EP 250 – Live Calls Q&A: Overcoming Objections With Credibility

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NCS 250 | Overcoming Objections

NCS 250 | Overcoming Objections

Everybody starts from somewhere, whether you’re a broker who lost it all and worked hard to get it all back or a high school graduate that transitioned from being a janitor to construction worker, who now owns an LLC. One thing about transitions is you need to build confidence which is the biggest hurdle for Anthony. People still see him as the construction guy and not as a note closer. He realized that overcoming objections is part of the game and the biggest challenge is to change their perception of him. He shares that one key to achieving this is to build his credibility to show people that he knows what he is doing. On the other hand, Ken is in the middle of closing a deal and is double-checking that he’s taking the right steps.

Listen to the podcast here:

Live Calls Q&A: Overcoming Objections With Credibility

First and foremost, this show is all about our listeners, all about our students, all about helping you take things to the next level and close more deals. We’re excited to have a few people who had some questions. Anthony Ruiz has joined us. Anthony, why don’t you tell people a little about yourself, where you’re from, where you’re located and all that jazz?

My name is Anthony Ruiz. I am a construction worker by day and a note investor by night. I am from the Los Angeles area, California. I’m trying get some notes so I can get out of construction and provide a better life and stop to wear and tear my body.

I appreciate you being on here. Thank you so much. You work in construction. Talk a little about your real estate experience. You’ve been doing some fix and flips on the side, some rentals. Are you buying notes? What’s your background?

I bought my first house in 2000 right after the last crash or the first crash. I bought a house that was a $120,000 and my interest rate back then was 13%. I was jazzed when I got down to 9%. I thought that was the best thing ever. Three years later, I sold that house for $320,000. I learned about the markets and I learned about selling high, buying high. I started getting into real estate investing and I started looking into everything. I started out bird-dogging and that was a flip. I got into another house, fixed it up a little bit with my construction know-how, and flipped that. I started looking around and everything seemed to be a job.

You don’t have anything until you’re flipping the next house, the next job. In late 2015, a co-worker told me to look at the movie The Big Short. By the end of that movie, I was Googling how to get into notes. I found a bunch of different people and a bunch of different gurus. I finally came across you and I said, “This guy’s giving out so much free content, so much free value.” I couldn’t believe all the stuff you’re giving out for free, opposed to what everybody else is giving out. I started following you. Last year, I got my LLC going. This year, I’m finally ready to jump in and start doing it.

What’s your biggest hurdle right now?

I sat down and try to put together some questions that I wanted to ask you, and they all wrap around confidence. In the book, The Richest Man in Babylon, he talks about one of his biggest losses was because he took advice from a bricklayer. He asked him later on the book, “Do you still take advice from bricklayers?”He says, “Only on building walls, but not investments.” Everybody sees me as a construction worker. They don’t take me seriously as a note investor and/or the people that I’m speaking with are baby boomers or they’re about ten and fifteen years older than me. Those are ones that I’m seeing that have money to invest right now and are looking for a better way out in their pension that they have. They don’t see me as a serious investor because I haven’t done any deals yet. I have that hurdle of how do I solidify myself as a serious investor so they can take me more serious?

When you start doing something, people see you as Anthony, the construction worker, because that’s what they know as initially. What happens is like with anything else, what did you do before you got into construction?

I got in right out of high school, so I’ve been at it 21 years.

Did you have a job in high school?

I was a janitor.

You were once, Anthony, the janitor. There’s nothing wrong with that, but then you transitioned over time. Everybody had to start somewhere. You probably goofed up quite a bit your first few days in the construction site. You probably went from a gofer to actually doing things to where you’re at now. You have a lot more responsibility now on a construction site than you did 21 years ago. You’ve cut your teeth to build your experience. It’s the same thing in real estate investing. You completely lied to yourself though. This is a mental thing.

You mentioned you bought your first house for $125,000 and then a couple years later, you sold it for $300,000. Everyone will tell you that’s a real estate investment. While the market’s going up, everybody can make money once it’s gone up, but it’s still a very valuable deal. The proof is in the pudding. It comes the two things. You were smart enough to buy it at a decent price. The interest rate wasn’t great, but you were also smart enough to sell it and put a lot of money in your pocket. Have you done some other deals along the way, other fix and flips, other wholesale deals?

I’m just more or less bird-dogging. I got my California Home Inspector Certification. I became a realtor in ’06. A lot of it was schooling myself and learning because I thought being a realtor is what I wanted to do, but it’s nothing to help people. Seeing what notes can do for the borrowers and seeing how much these people are thinking they’re going to get into something good and then they just get into bad things, just seeing the notes and aspect of how much we can help people and also help yourself, it’s a win-win.

NCS 250 | Overcoming Objections

Overcoming Objections: Seeing what notes can do for the borrowers and seeing the aspect of how much we can help people and also help yourself, it’s a win-win.

A good, valuable thing I could tell you to do is to put some sample deals together. Even on deals you’ve bird-dogged. You found those deals. What I want you to do is put a little portfolio of what you’ve done. How many deals have you bird-dogged or wholesale? Do you have a solid number on those by chance?

I have to go back and look at my books and see what I have altogether.

Is it few or is it like one?

Less than ten, but I’d say maybe around seven.

That’s still more than one. This is a great advice for everybody who’s struggling with this. People see you as a coworker, as a construction worker, as the mortgage broker, the realtor. They may not initially see you as Anthony Ruiz, note investor. The beautiful thing is that you have a couple of things. You’ve got deals you’ve done, you can use sample deals. You’ve been through our virtual workshop before, correct?

Yeah, on October of 2016.

I’m going to comp you into this weekend’s virtual as well. Inside of that, we always give sample case studies, sample deals. You can take those sample deals and talk about, “Here’s the types of deals that we do.” You have to build yourself a credibility kit. If you’re going to go out and get a new job somewhere, what would you do? What are two things you’d probably put together to go get a new job?

A resume and a cover letter.

You do the same thing in note investing or real estate investing. Your cover letter, in this case, is an executive summary. Executive summary is a one-page thing that talks a little about your LLC. What’s the name of your LLC?

Paper Assets Group, LLC.

“Paper Assets Group is a California-based note investing company that specializes in buying distressed assets in most of the major markets across the United States. We are located in LA, California. We’ve been buying real estate since 2006.” Since you bought your first home, which is the truth. “We have a variety of wholesaling and buying for our own portfolios,” is one thing you want to say. You also want to say in the next paragraph, “Anthony Ruiz has over twenty years of construction background, has also been a licensed real estate agent for ten plus years in California, and also a licensed inspector. We draw upon that knowledge and experience to help us find great deals.” That’s your executive summary. That’s your one-page. It tells a little bit about what you did.

The second page is going to be your sample deals, your resume of deals. You may want to throw that fix and flip in there. You may want to throw in some of your wholesales. One of the great things that you can do that a lot of people do is put photos of the assets you’ve flipped or the bird-dog deals that you flipped. If you’re getting tapes and find a couple of deals that you’re working on or you’ve made offers on, you say, “Here are the types of deals that we do.” That’s the second page. The third page is to take the focus away from yourself. A lot of people that don’t understand note investing are going to look at, “Anthony, are you going to handle the foreclosure? Are you going talk to those people?”

Take that third page and make it about your team, your servicer, your attorney. If you use Laughlin Associates, throw them up there. If you use Singer Law Group, throw them on there. All your vendors, ProTitleUSA, if you’re using insurance, Ross Diversified, throw them up there as your vendors, or Madison Management as your servicer or Quest IRA. Make one page of, “Here are the vendors that we use.”When you’re talking with people, you have a packet. “Here’s some of the types of deals that we do. Here’s our vendors, know I’m not going to do it all. We’re going to be buying.”

These are always great five points that you want to tell your potential JV and funding partners to take off of you. The executive summary, your sample deals, and then your teams are important, but it’s always good to have these things ready to roll and tell people this. One, first and foremost, “We’re only buying first liens.” We’re in the first lien position. The only thing that’s going to wipe us out is taxes. The second thing is, “We’re buying below 70% of as is value.” If something does go wrong, there’s still plenty of equity for my investor to be made full on. Third thing we’re using is we are not handling everything. We’re using attorneys and servicing companies to handle the borrower or reach out, the foreclosures. I am not the guy to do that. Fourth thing is we have insurance in case of an act of God. We use insurance religiously on different things.

What insurance is that because we’re not the homeowners, so it’s not homeowner’s insurance, right?

You’d be giving a force placed policy through Ross Diversified or a commercial insurance policy. It’s petty relatively cheap when you’re buying a portfolio if you’re buying more than one. If you didn’t pay your homeowner’s insurance policy, you get a nasty letter from your state farm or a farmer’s rep saying, “You need to provide proof or we’re going to go throw it on there and charge you three times the amount.”It’s the same thing. It’s a force placed insurance policy, or you can get a blanket policy. Very easy to add and take away as you’re buying assets, as you get bigger.

The fifth thing is you’re going to always have your attorneys review the documents. You’re doing a lot of due diligence. What we mean by due diligence is you’re checking values. You have realtor do that. Second thing with due diligence is you’re going to checking values. The third thing is you’re always going to check the collateral. That’s the loan file. Make sure it’s clean. If somebody watched article about MERS, I always get that from new people, “Is that MERS thing going to affect us?” It doesn’t affect us, but that’s why we have professionals that look our thing. That’s your five points for the most part.

We’re only buying first liens or buying at 70% of fair market value or less. Usually, it’s below 60%, but that’s just in California. I can understand buying at 70%. We’re always having attorneys, professionals handle the foreclosures. Fourth thing is we’re going to have insurance in case of God. The fifth thing is we’re always going to make sure and dive in with our due diligence aspect, checking values. You being an ex-realtor, you can rent BPOs. You’re always going to have realtors pull the stops. You’re always going to check the property taxes to see if there’s a tax foreclosure. That’s relatively easy to do. Third thing is you’re always going to check the collateral whether it’s through Richmond Monroe or you have Madison Management do a file review for you.

NCS 250 | Overcoming Objections

Overcoming Objections: The executive summary, your sample deals, and your teams are important. It’s always good to have these things ready to roll.

Those five things are very helpful for you and that adds value. We all have to start somewhere new. One of the things that is also valuable is you may want to put in there at the bottom of your team, your real estate club that you go to, like you’re part of the LA County Real Estate Investors Association or you’re part of the Note Crew on Facebook. It’s a great resource to have because you’ve got 600 other investors you can bounce ideas off of. Use those things. Don’t be afraid to call on those things. If you’re having a hard time raising capital, I’m going to ask you a question. Are you going out trying to raise capital before you make offers or are you going out and finding assets and then trying to get investors to fund those deals?

I’m trying to find the assets first, but I’m not doing my emails and I know you’re big on the emails. I know that I need to dive into it and start doing it and being diligent about it.

How many days a week are you working graveyard?

I work five.

That makes you pretty tired in the weekend because you got family too, don’t you?

We’ve got baseball on the weekends. I didn’t make it a priority so that way this can become my full-time job.

You’re not putting in the time, my friend. You have your family first, so that’s why you do your job. Baseball is a fun thing but it’s probably not paying the bills. If you aren’t doing the things, you’ve got to set aside that time. We’re not talking to spend 40 hours a week on it. I’m not saying that at all. I’m not saying cut out baseball. I’m simply saying carve out ten hours a week. That doesn’t have to be calling a lot of asset managers. It could literally be you spending an hour a week writing up your emails that go out every Sunday night because that’s when most people read. That’s when people are getting ready to go to their job and they get that icky feeling in their gut.

Just start sending those emails out once a month, go on LinkedIn and post. That’s the beautiful thing about taking your sample deals that you’ve done. Those become great marketing pieces to post on Facebook, on Instagram, on LinkedIn, on Twitter to start getting people to start thinking differently of you. You can also take your case studies and throw those on BiggerPockets as a quick little blog too. The beautiful thing is you’re in an area where there’s a lot of private money. There’s a lot of people that can’t buy a house, but they’ve got money sitting on the sidelines because it’s just so expensive out there. How often a month are you going to a real estate investment club?

I’m working for a hospital. We can only go into certain areas when patients’ surgeries are not going on. I’m on call where it’s graveyard swing or days. Most of the REIA meetings that I’ve been looking into are Orange County or LA are at 10:00 AM or 11:00 AM or in the afternoon. If they’re late evening, I have to drive back. I’m trying to figure out, would it benefit me to start my own?

No, it would not benefit you at all because you’re not doing the things you need to be doing. That becomes another job. Let’s look at something fast. I’m going to go to Meetup.com. This is an easy tool for those who are looking for investment clubs in your area or something close to you. You’re in Los Angeles, California. What’s the specific city you’re in? Azusa, California. Real estate investment trainers in Azusa is 407 real estate investors. Black Belt Investors Real Estate Club in Arcadia. That’s got 469. This is by Sensei Gilliland. They have a thing called Investing in Airbnb. I would be looking to go to that one. I would join it. It’s free to join online and then go by and check it out because he does a variety of things. That’s what I would do. There’s one that’s closer, the Dossier Capital Meetup at the THNQ Tank in Monrovia, California. How far is that from you?

That’s not far at all.

That’s what I would do. Go to Meetup and find something local where you don’t have to drive that far. I get Orange County and LA, those are the sexy things, but there’s plenty of people around you as well to dive into. Those people are looking for help as well. You may also want to look at uDirect. It’s a good group out there. There’s a lot of investors there too. If you go out and find the deals and then go to the investment clubs and share what’s going on or share an email, your only problem is in capital. You just need to get in the habit. You’re missing that critical link. You’re trying to take the lowest form of just talking to your friends and family members, and that’s the hardest sell at first when raising capital because they know you who you are.

They have the mindset of the old Anthony. I’m not saying anything bad about them, but a lot of times our family sees us one thing and they don’t believe that we can grow beyond where we’re at. They sometimes get jealous that we have bigger dreams and goals and they’re like, “That Anthony, he’s too good for us because he’s out doing other things.” I’ve experienced that with my friends and family. I’m not singling anybody out. You have another question?

I’m looking on these Meetup groups. Would it be beneficial to look at groups that are self-directed IRA groups or maybe people that want to do something with their retirement but they don’t know about note investing?

Yes and no. I would go to the self-directed IRA groups because you’re going to have plenty of people that are educated. The thing you got to keep in mind is going to a neutral retirement Meetup group where they aren’t real estate investors already, that’s going to be a harder education and a harder sell. You want to network with people that have the same mindset that you do. There’s plenty of people there that have money that are willing to write a check. You got to have your MailChimp account set up. You’ve got to start sending an email out initially.

NCS 250 | Overcoming Objections

Overcoming Objections: Due diligence is checking values, checking the taxes, checking the loan file and make sure it’s clean.

The first email is what we call the Lionel Richie email. “Hello, is it deals you’re looking for? Hi, I’m Anthony. We’re friends on LinkedIn, we’re friends at a Meetup group or we’re friends at an event. I just wanted to reach out to you. Maybe you may have known me as being in construction for the last twenty years, but you may not know in the last ten years, I’ve been an active real estate investor.”That’s an easy transition.“If you want to focus on notes, check the images below, my email, and some of my sample deals. I would love to visit with you.” Short and sweet. Get it out and follow up with another email every week of the journey.“Come on out to the Meetup group tonight. Come on out to this other group that I’m meeting. If you want to grab coffee and talk real estate, I’m glad to do that.”

Thank you so much for your time.

Thank you for being with us, Anthony.

That’s the biggest thing we’re trying to do with everybody is help everybody overcome obstacles. Anthony is very similar to so many other people out there. They have this mind block. We think of ourselves as one thing, the construction worker, the janitor, the broker, the realtor, and we don’t have the confidence to see ourselves as a note investor. We all have to start somewhere. I didn’t get where I’m at overnight. Before I got into notes, I was a mortgage banker, a mortgage broker. Before, I was a banker with JP Morgan Chase. I had to make a transition.

My buddy, Boyd, came to me when I was a mortgage banker at Chase. I know Boyd previously when we work together as financial advisors. It was an easier transition going from that to Chase. Boyd convinced me, or Kaitlyn talked with me about moving over to his mortgage company. He was traveling the country to all his real estate investment seminars. I knew that’s an opportunity that I want and that’s why when I was talking to the wife at the time, I made the decision and gave my two weeks. Two weeks later, I was on a plane to LAX at a Ron LeGrand seminar. I was standing in the back of the room as a vendor doing mortgages, real estate investment.

I haven’t done a real estate mortgage for somebody, but I sure talk the talk. I relied on Boyd. I relied on Anne Cox who was there. I relied on Bob Lee and Eddie, Jamie, Kayla who are also my mentors there. I talked to investors and understood some of the concepts. I knew that I would add as I grew and got more comfortable with it. Within a month, we’re doing 30, 40 mortgage applications every other weekend. I was able to take in while I listen what I heard and started doing little things on the side. One of the biggest things that I have is a goal.

When I learn something new, I try to implement it within 24 to 72 hours. What’s killing me is I haven’t implemented a few of the ideas that I learned in San Diego because I’ve got things going on, but they’re on my list. I’m like, “I’ve got to get that implemented. I got to spend some time on that today.” I got to get it out and then I got to put it on my calendar. If you have people that are coachable with you or accountable to you, have them hold you accountable.”I need your help. If I get sidetracked, make sure to tell me. Did you do your email this week? Did you sit down on your email blast? Did you do your social media posts?”Those are the little things that help out dramatically. It’s a good thing as well.

Anthony is struggling with something that’s normal. Everybody struggles with that transition. It’s the thing that we get comfortable doing something twenty years. You’re going to be comfortable in construction because that’s what you’ve done for years. It’s been a career for you. You’re figuring out this other career on the side, but if you want to be focused on it, if that’s where you want to go, your why has got to be stronger than what your comfort level is and I know many of us struggle with that. I struggled with it and so I guarantee everybody struggles with it. Your “why” is going to be stronger than your comfort level. The only way you grow individually is that you get outside of your comfort level.

Steph and I were having a conversation weeks ago. She asked me, “What scares you? Death?” I’m like, “No, death does not scare me. The one thing that I don’t like are snakes.” I’m not scared of anything. I’ve built that fearless attitude because I’ve realized I’ve been knocked down, I’ve been at the bottom. I crawled my way up from not having anything. Once you’ve gone through that, you’re not scared of anything. I know if the market crash tomorrow, I would be okay. I would find a way to make something work. I would find a way to make money to pay my bills. The fact is if you go to doing the nuggets that we talked about with Anthony, getting networking with people outside of your circle, to marketing online with your email, those are putting tools in place that will help you no matter what you do.

I know it’s a little different tool than being on the construction side. You’re going to find with construction, shovels, rakes, hardhats, those are all tools you use on a regular basis. You have to start developing some of those other tools on the side, the social media, the networks, the Meetup groups, your sample deal, your executive summary, your credibility package is what I was looking for. Julianne asks, “What benefits to your membership are there? Is it better to wait until you get more going?” We have a new thing we’re doing. It’s a monthly membership site with our students. We have people that come to our workshops that want help but they don’t necessarily want to jump into our Fast Track and Mastermind. We understand that Fast Track and Mastermind training are an investment.

We’ve got something to help people a little bit more along the way in between our normal workshops to our Mastermind. It’s a monthly membership. It’s $97 a month for a beta. Until we hit 100 people in our membership, it’s going to stick at $97. Once we hit over 100, we’re bumping the price. What’s included with that is some cool stuff. We’ve got some great vendor discounts from some of our vendors and bonuses. We’ve got some discounts to events like The Paper Source, REI expos, Think Realty, ProTitleUSA. They’re all giving special discounts to our members. We impart them with a lot of things, things that we would use, things we don’t use but others use. We want to pass it on to our members. Along with that, we’ll be doing extra training each month. Twice a month, we’ll do a special training for our members only. Our members will be getting the video replays to Note Night in America. Everybody can still watch it live, but 24 hours after we do it, we’ll be putting the video replays into the member area so they could watch it exclusively.

We’re adding some stuff as well, some books, some monthly swags. We’ll be sending stuff out on a monthly basis to our members. At $97 a month, you’re going to make that back exponentially over the initial cost. We’ll probably bump it to $147as we transition. We want to offer up 100 initial spots for $97 a month. As long as you’re in good standing and stays that way, it’s never going to go up for you. You do have the right, if you want to, after three or four months to cancel. It’s my big thing to help you grow. That’s what’s involved with our WCN membership. You’re going to get an earlier access to some tapes than our general public. It’s going to be well-worth the price of admission.

Is this Ken?

Hi, everyone.

You’re in a process of closing one deal or you’re going on a contract with a note deal, is that correct?

I’m looking at a mortgage loan purchase agreement right now.

Are you a little nervous?

I want to double check that I’ve done all my due diligence correctly before I sign anything.

NCS 250 | Overcoming Objections

Overcoming Objections: Get your emails out and follow up with another email every week of the journey.

Ken, where’s this asset located?

It’s in Jacksonville, Florida.

You want to give the numbers on the deal?

Originally, when I was pricing the deal, I was looking at the online evaluations and it was around $65,000.I put in a bid of 55% minus the taxes due. There’s about $7,000 of the case that needs to pay off, so that was the pricing that I submitted with my original bid. As I was doing my due diligence, I contacted some of the real estate agents in Jacksonville. I went through a lot of real estate agents before I got one that was able to look at the property and give me a pricing on it. Thankfully, he was a real estate investor. He took a look at the property and told me that the value, instead of $65,000, which it would have been if it was all fixed up in ARV, it isn’t. It’s around $32,000 to $40,000 invested in that area. I stated in my bid and we eventually agreed on a purchase price of $15,127, so I’m expecting to be all-in at around $22,000 with paying back taxes.

Is it occupied, vacant? Is the power on?

It’s occupied. I called the City of Jackson utility and they wouldn’t give me actual standing for how much was on the account, but they said it wasn’t in any danger of being shut off.

When was the last time a payment was made on this? Is this a non-performing note or a contract for deed? Is it a true first NPN?

It’s a non-performing note. I don’t have that much in terms of payments made on it. The seller didn’t provide me that much. From what I saw in the recorded finance and on the O&E report is that they originally purchased the house in 2004 for around $60,000. When the housing market started going crazy around 2006, 2007, they financed like two times in one year and took that $60,000 mortgage to like $111,000 mortgage. There were payments made up until around 2008. I’ll have to double check where I last saw that.

Are you buying this from a private seller or from a fund?

There’s a private seller.

Who is the servicer on this loan? Do you know who the servicing company is?

FDI, it’s what he told me.

Your seller needs to provide you with servicing history, a payment history. He may not provide until you sign the contract, but he still should have at least told you when the last payment was made. That should have been disclosed before you sign. Let’s run some numbers on it. They still owe about a $130,000, $160,000 with the UPB is?


It’s worth $42,000 as is roughly?

$32,000 to $40,000.

We’ll just say $37,000 in the middle. Is it in decent condition based on what you can tell?

It looks like it needs some roof work and I don’t have any pictures of the interior.

Why is a private seller selling it?

It sounds to me that he buys in bulk. In this deal, he hasn’t told me specifically why he’s selling it. It doesn’t look like there’s too much profit on this small deal for him if he’s buying in bulk, especially after I went by with the realtor and showed him that this house is not in ARV value because it definitely needs roof work.

What’s the market rent on the property? What would be the big market rent in the area?

It’s around $900 in that area.

What’s their existing principal and interest payment?

It’s around $800. It’s like $799 with loan interest.

How long does this guy own the note? Did he tell you how long he’s owned it for?

I was looking at the assignment of mortgage. It seems like he bought it fairly recently.

Is this a product sell that I would know? I like Jacksonville, Florida. It’s a great market. It was one of the last markets in Florida that rebound because it’s up further up the coast than the rest of the markets. We’ve made some good money in Jacksonville. I would agree that your values in the $30,000 to $40,000 range, depending on the zip code, are accurate, especially if you get your realtor to drive by and take a look at it, that’s important. You need to find out when the last payment was made. If it’s been more than four years since the payment was made, you have to worry about statute of limitations.

If a borrower has not made payments for at least four years and the lender has not come after the borrower with a default notice or a lis pendens in the last four years, if it’s been greater than four years, you can only come after him for the last four years. If they haven’t made a payment in six years, you can’t come after him for all six years. You only come after him for the last four years. Was there ever been a foreclosure that’s started or lispendens filed on this property that showed up on the O&E?

I didn’t see any foreclosure. I saw some civil judgment, but I didn’t see a foreclosure.

That’s a couple of things you need to go back before you sign. When was the last payment date? What’s the total payoff on this? They should be able to pull this off at FCI relatively easy. I give FCI a lot of crap because they don’t call people back, but their online portal is pretty easy to pull information off of.

The total payoff won’t just be the value on the mortgage?

NCS 250 | Overcoming Objections

Overcoming Objections: Your “why” has got to be stronger than what your comfort level is.

No, because you take the UPB, the unpaid principal balance, plus the arrearages. That’s the total payoff.

It will be more than what’s written on that mortgage?

Yes. You’re going to have the unpaid principal balance plus the back payments plus the late fees. They’re obviously upside down. That’s not a question. The thing you have to look at is if they’re not paying their taxes and there’s been tax search that had been filed, it’s probably not a good idea for a modification. What’s your goal with this deal? Was it trying to get it re-performing or take the property back or get your first deal or two done?

From what I was looking, it didn’t seem like they would be getting it re-performing because who would be paying a $111,000-mortgage on a $60,000-property once it’s all fixed up? I was thinking more of a deed in lieu or a cash for keys. Worst case is foreclosure. Taking that and selling it either to an investor in the local area or asking my funding source if we want to put some money into it, fix it up, and get it as a rental in that area.

You said the market rent rate is less than what their mortgage payment is, right?

No. The market rent rate is $900, and that mortgage principal and interest was $800.

If you add taxes owed monthly, their payments should be higher than market rent or right around there. Never assume that somebody doesn’t want to stay in a house because I guarantee they’d been looking at what the market rents are in the area. If they can stay and start paying their mortgage payment on time, it saves money versus rent and moving and deposits. Oftentimes, they’ll stay or they’ll try to stay. If you were to start foreclosure, they’ll try to come to you to do a loan modification. I guarantee you that conversation will come about.

Florida has some little trickier laws or sometimes the judges in different counties want you to offer up a loan mod for a while and you can say you offered up. It doesn’t have to be one that works for the borrower but it still draws into your timeframe as far as foreclosure. The most important part, you need to get payment histories. You need to know when the last payment was made. Have you had an attorney review the collateral file? This all can happen after you sign the contract. Are you paying the deposit or anything with your contract?

No, he wants me to wire the money over with an LPA.

No, you’re not going to do that. That’s a big red flag. Has he sent you a copy of the collateral file yet?


This is very important. You need to have him send you a full payment history from the servicer. You don’t fund until you get that. Have you had an attorney review like Richmond Monroe or Madison Management review it?

I had Richmond Monroe review it. I was looking to have Daniel Singer review it but the seller is a client of Daniel Singer. When I asked them to do that, they said they didn’t want to have any conflict.

Daniel Singer told you that?

Yeah, Joel told me that.

I know that Singer moved their operation to only working with people that have ten assets or more because they’re bombarded with work. Did Richmond Monroe give you any deficiencies or things about the file? Are there any problems with it?

Originally, there was missing assignments and allonges. My seller got back to me with all of the missing assignments. The assignment chain is complete, but the allonge chain still looks like there’s a break in it.

Allonges aren’t that bad. Allonge is pretty easy to get, but you should still get those because those are going to cost you money to get this done. He needs to get this corrected to you. That’s the biggest thing. The good thing is you have a complete file, correct?


You’re comfortable paying the $15,127, is that correct? Is that your purchase price of the loan?


Then you’ve got $7,000 in back taxes owed?


You’re overpaying for it because if it does need work, you’re sitting on that $22,000.Is the outside of the house in immaculate condition in good condition? Does it need a new roof or any of those factors?

It looks like it needs a new roof.

NCS 250 | Overcoming Objections

Overcoming Objections: Allonge is pretty easy to get, but you should still get those because those are going to cost you money to get this done.

Then you’re looking at least probably $10,000 in repairs on the property with new roof and then clean up the inside and updating things. When was the house built? Honestly, this is a bit of a skinny deal for you.

It looks like the ROI was at very least 25% and that’s why the sale price of $32,000. I don’t want to argue the numbers with you, but it was on the edge of being a good deal. I just didn’t think we were going to lose money on it.

Is this your own money or are you using a partner’s funds?

Funding partner.

No offense, this is a skinny deal. Let’s go low end value. Let’s not go high end. We know that the value’s $35,000 and you’re into it at $22,000 with your $15,000 purchase price plus sitting in back taxes, you’re paying something at 67% right now. That’s a no-go. That is not a good deal to be in. You haven’t even considered if you have to foreclose, if you’ve got to do some repairs. You may get some value on it, a bump in value, but even when you’re in the 40s and it takes you a year to foreclose in Florida. It may not take nine months maybe it came off from cash for keys, but those are still expenses you have to figure in on that aspect of things.

Respectfully, I would tell you not to do this deal. I don’t want this deal. There are red flags and bells going off my head. The first thing is that you’re way above where you need to be pricing wise. The guy hasn’t provided a servicing or last payment aspect of this. It’s good that he provided the collateral file. Honestly, you’re overpaying for this. What I would do if I were you, I would hold off and say, “At this point, based on the numbers, I’m not comfortable at the $15,000. I would probably need to be at $10,000 or less to take this thing down.”

The only concern I have is that I had this discussion before we got it to $15,000. I had put in a bid for around $10,000 after finding out that the roof needed work. He told me that if he sells it out $15,000 then he is not making any money on the deal.

That’s not your problem. That doesn’t mean you want to risk not making money just because he’s not making any money. If he bought in bulk, he should have other assets that he’s made profit off of. This is one thing that I see from hedge funds. I’ve seen this from the Granite. I’ve seen this from others out there that they think they need to make money on every asset. When they overpaid on assets in some cases, I just laugh and say, “It’s not my fault you over paid on assets.” You run a business and you have to watch out for your investors’ money first and foremost. It’s exciting to have a deal on a contract and you’re working to get stuff out, but you don’t want to do a deal just to do a deal.

You want to make sure you’re protecting your investors’ money. When you get into these assets that are below $50,000, you’ve got to be sure that you’re paying the right price for it. If it was a fast foreclosure state like Georgia or Texas or North Carolina, I’d say okay. The fact that it’s in Florida or South Carolina or any of the states that have a longer foreclosure timeframe, you are jeopardizing not making any money on this thing because you’re overpaying for this. I would just simply say, “Your numbers aren’t going to work.” You haven’t figured inutility bills and things like that to get the value or get the power on within the expected timeframe. I would not recommend this.

I’d say save your money for a better deal and follow up with the guy in a month. If he hasn’t sold it, he’s not going to sell it at more than $15,000. If you follow up in 30 or 60 days, he may still have it and maybe much more willing to move it at $10,000 at that point. If anybody ever tells you to wire the day that you send the MLPA or the Mortgage Loan Purchase Agreement, that’s a red flag. There usually should be some time after you signed the contract. How long have you been talking to this guy on this deal?

NCS 250 | Overcoming Objections

Overcoming Objections: If anybody ever tells you to wire the day that you send the MLPA or the Mortgage Loan Purchase Agreement, that’s a red flag.

We’ve been working to this deal for about a month. Originally, he wanted a three-day closing period. This thing dragged out because he’s given me some time to find a real estate agent to take a look at the property and then I’ve given him some time to figure out the broken chain of assignments. It’s been dragging out for about a month.

I wouldn’t do the deal. That’s my opinion. You could still do it if you want to. You’re risking a bad deal taking place. It’s too skinny a deal. There’s no reason to do skinny deals.

Thank you.

You’re welcome. Talk to you later.

Thanks, Scott.

Hopefully people understand where I’m coming. I’m not trying to talk a guy out of doing a deal. I’m excited that Ken is making offers and knocking stuff out. That is a good thing. We all can agree to that. What does concern me is when I start seeing that stuff, “At $15,000, I’m not going to make any money.” That’s not my fault. I am an investor. If I’m going to buy this, I’m going to make sure that I’m making money and my investors are making money. I’m not going to buy an asset from you just so that you can add a price and you can make money where I don’t make any money.

If you don’t know when the last payment was, if borrowers aren’t making payments on their taxes for three years, it’s probably not going to be a mod. It’s going to be a foreclosure. Power’s on, that’s great. You have to be careful there if you’re getting a longer foreclosure or a longer rehab. Knowing that it needs some work, new roof and stuff like that, that can blow your whole kitten caboodle a lot and you don’t want to do that.

I want to thank Ken for sharing. I want to thank Anthony for sharing. I want to thank all of you out there; Marco, Kenneth, Laura, Shannon, Cedric, Julianne, and Jeff for sharing as well. Thank you so much. It’s always great to have you involved because that’s what the show is all about. It’s not about me. It’s all about what we can provide, what my guests can help provide to help you take your business to the next level. Until we meet again, go out and have a great day. We’ll see you all at the top.

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