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One Source Away From Success Or Failure
Unfortunately, a lot of note investors are one ingredient away from either exploding their business or they’re one ingredient away from having no business. I’ve seen so many note investors as I go out and cross the country and talk to people. They are like, “I bought some notes years ago from Condor and then it stopped having anything, so I stopped being in the note business. I used to buy Granite Loan Solutions and then they went out of business, so I stopped buying. I’m upset because everybody’s buying from Granite or Condor or other sources increasing the price and getting upset about that.” I see this even happening now. People are saying, “All the pricing on the stuff I’m getting.” That’s the same tape that’s been around for a while. If it’s this low-hanging fruit, it’s going to get pricier for you because you’re not marketing for other assets. There’s always this pendulum whereas the seesaw aspect of investing. Where you need to be reaching out for other sources, you need to be reaching out on a regular basis.
One Ingredient Away From Exploding
I’ll give you a great example. My good buddy, Val Sotir of Watermark Exchange, he would be moving assets on his platform from a variety of different sources. As one went up, he would have bought another one and find it from a wealth of different sources. Unfortunately, we as note investors and real estate entrepreneurs often get fat and happy off of one source, one lead source and we stop marketing. We get fat and happy off buying assets from one seller and that’s it. We get fat and happy off of not doing anything else besides with the bare minimum. We complain when things change and affect our business. That’s what you have to keep in mind more so than anything else. You have to keep that in mind when it comes to do and looking at what you’re trying to do. Looking with what you’re trying to grow your business. You have to keep in mind that if you have one source, it’s great. Especially if they give you a bunch of deals if they also have stuff on a regular basis. You have to realize what happens when that one source goes out of business or stopped and doesn’t have inventory this month? When it doesn’t have inventory this quarter? Think about that. That’s important. You’ve got to have multiple sources. You’ve got to be either from hedge funds or from banks as well. You’ve got to have a variety of sources that’s going to provide you a product.
You Got To Have Multiple Sources
The question I always ask is if you think about where you’re getting your assets from, is it one source? Is it two sources? Is it hedge funds and banks? Is it just hedge funds? Is it just banks? What happens when something changes and you aren’t ready for that or you don’t have an alternative source? Think about that. What does that mean to you? That’s scary. A lot of people aren’t doing the things they need to do. I see this especially in the more of the traditional real estate side. I see this on the masterminds and other investors there and they’re sending out 5,000, 10,000 or 15,000 postcards a month. They send out more postcards because they’re not getting enough leads. What they’re physically doing, for the most part, is beating a dead horse. They’re literally beating that lead source to death. It doesn’t make sense. It’s not a good thing to be doing. If you find yourself doing it, you have to evolve. You have to look for new business, you’ve got to look for news sources. You have to look for different ways to bring in business.
As a note investor, if you’re buying straight from hedge funds, maybe you need to find alternative sources. Maybe you need to get on the phone and start calling banks. Maybe you need to reach out and see who’s buying or selling assets. Maybe you need to pull a list of assignment of mortgages in the county you’re at. There’s a whole variety of different ways of tracking down business. It’s a matter of doing that four-letter word that most people hate, work. People hate doing work especially when you see lists that roll around that have been recycled. If it’s been recycled list, don’t waste your time on it, move on. Don’t try to squeeze all the blood and the water out of an old recycled list. Go do some marketing. Go find another source. Go find another alternative to sync your business. That’s what’s so funny is I see people complaining about this one source, “Who’s pulled comps on this one? Who’s pulled PPOs or holdings on this list?” Why are you wasting your time with that list anymore? Move on. If you don’t see new addresses, move on. If it was the same list that was a month ago, move on. Find another source.
Move Up The Chain A Little Bit
That’s one of the biggest things that we’ve focused on in the Fast Track Training out there and in our Mastermind group is new sources. What’s new? What’s popping? Where can you find a new product? Who are the new players on the market? Who’s buying stuff? How can you go further up the food chain versus sitting there? What happens is there are people coming in the business so the low-hanging fruit gets more expensive. The low-hanging fruit that people buy from the loans is easier to track down and you have to move up the chain a little bit. That means a couple of things. It either means buying in bigger bulks, raising more capital. Starting a fund or marketing out to bankers and asset managers. One of the biggest things is you have to be doing that on a constant basis. If you haven’t bought anything or you’ve been waiting on one source and you complain about that one source being too expensive, that’s not their fault. That’s your fault for not going out and finding a new product, not finding new sources. Not being a true investor and learning to market on a regular basis.
Marketing is not difficult. It’s a matter of doing on a regular basis. Marketing has different flavors to it. Marketing to investors, what’s going on your database. That’s one big thing and you need to do that via social media, do that via LinkedIn. All the social media aspects, which is great. One of the most fruitful ways to market for assets is simple, email blasts out to asset managers. I say this again there’s less than 5% of people out there that do it on a regular basis. By regular, they’ve done it for at least six months straight. Probably more people will do it one week and the second week and they’ll forget about it for three months because I did that like that. I was like that for the first two years of my business posting whatever I thought about all with MailChimp, Infusionsoft. You can schedule it out for six months and it’s done. Set it and forget it.
Prospecting is not a difficult business in the note space. You have to do it. Prospecting for institutional data is easier than prospecting for owner finance debt. On BiggerPockets, there have been some threads on there. People are like, “How do I find finance buyers or owner finance sellers?” That’s a much tedious process because most of the financed owners or owner of the finance notes have one note, maybe two notes. They don’t have any large inventory because they don’t. To do those, you’ve got to send a lot of mails out, a lot of letters. I’ve got a lot of yellow letter campaigns coming in from our properties or some of the different notes. You’ll see this happen, people wanting to buy a note from you. It doesn’t make sense for me. The fact is it’s not effective. It’s one deal per letter. It’s not a mass deal. It’s not getting 50 notes every quarter, a new source every month. You have to market in the 21st century to banks directly. If you’re not buying to banks, go out and keep marketing. Go out and keep moving forward with things. Go out and change the way that you do business.
Know How To Market
I’ve got a way that we target or market to older lists to get the fruit that’s still sitting there to reach out to us, but I’m not going to share that. That’s something we do for the Fast Track training and the Mastermind. That’s where we get so many people, they keep making bids on this crap. Why make offers in a crap anymore? Go out and find something new or change the way that you market. Use a way to have the borrowers reach out to you and I’m not going to tell you how we do that. It’s a secret. When we send postcards out to IRA investors, that’s a highly marketable thing. For the most part, most people don’t know how to market. It’s unfortunate. They want to be served. They want to sit there and have to be fed. They don’t want to go out and hunt and kill their prey. As note investors, that’s what you have to do with marketing. After a while, you can get so many sources and that’s one of the funny things that people come to the Fast Track or our Mastermind like, “Here’s a list of twenty hedge funds that have stuff or twenty sources that they’ll have product on a good basis. Getting on their list is a great way to look at it.
We have a question, “On finding IRA, finding if the assessor’s site only shows the IRA business address, where can I trace or follow the FBO name to get their address?” What I like to do is I will look at the deed. Pull up a copy of the deed or the assignment of mortgage for that property. Oftentimes, you’ll find the name on the actual deed at the assessor’s office. You have to take a look at it. A lot of times they’ll want it labeled out. You can see the person’s name do a search in that county. Oftentimes, they’ll have other property or real estate in that county. Let’s say a Quest trust for the benefit of Scott Carson, IRA, one, two, three, four, five, six, 171 Park Row in Houston, Texas. All I would do is on the county do a search and say, “What other property does Scott Carson own?” It will often pull up a mailing address or my primary address. That’s the way you check it out, you’ve got to track. Other people own property upstate. In that case, you do a search and see if they pop up. If they don’t pop up and move on because usually there’s more than enough IRA investors who own a real estate that you’ve got a few of them. 10% or 20% that have the mailing address, I wouldn’t worry about it.
Starbucks Is Not Starbucks Without Coffee
Going back to prospecting, so many people look at one source and that’s how they build their business around one source. Starbucks is not serving coffee, they’re hurting here in this county. At restaurants, do you wonder why you pay $1, $1.30, $1.50 for a glass of iced tea? A glass of iced tea costs $0.10. It’s a huge profit center for them with every client. They were walking in and somebody orders a soft drink or an iced tea, they’re starting with $1 profit right off the bat. When you have one source, that’s great. You’ve got your profit areas. Are you buying from them on a regular basis? Great. When they stopped buying where they don’t have anything this month, what are you doing? That is not a strong business model. You have to have multiple sources, multiple leads, all the ways to generate deals coming to you to make things happen.
This is where I always crack up because when people go, “Scott, when you provide lists to your Mastermind members and Fast Track members, don’t they get overbid in or do you cherry pick the good stuff and give them the crap one?” I don’t have to do that because I find enough sources myself. I see enough assets coming in from other sources that we can take down. I see sources from a variety of things. They may not be 1,000 assets every quarter, but they’re assets that feed me on a regular basis. They feed me on a quarterly basis, they feed me on an annual basis. That’s why I get so excited this time of year because there are so many new sources that pop up that weren’t selling the other nine months out of the year. I don’t have to worry about not having coffee to drink because I’ve got plenty of other hot water coming from other places; filtered, clean water, non-boil type water. If all you’re going to do is bitch and moan about life, then you are the problem, not me. If you’re not going to go out and get creative because this is business, you have to constantly monitor where you’re getting your deals and deal flow from and going out and marketing to make things happen.
Creative Ways To Find Deals
Let’s talk about some of the creative ways to find deals. I’m a big proponent of jumping on LinkedIn. Using LinkedIn to find asset managers and secondary marketing professionals. It’s a great place to go directly to find them and contact them. Spend a little time at night. This is something that everybody can do even if you’re working full-time or part-time. You do this from 7:00 PM to 2:00 AM. This is something you do while you’re watching TV or sitting at the mall or on your lunch break while you’re eating your lunch. You can go on your phone. Pull up on LinkedIn, type in asset managers, secondary connections and start connecting with them. Send them an InMail, “What do you have in your books if you’re looking to get rid of in before the end of the year?” That’s one of the easiest things you can do.
The beautiful thing is if they connect with you. You can export your connections on LinkedIn and you have them in your database. Before I went home, I went and downloaded my export, my connections 14,300 something from LinkedIn. I did a quick sort, filter it for an asset manager or special asset managers, marketing managers, bank. It helped me clean my list up as well. It took me about 30 minutes to do and I have a pretty big list. It took longer for the list to get emailed being downloaded from LinkedIn than it did for me to use my own scrubbing on it to identify and filter my list. I have different lists that I’ve customized. I can put into my CRM tool, Infusionsoft. If you’re using MailChimp, you can upload those and you have a targeted list you can be specialized to. First name, last name, institutional name, company name, “John, I wanted to talk to you if you’re the right person at ABC Bank to handle your special assets or secondary marketing. We’re looking to buy some stuff before the end of the year. We want to see if you had anything in your books that you can get rid of. We’d love to visit.” Nothing too difficult. Nothing too hard to do. We’re talking less than two paragraphs. It’s a matter of setting it up in your CRM tool and doing it. Following up and following up.
A lot of people will get focused on one market or two markets, “I’m only going to buy because I’m in Florida.” That’s great, you’re in Florida but the market has changed there. You have to expect when pricing changes or markets recover, that inventory’s going to get tighter, so you have to move markets, “I want to buy in my backyard. I can’t find any more notes in my backyard. I’m not going to do note business anymore.” That’s the most asinine thing to say. It’s the 21st century. Why don’t you use Meetup or a little thing called the internet to help you with realtors and other people to drive by or servicers? It’s amazing that people basically followed about one thing and one thing only while they’re focused in their market or from this one source or this one specific type of note deal that I’m going to do. There are a lot of ways to make money. I had a guy that was coaching one time who has one of the perfect note deals for his first deal “I can’t do that. I’m paying too much.” I was like, “What are you talking about? That asset is worth $100,000. You’re paying $50,000 for the deal. It’s an appreciating market. What’s not to love about this deal? You’d be done with it in six months.” “It’s not perfect.” “What do you mean? It’s still going to be a good 20% yield if they reperform. What’s wrong with that?”
A Book On Case Studies
He didn’t do the deal. I made $70,000 on the deal. If you wait for perfection, it means somebody else is going to make profit. You’re waiting for the perfect deal. Somebody else is going to run with that deal and make some money. That’s what you have to realize. It’s not one source. It’s also the same thing about having one person fund your deals. You’ve got to make sure it would be raising capital. You can’t wait for one specific source, one specific vendor. This was a funny thing that happened to me. We had a lot of our stuff with Peak Servicing. When they stopped doing foreclosure work, it put everybody in a tizzy. It hurt a lot of people. Transferring files where they laid off their whole marketing staff on the distress note side. It hurt some things. You have to be careful about that aspect. Be very careful when it comes to having that one source. One of the things that we’re doing too is we are doing something here. We’re working through something to hit a goal for next year. Important to keep in mind is we’re doing a book. We’re doing a book on case studies, not our cases. I can write a million cases on deals that we’ve closed. I’m talking about different deals that you are closing.
We’re making this open to everybody, not our students. We’re looking for at least 50 people to come in and want to write a chapter about deals that they have closed. A deal that they close a little bit about what’s so great about the deal, what they liked about it. Then we’re going to take these chapters and combine them together into a book and then we’re going to market it out wherever we travel. It’s a great way for you to get your story on a deal out in front of a lot of people as we market this across the country and different events. We’re not looking to sell this on Amazon and make $20 million in book sales. We don’t foresee that. This is more of a lead generation thing for everybody involved. Not only myself, but for also the people that are involved out there as well. We’re working to start this out, but we’re waiting to get 50 people that have shown interest, then we’ll send some links out and get things rock and rolling on. We’re pretty excited about this. Especially in some of the things that we’re looking for next year’s opportunities to provide the book out to our database, other’s databases to get the word out. To help build a lot of notoriety for those 50 people that are involved in the aspect of it.
It’s pretty easy to be a bestseller on Amazon at some point. It’s a great marketing tool for everybody who’s involved, “I’m a part of a book or I’m part of a bestseller. Here’s my chapter on a case study.” If you think about the thousands of people who are going to be reading about those deals, it leads for a pretty good capital generating aspect or joint venture partnership. Lead source as people are reading about you, reaching out and contacting you. I’m pretty excited about that and we’re working on that. If you’re interested in being a part of the book, drop me an email at Scott@WeCloseNotes.com. We’ll definitely get you added to the list.
We’re up to 24 based on a couple of people responding. That’s exciting. We’re halfway there to have a book on note investing getting in interested parties. Take a look at your business. We’ve been talking about planning out for the next year. I totally think that’s a great thing. You have to be doing that for the year 2019. What you also have to look at is where your product is coming from. Is it coming from one source? Is it coming from two sources? Is it a mixture of bank and institution? When I first started in the note business, 75% of my deals came in from banks, only 25% from hedge funds and that evolved. That changed then it went to 50/50, then it went to 75% hedge funds, 25% banks. Then we’ll do 100% hedge funds and zero from banks because it was low-hanging fruit. I was like every other investor out there. Maybe not like every other investor because we’re buying more. Then it evolved back 25% to 75%, 50/50. If you can be somewhere at a 50/50 point, your business is not always going to be that way. That’s the healthy aspect of things. At least you’ve got some hedge funds and some institutional debt. We all know things can change willy-nilly.
You’ve also probably wanted to have a little bit of a mixture of judicial and non-judicial foreclosures. When you have different states when you have things that happen in states like where you have the attorney general comes in or puts a stop on foreclosures in the state for six months as people recovering from a flood, hurricane or the foreclosure crisis. You had that in several states. The journalists came in and suspended all foreclosures for six months. That’s a big kick in the shin or kicking the teeth if you’re owning assets in those areas that you’re trying to foreclose on. That puts a different timeframe on your exit strategies. Try to be as balanced as possible on the seesaw. When you start feeling yourself going more one direction, you’ve got to try to re-correct what you’re focused on and where you’re pulling inventory because that’s a balanced business.
If you’re any type of business and you have one client who’s the majority of your business or one person who’s feeding you affiliates or you getting deals. You have to learn to develop those other sources to drive other business because that’s a scary place to be. We know that Pareto Rule, 80% of business comes from 20% of our activities. It’s very easy to turn around, “I’m going to focus on this one guy and spend all my time on his assets or their assets that they send me. I’m not going to waste my time marketing on a lot of the places.” That’s the wrong idea to have. You have to develop other sources. Otherwise, you could be hurting if they run out of water. If you start boiling water, you may see your business start to boil as well. That’s what I have for you. Don’t be stuck on one deal source. Don’t be stuck on one person providing deals. One bank, one hedge fund. Go out and develop those other relationships. Go out and develop those other lead sources because it may not pay immediately. The moment you may get a little bit of inventory, the moment may be one faucet shuts off, you won’t be able to reach over and turn another faucet on to help you feed your business. Go do that and make it happen. We’ll see you all at the top.