EP 215 – Studying Double Digit Deals with Cody Fox

NCS 215 | Double Digit Deals

NCS 215 | Double Digit Deals

Every asset is a different case study whether it’s in Portland or Austin. It’s just a matter of figuring out a model and following that model so that you can manage what you can manage and make the note closing game work for you. Most note closers who have full time jobs find it difficult to stay consistent in the marketing, but Cody Cox found a way to keep the note closing wheel rolling instead of reinventing it. He has been in the mortgage scene for 35 years and is a successful note closer of double digit deals for three straight years. Find out how he builds his local note group and how reaches out for new sources in his limited time.

Listen to the podcast here:

Studying Double Digit Deals with Cody Fox 

We have a very special guest joining us from the Pacific Northwest, a good friend of ours who has done a lot of great things with his own note business over the last couple of years. He originally appeared on one of our Facebook Lives; one of the first ones we did along as a case study to check out before we rolled it into a podcast. We only thought it fair to bring this man, the myth, the legend, Cody Cox back on.

How are you, Scott?

I’m doing wonderful. Cody, why don’t share with everybody who you are, what you do, that kind of stuff?

First of all, I’m just this humble mortgage guy from Northeastern Oregon. I’ve been in the mortgage industry for over 35 years at this point in time. I’ve done most everything. I was a VP with a major national mortgage company. Currently, I still have a day job where I run a mortgage company essentially for the State of Oregon for the Veterans Association here. That keeps me busy. Basically, I was just calculating that takes about twelve hours out of my day. If I’m going to sleep seven hours, I’ve got to be really disciplined about trying to do this note business.

I got started in the note business probably about three years ago. It was more of a hobby at that particular time. I had little funds in an IRA and I was dabbling with that. Eventually, I decided that there’s a bigger and better way for me to do this and of course, that’s when I associated with you. We sat down on one of the Fast Tracks and came up with a little bit of a plan. I’m a little shy of the plan but nevertheless, I’m a whole lot better than I would have been had we not did that planning. For 2017, I think I’m going to finish with about seventeen assets that we acquired within the last twelve months and some of them we’re coming around. They’re maturing now. We’re seeing the backend side of these things, and some of them we’re still fighting with.

I’m glad that you shared the fact that you are putting in a full day of work job and you’ve got to commute, that goes along with it and all the good stuff as well because we have a lot of people that listen here on a regular basis they are still working full-time and trying to figure out the best way to manage it. It’s not the easiest thing when you are working full-time especially when you got a long commute back and forth to work as well too, don’t you?

Yeah. It’s about a 40-minute bus drive one way. That takes up and plus the time to get up. One of the things about the bus is you’re on somebody else’s schedule. You just can’t jump on the car when you want to go. It’s a matter of being there because the bus leaves without you. You’ve got to manage that time and to be honest, the transition has been a little tougher than I thought it would be. I thought that I could sit down and do these things at night but it takes a lot of effort and it takes some focus. Sometimes you just come home and I’m just a little pooped and I just want to sit down. It takes a little more discipline and it’s a little harder to transition than I anticipated it would be.

Seventeen notes in the last twelve months, it’s still very phenomenal. That’s one every three weeks basically if you figured it out on average. There were the ups and downs and things like that. You’re working full-time, it eliminates a lot of the hours that you can do. What are probably the three biggest things that you do to ensure that you’re staying plugged in and working on your business?

NCS 215 | Double Digit Deals

Double Digit Deals: You have you to focus. You have to settle down and you have to do the things that you want to do

I think the big thing is focus more than anything else. You’ve got to really move it beyond just being a little hobby, a little something you dabble with on the side to come up with that why and that goal. What I’ve tried to do is I try and make sure I’m reviewing what goals I have for the year, for the week, for the month whatever and make sure you stick to those. It’s like sending out this weekly emailer. One of the things I wrote recently is sometimes you’ve got to do what you don’t feel like doing. If this is really going to be a business for you, if it’s something that you’re going to take to next level which we talked about all the time, but it’s a real deal. You have you to focus. You have to settle down and you have to do the things that you want to do in order to get to that next step. It’s not going to come if you’re just sitting there waiting for it to happen. It doesn’t just come to you. You’ve got to go get it.

You’ve been doing regular emails every Sunday for how long now?

It’s almost two years. It’s been at least twenty months and that consistency I think is the key. You’ve got to do it every week.

You share your journey. It’s basically a week in the life of Cody Cox, the note investor. What’s going on, insights and things like that?

My approach on that is a little different than some of the other ones I see because I think consistency is key and then really I’m not out there trying to solicit money on an individual deal. I don’t think that’s the right way to do it. I go out there and I just tell them, “This is what happened to me this last week but here’s what could happen this last week and here’s a way to get on my training.” That’s what I do is more of a little story about what I did or what’s going on and sometimes I add a little philosophical point of view into that and just where I come in from, my approach and what I think is going to happen next. That’s the fun part for me because it allows me to be a little creative sometimes rather than just sit there and say, “I’ve got this deal in Indianapolis. I need $30,000,” which I think is not the right way to do that.

I will agree to you to a specific point. I agree if the only email you’re sending out is, “I need funding, I need funding.” It’s not the correct way. What you’re doing and the consistency of sharing the journey and people being aware of what’s going on is a great thing and then slipping into your deal, “I’ve got a deal I’m working on if anybody is interested” is definitely a great way. You’ve built the trust with your following or your tribe, which is a great thing. You also leveraged a local REIA group as well?

I have in the past. I haven’t so much recently because I have to be sensitive to my time. We’ve started a little local note closers group here where I think there’s about seven or eight of us to get together every month. We talk about what’s going on in our note business. I don’t want to be a trainer. I don’t want to be a guru. That’s outside and I’ll leave that to you. From my perspective, sharing what we do, best practices, things like that is important. At times, what I was able to do is I would actually have my own little meeting about an hour before the regular local REIA general meeting and anybody that wanted to come, could come. I think that started off very, very well. It morphed into a training thing. I said, “I don’t want to do that.” I quit that. Being the former president of that REIA, I had access to folks and their mailing address. They become part of my database. They get this weekly emailer from me as well.

Portland is a tough market because one of the things I have found in the REIA is they focus on landlords, they focus on wholesaling and they focus on flipping. Right now, Portland is maybe not the most conducive market for that. There are a lot of guys sitting out there with some capital that they don’t know how to deploy. I know how to deploy it. I’ve been sitting and talking to folks. I’ve talked to two investors. One is a potential, the other one is an existing one. It’s easy to get out and that’s what you’ve got to do. Be consistent in your marketing, talking to these folks, and being visible so they know what you’re up to.

A huge key is sharing your message and getting the word out there for it. It’s also really good when you’re closing on deals. You’ve got a couple of deals you want to talk about?

I got one that’s in the midst of it right now but it’s a performing note. I saw this note on a tape and it looked really, really strange. It was a little house in Detroit. I’m liking that Detroit market, certain pockets of it. I think there’s a lot of potential there. What it was is I bought the note in July right after the prior note owner modified the loan. What they did is they modified it into a twelve-month term on just over an $18,000 UPB and this guy was paying over $1,500 a month. I’m going, “Hold it. Hold it.” I did the math and I must have been the only one that did the math because I paid $8,900 for that note. This guy is paying me $1,500 a month. Of course, the servicer has taken a little bit of that and I did that in my IRA. I think my return on that is at least 42%. It might be even more if I look at that.

If you’ve had it for six months, you’ve made back your investment. It’s going to be adding 200% ROI to you.

Not bad for twelve months; the best twelve months CD I could find.

We need to call this a CP, instead of certificate of disappointment, a certificate of performance.

In twelve months, this guy’s house is going to be paid off. I’ll get all my money plus a whole bunch more back and ready to redeploy on that re-performing note. I really like that. I don’t know how anybody else that saw that on that tape missed this deal. I thought, “I couldn’t go wrong.”

That came from a bank or a hedge fund?

It was a hedge fund and I can’t remember exactly which one. I’ve got seven or eight or twelve of them sending me stuff. That came in and I thought that was a perfect deal for my IRA. I kick things off about a year ago this time. One of the deals that I did last year was on this little shack in North Las Vegas. It was a non-performing note in North Las Vegas. It was probably about 1,100-square foot house. The owner in the house had not made the payments since 2009, which was the time that his wife had passed away and he was an elderly guy. He had his daughter, a single mom. Daughter was living with him who was not contributing anything. His son had just got out of prison, so he wasn’t contributing anything. He was a great old guy and it was one of those deals that your heartstring is pulled on because you don’t want to have to kick him out, but perhaps it was really time for him to go. He is at a point where he probably needs some assistance.

We bought the note with a joint venture investor. He funded almost everything. I put $1,000 in because this also was in my IRA and he funded $48,000. The value of the house as is was right at $80,000 and we could not get those guys to play ball. There was no way that they were going to be able to reperform or get back on track. Reluctantly, we started the foreclosure process. I think that was last April, May or something like that. This is in Nevada. The Nevada Legislature that year came up with some new rules on their foreclosure mediation process. Every foreclosure that was a process was on a stay until that respective state agency rewrote the rules on the mediation process. My investor on this was not the happiest guy. He was counting the days. “Cody, we’re in this thing 273 days.” He is a former hard money lender so I know where he was coming from.

What happened was in early October, we got the notification that the rules were rewritten. We were able to reinitiate the foreclosure process. We did that with Daniel Singer’s office. Then right about the same time, I get an email from my loan servicer who said, “We were approached on a short sale.” I go, “There’s nothing wrong with that.” I looked at the numbers and as you know that when there’s a short sale, the seller, the owner of the house really has no money to contribute to the seller closing cost so all gets passed onto the lender. He wanted a $10,000 relocation fee for this guy that hasn’t paid since 2009. All the realtor fees were shoved on my side at a HUD-1 and I’m going, “No, that isn’t going to work.” I rewrote all the numbers, countered back and said, “We’ve got 30 days to do this. Otherwise, I’m foreclosing,” and I didn’t hear a thing.

One day, I’m coming home from my work and I’m on the bus and I’m looking at my phone and I’m looking at my email and I see an email from my servicer that says, “An autodeposit was made to your account.” I go, “That’s fine,” but it looks like all the other ones where I’ve got people paying me so I didn’t really pay any attention to it until I got home. I got home, opened up the email, and here is this deposit in there of $72,000. My wife sees me dancing. I’m going, “What’s this all about?” Apparently, they accepted that short sale, my counteroffer. There was $72,000 in the bank. The servicer took care of all the reconveyances and all that stuff. Here about three weeks ago, I was able to sit down for coffee with this investor who is counting the days. I handed him a check that repaid his $48,000 plus another $12,500 would put him at an ROI of 42.6% or 34.6% or something like that. Since I had a $1,000 in it, I got $11,000 back. My return on that was 1100%. Not quite infinity but it was a pretty good deal and that’s the way it’s supposed to be. Needless to say, this stuff works.

The other deals you’re dealing with is primarily performing, that’s turning a performing into foreclosing one of them or how’s that working out for you?

My model follows the idea that these borrowers, we want to keep them in the house. In fact, one of the guys I was talking to is a loan officer. He runs his own brokerage shop and I’ve known him for 31 years. We’ve both have been on the mortgage side for quite a while. It’s something I said to him, “Todd, you and I have put a lot of people in the houses over the years. It looks like I’m finishing my career by keeping people in the house.” I thought that was my neat little philosophy. My goal is to try and keep everybody I can in that house if it works for everybody involved. It doesn’t work for everybody involved but we will give it a try. If it doesn’t, then we’ll go down the deed in lieu path or we’ll go down the foreclosure path if we have to.

NCS 215 | Double Digit Deals

Double Digit Deals: My whole goal is if we can’t keep them in the house, at least find a way to provide them with a dignified way for them to exit that.

My whole goal is if we can’t keep them in the house, at least find a way to provide them with a dignified way for them to exit that. That’s our approach on that. We’ve got one right now that we’re going to accept the deed in lieu. We’re paying her some Cash for Keys. She is moving out. I’m going to pay it directly to the landlord so they can get into a place, let her stay in the house over the holidays and after the first of the year, it’s going to happen that way. I’ll have a house to market there. This one here is in Ohio somewhere.

Let’s talk about your Friday stroll.

I do this Sunday night thing every Sunday night and for the folks that don’t open it, I send the emailer on Wednesday. We’ve talked about and we’ve heard a lot that video is the next marketing thing. It’s the big marketing thing. I’ve chosen Friday as the day that I can get out of the office. I’m a fair-weather stroller. If it’s raining out there, I’m not going to do it. If it’s cold, I still get out and do that. It’s really a cumulative philosophical thoughts of what I’ve gone through for the week. Recently, I’ve been talking about finishing strong for 2017, gaining momentum to 2018. It’s just a Facebook Live thing that I eventually upload into my YouTube. Just seven or eight minutes of just what has been on my mind, this theme that’s been going on in my head and tie it into success, tie it into notes, tie it into anything like that. Just to get a little video, just a little snippet and hopefully somebody can take that and power their way through the weekend on it.

It’s effective, you get a lot of people that like it. I watch it every Friday but I do go back and watch it and my staff comes, “Have you seen Cody’s Friday strolls?” I’m like, “No. Let me go back and watch it here.” You’ve bought seventeen notes. Do you remember what your goal was in the beginning of the year?

You and I sat down and we we’re going to try and do 60. I’ve actually deferred that to 2018. I think I can do 60 in 2018. Wanda and I have wrote down and sat down and talked about it, that’s really only five a month. If you can really sit down and break it down to that elements rather than look at this big chunk of 60, it’s the old adage, “How to eat an elephant?” I’m going to eat it five notes in a month. In that case, that’s very, very doable even with a full-time job. With that focus, with the commitment I have, with about $3 million in pledges from my joint venture. I’m in this situation now where I’ve got my joint venture investors emailing me saying, “When are we going to do a deal? I’ve got this money. It’s allocated. When are we going to do a deal?” It’s a nice little problem to have but I’ve got to make sure that they don’t go invest in bitcoin before I can get them into note.

They may be calling you more today based on the drop of bitcoin. They get down 33% in the last couple of days. Where are you investing? Are you buying a lot of stuff in the Northwest or doing more so in the Midwest?

Oregon is a little tough market because the values here is such to a point that the banks are going to go ahead and just keep them and foreclose it themselves. I found that most foreclosure activities are fixed costs. It’s the same cost for somebody to do it at $25,000 as it does to $250,000. The banks are going to keep that because of their profit margin. I’m focused on the better entry-level values, somewhere Ohio, Indiana, Michigan, Missouri. I like North and South Carolina in that regards. I’ll look at some of the other ones. Sometimes if it’s in the right area in Pennsylvania, I’ll look at that as well. I hate Illinois. I’ve got one that’s just dragging on and the attorneys will tell me, “What do you expect? It’s a consumer-friendly state.” That’s dragging on too much. That’s where I’m looking at things that are more entry level where most of my JV investors have the capital available to get into something. I had a dream dinner with one of my existing investors and he says, “We need to elevate our loan amount.” He is ready to start looking at higher value houses and I’m going, “If can have five or six or seven of these guys is right where I want to go.” It’s just a matter again of visibility, talking to these guys and understanding their expectations.

You’ve been doing notes for about three years. It started off as a hobby for the most part. Picked a couple of deals up, but you’ve been very serious for the last eighteen months for the most part.

It actually has been about fourteen months because I sat down with you at the Fast Track in October of 2016.

What’s been another big tool or resource that you have used to really help you with your business and balance that work and note life aspect?

You’ve challenged me throughout the year about delegating and hiring assistants. I haven’t been able to do that to the full measure that I should, but I am incredibly seeing the value of that more and more. That’s the big deal. I’ve done a little internal tools to try and make my process a little bit easier. I actually have hired a guy who is building a tape scrubber for me. I’ve talked to the folks at Upwork, but I wasn’t exactly happy with what I saw there. Going into the New Year, there are some things that I really have to implement. My website is rolling pretty good although the whole thing is, who is my website targeting? It’s not targeting the consumers. It’s targeting the hedge fund managers. It’s targeting the banks. You have to make sure that who your audience is not only with your websites, but also where you’re sending these emailers out to. Targeted marketing I think is a big deal in making sure that your message is on target for who you want to receive it. That’s a big deal for me.

I’m going to give you a gift. It’s a company we had on the Virtual Workshop called NoteProz. It is well worth it. They will basically knock out all your initial online valuation, bed, bath, literally in seconds. NoteProz.com, really inexpensive. NoteProz.com/ScottCarson, if you sign up, instead of paying $47 a month, it’s $27 a month for lifetime. It also has a nice feature where it’s pooling bank asset managers in twelve major states. It’s something that we’ve been toying with around for a while. They’ve gotten better. They’re constantly tweaking it. We’ve been working with them for about six months with some stuff just to help people like you and other things. Your biggest bottleneck is you’re getting tapes in, you’ve got sources, it’s finding that time to break it down and go through everything and make the bids and go back and forth, right?

Exactly. Something clicked in me, it was 4:30 in the morning. I must have been waken up and in this dream I thought it was, I was talking to a new investor and getting it setup for them to invest in my company. Then I turned around and there was a laptop which signified due diligence, if you will. I know this is weird but this is what it meant to me. The laptop was closed which meant that’s not what I’m supposed to be doing. I’m supposed to be doing and the constant reminder is, “What is my highest and best use?” It’s the old appraisal term “What’s the highest and best use of that asset? What’s my highest and best use?” Maybe it’s out talking to these guys to generate business development for my company and all these other technical things, which are not my favorite anyway. At least I need to delegate that out. It was something that clicked in me for what’s going on for the next year.

Once you buy a note, you’re relying on Singer Law Group to do most of you workout with your borrowers?

Yeah, most of the loss mit. We always try and run it through them to begin with. I’ve tweaked my model just a little bit because I did look at vacant houses at one point in time. I think another important part of what we do here is make sure you have a written model and you stay within the parameters of that. We talked about all these good things that have happened. There’s been a couple of things that haven’t been quite so good and I’ve noticed that the main thing that happens during those is I’ve got outside my model to some degree. Whenever you get outside your model, you’re dealing with some unknown stuff and that’s not where your focus is. That’s not where your expertise is. I’ve tweaked it down to make sure that every asset I break down on a day is owner-occupied because that’s what I want to do. The vacant ones or the ones that maybe have the windows shattered out or internal fire and you can’t see that. I’m constantly trying to refine what my model is and get it down to something that’s very systematic every single time.

Let’s talk about a couple of those deals you were sharing.

It’s like one of our contemporaries talks about he buys houses where the people is always in the state. The states I have found, the couple that I have done are the ones that sometimes come back a little problematic. We’ve got a house right now that we’ve had on the market. It’s an REO we’ve had on the market in Michigan City, Indiana. If you know where Michigan City is, it’s right at the bottom of Lake Michigan. It’s a nice little community there. This a nice little single level house but the people that have lived in there had been there for a long time. It needs some updating. My model isn’t exactly to do any updating. I’m trying to sell it as is to a local investor but it was in the state. It had been neglected for a while. In fact, two owners had gone winterize the house. I never had to winterize a house because it had been winterized by two note owners before.

That’s one of the ones that I’ve got it in inventory, I’m trying to sell it but it’s taken a little while because there just needs a little more work than I have the capacity to do right now. I’ve got another one, a nice little home in Ohio, in Cleveland actually that will be on the market very, very soon but it’s in the state. Fortunately, we’ve got somebody in that house. I have no idea who is in that house. You just really don’t know but I have found that there are customers out there, there are homeowners in that that really want to do something. Whether it’s try and retain the house or exit in a dignified manner and for me, that works out a whole lot better when you have somebody that was cooperating with whatever the next step is. I think it saves thousands of dollars too.

Have you run any problems with any of the rehab stuff in Cleveland or anything like that or in Cuyahoga County?

Not yet. More houses I’ve got is going to be in Cuyahoga County in Cuyahoga Falls. I’ve got another one coming in South Euclid here real quickly. They’re nice homes. They’re occupied but we’ll see what the next step is.

Let’s talk a little bit about that. You like occupied because A) You can hopefully keep them in the property, B) They can start paying you and then, C)You don’t have to do a lot of rehab or repairs hopefully, right?

NCS 215 | Double Digit Deals

Double Digit Deals: There’s a lot of responsibility there with this note business going on here that I’ve got to make sure that I don’t overextend myself.

Exactly. That’s the three top things I’m looking at because there are a lot of folks that have the expertise to do a remote rehab. That’s not me. If I didn’t have the day job, maybe that’s another story. Maybe I can go out there and that stuff but again, I’ve got to stay within my model. My model right now is I’ve still got to focus on the day job. It’s a pretty substantial one. There’s a lot of responsibility there with this note business going on here that I’ve got to make sure that I don’t overextend myself. There are a lot of other marketing opportunities I could do. You’ve talked about the content spider and all the way to get a lot of things out there. A lot of that I have to temper what I’m doing because I’ve got to make sure that I can manage what I can manage right where I’m at. If we’re able to do what you and I talked to then that’s a different story. Everything is wrapping up towards that in incremental steps.

It’s a fun game, isn’t it?

It is fun because a lot of what we do is manage vendors was akin to herding cats and I like that.

Who are you using as your servicers? Is it Madison?

I like Madison. I’ve got some at FCI I haven’t been a 100% enamored with. I’ve got a couple at SN Servicing as well. Those guys seemed to be responsive, but I think they’re a little bit more expensive than I want them to be especially on non-performing. The folks at Madison I think have done a really good job for me and I’m filtering as much stuff as I can now.

We’re a big fan of Shante, Kevin and the whole staff over there. They do a great job.

I got a Christmas card from them. I go, “They’ve got to be good.”

A hand signed one as well too. I got it too. Good stuff for them as well. We have a question, “What are you doing to build your local note group?”

I’ve actually deferred it to another mastermind student that lives here locally. I’m letting him manage that part of it but I’m still involved in it as I can. We still have that old Facebook page which is called the Note Closer’s Portland Group, which I’m an admin of that. I do a lot of marketing that way. Again, this is not what I would consider a source of additional capital or additional business for me, but it is a networking, best practices review thing. I look at it from that way. It’s targeting what you want out of what you’re doing. A local Meetup group, a local note networking group to me is more of a best practices, “What are you doing here? Who is your servicer? What are you finding on this? Have you talked to Wayne County, Michigan before and who is your contact there?” That’s far on a local basis. If I’m going out to try and raise more capital, I don’t think I’m going to find it in a local note closers group.

Because they are all looking for the same thing, basically.

That’s the thing. I have to be sensitive to the fact that a lot of these guys are still waiting to buy their first note. You’ve got to judge your time especially when it’s limited. Here’s one of the things that that weekly email has generated. I have an offer to now become a contributing writer if you will to a national investor magazine. I think that’s a good opportunity for exposure but it’s another opportunity to take time away from my mission. Sometimes you have to say no to the good so you’re available for the better. I’m weighing that very, very carefully. That’s a one-time thing that might be the case but it might not be. That’s one of the things I have to consider.

You’ve hit your goal. It’s better sometimes to say no than say yes to everything. I’m bombarded with stuff on a regular basis, “You want?” I’m like, “No. No.” I think someone wrote the book called The Power of No. “The sooner you learn to say no, the faster you’ll find success,” is a quote that I’ve heard from several people and I will totally agree with that. We get rock and rolling, it’s exciting. It’s really an ego boost. Some people to come to you, “Can you do this? Can you come speak? Will you write? Will you appear here?” That’s all great and it can lead to that but if you’re not hitting your ultimate goal first, your goal gets pushed to the side because of these other things. It’s like the Russian proverb, “A man who chases two rabbits catches none.”

I do have another opportunity coming up here in the end of January to go speak in another local REIA group. The last time I did that, I walked away with $2 million in pledges. I anticipate a good number coming out of that as well. These are local investors who have capital to deploy but there are no assets to try and deploy them on.

Portland is very similar to Austin. They are sister cities actually. Keep Austin weird and then Portland is where twenty-year-olds go to retire. Plus you’ve got the whole green economy up there as well too. Do you have any of your green investors looking to deploy a capital?

There was another note investor that’s decided to give up on notes and buy a farm. They’re doing that and she is trying to raise capital for her little farming activities. I also had a local investor that I had a contact with and he gave up his local attorney. He gave up his law practice to invest in the farm down in Southern Oregon because he is going to go on this big growth thing. There are a lot of people that are looking to participate in these growth economies that we have here in Oregon. It’s an interesting mindset that they have and where it’s going and who knows where it’s going to develop. To me, it’s another bitcoin.

You just figured out a little harder to get that money from the green on the ground and doing green on the wall.

Some of the local credit unions have opened their doors for those guys because banking has always been a big problem because of the national rules on that. Some of the local Oregon-grown credit unions have opened their doors to that.

Your website targets towards banks and asset managers. What are you doing to reach out for new sources?

Basically, I use MailChimp. I found it to be very, very easy. My government job, we have this government mailing system that’s convoluted and I don’t use it because I don’t know how. MailChimp is really easy as far as I can see. I’ve got four lists that I’m sending stuff out to and maybe five. One of them is the asset managers and banks and things like that and that’s just a simple search that I do on LinkedIn periodically and update it to the ones that aren’t on it already. As you get more visible, people start requesting connections with you and you add those to the list. Part of what I need to do in 2018 is to get a greater following on the bank side of things and maybe even the servicer side of things as well. I have found the hedge funds that are the low-hanging fruit, which everybody pretty much has access to with an influx of new folks coming into the note space, prices are going up and I’m not all that happy with them especially on the hedge fund side of things. They’ll play you against somebody else that you don’t know is there or not.

I find that by going to the banks directly or maybe even to some of the servicers, you’re going to get a little bit better pricing, you’re going to get a little bit better service. I think the next step rather than try buy one offs with the funding that I have access to, I’m going to start looking at small pools. If I only had to do five a month, then if I buy a fifteen asset pool, there’s a quarter for me. Why not do that if I can find one bank in Ohio that’s got fifteen assets they want to sell? There’s my whole quarter. I’ll work that whole quarter on that as I continue all the other stuff. It’s always recycling the marketing pieces but that will solve my 60 pretty quickly in that regards.

I think 2018 is going to be the year of the bulk. Not the hulk but the mini bulk at least. We’re going to have a lot of people that are coming over from the fix and flip side, the tired landlords. They want to get their feet wet. They’re not going to do as much work. They’re like, “What? You have to reach out and talk to somebody and you can’t just drop postcards in the mail, that kind of facet?

The other thing is what happens after you acquire the note? There are a lot of little things that you have to take care of. If you buy a note, how are you going to record that assignment? Somebody who is a fix and flipper probably doesn’t exactly know what an assignment is. All those things, there are a lot of stuff that happens after you acquire the note, getting setup with the servicer, getting setup with loss mitigation, you’ve got this request, this request. How do you even review a collateral package when it gets into it? What’s this stuff on the title policy mean? There are a lot of little things right there that come with time and experience that I think some of the folks that are just now coming into the marketplace that were retired landlord don’t have that exposure, and they’re going to get disappointed pretty quickly when that thing doesn’t work out for them just because they missed the detail.

We deal with it on a regular basis. I get people call me all the time looking for notes and I ask them, what’s their history? “I’m a landlord. I’ve got a lot of real estate experience. I don’t need to learn anything.” I’m like, “No, it’s a different experience.” It’s a different mindset. I know I struggled with it when I first got into this about a decade ago once you start evaluating things from the fix and flip side, or ARV versus as is. We both know there’s a lot to discover between those two numbers.

I’ve been in the mortgage industry for 35 years. I’ve seen a lot of it. Mostly on the origination side. Now, I worked for the state on the Oregon Hardest Hit Funds team. I saw a lot of that stuff on the servicing side of things plus what I do now but everyday in the note business is a day of education. You learn something new everyday and I think you, who have been in it as long as you have, would agree there’s always something new that comes along. You have to be flexible enough and pull from your experience in order to deal with it. Which to me is the exciting part of it is because every asset is just a little bit different.

Every asset tells a different story whether it’s in Michigan City or Cleveland or Las Vegas.

Or Klamath Falls.

Tell me about that deal.

This is one of my first deals. A little beat-up house in Klamath Falls, Oregon. If you know where Klamath Falls is, it’s down in the Southern part of the State. It’s off over by itself out in the arid desert. This was a little beat-up house that this gal from California had purchased as a second home. Why anybody would want a second home in Klamath Falls? I don’t understand. It was at the time when people are buying real estate if they had breath to breathe. I don’t think she ever made a payment. I don’t think she ever went to the house but I bought it from a fund and the house was worth about $25,000 as is. I paid $12,000 for the note and we were able to convince this borrower. We chased her through Southern California for about four months and finally caught up with her to sign a deed in lieu and then she’d send it back to us but didn’t sign it. She had it notarized but she didn’t sign it. We had to find her again, sign it, and then once I got it listed on the market, we sold it in 24 hours, closed within ten days at $25,000. I had a 103% ROI back into my IRA on that one there and that took about eight months to do that. The hard part was finding her in Southern California or some place.

That’s sometimes the toughest, tracking down the borrowers. Especially when it’s the second home, it’s not their primary residence is sometimes a difficult thing.

She owed over a $100,000 on this thing here. Part of my hook with that is, “I’ll wave my deficiency if you sign the deed in lieu.” We did that otherwise, it’d go through a foreclosure and of course, recovering on a deficiency is not at all the best. Anyway, it worked out great and stuffing that IRA I think is a good thing.

I think a lot of people don’t realize the power of a self-directed IRA, and how really it is geared that you can use it for fix and flips but it really works really, really well with the note business especially when you have your servicer handling all the stuff because you’re not self-dealing.

That’s the key with where I’m sitting at is to have the right vendors in place that can do that day-to-day stuff. I am not the detail, task-oriented person. My wife will say, “That’s exactly right. You said the right thing.” How many unfinished projects do I have around here? The deal of it is I’ll go out and make the initial contact to business development. I’ll pick up the telephone. I’ve done 20,000 cold calls in my life. That’s not a big deal.

You’re doing some great stuff, Cody. I think consistency is building success. You keep moving forward, you keep moving forward, keep moving forward, keep moving forward and doing a great job.

I appreciate that. Thank you. I appreciate your direction and support on that as well because there were things that weren’t happening until I got associated with you.

Sometimes you just need a push in the right way. We talk in a pretty regular basis, don’t we?

Yeah, we do.

It’s a good thing. We all hit roadblocks. Even I do and we all hit goal or plateaus or we get stuck in the mud with life and things like that. Sometimes it’s good just to pick up the phone and talk to somebody, “This is what’s going on,” and we all do it. I do this. I call my buddy, Greg Reid, every once in a while. It’s about four and a half minutes longer than any other conversation with him on stuff but that’s just it. We talk regularly online, text message and stuff like that but when you hit a low spot, you give me a phone all, we talk for about half an hour or thirty-five minutes and go from there. I think that’s a very valuable resource versus a lot of people will just hide and not do anything.

As a former REIA president, I’ve had a lot of those national speakers come through. I hired a lot of them to come speak to my group and you’ve always been the most accessible one that I’ve ever had, that I’ve been associated with. I really appreciate that.

I appreciate those words. Thanks so much, Cody. You’ve done a tremendous job. We’re very proud of you. We look forward to see what you’re going to accomplish in 2018. We’re going to see you in Cape Coral in April?

We are making the plans right now to be there. Make sure you get our names down.

We got you. We’ll have a good time there. Looking forward to it. Just so you all know, Cody Cox was the Rookie of the Year at last year’s, weren’t you?

I was a Marketing Superstar.

Our Mastermind last year, just doing the basic things that you need to be doing on a regular basis.

You don’t have to reinvent the wheel. Just roll the wheel.

You just share what your journey has been done, you’ve raised capital, you’ve talked with people, you got people that pledge money to you. It’s all about going out and shopping out, and spending other people’s money to make money, right?

Exactly and reward them as well.

It truly is a win-win. Here’s to the deals and the funders that count the day on a day-by-day basis. I’m very proud of you, Cody. Thank you so much for joining us on The Note Closers Show.

Thank you. I appreciate it.

You go out and have a great time. Go out and make something happen. We will see you all at the top. 


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About Cody Fox

NCS 215 | Double Digit DealsTrinity National Holdings, LLC is a boutique mortgage investment company located in the Portland, OR area. We purchase non-performing promissory notes secured by residential real estate in certain markets across the country. Our purpose is attempting to find a mutually workable solution for the borrowers of these promissory notes and have them retain ownership of their home.
Funding for these note acquisitions comes from a joint venture relationship with a variety of investors, both local and around the country. Because no money is ever co-mingled with another’s funds in any individual asset, investors do not need to be “accredited”, and can easily invest their capital on investment quality paper.

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