EP 201 – Planning For 2018 (Live Calls Q&A)

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NCS 201 | Planning For 2018

NCS 201 | Planning For 2018

From setting up a Mailchimp account and sending out emails to getting a LinkedIn account and increasing your contacts, planning for 2018 starts today. Up your investing and marketing game and push to make more offers to get more deals closed. Join Scott Carson as he guides note investors with different levels of experience on their biggest goals for 2018. From a brand new student two weeks in the business to someone closing on their 30th deal in their first year, there are a ton of nuggets to take away from this episode. Scott discusses the number of deals to make, reaching out to asset managers directly, automating your due diligence and marketing, tax overages, and getting the bank to carry financing on your note purchase.

Listen to the podcast here:

Planning For 2018 (Live Calls Q&A)

Our episode is going to be jacked up in all kinds of positive ways for you. Our episode is going to be extremely important. We’ve got some great stuff. I put a post out on Facebook in The WCN Crew Facebook page. If you’re not a member of The WCN Crew page, go ahead and ask to join. It’s just a closed group of our students and we’d love to have you there to grow in group. We’re almost 400 members there. What’s great is the amount of information being shared on that page. I posted there, “Who has goals, plan for 2018? Who would like to be a guest on the show?” I think that’s the only effective way to really get your goals out there. Don’t get me wrong, a lot of us have big New Year’s resolutions or set goals for ourselves for the next year or especially the New Year. 2018 is just over a month and a week out. What a lot of people struggle with is they set these grandiose ideas of what they want to accomplish in the next year but they don’t have any type of specific or measurable statistics or measurable action items along the way to help them be effective and get things done. I’m a big believer that not only do you have to come up with the goals, I think you’ve also got to write them down and then you’ve also got to share them to be effective and they have to be specific. They had to be very, very specific. As Dan Zitofsky says, “Goals are huge.” We all have goals that we have to and want to accomplish, whether it’s weight loss or you want to make more money or want to close more deals. You have to be specific and have a game plan of action to make things happen.

NCS 201 | Planning For 2018

Planning For 2018: The Note Mastermind

One of the biggest things that I focus on each year is the number of deals that I want to close for my own portfolio along with the number of deals I’d like for my students to close. We’ve had a very successful 2017, closed on a couple of hundred deals and our students have closed on a quite a bit of chunk. Actually, the student deals are down closing through us but basically on the number as I see, our student deals are actually up exponentially over last year because students are closing deals outside of WCN, which is completely great, completely okay. I am not a note natzi that requires everything to go through We Close Notes or myself. I love seeing people close deals. It’s really, really refreshing seeing people put their hard-earned hard work in making harder in cash. For those that don’t know, we have our Note Mastermind group coming up. Thursday night kicks off the intro with happy hour. We’ll have maybe 70 people joining us here in Austin for three days of just great networking fun, deal sources, deal scenarios and literally helping each other grow our businesses. A big chunk of what we do each December is focus on business goals for the next year. We’re really excited. I’ve got some things lined up that I’m not going to share until after the Mastermind.

What I did is I posted a post on The WCN Crew and then another Facebook group and asked for people to post. First of all, I could not get to everybody that posted. My inbox got bombarded with requests and goals. I had to pick basically what I like was the first four people that responded to it, which it turns out is going to be a good mixture. Somebody who’s literally a brand new student from about a week and a half ago to somebody who’s our newest Mastermind student as well. We’ve got a couple of people in between. I think a lot of these people have very relevant questions from closing on their first deals to getting JV partners, to cashflow, to automations. We got a good mixed bag of goals for the year.

Our first guest is Sarah Schoner. First of all, thank you for responding to the Facebook post and being a guest here this morning. Why don’t you tell people a little bit about your real estate experience and your experience in notes?

As far as real estate goes, I’ve been in real estate for about two years doing mostly fix and flip and newer to the note world. I saw you at the Ohio REIA Convention and watched your course and just started learning about notes then. Notes is all new to me.

That’s why we’re starting off with you because we’ve got a lot of people that are brand new looking for some things to get rock and rolling. You’re going through the Note Buying Blueprint manual and stuff like that right now. Is that correct?

Yes.

How far have you gotten into it as a percentage, 20%, 10%, not started?

I’m like 20%, 25%.

You are coming from a little bit of fix and flip. How many deals have you done in the last twelve months?

Three.

What separates you is that you’re in the top 5% of real estate investors because you’ve actually pulled the trigger.

That’s true but flipping is too much work for my liking. I’m looking for notes, half of them that’s not as hands on.

Do you have a full-time job?

Yes.

That does make it difficult but kudos to you for taking action in your off time and doing things. Do you have a traditional 9 to 5 job?

No. I’m a nurse. I work 12-hour shifts.

What focus of nursing?

I work with babies in the ICU. I work in the NICU with tiny babies.

My mom worked there for twenty years. Kudos to you. You’ve got a big heart. Do you work nights or days or does it vary?

It flows.

Just depends on the schedule for the quarter for the most part, right?

Yeah. I flip back and forth; nights, weekends, holidays, you name it. I work it.

Sarah’s got a very hectic schedule. You work 12 on 12 off. Is that about right?

Yeah, I work 12 hours on.

One of the bigger things that you need is definitely time to sleep to recover because of the hectic hours. I understand why notes are much more attracted to you so you don’t have to go out and look at the properties, mail out postcards, do all that stuff to go meet the buyers and from there. Correct?

That’s correct.

There are a couple of things that you can do. Your big goal for 2018, one of them is to close on your first five note deals. Correct?

Yes.

What part of Ohio do you call home?

Cincinnati.

NCS 201 | Planning For 2018

Planning For 2018: To get your first five note deals done, most new note investors only have about a 10% acceptance ratio when they’re making offers.

For those that live in Ohio, there are plenty of note deals in that neck of the woods, which makes it the new pot of gold at the end of the foreclosure rainbow as I like to say. First, you’ll see a lot of non-performing contract for deeds throughout Ohio plus you’re also close to Michigan, Kentucky and other things like that. A couple of things: One, to get your first five note deals done, most new note investors only have about a 10% acceptance ratio when they’re making offers. Keep that in mind. If you make ten offers, you’ll get one accepted. That’s better margin than sending out 500 postcards for four or five phone calls, right?

Definitely.

If you expect a 10% closing ratio, that means you needed to be making 50 offers.

Basically, one in a week then.

About one a week for 2018. The five note deals are extremely feasible. I would even say I’d bump it up to ten for you. Many people, especially if this is your focus and you’re not doing any other things out there, and I don’t know what your time away from the hospital is or from nursing, but if you focus on this, there are some things that you can really focus on during your downtime while you’re even there or even downtime at the house while you’re either sleeping or recovering.

One of the big things I like doing and a lot of people have done this with full-time jobs is they leveraged LinkedIn. They have a profile on LinkedIn. It talks about their real estate experience and you’ve got some experience, which is great. I would post that you’re a nurse but also an active real estate investor. I’d make sure and put pictures or create a project for each of your three rehabs that you’ve done. That will add credibility for you. I would spend time jumping on LinkedIn and looking for special asset managers and secondary marketing professionals. I would just search for those and literally just start dropping emails, “I’m an investor here in the Ohio area. Do you have anything on your books you’re looking to get rid of here before the end of the year or end of the first quarter?” That’s something you could just knock out; literally copy, paste, copy, paste, and knock out 10 to 20 or 30 plus a night. That’s an easy thing to do. Second thing I would do is I would pull up a list. Is there a company that provides a foreclosure list in Cincinnati there for you?

Probably. I’m not quite sure who it is.

You can go to Foreclosures.com I believe or something like that. I would check out if there’s a company that provides the foreclosure list in your area, purchase the list. It’s usually $35 to $55 a month and start looking at the smaller banks on those lists as far as smaller banks that are foreclosing. Avoid the city banks, the Chases, the Bank of Americas, those and literally the smaller banks will give you better targeted marketing for your direct phone calls. If you want to start calling banks, those would be the smaller banks that I started off with and say, “I see that you have this note on this property on 123 Main Street you’re foreclosing on. Would you be interested in selling the loan off or do you have any other loans that I could get my hands on and make offer on them for you?”

Basically, use the warm lead to get more. That’s a good plan. I could definitely do that.

Those are pretty easy things to do. The thing if you’re reaching out to asset managers is a numbers game aspect. For every 50 asset manager contacts or reach outs, you’ll probably going to end up talking around thirteen to fifteen of them. You’re making contact where they respond. Then out of those thirteen, you’ll probably get four of them that send you a non-disclosure and then out of those four non-disclosures, you’ll probably get one tape or more. Another source that you could use as well is if you use LaneGuide.com. Lane Guide’s about $150 a year and will allow you to literally sort out. Once you create it, do an REO asset manager search. We’re not looking for REOs. It’s just that Lane Guide lumps REOs and note asset managers into the same search engine. If you do an REO asset manager search just for Ohio, it will pull up a list. Especially if you filter by large institution special asset managers, it will pull up a good-sized lump of probably 100 or 200 asset managers on banks that lend in Ohio there. I would just pull their emails and start sending an email blast out to those people once every two weeks. Do you have a CRM or email service provider like MailChimp or an Infusionsoft or even something like Constant Contact or anything?

Not currently.

That would be one thing I would definitely do. How big of database do you have as a real estate investor with your contacts and any people you’ve met at the local REIAs and things like that?

I definitely have a couple of hundred people.

Are they in anywhere where you can send them all an email at once?

Not super easily.

That’s got to be one of your big things to get done before the end of the year. You’ve got to take all your business cards and put them in a spreadsheet of some sort; first name, last name, email, city state, zip, phone number. Then upload and go get out and get you an email service provider. MailChimp is going to be the easiest for you but that’s also going to be a tool that’s going to help you get a lot of things done and be able to track your marketing. The last thing you want to do, Sarah, is send out an email to 200 people and not know who opened the email or not. Same thing when you start pulling asset manager names and emails from either Lane Guide or LinkedIn. You could export your connections from LinkedIn that gives you a list that you can email out too as well to connect with those people. The beautiful thing is you’re working a crazy schedule that you could pre-write your emails and pre-schedule them to go out for marketing for you while you’re at the hospital.

NCS 201 | Planning For 2018

Planning For 2018: Your goal, and I’m going to challenge you to this, is to get an email out to your database before New Year’s via MailChimp.

A couple of goals for you between now and first of the year. This needs to be priority number one because they’re going to help you the most. One is go get your MailChimp account. I think it’s free under 2,000 contacts. That’s the first thing. I would also take all your business cards. You may want to use a business card scanner like Evernote or something like that on your phone that you can use and scan them and then it will upload them all to a spreadsheet for you. Your goal, and I’m going to challenge you to this, is to get an email out to your database before New Year’s via MailChimp. Those are the three biggest things. Those are going to help you the most to get to your big goal giving you five note deals done because it will help you set up your marketing, help you set up the infrastructures. You can communicate with those asset managers more effectively and efficiently especially when you’re working full-time.

When I’m emailing out the people in my database, what am I asking them for directly?

You’re just reaching out and let them know what you’re doing, “Hey, everybody. This is Sarah. Many of you have known me for a while that I’ve been an active Neonatal Intensive Care Unit, the NICU, but maybe you didn’t know that I’m an active real estate investor for the last two plus years. Over the last two years, we’ve done three fix and flips. We are the Flip These Housers.” In MailChimp, it allows for you to put photos in your email down below so you can put up a before and after photo or just a picture of the house on the frontend. “Many of you know I work full-time. I have a hard time doing fix and flips and mailing out postcards that’s why we’ve moved to the sexy side of real estate as note investing.” I will do this for you for being very brave and offering up to be there. If you go out and put your list in a spreadsheet, go out and get MailChimp and then once you get those two, reach out to me and I’ll help you write your first email that goes out in MailChimp. Those are the three biggest things you’ve got to get done between now and the first of the year.

I can definitely do all that before the first of the year.

It’s not anything difficult at all. Do you have kids?

I do not.

Do you have nephews, nieces?

I have a couple, yes.

Are they comfortable typing on a computer pretty well?

No, they’re only two to five.

I just thought you could get some cheap labor to scan your business cards for you.

I don’t think they’re quite old enough for that work.

You could probably jump on Fiverr or Upwork. You could basically just take all your business cards and scan them all into one piece of paper and then email that scan to a VA to type them all in for you. That’s what I used to do when I’m on the road.

I’ve got hired off of Upwork before.

You can even have them help you set up your MailChimp account too. It would make it very extremely easy for you. Sarah, five goals were great. I think most people want to get their first couple of deals done and I get it. Five is a conservative number especially when you’ve got a hectic schedule as a nurse putting a lot of hours at days and nights and stuff like that. I get that. I think you could do more. I think we could get you down to at least one a month. If you use some of the tools to automate your business, it will definitely help you in the long run.

Sounds great. Thanks for all your help.

You’re welcome, Sarah. Make sure to drop me an email when you’re ready for me to help you on your email.

I will.

We’ll bring on our next brave soul, Chad Urbshott. A lot of the things that you will do as a note investor are going to be very easy to implement. It’s just a matter of using those tools on a regular basis going forward. Why don’t you tell people a little bit about yourself with your experience in real estate and notes?

I’m actually from Canada originally, started about ten years ago doing rentals, lease options, got into students apartments. Three, four, five years ago, definitely I discovered how lucrative the US market would be after the crash. Coming back and down to Florida around in the Southern Florida market, I started buying directly at county auctions and I’ve been fix and flipping and just wholesaling. Then I teamed up with the guys over at RSI Asset Management, Bill Bymel and started doing flips with them and also has been doing quite well. Finding that the market has been crazy finding deals, the inventory has dried up, foreclosures have dried up. Everybody wants stuff in Florida especially. A couple of years ago, I got a little bit of education on notes and I did some joint ventures like being a capital partner. We did about six notes together I guess. They all turned out very well. We sold a couple in the pipeline that they haven’t been closed yet but a couple of them are re-performing just like we sell them.

NCS 201 | Planning For 2018

Planning For 2018: I took the plunge back about four or five months ago and just started buying them for my own portfolio and my own company.

Then I took the plunge back about four or five months ago and just started buying them for my own portfolio and my own company. Since then, I bought five I believe. I got them priced from $20,000 to $450,000. I’m looking to buy a lot more in 2018. I want to do 25 on my own, for my own company, my own portfolio and then maybe we can do 25 more with joint venture partners so $500,000 and $500,000 to $2 million and reach $10,000 in cashflow for myself. That’s why I posted one and thought, “I’m going to jump at the chance.” You’re the master and you can give me some guidance yourself. Scott, I just want to say thank you for the incredible amount of information you put out to the community. It’s absolutely incredible in the note industry. I just want to say kudos to you for that.

I appreciate that, Chad. Since joint venture deals with somebody, you bought ten so far this year. Is that correct?

Five.

Your biggest goal is you want to do 50 yourself. Is that correct?

Yes. 25 with my own capital and my own company and then another 25 with joint venture partners.

You’ve got some private capital for yourself that you’re ready to rock and rolling and put the work. Is that correct?

Yes. I’ve already got some and I’ve bought a couple properties from the fix and flips. I’m not completely getting out of that business. If a great deal comes along, I’m open to do them.

What states are you buying in besides Florida or are you just sticking to Florida right now?

No. I’ve purchased in Indiana, Ohio, and Pennsylvania. I’m finding it hard to find deals in Florida actually in the note side.

Florida has gotten expensive, especially the guys they have premium prices because the values have come back. I’m talking from the low-hanging fruit. The RSIs and some of those other guys that are Florida-focused. It doesn’t mean there is not non-performing stuff out there direct from the banks. It’s just that the lower-hanging fruit stuff are selling at a premium for the most part. Let’s focus on one or two things because if you’re doing 50 note deals and you’re focused on owner occupied assets that you can look to getting reinstated, the $10,000 in cashflow should come relatively easy. It will just depend on what your asset class is. If you’re looking at first liens, obviously the states that you’re looking in, the payments that are coming off that. Let’s just figure it. You said Ohio, Indiana, Kentucky and Pennsylvania were four of the states. Is that correct?

Yes. Not Kentucky but Pennsylvania. I’m open to getting in other states as well. Like with the joint venture partner I had, we were in Kansas and Alabama. We’ll see others like Texas, but it’s a little hard too.

We don’t see much stuff in Texas. It’s the bottom of the barrel for the most part. If we figure something out here real fast, let’s figure it in those states. If you’re going to reinstate, it’s probably going to be around somewhere between $400 to $600 monthly payment for the mass. If we take our $10,000 a month divided by $400, that means it’s extra 25 deals. You’ve obviously done some math on this, which is great. Let’s just stick with that number because you’ve bought some notes. You’ve got a little bit of experience behind you, which is great. You’re still going to probably see around a 10% to 20% acceptance ratio, a little bit higher than Sarah’s who’s on beforehand because you’ve got a little bit more experience. You’re a little bit more knowledgeable on where you want to invest and the underwriting process of due diligence procedures.

I’m going to say very simple it’s all going to come down, if you want great product, you’re going to have to probably go bank direct on a lot of stuff to avoid the low-hanging, and I don’t want to say in the overpriced assets for the most part. I won’t name drop but the lower companies, the lower hedge funds that have stuff all the time or who have the smaller list, those things get overbid I think more so where they don’t really make sense for deals these days. Do you know what I mean?

Yeah, I agree.

What I would do if I were you, I might look at some of the contract for deed tapes that are floating around out there, that are occupied. The reason I bring this up is I’m buying quite a bit of those assets and it turned out being really, really well for a couple of reasons. One, I’m only buying the owner occupied once. Two, I’m filtering the lists by those that have made payments in the last six to twelve months, some payment. We also double checked the rent rates to make sure rent rate is higher than what their existing payment is so that it helps with us on reinstatement. I’ll give you my last four or five transactions; 33, 20, 40 and then 50 and then 70 is in bulk chunks. They all started out higher like I’ve made 100 offers and we ended up closing on 20 of them because out of 160 who came back countered, and then we worked through those 60 to finalize the 20 that we needed.

I would push you. I don’t know what your biggest offer has ever been as far as number of initial bids, but push to make more offers especially on some of those that you’ve got tapes. You can knock out 20, 25 relatively quickly if you’re going direct to the banks or you’re dealing with contract for deeds or some of those tapes that are floating around that are direct. The beauty about those is if you’re buying twenty of those contract for deeds that are owner occupied where they made payments in the last year and you’ve checked the utilities, the water or the power, gas, and then lawn, you’re probably going to see around a 40% to 50% re-performance rate is what we’re seeing. I’ve got two modifications in the email that were approved, so I think we’re sitting in about 55% to 60% on ones that we’ve bought in the last 90 days. Depending where you’re buying those, obviously it will lead to some REOs, deed in lieus and you need to around sell those off for some chunk profits. Not $400 a month but buying it at $35,000, selling it at $55,000 or $60,000 and making $10,000 to $20,000 too. A very similar question like I asked Sarah before, are you emailing out to asset managers on a monthly basis right now?

I’m starting about getting this. It’s definitely been up to my list of things to do.

The beautiful thing is I would do the same thing. Jump on LinkedIn, jump on Lane Guide, and start reaching out to some of those asset manager lists to reach in for products and stuff like that. Have you been to the IMN Conference?

No. It’s another thing on my list to start attending as well.

NCS 201 | Planning For 2018

Planning For 2018: The people in charge of business development are the guys that have got servicing investors like you and me.

IMN has a note conference twice a year or a single-family rental conference twice a year. One of the things that these guys do is once you get on their email list, they will send you out an email about once a month or once in a couple of weeks of, “The IMN Conference is around the corner. Here’s the list of everybody that’s coming.” They literally give you the company name and the job title or the title of the person coming. You may save your $1,500 plus travel fees from Toronto down to wherever, unless of course you want to go Miami or I don’t know where it’s at and it’ll be a little bit warmer for you, which I can understand the trip then for you, Chad. They’ll literally give you the company name and then the person name. I wouldn’t waste going to the event, I would just pick up the phone or jump on LinkedIn and start tracking those people down individually. There are some big names on some of those lists. What I would also do for you, Chad, I would also reach out to servicing companies that are servicing loans in your favorite states. Call the servicing company and ask to speak to the person in charge of business development. The people in charge of business development are the guys that have got servicing investors like you and me. They’re going to know people that are either buying assets or maybe looking to the sell assets off especially this time of year.

End of the year rush for sure.

End year rush or by the end of the first quarter of 2018. The only way to effectively do this on a bigger scale to hit your numbers is to literally have some system whether it’s a CRM tool like Infusionsoft or an email service provider like MailChimp that allows you to put your list in place that you can reach out to them and communicate with them in an effective way. 500 at once versus 500 individual emails. Does that make sense?

Yeah. I’ve got a MailChimp account. I’ve been using it for years.

That’s what I would do. You’ve got to upload your list. Build some of your list for asset managers, upload them into MailChimp and start mailing out to them on a monthly basis. Chad, I’ll make you the same offer. When you get the list uploaded, drop me an email. I’ll help you write your first email out to your asset managers.

I’ll definitely get one now for sure.

I think that’s the best way. You’ve got your feet under. You’re closing some deals. You’ve got some JVs. You’ll be able to relatively knock out your goal relatively fast. You’re just going to have to up your marketing game, up your connections game.

I’m definitely going to set up for sure.

Just look at this way. Instead of going from the fix and flip, the pen is mightier than the hammer.

I just find the note business, I would say the barrier to entry is lower just to put the price point to lower but really the execution behind that and you definitely could buy that. I think the first I signed up was your Note Buying Blueprint back in July I believe. My brother and I signed up two years ago for this and he’s so much further ahead now. Your system is incredible. I attended Note CAMP and got a lot of good contacts there and really up my game that time, still doing the program and the Facebook group as well to create contacts on there.

Do yourself a favor. Take those Note CAMP lists, the list from the workshops and things like that, and upload those into your investor list on MailChimp and that will help you out with raising capital as well.

I’ve actually done that as well. Thanks for your input, Scott. I’ll definitely take that into consideration.

That’s a big thing that we see with a lot of note investors is, “I’ve done some deals but I want to up my game. I want to get away from the overpriced chop shops,” as I like to call them. It’s never wrong with buying a few notes here and there from those sources because there’s low-hanging fruit but you’re going to have to expect those prices especially as demand increases, pricing for those lowest-hanging assets are going to go up because of the demand. What happens to demand, prices will go up. Simple economics behavior. When Chad was talking about how he’s buying in couple of states, just pick up the phone or jump on the National Mortgage Lending Service site or Lane Guide or anybody finding servicers in the states that you buy in, servicers who are licensed in those states and see if they have anything in their books they’re looking to get rid of. Madison Management is one of our major servicers companies. They actually have a sales platform, an exchange that most people don’t know about. I think you could find some deals on there as well. Check them out. You can call Shante Duffy. Reach out to her directly as they’ve got some stuff available. That’s another source.

We’re going to move on to our third guest, Juliana Ferraro. Her biggest goal is marketing automation and wants to get 25 JV deals done this year. Why don’t you share with the people a little bit about your real estate history and note experience?

I started off wanting to get into real estate. I found a little frustration that got me in real estate which is probably in fix. I started trying to wholesale houses then I developed this frustration of being at the bottom of the feeding bowl. I started looking outside and I started finding definitive avenues to invest in. I came across Quest IRA. From Quest IRA, I came across Scott Carson. I started with the Note CAMP, then I started networking with other people. The first time I bought one note was to a couple other guys that I met at Note CAMP. I started with Distressed Pro. I started calling and my first probably ten contacts, I came across a local bank and the guy said, “I won’t do it over the phone. Come in and see me,” so I went to him. I’m basically closing next week on a six-property multi-family portfolio that they were so desperate to get rid of, that when I couldn’t get bridge funding, I got the bank to lend us the note with a bridge lending note for a year.

You were calling to track down for note deals from Distressed Pro, is that correct? 

NCS 201 | Planning For 2018

Planning For 2018: I knew that he had a lot of contacts so I’m trying to get funding and stuff.

Yeah. I found the asset manager at a local bank that was basically pretty much right now in Illinois with notes and with Wisconsin. I sat down with him. He said, “I really have something that I need to get rid of,” so I actually wrote a contract. One of the guys that I met at your Note CAMP is Dave Watt out in California. I called him and I said, “I’d like to try to do this note deal with you.” I knew that he had a lot of contacts so I’m trying to get funding and stuff. We only had a real short amount of time. We wrote a contract with him for the note in a really short amount of time. When we couldn’t get the funding, I called the bank back and said, “Would you write a bridge loan for a year, because once the title is in my name, I can sell them. They’re just poorly mismanaged. They’re eight-flat, mixed units building, four units, three units, three units, and one unit. They’re just poorly mismanaged so I can sell them. I can turn around and make probably $200,000.”

That does not suck. Basically it’s one loan that the borrower has these six properties on that the bank has financed, is that correct?

Yeah. The bank actually had two notes and I was going to buy both notes. I got them at $0.52 on the dollar.

Of unpaid balance or value?

On the value. The note was for $340,000. I’m getting them for $175,000.

Are these occupied or vacant? 

Some of them are occupied. There’s a couple that have a couple of tenancy and then there’s one that’s completely empty but that’s the cash cow. I just have to get that one  back sold.

Where is this located?

Glasford, Illinois, not your favorite place.

They’re not in Crook County, so that’s not bad though. 

They’re in one of the better counties.

One of the better counties, fine to deal with. 

For the price point I’m getting it for, that’s good. I continue to try to call asset managers, email asset managers. I know in your last podcast, you had the guy that said if they’re not going to answer you right away, I’m still working on that. Like I said, my goal is to get more asset managers that I actually can build relationships with on a regular basis.

Let’s go through that. How many phone calls did you make before you got a hold of this one?

Maybe fifteen.

Are the other fourteen phone calls, did you talk to other asset managers or did you just leave voice messages?

I just talked to either an operator that gave me names. In Distressed Pro you actually have a direct line, so I could leave messages and then I would follow up with emails that I set up in MailChimp. I have that finally going a little bit better when setting up continuous campaigns to go out about every week.

That is so awesome. I love it because you’re actually doing the things that we teach people to do. It’s funny, it works, doesn’t it?

Yeah, it definitely works. I talked to Jay Tenenbaum after Note CAMP a little bit. He gave us fifteen minutes for free. He basically said bridge funding is sometimes frustrating notes. The more you expand it, the more you get into it, telling people that know what the notes are. I do have in LinkedIn a pretty fair amount of contacts. I got people now inquiring, getting calls from there. They’re inquiring, “How much do you make on your notes? What percent returns in a week?” We bought the one in Michigan already and then I’m going to close on this one. I’m supposed to close this week because it’s Thanksgiving. We have to close next week.

They’re just basically writing you a loan, or is it just paperwork?

No, they wrote us a loan, me and Dave. We have to bring in a little bit to the table, so basically within a year, we can refinance all of that back out.

How much is the loan for? Is it for the full purchase price or more than what you’re paying for the loan?

We have to bring $35,000 to the table, so we have to bring 15% to the table. Within a year, once we sold some of these, we can go out and get another commercial portfolio loan, no problem, just based on the lease we sold and refinanced all of that back out. We can only do it on the title.

You have to foreclose on these, is that correct still?

No, I don’t have to foreclose because the bank was so desperate. Originally my contract was the written four then two notes. When I said I need a little bit more time to get more funding. Even when sometimes you make it good or something, if you go back and you’re just honest with them upfront, they will give you more time. I thought they were going to give me more time, but the bank said, “How about we just write you a bridge note for the amount. You’re just going to have to bring a little bit to the table.” I talked to my partner, Dave, about it and he said, “Let’s pull this. I’m sure we’ll get that amount and it will be to get the whole amount.” We just signed on that note. It’s a non-profit. We own them now. They just want out. The bank doesn’t have the ability to do receivership.

Now I’m getting it. It’s a commercial loan and a receivership. The borrowers’ portion of the non-profit is willing to sign these properties over to you, is that correct?

Correct.

That’s a beautiful thing. Here’s what I’m trying to tell people, banks, especially in commercial deals, they don’t want to own the property because they’re not in the management of the property. They’d rather find somebody to take the commercial assets off their hand, and they’re replacing a bad loan with a good loan.

I didn’t expect them to do that. Like I said, I wrote that contract for a note purchase, so I bought the note. They ended up loaning a note for me into one towards a $175 with a 15% down, and I’m getting it at 6%, so I can’t complain. Without Note CAMP or anything like that, I wouldn’t be able to do it. I learned all the stuff that I learned from you either your podcast or Note CAMP. My goal there is high. I just have to keep driving the asset part of it and get those tapes for me and keep treading along.

Your big thing about having 25 new JV partners this year is going to be very easy for you because of a couple of things. One, you got your Note CAMP contacts and you’ve already got one. Literally, if you send an email out to your whole database, your LinkedIn connection and stuff like that, once you close regarding this deal, I guarantee you’re not going to have any problem raising capital.

I hope so. It was a little frustrating. I’m sure you have to tell people all the time that your first deals is a little nerve-wracking. I used it when I sat down with him that they weren’t motivated. I was like, “I’m just going to go back and tell them I need more time.” I just got to get more people to send out deals to.

The biggest question I have for you, Julie, is why don’t you pick up the phone and call me? 

Sorry, because I didn’t have your number. I have your email. I have to say, I have your email that you have sent me. You have been very on top of things. I do receive your Facebook Live because I am a police officer so I am more often in the car. I’ve just been following on Facebook and just listen. I encourage anybody to keep trying to make contacts. That was the best thing that I did because certainly Note CAMP and a couple of other things that you have just said that I needed the contacts. Obviously Distressed Pro isn’t free but I try to do it as low-cost as I can. I know you’re probably going to suggest Infusionsoft but I’m not quite to that. I didn’t come along way yet. I’m still trying to get this deal done.

One thing you’ve got to keep in mind is Infusionsoft did run a special. It wasn’t expensive compared to what I’ve done in the past. You have a MailChimp account though, correct?

I have a MailChimp account since the first Note CAMP. I started sending out a little bit of email. I think I voice mailed, “By the way, what topic do you use?” I think the more you get into it, the more you learn about stuff as it gets easier to come up with topics to talk about.

I want you to do a couple of things. Have you gone through the virtual workshop yet or not?

I did go through your Note Buying for Dummies. I did do that one. It was the other one that’s online because I can go back and listen. I could have to go back and listen to a lot of that. I wasn’t able to watch or follow that at once. I want to take that weekend to do it, but I was able to go back on topics that I needed help with.

Julie, what I want you to do is once you close on this deal, I want you to give me a phone call and let’s help you write up your email out to your database discussing the deal. We’ll help you put it together and send it out to your database. Trust me, you’re not going to have any problem when you’re raising capital just with your connections that you already have from different workshops or the Note CAMPs. Drop an email on that. Trust me, I know there’s about 160 plus people that mentioned they were interested in doing joint venture deals on the last Note CAMP. It’s just a matter of communicating with them in mass to get people to respond to you. You won’t have a problem with that at tall. 

Sounds perfect.

Drop me an email once you close. First of all, congratulations and thank you for being a police officer too.

Thank you. I’m still a straight cop after twenty years service. Much like this deal, nothing’s really what you expect it to be. Keep chugging along.

Thank you so much for your service. Congrats. Way to take what you learned and put it into action and make things happen. 

Thank you.

You’re welcome, Julie. We’ll talk to you later.

Honestly, you could probably tell that these aren’t scripted. They’re just straight up talk with people based off what they posted on their Facebook posts where they were trying to get. I had no idea that Julie had closed on a commercial deal and had to call banks which is phenomenal because it does work. If you look back, two of our previous episodes with Joe Bayarena and Jamie Kubiak, and of course Adam Adams having closed recently on  a portfolio of 23 or 31 notes from a San Antonio bank on San Antonio assets, where a chunk of them, half of them at least were performing. Good things happen when you call back banks. That’s just phenomenal. That’s why calling banks is one of our biggest strategies for this next year. We’re looking forward to that.

Let’s bring on our fourth guest. It’s our buddy, Christoph Bene. Chris is a note investor. He actually was the social media winner at Note CAMP 4.0. He really kicks some butts. With all the work that he did, he actually earned the grand prize which was a membership in our Note Mastermind group. We look forward to what Chris has to share with you and his big goals for the year. 

Chris, why don’t you take a second to share with everyone about your real estate background and then your note experience.

NCS 201 | Planning For 2018

Planning For 2018: I realized the higher you get up the food chain, the better off you are.

I worked full-time and I’ve been in commercial construction real estate for twenty years. I worked for a large general contractor for fifteen. Then five years ago I flipped over to working for a developer. Once I did back flips to go work for a developer, I realized the higher you get up the food chain, the better off you are. I started out as a landlord, bought a few properties that did the Bigger Pockets’ BRRRR Strategy, buy them up, fix them up, and go from there. After the second one, it was too much. After that, I saw you on Bigger Pockets and learned about notes. Now I’ve started to do a little more research and actually had the analysis-paralysis of the note investing, especially after taking the workshop last fall. Last month, I did the dip and bought four notes. At that time, I got them from Paul Burkett, so it was, I could say, a low hanging fruit. I bought them strategically. I didn’t JV with anybody. I bought one in bankruptcy, bought one that was performing, and bought one that was non-performing. What I want to do is see the different aspects. As you know really, I think you use the analogy of golfing. You can watch all the videos about golf all you want, but once you get up to that tee and hit the ball, it’s a completely different world.

That’s correct. Those four deals that you bought, you used your own funds. What was the funding amount of those four all together?

They were all I’d say low values. I had switched jobs about six months prior so I had some 401K money sitting there that to these will be transferred. I did use my own funds. I didn’t JV with anybody. The deals are all low-balance UPB, all under $20,000 on them. I picked them up for about $0.35 to $0.40 on the dollar. I knew I wasn’t going to crush it and make a lot of money off of them. From a percentage standpoint, I thought I could do well but when you look at those little dollar it be enough. It was really experience what I wanted.

How did they play out?

They actually played out well. Three of them are paid off and there’s still one that is just been paying $325 a month. It was in bankruptcy and it’s still in bankruptcy. They’ve been just paying $325 a month since basically we bought it. It took about three months to get them repaying. The reason why is a divorce where the husband and wife were going back and forth on who was going to pay the mortgage. Even before then I really start to ramp it up. I started getting joint venture partners this past spring. I’m up to 22 notes now. I’ve got another ten right now that I’m closing on three on Friday and I’ve got another seven that I recently got under agreement that went for a collateral package to get onboard. One of the things for my goals for this upcoming year was, people talk about that twenty-note level and went to bring on other people and stuff. Everything that you’ve talked and everything so far, like the last person talks about Infusionsoft and marketing and getting deals. If you have a deal and you send it out, it’s a decent deal, if you’re going to find funding partners. A lot of times you’ll find multiple partners for one year. You have to pick and choose who’s actually you got the team with. That’s something I had recently, which is a good problem to have.

First of all, congratulations. You have 30 note deals, is that correct? 

Yes. It will be 30 once I get the flat package end.

Thirty in your first how many months? First year, year and a half?

Really, I’d say the last year. I bought the one last year but then I held off on buying anything. I focused on trying to get those worked out and learn that process. Really, since March of this year, 28 of them has been where I finally got me.

That’s so phenomenal. I’m so proud of you, Chris. That’s really, really great stuff there for you. Let’s talk about some of the major stuff. Who are you using as a servicer? Are you using one servicer or two or three with all these twenty-some notes?

I had two. Basically it started a little bit Security National. Recently, Madison now takes pretty much everything I have. I’m trying to streamline everything. One of the things that I was doing early on was I had too many systems. I switched over since Note CAMP to Infusionsoft which I can’t think more highly about because previously I was using Pipedrive, I was using Folio, I was using Gmail Shrink and we’d be so disorganized. With Infusionsoft, basically I can use that now as a one-stop shop. What I’m partly figured out as well is what aspects can bring in a virtual assistant and what things to have a VA do, versus trying to automate something. You said with Infusionsoft, basically you can do almost anything. I can have it now once I get a bid accepted and have a task automatically send ProTitle to order the O&E. It’s amazing how much it can do. An engineer is trained to be able to access with that.

Infusionsoft can definitely be an engineer’s wet dream. It is a multi-layered onion, I will tell you that. There were times I donated to Infusionsoft for a year or two before I really started implementing it to get my drift. That’s good that you’re using that. You’ve got a good CRM, a good reach out and other stuff like that. What I would highly recommend that you do is I bet you spend most of your time on the frontend doing a lot of the initial due diligence that is hard to automate, is that correct?

Correct.

Are you pulling values, are you pulling photos, and that kind of stuff yourself?

Right now, yes, I am.

I think one of your biggest keys is either going to be to find a due diligence service or bring on a couple of VAs or even a local assistant who can help you with that due diligence but it can also cross-reference to help you with other aspects of the business.

That’s one of the hardest parts because of the aspect of being a control freak. There’s this urgent side. That’s where I think I struggled. Certain things like the QuickBooks and accounting, I had no problem sorting that or making phone calls with taxes and certain things like that. The due diligence side will always be the biggest struggle sometimes for a control freak.

Let’s take away the control freak and face this for you. One of the big things I did when I first hired my interns here, and Greg’s a great example. Greg would come in two days a week. He would do something different every week, three or four hours, and they all built upon itself. One day, it was just literally pulling bed baths and square footage from Zillow and the Zillow values. The next time, it was checking the taxes due or checking how much in annual taxes are due. The third time, it was checking Rentometer to check my rent rates. If you add little things like that to an intern or assistant, they’ll get good at what they’re doing. You don’t have to be a control freak because you will see it’s pretty relatively easy just to pull values and that kind of stuff. Right, Chris?

Yeah, it is.

Then Greg for the most part now, he handles most of the realtor outreach. He was giving realtors to pull CMAs for us direct, not using a nationwide company. He does most of the outreach to realtors, getting the CMAs and getting current photos. For what you want to make, and knowing you Chris, you don’t want to be doing that. That’s below your paid grade right now. That’s what I would do. I would have somebody come in and start doing that. Another thing you’re going to need somebody, who are you using for your collateral? 

Orion.

NCS 201 | Planning For 2018

Planning For 2018: Every collateral company I’ve ever met will miss something sometimes.

What I would possibly do, which might be a good thing to do, is have your files shipped to you and then shipped to Orion, because then you could have somebody literally going through your file folders. Orion’s not bad about scanning things. Every collateral company I’ve ever met will miss something sometimes, whether it’s photos, a file or a letter inside of it. They’re paid to scan it and the whole of it, but not really review it for the most part outside of the assignment chains and things like that. Maybe you don’t have Orion. Maybe you just have your assistant or whoever that could be start looking at the collateral files, looking for letters, looking for personal things, looking for the previous 1003 of the financial statements from the borrowers at which you’ll have contact information or tell you where they work or if they have any retirement accounts or any other real estates. Does that make sense?

That makes perfect sense.

Those are some things that you very easily do that will add immediate value to what you’re doing. Let me give you one other piece of advice too. Have you ever looked at spreadsheets of tapes where you saw that some of the assets went to tax foreclosure or wiped out? 

Yes.

Here’s a little trick that everybody’s going to love. On the ones that went to tax foreclosure, have your assistant call the county and find out if there is a tax overdue of any sort. What I mean by this, let’s say that $5,000 was owed to the county for the taxes and it went to tax sale. At the tax auction investors bid it up say $20,000, $25,000 because the property is worth $50,000. What happens in the tax foreclosure, the county takes their $5,000 but that $20,000 is sitting on file there with them. A lot of times, these large head funds or banks they think little about the tax foreclosure, they think that it got wiped out. What we have been successful in doing a sale hammered by this asset, “Can you throw this one in for free because it went to tax foreclosure? We’re going to try to track down and do deficiency judgment on the borrower,” knowing that there’s $15,000 and $20,000 sitting there at tax foreclosure.

I saw something like that at one point in time. The question that I had is getting it assigned after they had already gone to tax sale and then somebody else bought it. It was really a confusing process that I was trying to understand.

It’s actually really simple. You just need another assignment from the note seller to you, which is what you’re doing in buying the note. Then when you fill out the affidavit for claiming when you file the claimant, it’s a one piece of paper, then you just send over copies of the assignments.

It’s not an issue that the tax now. Like I said, the tax sale happened twelve months ago and you’re getting signed out for this asset. You want it right now so okay.

It does not matter. You just need to show a payoff amount that you’ll have to get from either Madison or your other servicer.

I’ve seen a few tapes with a hedge fund that literally were trying to close out a fund, and 90% of them had gone to tax sale. I was trying to throw the ball and basically a lot of it just meant tossing them to the side because they have gone already and sold at tax sales.

Greg will look at tapes. We get tapes in and he’ll look at those, anything over $1,000. It’s a tedious process to pick up the phone and call in, “I’m calling regarding this tax sale on this asset. When did it go to tax sale? Is there a redemption period? If there’s no redemption period, is there a tax overage?” If there is a tax overage, they’ll transfer you to the treasurers or usually the treasury department for the county. You can find out, “Yeah, it sold for $25,000. There’s a tax overage of 15% or 5%.” “You send me a claim form because I’m now at the new bank.” A very, very simple process. It can take anywhere from a year to get the funds or it can relatively easily in 30 days. It varies.

Another great nugget of information always thrown out there that you provide.

That’s a good thing to have an assistant too. You don’t need to be doing that. You just need to be pulling if they go on tax sale. Show them how to do it once and then they can look at this stuff. It’s one thing that Greg does on the tapes that we’re diving down into.

That’s a great nugget. With everything on the previous calls, the pricing and everything going up instead of trying to find different avenues, the contract for deed, calling banks and everything, I’m thinking about getting more creative in the next year.

If those that are going to be serious, you have to separate themselves. You’ve got to be making more offers so you’re more enticing by the hedge funds. If you closed on 20/30 deals, that’s not really going to be a problem for you. I talked with Chad earlier. He’s made a few bids and closed a few deals. He needs to up his game to get where he wants to be. It’s not that difficult because it’s just adding a zero to it for the most part.

If you do have some spare time between now and the end of the year, make sure you take and put some infographics together on the deals that you closed, your individual case studies. Those will be very valuable for you. You can put a video together on the deals that you’ve done using Animoto to put a slideshow together. You can market some of that stuff on Instagram or Facebook. You could use either Hootsuite or Buffer to help you with some of your animation for your marketing. 

I started using Buffer which interesting story is before Note CAMP and everything, I didn’t have Instagram, Twitter, nothing. I was talking with Gail Greenberg and have their Masterminds. They helped me great where they basically said, “You need to get Buffer and you get all the accounts set up.” I spent fifteen minutes on the phone with her and walked me through that process. It’s god-send.

If you can do anything, you could literally schedule twenty deals a day, a deal a day for the next twenty days if you wanted to.

The challenging thing is focusing and time blocking because right now you’re seeing a lot of tapes coming in and you want to try and bring on stuff.

This is why you need to hire an assistant or VA to do it. This is why you’ve got to hire somebody and take a control freak and take him outside and shoot him. Good stuff, Chris. I’m very proud of you. Congratulations on all your success.

NCS 201 | Planning For 2018

Planning For 2018: You can say it until you’re blue in the face that if we just follow what you say, it works.

Thank you, especially everyone over there. You can say it until you’re blue in the face that if we just follow what you say, it works. Honestly, it does. If you work hard and just do what you say, do the marketing, put the offers in, and continue just to learn, there’s so much free content that you put out there with all your podcasts and everything else about how to resource, to look at tapes, and how to bid on assets. There’s so much information out there that you provide. If people want to be successful, it’s there. It’s just a matter of taking your time to do it. Now I think that I’ve done okay doing it. I thank you and your whole staff and everything for promoting and teaching people because not a lot of people who go out there can do that. A lot of people are more just in it for themselves. You’ve been out there preaching us for a very long time now.

Once again, Chris, thank you so much. I think we’ll see you in January or February for the next Fast Track. You’ve talked stuff about that.

Yes, I’m going to try in probably January. I’ll be up in Jersey with Distressed Mortgage Expo. I’ll be up there prior to the event.

Thank you so much. 

Thank you.

What would probably be your biggest takeaway from those that you’ve heard from today, whether it was Sarah being a brand new person and starting some things, or Chad who’s bought a few notes but looking to good cashflow, or Julie, our police officer in the pool that’s more closing on a commercial deal direct from the banks, or Chris who started off with some small assets on his own money and is now going to be closer to 30 assets before the year is out. I think my biggest takeaway from that is they’re all taking action. They’re all doing things, whether it’s beginning with Sarah, starting off some things and her not being afraid to take action and working the crazy full-time job. If you’ve ever been in NICU or known a nurse in Neonate Intensive Care Unit, that is one of the stressful nursing positions out there because you’re dealing with premature babies, sick babies, and not a lot of them keep it. I know my mom worked it for years and loved it, but very stressful too, so big shout out to Sarah for sharing that and being in that aspect. I think the biggest thing you’ve got to take away from it is just them doing things, just them taking actions. They’ve failed. They’ve all stumbled on different things and they, by no means, have a complete business, and by no means, it just takes time. It’s just the fact that they’re doing things on a regular basis. 

We have a question, “What happens when we get collateral files?” I’m a big proponent of getting the loan files shipped to you first, reviewing them, see if there’s anything in there that’s been missing, and then shipping this off to Orion. Orion, Richmond Monroe, those guys are good at scanning and looking and sending a collateral file to look at it. PDF, a lot of times they get buried in our emails, buried in our final folders. Having the file folders here, taking the time off to literally take the time, flip through it, just looking at some of the notes, the contact information, that provides so much valuable information that you can provide to your servicer or your special servicer like The Law Offices of Daniel Singer or if you need to do any borrower outreach today. It helps dramatically. It helps you identify. I’ll give you an example. We got the files in, the property’s vacant, cars, just literally you got a property port. We didn’t even bother sending it over to somebody. We’re like, “Let’s move it straight to cancellation, get the property sold.” Hopefully that helps. Just about getting your little hands dirty. They were the first four that responded. We had two women and two men. We had a couple of people who are very brand new and then a couple of people who are a little bit more experienced, which is great.

It was great that Julie asked the bank, “Would you mind doing a bridge loan?” You’ll never know what you’re going to get unless you ask. We’ve seen that happen to commercial deals. This is not a huge commercial loan that she’s taking out. It’s less than $175,000, less than $200,000 purchase price and they’re financing 75% of it. Kudos to her and her JV partner for taking that down, but she better call me next time. 

If you’re listening to this on iTunes or Stitcher or Google Play or Google music player, any of those podcasts out there, do me a favor, leave a review. Tell me what you like. It’s so, so valuable to us here as a show because we do read the reviews. I read every review. If you have a question about the show, you can send it to me at Scott@WeCloseNotes.com is the easiest way to reach us.

If you really want to do some big things, the most important thing you can do between now and January first is put your deals down, write them down, share with them with your significant other, and then post them somewhere where you can see it. Post it somewhere where it will look you every day in the face. Post a picture of the car you want to drive. Post a picture of the trip you want to take. Post a picture of whatever something is valuable to you, whether it’s a purse or it’s a gun or something like that. Many things that you want to accomplish this year, write it down, post it, whatever those little things are.

We’re excited. This year we’re going on two cruises. We’ve got the Quest IRA cruise come to the first part of January. We also have a Disney cruise to Italy we’re taking in mid-year. We’re excited about these things. Those are the big goals for us to go to these things and work on the shape aspect, the fitness and stuff like that. Literally, those are big goals for us to have some fun this year. Also I have to make sure my staff is good to go. I know so many people struggle with the control freak in all of us. My staff will be working on things while I’m gone because I’ve taken the time to train and help them out. Hopefully, Chris, take the time, make that a priority to hire somebody to help you out to get things done. 

NCS 201 | Planning For 2018

Planning For 2018: Quest IRA Cruise 2018

That’s about all I’ve got for this show. I want to thank you so much for all those that are listening. Thank you for all of those that shared. Please share this to your page. Share this out there. I believe it’s a valuable episode that everybody can take a lot from hearing other people talk about their goals and ways for them to achieve their goals for the next year. Honestly, most everybody has the same goals. They want to close more deals, they need more help with marketing, raise more capital, or automation. It’s really a combination of those four things over and over and over again all across the board. 

Once again, if you’re listening, go out and make something happen. We look forward to seeing you in the next episode of The Note Closers Show. We’ll see you all at the top.

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