
hey look, you know, becausewhat's going to happen in
Florida is, honestly, if theyhave to foreclose, it may take a
year or two to foreclose, ifyou know there's pushback from
the borrower just because it'sthings can be slower in Florida.
But you know it doesn't reallymatter because property values
are coming up so much andthey're going to continue to
rise even more that the propertymay be worth Richard 330,000 by
(15:45):
the time it's done, you know,through foreclosure.
So it's just, it's just reallyinteresting how you come across
these deals and they end upgoing a little bit sideways
because things aren't going wellin the economy.
A lot of people are juststruggling to because everything
is more expensive.
But us as lenders, you know ifwe're buying these things right
and we're getting good loan tovalues when we originate them or
(16:07):
when we buy them from somebody,I mean you're still sitting
really, really, really well andappreciation is helping that
even more.
Put you know, more protection,it's more safety net for us
lenders.
Richard Thornton (16:19):
That's true, and you might get an iPhone
right.
Justin Bogard (16:22):
I might get an iPhone.
Yeah, it just happened to beright in front of me as I was
trying to think of what'ssomething.
I can compare it to, eventhough we know the iPhone
doesn't appreciate in value.
But that's true, but but yeah,and I think a lot of people,
especially when they're novices,they don't take that they don't
(16:42):
know what they don't know, andthat was smart of this person to
try to contact somebody like me.
I'm glad that they couldcontact me because they actually
are from, you know, close towhere I live here in Indiana, so
I was a local person to them.
But yeah, they got reassuranceof like hey, look, man you're,
you're sitting really well, it'snot like they owe you $90,000
and the property is worth 95.
(17:03):
Like you know then, then youkind of have a problem.
Richard Thornton (17:06):
And I'm glad they contacted you, Justin,
because you're so smart.
Justin Bogard (17:12):
Yes, yes, I am.
Richard Thornton (17:15):
We, we, we kibbutz with each other.
We have fun.
Justin Bogard (17:21):
Well they're.
They're thinking I'm so smartbut I'm thinking like man.
There's like 12 other people Iprobably would have called he
got the.
He got a short end of the sticktoday.
Richard Thornton (17:33):
Yeah, yeah, short end, which is a good segue
into the other thing we weregoing to talk about, right?
Justin Bogard (17:37):
Yeah, this is your, your foreclosure that you
got going on.
Richard Thornton (17:41):
Yeah.
So I mean, I'm not getting theshort end of the stick, I'm
getting what I'm owed.
But yeah, the reason that wethought this was worth bringing
up just a little bit is thatI've got another note that's
being paid off is because Imentioned earlier and it's a
hundred and sixty thousanddollar house.
It's a forty seven thousanddollar note and I've gotten four
(18:05):
calls today and yesterday fromthe title company Because they
can't believe I'm selling thishouse for $47,000 and it's got
$160,000 value and they areconcerned about fraud.
They have had DocuSign fraudtwice and gotten stung twice on
(18:26):
the title and had to come upwith insurance funds.
So they've called me on mybusiness line.
They've called me on my mobileline.
They've asked all sorts ofquestions about my articles of
incorporation and gee, why wasone signed in 2017 and another
document was signed in 2020.
These are documents regardingthe formation of my company.
Justin Bogard (18:48):
Yeah.
Richard Thornton (18:50):
Blah, blah, blah.
I don't think I've ever beengrilled for over an hour.
Justin Bogard (18:58):
That's like the two businesses I would never get
in real estate would probablybe a title company and a loan
servicing company, because thatjust seems like a lot of chances
for failure.
Richard Thornton (19:09):
Yeah, we have a loan servicing company that
I'm not sure is going to make it.
Justin Bogard (19:15):
I know we don't need to talk about names, but
Well, there's actually a lot ofloan servicing companies out
there.
Some of them are state specific, like they may work in just one
state or a couple, and some ofthem work almost every state.
Right, it's a tough business.
Richard Thornton (19:32):
I think it's a very tough business for very
low margins.
Justin Bogard (19:35):
And you've got to deal with people like Richard
Thornton.
Richard Thornton (19:37):
That's right.
It's right.
Who can't think keeps thingsstraight.
Justin Bogard (19:43):
If you guys want to check out the video feed that
we do on this podcast, pleasego to our American Notebuyer's
YouTube channel.
You can check out the playlistcalled Be the Bank.
You can see all of ourrecordings of the podcast we do
for the last five seasons.
Richard Thornton (19:57):
Right, I've got a really quick another, just
anecdotal thing, that's aquestion.
Another property I'm selling.
I'm buying this one.
Actually, this is going fromself-directed IRA to
self-directed IRA, being sold bya self-directed IRA and I'm
buying it by self-directed IRA.
Well, we've got the Elanj andall the other, the assignment
(20:19):
and blah, blah, blah, blah.
Hold on.
I've shown all that to mycompany.
My company is saying we want tosign docs before we'll fund the
sellers.
Ira company is saying no, wewant you to fund before we send
you the signed docs.
Justin Bogard (20:37):
You've got two people pointing in different
directions.
Richard Thornton (20:40):
Yeah, I don't have resolution yet.
I'm still working on this one,folks.
To be continued.
Next podcast.
Justin Bogard (20:46):
It's almost like you have to have an escrow
company in between so that thesigned documents can go to the
escrow company, the funds can goto the escrow company and they
hold it until they show bothparties Look, it's all legit
here.
Richard Thornton (21:01):
But I get it.
Justin Bogard (21:03):
You bring up a good point about the potential
title fraud and how diligentthey have to be with verifying
who you are, because that stuffcan get messed up pretty easily
nowadays, because it's so easyto manipulate things
electronically, becauseeverybody's trying to go to
online stuff only Everybody'strying to do online closings,
only virtual closings, becauseit's just a lot more efficient.
Richard Thornton (21:24):
Yeah, yeah, I don't know about you, but I
think there's somehow that thebad guys figure out that we're
using DocuSign or whatever.
I'm not that technicallyoriented, but I get a lot of
DocuSign requests and closingrequests that are total phishing
(21:45):
scams that look very much likeDocuSign.
So you do have to be verycareful.
Justin Bogard (21:52):
Yeah, if I don't recognize the name, I just
delete the email.
That's been my habit for a verylong time because I see a lot
of those invoice blah, blah,blah.
It's like invoice.
I don't even recognize the name, so I just delete it and if
they want their money they'llcall me.
I made a mistake and be like,hey, okay, I deleted it and they
understand.
But I haven't had an issue withthat as far as after I delete
(22:15):
some of that stuff, somebodycalling me because typically
you're already dealing withsomebody and they you know you
recognize the invoice or thecompany that you're working with
.
So you do it to be careful.
Richard Thornton (22:26):
If you start to date somebody named Sally
Invoice, you're in real troublebecause you're going to be
deleting their emails.
Delete, that's right.
Justin Bogard (22:34):
That's right.
All right, richard, there waswhat else happened.
Okay, here we go.
That was揪三。.
So I've got an eviction.
I had a note in Michigan and Iforeclosed on this loan because
I had basically no response fromthe borrower.
The borrower is still living inthe property after I foreclosed
(22:57):
on it, so I was required thento go through an eviction
process and then so.
I submit to the courts thedocumentation or my attorney
does, and then they have a courthearing and then the person
dwelling there did not show up.
So then the judge delayed it byanother week to have another
hearing.
The person didn't show up againand then they ordered the the
(23:19):
writ, and then the sheriff gotthe order from the judge to say,
yes, you can go get them out ofthere.
And in this particular countyin Michigan they actually go in
and can remove all the stuff andthrow it away, because by this
time the person has been warnedto get their personal belongings
.
And so they had severaldumpsters full of junk in the
(23:44):
house, in the basement, in thedetached garage, and they
actually cleaned it all out forme.
However, they did not changethe locks.
Oh no, they said, well, it'sopen.
And I said, well, I guess I'llbe getting somebody out there to
change the locks ASAP.
So that was kind of funny.
(24:06):
But I've got the eviction partdone.
But I think this process hastaken.
It's been over a year since Ihad to start foreclosure.
I think I started in.
I want to say July of 22 iswhen I started the process, and
then it's taken circle all theway back to now, almost a year
and a half, with going throughthe foreclosure you know all the
(24:28):
all the proper things and thengoing through the eviction.
The eviction actually took acouple of months.
Some of the delays actually wereon the attorney side for not
getting the stuff to the courtsyou know for a couple weeks.
Richard Thornton (24:39):
It's interesting, though, that they
did the complete clean out,because my experiences, I've had
to do the clean out myself, sohow much did they charge for
that?
Justin Bogard (24:48):
I haven't gotten the bill yet, but I suspect it's
gonna be between four to fivethousand dollars.
Richard Thornton (24:53):
Ouch it was just a clean out.
Justin Bogard (24:56):
Yeah, and it's to my understanding it wasn't a
negotiation.
It's like this is what happens.
This is what happens when yougo through eviction.
I was like, okay, well, youknow, it is what it is.
But they did leave a hot tubbecause they said the hot tub
was too heavy to move, so thiscould add value.
(25:16):
So, anyways, I'm able to putthe property in the market today
and I think I'll be able tosell it for twice as much as I
have into it.
So I'm still okay.
Richard Thornton (25:30):
So you have to wonder.
I mean, I think that we allsort of get quizzical sometimes
about a lot of the propertyowners, but you have to wonder
what was going on with thatperson.
I mean they really they had anasset, whether there was
perfectly good asset.
(25:50):
They somehow let it go in thetoilet, but it but still was
worth so much more and basicallythey're walking away from how
much money.
Justin Bogard (26:02):
I think they probably.
They probably could have mademaybe ten thousand dollars after
paying off the full judgment.
They probably could have hadsome money in their pocket.
Yeah, so I do know thesituation about this and we can
talk about this because it was a.
The original borrower actuallystopped living there because
their parents passed away whenthey were paying us the mortgage
(26:26):
and so then he moved into hisparents house, which was nearby
to where this house is, where wehave the mortgage on.
Are you saying?
Richard Thornton (26:35):
that somebody stopped making their mortgage
payments after they died.
Justin Bogard (26:40):
No, no.
So the borrower has parentsthat have a separate state in a
separate house.
So they passed away.
So he moved into their house,so he put his son into the house
that we have the mortgage on.
So his son was supposed to bepaying him the mortgage payment,
so then he could pay themortgage payment, and so then
(27:00):
that stopped happening and theson just pretty much squatted
there for rent-free,mortgage-free, for over a year.
Wow, and the original borrower.
It was actually his childhoodhome.
So he was telling me on thephone this was.
You know it was, this was anemotional thing for him, that to
keep the house.
But you know he was not able tomake the payments and he was
(27:26):
unreachable as well.
But yeah, there again they walkaway from money that they could
have had for whatever reason.
Richard Thornton (27:34):
Money and memories, and it's.
There's a lot of disconnects inthis business.
Justin Bogard (27:41):
Yeah, it's amazing to me how many
reach-outs there were to theborrower and the person dwelling
there about hey, you know youneed to pay this, you're going
to lose your house.
We have to evict you now.
Do you need your belongings?
Like I mean, obviously I'vebeen telling you.
It's been going on for over ayear.
It's like I mean, times aretough.
(28:03):
I get it, but at the same timeI think I'd want some of my
belongings, or at least try tofigure out how to how to salvage
my you know childhood home, tosave it.
Richard Thornton (28:12):
Yeah, yeah so anyways.
Justin Bogard (28:15):
So that's.
That was one of the more recentthings.
That's just kind of it stinksnot getting the cash flow At the
same time.
You know, we do always want totry to figure out, like, if the
borrower wants to stay there,like let's figure out a solution
, but when they're just non,they just don't communicate and
they don't respond.
After many, numerous times ofreaching out through email,
through phone you know multiplephone numbers and sending out
(28:39):
people to the house or sendingletters in the mail, like it's
just like, what do you do beyondthat?
Richard Thornton (28:44):
Yeah, yeah.
And if you've got an investoron the deal and you're having to
keep them whole, then you'resort of getting a double burn.
Justin Bogard (28:54):
Yeah, and we would kind of move their, their
protection to a different asset.
This one didn't have aninvestor on it, this was just
our money.
So you know, there you have it.
Richard Thornton (29:08):
Okay, well, this has been a a broadcast of
sort of everyday experiences andthings that we're going on in
our our lives.
Justin Bogard (29:20):
The bad is not so bad at the old cliche.
At the end of the day, we'restill making money, and we're
still actually making more moneythan we would if this, if these
people were paying for the pastover over a year.
So I'm actually going to bemaking more money.
It's just I had a dead time ofno cash flow for over a year.
Richard Thornton (29:38):
Yeah, and can you?
Can you survive that period?
And you know, in my case, thesepayoffs, I can complain about
them.
One is one reason I wouldcomplain about them I'm just
losing the cash flow.
But the bigger reason is mostof them are partials, so I
actually don't have anything inthem.
As a matter of fact, I've gotminus basis because I made money
(30:00):
on selling the partial, yes,but there was 10 or 15 years of
income that was going to hit ina year or two here that I'm not
going to get, so bummer.
Justin Bogard (30:13):
All right, there you have it.
Richard can lend out money now.
Richard Thornton (30:16):
That's right.
Justin Bogard (30:17):
That's right.
This is episode number 22 onthe Be the Bank podcast.
He's number five.
I'm Justin Bogard here withRichard Thornton and we will see
you guys on the next episode,take care.
Richard Thornton (30:28):
Stay tuned.
Justin Bogard (30:29):
Yeah.
Narrator (30:34):
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 at Be theBank, and on Instagram at Be the
Bank podcast.
Be the Bank is sponsored byAmerican Note Buyers.
Thanks again for listening.
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