On this episode of the Note Closers Show, Scott talks about launching your business. He discusses some of the easiest ways to help you launch your new business.
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Launching Your Business
We had a great webinar on Monday night. We had a lot of great turnouts. Over 400 people are actually being joined in to watch the webinar to catch the replay. We talked about 2018 market trends or what I can foresee with the market. If you missed that webinar, take an opportunity, go to WeCloseNotes.tv. That will take you to our Vimeo page where you can see our most recent episodes from Note Night in America and also the replays of the videos from the Note Closers Show as well. We talked about some great things about what’s going on in the market, trends, some of the numbers to look at, or is the note game dying? Is it closing up? Are there not going to be any non-performing notes available? A lot of great information. Webinar was over an hour and 40 minutes long. I’m not going to go through it here on the show today with you but definitely take the opportunity to go back and check it out because it’s some great stuff.
If you have not already heard, we have obviously a lot of record sales going on this year. The numbers are going. They expect us to have over $5 million loans done this year, with new originations, refinances, also home equity loans, record number of loan officers coming back into the business. Expecting to do 7,000 new home sales this year, which is a lot. We’re still sitting in just above 4% default rate on our mortgages. One of the big things that I looked at is I went back and added up the last four years of mortgages created and loans done. It was over 11,000. If you’re sitting at a 4% default rate to a 4.05% to be exact, that still leads to a lot of loans out there available for us as note investors to tackle.
A couple of things that we talked about the webinar was where are those opportunities? A lot of people like to talk about the HUD sales. There was a ton of loans sold through the HUD sales through 2012 to 2016. The numbers still weren’t out because they have their next loan sale. We talked about who bought those loans only a possibility to being able to buy direct from those sales. That’s a possibility for sure for a big chunk. We’ve talked about who those buyers were and a breakdown of those things in the states. The record number of modifications and the workouts. If you still look back at the numbers based off of January’s numbers of this year, there are still 20,000 mortgages out of the original. About 22% loans sold from HUD are still struggling with servicing. That leads to an opportunity still to reach out to the sellers or those people that bought those and see if they can sell you the loans that are still non-performing.
I also talked about a couple of other things; how I really do believe that in 2018, your goal as a note investor is to go bigger. Instead of buying a one off and dipping your toe in the water, you’re literally diving straight in. Buying in bulk or being part of a mastermind group or being part of a buying club that’s coming together raising capital together and buying together. Preferably cutting up the pie for everybody to get a chunk of if they want to do that. I honestly believe that the one-off buyers, the small intro buyers are going to get out-priced out of the market relatively quickly because they’re going to be buying from the low hanging fruit where everybody else is going so those demand is going up and those assets are being overpriced.
One thing I think is the most important thing for 2018, because you’re in the 21st century, is you’ve got to have your systems in place. You’ve got to have your business in place. That comes down to a couple of things. I’ve been planning for a little while now to have our note nerd. I’ve got to give Eric Hyde, a little shout for coming up with the name, The Note Nerds’ Book of the Month Club. I do a lot of avid reading. I’m very fortunate enough to be a part of a couple of different groups, there are some authors. Most recently, our launch of our Note Nerd Book Club is How To Set-Up Your Business For Under $1,000. It’s by two guys, one by the name of Dan Fleyshman and another one, Brandon Hampton. One of the great things about Dan is he’s the youngest owner of a publicly traded company in history. He’s also a professional poker player, very laid back cool guy. He also does some stuff with the cannabis in California. He wrote this book with his buddy, Brandon Hampton. Brandon is the largest independent social media publisher in the world on this stuff. It’s not a fit book. It’s not something that you’re going to get bored on. Literally, it’s a 100 pages with all the stuff of the inner sources. This is such a great book if you’re getting started somewhere. I know we got a lot of people that follow us here that are listening out there. Once again, the book is called How To Set-up Your Business For Under $1,000.It is a true verifiable fact and I love the fact that on the back it says, “The quintessential book for those about to start their business.” In today’s world, the media glamorizes startups able to raise tons of money and seek funding from investors. While this has helped inspire more people to launch businesses, I believe it has also filled the notion that tons of funding is needed in order to actually start. I’m here to tell you that this is simply not true. I totally agree with that. This belief is exactly the reason why Brandon Hampton and Dan Fleyshman wrote this book. It’s literally great.
The chapters are pretty easy to go through. You have a checklist, setting up shop, business plan, executive summaries, short business plan, SWOT analysis which we’ve spent a long time going through; getting your first customers, final thoughts and resources, guides for the use of websites and apps. Literally, a great thing. You have to read this book. The structure of the book where we walk you through building and growing your business from start to finish. Then we provide a list of resources to help you with the execution. It’s 95 pages, very easy to read. You can knock this out in a two-hour afternoon or on a plane ride. I just meet Dan at a national event in LA in May called Secret Knock that I’m a part of, that my buddy Greg Reid run.
We’re working to have Dan on hopefully with an interview later on. I highly recommend this. This is something good out there. If you buy it online, it’s $19.95. What’s really cool about what Dan does with his book is every penny of it goes towards his charity. He does a lot with the homeless. What he does is he puts together this amazing high-quality black backpacks and he stuffs them full of over $100-worth of goodies; from emergency, to socks to first aid kits and they just give them away to the homeless. He puts them together and sees somebody, grab one take and give it to them. Basically, like a lifeline. That’s good to know that every penny of your $19.95 will go to that. Go out, buy the book on Amazon and you’re making a little charitable donation as we get into the holiday season.
This is a great starting point for you if you don’t have your systems in place to know what the hell you’re doing. You’ve heard me talk about having a plan of action and business systems is one of our first podcast episodes awhile back. You’ve got to know which way you’re going. That’s why I thought this is very easy. You don’t have to have a business degree to start up a business. Literally $20 and roughly about $1,000, you can get things rock and rolling. I know everybody can put that together. Depending on the state, those costs will vary a little bit. This is an expensive book but this is a great way to get everything organized and get moving on the right direction. Everything is set up and then get moving. Too many people dive in and they’re like wild Western guys shooting wildly like cowboys, gunslingers. This gives you a little bit more of a plan of action to take and get rock and rolling. If you’re going to be doing bigger things in 2018, you’ve got to have some systems in place.
I talked about HUD loans because one of the things that we hear about the sales of this in the last few years is, “Look at those HUD loans.” I’m not saying go after and try to bid on the HUD loans directly from HUD. I’d say reach out to the buyers of those HUD loans because most of them we’ve had them for a year and see if they can move any of those off their books now on a one-off basis or a smaller tranche basis or go to the other banks directly. Not going to trying to buy the HUD loans. You can beat against them to buy the $1,000 or $2,000 but going to the buyers of these loans after a year because now they’re moving to foreclosure or moving to other things are opportunities for you.
If you’ve got to have your systems set up, that’s where the big difference is going to be. If you are reaching out to banks on a regular basis, you are reaching out to special assets and secondary marketing managers. The difference that I see comes down to two things. One is continuation of following up. Being diligent, anything in those five phone calls or contacts. The second thing I see is people actually having a professional presence. They’re not turning five-minute conversations into a fifteen-minute conversation. They’re being direct. They’re having a professional appearance whether it’s through a website or just having their marketing in place that literally allows them to follow up whether it’s a CRM of either Infusionsoft or MailChimp or one of those two. Something that they’re just continuously to hit the asset managers. I think there’s a proof when we had Joe Bayarena and Jaimie Kubiak on a couple of weeks ago about them being successful in taking that portfolio from the San Antonio Bank, it’s just the fact they followed up five to eight times until they’re ready move. That’s I think the biggest key going forward, especially in this New Year is the continuation of follow-up. You’ve got to be able to get something so that the people you talk to can do their own due diligence on you and follow up with you. Whether it’s going back to your LinkedIn profile or going back to a website that features you in some sort of fashion.
One of the things that we have been working since NoteCAMP here is that a lot of people talked about how they didn’t have a website. They’re looking for a website, they don’t know how to create it. One of the things I’ve had my staff do, Nicole and Greg, Greg is in a big book of it of going into it and Nicole is assisting with it, is putting together a simple but effective website for you. It’s a cookie-cutter website where we can swap out logos, swap out names. It features some great stuff for you where it’s got a website where people can opt in to your contact list, stories default, case studies and things like that. It’s linked into your social media account. Pretty jacked up about that. If you’d like to find more information about that website and have that cookie-cutter, just drop me an email at Scott@WeCloseNotes.com. Trust me, it’s not a $3,000 or $5,000 cost to put it together. It is giving some time on our part to help customize it so there is a cost associated with it right at $1,000 but pretty relatively cheap for us of putting together a pretty decent website for you. It opts in and it links into your MailChimp account. It links in to your social media accounts and stuff like that so people can follow you and can contact you and help you grow your database professionally.
That’s one of the biggest things I see is that people follow up. When we market to them on a regular basis, one of the largest clicked on things is going back to our website. It’s to see more about your website. We had probably 20 to 40 new people to our database a week just off from website opt ins, which is really good because we can track it. Then Nicole sends me a report relatively once every week where we pull just to see who’s opted in and things like that. I’m going to tell you right now, the stuff that we’re working on is not going to have all the bells and whistles. We’ll have some whistles and it will be enough for you to get rock and rolling. It’s probably the best startup website for you that we see. We try to make it very simple but also colorful. If you don’t have a logo, we’ll help you get a logo. We’re going to put some things together. We really want to make it a very easy cookie-cutter so we can create it in very simple plug and play for everybody out there.
When I first started We Close Notes, I used a very simple GoDaddy website and it looked like shit. It did not look good. I paid a lot of money for my website to go through a transition and had a very good person, my buddy, Travis Houston, who does a major, major, big launches out there for people, revamped my website and revamped some other things. I spent about $20,000 on my website originally and he did a great job with it. Then after a year, because he wasn’t doing websites anymore and we revamped it. Chase Thompson did a little bit work on it, but Nicole does most of the work to it now to get it up where it’s at. It runs really well and it does what it needs to do. It’s out there for people to find more information. They opt in, they get on our list, that’s what we use it for and it’s effective. We put together some cool things for you guys when taking a look at it. We make sure and upload. If you’re interested, drop me an email at Scott@WeCloseNotes.com. We’ll be glad to get on the phone and talk with you about it.
Biggest things you’ve got to keep in mind is you’ve got to treat this like a business. Those people that are treating it like a hobby are getting it priced up relatively quickly in 2018 and going forward. It’s just it is what it is. We already see that happening. Some people already complained, “The guys overpriced.” It’s overpriced because you’re buying one note and you’re trying to buy a winner. It’s going to be expensive. The more you can buy are the good but also taking the ugly or the so-so with the good, lower your dollar cost averages per your asset. You also got some write-offs there, you’re probably going to lose some money on. That’s okay but because it makes it more profitable on the big side, you’re going to need some of those write-offs and things like that. Also, you add a service to the sellers of these notes that are getting stuck with this low-hanging fruit. That’s important to keep in mind, is buying in bigger tranches.
I think you guys all heard us talking with Adam Adams. He talked about how he’s only looking at doing two to three pools a year now. Instead of doing 20 to 30 individual note deals, he’s looking at doing one to two pools a year. It’s very feasible if you’ve got your systems, you’ve got your servicer, you’ve got your stuff in place to help you streamline your business. The last thing you want to do is run all over like a chicken with your head cut off to make things happen.
We’ve got a very hectic and very busy schedule in the next 60 days. I head out to Ohio for the Ohio REIA. I’m pretty excited about that. I’m speaking there with a couple of hundred people. I will also be in San Diego for the Grow in 2017 of the Laughlin Associates’ Magnify Your Wealth thing.
We have a question, “Roughly what figure for the pools, 100,000, 200,000?” I’m going to say there are ten assets or more. Depending on where it’s located, it’s going to vary on your values and stuff. Honestly, the average pool size we see is about 200,000 to 250,000. We pool that Joe Bayarena and Jamie Kubiak close was 31 assets and it was right at $1 million, 30 assets paying roughly about $30,000 apiece. That’s what you see on that stuff. Nevertheless, you see a lot of those pools that happened. Wayne was working on a pool about $1 million earlier. We’re getting ready to finish closing up on a pool, 30 assets and it’s going to be right at $700,000, $650,000 or anything like that.
Another question, “I got a note buyer’s website earlier this year from a company. It looks nice but after learning to work with it, I’ve realized there are a lot of things that it doesn’t have. No squeezed page. Do you think you could assist? I feel like I do more than what’s necessary. There’s got to be an easier way.” Unfortunately, I can’t help you with anybody else’s website. I’m not an expert pro. My staff is not an expert editing pro. We’ve put something together that we can work with our stuff. Unfortunately, I can’t help you. What I would do is I would go back to who you bought the website from and complain and say, “I need this added to it.” We took some time to focus on. One of the things we ask on Note CAMP with our Note CAMP investor survey is, “Do you have a website, yes or no? Are you looking for one? Yes or no?” A big, big chunk of people did not have a website. A big of chunk did, which is great. That’s not a problem at all. It’s just that people that don’t have a website, especially when they’re starting off something, they don’t know what to look for especially when they’ve been around for a little while.
You have to have a place for people to opt in into your website. You’ve got to have some place to collect that information. It’s got to be one of the most relevant things to do. That’s one of the most things that we have very relevant when you go to WeCloseNotes.com. Immediately three things pop up, “Are you looking for notes? Opt in to our note finder. Are you looking to get trained? Find out more information about our workshops. Are you looking for a mastermind?” Those are important things that we have right off the bat. The last thing you want the people do is go to your website and you not know about it. Of course people are going to click in your website and leave, which is okay. What you have to realize though is that’s going to happen. They’re given an opportunity to opt in. If your website is valuable, click in. That’s one of the best ways you get people to connect with you and grow your database on a regular basis. That’s one thing that really the people that close more deals and raise more capitals, they just have a bigger, bigger database than you. You all can start somewhere.
You’ve heard me harp on about using LinkedIn to grow your database, that something’s on there. About using Meetup groups to grow your database in Meetup.com. Going to REI clubs are very basic. Those are all great things to do because everybody that you’re connecting with falls into a couple of categories. Everybody is a buyer, everybody is a seller, everybody is a funding source. You’ve got to keep that in mind and that’s one of the things about your website. It’s great to have a website but a website is only good if you’re feeding people to it. That’s either uploading videos or blogs or things like. Just throwing a website up is only good if you’re feeding people to it. If you’re reaching out to asset managers and things like that, you want to have your website in the bottom of your email signature. First of all, you need to have an email signature. I see so many people that don’t have an email signature. It doesn’t mean it needs to be fancy; first, last name, email address, phone number, name of your business. You want to put a hyperlink to something. You could put your logo there. Something simple that way people can connect with you, “I want to connect to your website or connect me in LinkedIn or connect me on social media.” Whatever it is, it’s just that most people don’t do that.
That’s why we really focused on trying to create something that makes it simple, people contact, opt in, things like that to really get things rock and rolling. A website can be great but you don’t want to have something that’s so flashy or something that’s overly crazy that doesn’t do the work. It will also may take forever to load. You want a company that’s simple, people just grip a lot. The reason this is so important too is as we reach out and send out to asset managers or we do email blast to asset managers, I guess they clicked in my LinkedIn profile to see who I am if they don’t already know. If they don’t want to get bombardment with too many emails from. They also click on the website to see what’s going on. Those are two things that you’ve got to keep in mind, and start where you need to be. That’s what I love about Dan’s book. It goes through some great things and they’re very simple things. You don’t have to have a ton of money to be looking like a $1 million, especially in today’s day and age with social media and things like that. You can really want your business pretty inexpensive after.
We have a question about clear title, “O&E report shows two mortgages ahead of us, seller is insisting that title policy ensures that the first two mortgages are invalid or released. There is no release record anywhere. I am asking for a letter of notification from title insurance company. Seller is saying no, what can I do?” Basically, don’t close. If they’re not going to provide that stuff to make you clear, don’t close on it. “They should be able to reach out and get a release of mortgage relatively easily done from the previous two.” That’s one thing you may want to talk with Richmond Monroe and see about them having you help out with it.
If you go to WeCloseNotes.tv, you’ll be able to catch a lot of the replays. We go through a tremendous amount of information on commercial default rates. A lot of people were surprised about this and it’s the default rates across the board for credit cards, for auto loans, mortgages, auto credit card, student loans, default rates is at 11.5%, which is crazy. You’re going to need the $385,000 house as medium home price across the country. Based on that, you need to be bringing roughly about $70,000 a year income. If all these people go on colleges, they get degrees that aren’t coming out making $70,000 a year that’s why they can’t afford new houses. They can’t afford to pay their student loan payments because they’re getting out priced in the market. What does that lead to? Leads to them either moving with a family or renting more. What’s surprisingly too based on some of the things we showed is only about 2.2% of those loans that were closed in HUD, the HUD loan sales or were converted to rentals. Most of them are not. It’s either foreclosed or modified of some sort or a chunk of them are still in defaulted servicing work.
Go out, get How To Set-Up Your Business For Under $1,000. Go to BuyThisBook.com. They should direct you to the website so that you can max out the donations for that. You’ve got 66 pages of reading and the other 34 pages are all resources, websites, things to go to. A phenomenal book, one of the best books I’ve gotten from Secret Knock. Defaulted debt is America’s biggest game. It gives you an opportunity no matter what it is. You’ve got to get up, set up and get things rock and rolling. Get that foundation down and this one of the better books. We’ve got an opportunity for you. Drop me an email at Scott@WeCloseNotes.com if you’d like to find more information about the websites and stuff that we’re putting together. Go buy the book. We look to have a review of it.
Have a great day. Go out and make something happen. We’ll see you all at the top.