What Banks Won't Tell You About Mortgage Notes with Nathan Turner

Nathan Turner is the Canadian Note Guy. He started in real estate the way most operators do: he flipped a house, couldn't sell one of them, accidentally became a landlord. In 2009 someone introduced him to the world of buying the mortgage instead of the house, and he never looked back. He moved from being the hands-on operator (swinging hammers, spreading paint, fielding tenant calls) to being the lienholder. He owns Earnest Investing and runs the Diversified Mortgage Expo, which is hitting its 10th anniversary in May 2025 in Nashville and the third year Nathan has been running it. Earnest's fund started in 2010 buying non-performing loans, where borrowers were not making payments. That work is dynamic, problem-solving every day, but it makes investor expectations hard to manage. So Nathan pivoted to buying performing seller-financed notes, which are far easier to underwrite to a predictable return. The fund is Reg D 506C (accredited only). It pays investors 8% annual, and it's deliberately positioned as the sleep-at-night portion of an accredited investor's portfolio: a lower return than a multifamily syndication might project, but secured by real estate with a minimum 25% equity spread on every loan the fund acquires. What landed in this conversation: How notes actually get sourced. There is no MLS for mortgages. The closest thing is paperstack.com (which Nathan helped develop at the beginning, his semi-claim to fame), and even that surfaces a small fraction of what's available. The real sourcing happens at conferences and through relationships. Nathan went to his first note conference in 2009 as the Canadian guy, which alone made him memorable. Everybody in the note world is either buying or selling or both. You build a list, you call, you ask what they have. The math of pricing a note. Nathan buys to a yield target of 12%. On a $200K seller-financed note at 8% to 10% interest, he'll typically offer some discount to balance face value (say, $190K down to $160K depending on rate, term, geography, and underlying property value). On a bank note at 3% to 5% the discount required to hit 12% is so large that the deal almost never happens. Longer term gives him more room to discount lightly. Texas underwrites very differently from New Jersey. Most factors that look secondary at first end up moving price materially. Why banks sell at all. Banks typically sell large pools at par or near par to recycle their liquidity. They make their money on origination fees and lend it out again. They're not selling because they think the loan is bad. The exception is the 2008 to 2015 period when non-performing residential paper traded at 30 cents on the dollar because a non-performing loan is worth zero on a bank's balance sheet regardless of face value. On the individual side, a private seller-financed note holder might sell because they want cash today instead of payments over time (kitchen remodel, college tuition, another investment). What workout actually looks like. Nathan does not want the house. He has almost never wanted the house. Once he owns the property, liability and work attach to him, and he's trying to simplify, not add work. So when a borrower falls behind, the first conversation is "what happened?" Most defaults are temporary (lost job, new job hasn't started, between paychecks). The fund will adjust the rate up or down, stretch the amortization out, shrink it in, forgive some of the arrears, add the arrears to the principal balance, or carry them as a 12-month overage. Whatever keeps the borrower in the home and the loan performing. Foreclosure is reserved for vacant properties where the borrower can't be found. In every case Nathan has ever filed, the foreclosure went through. It's a matter of time and money. The advice that has stuck with Nathan since he was 17 or 18 came from an older man at his church after a nervous public speaking moment: "Stand up, take a deep breath, let it out. If you want to close your eyes you can. Then just go." He's used it before every stage appearance since. The biggest professional regret was holding the Curves franchise (he and his wife owned two of them) one year too long before listing for sale. The Great Recession hit and people cancel gym memberships when they're nervous about money. They ended up carrying years of debt out of that decision, which paradoxically taught them how to overcome and pay back big sums of money. Better to sell a year early than a year late. Books on his nightstand: James and the Giant Peach by Roald Dahl (Nathan got the whole set last Christmas and is working through them in order). Find it on Amazon. The serious read is The Diabetes Code by Dr. Jason Fung, after his doctor warned him he was almost pre-diabetic. Find it on Amazon. Get in touch: diversifiedmortgageexpo.com for the May conference (the Thursday-night ax-throwing tournament is included with the ticket and is where most of the relationships start). earnestinvesting.com for the fund. Real Estate Underground with Ed Mathews. 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