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Today, I'm talking with JT Olmstead, the brilliant mind behind the innovative platform YourLandLoans.com.
Navigating land investments with seller financing can be a complex and challenging task. Errors can be expensive and cause a lot of headaches for investors. JT understood this problem all too well and decided to create a solution for it. The result is YourLandLoans.com, a website dedicated to automating and organizing payments for land investors who sell their properties with owner financing.
In this informal discussion, JT explains how his software works, how much its costs, and who stands to benefit the most from it. We'll also explore why this software is such a big deal in the land investment industry.
Links and Resources
- Seller Financing Knowledge Base
- How to Find Loan Servicing Companies In All 50 States
- 091: How JT Olmstead Takes Down a Monster Land Deal
- PATLive Review
Editor's note: This transcript has been lightly edited for clarity.
Seth: Hey everybody, how's it going? Seth Williams here from The REtipster Podcast.
Today, I'm talking with JT Olmstead about something that I've been looking forward to talking with him about this for a long time now. He's been working on this website called YourLandloans.com, which is a pretty exciting new thing for all land investors, and I think really anybody out there who is collecting payments on seller finance real estate deals. But it's specifically aimed at land people. This gives us a really nice option to help automate and kind of delegate the payment collection process to software.
And if you're somebody who is considering selling properties with seller financing, or if you already have, maybe you've already tried to service loans yourself. And if you've done that, you probably know how terrible that is and how much it can drive you nuts to try to do that for dozens, if not hundreds of people. I mean, it's crazy. Please do not do that. If that's you, there are much better options out there and this is one of them.
So JT is going to walk us through the website and just explain a lot of the things about how it works and who it's for, who it's not for, and just kind of setting expectations so that if you're somebody who is in need of software like this. You can understand what this is all about and sort of decide for yourself if this is something that could benefit you.
So JT, welcome. How's it going?
JT: Thanks. Things are great. I look forward to sharing this with you.
Seth: So why don't you take this how and why did you start YourLandloans.com? How long has this been around? Who is this for? Just tell us what you want us to know about it.
JT: Yeah, absolutely. I'll share quick a little bit about the software and then we can jump right into it.
So a couple of years ago, a little over two years ago now, I went looking for kind of the best software that I could find to manage my own loans because I have my own portfolio I work with and I wasn't really happy with the solutions on the market. And I went kind of looking around and found they kind of ended up in two big camps: either smaller, generic software that didn't really fit this space very well; the vernacular was a little confusing for the borrowers and the communication wasn't really quite where I wanted it to be, or it was a massive piece of software, incredibly expensive, incredibly complex, difficult to deal with, and I didn't really find an option in between that was high enough quality, right? If I need something at a certain level of quality, I just wasn't finding it. So I decided just to kind of venture into building my own option.
So this is after a couple of years, this is what I launched YourLandloans.com. And for me it's that sweet spot where it's focused just on land, but the price is still incredibly affordable while maintaining that high level of quality. It's easier to maintain a higher level of quality when you have a really focused cohort, right? We're only working with land investors, so we could specialize in that and put all of our efforts into that.
Seth: Cool, man. Do you want to open it up and start showing us how this thing works?
JT: Yeah, absolutely. Let's jump into it. So let me just pull up the site here. So this is the website so you can check out all the details about it at YourLandloans.com. Obviously just the homepage. You can learn a little bit about kind of the software in here, jump some FAQs and block-ins, things like that.
We'll just jump right over to the pricing because that covers a lot of the features. And as of this moment, this is how our pricing stacks up. I just want to quickly kind of go over some of these features and then we'll talk about them more in the software itself.
So, as you can see, we kind of have four different options right now. At the first loan, totally free, you can jump in there and get pretty much the full functionality out of the site and see exactly how it goes, collect payments, and keep track of everything. It's a popular option; people like enjoy starting with this and seeing how it goes. You also have the option to create some kind of draft loans if you want to see what your other loans would look like as you add more to the site. And then it kind of scales up from there.
The main delineator being just the number of loans. Ultimately, in our top-end plan here, there is no limit. So we have people using quite a few loans in some of their accounts. We accept payments, big credit cards, ACH.
And one of the things that we are really focused on quality-wise is we want to make sure that with the ACH deposits, you didn't get like some huge lump sum, right? Because my bookkeeper hated that. Absolutely despised it. So when we collect payments from each individual borrower, we deposit that full amount. We don't take anything out of it or hold anything back or have these reserves. We just give you, like if they pay you $250, you get $250 in your account. And then we make sure we add the details to that deposit so you can tell, “Oh, this came from John Seth for the property in Colorado.” All the details would be written in there.
So it's easy to spot, easy to manage, and you can QuickBooks wherever you can create rules for it. So it's definitely streamlined.
My bookkeeping, and I know a lot of people really enjoy that. I got a lot of good feedback from bookkeepers who are quite happy with the results. We also make the actual expense for that incredibly low. Basically giving it away at cost for the actual ACH transaction fees, especially the top-end plans, we're basically giving you what it cost us.
Seth: Just to make sure I understand. So with the free plan just to have one loan, there's really no reason not to try it out because it doesn't cost you anything just to see how this thing works. But the one cost associated with that free plan is $2 per payment that comes in.
JT: Absolutely. Yeah. So if you want to go in and create the loan and add your borrower and then just manually record the payment, that's totally free. There's no cost to that. If you decide to collect the payments via ACH, then the system will do the automatic recording for you and then transfer the money to your account. And we have to pay the ACH processor for that. So we have to collect a fee to cover our expenses.
Seth: Is this automatic, these payments? Like, are they set up to just take it on the first of the month or does the person have to come in and manually do it, or is it either way? Or how does that work?
JT: Yeah, so we have a couple of different options. So the borrowers can go in for ACH payments and for credit cards and decide, like, yes, I will set up automatically every month my payments due on the first, and I want to pay on the 30th, the day before, or the 28th or whatever, or I want to pay on the fifth a few days after. But in the grace period, whatever day they want to specify, they can set that up. That's our default.
We have a journey we take the borrowers through when they sign up and it steps them through piece by piece by piece and leads them along until they get to the point where they're setting up this payment as a reoccurring monthly payment. So that's our default. In addition to that, though, they can go in and decide to make manual one-time payments. If they don't want to do recurring payments, they're just not cool with that, or if they decide that they just want to make additional payments or whatever it is, they can do those instantaneously, same day, for example, they'll make that payment and we'll process it immediately.
Or they can go in and set that payment up to say, “Hey, I want to set my payment up for four days from now and then I'll have it taken out after my check hits,” or whatever. So we can do that as well. So a couple of different ways for them to go in and make those payments.
Seth: Okay, I see credit card payments, too. So if you can pay by credit card, correct?
JT: Yeah. So we have a partnership with a credit card processing company. So if you can set up an account with them, then we'll kind of connect your account with the account on your landlords and that'll allow you to go in and do credit card payment processing in addition to the ACH. The ACH is baked right into the system. Credit cards are sort of an add-on.
Seth: Okay. And I know credit cards have long been problematic just because a lot of credit card processors don't want to be used for real estate deals. Is that any kind of a problem, or how is that mitigated?
JT: Yeah, that's definitely a hurdle we find for ACH and for credit cards. And so it took us quite a while to find the right companies who had the high quality of standard, like the high standards we need, right?
And good quality systems that we could integrate with and allow us to fully understand the business model. Not one of these “don't ask, don't tell” kind of scenarios, but they fully understand it's not like processing… Let's say Stripe. Stripe doesn't know what you're processing if you're collecting loan payments because that'd be a violation of their terms of service.
So we don't do things, we don't connect with companies like that because we want to build on a really solid platform where it says, like, hey, this credit card company, they know full well that you're collecting loan payments on land and they're totally okay with that. There's no problem.
Expense is a little bit higher than you're going to find on the super low-end options because of the increased risk. But we did our best to find a good company to put together on that.
Seth: I know, with GeekPay anyway, I had to set up my own account through Actum and set up my own whatever else, almost like this third-party thing, and then sort of hook that into GeekPay. Is that how this works too? Or do you handle all that for people? Or what other steps are needed to get these other sources of payment handled?
JT: Yeah, so the credit cards are more like that. We will connect you with them. You just fill out an application on the website and the third party will reach directly out to you and say, “Hey, we see you're interested. Let's get this figured out. Let's take you through the process step by step.” And at the end of it, we use Authorize.net as kind of the medium with them and us. So you'll give us your Authorize.net codes, basically, and then we'll be able to connect everything together.
But on the ACH side, it's fully baked in. Like, you don't have to leave the site to do anything. It's all directly part of the site. So you'll fill out your application for ACH, really just filling out the information and submit any necessary documentation all directly through the website. And we're the ones who kind of have the relationship with the ACH companies, so we handle all that stuff on the back end for you and we'll let you know or they'll let you them know like, hey, we need an extra piece of documentation or whatever, but it's all handled directly to the website. Extra steps or verifications or underwriting or whatever.
Seth: What are the additional monthly costs of working with Authorize.net or any of these other third-party companies that are required to make this all work?
JT: The ACH cost is baked into your monthly cost with us. We handle all that for you. So there's no additional cost to collect through ACH besides what you see here on the per transaction fees, the credit card payments that will vary wildly depending on the volume, and a bunch of other things. Because instead of, for example, with ACH as a platform, your landlord has a relationship with the ACH processor. We've been able to negotiate that down so we can pass that on to you guys.
But the credit card companies, they want individual relationships with each lender. So that's where you have to go to them as a third party and kind of negotiate your own terms. Typically they're going to fall between 3% and 6% and 20 or 30 cents per transaction. And then there's a small monthly fee that goes from maybe $20 in the low end to, I think, the highest is $100 a month. But I think that's pretty high. It's uncommon.
Seth: So there's basically a per transaction cost, like any credit card transaction company, and then a small monthly fee that's a combination of Authorize.net and this processing company.
I'm curious, what do you see other people doing and what do you do? Or do you have any recommendations on is it even worth it to offer credit cards as a way for people to pay? Or should you just force them to use ACH? Because I've heard this argument that it's really easy for a person to cancel their credit card, but it's harder to cancel their actual personal checking account where their money is coming from. Do you have any thoughts on that? Is it better to just pay less and just make them do the ACH? Or what do you see people typically doing?
JT: Yeah, I think it really depends on the type of borrower you have. For example, for us, for my own portfolio, we don't allow credit card payments at all. We only allow through ACH. We haven't had zero kickback on that.
However, I understand that some lenders have a different group of borrowers and so credit card payments fit better for some of those borrower types. So, I think at a certain scale, it makes sense potentially to offer credit cards because, at least for now, the transaction speed is a bit faster when getting your money. So that's a concern, getting the money in your bank account.
Then there's also the list credit card companies that handle it. If they don't make the payment, if they can't come up with the money, the credit card company has to figure that out. That doesn't come from you, right? Whereas with ACH, if the money is not in the bank account, you're going to get a kickback and it's going to say, “Hey, we don’t have enough money, we couldn't take it, sorry.” So it's kind of a different kind of problem.
So I think it really depends on the type of borrower. But where I see people actually succeeding in using credit cards on the platform, I think more people have discovered that they think their borrowers really need credit cards. But the reality is that a lot of times, they actually don't. They don't need credit card payments. If you just kind of push them to the ACH, it actually works out pretty well. And for those few lenders who have got a larger borrower base and they're of a certain type, then it makes more sense to offer that. But they kind of have to get to a certain scale for that to really make sense.
Seth: A couple of other possibly dumb questions, but in case anybody else out there is wondering in addition to me, maybe you can help them out. So I'm assuming the person who is paying, if they're paying through ACH, it has to be a U.S. bank. Correct? Not some foreign bank in another country. Is that accurate?
JT: Correct. Yeah. This ACH processor, and this has been across the board when I've talked to ACH processors, but they want two big things. One, they need it to be like a U.S. entity with a U.S. bank account. So those are the two big steps. And the third one that trips up a lot of people is it needs to be a U.S. company that is operating out of the U.S.
So if you have a U.S. address that you can say your business is operating out of and then they can verify that, then that is going to be good to go. Whether that's like me working out of my house or someone with an office or whatever. But they won't accept things like, for ACH, they won't accept things like registered agents or those kinds of virtual mailboxes. Those are all going to get rejected because they're pretty thorough. Effectively, it boils down to this ACH company has contracts with these banks and these banks have regulations. They have to adhere to U.S. regulations. So there's a series of things, boxes that have to be checked, kind of, across the board.
Seth: Yeah. With all that stuff you just said, are you talking about the borrower-slash-buyer, the person who is making the payments, or the seller, the person who has your landlord's account as receiving the payments? Or both?
JT: Exactly. Yeah, it would be the lender primarily, but it really applies to both. The biggest underwriting the borrowers when they sign up to make their ACH payments are it's super simple. It's like first name, last name, email, boom. That's it, now you have an account. And then they just add their bank account.
They can do it instantaneously or they can do micro-deposits if they want to do that too. So the borrower side is actually very simple. So as long as they have a U.S. bank account, the borrower can make payments.
The lender side was more of what I was describing, the more involved vetting process. That all kind of goes on the lender side. So they thoroughly vet the lender so that they can make the borrower sign up super easy.
Seth: And I know a very common thing when somebody's selling a property with owner financing is collecting some kind of down payment upfront, like at closing. Is that down payment made through your land loans as well? Or is that like a separate check that they send or a separate wire and then these payments start after that?
JT: Yeah, so as of now, the down payments, those kinds of initial deposits, are being collected before you get to your land loans. Although that is a feature that a lot of people are requesting, so it may be something we work on in the near future, but as of this moment, that's not something that's functional.
Seth: Okay, so when you start a new loan, you just kind of explain to the software, hey, here's the sale price, here's the loan amount, this is how much is already made as a down payment, interest rate. I guess maybe you can show us that in a second. But you just kind of inform it what's going on and it makes sense out of it.
JT: Exactly. Yeah. So we give it all the details and you can recreate existing loans without problem. I've had people add loans that are years old and they can recreate the whole thing.
Seth: Oh nice. Cool on that. If somebody is using something else, whether it's a different software or a loan servicing company or they're servicing it themselves, how hard is it to take it from wherever it is and migrate it here?
JT: Yeah, we'll definitely go over that when we jump into the software. But we try to make it fairly simple. There's no magical way to do it. So there's definitely some work involved there because every platform is different and some platforms won't let you export your data at all. So there's no way for me to easily import it. So we're working on ways to make that simpler and smoother and they'll come out in the next month or two.
But yeah, right now it's still pretty straightforward. You can recreate the loan and backdate payments, all that stuff, no problem.
Seth: And on that thing, if somebody ever starts a loan with you and then wants to go somewhere else, do you export the data?
JT: Yeah, you can export our data anytime. You can fully download all of your data for any of your loans or all of your loans.
Seth: Okay, so a person is not stuck if they decide to go down this road with you?
JT: No. If we're not the best, then feel free to leave, but we're going to keep being the best. So I'm confident in my ability to keep on top of that. So I'm not trying to trap anyone. You want to come in and decide it's not for you? Then leave, by all means, no problem. It's just a monthly fee and you can turn it off and you're good to go and you can download all your data and go somewhere else. But I'm confident we'll keep staying on top.
Seth: And since we're on the pricing page, one thing I'll note and you kind of alluded to it earlier, but prices tend to change over time. So if you are watching this or listening to this, three or five years into the future, it's very probable that prices will be different.
But I can just say, looking at the starter plan or whatever the first one is called, for $25 a month that gives you up to five loans. $25 a month is what I expect to pay for one loan with a loan servicing company and I would just pass that along to the borrower.
But just by contrast, that's the cost for five loans with YourLandLoans.com. So it's a pretty good deal in terms of the price of that. If that price even does go up, it's still probably a good deal.
JT: Yeah. Our goal from all the way out is to make sure that whatever the price is, we're delivering so much value. It's a no-brainer. Like, if you're signed up for the platform and you're like, I just don't know, then maybe it isn't for you. But most of the users who really succeed on the platform, they look at it and they say, oh, yeah, this is no question, I will gladly pay double for this for what I'm getting.
And so that's what we want. That's the vibe we want. We want you to look at the platform and say, dang, this is awesome. It feels like we're underpriced.
Seth: Yeah. Cool, man. I'm thinking about this from the standpoint of the seller or the user of YourLandLoans.com, when they create their own account and how they get started. How many minutes does this take? Is this like five minutes and you're done? Or is there like a bunch of stuff you got to apply for? How many hoops do you have to jump through?
And then also on the buyer's side, so the borrowers that end up getting plugged into the system, is it like a self-serve model where they get their own account and they can log in and check their loan balance and all this stuff, or how does that work?
JT: 100%. So a lender account we make as smooth as possible. There's certainly going to be more requirements on a lender than a borrower. The lender should be able to go in and create a new loan.
In fact we'll just pull up real quick this website. So this is going to be the dashboard and we're in our sandbox here, so keep that in mind. But this is kind of what it looks like when you first log in as a lender.
And this test account, our test lender, they have 17 loans right now. So we can click through and see. We'll take a look at the loans here and kind of list them all out. But to answer these codes specifically, we kind of guide our lenders and our borrowers through the initial process and tell them, okay, great, welcome to the platform. Here's what I would do first to make sure we know step by step.
And usually one of the first things you're going to want to do is either create a loan or sign up for payment account. In this case, we're going to go over to this loan and say, okay, we want to add a new loan. We'll just kind of make this right now.
And they have the option to duplicate existing loans. If you have several loans on the platform and you want to make one that's really similar, we also have a lot of saved preferences in your account. So, in this case, my default rate right now is 9.9% on this account, so it automatically fills that out. And I know that I typically have a 60-day default and I like 365 interest, these kinds of things. Here's my regular late fee, I even have standard monthly fees I add to all my notes. These are all saved on my account as preferences.
So anytime I make a loan, it automatically fills it out for me. But in this case, we're going to say we sold this property in Maine, and it was in Kennebec County and we're going to say this is the parcel number right here and so it automatically fills out the name here. But let's just say I actually don't want this format. I want to add Smith as the last name of the borrower, or I want to just delete all of it and say like, “Best Test Loan.” So cool, you can just specify whatever name you'd like and then you go through and just specify what's the sales price.
Let's just say we sold it for $50,000 and they financed $40,000, $10,000 down payment. Awesome. Already have the interest rate and this one's going to be 100 payments. The interest start date.
Let's just say actually it was a little bit back. So we closed on this property in April 5 and then their first payment was actually May 1. So it's going to see and then the loan origination date is the same, the fifth. And then you see this, our standard late fee. Great. I'm actually going to charge them a dollar for every ACH and then credit cards are going to be one dollar per payment and 5%.
Seth: This thing you're doing where you're charging the borrower a dollar, is this just to cover your costs, right?
JT: Exactly. So the lender can specify what additional fees to add per transaction type, right? So if a borrower pays through the platform via ACH, they're going to charge it up and add a dollar fee for paying via ACH for each payment or for credit cards, it's a dollar plus 5%.
So you can specify what kind you can pass all the cost on, some of the cost, or none of the cost on. Whatever you like, you can specify.
Seth: Yeah, so if I were using a loan servicing company and paying them $20 a month or something, I mean, in that case, I would add $20 a month to this.
Seth: So I just want to make sure that's what you're doing here.
JT: Yeah, 100%. And this monthly fee, if you want to add another monthly fee, like strip taxes, $7.50 or whatever ends up being, great. So you can add a monthly charge for that and then you just have an extra fee. You're adding however you want to specify. It's up to you.
And you can save this as a draft and take a look at it. Even free accounts can have up to like ten draft loads. If they just want to add a draft and check it out and kind of play with it a little bit, that's great. Otherwise, you can just go ahead and create the loan as a new active loan. So we're going to do that.
And then, after this loan is created, it's going to bring us a little bit further along in the process to add the borrower. So, yeah, it says it's successfully created. Cool. So now it's saying here, look, this is the new loan you just made, the Best Test Loan, and you said that it was made a month and a half ago or two months ago. So it's actually a little bit late. So we're going to go in and fix that in a moment. But now we're just going to say this is the test borrower and we can specify the address if we want, but we don't have to. So, in this case, we're just going to hit submit and then it's going to go ahead and send an email.
So email is sent up to that borrower. So now that borrower has an email invitation from us from the platform saying like, hey, you've just been added to this loan, go ahead and get your account all ready to go. And all they have to do is take their temporary password and sign in and they're good, pretty much set, so we can open up this Best Test Loan that we just created. We can see that today. It's late because it says it was due way back when, got two payments built up here. So far, we can see the original balance is still there because no payments have been made.
And then it kind of goes through all the loan details as well as the borrower’s information. And you could have multiple borrowers per account and you can also have partners on your account. Let's say you have a lender who's going to get paid as part of this deal. You can kind of add them as an option so they can go in and check out the payments and information if they need to, as well as attached documents, things like that.
Now if we jump over to the payment history, we can see no payments have been made, but let's go ahead and jump over to the borrower side and see what they're doing. So we're going to go ahead and refresh this real quick and we should have this new loan on here.
Seth: You said that when you entered that stuff in originally it sent them an email. So if they don't have an account or anything, it would prompt them to open up their own account on your website.
JT: Exactly. So if they have an existing loan, let's say you're adding a second loan to them, or on a rare occasion, let's say they have a loan with another lender, then what it will do is it'll send an email saying like, hey, you've got a new loan. You either need to set up your account because this is your first loan or we just added it to your account, just want to let you know.
And so now they know, I've got this new loan, I need to work on it. They'll log in and then get set up and they’ll see these kinds of notices at the top tol prompt them through. And this notice is saying like, hey, you've got a late payment, you better hurry up and make that payment.
This is our test environment. We test all kinds of different states for things. But if we pull up the best test loan here, this one is, it is showing us late. So we'll go in and we can see that, yeah, we owe this much. Right now, this borrower already has their account set up or ACH, but I just recently removed the bank account. So we're going to go ahead and show what that looks like to add a new bank account. And actually, I apologize, actually this one is already re-added. So this actually here, you can see this bank account is already added. So we have the bank account for this one. It's verified, good to go.
And then it's got the credit card as well. So we're going to actually jump back to that loan.
Seth: Just to verify, what you're doing right now is you're acting as the borrower and you're adding multiple sources of payment as a borrower?
Seth: And you could do either a checking account, and/or a credit card, and however many you want, or is there a limit to how many they can have?
JT: So right now, there's a limit of one bank account per borrower. So if they need to add more than that, that's not currently an option. Although we haven't found that to be the case in almost every instance, it's just one bank account is usually sufficient. It's typically one borrower to one loan. That's the most common scenario.
But we want to make it flexible so that if a borrower needed multiple loans or whatever the case is that they have that option available to them.
Credit cards: there isn't really a limit to it at the moment. Authorize.net has a limit, so that's the theoretical limit. But right now, we can display kind of as many credit cards as they have available to them on their platform.
Seth: Can you require a borrower? You have to add at least two sources, or is it just kind of up to them to do whatever they want?
JT: It's kind of up to them at this point, yeah. So the borrower has the option to add the bank account, add the credit card, whatever one if the lender is ready to accept credit cards, then the borrower will see the option to add a credit card. If the lender is not ready, there will be no option for the borrower for ACH by default. It's kind of always set up. So the lender has to set up the ACH account as part of the signup process and then the borrower will have that option to pay via ACH.
So it kind of lets them go right into it. So as soon as the borrowers signed up, it usually only takes less than a few minutes to get everything set up and have the bank account added from the borrower's side.
Seth: Do you have any stats, just out of curiosity, like when payments are missed, is it missed from a credit card or from an ACH, or is it exactly the same?
JT: Yeah, the bulk of the payments are made via ACH. The vast majority, more than 90%. So I don't really have any good stats to share on that at this point because, yeah, the vast majority are made via ACH.
So if we go in and make that payment, we can see like they can generate a payoff, or they can go in and check various things here to kind of see a similar version to what the lender sees, just a little bit less information on, obviously.
But let's say we're going to go ahead and make that payment. So it jumps over here and says like, hey, you are late on this payment. So the only option you have is to make a one-time payment right now to get caught up and then you can go in and set up your regular recurring payments.
And we do this so that if they can't decide to set up a recurring payment three weeks from now whenever they feel like it's like, hey, you owe the money today, you got to pay today. It'll show them like, hey, here's the outstanding amount that's due. Or they can customize a specific amount if they would like. And then in this case, they can choose to either pay with the checking account or they can pay with a credit card. So let's try paying with the credit card today.
And we're going to say that there's a total of 32 and it's due right now and they can add some notes if they want to keep track of those. They go into this next step and we can see it shows them on the previous page what the actual fees are going to be added, the transaction fees, and their payments. And the same thing on this page, it shows them like, hey, here's the actual payment, here are the fees that the borrower or the lender has applied to this type of payment because we're doing credit card. And then here's the total amount where it's being taken from and the fact we're paying it right now.
So they can go ahead and just confirm this payment. It's going to process, send it over to Authorize.net and the payment gateways, make sure everything's good to go, and come back and let us know that it's been approved and then we're good to go. So, yes, payment processed, perfect.
And now we can jump in. You can see now in the payment history that we made this payment and the payment is a combination of a few different things. So the fees are a combination of monthly note servicing fees and transactional fees because they were behind.
This shows a slightly different version. Here you can see the monthly notes don't quite explain the details, but basically, what we're trying to display is like, hey, this fee is made up of multiple things. It's a combination of escrow fees, monthly fees, transaction fees, et cetera. And then we show the amount that was charged to interest, the amount of the principal, and then the total amount.
Seth: Can you add late fees to them?
JT: Yeah, absolutely. In this case, there are late fees. For some reason it's not displayed yet. Let's go ahead and take a look here. These late fees, in this case, weren't added automatically and this is actually something we're rectifying right now, but they will be added when we do the recalculation of the loan. But yeah, the late fees will be added for the payments that were missed.
Seth: On this whole subject of late payments. So a few questions come up. First of all, does YourLandLoans.com software send out automatic late notifications? At what intervals would it send those out?
And then also if a person's payment is late, is that because it was supposed to come out automatically and the money wasn't there? And so it's going to keep hitting their card or their ACH until it comes out, or how does the software respond? Does it just say, hey, you didn't manually make your payment or we tried to automatically take it out and it didn't come out, so make your payment now? How does it handle that situation?
JT: In that case, what will happen is they will go to make the payment. They're going to go ahead and calculate what the late fees were for each month and add them accordingly. And you'll typically go back in and add the late fees as necessary.
Let's just say it was due on the first and there was a ten-day grace period. They're going to get an email three days before that says, hey, you have a payment in three days. Then they're going to get an email on the first that says you have a payment due today. And then they're going to get an email on day three, somewhere between day three and five that says like, hey, your payment was due days ago. We're kind of always touching base with them to make sure they're not going to fall off the wagon. So it's pretty hard for them to miss it.
And then, ultimately, let's say it gets past this ten-day window, then it will come and say, hey, we told you multiple times you haven't made your payments, we've added a late fee to your account. And in this case, the calculation hasn't been calculated yet, but let's just say like, oh man, there's supposed to be a late fee here or something happened or whatever. We can't do it from this side. But if we jump back over to the lender, we can manage the details of this loan. So I can just refresh the information here and it will show that this payment was made on the loan account.
So now it's showing as current and I have the same details and I can actually go in and say, you know what, I see there was a late fee. I either want to waive a late fee or I want to add a late fee or change it. You could add one-time fees to the payment, or in this case, we're going to go ahead and add a late fee. We're going to add it to this most recent; let's say we let them skip this one because it was a brand new loan, they would figure it out. But this one, they shouldn't have been laid on because it was whatever period. And we're going to say it was our usual $50 late fee. Go ahead and apply that. So now it's going to go ahead and recalculate the loan.
And you can see that this fee went up, right? So now we have a $50 late fee included in that total. And because of that, they're actually behind again because they didn't make the full payment because the payment requirement just went up a little bit by $50.
So backdating that will make that change. And we say, well, you know what, we don't want to scrap the payment. We don't have to make another $50 payment. We're just going to go ahead and actually delete that. It's actually not we really want to do so, so let's go ahead and remove that late fee. And it says, hey, this is the only late fee you have applied on this loan. Just go ahead and remove it. Cool.
And then it's going to recalculate again. We're back to current, no payments due, and everything is back to normal. So it is kind of in real time.
And if you make adjustments to the payments or the loans or those details, it will just recalculate automatically and show you instantaneously, hey, here's what the calculations look like. Here are the loan details. I'm going to kind of let you go through and add those details.
Seth: Am I understanding this right, that in order to add a late fee, you have to do that manually? Or does it just happen automatically?
JT: Yeah, my apologies, I wasn't clear on that. So that will happen automatically every month, kind of on a daily process, we'll go through and recalculate and add late fees for the payments that were missed.
So we'll basically calculate and say, oh, this one should have had a late fee. We're going to add that late fee. Now, if you backdate your loan kind of like we did here a month or two, it's not going to do it automatically. We don't want to say, oh, I have a three-year-old loan, and then you create the loan with no payments, and it's got three years of late fees, right? So that would be a problem. So we don't go back way back and say, oh, every single one of these was late because you said there was no payment, because we need to give you a chance to go in and do that.
So in this case, if the lender wanted to record a payment, we can go to record payment and say, oh, I got a payment for them. They also have an option to do multiple payments. That's where we actually say, like, did you add a late fee? Yes. Okay, just click here, add the late fee, tell us what it was, and we'll automatically add the late fee for you.
So it gives them a chance to… let's just say they want to record a payment that was received on the 16th. They can say, yes, this one did actually have a late fee, and it's our standard $50 late fee. Okay, no problem. We've added it for you here.
So, yeah, we have ways to do it if you're adding multiple payments at once, and this goes back to your question about how do you recreate existing loans. If you have a really old loan, you just hit this populate payment history button and it will fill it automatically. Add lines for every single payment that would have been expected for every due date in the past. And then you can go through and just say, yes, these are the dates, and here are the default payment amounts. And then you can adjust that or decide… actually this on the 16th wasn't for May 1, it was for June 1. And here is the late fee amount, or no late fee amount, any notes you want, all that stuff. So you can kind of en masse add all those payments and bring it up to date, and then the amortization of the calculation should be kind of fully set.
Seth: You might have already answered this, maybe I just missed it, but is the assumption when you set up a new loan that the payments are going to be automatically withdrawn from their account or no? Do they have to come in and manually make that payment, or is it whichever one you choose?
JT: Anytime money is going to be taken out of a borrower's account, it needs their involvement. They're going to have to be involved at some level.
So they are going to log in and we're going to guide them through automatically setting up a recurring payment. But we don't have an option to force the money out of their account. The lender doesn't have the ability to make them give them money. They can guide them through and help them get to that point and get everything set up and it'll be good to go.
But we're not ever going to get to the point where a lender can just say like, take this money out of the borrower's account. That's not something we're ever going to do. But we are making it as easy as possible for borrowers to say, yes, I would love to have that money automatically taken out of my account each month.
We actually have some good ideas of work we're doing right now. Hopefully this summer we’ll be finished and it will make it very simple for a borrower just to click a button and say, yes, I would love a recurring payment added to my loan.
Seth: I feel like I'm hearing two things. One is that you can't take automatic payments out, but then they can set up a recurring payment. Is that handled by their bank or something?
JT: Let me differentiate that a little bit. So the system will automatically take payments for recurring payments, that's what we do. But it has to be set up and or approved by the borrower. It's not something the lender can do without the borrower's involvement. Every individual payment or just that first time you can say, yes, I want to tell my bank to send this money over once a month and then they're done.
So that's the difference. So you're not actually telling your bank to do anything. What we are doing is you connect the bank account, whether you're lender or borrower, you connect your bank account to the system and the system says, “Okay, so we have your bank account and we verified that you own this bank account. So here's what we're going to do. On the first of every month, you asked us to take $250 out. So we're going to go in on the first, go to the bank account that you gave us, and take $250 and give it to your lender. And we'll do that as long as you want us to.”
Seth: That's what Authorize.net is for?
JT: Authorize.net authorizes the credit card part of it, yes The ACH processor we use is who we work through to get that banking part of it done.
Seth: So that's the middleman. That's not you taking it out, but it's… Okay, I got you. I understand.
JT: Yeah, that's an old industry. So all we do is we have a relationship with the Frost ACH Processing Company, and they're the ones who handle the bank account details and they handle taking the money in and out and transferring them between people. We just send them instructions. We have a list of what needs to happen and we tell them, all right, take it from Borrower A and send it to Lender A and they say, no problem.
Seth: And it's a question that automatic payments are a thing, but do they have to do it? Like another option is, “No, I'm going to go in and manually make that payment every time.” Is that another way that it could work?
JT: They could, yeah. That's not mandatory by default. That's what we guide them to because most people want that and most lenders want that. So that is like the de facto answer.
But there is an option for them to make one-time payments. If they absolutely don't want to do recurring payments or if they want to make extra payments, they're like, yeah, I do want to set up an automatic payment and I want to do an extra payment sometimes. Okay, cool, you can do that too.
Seth: Okay, gotcha. And then in this scenario, when there is a late payment, either because the money wasn't there (in the case of auto-pay) or they just didn't manually make the payment… I guess maybe we'll go with that first one, the auto-pay thing is in place. So that's happening and the money is not there. Is YourLandLoans, after the 10th of the month or whenever it's late, does it try to hit that account again—or the intermediary ACH—does it try to hit that account again or it's just going to stop trying until that person comes in and manually makes that payment?
JT: Yeah. So right now, we have it set it up so that if we go to draft money for any reason, whether it's recurring payments or a one-time payment (there's a standard set of ACH banking codes called R codes or form of error codes), if we get an error code back from your bank that says, hey, there were insufficient funds on this bank account, or on rare occasions, we get a response that says, like, hey, this bank account doesn't actually exist, we immediately cancel all recurring scheduled payments. So if it's a recurring payment or you schedule something in the future, that all gets canceled immediately.
And we send a notice to the borrower and to the lender and say, hey, this is what just happened. We tried to take the money, it wasn't there. This is why you guys need to figure out what's going on. We've canceled all those scheduled payments until you figure it out. Once you figure it out, go back in and set them up again.
Seth: And one other random thing. Does this have the ability to send text notifications about late payments in addition to email or is it just email?
JT: Yeah, right now, it's just email.
Seth: From the borrower’s, and I guess from the lender’s end, too, can you see the full amortization schedule and the whole payment history in one place? Is that easy to do?
JT: Are you talking about for every loan or individual loans?
Seth: Individual loans. If we're looking at this Beta Test Loan borrower or something like that, and we want to find out, I want to see the whole history, like what payments did they make, when did they make it, how much of each payment went to principal interest?
JT: Let me show you a loan with lawnmower payments. So one of our test loans here, so you can see here, we're listing all of the different test loans. It got all the different loans over time and where they are applied to. So they made one on the third and on the second and on the first of fifth, and what due date they were applied to, what their status is. Like these are approved, but not quite finished processing. And the amount, and the principal. And this was like a little bit of fees, a little bit of transactional fees, and the rest went directly to principal. And this was more a larger payment and big term principal. But there were some fees involved and et cetera. And you can see if they were credit cards and kind of what account they used or if they were ACH, any notes that you added. So this kind of shows you all the history of this loan.
In addition to that, you can go down to kind of historical payments and see the same thing, but even more detail where it shows like the due dates, how many payments, this isn't individual payments, this is like a per due date calculation. So multiple payments were made in the same due date it's all going to be kind of included here and then it will have total payments made. What was required, what was the actual payment made and then how much principal interest fees, et cetera.
And then a breakdown. Was there late fee? Did they have a one-time fee that was included on this payment? Gere you can see we had a one-time fee of $15, this test fee too, and it was only applied to this payment on 12/1. And then you can see the starting and ending balance as it kind of goes down. In this case, it's going back in time so it's going from the top all the way down here at 18,000, and then you can see the same thing for the future, right? And this is kind of projected payments as you see.
So where it's going? All the way down to where it's going to end up. In this case, they paid a lot of extra so they're ending early. So they've come kind of this a lot of zero payments toward the end.
Seth: That place where you can upload loan documents. So is that just like where you would literally just upload your deed of trust, your mortgage or your land contract, any related notes and all that stuff, like application documents? Is that what a person would use that for?
JT: Yeah, absolutely. So that lets them upload whatever documents they think are appropriate to share with their borrower. And anybody who has access to the loan will be able to see these documents. Borrowers, lenders, whoever.
Seth: That makes me think of, if I ever wanted to sell this note to somebody else, or even if I bought an existing note and wanted to bring it into YourLandLoans, is that something people do? Like, is that easy to do or how would that work?
JT: Yeah, I have had lenders go through and transfer loans to other lenders. We don't have that as an automatic feature right now, but that will be added soon. So right now we're doing it kind of manually on the back end.
But if a lender says, hey, I just sold this note on Paperstac or wherever and I would like to transfer it to this new lender, they would like to use the platform to continue to manage the note, I say no problem, we can get that set up, all the accounts get set up, and then boom. You can just transfer the loan from one lender over to the other lender.
All the stuff you're seeing here stays in place, including the payments by the borrower. We just say, okay, well, well this is FYI, this is your new lender and he'll be collecting your payments from here on out. They're going to be your new point of contact.
So I just wanted to show you whatt we talked about this earlier when downloading loans. So you can go here and download the data, and you can choose to download all the data for just this loan or all the loans, and it just spits it out in Excel with all the information you're looking at here, including payment history, all that jazz.
Seth: I think about the different people out there who are actively doing seller financing or maybe they've done in the past. You've got people who maybe tried to service the loans themselves, like what I tried to do way back in the day when I got started.
It's a horrible idea. It was a huge pain in the neck. I can think of a lot of very obvious reasons why those types would move over to something like this. You've also got people who are using other software out there. You've also got people who are using loan servicers or like actual people just trying to think of any valid reasons if they were to move, why would they do that? What is better about YourLandLoans than other stuff out there?
JT: For us I think it really just comes down to attention to detail as a platform. Not only am I super committed to making sure that things are as tight as they can be, we're always taking feedback from our users on like hey, how do we make this better? Continually on that quest. We've got the software and I think anyone who's used it from when we launched in January to now would tell you there have been several improvements over that time period and that improvement pace continues on.
We're always looking for ways to make the platform better and get all the details right. Because if we can add an extra button or make a post a little more clear, or add an extra title, we want to do all those things because we want to be super simple for your borrowers and super simple as a lender. And we kind of want to add as many features as we can, so we're kind of iterative improvement effects.
One of the things that's important to me is I really want that feedback. So we have a whole section here under Account Preferences, under Feature Feedback, and it will let you vote on what features we have coming up. So you go in and say like oh yeah, I've got a whole list of other features I'd like to work on. And there's way more than this but these are just the ones I have listed. Some of these have already been completed. Again, this is our sandbox, but you can go in and vote and say hey, I really want to track escrow dollars or I really like co-branding or whatever, and let people vote. The things that are at the top of the list, we always have development resources focused on them. So we're always looking for ways to make that better.
So we want the feedback, we want you to send us your ideas. We want to let the community tell us what things matter to them so we can keep moving. That up our list of things to get done sooner rather than later.
Seth: When I think about a loan servicing company, I think historically that's kind of been what I've always leaned towards. And the reason was because there's a person I can call and talk to and say, “Hey, what's going on? Help me out with this.” And they actually handle tax forms like 1098 and that kind of thing.
Those are the two things that I would just automatically assume software can't and won't do. Is that accurate? Like, how would a person handle 1098? Do they call you if they have a problem or do they just kind of figure it out on their own or how does that work?
JT: Yeah. We are not a licensed loan servicer. We make that very clear. So you're very much on a self-service portal. We're just providing you the tools so you are going to be the point of contact for your borrowers. We're not going to interact with your borrowers, but we are happy to interact with you if you guys have issues or questions or concerns. We interact with the lenders all the time to help them kind of get off on the right foot or answer corner cases or maybe if they find a bug or something. Yeah, let us know so we can get it fixed and everything set straight.
So yeah, we want that feedback from them, but that is something they're going to have to do. When it comes to 1098, things like that, on the roadmap, we have a set of features that will allow that to be easier and easier, but at the end of the day, it will still come down to the lender to say, yes, this information looks correct and I approve it and now we're ready to go.
But kind of with all these steps, although we can't do it for you because we don't have the license, we want to make it super easy for you to do so. If you're interested in a platform that you can handle yourself and offer your own customer service, but you want it to be a very streamlined process, this is the platform, if you want to be completely hands off. But if you don't ever want to be involved, then yeah, go to a loan servicer, the cost is much more substantial, but if that's what you're looking for, then that's a good option.
Seth: And I know you're one of several different people that is trying to serve the land investing audience, which is inherently just a smaller group of people, and your company is smaller. It still hasn't been around that long. It just makes you wonder, if you were to get hit by a truck tomorrow and JT is gone and I have 50 loans in this software, does the software cease to exist and cease to work if you're gone? Or are there other people who can keep this working?
JT: So we have the entire thing built on the serverless AWS infrastructure, so it scales infinitely and lasts for a super long time.
So let's just start there. But actually, we have a team of five developers that I work with to get a lot of this done. So even if I got hit by a truck, they're the ones doing most of the work. I'm the one kind of pointing and saying, let's make that better, how are you doing on this?
I'm kind of a project manager at this point in the process. So they're the ones who do that. And yeah, we have a way to carry that on. We have other people who can step in and say, okay, yeah, I've got partners and other things I've discussed. If they need to step in, they can help me pick up that work with those developers and keep going.
So the majority of it's being done by someone else. I'm really just here as a project management figurehead to keep the development moving.
Seth: What else should I be asking? I feel like we've covered a ton of stuff here, but I don't know, is there anything else that people ought to see or understand if they're going to use this or… Anything come to mind? I think we've hit a lot of the highlights about the platform.
JT: Yeah, for me, it just comes back around to we're a new platform, but we're growing and we're always adding features and we really want feedback. We want people to use the platform. And I think, as it exists today, it's still the best thing on the market for land investors.
But there are strategic features that people really need, and I want to hear about that. I want your feedback on that and say, hey, I really want to use the platform, but this feature is something really important to me. How can we add that so that I can really fully utilize it? So, yeah, I'm looking for that feedback so we can find ways to make it as good as it possibly can be.
Seth: I don't even know if this is possible, but could a person somehow plug this into their CRM so that their CRM could communicate with this? Or is that not really how it works? Like, you get in here for your seller financing stuff and you do everything else on your own CRM?
JT: Yeah, so right now those are separate, but as I mentioned a little bit earlier, like, that API access on the back end between CRMs or websites, that kind of stuff, it is definitely something I intend to do. It's just not completed yet.
Seth: For anybody out there who maybe just been listening to this and not watching the actual video, just my own thoughts on that, is that the design looks really clean and simple. I like how there's not a whole lot of noise. It'll take a minute or two to figure out where stuff is, but it's not hard. This is not something where you need weeks of training to understand how to use software. It's like pretty intuitive.
And some websites out there are great at this. Some of them are terrible at it. But this is one that I would say is pretty darn good from what I'm seeing here. It's not a whole lot of places you can get lost or confused about what's going on.
JT: Yeah, I appreciate it. Definitely one of our goals.
Seth: Cool. Well, JT, thanks again for explaining this to us. Thanks for the value you're trying to bring to the land community. Are you going to plan to let other types of lenders use this? Do other types of lenders use this even though it's meant for land people?
JT: I would say short-term, the answer is probably no. I really want to stay focused on serving the land community as best as we can. And if, for some reason, way down the road, we decide that we've done everything we can on that front, then potentially somewhere else. So I wouldn't say not never, but certainly not right now.
Seth: And if people want to find out more about this, it's just YourLandLoans.com, right?
JT: That's it.
Seth: Sounds good. Well, thanks again, JT. Appreciate it. Hopefully, we can continue keeping our eye on this and we'll see it continue to evolve and get even better. But it's already pretty good as far as what I'm seeing.
JT: Fantastic. Appreciate it.
Seth: You bet. Thanks. See ya.
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