In the latest episode of “Raising Private Money,” Jay Conner dives deep into the nuances of mortgage note investing and private money with his good friend, Jamie Bateman. Renowned for his success in raising over $3,000,000 in private money, Jamie shares his journey and insights into leveraging mortgage notes as a powerful investment vehicle. This episode is a goldmine for both seasoned investors and newcomers looking to expand their portfolios. Let’s break down the themes and insights discussed during this illuminating conversation.
Jay Conner’s Real Estate Wisdom
A Wealth of Experience
Jay Conner, a real estate investor who began his journey in 2003, has rehabbed over 500 houses. His experience spans various facets of real estate, making him a credible guide for aspiring investors. Conner emphasizes one crucial lesson: avoid operating in isolation. He avows that seeking mentorship from experts can save you from costly mistakes and accelerate your path to success.
Jamie Bateman on Mortgage Notes
The Strategic Advantage
Jamie Bateman, a prominent voice in mortgage note investing, emphasizes the versatility of this investment strategy. Mortgage notes offer a unique advantage: you can invest across state lines without ever visiting the properties. This location independence is a game-changer, making it easier to diversify your investment portfolio.
Moreover, mortgage notes come with a relatively low barrier to entry. Utilizing a licensed loan servicer simplifies compliance and licensing hurdles. This ease of access complements existing residential real estate investing experience and provides opportunities for creative and analytical investment strategies. However, Jamie notes that mortgage notes lack inherent tax advantages. Fortunately, this limitation can be mitigated with self-directed accounts.
Passive Investors’ Opportunity
Jamie offers a tantalizing glimpse into the potential for passive investors to earn high returns by partnering with him. For those interested, Jamie’s platform offers pathways to explore these lucrative opportunities further.
Understanding Private Money in Real Estate
Securing Single-Family Houses
Jay Conner elucidates how private money underpins real estate transactions, particularly in single-family houses. Utilizing promissory notes to secure private lenders is a prudent strategy, complemented by collateral via a deed of trust or mortgage. Insurance policies include private lenders as mortgagees, and Conner maintains a conservative loan-to-value ratio of 75%. Additionally, a 90-day call option provides a safety net for emergencies.
Collateral and Mortgage Notes
Mortgage notes employ a similar protective measure through hypothecation, where the note and deed of trust serve as collateral. An illustrative example is purchasing a $70,000 principal balance note for $50,000 and borrowing $30,000 against it. Such flexibility in terms is mutually agreed upon between lender and borrower, making mortgage notes a versatile investment vehicle.
Jamie Bateman’s Journey
Transition from Defense to Entrepreneurship
Jamie Bateman’s career transition exemplifies the allure of real estate for control and flexibility. After 14 years at the Department of Defense, Jamie ventured into real estate, leveraging his family background in the field. His journey began with rental properties using the BRRR method and pivoted to mortgage notes in 2018. Jamie’s varied experiences, including title work, have enriched his investment acumen.
Evolving Strategies in Raising Capital
Organic Growth
Jamie shares his organic approach to raising private money: documenting his investment journey on social media and blogs attracted interest from potential investors. This visibility led to his first substantial investment from a former college friend and finance professional.
Joint Ventures to Fund Models
Initially involving joint ventures with capital partners, Jamie’s strategy evolved. He now prefers selling partial notes and employing hypothecation methods. Currently, managing mortgage note funds simplifies accounting and scalability, a transition Jamie finds advantageous.
Building a Personal Brand
Jamie continues to leverage social media for investor attraction, underscoring the importance of building trust and a personal brand. He advises beginners to learn from successful peers, avoid overextending the “fake it till you make it” mentality, and align with experienced partners for credibility and learning.
The Integrity Income Fund
Tailored for Passive Investors
Jamie Bateman discusses the Integrity Income Fund, offering accredited investors an 8% annual preferred return for investments under $100,000 and 10% for investments exceeding that amount. Distributions are made monthly, maintaining a stellar track record with no missed payments in over 2.5 years. A 12-month lockup period ensures investor flexibility, distinguishing it from typical mortgage note funds with longer terms.
Final Thoughts
For those seeking more information, Labrador Lending’s website, https://www.LabradorLending.com, offers comprehensive details on investment opportunities. Jamie Bateman’s podcast, “From Adversity to Abundance,” and his contact email, batemanjames@labradorlending.com, are also valuable resources.
As Jay Conner urges, curious and ambitious investors should explore these insights further and consider subscribing to “Raising Private Money.” For additional resources, a free money guide is available at https://www.JayConner.com/Moneyguide, a perfect starting point for anyone looking to navigate the world of private money in real estate.
10 Discussion Questions from this Episode:
- Jay Conner’s Experience:
- Jay Conner emphasized the importance of not operating solo in real estate investments. What do you think are the biggest advantages of learning from experts in this field, and can you share a situation where expert advice saved you from a potential mistake?
- Mortgage Notes Advantages:
- Jamie Bateman mentioned several advantages of investing in mortgage notes, such as location independence and low barriers to entry. Which of these advantages do you find most appealing, and why?
- Challenges of Mortgage Notes:
- Although mortgage notes offer several benefits, they lack inherent tax advantages. How can investors mitigate this disadvantage using self-directed accounts?
- Private Money in Real Estate:
- Jay Conner discussed using promissory notes and deeds of trust to protect private lenders in single-family house investments. What do you think about these protective measures, and how do they compare to more traditional investment protections?
- Hypothecation in Mortgage Notes:
- Hypothecation was cited as a method for leveraging mortgage notes for further investment. Can you explain how this process works and its potential benefits for a real estate investor?
- Scaling with Private Money:
- Both Jamie Bateman and Jay Conner emphasized the importance of scaling using private money. What strategies have you found effective for scaling your business, especially when it comes to raising private capital?
- First Experience with Private Money:
- Jamie Bateman shared his experience of raising private money by documenting his journey on social media. How can personal branding and social media presence impact an investor’s ability to attract private money?
- Evolution to Fund Management:
- Moving from joint ventures to managing mortgage note funds was a significant transition for Jamie Bateman. What are the primary advantages of managing a fund versus handling joint ventures in your opinion?
- Advice for Beginners:
- One piece of advice given to beginners was to align with more experienced partners to gain credibility. Have you ever collaborated with a more experienced partner, and what outcomes did that partnership yield?
- Integrity Income Fund:
- The Integrity Income Fund offers different preferred returns based on investment size and has a 12-month lock-up period. What are your thoughts on these terms, and how do they compare to other investment opportunities you’ve encountered?
Fun facts that were revealed in the episode:
- Jay Conner’s Experience: Jay Conner has rehabbed over 500 houses since starting his investing journey in 2003.
- Jamie Bateman’s Background: Jamie Bateman transitioned to real estate investment after a 14-year career at the Department of Defense, bringing some humorous insights about government coordination.
- Jamie Bateman’s Fund: The Integrity Income Fund boasts an impressive record of never missing a monthly distribution in 2.5 years of operation.
Timestamps:
00:01 Raising Private Without Asking For It
04:14 Pursued real estate entrepreneurship for control and familiarity.
07:32 Scaling a business requires finding, managing, and raising capital.
12:48 Transition to fund model simplifies accounting issues.
14:57 Learn from others, avoid dishonesty, and understand deeply.
20:06 Mortgage notes connect property investment methods seamlessly.
21:07 Mortgage note investing combines creativity and analytics.
25:10 Using hypothecation to leverage mortgage notes.
28:29 Mortgage notes and podcast info: https://www.labradorlending.com
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Jay Conner is a proven real estate investment leader. Without using his own money or credit, Jay maximizes creative methods to buy and sell properties with profits averaging $67,000 per deal.
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The Financial Benefits of Mortgage Notes with Jamie Bateman
Jay Conner [00:00:00]:
Welcome to another amazing episode of Raising Private Money. I’m your host, Jay Conner, also known as the Private Money Authority. This is the podcast where we talk about how to raise private money for your real estate deals without ever having to ask for money. And if you’re listening to this show and you’re interested in just being a passive investor, interested in being a private lender yourself, we’ll be speaking with you as well. Well, my special guest today has already raised over $3,000,000 in private money, and he’s got a very, very interesting background. So he left his two jobs some time ago to fully commit to this entrepreneurial journey, which is focused on empowering others, teaching others, and inspiring others such as yourself, in mortgage note investment. So if you’ve never heard about investing in mortgage notes, we’re gonna talk about that. If you’ve already been investing in mortgage notes and you’d like to raise more private money for investing in mortgage notes, we’re gonna talk about that as well.
Jay Conner [00:01:09]:
Well, in addition to that, my guest has built a really impressive portfolio of single-family rental properties, and as I just said, mortgage notes as well. He’s operated multiple successful mortgage note funds. He’s got a couple of funds going on right now. And in addition to that, he’s helped numerous investors navigate the market and achieve amazing returns. Now I was a guest on his podcast, which is called From Adversity to Abundance. That’s an amazing podcast, and you’ll want to check out that as well. On his podcast, he shares valuable insights and highlights the stories and the quote-unquote mental fitness tips of successful real estate entrepreneurs who inspire others on their path to financial abundance. In just a moment, you’re gonna meet my very, very special guest, mister Jamie Bateman, right after this.
Narrator [00:02:09]:
If you’re a real estate investor and are wondering how to raise and leverage private money to make more profit on every deal, then you’re in the right place. On raising private money, we’ll speak with new and seasoned investors to dissect their deals and extract the best tips and strategies to help you get the money because the money comes first. Now here’s your host, Jay Conner.
Jay Conner [00:02:36]:
Jamie Bateman, welcome to the show. How are you, my friend?
Jamie Bateman [00:02:42]:
I’m doing great. Thank you so much for having me, Jay. This is gonna be fun.
Jay Conner [00:02:46]:
Absolutely. Well, I enjoyed being a guest on your podcast, From Adversity to Abundance. That was fantastic. So I knew after being a guest on your podcast, that I for sure wanted to have you over here to raise private money because you’ve raised 1,000,000 dollars in private money. You show other real estate investors how to raise private money for mortgage note investing, and you’ve got opportunities as well, for passive investors that just want to sit back and get high rates of return. So before we dig into all that, what motivated you to leave your two jobs, and what was that, and why was that investing?
Jamie Bateman [00:03:29]:
Yeah. I think what motivated me was having the control and flexibility many entrepreneurs envision and want. Many people many w two employees want that as well. I think I was I was really getting tired of the Groundhog Day of over and over and over commuting to my 9 to 5 and just felt like I, yeah, might get a little promotion or bump in pay, but it was just a number at a large organization. I worked for the Department of Defense. I had served in the US military, and so it was a natural transit transition. Excuse me. And, worked there for 14 years, and it was a it was a good good job.
Jamie Bateman [00:04:14]:
And I felt like we, you know, it served a good purpose and everything, but I just got so tired of just being a, you know, a number and just wanted that control and the freedom that entrepreneurship offers. And so why real estate was because I did have a background background in title work. I started to, during my commute, listen to a lot of real estate podcasts and use that time to kind of gain knowledge and inspiration. And I started to realize, who’s in my corner? Who’s on my team? Well, I’ve got my father has been a real estate agent for decades. My brother was a loan officer. I had worked at a title company previously. And so I just started to realize real estate is kind of the niche. Residential real estate in particular is the niche that I understood.
Jamie Bateman [00:05:05]:
And so you point to your strengths and your network, and you rely on that. And so it was a natural fit to move into initially rental property investing where we were doing the BRRR method, you know, where you’d buy and rehab, rent, refinance, repeat. I think that’s that’s what it is. And then, so my wife and I built out that single-family residential portfolio. And then in 2018, I really focused, switched my focus over to mortgage notes, and currently do both, but mortgage notes are 95% of my professional focus.
Jay Conner [00:05:45]:
Now, Jamie, did I just hear you say you worked for the Department of Defense for 13 years?
Jay Conner [00:05:52]:
14 years. Alright. I’m gonna ask you a question, a very relevant question.
Jamie Bateman [00:05:56]:
Okay.
Jay Conner [00:05:57]:
That I believe you’re gonna have a very strong opinion on. Here’s the question. Does our government know what’s going on with all those drones?
Jamie Bateman [00:06:10]:
Let me just answer that by saying when people have these conspiracy theories, I tend to get off the conspiracy theory train only because I’ve seen a decent amount of incompetence, and I’m not sure that the government could pull off anything too coordinated. You know, I don’t have any up-to-date relevant information on the drones, but it’s a little scary, to be honest with you.
Jay Conner [00:06:40]:
Yeah. Well, my prediction is with and, of course, what I’m getting ready to say is I’m gonna time, date, and stamp this podcast, but that’s okay. My best guess is with all the scuttlebutt and all the buzz that’s going on about these drones.
Jay Conner [00:06:56]:
That is flying around, I think the cat’s gonna get out of the bag here within the next couple or a few weeks.
Jamie Bateman [00:07:03]:
I mean, usually, where there’s smoke, there’s fire. Right?
Jay Conner [00:07:07]:
Exactly. Well, anyway, I digress, but you said you work for the Department of Defense. I had to ask The question.
Jay Conner [00:07:15]:
Let’s talk about private money. So first, let’s talk let’s let’s talk to the segment in our audience that are real estate investors looking to raise private money. What was it that came along in your investing career that caused you to be motivated to start raising private money?
Jamie Bateman [00:07:32]:
The reality is, I think similar to really any other investor, if you’re trying to scale your business, you run out of your capital or at least the amount of capital that you have set aside to put into a a particular deal. So in my case, I had, through mortgage notes, I’d done deals on my own with my capital initially, purchased I don’t know how many handfuls of mortgage notes initially, understood the concept but then, again, you run out of your capital that you so if I want you know, that you can put to work. So if I wanted to scale the business, I needed to access other people’s money. And the way that I typically frame this, and, I didn’t come up with this by any means, but for a mortgage note, business, and I would say the same is true for any kind of real estate investing business, it comes down to 3 legs of the stool. One is finding those deals, finding the assets, and in our case, those are mortgage notes that we buy. 2 is, managing those notes, and 3 is raising capital. So you could you could then put put as a 2 b, maybe, managing the capital. But raising capital is a really important leg of the stool, and you’re not gonna be able to scale your business without access to capital, and oftentimes that’s private money.
Jay Conner [00:09:02]:
So when you started raising private money private capital, how did you start out doing it?
Jamie Bateman [00:09:08]:
Yeah. Specifically, in my case, and it’s interesting because I know the episode that you were on on my show, Jay, was entitled, Desperiment Has a Smell, the psychology of of raising private money. And that that was my biggest takeaway from our episode was you saying that, and and it rings true. I didn’t know I was approaching it in that way, but in hindsight, I was. So in my first, the first time that I raised private money was for a nonperforming mortgage note, but I didn’t have the deal. You know, I wasn’t ready to close. I didn’t have pressure where I needed the capital immediately and needed some private loan, you know, by Friday to close on the deal. I was just documenting my progress as a note investor and document documenting my journey.
Jamie Bateman [00:10:00]:
I would publish blog posts on LinkedIn and other places on social media, on my website. And I would just I was learning, so I figured I would document things. Well, what ended up happening was an old friend of mine who I played lacrosse with in college, he had been following what I was doing and got very interested. He was a he’s a finance guy. He knows different types of investments and asset classes. And he reached out to me and said, hey. I wanna get on in on this mortgage note thing, you know, but I don’t have time. I’ve got a career and a family.
Jamie Bateman [00:10:36]:
How do we work together? So, I didn’t I wasn’t desperate. He reached out to me, and so we talked about it, okay. How much do you have to invest? And I went out looking for deals for us. So we ended up buying a deal together, and it did turn out to be quite profitable for both of us.
Jay Conner [00:10:56]:
So let’s unpack what you just shared because what you just shared, there’s a lot to unpack. You got your 1st private lender or investor without asking for any money. Yes. By the way, this is the show where we talk about raising private money without asking for money. So you attracted that private lender or investor by simply starting to share on social media, documenting what you were doing. You’ve got a connection that is now following you, reading about what you’re doing. They’re interested. They reach out to you, and it’s all because you’re just simply sharing, you know, what you’re doing.
Jay Conner [00:11:42]:
So have you continued to do that, since that very first person reached out to you? Yes. And do you still have people reaching out to you the same way just because you’re sharing what you’re doing?
Jamie Bateman [00:11:55]:
Yes. The way that we approach things has certainly evolved. And, for example, I was in the initial stages of doing just deal-level joint ventures. So briefly, what that would look like is I’d have a capital partner, and, I was the day-to-day manager of the assets. So the capital partner would bring the funds, and I would go looking for the deal or maybe the deal would arrive first. But, oftentimes, the money was there first, and then we’d buy, oftentimes, a nonperforming note. And so just the 2 of us were the joint venture partners on this deal. Since then, I’ve, I’ll say I don’t know if I wanna say graduated, but I’ve I kinda moved on to different types of, raising private capital.
Jamie Bateman [00:12:48]:
1 is selling partial notes or doing hypotheticals, and we could do a whole podcast just on hypothecation. And then now, as you mentioned earlier in the intro, Jay, I have 2 mortgage note funds that I manage, and that’s another way of raising private capital. What I’ve found in my business is from an accounting standpoint, scaling, doing joint ventures, deal-level joint ventures, and scaling your business, at least on the mortgage note side, created such a nightmare, from an accounting perspective. It was just a lot of work each month to reconcile the books, etcetera. So I found that going to the fund model was a lot simpler and easier a lot easier from a bookkeeping standpoint. But to answer your question more directly. We still document what we’re doing. We still do a lot of social media posting, and I get a lot of people investing in my fund without I mean, it’s a 506 c, so can I talk about the fund? I can advertise it, etcetera.
Jamie Bateman [00:13:56]:
And these are for it’s for accredited investors. People that I’ve never heard of don’t know where they’re coming from specifically. I mean, we do our best to track that, but, it’s all because we’ve started to we’ve we’ve got our name out there, and I have my podcast and etcetera. And so, ultimately, what they’re investing in is me. Right? They’re trusting me, the operator, to put their capital to work and make good decisions. So I think, you know, building that that long-term trust is very important. So, yes, things have evolved, but I still have people reaching out and placing capital with me, you know, to this day. So absolutely.
Jay Conner [00:14:38]:
So for someone listening to the show who’s never raised private money, private capital, for real estate or notes or whatever, What advice would you give them on how to start, and secondly, what mistakes to avoid?
Jamie Bateman [00:14:57]:
How to start? I mean, I would say look for other people who are doing it and copy them. And I don’t mean that in a steal, you know, someone’s, you know, proprietary system, from that viewpoint, but other people are doing this successfully, so you don’t need to be the 1st person to have ever raised private money or ever done a real estate deal. And, you know, what mistakes to avoid? I would say, make sure you understand. Don’t don’t, you know, don’t push the fake it till you make it too far. There’s a fine line there, Jay, between getting out of your comfort zone and pushing yourself that’s on one side. And then on the other side of the fine line is is is being dishonest and telling people you’ve done all these deals and, and faking it till you make it and lying to your investors. Oh, no. No.
Jamie Bateman [00:15:54]:
I’ve done this many times. Just be honest. You know? One of the things that can help with that, another tip is to align yourself. I guess I’m combining the 2 tips really, but align yourself with someone who has more experience than you. So in my case, for my first fund, it was our mortgage, nonperforming note fund, which is winding down. I started that fund with a peer of mine. His name is Chris Seveny. He’s he was a mentor and still is.
Jamie Bateman [00:16:23]:
And he had run 6 or 7 funds by that point. Well, not only am I learning from him on a day-to-day basis, but I’m also using his credibility. And, you know, through his association with me, that gives me credibility. And so that’s a way to kind of get started, you know, in an honest way without getting too far over your skis, so to speak.
Jay Conner [00:16:51]:
Well, I couldn’t agree with you more, Jamie. I advise people all the time. Don’t make the mistake I did. I started investing in single-family houses in 2003. I’ve rehabbed or my team has rehabbed more than 500 houses in my career since 2003. But I made the mistake I did. For goodness sakes. For the 1st 6 years, I was out here on an island by myself, figuratively speaking, and I was just relying on my experience from my previous manufactured housing corporate career and reading books.
Jay Conner [00:17:29]:
Well, you know, you’re gonna pay for your education one way or the other, and the most expensive way to pay for your education is making stupid mistakes that you didn’t know were even a mistake at the time that you were making. So as you say, align yourself with someone who knows what they’re doing. And one of your expertise is raising private money for mortgage notes specifically. So I gotta ask you this question. There are all kinds of real estate asset classes. I mean, there’s land, there’s self-storage, there’s multifamily, there’s commercial, there’s single family, and then an asset class is mortgage notes.
Jay Conner [00:18:11]:
Why mortgage notes?
Jamie Bateman [00:18:13]:
It’s a great question. And, you know, I am not somebody who acts like you know, you’ll you’ll see some of these, what I’ll call, gurus, touting mortgage notes as the end all be all or whatever asset class they’re they’re focused on. But in my case, mortgage notes, mortgage notes have pros and cons just like any other asset class. Frankly, there are no real inherent tax advantages to investing in mortgage notes. Now there are ways to mitigate that and get around that, like using self-directed IRAs and other self-directed accounts, but there are downsides to mortgage notes. The upside that drew me to that particular asset class was, that you can do it from anywhere. So I don’t need to go to the property. Now I understand you can do certain other real estate investing from a distance as well, but we’re not in the business of doing rehabs.
Jamie Bateman [00:19:11]:
And, you know, I’ve done a few I’ve done one long-distance rehab. I would not recommend that necessarily, although it was profitable for me in that case. But, mortgage notes, you can do from anywhere. So I can invest across the country in all 50 states, As long as I have a laptop and a phone it’s location-independent. The barrier to entry is fairly low. I’m not saying that everyone should just jump into mortgage notes because there is a lot to learn, but there aren’t a ton of, you know, compliance hurdles or licensing hurdles as long as you’re using a licensed, loan servicer. And so those are 2 big ones, the location independence and the low barrier to entry. And I guess the third one I’ll throw in is that I was already very familiar with residential real estate investing like we talked about.
Jamie Bateman [00:20:06]:
So I felt like this was almost the other half of the circle, so to speak, in the residential space. Now I kinda feel like I have it’s just one big circle. You know, you can buy a property and, you know, you could buy a property, a pre-REO, and end up with the property, and then you sell the property on terms, and then you become a lender. You can sell that loan. You can but it’s all kinda part of the same circle. So now I feel like I have tools that I can kinda plug and play depending on market conditions and whatever is needed at that time. So, why mortgage notes for me were those those particular reasons? We see people coming into the mortgage note space from a lot of different backgrounds. We have I deal with people who are more of the engineer type, who love to crunch numbers, or more of the real estate investor, the traditional real estate investor who’s familiar with the property itself.
Jamie Bateman [00:21:07]:
And then we have more of, like, finance people, mortgage lenders, and finance, you know, professionals who come over and certainly plenty of other types of people with other backgrounds as well. Before I am at the risk of rambling on, the other thing I love about it is it allows you to be both creative and, kind of that math and science, person. So there are a lot of strategies that creativity is required because each mortgage note has a story. There’s a borrower behind the mortgage note, and that borrower has a story. And so you can crunch numbers all day long on a spreadsheet, and that’s important, but there’s also the human element. And so there’s kind of an art and a science to being a successful mortgage note investor. And I love that kind of that variety, of in skill set and variety in, you know, you don’t know how each each, asset is gonna unfold. So it’s kinda it’s intriguing in that way.
Jay Conner [00:22:09]:
So let’s talk about, Jamie, and how it is that private money works logistically with funding, investing, and mortgage notes. So Sure. Let me start it out this way. And let’s contrast how to use private money for funding in the mortgage notes versus, say, single-family houses. So with a single-family house, the way I use private money and and take care of my private lenders is I have a private lender or a couple of private lenders who will fund a single-family property. And to protect that private lender, they’re they’re gonna get a promissory note. So we’re laying out the terms. What’s the length of the note? What’s the interest rate? What’s the frequency of payments they’re gonna receive? And then how do I mitigate the risk and protect my private lenders? Well, I don’t borrow unsecured.
Jay Conner [00:23:07]:
I give them a deed of trust. Most of the people call it a mortgage. But in North Carolina, the note is collateralized by a deed of trust Mhmm. Which gives the borrower, excuse me, gives the private lender the legal right to foreclose if I don’t pay him. I also named them on the insurance policy as the mortgagee. So if there’s a claim against that property, an insurance claim, the insurance company makes the check payable to the private lender and to my company. They gotta sign off on that. The maximum loan-to-value is 75% of the after-repaired value, so it’s a conservative note of the value.
Jay Conner [00:23:45]:
I give them a 90-day call option. They can call the note due early if they’ve got an emergency. So that’s just some ways that, you know, private money works, say, with single-family houses in my world. What are the logistics? How does private money work with mortgage notes?
Jamie Bateman [00:24:05]:
Sure. To be honest, it’s not that much different, and, I think the closest example is the hypothecation, example. So in a similar way that your the the property itself is the collateral in your case. In my case, if I’m borrowing money from a private lender, the note itself is the collateral. So you could say the note and the deed of trust are the collateral that you refer to. So the the private lender to me lending me capital, is one step further from that property. But the note that I own, it gets a little bit complicated if you’re not if you’re completely unfamiliar with buying mortgage notes, but the note and deed of trust that I own is the collateral for that loan. So it may take a little bit longer to get to that property for the private lender, but may we write it into the agreement?
Jamie Bateman [00:25:10]:
You know? An example would be, I would go out and buy a mortgage note with my capital, say, for $50,000. Maybe the principal balance of the mortgage note is $70,000. I buy it for 50,000. I wanna sell, you know, I wanna use that note as collateral to borrow $30,000 from a private lender. The note itself is now the collateral. So I’m borrowing $30,000 from a private lender, and those terms can be really whatever we the private lender and I come to an agreement how whatever we agree upon. And so oftentimes, hypothecating is a great way, and it’s very similar to what you’re referring to with hard real estate, a great way of expanding your note-buying business. Yet from the private lender standpoint, it’s pretty, nothing has no risk in this space, but it’s fairly low risk because they’re putting in $30,000, and their collateral is a note that has a $70,000 principal balance, and likely the property itself has a $100,000 value.
Jamie Bateman [00:26:19]:
So there’s some backing there. And that’s what’s really nice is it’s really just a loan. So meaning, we can spell out the term. It may be a 3-year loan, a 4-year loan, or a 5-year loan. And so there’s flexibility on the front end for the private lender and me as the borrower to agree to those terms that are mutually beneficial.
Jay Conner [00:26:42]:
Excellent. Thanks for the explanation. Now in addition to that, do you have an opportunity for people that are listening to passive investors with you to where they can just earn high rates of return?
Jamie Bateman [00:27:00]:
We do. For the passive investor, we have the integrity income fund, and that is for accredited investors only, just to be clear. And that fund pays it we target an 8% annual preferred return, for any investment under $100,000 and a 10% targeted annual preferred return, for those investments above $100,000. We distribute monthly, so we’ve never missed a distribution in the two-and-a-half years that the fund has been operating. Another highlight of our fund, the Integrity Income Fund, is that it has only a 12-month lockup period. Most mortgage note funds you’ll find have at least a 3-year term. So you put your capital in, and you can’t get it out without some kind of hardship reason for less within the 1st 3 years. In our case, you put your capital in.
Jamie Bateman [00:27:57]:
You’re committed for 1 year. If you if you need to redeem, that’s not a problem. You can get your money back, after that 1 year. So the Integrity Income Fund is the opportunity that we have for passive investors for accredited passive investors. We do have some other passive opportunities for nonaccredited investors, but the Integrity Income Fund is our primary focus for passive investors.
Jay Conner [00:28:22]:
Alright. And how do people reach out to you, and how do they learn more about these opportunities?
Jamie Bateman [00:28:29]:
Yeah. Thank you, Jay. Labradorlending. comlabr adorlending.com is our primary my primary website for our mortgage note, business. So all the mortgage note information, including what I just spoke about, can be found there. Also, my podcast, From Adversity to Abundance, has a separate website, adversity to abundance.com. It’s the number 2 as you can see there. And then lastly, I’ll just throw out my email address, and I apologize if you don’t have this, here on the screen, but batemanjames@labradorlending.com. So, labradorlending.com is home base.
Jamie Bateman [00:29:13]:
If you just if you only take one thing away, that’s that’s the site to go to.
Jay Conner [00:29:19]:
Alright. If you’re listening to this show, looking for some high rates of return, and you like what you’re hearing here from my friend Jamie Bateman on the show, be sure and visit him at www.Labrador Lending. That’s labradorlending.com. And Jamie, we’ll have all your contact information in the show notes. Jamie, thank you so much for joining me here on the show.
Jamie Bateman [00:29:47]:
This has been fantastic, Jay. I knew it would be a lot of fun, and I appreciate your time.
Jay Conner [00:29:53]:
Absolutely. I appreciate you too, Jamie. And there you have it. Another amazing episode of Raising Private Money. I really appreciate you being here and tuning in. If you happen to be listening on one of your favorite podcast platforms, be sure and follow me so you don’t miss out on upcoming episodes. I really appreciate the 5-star ratings and the reviews as well. That allows me to have more amazing guests like Jamie than we just had on the show.
Jay Conner [00:30:20]:
And if you happen to be watching on YouTube, be sure to subscribe and ring that bell so you also get notified of the upcoming episodes. I look forward to seeing you right here on the next episode of Raising Private Money.
Narrator [00:30:38]:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to www.JayConner.com/MoneyGuide. That’s www.JayConner.com/MoneyGuide, and download your free guide that shares seven reasons why private money will skyrocket your real estate investing business right now. Again, that’s www.JayConner.com/MoneyGuide to get your free guide. We’ll see you next time on raising private money with Jay Conner.