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Distant Due Diligence
In this episode, I thought I’d do a little bit of a preview of what I’m going to be covering at the Quest Trust Company’s Trillion Dollar Investment Mixer. I’m excited to be speaking there. Quest Trust is one of our sponsors of the show. We’re always excited to be doing something with Quest Trust Company. We’re a big believer in what they’re doing. Once a month, each of their offices has a Trillion Dollar Investment Mixer, which they’ll have a subject. It’s a networking event, whether it’s in Dallas, Houston or Austin. Me being in Austin, I’m honored to be speaking here at the Austin office.
I’ve spoken at the Houston. I haven’t spoken at the Dallas office yet. There’s talk about me coming up there and doing it as well. I didn’t want to talk basically about Notes 101, about nonperforming notes because I’ve done that a variety of times. I’ll talk a little bit briefly about it in my presentation. My topic is more so about how to do due diligence on assets that are outside of your own backyard. I live here in Austin, Texas. It’s a great market. Don’t get me wrong. I love this area. It’s also a very popular market. It’s also overpriced quite a bit especially for real estate investors, it’s a tougher market.
People are having to look to do deals outside of their own backyard. I thought, “Why not talk about that a little bit to provide some content, to share some nuggets?” It’s one of the things when you have investors that call me from across the country or call and ask questions, “How’d you do this? How’d you do that?” Many people get scared of something that they can’t go out, touch and feel. I can understand that especially when you’re a new real estate investor, you’re stressed to pull the trigger on something that’s 100 miles away, let alone 1,000 miles away. Whether you’re buying in Florida and you’re living in Texas, you’re living in California or wherever. I can understand that mentality of being nervous, being scared.
Identifying And Building Teams
One of the things you have to get over is it becomes a matter of identifying and building teams in different parts of the country to help you with your due diligence. It’s important to keep in mind that the same professionals that live in your area also live across the country in those cities and states. A lot of people have a hard time doing that because they’d be like, “They’re not going to do as good a job.” They may not do as good a job as you initially because you’re there. You’re looking at some specific things. If you mitigate your risk, you mitigate what you’re looking at, you mitigate instead of trying to be a Jack-of-All-Trades and you’re focused on specific things, you can identify some great deals and along with identifying some nuggets and maybe other people would miss.
ReiClub & Meetup.com
What I thought I’d do is talk about that on this episode. If you’re reading this, I’m going to give you some nuggets you’re going to enjoy out there, things that we use on a regular basis that is very valuable to getting things done in this business. I want you to get out of the fact and get out of the mental aspect of, “It’s so far away.” Everything is pretty close these days with the help of the internet and some of those tools out there. There’re a lot of ways to be able to do due diligence on a property, a borrower or a city as well so that you can identify some great opportunities. With the use of the internet, there are so many great websites to get to help you out with different type of things as well. When I get into a tape of assets or I’m looking about purchasing a portfolio of assets, one of the first things I like to go and do, there’s one thing that I recommend to everybody. If I’m going to invest in an area, I want to see if there was a Real Estate Investment Club in that neck of the woods. One of the easiest ways to look is you can go to REIClub.com and look there. You can go to the National REIA Group as well too, but I like going to Meetup.com for a variety of reasons.
If you go to Meetup.com, type in the city, and it allows for you to be able to see how many real estate clubs are in an area, how many investors are in an area for the most part. Those are some important things to look at right off the bat. Are there active real estate clubs and how many members are there? Is the club meeting on a regular basis? We have a lot of clubs all over Austin because it’s a pretty good size city. The thing to look at, to keep in mind here is if there are no clubs in your neck of the woods, that’s probably not a good sign.
It doesn’t mean that there are no investors, but there’s probably a bigger city nearby or there’s probably a bigger metroplex that’s drawn like Dallas has a ton of investment clubs. You see a lot of investment clubs. You’ve seen a major metroplex where there’s a pro sports team. They’re going to have enough people there. The idea is how do you find those people? I’m a big advocate of jumping on and looking to see what’s available. If I go to Meetup immediately, you’re going to see a box, a source that says within say, 50 miles of Austin, Texas. Let’s say I’m looking at something in Kalamazoo, Michigan.
It’s going to give me either an opportunity for groups with calendars that are meeting. Once I’ve narrowed the city down to Kalamazoo, I’ll type in real estate and hit the search button, the little magnifying glass that you’ll see. I can click over and hit the calendar. I’ll hit the groups. Also below that, it gives me a bunch of groups that pop up here. It says I can either pick recommended, I can put my most active, newest, most members. I like to look at the most active groups because that’s a good sign.
It shows me that there’s the Grand Rapids Note Closers, which is a group that we’ve put together. There’s also the Michigan EPIC REI Network, which has 496 members. There’s a property crawl with 43 members, but more importantly, I see a Kalamazoo Real Estate Meetup with 495 investors. I like that one. I’m going to click on that one. It’s very easy to join this group. It’s organized by Ramon. I could send a message directly to Ramon if I’m looking for the same thing, monthly meet up at Kalamazoo. It tells me when they’re going to meet.
If I was going to be going into an area to do my own due diligence, I would try to identify when real estate clubs are meeting in that area, try to organize my calendar around that calendar so I can go immediately and meet with people in that neck of woods. If I can’t meet the people directly or I don’t have time or there’s not a club meaning, what am I going to do? I’m going to go join this group. It’s free to do. I would say whatever I’m looking for to Ramon. I would send a message to Ramon, “I’m looking at a property in this neck of the woods. I’m looking at buying. Do you have a great realtor? Do you have a great rehab crew?”
I would go strictly to the source, Ramon, and inquire about what I was looking for. The beautiful thing about meetup groups is they’ve got events. They’ve got members. They’ve got photos. They have discussions. If you click on the more tab, what pops up a lot of times is the ability that a lot of the organizers would allow for there to be an active message board. In this one, there is an active message board where people are posting, which is good. A variety of different people are using it, which is great. We had Karen Vogelmann or Mark McWiggins, the two that are posting. They must be the co-organizers. I can start a new discussion, which is awesome. Let see if it allows me to send it now that I’m a member. This club does not have an active mailing list.
The mailing list archive, it does not allow you to send out to their mailing list, which is okay. It’s fine. If I got posted at the message board, it allows me to post a new discussion there. It does. I can post a discussion that will go out to all 496 members of the group saying, “I’ve got a deal I’m looking for, I’ve got a couple of notes I’m looking to sell,” whatever it is “I’m looking for a realtor. Here’re a couple of properties that I’m looking for some help at.” I can post that on the discussion board and submit it to and as long as it’s not salesy, it will go out directly to the 495 members, which is phenomenal. It’s a great place to start building your team. That’s a local real estate club. That’s a good one.
That’s one of the great things as well. Meetup is a phenomenal place to go on and it’s also a great place to move deals. If you’re going to be investing in a couple of outside markets, you probably want to go join a couple of the Meetup groups because it’s the networking thing. It’s the hub that goes around that neck of the woods. I would post a question, “I’m looking for a good title, a good realtor and a good general contractor in an area.” Those are some important things to look at. “Who’s got any local hard money lender in Kalamazoo?” Those are going to be pretty much the big four aspects of things.
You can find an inspector. You can find an appraiser. That’s not a big deal. Those are the biggest things, your realtor, your title company, and either your finance or hard money lender. The fact that you’re local there on the Facebook group, you could probably raise some capital too if we’re doing that. How are you going to pull due diligence? I’m looking for the realtor than to do the drive by and the CMA. We all know to jump on Zillow or Trulia is what a lot of people do to get an idea for the value. We know that can be way off. You always want to have eyes looking at the asset that are pulling values. You’ll jump on a website called NARRPR, which I like. It’s basically pulling an online valuation. It’s like an AVM, Automated Valuation Model.
If you’re a licensed realtor and you have your NAR, National Association of Realtors information, you can log in and create a password for this. This is free for realtors. It gives you the ability to pull some information and assets across the country. This is a great online valuation. It’s not my hard fast in-person valuation. It’s not going to replace a BPO. It’s not going to replace a local agent driving by, but at least you have some valuation and can see what’s going on in the market based on average market values, what the numbers would look like for the most part if it made sense and it’s in decent shape.
Besides using NARRPR, one of the things that I will look at for the most part too is we like to use a service called NoteProz.com. NoteProz.com is $29 a month. I can log into it. What we use this for is a lot of good online stuff especially it pulls everything into one spot, this online stuff for us. JD Bates, the guy that runs this or puts this together makes it easy. It will pull Zillow values. It will pull rent values. It will give us the information for a realtor in a local area. It shows us the peaks, the highs, the lows. It gives us a lot of great information on this asset.
NoteProz.com is pretty easy to use. Basically, you type in the address or copy the address over individually without the zip code and it pulls everything up and allows you to export it into a spreadsheet. It charges $29 a month, which is relatively cheap. They put it together towards for us to use for the note business. It works well for the real estate too, pulling values, pulling estimates, all that great stuff for everybody. It’s not meant to replace eyes on the property. You always want eyes on the property. The fact that gives you a link to the realtor is a cool thing as well. One of the other things that I like to use as well for due diligence on things that are far away outside my backyard is you need all to understand and use this website, which is free, NETROnline.com.
It’s public records online. I click on a public record. It takes me over to the statewide. It’s a directory of all statewide organizations. Let’s say I’m buying in Ohio, click on Ohio. Let’s look at Cuyahoga County. That’s basically where Cleveland is. Cuyahoga County treasurer, fiscal officer, county recorder mapping. Let’s click on the county treasurer. Most of these websites allow you to go in here, view and pay your tax bill, real estate taxes, investment policy committee. I reach all sorts of great things. Here’s one of the things I like to do. You can check if you didn’t pay your tax bill. There’s a parcel number by the owner’s last name, the owner’s draft by the APN number. Let’s type in equity trust and search.
It gives you a whole thing. I can see in this address in Cuyahoga County, the address is 24600 Hartland Avenue in Euclid, Ohio. I see the value here. They paid their taxes, total due. Its current taxes are paid, which is awesome. This is a great little website to see for a couple of things. Let me do this sales bid. If not, no biggie. I can go back to Cuyahoga County and let’s go back one more. I’d take a look at the county recorder or the fiscal officers. We’ll take Quest Trust. We have Tony Watson, IRA in Cuyahoga County.
Here’s the address. He looked like he funded this with his IRA, 1276 Parkfield Avenue, Cleveland, Ohio. We get the first and last name, Tony Watson. It’s great stuff on here. Let’s see your tax bill. Tony Watson did a good thing. Is the person with a mailing address to the Quest offices? That’s great. Now you’ve got some information on it, you know what’s going on with the asset. If it wasn’t paid, that would be something else. We have the address here, type in the address if you want to. It’s the same thing, you can do a search by borrower’s name or an address. That’s what I love about NETR Online is it works pretty much across the country for that.
ActiveRain Real Estate Community
A couple of states that are a little difficult, you can’t search by homeowner name is going to be on your West Coast or California, Arizona, Oregon. They’re not allowing you to search by online, by pulling borrower’s name. You’ve got to know the address, which is okay if you’ve got a property or a note that you’re working through, and you have the address. That’s a great way to search for it. NETR Online, it’s great stuff. NARRPR, it’s great stuff. RPR, Realtors Property Resource, it’s phenomenal. I get a lot of people like, “How are you going to find a realtor?” There are a couple of things. You can go to Realtor.com is a great place to look, which is pretty cool.
I happen to like another thing called ActiveRain.com, a free website. I can go to where your rank at and it gives you a ranking depending on points and things like that. It gives you a website. They can add things, take away things, things like that. There’s one thing about this that I absolutely love. I like quite a few things about it. It’s the referral network. If you’ve got a property in somewhere that you’re looking for comps or you’re looking to move an asset where you’re looking to figure some things out here, you can put on state province. Type in Texas in Travis County. If you don’t find any luck in NoteProz or Realtor.com, you go on here. It will pull a list of the realtors that you’re looking for, seeking any type, agents, loan officer, inspector, appraiser, home agent, broker.
Let’s say you want to post a referral. You’ve got an agent broker, the same thing, top five things that you’re looking for, type of lot, it will go out to people in the neck of the woods, which is great, the people will respond. I’ll offer up either $50 fee for them or they’ll become my REO agent and we’re taking the property back. Whatever it is, it will reach out to them. Let’s say I post it and nobody is at home. Nobody reaches out to me. It ranks me in the bottom. I’m following followers’ points. In Travis County, Austin, I ranked number eighteen. I ranked that high, top eighteen in Texas for that.
Here are the all-profile types across these entire things. If I’m looking for somebody in a specific area, let’s say I’m looking for a realtor, a broker-owner or a commercial real estate agent US. I could pick where I wanted to go, all 50 states. We’ll trim it down to an area they look at. I’ve got somebody who’s profile, I can see Donna Harris. She looks like she’s active. She’s a realtor mediator, property tax arbitrator. That’s somebody who understands the business, which is a top finalist. She’s done a good job profile. What I would do is I would reach out to her. I said to contact her in auto-populates my information and it also gives me her phone number. I give a phone call too. I sent her information, “Donna, hope you’re doing well. I’d love to talk with you about an asset to our property I have in your neck of the woods.”
That’s the beauty especially this works well in rural areas. It gives you an idea who’s doing stuff in that neck of woods. In some small communities, they may not have a realtor, maybe a rep that covers the entire county. In that way, you can identify the people in the county, pick up the phone and make a few phone calls. This is a great service that I use to find some stuff because if somebody is using ActiveRain in the market, I know they’re an active agent. I know they’re an active person who is using this on a regular basis. I like ActiveRain. It comes in handy. That’s the thing about ActiveRain. It’s phenomenal and pretty easy enough to use for everybody out there. We talked about Meetup. We talked about NoteProz. We talked about NETR Online. We’ve talked about ActiveRain.com, all great resources to look at. That’s all about the property and finding realtors.
Whitepages and Spokeo
One of the things I like to look at too in the note business side is checking out what’s going on with a borrower. I try to see what I can find out about a borrower to see what they’re working on. I call it social sleuthing. I’ll jump on WhitePages.com. Spokeo is a great website to use as well. I use a variety of resources when it comes to jumping online and using different electronic assets. One of these I was looking at, depending on what the age group tells me, I do a WhitePages reverse address search. Signing doesn’t cost anything. I’m looking at to track down a property outside of an area. I don’t have a phone number. I have an address. Let me do a reverse address. Let’s say 2813 Pioneer Way, Round Rock, Texas. I have Kathryn Danielle Maybaum. Scott Carson used to live there. Kenneth Blake, Gala and Blake, these are some renters of mine back in the day. I have different phone numbers for her. I have a landline, which is great.
The other details we got, phone number of Southwestern Bell landline. I have the name of the person living there. Kathryn Danielle Maybaum, the first place I like to go is that she’s 38. I imagine she’s probably working. I’ll jump over to LinkedIn and see if I can track what this borrower is doing. They’re working. I will take the middle name. Maybe she doesn’t have a LinkedIn profile. She doesn’t have it on LinkedIn. Let’s go over to Facebook then. Let’s type on Facebook. Tuscaloosa, Alabama has a lot. Let’s change it to a city though and take a look in Austin or change it to choose a location. Type in Round Rock, Texas. Kathryn Danielle Maybaum does not have a Facebook profile. That’s interesting. Let’s do a Google search then. Nothing, that’s interesting, probably the name has changed.
That’s the thing is I will look and track down people on that aspect. Now that I’ve got a phone number on here, the beautiful thing is I could do a different landline search. I can do a cell phone search to see if that pops up and do a search for that. We’ll go back to Facebook and search there for that number. Nothing there, which is interesting when we go back and search it here as well. No results found, which is strange. I’m striking out here. This lady doesn’t have a Facebook profile. It usually works a whole lot better. I like to use Whitepages. It will track of the things down and Spokeo, there are other things that you can use to track stuff down.
I like to use this because we use this for social sleuthing. We’ve tracked down our borrowers. We found they were professors at the University of Columbia or they’re going through changes in a variety of ways or that they wanted to pay to go to Disney instead of paying their mortgage. It is all valuable information if you’re doing due diligence on an asset. Get to know what’s going on with your borrowers. They bought a new car. They had a new event going on. A lot of people share a lot of things going on Facebook and their social media accounts. It’s valuable for you to know as well. One other thing I’m doing, I liked to do, especially you’re looking at condos in different areas, I’ll use YouTube to do a Google search for a property as well. Go to YouTube and search an address.
The beautiful thing about this is if you do see something like if I’ve got a condo that I’m looking at, I’m trying to find information out on the complex. Instead of using the unit number, I’ll type in the full address and not use the unit number to see what’s popped up in the area. It’s helpful. It’s the stuff shown up obviously before it’s been listed before. If it’s not the actual unit number, it’s not the actual property. It still gives you a layout. Maybe there are photos, you can see what square foot it would look like. You can see also with the current video of what the property could look like or go to a comparable comp would be, especially if it’s higher up or lower down. Those are the kinds of things we want to look at.
Using Facebook is a great way here. You see what’s going on there. It gives you a walkthrough. The use of videos is a great way to take a look at some stuff like that. Those are some nice due diligence there because now you’ve got a video, you get a walkthrough. You have seen the eyes and ears on a property. You have an idea what it’s going for. The numbers you’ve got to update. Hopefully, it’s in the same condition. It probably should be based on one of the local agents who would tell you and the local CMA you’re calling or I would call that agent directly and say, “It looks like you had some property in that neck of the woods in the past. Would you mind giving me some information on a new property there? Would you help me in the purchase of an asset there? Would you help me out with that?”
It’s a great way to identify people who are going to do some marketing for you. It’s also a great way to identify where the asset looks like. It’s also a great way to get a more of a 360-degree view of the property versus that image online or street view. Street views are always great to look at, but you’ve got to make sure it’s a relevant asset, a relevant date. That’s why I always like to try to go and see what’s going on in the neighborhood. Type in the address, find a local agent that can help you out with it because a local agent who is listing there may have had multiple offers. They may be able to have a buyer ready, willing and able for you to take down that property if you take something down. That’s the good thing about using YouTube for due diligence. Hopefully, that makes sense for you.
Rentometer: House and Apartment Rental Rate Comps
Let’s go back and recap. I like using YouTube, type in an address and see if there are videos. I will also jump on and do a search for videos on that asset to see what’s going on. It’s a pretty simple data. Zillow, Trulia, Eppraisal, those are all simple things. We’re going to talk a little bit more. If I want to know what the rent rate is, I’ll use Rentometer to take a look and see what rent looks like in a specific area. It gives me a dial aspect of things. It’s easy to use, Rentometer.com. They do give you a limit on the free version than what you can and how many pulls you can do in a basic area. It’s not going to let you pull hundreds of hundreds of assets. It gives you a dozen and typing in an address.
It gives you this map that you can use for some good stuff. The beautiful thing is you can test this stuff. You can see similar homes. It gives you a rough idea what’s in that neck of the woods. You’re going to be competing with these as your competition. It gives you the game map. We’ll save and print this off and we use this as our due diligence and say, “We pulled the rents. Here’s what they look like.” You’re not going to know exactly how to get there, but at least you have an idea of what you’re looking at. Rentometer is pretty easy to use. I like it better than I liked the Zillow Rent Report because it gives me the numbers here. Zillow is all over the spots, but it’s a nice thing to use for everybody out there.
BatchGeo: Create maps from your data
Other websites that we use, I like BatchGeo. It’s a great website to match things or map things in an area. Batchgeo.com is copy-pasting spreadsheet cells into it and it will map a whole area for me. I can see where it’s located at. I can go on street views and take a look at that versus trying to do one at a time. I can take them all, drop all ten or fifteen assets in there and pull it back out and pull it back in. That’s a free website too, 200 up to 250 relatively for free. It’s pretty fast mapping. It sends you a link. It also gives you a map. You can do a cool print screen aspect of things to look at. That’s Rentometer, BatchGeo, Whitepages, Spokeo, Meetup.com, LinkedIn, YouTube, Googling. You’ll often find if there are things about a borrower that you spent time looking at tracking down, see if they’re legit. See what they’re doing, see what’s going on with an asset and go from there.
That is due diligence. Online diligence is difficult. I did all that from here in Austin in less than an hour. I can track it down with a lot of information. It tells me what the borrower is doing if they’re working. If I find them on LinkedIn, I can see who they work for. A lot of times I find them on Facebook. I can see who they’re working for if they have a job. I can find out that they’re a cashier at Dollar General. I can find out what a cashier makes at Dollar General. I can call quickly and see if they’re working. There are a lot of things I can do creatively to see what’s going on with an asset from far away. It’s all about building a team. If you’re thinking about Meetup groups, realtors, you’ll find some great ones, or you find some great rehabs.
In a Meetup group, you’ll often find good recommendations for people posting which is a valuable thing for you to look at. It’s a valuable thing because it goes out to everybody at once. It’s not you having one conversation, one conversation that goes out to the masses. There’s a lot of great stuff to make sure that you’ll find a good deal, or you’ll find some information on a borrower and go from there. That’s what I’ve got for online due diligence or distant due diligence. It’s very simple. You use some of those great websites. It’s free. If you want to jump on a plane and go out and take a look, great, but you have to work smarter versus working harder and then go from there. Go out and make something happen. We’ll see you all at the top.
- Trillion Dollar Investment Mixer
- Quest Trust Company
- National REIA
- Grand Rapids Note Closers
- Michigan EPIC REI Network
- Kalamazoo Real Estate Meetup
- National Association of Realtors
- Dollar General