Guest Speaker: Jeff Armstrong

Making Money With First Position Seller Finance Real Estate Notes

With over 2,200 closed note transactions since the inception of Armstrong Capital in 1991, Jeff Armstrong’s knowledge and experience in the real estate note industry is unsurpassed. His company specializes in purchasing Seller-Financed Notes, for all cash. This allows investors to receive a lump sum of cash immediately, as opposed to the monthly payments they may currently be receiving. Jeff acquired his California Real Estate Sales License in June 1992 and then his California Real Estate Broker’s license in June 1996. He became a member of the American Cash Flow Association’s Million-Dollar Club, and is one of the leaders in the cash flow industry. He is also a highly speaker on the topic of seller financed notes, in addition to marketing, motivation and inspiration for conferences, conventions and other events nationwide.  Armstrong Capital’s credo is: Straightforward, Honest, Fair…The Way It Should Be. 

What you’ll learn in this episode:

*Jeff explains what a real estate note is. The mortgage is deed of trust, the security instrument that secures the note your borrow money from. The basic note is a debt instrument that states the term of repayment.

*Since he launched Armstrong Capital, Jeff’s focus has been on performing first position seller finance notes. The seller of the property carries back the note and security instrument, which facilitates the sale of the property. That is now the seller finance note. So instead of a buyer getting a loan from the bank or a mortgage company, the seller carries the mortgage and note themselves. When the seller carries back a note, they receive the monthly mortgage payments. In essence, the seller is carrying back the equity in their property to help the buyer purchase it.

*Jeff explains his business: “Let’s say you sold your property to Joe, and Joe couldn’t get a loan. You agree to carry back the mortgage for him, and Joe is now making monthly payments to you. What I do is I find all of the lances all of the people individuals receiving payments across the nation from another individual. I focus on all those individuals that are receiving payments on a seller finance note to hopefully try to purchase their note.”

*Notes are purchased at a discount depending upon the type of property they sold. The terms of the mortgage vary based on down payment, the buyer’s credit and other details that must be checked before Jeff buys a note.

*Jeff is looking for everyone who has sold a property and carried back a note for the buyer in the hopes that he can purchase their note at a discount.

*Jeff uses hypothetical numbers to illustrate how profit is generated with real estate notes. “Let’s say you sold your house to Joe for $100,000. He gave you a $20,000 down payment and you carried back an $80,000 mortgage. The note is $80,000.” Jeff may contact them via a letter, referral from their attorney or title company, or through online marketing. Jeff’s goal is to drive the note holders to contact him. You get one of his letters and tell Jeff you got an $80,000 mortgage. Jeff says the best prices these days are about 80 cents on the dollar. If he gives you that, he has to get more money from one of his investors. When he offers $64,000 for an $80,000 mortgage, he is selling it to another investor for $68,000. So he profits $4000. He sells half of the notes he obtains to other private investors. One way to use seller finance notes is to use them for business and brokering them. 

*Jeff explains that people who will take $64,000 cash for an $80,000 note are those who need quick cash, and since finding such a person is a rarity, he has to talk to many people to find someone “that actually needs the money to get a transaction and to get it to close.”

*Jeff agrees with Lance’s comparison of this process to wholesaling a property, where he’s acting as a middleman.

*If notes meet his criteria, he will buy them for himself for a yield over time, in addition to serving as broker/middleman between investors he works with and the seller of the note.

*Jeff agrees notes are a great place to use one’s self-directed IRA. In his 28 years of working with notes, he has had no stocks, bonds or mutual funds. He has only invested in seller financed notes. You can make great returns.

*Jeff explains in detail, using hypothetical numbers, how the type of transactions he engages in can benefit someone who is looking to buy property and create seller or finance notes.

*The big reveal: there are 29 ways to buy a note! Jeff can create an option to give some money now and some when a balloon pays off so they get more on their note later on. He also has the option of buying a few of their payments to get them more cash as a “down payment,” and they get their note back later to get even more money. Or take the balloon and give him half the balloon. There are multiple ways of doing business with notes.

*Jeff explains that this is a real business, not a get rich quick scheme. It will take at least a year or two of consistent marketing to individual note holders to start seeing steady deal flow. He says it’s simple but not easy. It requires great patience and persistence. There’s a level of negotiating skill that people have to learn. He mentions his humble origins and advises not to quit one’s day job while getting their feet wet. But it must be treated like a real business, and there are no promises or guarantees. Yet success can definitely come over time and he is happy to open this exciting new world of investment to people.

*Jeff adds that he has always essentially been a one-man operation, which affords him the freedom to conduct business from anywhere. He enjoys an active lifestyle full of travel.

*Jeff has a weekly newsletter he calls the “notable newsletter,” which goes out via email every Wednesday morning. He’s been generating it since the 2000s.

*Jeff discusses the difference in business practices between the time he started and now, and explains that technology has made his business more efficient and allows deals to close faster.

*There are less than 150 people nationwide doing what he does on a full-time basis. It’s a very niche business.


Jeff can be reached at 800-845-3055

Grab a FREE Copy of Lance’s Best Selling Book “How to Make Big Money in Small Apartments” Here.

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