Originating notes by working backwards

Note buying can pay outsized returns, but most of the work is admin: chasing tapes, filtering loans, pulling property data, pricing offers and following up. Over the last couple of months I've gone all in on using AI to take that admin off my plate. In this episode I walk through exactly how I'm using it to buy notes right now.   I use a recent Texas seller tape as the example. I sent Claude the email, it downloaded the tape, checked every loan against my written buy box, pulled Google Maps photos, values and crime data, gave me a first risk grade and required return, priced the offers with servicing, onboarding, recording and broker fees built in, and drafted my reply. What used to take an hour or two took a few minutes. I also get into how I've been training Claude to grade risk the way I do, using county records to map who is originating and buying seller finance notes, and how we're testing all of this with the current Note Accelerator cohort.   You still have to know what you're doing. If you don't, AI just helps you make mistakes faster. Write your buy box down first. AI can't follow rules that live in your head. AI is great at the admin: filtering tapes, pulling data and doing the pricing math. It doesn't replace judgment, relationships, negotiating or that sense that something doesn't smell right. The gap between investors who use these tools and those who don't is going to get a lot wider.   Interested in the next Note Accelerator cohort (starts in January)? Email me at [email protected]   Note training: www.notelaunchpad.com Note buying: www.fusionnotes.com Note origination and underwriting: www.calltheunderwriter.com Mortgage broker / DSCR servicers in TX, SC and CO: www.callthemortgageguy.com

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

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

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

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

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

Most seller finance borrowers are self-employed, and that's where a lot of originators get tripped up. In this episode I walk through how we actually verify self-employed income at Call The Underwriter, why it matters for Dodd-Frank compliance and your own protection, and the system we use to get through it fast. I cover why W-2 and fixed-income borrowers are easy, why tax returns usually understate self-employed income, and why 12 complete business bank statements are the workhorse document. I also get into the expense ratio approach for turning gross deposits into usable income, the account and commingling problems we run into constantly, and what borrower behavior tells you before you ever see the file. Plus the story of a loan with a mystery dog kennel that supposedly made $30k in a single month. If you originate or buy seller finance notes, this one will clear up a lot of confusion around documenting income that doesn't come with a pay stub. Questions? Drop them in the comments or email dan at calltheunderwriter.com. For more info on underwriting seller finance loans or get started on a deal go to www.calltheunderwriter.com

Dan sits down with Philip Louden — former backpacker, digital nomad, and reluctant wholesaler — who found his calling in seller finance after realizing he was just "dropshipping houses." After a 30-year Kansas City mentor showed him the power of creative finance, Philip went on to originate over 70 deals and build the Wrap Academy community around a simple philosophy: prosperous, peaceful, passive portfolios. In this episode, they cover: Why Philip walked away from a wholesaling operation doing 6 deals a month — and what it taught him about building businesses you actually want to live in How he structures 10-year lease options, wraps, and slow flips — and when each one makes sense The slow flip model: buying $20–30K properties in small markets and seller financing them to buyers who can't even rent for that price Finding buyers through unconventional channels (including a $75K down payment from Craigslist) Dan's note buying box — from 10-11% IRA-quality performers to 30-40% non-performing workouts — and how hypothecation creates spread Why the seller finance note market has a supply-demand equation you won't find anywhere else in real estate Connect with Philip: Wrap Academy: https://wrapacademy.net/ Instagram: https://www.instagram.com/phil_louden/?hl=en LinkedIn: https://www.linkedin.com/in/philip-louden   Call The Underwriter Call The Underwriting prescreening guide: https://calltheunderwriter.com/prescreen/ Call The Underwriter Register for the weekly Call The Underwriter onboarding call, every Thursday at 12 ET

In this episode of the Seller Finance and Creative Deals Podcast, Dan Deppen breaks down partials, one of the most talked about but least understood tools in note investing. Dan explains what a partial actually is (selling a defined chunk of future loan payments at a set rate of return), walks through a real numbers example on a $30K land contract, and covers why partials can be a win for both sides of the deal.   Topics covered include why partials only work on performing loans, how sellers use them to recapitalize and scale without giving up the entire note, why buyers like the lower risk of front-end payments and the ability to get exposure to note investing with less capital, how to find partial buyers through your network rather than open marketplaces, typical interest rates sellers offer buyers, key structural decisions like who holds servicing and whether to sell full or fractional payments, and how defaults are typically handled when a partial is in place. Dan also shares an update on his Oklahoma City note portfolio acquisition and the current Note Accelerator cohort. Want to learn more about note investing, seller finance, or creative real estate deals? Check out Fusion Notes for coaching and courses, (www.fusionnotes.com) and Call The Underwriter (www.calltheunderwriter.com,) for flat-fee seller finance compliance and origination help. Note buying: www.fusionnotes.com Note origination and underwriting: www.calltheunderwriter.com Mortgage broker / DSCR servicers in TX, FL and CO: www.callthemortgageguy.com  

In the latest episode, Dan covers: ✅ How to structure your listing language to attract qualified buyers from the start ("seller financing available for deserving borrowers with a large down payment" works wonders) ✅ The best DIY platforms for finding seller finance buyers — Facebook Marketplace and Craigslist are still producing results ✅ How to find a great REO-specialist agent, even in markets you've never worked before ✅ Why pre-screening takes just 5-10 minutes and filters out 95%+ of problem borrowers before you go under contract ✅ A real deal breakdown: Dan's own recent Michigan REO — listed, 6 offers received, and closed in about two weeks with an 18% down payment and a 677 FICO borrower Dan also shares updates from his note portfolio, including a messy Wisconsin bankruptcy situation, a high-stakes California non-performing note, and news about the latest Note Accelerator cohort. This episode is a must-listen if you've ever found yourself stuck with a bad borrower — or if you want to make sure you never do. Call The Underwriting prescreening guide: https://calltheunderwriter.com/prescreen/ Call The Underwriter Register for the weekly Call The Underwriter onboarding call, every Thursday at 12 ET