EP NNA 38 – Building A Perfect Pitch Book

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NNA 38 | Pitch Book

NNA 38 | Pitch Book

 

Some investors may have come into the industry without having any background on marketing. As we all know, the note business requires you to market yourself and your business in order to succeed in it. You will have to make presentations, speak at an event, or even just talk to your potential clients. Overall, you will need to ace your marketing skills. Scott gears you up for that as he shares about building a perfect pitch book. He starts by laying down the important components you need to present that will highlight your competitive advantage. Rounding it all up, Scott shows you his own pitch for We Close Notes, giving a great blueprint on how you can do it as well.

Listen to the podcast here:

Building A Perfect Pitch Book

This episode is all about the perfect pitch book. Thank you all for being here. We do these on a regular every Monday. For those of you that are joining us for the first time, welcome. We’re glad to have you. We’ve got a lot of great stuff to go through for you. We throw these videos up on our TV channel at WeCloseNotes.tv where you can catch every one of our videos out there for replays, whether it’s Note Night In America or our podcast stuff. Make sure you hit the Subscribe button if you’re either following us on YouTube or Vimeo. That way, if you miss a webinar or miss a call or something like that, you’ll be alerted of when we upload our newest replays for you. Along with that, many of you are probably familiar with our bigger podcast that we host almost every day is the Note Closers Show Podcast, over 400-plus episodes there under 250,000 downloads. We’d love for you to review. Give us a five-star review and subscribe. We had many people leave us reviews on iTunes or on Amazon. Thank you for everybody who left a review.

On the podcast, we’ve got lots of great content, interviews and guests. We had Elijah Whites with Serving Social talk about some different things. We also bring on different vendors on a regular basis, whether it’s Quest Trust Company or Laughlin Associates or CreditSense or Madison Management. Lots of great nuggets there for you as well. Before we dive into the main stuff, I want to go through a couple of events. Our next Fast Track Training is March 15th through the 17th. We do have another day for that, but that’s the next available one. March 15th, 16th and 17th. That is the last week of South By Southwest. We have Note CAMP 7.0 on April 4th through the 8th. That is an online event. We have our last Fast Track Training on April 19th through the 21st in Austin. The following weekend is the Note Mastermind also in Austin, Texas the 26th, 28th.

We’ve got an East Coast, West Coast and here in Austin in between as well for everybody. The upcoming days are going to be very busy for us and for those that are around us looking to get some education. Our Fast Track Training is our one-on-one three-day coaching. Come and spend three days with us. It’s a small group setting, six to ten people mostly. Once you go through that, you’re part of the Note Mastermind that we meet three times a year. If you’d like to find more information, drop me an email at Scott@WeCloseNotes.com and we can schedule a phone call to talk about it. It’s our in-depth coaching, our three-day Friday, Saturday, Sunday coaching for everybody.

We do have a special thing for those that might be new. We have a couple of chapters left in our Loan Tales book. It’s a story of 50 note investors and 50 different case studies. If you’ve got a story about any type of note deal, it doesn’t have to be nonperforming, if you’ve got a performing note or a partial or a wraparound or a Subject To. We had somebody talk about their hard money business is creating and originating notes that way. Residential, commercial, first and seconds, get your story told. I’m excited about those that have already signed it for a chapter. We’ve got one or two chapters still available. I’d love to have you. We’re going to get this published. You don’t even have to worry about writing your story. We have made this extremely easy for you.

What we do is we jump on a webinar, a Zoom call. I pick your brain about your past. What did you do previously? What do you love about notes? How did you get into it? We dive into the case study for you to talk about. What we do is we take that video, we get it transcribed and then we give it to our ghostwriter to edit. They put that into a uniform story. You don’t have to worry about trying to come up out of your head. I will interview you and we’ve had some great discussions. Laura Blunk did a great job. Chad Urbshott, some great stuff out there already for you who we’ve interviewed so far. We’re excited to have you and this is going to be a cool project. We’re going to market this thing everywhere. We’re going to be giving you electronic copies of the book besides some actual physical copies for you to have. This is going to be something that we use in our business on a regular basis and we want to help those authors out there that want to get shared out there amongst everybody else. Every person that’s got a chapter, we’ll interview you on The Note Closers Show Podcast. You’re going to have your own episode dedicated to your chapter.

This is something you can give to potential private money investors and potential investors, but we’re also going to distribute this to asset managers. People that we are buying on a regular basis. Who wouldn’t want to have their story and be featured in a book that is seen between 3,000 and 5,000 asset managers out there? We’ll also share this across REI clubs, Meetups, conventions as we go to and attend, an opportunity for you to do the same thing as well. We’re not asking $2,000 to $5,000 as it would normally go through if you’re dealing with somebody. We’re doing it $599, basically bare bones. Get the chapter, get everything printed, edited, done and see the value in the backend. I paid $10,000 to be in the chapter with Greg Reid, $5,000 for another chapter. I paid $600 to be in a chapter with somebody else. This is perfect for what we’re looking for. I’d love to have you. All you’ve got to do to is go to LoanTales.com. We’ve got a special group for you that once you get signed up for it, we’ll send you a link or two to fill out your information and schedule your thing. You got a deal you’re working on. We can dive into that and go with it as well. Once we do your story, our ghostwriter puts it together so we have an even flowing story. Once they’re finished with that, they’ll kick it back to our authors and you’ll have a chance to review that, edit it, tweak it, add or take away as you see fit and then we’ll look to get it published. You can go to LoanTales.com to RSVP or chapter now.

The Pitch Book

This episode’s topic is about the perfect pitch book. It’s something that I see many investors don’t have their stuff together. This comes primarily from the fact that you’ve come in from a spot where you had a previous job or previous experience where you didn’t have to market yourself or market your business. Every time I get up and speak somewhere, I have a presentation. I have what I call my own pitch book, whether it’s me providing content or providing some nuggets for those in our audience. There’s the ask for, “Do you want to either sign up for my webinar or sign up for my classes?” whatever it might be. I’ve got a pitch book. I used to put one together. I sometimes take it for granted, but why should you consider putting together a pitch book of some sort? Why should you look at doing this?

It organizes your discussion. It organizes your pitch. I saw Brady Durr when we were in Dallas and Brady was walking around with his portfolio. He had five different pages in there with case studies and exit strategies and things like that. He said they’re trying to pitch somebody at a real estate club. I think he was successful, which if he was, kudos to you, Brady. I also realize that a lot of people miss out on this opportunity on either BiggerPockets or LinkedIn, but they don’t know how to say. The thing about a pitch book is it guides you like index cards, like a PowerPoint it helps cleans up your presentation whether you’re presenting to investors or asset managers. You’re able to deliver what you’re talking about, share your experience.

There are a variety of ways you can use it like posting on LinkedIn if you’re dealing with other note investors, other real estate investors on there. If you’ve got a pitch book for those investors on some of the case studies and what your business is focused on. It’s the same thing on BiggerPockets. Wayne Snell has raised a couple of million there, Adam Adams, Chris Seveney, Paul Cooper and Dan Deppen. You guys are using some pitch book, something you have recording I was like, “That makes a whole lot of sense to have something that you can share.” You’ve got to have a pitch book for asset managers too. Many people aren’t doing that with a short video about what your focus is, because everything is going to video these days whether you believe it or not. Everything is going that way.

We have such a short attention span in the world nowadays that if anytime you can get ahold of somebody’s eyes and share that information in a much more valuable aspect, it works well. When you’re contacting new people on LinkedIn or contacting people in BiggerPockets, there’s only so much information you can put in there. Having a recorded video of something of you talking about what your business is focused on is a phenomenal thing. If you posted to YouTube, you’re going to get some amazing people or even put it in your email signature as you’re sending out to people you’ve met are things can be a phenomenal thing. Something that can help you separate yourself from the rest of the crowd. I don’t expect everybody to do that because I expect only about 10% of people or less to do something. Those in our audience now are going to get something valuable as we dive into it.

Let’s talk about what goes into your pitch book. There are a variety of different things and some people are going to have some good. Some of you had differently based on experiences. Your pitch book is going to tell a little bit about your business and talk about what you’re doing. One of the biggest pitch books I have ever seen is when I met with a realtor for the first time years ago back in 2002 or 2003. We were going to list our house for rent as we move to South Austin. This realtor, Mike Cusimano, came in and his pitch book was a three-ring binder that was four inches thick. I was blown away with the pitch book. He had signs. He had this entire huge pitch book. Before he was done, I was ready to get them to list it right there. A lot of realtors do this. Sal Buscemi gave a pitch book away on one of the episodes of The Note Closers Show, generic PDF that you could go back and edit it, but it gave you an idea.

What Is Inside Your Pitch Book

Let’s talk about what goes through your pitch book. You’re going to have a little about your background, your education, some of your experiences. You can tailor this so it’s about your strengths. You don’t have a lot of experience, but you do have a background in real estate investing. You haven’t done a lot of notes, “I’ve been a distressed real estate investor for several years or I’ve got an MBA. I’ve got a degree in business and a Master’s of Education in Real Estate. I’ve been an active real estate investor for many years.” You also want to talk about what your focus is. This is what are you pitching, whether it’s a deal or what you’re focused on.

NNA 38 | Pitch Book

Pitch Book: A lot of people will only talk about the good, which leaves a big elephant in the room of what could go wrong.

 

You also can talk about your team. That’s one of the most important things that a lot of people forget about is it’s not all about you. Your team, vendors, partners, affiliations you have, groups you’re a part of, there’s a whole great thing that you can do in what goes in your pitch book. I talk about the opportunities, I talk about the types of deals you’re doing or the due diligence that you do extensively on things, especially if you’re going into raising capital. Talk about results, some of the performance that we’ve done. Some of the case studies we’ve gone through. I’m talking about good and bad. A lot of people will talk about just the good and that leaves a big elephant in the room of what could go wrong. Share about some of the things, the due diligence that you’ve done and keep those in mind if anybody asks.

I’ve seen pitch books that have been detailed and long. Shorter has a better habit because I’m a big believer that if we can do a pitch book, especially digitally like with a YouTube video or a PowerPoint. You want to give some information but you don’t want to get diarrhea of the presentation. You don’t want to throw up all the information on the people in your audience because then they have no reason to call you. You always want to go to the ask. Send me deals, find my stuff, there’s always a hook that should be. Sometimes a hook is, “Contact me for more information.” Here’s what we do, “Contact me,” because those that contact you then are interested. I don’t say, “Here’s my deal.” If they don’t reach out to you, you don’t know if they’re interested or not. Sometimes less is a little bit more on stuff.

Competitive Advantage

One of the best things you can always put on is you’ve got a competitive advantage on things. I’m good at this because I know Columbus. I’ve lived in Columbus, Ohio for many years. I know Austin, Texas. I know because we’ve got this huge database of asset managers. It’ll vary a little bit, but everybody’s got different competitive advantages. Pitch basics, KISS, Keep It Simple and Short. I’m a big believer in the 10/20/30 Model and what I mean by that is ten pages outside of your intro or your first page, which is probably your logo. It will equate about twenty minutes in content. The 30 aspect of it is you want the posts, the words at least 30-point font. If you start getting below 30-point font, especially below 28, and you’re squeezing too much information. You’ve got to take the information off, either add a second slide or make a mental note to ask that question. Ideally, I don’t think your pitch should be longer than twenty to 30 minutes long. You need to keep it simple, straightforward. The idea here more than anything else is to gauge their interest and want to reach back out to you.

With us as note investors, there are two major facets that we’re going to be doing. One is, “Here’s what I do in the note business. Here’s what my business model is. I’d love to visit with about you more. Maybe you’ll potentially fund a deal or buy a deal from me.” Number two is the whole, “Asset manager, send me some stuff.” You’re going to have primarily two different pitches for your pitch deck. I would highly recommend before you film anything, you practice. Go through it a couple of times. It’s easier than it ever was before to film. You could use Zoom. You can go to go to the webinar. You could use BeLive.tv, which is relatively easy. That will link into Facebook. You could do a Google Hangout. There are a variety of different things. I don’t necessarily think you would use Facebook Live because there’s no way to share your screen or your images. Something simple, it doesn’t have to be long. Twenty, 30 minutes is ideal if you can. One of the most important things, a lot of people forget about this is you want to have an easy call to action. “Here’s a phone number, please give me a phone call. Here’s my email address, please jot this down.”

I’m a bigger fan of using one of two other things. I’d link something simple that they can remember. I like to put a link in there that they can go directly to an opt-in, either a text message. Many of you have heard me talk about text the word NOTES to 72000 or NIGHT to 72000, especially if it’s people to get them to register for the webinar. It’s also if I’m not speaking publicly, I’m not going to be able to capture a lot of stuff and I don’t have a table. I have an audience in front of me, “Text the word NOTES to 72000. You’ll get hours of webinars and also PowerPoint to walk you through.” Those are some easy things. It costs money for the services but it’s much better than, “Take my phone number down and call me or email.” I want something that they can click on that it’s pretty simple, first name, last name and time if I can. That sets up some things out there as well. What I thought I do in this episode is I put together a simple pitch book reaching out to investors.

We Close Notes

A little bit more about what I do in real estate investing. I’ve been an active real estate investor for quite some time. My company is WeCloseNotes.com. I am excited to share with you what we’re doing here at WCN. First, who is Scott Carson? I am the CEO of WeCloseNotes.com. I have been an active real estate investor since 2002. I’m a previous mortgage banker for years and also a financial advisor. I had all of my securities license for several years. I love what I do. I was also excited to be the 2014 Note Educator of the Year. It was one of the biggest honors I’ve received in the industry for what I do. I have been featured all across the internet in a variety of different periodicals from the Investor’s Business Daily, The Wall Street Journal’s courted me and Inc.com has had me featured on their website in the past. You may have seen me speak at a variety of events where there’s the National Realtors Association, the Think Realty Conference, the REI Expo or different real estate investment clubs across the country on a regular basis. I’ve spoken a lot on the specific topic of note investing. I’m a little bit of an expert. The most important thing is I have been buying commercial and residential debt since 2007. I am one of the premier experts in my field when it comes to buying and investing in distressed debt, whether it’s residential, commercial.

Who is WeCloseNotes.com? What is that? We’re an Austin, Texas-based real estate investing and we have an education side of what we do as well. We Close Notes originated in 2010 with the sole focus of buying and selling nonperforming notes or as we call them NPNs. We deal directly with banks and hedge funds. We’re not going out and posting bandit signs or mailing postcards and things like that to banks. How and where we find our deals is that we go direct to the source on a variety of different banks and hedge funds across the country that provides us portfolios. In the last many years, we’ve purchased over a billion dollars in debt. That’s been primarily for our own portfolio. We do have an education side. We’re a business and have been honored to be teaching other real estate investors how to buy and sell and invest in nonperforming notes as well.

Our sole focus as a company is buying distressed debt from banks at big discounts. This is one of the biggest things out there. We like that focus. We’re not doing a variety of other things. That’s our sole focus. Our goal is when we buy this debt, we become the bank. We have all the same rights that the bank does in foreclosing and working out the homeowners or the operators if it’s a commercial property. We have a lot of flexibility in what we can do. We prefer mortgages on owner-occupied assets. We do buy some assets with some equity, but we’re usually buying at such a substantial discount that we’re okay. We’re buying primarily in primary and secondary markets in the state of Ohio, Michigan, Florida, North Carolina, South Carolina, Texas, Indiana, Missouri and Kansas to name a few. We bought in over 30 states in our many years of experience. Primarily in nowadays market, that’s where we’re buying the most. Most of the primary and secondary markets in those states are our guideline. Our sweet spot is going to be assets on single-family homes that are valued between $50K and $250K. We’re usually not going above that because we like to stay in that beginner buyer market for the most part. We want to make sure we’re efficient in a big pond.

On the commercial side, we are looking at notes and properties that are worth at least $250,000 up to about $1 million in value. That seems to be the best sweet spot that we have found, especially in the commercial side with banks wanting to get rid of their stuff at a discount, same thing with the residential stuff. We like to try to stay above $50,000 value. That may be a dog house in California or here in Austin, but it can be a nice property in other parts of the country like Michigan, Indiana, some of those places. That’s our sole focus sweet spot, buying stuff from the banks that fit in its wheelhouse. That’s where most of our stuff is.

I will tell you what we are not. We are not a wholesaler investor where we’re putting stuff under contract and flipping it off for a flat fee. We are not a fix and flipper. We do not like to do rehabs. That doesn’t mean we don’t have that happen from time to time, but that’s not our primary goal. We are not a landlord. I do not want to deal with toilets and tenants and trash outs. We are not a joker broker. We’re not taking stuff that we see on online or we get from somebody else and spamming all across the internet. We are not these things. We’re not a joker broker trying to make something.

What we are is that we are always buying for our own portfolio, first and foremost. We’re always looking for a deal that we can add to our portfolio. That’s not saying that we may buy in bulk and move a few assets to some of our friends and colleagues, but we’re always buying for our own portfolio first. We’re turning problem properties into profitable solutions. There are a lot of distressed borrowers out there that we can pick up stuff at a price that makes sense and create not only a win-win for us and the borrowers but also a win for the banks and those hedge funds that have this in their books they’re looking to get rid of. It’s also a win for our investors. We’ve got an experienced in-house team. You’ve heard a little bit about me over several years’ experience, Bachelor’s in Business and Marketing from Texas State University. I’ve been an active investor for quite some time.

I’ve got an amazing team, starting first with our VP of Operations and Events, Stephanie Goodman. Stephanie has been with me for a few years, background in short sales. She does a tremendous job not only an active investor herself but does a great job running our in-house operations and our other events. We have Shannon Steidel, who is our in-house Marketing Manager. She handles a lot of our online marketing and our social media. She does a tremendous job with that. She’s a graduate of Texas A&M University. Stephanie went to Columbus State University out of Georgia. Shannon’s from that other school and college station out there.

NNA 38 | Pitch Book

Pitch Book: We are not a wholesaler investor where we’re putting stuff under contract and flipping it off for a flat fee. We’re not a joker broker trying to make something.

 

Hazel Rivera is our Portfolio Manager. Hazel’s got quite a few years of experience in the portfolio management side of working with borrowers, working with distressed borrowers. She came over to us after several years of working at Madison Management, a servicing company. It’s our premiere and featured servicer that we use. She was managing the portfolio and was able to hire away. She’s been with us for some time and does a great job of being a liaison between the borrowers and Madison Management and reporting back to where we are on our existing portfolio. Angel Maldonado, she’s in charge of our accounting and books. She comes into our office about once a month and works through everything and keeps all the numbers buttoned up.

We’ve got a pretty experienced in-house team that help us keep that boutique feel but also be lean, mean and a nice note-buying machine. We rely a lot on our vendors and our extended team of professionals that are out there. These are a few of our professionals that we work with, a team and the vendors that we use. Our biggest one is Madison Management out of New Jersey. They’re an amazing servicer. The servicer is the person that’s sending out statements and reaching out to the borrowers and collecting payments. Making sure we’re Dodd-Frank and CFPB compliant so we’re not violating laws in the debt collection side of our business.

If we’ve got borrowers that are a pain to deal with or being more aggressive and not wanting to pay, Madison will handle some of the foreclosure workouts. We prefer to send it to Singer Law Group. They’re an amazing group of individuals. It’s always nice when a law firm is working on your behalf, that’s contacting your borrowers. The borrowers seem to take a little bit more of an, “I need to do something now,” when they’re getting phone calls or letters from our attorney’s office. Singer Law Group is out of Irvine, California. They are working in a variety of states. Daniel Singer who runs that has done over 60,000 foreclosures and a ton of other modifications with previous working with Citibank and handling a lot of Citibank’s services back in the day. Daniel Singer, Matt Gillett, Joel Markovitz working over there are phenomenal and a key component to the success of our deals.

One of the great companies that we also work with is ProTitleUSA. Alex Goldovsky is the Owner and CEO of ProTitleUSA. The company is providing O&E reports for all the Fannie Mae note trades that you may have heard about in the news. They’re the company that we use to do title reports, title updates, to see what things are hanging around these assets as we’re getting ready to buy these. Ross Diversified Insurance, Ed and Mel Babtkis out of Orange County, California, they’re our insurance carrier. We do put insurance on our assets. They do this all across the country and it’s nice having a one-stop shop. They’re familiar with the note business and ensuring of distressed notes, whereas not every other type of insurance company is familiar with that.

We’ve also got some great friends and vendors. Laughlin Associates is a vendor that we use for a lot of our asset protection as far as entity structuring and making sure everything’s on board. We also are a big fan of our friends, Jillian Sidoti and Gene Trowbridge at CrowdfundingLawyers.net. They’re out of Temecula, California. As we’re doing and growing our business, they’re a firm that we use quite a bit to bounce ideas off of. Refer quite a bit of business from other investors out there looking to take their business to different levels and then raise a lot of capital. We could not do what we do on a continued basis not only with our in-house team but also our team of extended professionals. We’ve got realtors and vendors across the country in different markets for people that we work with, different law firms that we’re using to foreclose. Different realtor teams that are helping us not only on the valuation side of when we’re looking at assets but also on the liquidation side when we take an asset back and look to sell it as well. We rely heavily on our team.

Deal Focus Of We Close Notes

What’s our deal focus? Property values, $50,000, $250,000 in value. That’s on single-family residential. We avoid long foreclosure markets. We avoid New York, the New Jerseys when we see deals. Those areas take way too long to foreclose. We’re not opposed to a twelve-month foreclosure, but anything getting over twelve months does not make sense for us in the long run. We prefer occupied assets with payment history. If we can buy an asset where the person is living in it, it’s usually in better condition. If they made some payment attempt or some payment history in the last several months, it’s usually a good sign that we can get them back on track. We see about 50% modification rate or payment plan. Put in place when it’s an occupied asset with payment history. We’re buying notes that don’t always work with getting it reperforming. We’ll often offer up cash for keys for what it would cost us to foreclose. Our goal is to try to take that asset back as fast as possible to make payments. That was about a quarter of the time. Unfortunately, we do end up foreclosing. Borrowers will not be responsive, they will not return mail. We’ve had some interesting stories along the way with our vendors serving them, trying to get them to work with us. Unfortunately, foreclosure is going to happen. It’s business. We try to maintain a 30% or less foreclosure ratio.

We often find that if we can take what we would be paying in foreclosure costs and offer it up as a cash incentive to the borrowers, they’re more than willing usually to do something with us. If we do have to take the asset back, we try to price that asset to sell. We’re not going to try to squeeze every dollar out of it at 100% or more. We do not want to owner finance the assets for the most part. We do not want to turn them into rentals for us. Our biggest goal is we do have to take an asset back and price the asset to sell. That may require a little bit of rehab to it, but we have a tendency to avoid heavy rehabs especially from a long distance. It doesn’t make sense for us. It’s not the best use of our time. It makes more sense for us to move the asset, get the money back in and then double down and do it again and again.

To give you a brief synopsis of a lot of the assets that we’re targeting and what we’re looking for. Our big focus is to buy notes that we can buy and reperform. There was an asset in Fort Worth, Texas. We bought at roughly 48% of the unpaid balance that’s well below market value. You wish every borrower was like this. The first phone call, first letter out they responded and started reperforming on time. The return is extremely well and they’ve been performing on time for a few months straight. I see another at least a few months of performance before we look around to sell that asset off, somewhere between 80% and 85% of value. We bought it below 50% so it’s going to be a good return, not only on the cashflow for us if we choose to keep it, but also if we sell it off to a fund, a bank, or an investor looking for performing. That’s going to be a good return and a true win-win across the board for us.

Sometimes we get assets back. We had an asset that we thought was going to be a reperforming asset. Everything that we looked at in the collateral files showed it was occupied, online due diligence showed that it was in clean condition. The borrower was trying to rent the property out a few months before we came across this asset. We bought this asset at $44,000. It was valued about $100,000, $110,000. I bought the asset, got the collateral file from the bank, we opened it up and there was a signed deed in lieu of foreclosure right there in the top of the file. Lucky for us, the hedge fund didn’t do a lot of work on the collateral files. We did and we’re very happy we filed the deed in lieu after the assignment was recorded transferring ownership to us. The property needed little work, a little bit of landscaping. We’re able to get it almost a full price offer at $100,000 within 60 days and get the property sold. That was a great win-win across the board.

We’ll see apartment notes as well. Sometimes apartments can be a little trickier or a bit longer to deal with because you have longer foreclosures or you have stuff that dragged out a little bit. We had a small apartment complex that a hedge fund reached out to us to talk about bonding. It took us over 120 days of negotiating back and forth until we finally got the right price on this asset. It valued somewhere south of $300,000. We picked up this eight-unit in West Palm Beach, Florida for $175,000. It was almost fully occupied, but we were able to take it over in receivership thanks to the court grants receivership. We were then able to reach out and start collecting the rents.

Once we started collecting the rents, the borrower was much more willing to work with us. They were able to walk away. We sold this to the foreclosure auction a few months later after collecting a few months of rent for $310,000 for a nice $135,000 profit on roughly $175,000 investment. I wish they were all like that, but that’s not always the case. We see a lot of opportunity in that smaller commercial note market. It’s not quite ideal for a large bank or a large fund, but there’s a lot of great little base hit single, doubles and triples. Sometimes some home runs if you’re willing to roll up your sleeves and do some due diligence on it.

We’ve made a lot of connections with different banks and hedge funds that send us different lists on a regular basis, whether it’s a one-off asset or they’ve got a portfolio they’re looking to move. We feel blessed to have those relations that we’re doing. We’re also buying different loan portfolios and pools. We have twelve assets out of the portfolio of 60 that we bought. These were all a nonperforming, but they’re all occupied assets. We were lucky. We’ve got a steal of a deal and over 65% of these have been in performance of some sort, a nice chunk of them performing on time after 90 days. We’ve held onto it for a while. We’re in the process of moving them down as reperforming assets and we love buying portfolios because it allows for us to have a lot more bang for our buck. It also gives us a higher discount, especially because we’re taking over a sizeable portfolio.

NNA 38 | Pitch Book

Pitch Book: With deals, you will get some home runs if you’re willing to roll up your sleeves and do some due diligence on it.

 

All the assets look good. Some of them didn’t look the greatest. We were able to evaluate those assets and write-off the ones that didn’t make any sense for us or give it zero value when we ended up buying the portfolio. It’s a truly a win-win scenario when we’re buying portfolios because it allows for the bank to get stuff off their books. It gives us the opportunity to buy something even sizable, a larger discount, but also helps spread the risk out across the portfolio when we’re buying the loans. We have one or two assets across ten. They get rough or a longer drawn-out foreclosure. We’re often able to and easy to reach out to the rest of the borrowers and get some performance or Cash for Keys. We try to close on at least one to two, maybe three large portfolios a year. In the last few years, we have bought quite a few assets and these are in different areas. Not all of it is in one state, but that’s okay because we’re in relationships and a great network of people across the country that helps us.

To give you an idea of some of the markets and places we’re buying in. I have a chunk of our portfolio with the different colored dots representing different things that are going on in the asset, whether it’s red for foreclosure, orange for loan mods. Blues are either brand new ones or they’re in the process of a deed in lieu or give us the property back. We have another portfolio of stuff that we’ve purchased in the last several months. We’re constantly buying assets. We’re by buying a lot East of the Mississippi if we can, but we’re not afraid to go out west if the numbers make sense. Unfortunately, a lot of times the stuff further out west like California, Oregon, Washington, Arizona and Nevada are often a little higher priced because those are hot markets for investors in California. We tend to stay where we see the biggest bang for the buck and get the biggest ROI for us.

Six Things To Keep In Mind

There are six important things to keep in mind. Our number one goal is always to try to rehab the borrower. We don’t try to go into something, “We’re going to foreclose in case of the borrower out of me.” That’s not what we look at. Early on in my note career, that was my main focus and I left a lot of money sitting on the table by doing that. If we can get the borrower to rehab, if we can get them to get started back on time, this allows us to save money on attorney fees, reduce our servicing costs. It also saves us money in the backend where we don’t have to foreclose and then fix the property up to get it in a nice condition. If somebody is taking care of the property and living in that property, that’s a win for us.

We’re not going to pay taxes, less on the foreclosure cost, less on repair costs because somebody is living in it. We only buy first liens. We’re not buying junior liens. We’re not buying seconds. We’re not buying lines of credit. We only buy first liens. We want to be in control of the asset. We want to be in that first lien position so that the only thing that could technically wipe us out would be taxes, but that’s one of the things that we’re checking during our due diligence. We’re only buying below market values. We’re not going to be paying close to retail. I say 70% is less than here because there are a few situations that will go up to 70% and faster foreclosure markets like Texas and Georgia. For the most part, it’s below 70% of current as is market value. Not ARV, after repaired value, but we’re buying below current market values.

A big thing too is we rely a lot on our vendors. They’re reviewing files and they’re also pulling title for us. We always have a clear due diligence system that we go through when we’re reviewing before we pull the trigger on an asset. If an asset does not match up to stuff what we’re looking for, we’ll boot that asset out and move on. We’ve got some clear and specific lists, KPIs and steps that we go through when we’re doing due diligence, especially on a portfolio. There are a lot of moving parts, but we’re blessed to have some amazing vendors that help make it easy for us. We’re not the actual people reaching out to the borrowers. A lot of people think that we’re going to be the persons knocking on doors or making phone calls if they’re not paying on time. That’s not the best use of our time. It’s also not the best use of our investment dollar.

We rely heavily on Madison Management, Singer Law Group, different law offices across the country to handle not only the servicing but the borrower outreach. If we do have to foreclose, let them handle it. It’s not saying we don’t get phone calls from our borrowers from time to time trying to stay in the property and we’ll make some changes accordingly if it makes sense. A lot of times, we’ve given the borrower multiple options of staying in the house. By the time we start the foreclosure process, we’ve exhausted our measures of trying to keep them in the house.

Six, we do place insurance on the assets if something happens, act of God. We’ve got Ross covering our assets out there. If the borrower shows that they have insurance, we’ll remove it. Most of the time, we’re putting forced-place insurance. Ross Diversified also works well with Madison Management. The two work easy, the same thing with The Law Offices of Daniel Singer. They work well with Madison Management. It’s a team because they all work together. They can pick up the phone and call. We’ve given permission for Madison to be communicating with The Singer Law Group and vice versa. It’s a beautiful thing when things are working here.

What Are We Looking For?

Why are you reading this? What are we looking for? We’re looking for potential funding partners. We’re always looking to raise more capitals or closing on more deals. We deal with people who have cash or savings or 401(k). We do a lot with self-directed IRA accounts. Quest Trust Company out of Houston, Texas is a preferred self-directed IRA company. We do a lot with them. All the education they provide, some of our investors or students out there as well, they’re a phenomenal company. If you don’t have your accounts with them, that’s fine. We’ll want to talk to see if you do need to open up some self-directed accounts and take advantage of some of the tax advantages. We’re looking for real estate investors looking for above-average returns, whether you’re a retired landlord who doesn’t want to deal anymore with toilets, tenants and trash outs. You’re an REO investor who can’t find deals below $0.90, $0.95 on the dollar. You’re tired of fighting weekend lawyers at the foreclosure auctions for stuff. Fix and flippers who are tired of flipping, or in a lot of cases, flopping because the price doesn’t make sense like it used to.

We’re looking for a variety of people. More importantly, we’re looking for people who want to put their CDs or IRAs to work. They want to see an above average return for their money. We’d love to work with you. I would love to talk with you, see if you’re a fit for what we’re doing and go from there. I encourage it. Let’s continue the conversation. I appreciate you spending a few minutes of your day reading this. I’d love to continue the conversation for you. I’d love to discuss your goals and expectations, what you’re looking for in your investments, whether it’s real estate or divisional. I’d love to discuss that. Everyone is not always a fit for what we do. That’s a good thing. You want to work with people that are going to be picky about who they work with. If we feel it’s not a fit, I’ll be the first one to tell you. We can part as friends and go from there or refer you to somebody else that might be a better fit for whatever your expectations are. We have a huge Rolodex of professionals that can help you find something that meets your expectations and what your goals are.

If you are a fit, we’re glad to discuss some available opportunities with you because we always have deals that we’re working through. Deals that we’re buying that we funded with our own funds, we’re looking to arbitrage our funds out and put our money back in the market or vice versa. We’re not talking an hour long. We’re usually talking a 30-minute conversation or less. I encourage you if you go to this link, ScottTheNoteGuyCarson.com, that will take you directly to my Calendly link and you’ll be able to pick a 30-minute session that works for your schedule along with mine. We could spend some time there discussing this more in depth. I’m sure you’re going to have some questions and I’d be glad to answer any question that you might have during that session.

You can drop me an email at Scott@WeCloseNotes.com or you can send me a text message at (512) 585-3810. Usually, text is a better way to reach me. I am traveling quite a bit with different things that we’re working on either portfolios or speaking engagements. A text or email is often the best way. A lot of times, voicemails I miss with travel. Text message or email or schedule a direct 30 minutes with me. I look forward to hopefully continuing the conversation and seeing if we can’t help each other create a win-win scenario for you, for me and our borrowers. You can check out WeCloseNotes.com. It’s our main website as well.

Rounding Up The Pitch

That was exactly, start to finish as I expected, 27 minutes and 33 seconds. It was fifteen slides. It turned into roughly about 30 minutes of information. That’s about the third or fourth time I practiced it. I’ve given a similar presentation like this for quite a bit. If you spend a little bit more time on the front end of putting a pitch book together, it will pay dividends in the long run. If you can have one conversation or film one video and record it, you can get that out to the masses. That leads back into having those one-on-one conversations. There are times I want to meet people in person as well and I try to do that as best as possible. In this world, especially if you’re buying in a variety of different assets in different states and different cities, you may not always have the availability to meet somebody one-on-one for coffee. You can Zoom, which is one of the things that we’ll often do for investors if they reach out to us like, “Let’s schedule a Zoom call. Let’s talk face-to-face.” The idea is to get a feel for what we’re doing and share some things. People are going to have questions. By all means, 27 minutes is not designed to be the be all, give all when it comes to understanding people. That’s the big thing that I want you guys to keep in mind.

NNA 38 | Pitch Book

Pitch Book: You want to work with people who are going to be picky about who they work with.

 

How many of you are going to go do something? That’s the question I want to ask next. How many of you are going to go do something and put together your own pitch book? We have a question, “What would you say your close rate is?” I’ve got a good close rate. I haven’t kept track of it, but anytime I’ve met with somebody and talked with them, our close rate’s good. If people have gone through our virtual workshops before, we always have those simple deals that we provide. There are three. One’s a deed in lieu REO, one’s a modification and then one’s a longer foreclosure. Those deals have always closed. Those deals have always done well for people because it’s a good mixture of things. We have a question, “When will you have a note class near California?” I don’t do note classes for the most part. We do everything online. The idea is let’s schedule a phone call, schedule a conversation, a webinar. If you’re local, let’s meet for coffee. That’s what it comes down to. Somebody asked what my contact information was. You have to go to ScottTheNoteGuyCarson.com. That will take you to my Calendly link. It’s easy. If somebody’s watching a presentation, you want to make it easy for them to connect with you.

Are you going to do this? Probably not for a lot of you. For those that are part of our WCN membership, I’m going to take out the pitch book part of that and put that into the WCN membership members. You can have that copy to do. We’re glad to help you create your own pitch book. If you need ten to fifteen pages, we’ll put it together with sample deals. We’ll help you color match it up. If you’ve got a logo, we’ll include that in there for you. If you need a logo, we’ll help create that for you. We’ll take it one step further for you as well. Besides creating it, we’ll go online and help you record your own 30-minute video and help you upload it to YouTube. Help you with the optimization of making sure it’s got everything on there that you need.

We have a question, “Will we get a copy of the seminar?” If you’re in the WCN membership, you will. I’ll create one for you on that. It’s easy for you to create a second one. We can tweak it a little bit, but it won’t be difficult as well. We’ll help you out with that. $99 we’re doing for that. It’s easy to do, help out with those that are interested, NotePitch.com. If you’re in the WCN membership, we’ll upload the PowerPoint to that. We won’t be sharing that anywhere else. If you want to help and want us to put our spin on it and help you tweak it and add some sample deals outside of your own, we’re glad to do it for you. It’s simple, $99 to help you out with that. All you’ve got to do to is sign up for it. Go to NotePitch.com. Let’s hope that you get it. If you’re on the WCN membership, you’re sitting pretty well. You’ve got the nuts and bolts of it. The bonds, you can run with it, but if you want some extra help it’s going to take us a little bit time to do that for you, but not too difficult. We just want to add to our membership.

We have a question, “When a person responds to your pitch, do you vet them first? See if they are sophisticated or credit before you talk numbers.” If somebody reaches out to me, I’m going to ask some questions like, “What have you invested in?” I’m going to ask them questions over the phone. I’m not going to send them an investor profile sheet to fill out at me because that’s like, “You’re interested. Let me look at everything.” That’s like talking to a girl and asking her out on a date and then ask her, “Strip down. I need to measure everything. I need to see.” That’s not a cool thing. You want to talk to them. If we feel they’re a fit personality-wise, then I’ll send them an investor profile sheet, have them fill it all out and then we’ll go from there. I don’t mind talking to the number that we worked through, but I want to make sure before we do anything, before they see any agreement, before they see anything that they’re going to end up filling out an investor profile sheet. I’m glad to talk to them. I’ll give anybody 30 minutes. Somebody who’s not a sophisticated or accredited investor now doesn’t mean they’re not going to be one in the future.

That’s what I’ve got for you. I’d love to help you out with that. Our staff would be glad to help you. We see opportunities in this. This is something you can use when you’re reaching out to asset managers. You’re can attach the pitch book with it or a short video link. They can watch and learn a bit more about what you’re doing or you’re talking with other investors. Something you could send out on a postcard like, “Learn a little bit more about what we do. Go to this link.” Those some cool things that you can do to help you maximize the opportunities and make some things happen for you. WCNMembership.com is the link to get signed up for the WCN membership. Go to NotePitch.com or drop me an email. That’s all that I’ve got for you on this episode. Hopefully, this was valuable for you all. Thanks for joining us on the show. We’ll see you all at the top.

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