EP NNA 17 – Choosing Markets

Choosing markets is one of the scariest things that people do. Let’s face it, if you’ve been in the note business for longer than six months, you find that not every market is created equal and not every market has the same foreclosure time frame. Most don’t even have the same inventory levels. Choosing a market investment is like buying a monopoly. You’re not going to be buying Park Place or the railroad stuff, but you’ve got to keep some things in mind when you’re playing the game, one of which is asset class availability. What’s available out there? Scott gives the lowdown on what you need to make sure of when you’re choosing and buying in a market.

—

Listen to the podcast here:

Choosing Markets

I’ve got some great stuff to go through with you. A lot of you are excited about this to help you clarify some of the things that you’re focused on as you’re getting started, expanding into new markets, figuring out what should I be doing, where should I invest in, and what comes next. This discussion is all about choosing markets. I’ve spent a lot of time on this helping you identify some things and you are going to get a lot out of this. This is going to be a fun episode with some great stuff to talk about.

I’ll start off with our current mission statement. One of the big things that we have been focusing on over the next couple of years not just this year is to help educate and create 10,000 note investors. I’m a big believer that we’ve got a lot of stuff which is going to be hitting the market in the next twelve, 24 months as the economy changes and as the market changes. You already see things going up with some of the things that the economists are talking about and note investors can help with what’s going on. We can help make America be great again with one mortgage, one note at a time. Our big goal is to help educate and create 10,000 note investors in the next four and a half years.

We’ve got some people joining us for the first time. We’ve got a variety of real estate investors who are active or passive. We’ve got a lot of note mortgage investors, people who are buying distressed debt, nonperforming debt, performing, and all that good stuff. We have people looking to get in and out to exchange emails with a couple of people like, “I’m going to give him the note game. Where should I begin? Am I going to jump on a call?” It’s a good start for you. If you want to catch the replays, it’s not hard to do. Just go to WeCloseNotes.TV to watch our whole library of information that’s available too. We’ve got thousands of videos out there. It is on our Vimeo account or you can go to YouTube and look for We Close Notes on there as well.

You can also catch these replays if you’re out traveling by going to iTunes, Stitcher, Google our podcast. They are available on iTunes and all those things as a podcast to read, download, and listen to. We’ve got a bugger out. We can’t make it to the entire thing to replace. It’ll take about five or six days before they get up on iTunes, but they’re there in case you’ve missed it. We’ve got all the Note Night in America’s from 2018 on there. We won’t be adding anything from the previous years because of the information changes on what we do but you can catch those on iTunes as well. I highly encourage you, if you aren’t listening to our podcast, please do so. Episode 300 is with 118,000 downloads, 125,000 views on Facebook and our Vimeos from those who are watching the live episodes. A big thank you to those who watch and listen.

We’re doing a new event, Note Roadshow. Lilly and Stephanie are flying out to an undisclosed location. They’re going to spend Friday, Saturday and Sunday driving assets. After that is our Virtual Note Buying Dummies Workshop. We’ll have a full house of that probably close to 200 people. Be a part of that Virtual Note Buying Workshop. If you are a WCN crew member where you are part of the membership and you’d like to repeat then you get to. Drop me an email and I’ll make sure that you get added into it. If you’re part of the monthly WCN crew membership, you get to repeat at no additional cost. Feel free to drop me a message and I’ll be glad to get that out to you.

With the podcast moving, I’ll be flying to Philadelphia. We’ll do some live Note Closers Show up in the Philadelphia market at Podcast Move It. I’m excited to be a part of that event with 85 other podcasters. It reminds me of another presentation that I got to get ready for. We are excited to be flying directly to Las Vegas for our Note Boardroom, which is two days of intensive coaching with a dozen people. Our Mastermind group is not like our Fast Track. We’ve got some cool stuff for those who want to take their business to the next level but can’t afford it or looking at a little bit cheaper than what we charge for at the Mastermind.

I highly encourage you if you’re at the Ohio market, there is a note summit taking place the eleventh and twelfth of August in Mason, Ohio. Let me know about that. It’s put on by Vena Jones-Cox. Donna Bauer is speaking there along with myself. Bill Griesmer got a session to be speaking at along with Scott Brown. It’s a great two-day intensive note training aspect of things. I’m looking forward to being on that board. Our Note Mastermind, August and July is back to back with full of stuff. I’ve got to know if I’m coming or going. There’s a Note Mastermind in Dallas, Texas on August 23rd, 24th followed up with the Quest Expo. You still have the availability to get 25% off by using the code WCN Expo when you go to QuestExpo.com.

I had a lot of people reach out to me and said, “Tell me a little bit more about the Note Boardroom.” As I’ve said previously, it’s a small twelve persons only coaching for two days, Friday and Saturday. We’ll go through how to find sources, we’ll help you with marketing, and dive in a chunk into asset structuring along with marketing and raising capital. We’ll go and bring some deals for them to break down and go through one on one. We’re stoked about that. It’s two days at the Wynn Hotel and Casino. It’s a $2,500 ticket for you and your spouse or you and your partner to attend. We’ve only got twelve spots total. Over half of those are already booked now so we’ve only got five seats available. A lot of people are leaning towards maybe doing like, “Should I sign up for the mastermind? What’s the difference?”

This is not the Mastermind. We’re not going to give you buying lists of asset managers. I’m not going to give you that stuff because that’s where there’s a whole lot more, but it gives you an opportunity to come in. We will spend some time helping you structure your business. We’ll be getting things rock and rolling. The beautiful thing is if you decide to want and end up signing up for the mastermind at a later time, we’ll credit that $2,500 that you’re paying towards the full cost of the Mastermind, so you don’t lose out on anything. That is July 27th and 28th Friday, Saturday in Las Vegas at the Wynn Resort. If you’re interested, drop me an email at Scott@WeCloseNotes.com. Tell in the email it’s Note Boardroom. We’ll make sure and get you a linked out, so you get signed up for that.

The reason you all are is about markets. Choosing markets is one of the scariest things that people do and they come to a workshop. I talked to somebody and they go, “I’m in Carolina.” I don’t know which Carolina they’re a part of. “We want to buy. We want to take action.” I’m like, “What have you learned?” They’re like, “We want to buy all of it.” I’m like, “No, that doesn’t make sense.” Let’s face it, if you’ve been in this business for longer than six months of getting taped to reaching out to asset managers, you find that not every market is created equal. Not every market has the same foreclosure time frame, and most don’t even have the same inventory levels.

Choosing Markets: Choosing a market investment is like buying a monopoly. You’ve got to keep some things in mind when you’re playing the game.

We have a question, “Can I do notes with only $4,000?” One of the big things we talked about is not using your own money. We have a lot of people that are using other people’s money to fund their deals to work them out. You can save your $4,000 and sign up for a boardroom or use it for some miscellaneous costs along the way. Often, you buy stuff cheaper and add a little bit extra. Choosing a market investment is like buying a monopoly. You’re not going to be buying Park Place or the railroad stuff, but you’ve got to keep some things in mind when you’re playing the dope game. Asset class availability.

What’s available out there? You’re not going to be buying apartment complexes and the distressed type. You don’t see a lot of that. If that’s what you’re excited about, this is not for you, or “I want to buy a million-dollar house.” You’re not going to have a lot of luck with that. What you want to focus on is what you’re going to see, that $150,000 value house or less, and that’s on average. In some cases, it will be bigger or less, but a lot of that’s where 90%, 95% of the inventory is in that first-time home buyer house. If you don’t want to work in that range, go do something else.

Foreclosure Timeframes

You’ve got to make sure when you’re buying in markets is that you don’t have an investment weird license like Georgia has required you to have a mortgage broker’s license. The only ones you have is a debt collector’s license. One of them is foreclosure time frames. What are you going to buy in Florida with probably nine months to a year or South Carolina to a year? New York and New Jersey, we can take three years. You’ve got to keep that in mind when you’re looking at the states. You want to start off with them. I’m a big believer in starting off for two or three that’s got inventory. If you live in California or the West Coast and you want to buy that, you’re going to be sitting there and scratching your head a year later because you’re not going to see that much. Even if you did see, it would be way overpriced.

Growth Rates

You also want to look at growth rates. Are these markets growing? Are they affordable? It’s not overpriced like San Francisco is getting overpriced. Austin is getting close to there, too. Is the market growing? Are they rebounding or are we already seeing 10% appreciation every year which is great? Are you seeing negative? Is it shrinking? We’ll go through every state. I’m not going to give you all the important nuggets in the first five minutes because you’re fine. You want to look at job growth. Are people working there? Is the economy rebounding strong? Is a lot of money being dumped into the markets or the cities? Are there buyers? What’re the days on markets? Are there people that rent your property or is there for education, colleges there? What’s going on with the population growth, is it increasing or decreasing? These are things to consider when you’re looking at the market. It’s not one thing of all like “I’m going to buy in Ohio.” You probably don’t want to buy in Ohio unless you’re buying in areas that make sense. “I love Missouri. I’m buying anything in Missouri.” You probably don’t want to buy everything in Missouri.

Crime Rates

You want to focus on things in cities or markets that make sense. Importantly too, you want to get crime rates. It’s important to know when you look at Trulia in an asset, does it light up like a Christmas tree? Does it look like somebody got shot on your screen, it’s all red, or is it different now? Is it a blue color now that they use at Trulia? They’ve changed color going from red to blue. Are you buying in an area that makes sense? Even if you have an interest in Detroit, do you want to buy below eight-mile road? Do you want to buy Western or East of downtown or West of Grosse Pointe Blank? Probably not. You have to look at those markets and realize that yes, there are a lot of times that it goes in the street by street or zip code by zip code or north-south. You got to know those markets and we’ll help to figure that out.

The ESPN Factor

Other factors? I call this the ESPN factor a lot of times. I’ll be looking near major markets like is there a major sports team that plays there? Is there a major university with probably a better list of opportunities out there? A lot of people are looking for stuff in the prime markets like Dallas, Houston, Atlanta, or Indianapolis. Those are great markets. There’s a lot of great opportunities in B markets or where there’s a major university, but it’s not in the biggest of cities. I like looking at sports teams.

Good Realtors

You want to make sure that they’ve got good attorneys there as well in those states. Some of those you can deal with because you’re going to have an attorney at some point. No, you can’t do it all yourself. You’ve got to make sure there are plenty of good realtors.

Ease Of Access

One thing I like to look at is can I jump on a Southwest flight and be there in five hours the latest? If I were to fly here to Ohio, here to Cincinnati or here to Detroit, it’s about a five-hour trip. I get to switch planes once, which is okay. I don’t mind doing that. If I’m going to fly to Florida, can I do direct? Look at those things, ease of access. I don’t want to fly in somewhere and then have to drive twelve hours to get to the spot I want to go to. That’s not a fun thing. It’s not ease of access. It makes it difficult for me to get to if I need to get to it. I’m a big proponent of where you’re going to use a lot of vendors to make things happen outside of where you don’t need to jump on a plane every time. Are there plenty of people to live in? Do people want to live to where you’re at? You buy a note in La Grange, Texas but if the days on market are 360 days and nobody’s moving there, it’s because Texas is not an ideal situation.

What You’re Buying

You also think about what you’re buying. There are a lot of people who are starting to overpay for stuff because they’re thinking it’s going to go up and go up. What happens in a downturn? Can you convert it if the borrower even foreclosed? Can you convert it to a rental that makes sense? Do you have plenty of people still in that area whether it’s students or residents like that if you’ve got to turn it to a rental? Can you dump the property and move on because you’re still sitting at a good price point? There are a lot of other factors to keep in mind.

The big thing I like to look at when people ask me, “Where should I buy, Scott? Where should I be looking to invest?” The big ESPN Sports fan. SC doesn’t stand for Sports Center, it stands for Scott Carson. In the Sports Center on Scott Center, the markets you should focus on comes down to where there’s inventory. We have a good question. What is a good way to gauge the level of asset class inventory? When you start reaching out to asset managers, you start seeing stuff coming to you. That’s what it all comes out to. If what you’re looking for starts seeing showing up on tapes, that’s where you know plenty of stuff is at.

There is some stuff that we see plenty of. I will avoid it like the plague, but there’s a lot of opportunities and a lot of areas that have that. I’ll give an example. Years ago, when everything was hitting the fan, 2009, 2010, I saw an opportunity in Florida and I went to Florida. Everybody thought I was crazy, but I bought a lot of stuff in Florida. It was at 35% of what was owed. The values dropped dramatically to 60%, 65%. I bought a lot of rock-bottom stuff that I’ve made a lot of money on because I knew it would come back. I knew that it’ll take me two years to foreclose and that’s okay. Opportunities are going to come back on that stuff. I was buying that stuff cheaper than buying it cheaper than what you could build off.

What It Costs To Build A House

That’s one thing you look at. What does it cost to build a house? $50, $60 a square foot or more. Look at what it costs. You’re buying it cheaper than what you can build off that. It’s in decent condition and you’ve got a great rental that’s going to be above or more than 1.5%. One of our audience got it exactly right. Warren Buffett says, “Be greedy when the rest of the market is fearful, Florida in 2009.” I like to say this was sponsored by Crown Royal rib eyes and Florida sunsets. I love God’s waiting room. Still to this day, I love it. I haven’t bought many stuff there because the markets recovered. People have gotten on that gravy train. If you’re a new investor these days, where should you be looking to invest?

This is coming from a note side, a note and a contract for a deed side. The markets I’m going to go through here are not the leave all, be all. If you’ve got a family in your neighborhood or family in a specific city, don’t get bent out of shape. That’s an asset that you have that’s not listed on here. Having family members understand the business, having a realtor, sister, brother, aunt, uncle, mom, dad, pops, son or daughter. That’s a different strength. That’s a different asset that you have available to you that not everybody has. Don’t get bent out of shape if I don’t mention your city with the state that you love. Looking at where the market is and the stuff that we see on a regular basis, I’m a big believer in what I call two conferences 2.5. What do I mean by conferences? It’s the big major five conferences in the United States.

Big Ten Conferences

The first one would be the Big Ten Conferences made up of schools in Ohio, Michigan, Illinois, Indiana, Pennsylvania, Maryland, Wisconsin, New Jersey, Minnesota, Nebraska, and Iowa. There are eleven states in the big ten. It’s on your map, all on the light there as you can see. I’m not going to buy everything in every one of these states, but that’s a great place to start. I still don’t buy in every state. There are a few of these states that are extremely popular with some great opportunities involved. Most of the cities are going to be over 100,000 in population. Some of the ones in smaller southern states may be 50,000, which is okay. It’s still a good size. I’ll go below that if I know what’s going on from buying in bulk.

Stick To The Major Cities

If you’re a brand-new investor, you probably need to stick to the larger cities of 50,000 or 100,000 or greater because the economy is at scale. There’s plenty of people there to help you out with if you’re not used to doing it or you’re doing this part-time. Stick to the major cities. Michigan is where we seek the most amount of inventory. I still see a lot there. You’ve got Detroit, Lansing, which is the state capitol, Grand Rapids, Sterling, Flint, Warren, Sterling Heights. Those are the eight biggest cities in the area with plenty of inventory in those areas. There are plenty of realtors and plenty of repairing people if you need to. Your servicers are licensed in Michigan. There are lots of opportunity out there and Michigan is still not the longest foreclosure process out there.

Does it get cold? Yes, but there are still lots of opportunities there because the fact that Michigan itself is rebounding strong. 5% to 10% of these cities have major universities inside of them, Michigan State and others like Ann Arbor, too. I was leaving one off in Ann Arbor as well where the University of Michigan is at. Indianapolis in Indiana is a major market, but outside of that, Fort Wayne has recovered very strongly. Evansville is doing very well. I was surprised Evansville is as big as it was. When I looked at it I was like, “It’s the third largest city in Indiana.”

Bloomington where the University of Indiana is, South Bend, you have Touchdown Jesus, Notre Dame, Fighting Irish. Then, West Lafayette area where Purdue is located. You will see that a lot of these are in the major cities where there are big universities at. I don’t like rentals or student housing. You got people coming in and people like, “Do you want to buy instead of rent?” Ohio, Columbus, Cincinnati, Toledo, Akron, and Dayton. I would not invest in Cleveland. Cleveland has got too many problems with it now especially the city wanting to charge you a nice $10,000 bond that makes you upgrade the properties quite a bit. Say away from Cleveland. Columbus is the largest city there. Cincinnati is also doing well. Toledo, Akron and Dayton you’ll find plenty of inventory there. You’ve got to make sure of the price that makes sense for you.

We have a question, “What about Gary, Indiana?” I wouldn’t buy in Gary, Indiana. It is one of the large cities but unless you’re going to spend some time there. There are pockets of Gary that can be very nice, but you need to know that city on a “street by street.” I don’t like Gary. I’ve been shot twice there. There’s enough inventory in the rest of the area that you don’t want to deal with gangs and violence. You’ve got Pennsylvania, Philadelphia, Pittsburgh, Allentown, Erie, Redding and Happy Valley. It’s not the biggest of cities but when you have the university or the Penn State there, I’d throw it in. The fact is that you’ve got a major university there for you. Philadelphia is the biggest one, Pittsburgh the second, and then those are the top five that rolled out. Maryland is also in the big ten. Where is the location with foreclosure laws and such? It’s still less than a year when you look at Philadelphia and those crazy Eagle fans.

Illinois has been known to have a longer foreclosure time frame. I’m not including Chicago in here. Other cities outside of Cook County, Aurora, Rockford, Joliet, Naperville, Springfield, Peoria, and Elgin are not bad markets. You still got to expect about nine months’ foreclosure time frame in those areas. They’re not corrupt at all compared to when you look at what is going on in Chicago or Cook County. Unemployed people may have made some great money there. I’ve been to all those areas. They’re all decent sized areas and nice.

Big ten don’ts are the things to keep in mind that I would not do. I don’t see much in Iowa. I’d probably stick to the one or two biggest cities in Iowa, Ames or Iowa state. In Minnesota, I don’t see my stuff there even though it’s my homeland where I was born. You have the twin cities, Minneapolis-Saint Paul area which got a year redemption period. I don’t see that much stuff in Minnesota. I don’t see that much stuff. It’s cold up that neck of the woods. It’s the land of 10,000 lakes and is more shoreline than California if you didn’t know that. Minnesota is more shoreline of all the lakes they have. I don’t see much paying their bills in Nebraska. It’s not that Nebraska is a bad area. If you see something there that stick to whatever that Nebraska is, it’s in Lincoln for the most part. I got a couple of other assets in Nebraska doing fine. I don’t see that much stuff in there as well.

Choosing Markets: If you live in a state that has a ton of inventory that makes sense, you should be bidding on a lot of stuff.

I’m not a fan of Wisconsin because the property taxes are through the roof. I removed it from my list. The thing that you got to keep in mind everybody, you don’t have to invest in everything. Pick out two or three states that you like, that you’re comfortable with, and go visit with those. It’s an important thing to keep them. Avoid Chicago and Cook County. I’m at a point where I’ve eliminated them completely from our list. I don’t buy anything from New Jersey. It is part of the big ten now with the Rutgers being there. It takes forever to foreclose. If you live in a state that has a ton of inventory that makes sense, you should be bidding on a lot of stuff. In Austin, Texas we’ve got Cedar Park, Round Rock and Pflugerville. Kyle, Buda on the south of it. Those are areas I would buy if I saw stuff here. That’s not big enough areas like Austin but still part of the metroplex area. When you go back to these areas, there’s something right in the outskirts of town. Don’t ask a question. What about this site? Is it within twenty minutes, 30 minutes? That’s the thing to keep in mind. Don’t get so bent out of shape on little things.

What about the Western states? One audience said that you’re not going to find anything in the Western states that makes any sense financially now. Don’t waste your time in California unless you want to buy $0.95. It’s the same thing with Arizona, Nevada, Utah, Oregon, Washington state. All those are priced expensively. I’m not saying you can’t find anything in there. In Colorado, you might see something that makes sense like Pueblo. Pueblo is a depressed area. This is why you got to be smart. California is the land of fruits and nuts. All the drops that have dried up the fruit, so you have nothing but nuts there. You’ve got people that are paying way too expensive for stuff. When you see nonperforming portfolios going at $0.95, $0.96 on the dollar in California, anytime you start seeing on the MLS for stuff selling retail where they say, “Appraised price will not dictate sales price,” it doesn’t make any sense to pay there. Plus, what would you rather do? Take $1 million and buy one property in California or buy 40 properties in somewhere else? Think about it. Be smart.

Our audience says, “I live in California and it goes up every single day.” We are in Nortonville. If you’re righting it up, congratulations. You get some equity, but it doesn’t make sense to be minor. The next conference I would look at is the Southeastern Conference. The SCC is made up of Missouri, Texas, Florida, Tennessee, South Carolina, Kentucky, Louisiana, Arkansas, Mississippi, Alabama, and Georgia. You’re going to see a lot of stuff in this neck of the woods like you did in the big ten-part. In the Fresno area, you’re not going to see anything in there.

The Big One

The big one is Florida and I did not know this until I did this one. Jacksonville is the largest city in Florida. I was surprised. It was also the slowest city to recover in Florida. Everything started down the tip of Miami and grew from there. You’ve got your ten biggest cities, their Jacksonville, Miami, Tampa, Orlando, Saint Peter’s, Hialeah, Tallahassee, Port St. Lucie, Cape Coral and Fort Lauderdale. It’s gotten expensive there. You’d probably be paying closer to the mid ‘60s, ‘70s because of depreciation. Florida is a little overpriced, but it’s still one of my favorites. I like it there. It’s going to take a big hit as well for the market changes because $0.30, $0.40 of every dollar spent on real estate is still from the international buyers coming in.

Georgia is a fast foreclosure state. It does have the license requirements already and you don’t need a mortgage broker’s license to buy there. They’re not that difficult to get. It takes a little time to do it. You’ve got your big cities like Atlanta. At Columbus, I did not know that sets where the stuff is from. Augusta, Macon, Savannah, Athens and Aberdeen, which looks a little bit further down below 100,000. The rest of these are all yielding above 100,000 in size. Look at the cities that are in there. You can do your own work. DuPage County is not that bad. South Carolina is a very nice area. It’s going through some great growth. Columbia, Charleston, North Charleston, Mount Pleasant, and Rock Hill are some areas that are doing well. Rebounding cities are the six largest ones in South Carolina. It does have a twelve-month foreclosure time frame, but still with a lot of good opportunities there where depreciation is taking place as it’s growing over that time frame. Nashville, Knoxville, Chattanooga, Clarksville, and Murfreesboro for Tennessee.

I did not include Memphis in there. Why? Memphis is an 85% real market and it’s being hit hard. A lot of investors have stopped doing it because you have people that don’t care. Nobody pays on time. They bounce from one room to another one for the very difficult law blight going on. A lot of law growing blight in Memphis. In Nashville or Knoxville, you’re not going to see a lot of stuff there. Nashville is about as expensive as it has gotten in Austin. Those are the cities in Tennessee with it being a faster foreclosure state. Memphis has its own country leaks. Alabama does have a redemption period of about a year.

There are still some good cities in it. You see a lot of inventory down there like Birmingham, Montgomery, Mobile, Huntsville, and either in Gulf Shores, which is a nice part of the state. If you can find something in there that you can foreclose on and pay off the reduction rights, great and good stuff. Otherwise, it’s still going to take you a little while to foreclose. You’ll have a little bit slow depreciation in there but you’re also around some bigger universities especially in Birmingham. Those are the bigger ones. The physical store is not one of the bigger ones, but it’s a nicer part of the state. Foley, Alabama is not on a bigger area, but still got some nice growth to it and done well.

Tuscaloosa, that’s where the University of Alabama is at. Tuscaloosa should be in there. It’s not necessarily in Opa-Locka unless it’s a good size. A question from our audience is, “Do I work around to buy in Georgia until you’re licensed?” Yes, you work with somebody who’s got a mortgage broker license in Georgia. Kansas City, Missouri is different from Kansas City, Kansas. You’ve got to be very careful about St. Louis because it’s got a lot of crime, some blight taking place there. Springfield, Independence, and Columbia where the University of Missouri is at. Independence is near. Kansas City and Springfield have been great. I haven’t had anything wrong with those.

A big thing about St. Louis is you’ve got to be careful if you’re buying down by the big dump that’s down there, the landfill that got an underground radioactive fire that has been going on and taking place, but there are good areas of St. Louis as well. I’ve totally spaced Kansas because the fact is it’s not in the SEC. It’s in the big twelve and about a year to foreclose. Kansas will not be back in the bigger cities in Kansas. In Mississippi, Jackson is the biggest market down there. Everything else falls off dramatically below 100,000 people. You’ve got Gulf Port, Southaven, Hattiesburg, and Biloxi. The big thing about Mississippi is you want to be as close in downtown in those cities. You don’t want to be on the outskirts because there’s a lot of blight, a lot of poverty. It’s a poor state. The closer you can be to the main area where you’re seeing stuff, the better. It’s not trash everywhere.

Hattiesburg is not in the SEC where you have Southern Miss University. It’s not a bad area. I’ve been through there a couple of times. Biloxi is the same. Gulf Port is right in the water. In Kentucky, you’ve got Louisville. Bowling Green is where you have the interesting Bowling Green in Owensboro. Those are the four bigger cities areas where I’d stick to. I wouldn’t go outside of those areas because a couple of years they’ve made a lot of REO’s that was for below value stuff, $3,000, $4,000 or $5,000 that were affecting values on traditional sales. Lexington is important. Lexington is where the University of Kentucky is. I would buy in Lexington.

Choosing Markets: If you find someone that you’ve partnered up with, give them 10% of your profits and they run everything through their LLC.

If you find someone that you’ve partnered up with, give them 10% of your profits and they run everything through their LLC. That’s what you do. Another question is, “It worth getting debt collectors licensed in Illinois? How expensive and how difficult is it to obtain?” It’s about $700 a year. If you’re going to be buying in Illinois. Yes, go ahead and get it. You’re going to need it. SEC don’ts and this isn’t negative by any means. It’s some of the don’ts that you probably want to do. Memphis, Tennessee is with 85% rental community. Lots of blight. When you get a spreadsheet in, delete those off. Texas, which is unfortunately A&M. I don’t see anything and it’s too expensive. Most of Texas is part of the big twelve countries but it fell into this and made it simple for me. It’s not too expensive. What I do see is usually stuff that’s got a lot of problems with it. That’s what I usually see when we do see something in Texas either it’s rural, remote or maybe down by the valley. It doesn’t mean you can’t come across a bank in Texas that’s got good stuff to move like our good buddies, Adam Adams, Joel B. Arena and Jimmy Kubiakhalf.

If you’re going to be reaching into the banks, there’s nothing wrong with that because you’re dealing with the masses. I would not make Texas one of your top three or top five states. It’s not one of mine. As far as the University of Arkansas, I don’t see my stuff in there at all. It doesn’t mean you won’t see something. Hot Springs, Bentonville where the Walmart corporate headquarters are, you might see some stuff there occasionally, but I don’t see that much. Stay away from rural areas. If it’s in a state that you like, great. If you’ve got family, great but it’s still rural with 500,000, less than 5,000 people. Louisiana has got a six-month time frame which is not bad. You’ve got to be careful of all the flooding that takes place there. It’s not that you won’t find some stuff in Baton Rouge and New Orleans from time to time, but you will. It’s just a different type of judicial foreclosure process there. I’ve never been a big fan of Louisiana. Alabama is having a one-year redemption period which is different than if you’re buying a contract for deed there where you can evict relatively quickly.

When you’re buying a note there you may want to try to figure that out if you get a foreclose. Pay off the redemption rights or offer up cash for that aspect so you can take the property back and then use them if you’re going to foreclose. Another one of the big conferences is the Atlantic Coast Conference and that’s made up of North Carolina, Virginia, Massachusetts, Florida, Georgia, and South Carolina. The biggest ones you’re going to see mostly in North Carolina are Charlotte, Raleigh, Greensboro, Durham, Winston-Salem, Fayetteville, Gary, Wilmington, and High Point. Most of those areas are with over 100,000 people.

ACC is going be a little bit more expensive though because it is a faster foreclosure state. Virginia is a non-judicial foreclosure relatively quickly. Virginia Beach, Norfolk, Chesapeake, Arlington, Richmond, Newport News, Alexandria, and Hampton are the biggest cities in the neck of the woods. I don’t see much stuff in Virginia. I’ll see stuff occasionally in Norfolk, Arlington or Alexandria. So that’s why. There’s similar stuff in Charlotte or North Carolina than you will in Virginia. I didn’t throw West Virginia in there. I don’t invest in that area because it’s too rural. I don’t see much stuff in Massachusetts which is part of the ACC with Boston College. It’s overpriced. In New York, New Jersey, New England area, I don’t see that much stuff. We covered most of the states in the big twelve. I don’t deal with the Pac-12 because that’s all overpriced.

Are There Vendors

One of the things that’s also important and we’re looking at a market is are there vendors? There are things available and places to meet people. Most people struggle with this. They struggled with the networking and go, “I’ve got to reach out to people. Do I got to get some help?” Your first and most important thing is you want to make sure that your servicing company is licensed to do business in that state. Not every servicing company would be licensed in all 50 states, they don’t need to be. There are going to be licensed in the states where they’re getting most of their business. Make sure that if you’re investing in a state that surfacing company you’re going to use is licensed to do business in that state. A good website to go and find attorneys in that state is LegalLeague100.com. If you don’t see a lot of attorneys in that market or in that state, it may not be worth your time to invest. The bigger the city if you start getting above $50,000 then there should be plenty of attorneys there.

Realtors are the lifeblood of real estate. You’ve got to have realtors book comps for you. We’re not talking about Zillow as much as I love NoteProz.com. You still need local realtors to help you out with the evaluation, pulling comps, and telling you what the properties are worth. Realtors will have access to repair teams that can help out with proper evasion, changing the locks. Those are important to have as well. If you have somebody there who don’t know how to reach out, then go to Realtor.com or ActiveRain. You can go to your local REI clubs or real estate investment clubs and we find those on Meetup or National REIA groups by doing a search for that. There are bigger groups in the cities across the country.

What’s so important about these? You’ll find a variety of people there, realtors, attorneys, preservation companies, and investors who might want to buy that deal you’ve got. They might want JV, fund, or buy it from you. When you’re investing, one of the big things that I did was I spent a lot of time and I connect to it a lot of minutes. If you’ve been to my Fast Track training, you’d know that we go through a lot with our meetups. We pull a list of the larger media groups in the country, so I have access to them, a member of those. If I’ve got something that pops up, I can jump on, post something there, and reach out to their membership lists or the president and get a referral for somebody in that area.

Meetup Groups

If you like a market or like a city, see if there’s a Meetup group, all you’ve got to do is go into Meetup.com and look for a real estate and then the city. I won’t look at greater than 25 miles away from the major city. If you’re in an area that has multiple cities nearby and they are bigger areas, then you’re going to have a little bit of crossover. It’s important to try to find a Meetup group that’s active and got some members. Not ten people, but something with 50, 100 members at least, 150 members or something like that. The bigger, the better. A 100-member group is not going to be more active than the 4,000-member list. It all depends. If you can make it, great. Sometimes this is all doing stuff online. Talk about learning things abroad, but sometimes it’s worth getting on a plane if you could go see it for yourself and do your own little note roadshow.

I’m not trying to sell you anything. This is not me with a sales pitch or anything at all. I’ll be jumping on a plane Thursday afternoon flying to an undisclosed location. I’ll be looking at about twenty, 25 of my assets and about 40, 45 other assets that several of our sources sent to me. I’m not going to tell you the market probably until I’m there and looking at things first thing Friday in the morning. I’m excited about it. I’ve thought about this in the last couple of days. I’ve got a couple of tapes in. I stare this down and I’m like, “I’ve got bids in and waiting for candidates to come back.” I’m going to get a bit of itinerary approved and then I’ll jump on a plane to where I’m flying to go take a look at some stuff.

One of the things I’m going to do is the power of marketing, the power of video. I’m going to do some Facebook Live and quick photo updates in front of each asset. We’re going to be doing some cool things and deal sheets. I’ve got Shannon to work on some videos of the assets, pulling some great street view photos. I’m excited based on the look of some of these. Some of these have been paying for a little bit, some of these are not paying. I’m going to drive by roughly 40 to 50 assets Friday, Saturday, and Sunday then fly back on Sunday night. Steph is going with me so I’m excited about that. We’ll be doing our own road show and we’ll share with what’s going on. We’re not selling tickets to it. You can’t ride along with us. We’ve got to be able to turn in Burn and get rock and rolling from there.

Choosing Markets: A lot of people looking at having $50,000 to invest with but can’t buy anything in their backyard.

You’ve got probably plenty of people in Silicon Valley looking for deals elsewhere. It’s a lot of money made that way. A lot of people are looking at having $50,000 to invest with but can’t buy anything in their backyard, but they’d rather buy two houses or two notes in Columbus. We’re going to do one of these in Ohio, the week before the Ohio note expo or note event that Vena Jones-Cox will be doing for the Ohio area. I’m going to fly out there and do that on Tuesday, Wednesday, Thursday depending on what assets we still got and some stuff to look at.

I made 40 offers. They didn’t accept any of them. They wanted higher bids so let me know. I make counters back. I bumped my bids up about 5% across the board, waiting to see when they come back. We’re pulling pictures, a couple of online values, and some other stuff here. I’ll share with you step by step as we go up like here’s a picture of the house, here’s what we look for, here’s what we’re looking at, this looks good, borrowed on the outside, up if not paid in a year here, let’s see what’s going on with this and those stuffs. One of the things I will do with this PowerPoint as well is I will upload it to SlideShare. You can find me on Slideshare.net. We’ll upload the PowerPoint presentation on there. If you want to go back and look at the cities, you’re more welcome to. You’ll be able to go there. You’ll be able to download the slide and share the PowerPoint.

Do I share where you’d find your nuts listed for sale? I’m not going to share that. There are plenty of sources out there if you’ll go to an event, but I’m not going to give you my personal sources just because I’m a nice guy. If you’ll come to my Fast Track or to our coaching, yes, we do that for our Mastermind students. I don’t do it for people I just met. One thing, if you did not get a text message from Send Me 2000 reminder. One way you can do that, and you can help me out, is if you text the word Night then send to 72000. That would be a reason if you did not get a text message from me, you’ve never registered for that. Then you’ll be in the system for text message updates and stuff like that, especially as we start driving some assets and deals on that stuff because we’ve got some cool things working on for that.

I have done this for a long time with what we do and there’s always a variety of different things. The market changes on a constant basis in all business. You’ve got to be careful of where you’re buying it. The markets I used to buy, I’m not buying any more. The markets I’ve bought in, I want to shoot myself in the head sometimes. I make mistakes all the time. I’m not going to be the first person to say or tell you that I’m perfect. I’m far from it but I like to share things that can help you overcome things. It’s the ESPN thing. If you’re looking for a market, go to ESPN.com and look for the big five conferences. Where those colleges are at, you’re probably going to do fine being in one of those areas.

I was looking at Virginia Tech in Blacksburg, Virginia. The population is 42,000. They figured around another 20,000 to 25,000 students. It’s a small town feel for me and less than 50, but you’ll still probably do okay. A question from the audience is, “Are you going to talk about the Mastermind?” The big thing about our Mastermind is we get together at least three times a year usually three to four days. Some come in earlier, some stay a day afterward. Our mastermind is made up of great people who get together on a regular basis to work on our businesses. This is development. I bring in speakers, new sources, new marketing things, how to raise capital, the research that I do, and share with the group. It’s a great tight-knit audience of amazing individuals who have a big heart in giving.

If you think about some of the people who have gone through our Mastermind, we’ve got two people that are closing a lot of deals. Some of the who’s who in the note industry up there. Before everybody goes to the Mastermind, they come in and spend three days doing a Fast Track training in Austin. In-depth, that’s where we keep those groups small usually about six people or less. That’s a $15,000 check to write and to be able to come to a Fast Track and to a Mastermind. It’s four events in a year, three mastermind events and a Fast Track. It’s not that expensive when you combine that all together. With the resources I’ll give you, the list, the asset managers I’ll show you exactly who to call, tell them I sent you, the bonuses you get, the discounts, the help, the coaching that we give on a constant basis is unparalleled in the industry for our Mastermind. It’s well underpriced based on what I see other people charging for a whole lot less.

There is one question here, “You said debt collectors license was required in Illinois, is the servicer supposed to have that too? Would that also apply to an IRA?” If you’re funding totally your IRA, it’s not needed. You individually still have to have a debt collector licensed. It’s different than the servicer. In other states it solves it, but in Illinois, they’ve got to have a way that makes more money off of you. Back to the Mastermind, we stand by it. We’ve got a great success ratio of people doing amazing things, closing deals. Before, during, and after we always like to get people involved in making offers. Make deals, we close notes. That’s why we have that. When our biggest competition says that our students close deals and we know how to market, that says it all. That’s what we’re here for. We do offer payment plans if you’re interested potentially, break it up over a few months for if you need it as well.

Hopefully, this was helpful. Don’t be overwhelmed and look at stuff in all these markets. That’s the worst thing you could possibly do. You will flip out. Pick two or three states and focus on the bigger cities in those states and you’ll be a lot happier. If I lived in Ohio, I’d be the Ohio note king. You have enough there. You should be making tons of deals or offers every month. If you live in Michigan, the same thing. If you live in Indiana, Illinois, in those four states alone, you should be making a ton of offers in those areas. Those are the land of milk and honey for you. If you’re in Maryland and getting rid of the foreclosure or in Pennsylvania, there are plenty of deals in those areas. Yes, there are other states that look faster. If you don’t listen to the podcast, do me a favor and check out the podcast, Note Closers Show. If you’re not a member of the WCN crew Facebook page, check it out and we’ll try to get you out of there as well. Otherwise, go out and make something happen. I will see you all at the top.

Important Links:

Love the show? Subscribe, rate, review, and share!

Here’s How »

Join Note Night in America community today: