The most important thing in the note business is finding notes. Yet it is probably the most difficult thing there is to do. The thing about banks is that they sell notes and continually generate them. Brecht Palombo discusses some of the ways to use Bank Prospector to find banks with bad assets. Brecht walks us through a proven three-step system for sourcing bank direct notes from institutions. With the aid of a software, he is going to teach us how to use the Bank Prospector. He also talks about the goals you need to set, from how many sellers to connecting with the right people in control of assets.

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Listen to the podcast here:

Prospecting For Note Gold with Brecht Palombo

This is a great bonus session from Note CAMP 6. We always keep the spot open for rockstars. I’m honored to have our special guest. We’ve got a variety of people that are on. We have note investors, real estate investors and people who want to learn a little bit more about note investing. We have a five-year goal at the beginning of this year to help educate and create over 10,000 note investors. We’ve had over 7,000 people join us on Note Night in America alone in 2018. I’m stoked about that. We hit our one-year mark with over 2,100 students of some sort for this year. We’re on pace to hit that number by the time that rolls around.

I want to go through some upcoming events and scheduled things to mark your calendars with. Our Note Mastermind kicks off on December 7th, 8th, and 9th in Cape Coral, Florida down at the Westin. We’re going to be doing a note investor meetup on the 6th at 6:30 as well at the Westin, Cape Coral. We’ve got a few sneak peek spots left available if you want to come and see what the Note Mastermind is all about. Our first Fast Track Training of January is on 11th through the 13th here in Austin. I’ll be then heading to the Bahamas for Mr. Landlord Retreat on the 16th through the 19th at the Atlantis Resort. I’m looking forward to that. If you are interested in joining Sidoti’s Crowdfunding Workshop, they let me know that they’ve got their date set in Orlando on the 7th and 8th. We have our first Virtual Note Buying Workshop of the year, February 15th through the 17th. I’ll be in San Diego after that February 25th to 27th for the big Traffic and Conversion Summit. There are about 700 other marketers out there. Our March Fast Track Training is on the 15th through the 17th. If you’re looking to get something rock and rolling, you definitely want to take us up in January or March because those dates are going to fill up fast.

Over 450 people were on Note CAMP. Over 10,000 views across the social media channels. Over 1,000 posts from you out there, sharing different content or sharing images. Thank you. Hopefully, you all learned a lot from it. We’re enjoying the reviews and enjoying what people are sharing online there. We are honored to have our guest on here who is a part this. We bring on Mr. Brecht Palombo. We will move into it and bring on our buddy who is joining us from the West Coast. I’m glad you’re alive, that’s what I want to say.

First off let me say, you’re the hardest working man in the note business. I can’t believe those schedules that you got coming up there. I’m not sure when you do anything else.

I don’t do anything else. I don’t have kids, so I can get away with that. When you’re taking it to the Bahamas, going to the Traffic and Conversion Summit in San Diego, that’s not really work. I’ll enjoy that in San Diego. When you enjoy what you do, it’s not work.

I was in San Diego for a mini-summit. I get together a couple of times a year with other guys who have similar businesses to mine. They’ve got these electric scooters. They’re all over the streets. You get a nap, you woke up, you unlock and you ride away. It costs you $1 or whatever. They were the greatest thing the whole time we were there. Then it got a little nutty. I had an accident on one of those things. I must have been going fifteen miles an hour or something like that. I hit the pavement and I got a cracked rib. I appreciate you for excusing my absence. I know we talked about doing an earlier session but it’s much better for me to be here. Watch out when you’re in San Diego for those.

We got those damn things here in Austin, Texas too. I went down on 6th Street and I almost got taken up by three or four guys. I was like, “You can’t be riding these on the sidewalks.” A few people in here have read about you talking about these on the blog.

If you’ve read about this before, then this isn’t going to be new and here’s the reason. We’re going to be talking about the fundamentals and the fundamentals don’t change. I got some new slides and we got new programs and some new offers, we got about 21 responses there. If you’ve read about this topic before, I’m going to cover the same things, which is I’ve found essential over the years that we keep coming back to what are the fundamentals. I’m not going to teach here one weird trick that’s going to convert your life or anything like that. I’m going to teach you a proven process that many people have used. It’s the same system all the time and the same process. With that, what I like to kick these things off with is some data most of the time.

 

Do you want me to hold question until the end for the most part or interject as we get going? If it’s relevant, do you want me to keep it or not?

Sometimes what happens is I get doing these things and someone will ask me, “How do you value a note?” I’ll be like, “This is not the topic.”

I’ll kill those comments until the end.

I’m showing the Case-Shiller Home Price Index. The gray bars are recessions. This is our past peak and then we’re right back up there. This is the Green Street Commercial Property Price Index. What they do is they peg this to 100 in June or July of 2007 at peak and then here we are way above our pre-crisis peak. If you’re wondering what’s going on out there in the market, if you’re paying attention right now, you know that we’re in a bit of a bubble. Everywhere you look, CNBC, The Motley Fool, National Real Estate Investor, the National Mortgage News, Wall Street, we’re all talking about a bubble. What we’re seeing is that in a lot of areas, that bubble has been pricked particularly in some of the higher-flying areas like New York, North Carolina, Seattle, Portland, San Francisco and in LA.

It’s interesting that this data that we have because the homeownership rate is still at all-time lows. We’re way back. The percentage of people own the home that they live in. The employment to population ratio, we all know this top-line data about the unemployment rate being super low. What’s weird is how they get there because they just cut out all these people. The fact is that in terms of the percentage of people who are working we’re way back to 1986 in terms of the percentage of people who are able to work or who are working. Residential loan delinquency is stubbornly historically high. In fact, it’s at about 247% of free global financial crisis levels. That’s our current default rate. What that says is that even as we’ve had the markets come up and pricing come up and all that, a lot of people are still struggling to pay their bills and to pay mortgages.

The thing that we know is that bubbles always pop. The thing is that profits are made up when you buy. The people who I know who are moguls in the business, who own tons of stuff, a lot of them got started back in the RTC days. If you don’t know what that is, this is the time after the SNL crisis and the RTC was this Resolution Trust Corp. which was a set up just to clean up the mess. During that time, there were a ton of deals out there. The thing is that in real estate, it’s much easier to make your money when you buy. Even though we’re coming into this time where values are coming down, I wouldn’t take that to mean that I should get out of real estate altogether or get out of notes altogether. It’s probably one of the best times to be in notes because you’re going to be more insulated because you’re so low in the stock rate. The equity gets wiped out first. The owners get wiped out first.

Meanwhile, you’re secured either receiving your payments or collecting on the collateral through the assets. I think that in a time like this, there’s no better place to be than the notes. It’s not the stock market, it’s not Bitcoin if you’re following that pricing now. Owning the debt that’s secured by real estate, that is the place to be in my opinion in this climate. The biggest challenge in the note business though is that there are internet joker broker chains. Folks out there who know a guy who knows a guy who knows a guy or gal. There’s this recycled product. People who see tapes that are years old get passed around out there. There are lot of folks out there who bought wrong and they’re looking to get more than their assets are worth. There are a lot of people trying to jam themselves into transactions and we’re seeing a lot of competitive bidding for some of the best assets.

Finding notes is the biggest problem. Finding notes that makes sense is the biggest challenge in the note business now. There is no note business until you find the note. It doesn’t matter what you do for analysis or due diligence, if you don’t have assets, there’s nothing to do. Finding notes is the most important thing. It’s probably the most difficult thing that there is to do. The thing is that banks sell notes and they continually generate notes. In good times and in bad, lenders are out there. They’re making loans. Some of those loans go bad, then they are disposing of those loans either by selling them or by foreclosing on and them and collecting on them. This is a regular repeat recurring process that they’re in all the time.

There are about 11,282 banks and credit unions in the United States. I’m going to walk you through a proven three-step system for sourcing bank direct notes from these institutions. Institutions like banks are repeat, non-emotional sellers of distressed assets. When you talk about a repeat, how many distressed sellers do you know selling on a repeat basis? They don’t. Private sellers aren’t selling in a distressed manner again and again. You might find certain funds or whatever who are doing that but for the most part, if somebody is taking a bath on some stuff, they’re not then selling again. You’re not having a friendly relationship. Banks do this over and over again, non-emotional. If you’ve ever dealt with any private sellers at all, you know that it doesn’t matter what the thing is. It’s worth way more in their minds than it’s worth to anybody else on the planet.

You can go and talk to them about their property. As you walk around it, they’ll reminisce about the toilet that they put in and the swing in the backyard and all that and there’s nothing, but emotion wrapped up in their assets. That makes the whole deal cloudy and more difficult. When we’re talking about repeat non-emotional sellers, that if you’re going to build a big business, that’s the place to be. It’s something that you can work on, you can count on, you can grow with and you can scale. If you’re a direct institutional seller, you’re looking at repeat deals, you cut out the middleman, you get much better pricing and you have this continuous product that just keeps coming. That helps you defend your margins and protect your profits.

Usually, most of the things you heard about finding notes especially from banks for sale is BS, except what you’ve heard from Scott and his friends. We’re going to cross the biggest myths about getting notes from banks. I’m going to walk you through the proven three-step system for sourcing notes. I’m going to teach you how to use our software which is called Bank Prospector. It’s been around since 2009. I’m going to teach you how that aids in the process. I’m going to give you an opportunity to try it risk-free if you decide that this is something that you want to do yourself.

Why would you listen to me? First, let me say this. I don’t come from a long line of bankers. I don’t have any special connections. I didn’t finish college. There’s no reason that I should have had any particular success in this. I didn’t have any special leg up, none of that. I’m the Founder of DistressedPro.com. I’m a licensed broker and auctioneer in a number of states. I have completed more than $200 million in asset sales for lenders and closed over 300 transactions for them. I started full-time in real estate back in 2001. I started selling assets for banks in 2006. I’ve been very fortunate to enjoy the company of dozens of experts. One of the things that I pride myself on and I’m very proud of with regards to DistressedPro is that a lot of the content that goes into there like the sale indicators and the different numbers that we look at, comes from various experts. They have had collectively many decades of experience in doing this. That’s where what I’m going to show you comes from. It’s not something that we made up a process. This is a process that’s been distilled from a lot of experts.

Here’s what we’re going to cover. Here are some of the deals that we have done for banks. There’s a $40 million hotel note, subdivisions, small commercial office properties, multifamily properties, broken condo conversions, portfolios of gas stations and individual residential homes. Let’s get into crushing some of these myths. The first thing is a lot of people believe that everything gets foreclosed on and then sold as REOs. More than ever, lenders are looking to sell notes rather than foreclose. Selling notes speed up recovery. It reduces administrative costs and it helps avoid municipal entanglements. That cry out there that it all gets listed with realtors is just not so. Banks won’t deal with you directly. You’re probably calling on the wrong banks. I’m going to teach you how to call on the right banks.

Calling on distressed property owners. I don’t know anyone who has had success with this. Owners have nothing to do with the sale of their notes, so they have no rights to their paper whatsoever. The lender owns the paper and the property owner has the right to be in the property so long as they’re paying the note. Calling property owners to buy their note is not going to get you anywhere. There’s no more product. I hear this a lot. There’s not anything left out there. Lenders are always making loans. Loans are always going bad. Now, residential defaults are still way above pre-crisis levels but almost 250%.

Step one is we want to identify our target banks. All successful prospecting, it doesn’t matter what you’re selling. If you don’t start with a good list, then it doesn’t matter what you do. You’re not going to have good results. You have to start with a list. Successful prospecting starts with the list. In any prospecting, you need to do this. With more than 11,000 lenders in the US, you just can’t call them up. You got to focus on those who are the most qualified and most likely sellers. Which banks should you put on your list to start with? I’m going to suggest that you start with qualified community, local, and regional lenders. Local lenders, when possible, if you can get in, if you can find a way to sit down with them, you’re going to learn so much faster than if you don’t have that opportunity.

There are thousands of lenders. There are some in your area that you can go get a sit with. I’m going to suggest that you avoid your top twenty banks, Chase, Wells and B of A. Don’t bother calling on any these guys right now. Let’s cut our teeth somewhere else where there’s less red tape, where we can get more direct right to real decision-makers, where those people can make a call and decide to do business. The top twenty, they’re harder to connect with the right person. There’s more vetting of you and more procedure to go through. There’s more bureaucracy and typically there are larger deal sizes required. If you don’t know what you’re doing yet, there’s no reason for you to go.

 

For a lot of people, it’s like elephant hunting. They see that they want to run off and chase these things down. I recommend you don’t do that. That leaves just 11,262 lenders for you to call. If you called ten every workday, it will take you five years and seven months to get through that list once. That doesn’t work. That’s not the process. Step one, what I suggest you do is you start with a manageable list of prime targets. These are your target banks and some of them you won’t be able to reach, some of them won’t sell to you, but some will. Those are the ones that we’re looking for. I’m going to suggest that you set a goal to get five to ten sellers that you can work with. If you have five to ten sellers who are selling even once or twice a year. Think about, Scott, what’s a small portfolio for a bank to sell or a small deal to do bank direct like that?

It will probably 20 to 30. I’ve gotten one off before but some of them will send out once a quarter like Synovus’. The Bank of Georgia or Bank of Tennessee, they will have a quarterly sale. It varies from bank to bank. They still have stuff on a regular basis, that’s the beautiful thing.

If you are getting one or two deals from five or ten sellers, you’re talking about tens of millions of dollars probably in transactions.

It’s cleaner paper too because it’s direct from the source. The collaterals are there and the notes are there, the servicing. It’s a much cleaner transaction.

The I’s are dotted T’s are crossed for sure. Five to ten repeat sellers can make a big book of business for you. What I suggest that you do rather than get into our 11,262, is we’re going to prequalify the prospects with good research upfront. Here’s what you need to know to start making your target list. Bank’s report on twelve categories of non-performing notes. The first thing we want to know is do they have what we’re looking for? The things that they report are one to four family first position, junior liens, HELOCs or lines of credit. Owner-occupied commercial, non-owner-occupied commercial, multifamily or apartments which is five plus residential units, commercial construction, and land help for development. One to four family construction, farmland and agricultural land, CNI debt which there’s an increasing interest in. If you’re out there and you’re making calls to lenders and you’re finding some of this, there are a lot of buyers right now. Consumer credit cards and auto loans, I’m talking to an auto loan guy who’s been doing nothing but that for years.

The first pass is we want to know, “Do they have some of the stuff we’re looking for?” That’s the very first thing that you need to know. Then the second thing you need to understand is the way that things are moving through the lenders. They go through four stages of default in terms of how these things are categorized and bucketed within the lenders. Thirty days late and still accruing interest, 90 days late and still accruing, then it moves into non-accrual. Anything more than 90 days late is considered non-performing. Ninety days late and non-accrual together are non-performing. Non-accrual means that there’s no longer any hope of those assets being repaid according to terms. That’s the technical definition for that. Finally, if it goes through this and they don’t sell the paper or they don’t fix it then it gets into REO. This is your sweet spot right here.

Phase two, you should have some qualifying questions of your target list. There are a couple of ways we can do that but here are the questions that I like to ask. I would ask these and when I say ask these, I’m not calling up and asking them. This is what I’m asking the data. I’m looking at the data and I’m saying, “What are the answers to these qualifying questions? Do they have assets in my area? What types of assets are they preparing to sell? In which portfolios are they having the most trouble? Do they have non-performing assets specifically held for sale? Do they have a history of selling non-performing assets? Do they see their portfolios improving or deteriorating? Finally, what’s the maximum deal size potential?” There’s other information that you can get or you can glean before ever talking with them.

These are the core first pass that I go through in order to determine does this bank go on my target list? There are answers to these. Typically banks with few exceptions are lending where their office locations are. If they’re taking charge-offs, this is how they prepare their books to take a hit. If their non-performing loans to loans ratio is more than 6%, this is an indicator that they’re having trouble in that specific portfolio. If they have late non-accrual loans held for sale, there’s a specific bucket they put it in, that’s a good indicator that they’re a seller. If they have sold non-accrual assets in the past, that’s a good indicator that they have a process internally for dealing with it.

When we look at their loan loss provisions, this indicates what their future outlook is. All banks have a rainy-day bucket and it’s called the allowance for loan and lease losses. Any money that they put in there and they’re required by regulators to put money in there, any money that they have in there they cannot lend on that. The banks are in the business of lending and then making money on what they lend. For every dollar that they have to set aside for the rainy day and they don’t get to lend, they’re not making money. Loan loss provisions, if you imagine allowance for loan and lease losses is like the rainy-day bucket, the loan loss provision is the scoop. That’s how much is either going in or coming out there.

We look at that to see what they’re thinking about their portfolio. There are free resources for prospecting. You can go out there and you can do this yourself. I did this before, way back when I first got started in 2006. I was up to my neck in spreadsheets, which is part of the reason why I built Bank Prospector, but you can go to the FDIC.gov. You can download their bulk bank reports. The pros are you get it for free and you get the bulk data and the cons are but it comes out one and a half to two months later than the data that we have. Unless you’re good with Excel, it’s hard to work with and there’s no searching or anything like that.

There’s the FFIEC. At the very end, I have a DIY kit. You can download the zip file. It has instructions and has all this laid out for you. You can do this if you’re interested in doing it on your own, and then the NCUA.gov. When you download a report, you’ll have a PDF and you’ll have line items. This bank’s non-accrual assets sold during the quarter in this particular report format, there would be zero. This bank sold $241 million in change in non-accrual assets during that quarter. This data is out there for the finding. It’s going to help you immensely in determining who to go after first or if at all. You can do this on your own business and what it looks like when you download the reports. You get this giant file full of CSVs, then you can start opening them up. If that’s how you want to spend your time, you can do it on yourself just like anything else. I definitely want DIY.

What Bank Prospector does is it automates prospect research for non-performing notes and REO. It’s going to help you build the list of highly qualified prospects in minutes and it’s going to eliminate time-wasting research. We have guaranteed up-to-date information. We do nightly updates. We breeze through the FFIEC there. The FFIEC is an organization where all the banks plug their servers in there and then they file electronically. They file their quarterly reports but then they also file addendums throughout the quarter. Each night we go, and we pull from their servers and we download every new update. When we have a reporting month, from the very first day that any lender’s report, you’ll have that information which typically won’t be on the FDIC for even a month and a half after the full reporting. Most of the time, we have two and a half to three months lead time on any manual search that you could do.

That brings us to step number two. First thing, we go and pick our lenders. Maybe we’d find 25 or 50 or 100 lenders who seemed like we’d have a good shot. The next thing that we want to do is we want to start identifying decision-makers because deals are done between people. You’ve got to find the right people. They’re not advertising that they’ve got non-performing assets for sale. We’ve got to find the right people. A lot of folks want to do it like this. They want to go, and they want to find a property in foreclosure and then they’ll see if maybe they can find the person who is responsible for that deal. I suggest that you do not do this. Instead, what you do is you find the person who is responsible for the assets and then you do lots of deals with them. This is a much better way to do it. These are identifiable people within the organization and it’s going to bear fruit much faster, much more quickly than trying to do anything like this. Find the people, not the property.

They’re not filing reports for individual holds on. This is one thing that a lot of people reach out to me and they say, “How am I going to do this? Where’s the list of the non-performing notes?” That’s not what we’re doing. In Bank Prospector, we’re not giving you a list of all the non-performing notes for every bank. That would be wonderful. That is not a possible thing because banks don’t report any of that data. They file their data in aggregate, meaning all lumped together in different buckets. They don’t have to do any reporting on individual whole loan. If you’re looking at public records, if you’re going into public records to look for troubled assets, most of the time you’re only going to find notices of default and most of the time that’s too late. That means they’ve already gone through and engaged an attorney to foreclose. An NRD is not a helpful way to pursue that. There’s no public data for individual home loans in default which is good. If you think about that, if you could look up and see that Dick Jones’ place is 31 days behind in his mortgage, that’s a drag. I don’t think I want to live in that world anyway.

Don’t try to track down individual assets. Make connecting with the right people in control of the assets your priority. I suggest that you find one to three decision-makers for each of your targets. I suggest that you do this first before you begin prospecting. Identify the contacts before you prospect. Don’t do your research as you prospect, find your prospects first. If you make a sale, you make a living, but if you sell a relationship, you’ll make a fortune. If you have folks who rely on you, who know that you can deliver, who know that you’ll pull in Scott and anyone else who’s needed to get the deal closed and that you’re going to perform, they will call you again and again. Especially as things get a little hairy as we’re going into whatever comes next in the economy here.

With Bank Prospector, we’ve got decision-makers for 98.5% of the institutions. The way we used to do this is that we are plugged into LinkedIn, and we are plugged into Data.com, and we would let you go and get those contacts from there. What happens is that all of that stuff went away so there isn’t anything we can plug into to get that info out anymore. We built a whole in-house team. We built the big backend application that’s not open to the public. It’s just for our researchers. Then I have full-time people who all they do is research and call and find contacts, full-time, all time, day and night.

 

We add 600 to a 1,000 new contacts per month to the database. We’re coming up on 30,000 people. We also have a contact research concierge service. If you go to one of our lender records and you find that the particular contact or type of contact that you’re looking for isn’t there, you click a button and you say the title that you’re looking for from one of our pre-approved lists of titles that we know to be worthwhile. Someone on our research team goes and finds that contact and you get an email with the contact information in your inbox or they come back and they say, “We already looked for that contact, it doesn’t exist. Or that one doesn’t exist but here’s one that’s similar.” In any case, we do all of that for you. It’s totally done for you.

That’s a combination of technology that we built in-house plus a very well-trained team. That brings us to the next thing which is our prospecting system. We find the banks that we want to talk to. We find the people who work at those banks. The next thing is I want you to add them to a prospecting system. This is where a lot of folks fall down, and we’ll talk about why and how not to. If this is what your typical funnel looks like, you’re going to have a whole bunch of prospects. In this case, we’re talking about let’s say that you had 50 banks and you’re doing one to three. We’ll call on an average of two contacts that’s 100 contacts for 50 banks. Here they are and then we’re going to only speak with so many of them.

There are only so many who we’re going to be able to reach them or they’re going to get back to us. There are only so many who they’re going to be like, “Maybe we can play ball.” At the end of it, there are going to be deals. Any kind of deal-making that you’re doing, you’re going to put them in the hopper and you’re going to get some percentage out. What happens in between should be scripted. It should be a thing where you say, “I’ve got this contact. What do I do with it? I do A, B and C and then we see what happens if I get to the D.” This is how most people approach prospecting. It’s like, “I’m going to do a research there on the internet. I’ll think about this for a little while. I’ll send them an email and see how that goes. I might pick up the phone. I’m not sure about that. I hope they reply.” Then they get into this again and then this is what they do.

Rather than having prospecting time, what they have is they have some time at the computer where they’re futzing around. I’m going to recommend you don’t do this. You go in, find your banks, find your list, take your list, and put it into a system. Let’s talk about what a defined prospecting system. There are three kinds of prospects. There are sellers who are ready to sell now. There are sellers who are ready to sell at a later date. There are non-sellers and we don’t care about them. We’re only looking for these two. How do we find them? I didn’t make this up because there’s no reason to reinvent the wheel. I’m a big fan of Gary Keller. Scott, do you know Gary Keller?

Yes, I do. He knows his stuff. He has a short sale department that he used to run, the Keller Williams Corporate office here in Austin.

He wrote The Millionaire Real Estate Investor and he wrote The Millionaire Real Estate Agent. Those are all about processes. I’m going to borrow from him because he’s got a huge business. I recommend that you do an eight by eight. That means eight touches over eight weeks for your first pass. I’ve got my hundred. I pick a batch for this week and then I’m going to find my now prospects with my eight by eight. I’m going to take a batch of these. Whatever it’s going to be, whatever your schedule allows, a lot of people are going to look at this and they’re going to say, “I don’t have time to call 100.” Do you have time to call ten? If you have time to do ten this week and you do ten next week and the week after that, pretty soon you have 100. By my count, it’s just ten weeks and you got to 100.

I suggest that you set this up and then you add them in whatever manageable size batches you can do and you do this on a schedule. You might send an email, you might connect with them or hit them up on LinkedIn. You might send another email and give them a call and say, “Did you get my emails?” You might even send them a letter. If you do, you’re going to stand out because nobody’s doing that anymore. Send them another email, another email and at some point, we’re looking to do a deal. If we know what this looks like before we begin, then it’s not very complicated at all. We have everything written out. We’re not thinking about it. We’re just taking our list. We’re plugging it into the system.

It could be that you get to the end of this and your system didn’t work that great. We’re going to have some analytics so that we can see. If I sent 100 emails and I got five replies, what could I do differently to get ten replies or twenty replies? If you don’t have a system like this, then you have no idea what you could do differently. That’s a major trap that people fall into. They’re not sure why it’s not working but they’re not tracking anything that they’re doing so there’s no way to fix anything that might be wrong. You want to avoid that. Assets that you’ll need, and I’m not talking about real estate assets but would be like a call script, some email templates, a couple of email scripts, maybe some direct mail templates or something like that.

Take a day, take a weekend and sit down and map it up and say, “What’s this going to look like when I call? What email am I going to send?” Send that same email to all of your prospects first. Then we’re going to evaluate performance and see how it’s going. You’ll find later prospects. This is going to get a little bit more advanced, but this is again from Keller, a 33 Touch. What a 33 Touch is 33 touches over the course of a year. This is how you’re going to find your later prospects. Your 33 Touch annual follow-up. We talked about relationships and this is where that starts to come into play. Send them a holiday card, put them on a holiday card list, or send market updates. You’re paying attention to the market areas where they’re lending, where you’re buying. You should be sending them an email that says, “This is the market. I don’t know if you saw this but here’s something interesting that’s happening in the market right now.” Interesting articles, give them a call quarterly, make an introduction to somebody you think that might be helpful for them. These kinds of things where if you do this, you’re going to be very hard to ignore. When the opportunity does pop up, you’re going to be there, top of mind.

If they’re only selling once or twice a year, if you call them now, there might be nothing on their radar. They might get a stack of files on their desk, Monday, after the holiday here. That stuff that’s got to go before the end of the year. It happens all the time. If you’re there, you’re going to get a shot. If you’re not there, then you won’t. It’s as simple as that. Find out their birthday, meet them at conferences. One of the things that helped me out a lot was I went to the American Bankruptcy Institute Conferences. It’s a $99 a year membership to belong to that thing and you get access to all kinds of attorneys who frequently worked for banks. Go to TMA, the Turnaround Management Association where you’ll meet all kinds of workout officers and special assets people. Send them articles, give them a call.

This is what something like a 33 Touch would look like and it’s scripted. You take a document, take a spreadsheet and write it out. What would I do and what are the dates? Just put it down and that’s it, then take your contacts and put it in there. This is Paul Marshall’s $22 million in UPB in about six months from a cold start. He began calling in September or October. He closed his first deal in February or March. It was a huge deal for him. It sold almost $240,000. He represented the seller in the sale of these notes to a private buyer. It’s just a fantastic deal. Joe Bayarena, 33 non-performing notes.

This was a great deal. Paying notes at 1.1, I think it was 31 notes. 23 of them were performing with equity. It was a portfolio on a bank in San Antonio. All these assets are in San Antonio. The bank wanted to sell off the loans in this one particular portfolio and they sold it at $0.45 of the unpaid balance. Eight of them were non-performing, the other 23 were performing basically. It’s been a killer deal for him.

The reason they sold those was that they were out of the box. They no longer fit in the lending box for that lender. They didn’t want these anymore and that is not uncommon. They’ll change guidelines for whatever reason, sometimes from regulatory. In this case, it had a special program or whatever. I got a call from a bank out of Lubbock with things like this. The little package of commercial stuff that didn’t fit in the box anymore and so it had to go. That thing happens all the time. This is Eric Williams, 2.2 million UPB in note pool and he found it very quickly. Bank Prospector Expert, we’ve got 100% banks and credit unions in the United States. We’ve got a local lender search that will help you pinpoint targets with what’s called our advanced search. It will show you no portfolio information, key seller indicators. You can hone in. You can save your searches. We have some features coming out where you’ll get notified as different things happen within the portfolio, so you don’t have to keep checking.

We’ve got contacts now for all but the smallest banks. The banks that we don’t have contacts for are like one office in the middle of North Dakota, that kind of bank. We’ve got almost 30,000 contacts and we’re adding 600 to 1,000 per month. I’ve got the concierge contact request. We’ve got the advance contact exporting. The reason we built this was that some people are pulling the data into their CRMs or their mailing systems or even Power Dialers in order to be more efficient and scale their systems for prospecting. We’ve also got a light CRM in there which admittedly has ways to go. It offers you reminders and notes and activity tracking so that you can do everything that you need to do in one place. I put together a special deal for Scott.

The first thing I’ll do is I go look at our note indicators. Let’s see who’s got loans for sale currently. This is just in this particular quarter. It has one four family, first liens. This is a little simple search, I can save the search if I want and click run. This is a list of all the banks who currently have a designated bucket. This doesn’t mean these are the only ones who are selling. This means they have set aside a bucket that says this non-accrual is for sale and here they are. It looks like there are 33 at this moment. The next thing that I do is, these are some bigger banks up here but we’ll pick this one. I hope there are no whammies there. I added this to my target list. Here’s what we can see is we’ve got our REO balances up here. We can see what their REO trend is over here. We can see they added a ton of commercial right there, in this most recent quarter.

I can see that they do apparently have loans and leases held for sale periodically and they have non-accrual loans held for sale here as well on a regular basis. Here is mortgage banking activity. This is bigger stuff. Over here are regulatory capital ratios. What this says is whether or not this lender is healthy. One of the things people think sometimes is if they’re on the ropes then they’ll sell cheap. The fact is it’s counter-intuitive but it goes the other way. What happens is that reduces their total assets and when they do that, it can put them into a bind. What we like to see is either green or yellow and not red. If it’s red, that means they might be in trouble. This is our loan loss provisions. We can see they do keep adding to it every quarter. It came down a little bit that quarter but that means they are a little bit concerned about something in their portfolio because they keep adding to it.

They’ve got $251 million portfolio. They’ve got 1% here which is non-performing, but I would probably call them anyway. The next thing that we do if we want to reach out to these folks is we want to find a contact. We’ve got the vice president of mortgage loans, the loan officer, executive vice president of commercial lending, credit officer, and operations. We pick one of these. Let’s say I like this one. Now I’ve got their email, their phone number, and their address. I’m going to save that. I’m going to add it to my contacts, and now I’m off to the next. I’m going to go back and pick another. We could go right through like that. There are a lot of different ways that you can do this. When you go to export, we’ve got different ways that you can do. We’ve got an advanced export here. If you’re the type of person who’s going to pull these all into a CRM, you can pick exactly the information that you want to be in the export. Pull that into your own fields inside your CRM if you’re not there yet and that’s not what you’re doing.

The other thing that we have here is we’ve got our watch list. When we have lenders like this on our watch list, one of the things we can do is if we go to the Beach Community Bank and I say, “I found this contact and I’m going to call this person now.” Here’s all their information right here. I can say, “Call Jessica. No answer. Call tomorrow.” What this will do is it will automatically set a reminder for you to call tomorrow because it reads this, and it knows what you’re talking about. Let’s suppose you made this call and you found out that this is the wrong number or this email is bad or whatever it is. You click this flag button and you tell us what it is. This email is bad email, this a phone or they’re no longer with the company. What happens is it goes back to our backend system and it gets taken care of and you get an updated contact. There are other ways that you can find banks. You can just go to your local area.

We could go and look in Texas. There are 446 banks in Texas and I can see that there are 117 of them. I’m a commercial guy. I went for my CCIM training. I had a commercial real estate brokerage for a while. I like the commercial side of things for a lot of different reasons. I would look at this and say, “Maybe if I’m going after commercial REO, I know a lot of your note folks here works the same way. Here’s a list of all the banks in Texas with foreclosed bank-owned commercial REO, ranked by the total amount that they have on their books now.” We talked about step one is we’re going to build our list, and this is how you build your list when you have Bank Prospector. You don’t do a whole bunch of research. You don’t have to go around and pull out spreadsheets and all that. All you have to do is come in here and you find the lenders you’re looking for. I’d go to residential and let’s say I’m looking for junior liens and we’ll start here with these 30 banks that have late-stage, non-performing residential junior liens and we’ll add them to our list. This is our step one.

Step two is I’m going to go in here and I’m going to start adding context, just to tie it all back in. I take a look. They’re selling notes here. It’s a healthy bank. They regularly sell non-accrual loans. I’m going to go ahead and I’m going to find contacts. Here’s a special assets group, I got that and I’m on my way with this. Then we just rinse and repeat. We also have credit unions. We can do a similar thing now, they have different reporting. It comes in differently. What we can do is I could sort this down further by drilling into a state if I wanted to. In this case, I’m going to click on a couple of these, add them to my list and I’m going to go in here. It’s a little bit different.

For our reporting here, we get the actual number of foreclosed and repossessed assets. They have 75 of them. Only one of them is a property for $245,000 on their books here. If we look down, we can see they’ve got $84.4 million in loans held for sale. We don’t know what portion of those are non-performing or not. We can have a look at what they’ve got going in there in the rest of their portfolio here. Down here, this is where they list. It’s heavy in San Antonio and some other places that you would know, Scott, that I don’t know. That’s how it works.

In addition to this, we have some training. We have a lot of training while a lot of folks end up here. Unlike Scott who is the master of notes, I like to think we’re masters of prospecting. That is what we’re focused on here is finding the deal. We do have some due diligence and some other deal structure information in here but what we try to focus on is finding the deal because it is the most important thing. Nothing happens until you find the deal. What we try to focus on is getting you up to speed with being able to find the deals. One of the things that this comes with is called Mastering Bank Prospector. It is a training that is specifically for bank prospectors. It shows you how to get up to speed quickly and understand what all the numbers mean and how you can be efficient with it.

With that, I’ll take you back to the offer which is this. If you try us out now, you’re going to keep the Bank Direct Success Manual. This is an exclusive here. We have this thing that’s called the verified investors’ database. We’ve got several hundred investors in there who come and apply to get listed in the database. We asked them a series of qualifying questions and then we put them in the database and you can search for them by asset type or by location. Then you’ll get their phone number and their email. There’s a deal submission form. You can communicate directly with them right there. If you’re not somebody who’s like Scott, and I know Scott teaches, who’s already built a list of people to send your deals out to, to find your funding, to find your JV and all that. This is going to help you do that very quickly.

If you’ve searched for non-performing notes and stuff, you probably come across our site more than a couple of times on the Google there and so have these people. That’s why we have such a big list for that. If you want to try Bank Prospector now, we’re going to give you the Bank Direct Success Manual just for trying. We’re going to give you a bonus. The way the bonus is going to work is after you sign up, if you’re with us after the seven days and you decide to stay with us, you write into support and you say, “Give me that bonus.” You say it in a nice way and then somebody will add that to your account. Normally, it’s $199. We’re going to do it for $99. It’s half price. There is a seven-day money back guarantee.

You’ll pay $99, you get immediate access. You will not be able to do the advanced export and whatnot. What we found was that, unfortunately, this is a business where folks come in and rob you. We don’t want to do that anymore, but you do get a seven-day money back guarantee. Come in, kick the tires, look round, does it work like you expect it or are you getting the results that you want? You’ll still see the contacts and their info and all that. You just won’t be able to export. If you’re not happy, let us know and we’ll give your money back. There is a special coupon code that is attached to this. There’s no field to enter it in or anything like that. It’s only attached to this. It’s bit.ly/WeCloseNotes2018.

Here’s one thing that we’re doing. We realized that for a certain set of folks, we’re vastly undercharging. In the past, we were very much a software and plugged into LinkedIn and plugged into Data.com and all that. We’re a research firm and we invested a lot in doing all of this research and finding the contacts. What we found is that we have people with some different tiers of need in terms of the volume of contacts and all that. We’re moving to contact-based pricing. After this and going forward, we’re moving to contact-based pricing. Each month based on the plan that you have, you’ll get an allocation of contacts.

This is a screaming deal. If you look at there, most of the time, you’d be paying a couple of bucks if you go to ZoomInfo.com or if you have a LinkedIn and you’re paying for their premium services. You know that mostly you’re paying by contact. We had folks coming in like family offices and acquisitions firms were getting hundreds or thousands of contacts for $99. Maybe we should stop that. That’s what we’re doing going forward. It’s the Bit.ly/WeCloseNotes2018. The Bank Direct Mastery Academy is a six-week training course. If you decide that you’re going to try us out, then the next page after you put your credit card in there and your information and we create your account. We’re going to take you to the next page where you can decide whether or not you want to get involved with the training and it explains exactly what’s involved in there.

Some people want it, some people are using other people’s prospecting methods. What we have in there is in-depth prospect research training. We’ll show you how to get set up and do some goal-setting. We have scripts and templates for calling, for emails, for in mail and for direct mail. We go over on how to arrange things, seller rep, buyer rep, all that stuff. We don’t do a lot of the stuff that Scott does. We don’t talk about work out, we don’t talk about note and due diligence. We talk about finding and putting together the deal and making sure that you get paid.

Here’s the other thing that I want to give you for hanging on with me here. If you think this sounds interesting but you think you might want to do it yourself, you can do it yourself. We put together a little zip file for you that has some instructions on where you would go and what you would do in order to do this. That’s Bit.ly/DIY/REO/NoteKit. What that will do is you’re going to go direct to a zip file download and then you open that up and there’s a PDF instructions that shows you exactly how to go through that stuff. That was the link. Do you have questions for me?

We have a question, “The $99 covers what period of time? How long is that good for?”

A month.

It is a phenomenal offer. Go ahead and click on the link. You’ve got seven days, you can opt out if you don’t like it.

Kick the tires. I’ve been in business now since 2009. You’re secure. I’m pretty well-known, people know. You can find me. I’m not going to run off of your $99. We’ll still be in business next week and next year and all that. If you signed up and you don’t like it, try it for a week, tell us, “This didn’t work out. I can’t see anything,” and we’ll return your funds. We worked hard. One of the things that we’d like to do is I have folks who’ve been with me since 2012. We have always grandfathered people in, so we have people who are still paying $300 a year from long ago. Our future pricing at the top end will be more than that a month. If you get it now and you stay with us where you’re locked in, we are working on the release 4.0 now. We’re working on release 5.0 which will be better for mobile. If you’re on your iPad or your tablet, it’s going to work a lot better there. Do we have some questions at all?

We have another question, “How much is the six-week training course?”

It’s $497. You have one-year access to it. We suggest that you complete it one per week and that you do the practicum. You do the exercises in there. What some folks do is they come in. It’s like Netflix or something because there’s a lot of stuff in there. It’s 28 hours or something. There are a lot of videos. We try to make it so that each thing is actionable, and you can get to the place that you need to be. One of the other things that we have in there is that we have a curated list of all of our best interviews that we’ve ever had. There’s a mobile player for it. On these things, we go in-depth with people about very specific things. You’re on a couple of those. That’s another benefit we have in there.

Somebody asked, “If I am renewing, is the $99 grandfathered in?

Email us at Support@DistressedPro.com because I don’t have your account details here. I can’t speak to that. In order to run this operation, we have servers. I have half dozen full-time staff. I appreciate that people want things cheaper but I would like more. We got to stay in business here and keep going. I try to make it as affordable as possible. I found out that when we go too low, I get the wrong mix out there and so we’re not doing that. One of the big differences out there is you can find things like guides or whatever and some of the data is right, some of it is not. I find a lot of stuff out there is 50/50. A bigger point is that most of them you’re just going to get a mainline or department line. What we’re trying to do is give you real names, emails, titles and person to connect with. If I just give you the phone number for On Point Credit Union, you can call in but twenty calls later you’re looking for the right person. What we try to do is cut all that out for you.

Here’s a frequently asked question. Some people come in and they say, “I want the Bank Prospector and I want the training.” They start with the training and then they go, “I need a little more time with the training before I dive into the software here.” We’ll do that for you if you sign up now and then you get the training. If you say, “I want to spend maybe a few more weeks with this training before I start paying for the software,” we do that. It’s not advertised but we will pause your billing on the software and let you have a few weeks. It’s a pretty good time to spend with some training.

We did have a question, “How do we learn more about C&I loans?”

This business is like a lot of business. There are people or organizations who carve out their niches or whatever. The way to learn about that is to start getting involved. If you’re making calls and you’re uncovering deals, you get a live one and you go find somebody who’s doing these deals. You say, “I’ve got a live one.” You cut them in, you do the deal. You learn in the process. I know that for my first couple of years, I gave up a lot of commissions, a lot of fees to mentor. Not hundreds of dollars. We’re talking a lot of money, tens of thousands of dollars or hundreds of thousands probably for the mentorship. If you’re still looking, then if it’s not an asset type that Scott is an expert in, then you need to find an expert and they’re out there and there’s plenty of them. You’ll find one in our investors’ database. I got approached by somebody who’s looking to buy restaurant papers. Anything where they can take over food service type of stuff. You would find the deal and then you go to the investor to say, “I’ve found this deal, let’s do it. Cut me in. Show me how we do it.”

I gave up a lot of money on my first round of deals as well to get myself through it.

If you do decide to do the training, we have a script builder in there. What I did is I worked with Sandler Sales Institute. It makes a lot of sense. I hired a private coach. It costs me $500 an hour. We worked on how to make better calls. I used to work in a boiler room $100 a day, two hours talk time minimum, so I wasn’t foreign to calls. I want to make sure that I got it right, especially as you’re moving upmarket and you’re talking to people. It’s important that you get it right. I worked with him and we came up with the script that I use to find deals. What I did is I took that script and we deconstructed it and it’s one of the things that we go through in the training is how to put together exactly the script. We’ve got a call flow chart.

We’ve got the different sections where you put in whatever is particular to your business. Here’s what we say, here are the things you change for your business. What you’ll do is you fill that out and you submit it to me. I will actually do a personal review for you. Once a week, I get all of the scripts that have come in. I know I see the look on your face and you’re thinking, “How does he do that for $497 and still talk to people?” I’ll get the script and I’ll do a personal review. I record it for you and then I send back the audio file for you with my changes there. You have a personalized copy of the things that I suggest that you do to improve or fix.

Take advantage of this. Brecht, as always, thank you so much for coming out here and giving some great content and great training. Then also offer an amazing special you should all be taking advantage of. One of the biggest things we saw at Note CAMP was people wanting to take action and get started. Here is the no BS way for you to get rock and rolling.

Get it now, consume your first week and then hit the ground running next week. Thanks for having me, Scott.

Thank you so much to Brecht Palombo. I’m looking forward to it. You guys take advantage of that. Go out, take action and we’ll see you at the top.

Important Links:

• Note Mastermind
• Fast Track Training
• Mr. Landlord Retreat
• Crowdfunding Workshop
• Virtual Note Buying Workshop
• Traffic and Conversion Summit
• Mr. Brecht Palombo
• Bank Prospector
• DistressedPro.com
• FDIC.gov
• FFIEC
• NCUA.gov
• Data.com
• The Millionaire Real Estate Investor
• The Millionaire Real Estate Agent
• bit.ly/WeCloseNotes2018
• ZoomInfo.com
• Bit.ly/WeCloseNotes2018
• Bit.ly/DIY/REO/NoteKit
• Support@DistressedPro.com

About Brecht Palombo

I bootstrapped distressedpro.com from concept in July 2009 to a thriving online business serving real estate investors and brokers across the country.

Members of distressedpro.com are professionals looking for the edge in their REO or note business. They use the software and training to find, qualify, and connect with banks and credit unions with distressed real estate assets, C&I and credit card debt.

Before starting distressedpro.com I served independent real estate investors and developers to maximize their return in the acquisition, reposition, and disposition of commercial, multifamily, and construction projects.

As an auctioneer I worked for lenders, special servicers, attorneys, court-appointed trustees, receivers and businesses and provide them with rapid commercial real estate, multifamily, and construction property or note disposition services via online auctions, live auctions, sealed bid, or hybrid bid formats. I act as a single point of contact for real estate auctions nationwide.

• Here’s How »

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