[00:00:00] Speaker A: Welcome, listeners. You're listening to the Deeds in the Desert, where real estate investors tune in for the latest news.
[00:00:08] Speaker B: Welcome back to part two of Deeds in the Desert. What investors are thinking, but maybe not asking. And we hope that you'll also join us on part one. So make sure you go back and watch that one. But for the time being, we're moving on questions six through 10. I am joined by Misty Bethany, our chief compliance officer.
And you ready for question six?
[00:00:33] Speaker C: Let's do it.
[00:00:34] Speaker B: Here it comes.
All right. Now, how long does a foreclosure usually take and what happens to my investment during that time? That's the framework of the question.
But here's what they're really thinking.
Will my money be tied up for years?
[00:00:54] Speaker C: Well, that's a loaded question. Right.
And a lot of that we don't know.
Will it be tied up for years? In most cases, no. Foreclosure in most states takes a minimum and I want to emphasize minimum of four months. Now in reality, it's probably closer to six to nine months by the time there's some back and forth with, you know, protections the borrower may seek.
But very rarely do foreclosures, do defaults that turn into foreclosures drag out for years? Yeah, it can happen. Yeah, it has happened.
[00:01:31] Speaker D: Yeah.
[00:01:32] Speaker C: Rarely. Rarely during that time.
Well, you're going to get a lot of communication. At least once a month we're going to give you an update on what's going on.
And you know, during that time, what we're doing is we're looking for resolution.
We don't want to foreclose on these assets. We want to get our investors principal paid back to them and anything else we can get for the investors along the way, obviously we're looking for that. And there may be many ballots in between there where there's where maybe the borrowers come to the table with a resolution offer and that will go to the investors.
We talked about it in part one. The investor majority will determine whether those offers are accepted or not.
So there's a lot that's going on.
And really for investors, it's a patience game at that point.
[00:02:22] Speaker B: It really is. And there's so many variables when it comes to time.
[00:02:27] Speaker C: So many.
[00:02:28] Speaker B: And so I'm going to throw a few of them out. Probably going to make you smirk because we're going through a few of those right now.
[00:02:33] Speaker C: We are.
[00:02:34] Speaker B: And you know, every state has different laws as it pertains to foreclosure.
Timeframes, like you said, are pretty standard. The Four to six months.
But then there's all these other variables that come into play.
Right now we're going through a default. I'm going to bring up two defaults.
Right now we're going through one where a lien was put on the property.
[00:02:57] Speaker C: Right.
[00:02:58] Speaker B: And this lien is prolonging our ability to foreclose.
[00:03:03] Speaker D: Yeah.
[00:03:04] Speaker B: Because the lien on the property is stopping our ability because of the pure nature of the lien is associated with us receiving benefit without them receiving payment. It's a simpler term.
I won't use all the legal terms behind it, but basically we have benefited from something and not.
[00:03:30] Speaker C: We are investors.
[00:03:31] Speaker B: Yes.
And they want to get paid. And in that particular state, they are allowed to take additional legal action against us beyond just the lien, which would create an inability for us even if we foreclosed to actually sell the property.
[00:03:51] Speaker D: Yeah.
[00:03:51] Speaker B: So if we get ourselves in a situation where we will not have a clear title and they will be able to cloud the title, we won't be able to sell the property anyways. So there has to be legal action taken, negotiations completed before a clean foreclosure can take place.
[00:04:12] Speaker D: Yeah.
[00:04:13] Speaker C: We have to protect the asset and the value.
[00:04:15] Speaker B: Absolutely. And we have to work with those general contractors that are filing these liens. And in a perfect world, and we've had a lot of situations where, you know, there's no liens on the property and everything is good. And they just got in a financial crisis.
[00:04:31] Speaker D: Yeah.
[00:04:31] Speaker B: And this particular one, the borrower got into a financial crisis, but they also have this rather large size lien on the property.
[00:04:41] Speaker C: Right.
[00:04:42] Speaker B: So so many variables. Variables are going on. We're trying to protect the asset.
[00:04:46] Speaker D: Yep.
[00:04:47] Speaker B: We're looking at what. What weather conditions we're coming into in that particular area. Right, right. Again, goal, protect the asset. We're getting insurance on the property because we want to make sure that, you know.
[00:05:00] Speaker D: Yeah.
[00:05:00] Speaker B: It works.
[00:05:01] Speaker D: Stop.
[00:05:01] Speaker C: Sometimes.
[00:05:03] Speaker B: Yes. General contractors, from time to time, not to say all general contractors are bad. Just throwing that out there. But when they don't get paid.
[00:05:11] Speaker D: Yeah.
[00:05:12] Speaker B: Sometimes they strike a match.
And your asset value now has gone down drastically.
[00:05:22] Speaker C: That's right.
[00:05:23] Speaker B: So those negotiations have to continue.
Does it cost additional money? Yes. Does it cost additional time?
[00:05:30] Speaker C: Absolutely.
[00:05:31] Speaker B: All of those things occur.
So in those types of situations, we may have to act very fast to protect that asset.
So fast so that we might have to make split decisions that we know there's no other option.
[00:05:49] Speaker C: That's right.
[00:05:51] Speaker B: And so that could prolong the period of time, but it doesn't stop us from continuing to work with that borrower. And I think that's a little, I think people think, oh well, they're going through the four to six month period. Well, they're just going to, I'm going to get an update that says there's no update.
[00:06:07] Speaker D: No.
[00:06:08] Speaker B: Trust me. We never stop working with the borrower till the very end.
We've even been at the steps.
[00:06:17] Speaker C: Even after sometimes we've even been at the steps.
[00:06:19] Speaker D: Yeah.
[00:06:20] Speaker B: Of the courthouses and borrowers are paying off loans minutes before we foreclose.
[00:06:26] Speaker C: And that's because we do keep those lines of communication open.
[00:06:29] Speaker B: Yes. We have to. This, this is, this is not where they stop paying and we stop talking.
[00:06:34] Speaker D: Yeah.
[00:06:34] Speaker C: We're not cutting our nose off despite our face.
[00:06:37] Speaker B: No. If there's opportunity to get capital back, we will deploy it.
[00:06:40] Speaker D: Yep.
[00:06:41] Speaker B: But then there is a scenario where the timeframe really starts to extend and that's when a borrower uses their le Legal.
[00:06:51] Speaker C: That's right.
[00:06:53] Speaker B: Abilities to file for bk.
[00:06:57] Speaker D: Yep.
[00:06:58] Speaker B: Protect the asset. That's what it's, that's what bankruptcy, federal bankruptcy is there for.
[00:07:02] Speaker D: Yep.
[00:07:03] Speaker B: It's for you to really get time to prove.
[00:07:07] Speaker D: Yeah.
[00:07:07] Speaker B: That you can restructure, take control back and get the investors paid.
[00:07:14] Speaker C: And really the intent behind that is for the courts to determine if there is a viable resolution path for the borrower on that property.
[00:07:26] Speaker B: Now takes a long time, isn't there?
[00:07:29] Speaker C: And that's up to the courts to decide ultimately. Right. But it's a protection that everybody is afforded.
[00:07:35] Speaker B: Absolutely.
And what I've noticed, we've been in this situation from the BK three times, I believe.
And sometimes if they're special purpose entities.
[00:07:49] Speaker C: That's right.
[00:07:50] Speaker B: And sometimes if there's not other lenders involved, we can get a lift, stay on it. We can move past it now. Does it delay it a couple months? Of course. Because the court is going to give them time to come to, you know, some sort of resolution and it may be anywhere between three and six months and you know, there could be extenuating circumstances where, you know, they get an extension beyond that. Like it happens. Those types of things happen. Can we control what the courts decide?
[00:08:17] Speaker C: Absolutely not.
[00:08:19] Speaker B: I, if I could, I would, but I can't. Right. I am never going to walk into, speak to a federal judge and say I demand my investors want this back now. It doesn't work. It doesn't work that way.
[00:08:33] Speaker C: It doesn't.
[00:08:33] Speaker B: And so that's where we start to see, see the duration of time, continue to expand where we have other lenders involved on the project with us.
[00:08:42] Speaker C: Yes.
[00:08:43] Speaker B: Or we get in a situation where the borrower's like, okay, there's so much equity in this thing, I'm going to.
[00:08:50] Speaker C: BK hang on for dear life.
[00:08:52] Speaker B: If nothing else, just to buy me more time.
[00:08:55] Speaker C: Absolutely.
[00:08:56] Speaker B: And so that's the reality. But when that happens, when a BK happens, you know what that says to me?
[00:09:03] Speaker C: There's value there, there's value.
[00:09:05] Speaker B: There's a reason they're protecting it.
[00:09:07] Speaker C: That's right.
[00:09:08] Speaker B: There's absolutely a reason they're protecting it. So, yes. Will it take more time?
Likely.
But the outcome is probably going to be better.
[00:09:18] Speaker C: Absolutely.
[00:09:19] Speaker B: So sometimes with investments we have to sit tight a little bit.
[00:09:23] Speaker D: Yeah.
[00:09:24] Speaker C: Kind of the worst case scenario, although investors will not see it that way in most cases, is loan goes into default, borrower says go ahead, take it back. The four months, cycle through, we take the asset back at foreclosure.
[00:09:38] Speaker B: Yeah.
[00:09:39] Speaker C: Now, great. We take, have taken the asset back through foreclosure. But the fact that the borrower was willing to walk away is usually not a great sign.
[00:09:48] Speaker B: Yeah, absolutely. If we're doing a deed in lieu, they're done.
[00:09:52] Speaker C: Yeah, they're out.
[00:09:53] Speaker B: There's no liens, there's no whatever. We can take it back quicker, don't have to wait the time frame. But.
[00:09:58] Speaker C: And we look at that and we'll do that.
[00:10:00] Speaker B: So rare, very rare. So rare that something like that happens.
We're just, we're not lending enough to them on the onset for them to walk away.
[00:10:11] Speaker C: Well, intentionally, very rarely would there be a project where there's not something that would have occurred. So there'd be no liens on it.
[00:10:18] Speaker B: Yeah, absolutely.
All right.
Okay. Has Ignite funding ever lost investor capital?
Translation, am I taking a gamble with no safety net?
[00:10:36] Speaker C: Well, the answer is yes. Investor capital has been lost from time to time. Again, you know, we disclose that so you can look at the, the nitty gritty details on that. But are you taking a gamble? Well, all investments carry risk. Right.
So this is no exception, no safety net. No, you absolutely have safety net with Ignite funding. And that is the collateral of the property.
[00:11:01] Speaker D: Yeah.
[00:11:02] Speaker C: So again, I think I said it in part one. There's never been 100% loss of principal on a first lien position loan. Meaning there's, you know, we're in first priority for a foreclosure.
So in order for that to happen, I mean, I can't even think of a viable scenario. Right. Like the real estate would have to be at Zero. Has that ever happened?
[00:11:22] Speaker B: The value had to go to nothing. Less than nothing, actually.
[00:11:25] Speaker C: Less than nothing, absolutely.
So you are taking a risk. You're taking a risk when you invest. You're taking a risk when you deposit money into a savings account. Right. And that risk is that it's not going to keep pace. Your interest is not going to keep pace with inflation.
[00:11:39] Speaker B: Yeah.
[00:11:40] Speaker C: So life is risk.
[00:11:42] Speaker B: Life is risk.
I'm going to talk a little bit more about this because, you know, one thing that I think really sets us apart from other companies, although we haven't been able to find one that originates services and collects. If anybody out there finds one, please let me know because we've been looking like. It's tough to compare what we do with others. It's really, really hard from a transparency standpoint because on our website you will find our performance record as it was, pertains to everything that we've underwritten.
[00:12:15] Speaker C: Everything, Everything.
[00:12:17] Speaker B: But maybe in more detail as to our asset performance record.
Because when we have to collect on a property, we take it through foreclosure and it becomes a real estate owned property. We report on that. We do report on the time frame that it takes. We report on the loss that has been received.
[00:12:37] Speaker C: Absolutely.
[00:12:39] Speaker B: I mean, it's all there.
And to date we have funded what, $2.3 billion.
[00:12:46] Speaker D: Yep.
[00:12:47] Speaker B: And the last second quarter asset management performance record that we put out, it's a little over $3 million in loss during that entire duration.
[00:12:59] Speaker D: Yeah.
[00:13:00] Speaker B: So to say it doesn't happen is not true.
[00:13:04] Speaker C: It's not true.
[00:13:04] Speaker B: But to say that the, the levels in which it's happened is extraordinarily low.
And the only comparison that I can have to this, outside of finding a competitor that's similar to us, is looking into public REITs.
[00:13:21] Speaker D: Yeah.
[00:13:22] Speaker B: Public real estate funds, and seeing what their default rates are and what their loss ratios are will blow your mind.
It will mine like out of the water. I'm like, holy crap. We, we are chicken ass over here. Yeah. It is crazy what is disclosed in those public documents.
[00:13:48] Speaker C: And sometimes the investors in those investments have no idea.
[00:13:52] Speaker B: They have no idea. And so it's, it's, it really is eye opening to me to really see what a phenomenal job we have done.
Not to say we don't have, you know, defaults that occur, because we absolutely do. But to think we sit on our hands and don't think about it, you know, and work on it on a daily basis is absurd. So duration of time, you know, if a default occurs, this is What I hope for every investor, your real estate portfolio, whether it's with us or with multiple companies similar to ours, that you are well diversified.
And if you're utilizing this passive income, truly as passive income for your day to day life, you have to have a diversified portfolio.
[00:14:45] Speaker C: It's a must.
[00:14:46] Speaker B: And if you do, when you have a default, not if, when you have a default, it should be less than 10% of your portfolio in default, meaning 90% of your portfolio is still providing passive income to you.
So diversification is key, period.
[00:15:05] Speaker C: Yeah, we can't say that enough.
[00:15:07] Speaker B: We can't. And if you're going to invest $100,000, we do not care that you put it in 10 loans, do it. We want you to, we want you diversified in asset type, we want you diversified in location, we want you diversified with borrowers. Like that's on you. We don't pick the investments for you. But if you pick the investments with the mindset of diversification, when a default.
[00:15:31] Speaker C: Happens, it's not going to be a big. Exactly.
[00:15:34] Speaker B: It's a speed bump. Let us do our job. We will take care of, may take time, just lock in a year and know that particular portion of your asset, of your portfolio may not be performing. But we will do every freaking thing in our powers to get 100% of your capital back. And if we can get more, we will absolutely go after it.
[00:15:56] Speaker C: And you know, once again, we're talking about worst case scenario, which is a principal loss. Right. But that's not to say that every foreclosure ends up in a principal loss.
[00:16:05] Speaker B: No.
[00:16:05] Speaker C: And because they don't.
[00:16:06] Speaker D: Yeah.
[00:16:07] Speaker C: And there have been gains.
[00:16:09] Speaker B: And there have been gains. Yeah. We never talk about the gains, we always talk about the risk. But oh yeah, there have been some really nice gains.
[00:16:16] Speaker C: We would report on that too.
[00:16:17] Speaker B: Yeah.
So next question. Who manages the foreclosure process? Me as the investor or ignite?
Really what they're thinking is am I going to have to deal with attorneys and paperwork?
[00:16:31] Speaker C: No, what you're going to have to deal with is reading your ballot, communication, asking questions if you have them, making a choice, whatever that choice is, and we will handle the rest from there.
[00:16:43] Speaker D: Yeah.
[00:16:43] Speaker B: And I think I'm going to go out on a limb and say our investors are spoiled.
[00:16:51] Speaker C: Well, we try to keep them that way.
[00:16:52] Speaker B: But let me tell you why. I think, Yeah, I think that because any other organization, the very first thing they're going to do when there's a default, well, they're going to do two things. They're Going to pass you off to a collection agency.
[00:17:07] Speaker D: That's right.
[00:17:07] Speaker B: That's going to take 50% fee.
[00:17:10] Speaker D: Yep.
[00:17:10] Speaker B: On your capital, just boom, out of the gate. 50%.
[00:17:14] Speaker D: Yeah.
[00:17:15] Speaker B: Or they're going to do a capital call and they're going to say, we estimate this is going to cost us X and here's your portion pay by this date.
[00:17:24] Speaker D: Yep.
[00:17:25] Speaker B: Check made payable, too.
[00:17:26] Speaker C: And what happens if an investor doesn't do that?
Right.
[00:17:30] Speaker B: We're a stalemate.
[00:17:32] Speaker C: Exactly.
[00:17:33] Speaker B: So the reason why I think investors are a little bit spoiled is because we're taking care of all of this behind the scenes, all of that. We're not passing you off to somebody else. We stand behind what we underwrite.
[00:17:48] Speaker D: Yep.
[00:17:49] Speaker B: We're not doing a capital call. In fact, I've made a business decision to utilize the capital of the company.
I don't even have a percentage of ownership in this asset. But I am putting the investors capital at risk on behalf of investors to make the process seamless for them.
Seamless.
I'm hiring the attorneys.
[00:18:14] Speaker D: Yep.
[00:18:15] Speaker B: I'm dealing with the back and forth with these attorneys. I'm riding a line with these attorneys on their bills. Trust me. I call them out on it.
[00:18:23] Speaker D: Oh, boy.
[00:18:24] Speaker A: Do you.
[00:18:26] Speaker B: I stop them attorneys from making some crazy decisions on behalf of investors. I'm like, whoa, timeout. Let's think through this. Like, let's really think about what the goal is. Here is the goal for you to make more money as a law firm, which I understand. Billable hours. It's important. You got to keep your job, too. But my investors come first. And spending their money, I don't take lightly.
[00:18:49] Speaker D: Yeah.
[00:18:50] Speaker B: Because in order to return 100% of capital, those costs have to be controlled.
And it is difficult to control the costs of law firms that need to book a certain amount of hours. Right.
[00:19:03] Speaker D: Yep.
[00:19:03] Speaker B: So it does become challenging. It does become difficult. But we're constantly monitoring that, staying in touch with the attorneys, not to the detriment and cost of investors, but making sure that asset continues to be protected throughout the foreclosure process.
And so when it comes to to your role, Missy's 100% correct. Please pay attention to your email.
Please read the ballots, not just the first two paragraphs. Read all the way through.
[00:19:31] Speaker D: Yep.
[00:19:32] Speaker B: Take in that information. Ask questions if you have questions, and then respond.
[00:19:37] Speaker C: And then respond.
[00:19:38] Speaker B: We cannot act unless you respond. And if we can't act, it could be a detriment to your capital return.
[00:19:45] Speaker D: Yeah.
[00:19:46] Speaker C: And if we can't get a 51% majority, we can't do anything.
[00:19:50] Speaker B: Yes.
[00:19:52] Speaker C: And so question for you.
[00:19:53] Speaker B: Yeah.
[00:19:54] Speaker C: How often do our lawyers want us to communicate with our investors?
[00:20:00] Speaker B: They don't.
[00:20:01] Speaker C: Right.
[00:20:02] Speaker B: And, you know, from time to time, I have gone out on a limb and sent them an email and said it's time for our update.
And I don't know what direction you guys are going in. There's been so much back and forth.
You know, sometimes there are. It's specific to, you know, an asset. Sometimes there's multiple parties involved, sometimes there's multiple attorneys involved.
And getting one concise answer is very difficult sometimes.
[00:20:32] Speaker C: Right.
[00:20:33] Speaker B: It's very difficult because they don't want to put themselves out on a limb and state something that's going to change.
Well, that sounds familiar, doesn't it?
[00:20:43] Speaker D: Yeah.
[00:20:43] Speaker B: We are constantly in that situation.
[00:20:46] Speaker C: We are.
[00:20:46] Speaker B: Where there's constant evolution during the foreclosure process of changes happening, communication happening. And if I had the time and you had the time and Pat had the time to communicate every single conversation, we wouldn't get anything done.
[00:21:00] Speaker C: We don't.
[00:21:01] Speaker B: So we have to continue on. And yes. Do we keep track of those correspondence? Of course we have to keep track of those correspondence. But until it's something viable to present, yeah, we're going to keep playing that chicken and egg game with the borrower until the very end. Until the very, very end. Until we're taking it back to foreclosure.
[00:21:20] Speaker C: Absolutely.
[00:21:21] Speaker B: So, you know, when it comes to the paperwork and the attorneys and all of that, our investors are absolutely blessed to have us to do that at a nominal fee.
[00:21:33] Speaker D: Yep.
[00:21:33] Speaker B: Because in the grand scheme of things, the max amount that we can take for a fee, 5% in comparison to 50%, which is the national average for collection agencies.
So you really do have a partner with Ignite Funding when it comes to foreclosures.
[00:21:51] Speaker D: Yeah.
[00:21:51] Speaker C: And we're not just. We're not just saying, okay, it's in default, lawyers handle this, and we'll see at the foreclosure. So that is not at all what's happening.
But investors can just, you know, read your updates, read your ballots, know that behind the scenes, a lot is happening there.
How often do we meet throughout the week?
[00:22:11] Speaker B: Yeah, well, we meet every week. As a standard.
[00:22:14] Speaker C: As a standard.
[00:22:15] Speaker B: And then as things arise, we're in and out of each other's offices going on, here's what's happening. Here's what's happening. Do we communicate this now, Pat coming back and saying, well, wait, next Tuesday, I've got this, this and this lined up, or I'm flying out to meet with the HOA or I'm doing this or I'm doing that. And we're like, okay, now is not the right time to communicate. We need to get more facts.
And so yes, that's why we give ourselves 30 days.
[00:22:37] Speaker C: Right.
[00:22:38] Speaker B: Because a lot happens on a daily basis.
[00:22:40] Speaker C: It does.
[00:22:41] Speaker B: So that one's crazy. But don't worry, I know it seems crazy, but you really do have to trust that we know what we're doing and we can do our job. And our track record does prove that it does. All right, so what kind of reporting or updates do investors receive throughout the life cycle of an investment?
Of an investment. Not, not a default.
[00:23:04] Speaker D: Yeah.
[00:23:05] Speaker B: So they're their question, will I be left in the dark once my money's invested, in other words? And that this happens a lot. Right. You invest and you're like, well, I don't know what happened, I don't know what's going on.
What do we do? Like the moment we fund that loan, what happens between the moment we fund that loan and the moment the loan pays off?
Are we engaged at all with borrowers? Do we visit?
What are we doing?
[00:23:31] Speaker C: I mean all of that. And so from an investor standpoint, when you open up an account with Ignite, you're going to get an email, it's going to have your user ID and your login for the client portal. Make sure you get that set up right away from the beginning before you ever go on a loan. Once you do go on a loan, even before you're recorded on that deed, you're going to be able to go to the portal now and you're going to be able to see those what we call pre funding documents, but it's a due diligence document, documents for a loan.
So you know, the borrower's credit report, tax returns, the appraisal or bpo, those things will be there that you can look at after a loan funds. Then it's going to be recorded in your name and as you receive those documents, it's going to be posted to the portal. You obviously your statements are going to be there. Any interest payments or pay downs are reflected on the statement.
And then. So that's what you can see now from an Ignite standpoint. Yes, we're not just lending money and saying, good luck borrower, we'll see you in nine months.
[00:24:35] Speaker B: That's why we decided to be a servicer.
[00:24:37] Speaker C: Right. We are actively engaged with that borrower throughout the entire life cycle of that loan, Pat. And the Underwriting team are their primary points of contact, whether that be site visits. Definitely ongoing communication throughout the month with borrowers, not just at interest time. But what's going on with that loan? What's the progress? We will get updated pictures, photos. If we're not boots on the ground that month, then we're getting those things.
So just like we are actively involved with our investors and providing updates, so too are we with the borrowers.
[00:25:15] Speaker D: Yeah.
[00:25:16] Speaker B: You know something that I don't think most investors know is when they receive that investment overview.
[00:25:23] Speaker D: Yes.
[00:25:23] Speaker B: And they initially select that loan. There's a QR code in the bottom right hand corner.
And throughout the duration of that loan, if you ever want updates, rescan that QR code gets updated. It gets updated periodically throughout the loan. And it's something we don't communicate enough. And we probably need to start communicating that a little bit more because many of our loans are what we call tranche loans.
[00:25:47] Speaker D: Yep.
[00:25:48] Speaker B: And so the borrower is taking a draw on those loans throughout the cycle of that loan.
[00:25:53] Speaker D: Yes.
[00:25:54] Speaker C: Progress happens.
[00:25:55] Speaker B: But in order to get that, we have some checks and balances that we do.
[00:25:59] Speaker C: We sure do. One of which is updated status, which usually involves either a direct site visit by night with pictures, so always pictures. And then if, if for whatever reason we can't get there, there are pictures that we have to verify that progress has happened. Just as the borrower's communicating to us.
[00:26:20] Speaker B: Absolutely. Site plans completed, maybe the development gets completed and we're moving on to construction. Like just scan that QR code, keep those investment overviews because it really is a place where you can just check in and see what's going on with that particular investment. And I don't think most people know that and so wanted to make sure I got that out so that everybody is aware. And we probably need to educate our staff a little bit more about that so that they are saying that to investors on a regular basis. But agreed. Yeah, it doesn't stop. It's just, it's nonstop as it pertains to, you know, making sure everything's in tip top shape.
And we're a servicer for a reason. You know, the reason why we stayed on to not just be an underwriter, but to be a servicer and to collect if need be is the servicing component.
I mean, we get paid to service loans.
Again, we don't sit on our hands and wait and see if the investor or the borrower pays between the 1st and the 10th. You know, we're actively communicating with them throughout the month.
[00:27:22] Speaker C: And if they don't pay, we're not getting paid.
[00:27:24] Speaker B: That's right. And so if you're not getting paid your interest, we're not getting paid our servicing fee. So we're right there with you. We're, you know, neck and neck. We're in it with you. We 100%.
So. So know that it's. Even though we have to continue working and not getting paid, that's okay. Because our end goal is we've got to get that capital back. We got to get the loan back in check. We got to get the borrower making their interest payments, even if it is coming in late. Like, we got to figure out what went on.
[00:27:53] Speaker D: Yep.
[00:27:53] Speaker B: And sometimes, let's just be honest, we make honest mistakes. Wire doesn't go out in time. Somebody's out of the office. Those things happen.
[00:28:02] Speaker C: They sure do.
[00:28:02] Speaker B: So, you know, but we're in constant communication with them. It's definitely not an afterthought. All right, so last question.
[00:28:10] Speaker D: Okay.
[00:28:10] Speaker B: Do you invest your own money in these deals? Translation, are you really confident in these investments, or is this just a sales pitch?
[00:28:19] Speaker C: So we do invest our own money in these assets. We don't have any priority above any other investor.
But what I say to clients when I'm, you know, doing that introduction call is it doesn't matter if I invest here, if I'm recommending this to friends and family. That's what you care about. Because I can take risk with my own money. Right. I can tolerate that. But if I'm asking my grandma to invest in these loans, and she does, do you think that I want to sit across from her at Thanksgiving and answer as to why something's not performing? Absolutely not. And so I think the better question that we should be asking when we're doing due diligence on a company is not, do you invest employee, but do your friends and family invest? Do you recommend this for your friends and family?
And, you know, speaking for myself, but I also know that the answer is the same for most, if not all of our employees is, yes, we do invest.
[00:29:17] Speaker B: Yeah. And our employees do have a few benefits to investing with us as well. You know, first and foremost, they have to meet suitability still.
[00:29:26] Speaker D: Sure.
[00:29:27] Speaker B: This isn't one of those things where, you know, they get to invest just because they're an employee.
[00:29:31] Speaker C: Right.
[00:29:32] Speaker B: So suitability requirements are $70,000 household income or $250,000 net worth, excluding your home.
[00:29:39] Speaker D: Yep.
[00:29:40] Speaker B: And so, you know, we are looking at that from an employee standpoint as well.
[00:29:45] Speaker C: It has to make Sense for them.
[00:29:46] Speaker B: Absolutely. And not every employee invests. I mean, let's just be honest. I'm not going to say from top to bottom, but I will say that every employee has the opportunity to participate in these types of investments because if they can't afford to invest themselves or they don't meet the suitability.
We also have an employee endowment.
[00:30:06] Speaker C: We do.
[00:30:06] Speaker B: And our employee endowment invests in our own investments. And that's just the company putting more capital towards what we believe in and what we're offering to our investors.
So we 100% are investing as a company, as employees, and as friends and family.
You know, we know what our track record is. And so we have that level of confidence of, you know, bringing this up at Thanksgiving and being okay with it. You know, we don't hide from it. But all investments have risk. And I think when we lead with risk with friends and family, it is like we're really leading with risk on that part. But for the most part, I can tell you from friends and family and 60% of all of our new clients coming from referrals, there's a reason why we're comfortable doing that. And it all stems back to our track record. It all starts with underwriting, which we've talked a little bit about. I know Pat and I have had many conversations about that, but it also deals with how we handle difficult situations.
[00:31:15] Speaker C: Absolutely.
[00:31:15] Speaker B: And that's really the key. We don't run from it. We're just, yep. Roll up the sleeves, get done what we need to get done. Good cop, bad cop, whatever it takes to get the investor capital back, whether that's 100% or as much as we possibly, possibly can.
There are sleepless nights for us until we get that back.
[00:31:36] Speaker D: Yep.
[00:31:36] Speaker B: And when we do, we reap the rewards. And that's where, you know, I'm very proud to say that 60% of our new accounts come from referrals. That just means that we have done a really good job.
[00:31:49] Speaker C: We have confidence from our investors.
[00:31:51] Speaker B: Absolutely. Absolutely. And that starts with having confidence in ourselves first, being able to do our jobs well, you know, not hiding from anything, answering questions. When investors have questions, and I know you take some difficult ones. Misty, it's okay.
[00:32:06] Speaker C: Keep calling.
[00:32:07] Speaker B: Yeah. She gets the joy of the investors that have just, you know, want to ask these questions but maybe don't.
[00:32:14] Speaker D: Yeah.
[00:32:14] Speaker B: Allow themselves to get this pent up aggression.
It's okay. Call, ask us if you're mad, be mad.
[00:32:22] Speaker C: And very rarely do I end a call the same way it started. Usually, you know, you may not be a hundred percent happy with the situation, but at least you feel better having maybe express some of your frustration but also have, you know, some of these questions we talked about today answered.
[00:32:42] Speaker D: Yeah.
[00:32:43] Speaker B: Well, if you have any more questions that you would like answered and maybe, maybe you've been thinking them for a really long time, time, let us translate for you. Let us put it out there to all the investors. That's what we're here for.
If you have any further questions, you know where to reach us.
You can just send an email in and we will answer any questions that you have. But for now, we're going to end this series of what investors are thinking but not asking. Thank you so much, Misty, for joining us today. We really appreciate it. And we'll see you on the next episode of Deeds in the Desert.
[00:33:22] Speaker A: Thanks for joining us this week on Deeds in the Desert, where short term investments meet long term investors. We hope you enjoyed the content so much that you share it with all your friends. Who doesn't like learning about passive fixed income, right?
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