EP 369 – Picking A Note Market

NCS 369 | Picking A Note Market

NCS 369 | Picking A Note Market


A lot of people are looking to invest at something. However, the California, Oregon, Washington state, Arizona, or Nevada markets are overpriced for the most part. That’s not saying you can’t find something that makes sense, but for the normal note investor, those markets are a little overpriced and just don’t seem to make sense. You could actually buy a load of assets across the country and totally leverage your risk and go from there. On this episode, Scott breaks down some of the things and markets to look for when picking a note market to invest in for notes.

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Picking A Note Market

One of the things I wanted to talk about is how to identify and choose a market for you to pick notes to buy in. I wanted to talk about picking a market because a lot of people, especially if you’re on the West Coast, you’re like, “I’m looking to invest something.” It doesn’t make sense in California, Oregon, Washington State, Arizona, Nevada. A lot of times, those areas are overpriced for the most part. That’s not saying you can’t find something that makes sense but for the normal note investor, those markets are a little overpriced. They don’t seem to make sense when you look at what you can buy with buying distressed debt. I was flipping through Facebook and I was like, “This is what $9 million will get you.” If I had $9 million, I would not buy one property. You could buy a lot of assets across the country and totally leverage your risk and go from there. What do you do when looking at markets to potentially buy in? How do you filter those out? The best thing that you can do is talk to other note investors out there and see where they’re buying at. There are quite a few states that have a lot of inventory.

Talk To Other Investors

First and foremost, I’m going to rattle off some states that are great markets to be buying in. You have Ohio, Michigan, Indiana, parts of Illinois outside of Cook County, Missouri.  Kansas has got some opportunity there even though it’s about a year to foreclose. You also look at South Carolina. It’s about a year to foreclose, but it’s really on the upswing. North Carolina is also the greater state to invest. It has a faster foreclosure state for the most part. I like Florida. Florida’s been hit a little bit harder. You need to hold off from buying in Florida for a while based on values and insurance costs, especially if you’re going to be near the water with all the hurricanes that have been hitting there. Those are the states that I would probably be choosing right off the bat. I didn’t say Texas. Texas is overpriced, plus the fact that the fast foreclosure timeframes, the banks wouldn’t let enough.

Let’s talk about what you do if you don’t live in one of those markets. This is one of the biggest fears of investors. They hate it most when they come from the fix and flip side of the business, the landlords of the business. They want to go out and touch it, feel it, and see all that stuff. If you’re going to be looking at a bunch of assets in Ohio or Michigan and one of the states, it does not hurt. Jump on a Southwest Airlines flight and fly over to them. Spend some time in some of those markets. Spend a weekend. You can drive around and hit quite a few assets in a weekend. You start looking at buying in those markets. It’s well worth doing it. It’s worth the trip. It’s worth the expense to spend some time there. When you’ve identified a state, the next step to do is then to look at the bigger markets and that’s easy to google. Top five, top ten markets inside of South Carolina. Top five area, their top ten cities inside of Michigan or Ohio or whatever it is. If there are five spots in Ohio or five spots in Michigan, those are your big cities to look at.

Let’s use Detroit, Michigan for example. I would look at where there are big universities like Ann Arbor where the University of Michigan is, Lansing, Grand Rapids. I would jump over on the outside of Michigan like Flint. Bay City on the North side is a great area as well. Looking at those cities, those can be the biggest cities for you to be investing in. There’s a reason why the bigger cities work better than the rural cities. More people are moving there. You have a bigger pool of labor. What I mean by labor is realtors, attorneys, and people that can help you fix the property if you need to do that. That’s one of the biggest things people outside of Detroit are running into. A lot of the work is going on inside of Metro Detroit. The outskirts are having a hard time with construction and crews coming in and finishing construction. That’s one thing you’ve got to keep in mind. Avoid the rural areas at all cost. If it’s a small city and you don’t recognize it, avoid it unless you’re getting it as a phenomenal deal like as a throw in with your other assets. That’s the big thing.

The question is, “I’ve picked my five cities in one state, what do I do next?” That’s when you probably should jump on the horn and start looking for realtors. How do I find a realtor? Pretty simple, you can go to Realtor.com and look through realtors in that area. You can google an address, they’re oftentimes on Zillow. When you look on Zillow for property port, they often pick two or three realtors on the side there. What I will also do is if you find an asset or two in a specific city, let’s say Flint, look for the nearest real estate office near you. Then call the office and say, “I’m looking for an agent to help me out with this.” A lot of the senior agents have been around for a while. They’ve got their book of business. They don’t want to work with investors. That’s fine. Let them do what they want to do, but there are often a lot of younger hungry agents that need a little bit of my $50 to go do a BPO or a CMA and take photos. It’s right in their wheelhouse. Calling the main office and talking to the gatekeeper at Keller Williams or at RE/MAX or at eXp or whatever the offices that are nearby your address is a great thing. I’ve done these many times.

NCS 369 | Picking A Note Market

Picking A Note Market: Avoid the rural areas at all costs. If it’s a small city and you don’t recognize it, just avoid it unless you’re giving it’s a throw in with your other assets.


I did this in Florida driving by. Here’s a real estate office a block away from a house I was looking at. Let’s drive by, get a card for the main broker there and then give them a phone call. When they’re back in office, you’ll see if they can’t meet with you immediately there and say, “I just picked up. I’m in the bank. Here’s what I do.” It’s one of my favorite things to do. See if there’s a real estate office nearby your asset and pick up the phone because that way, they’re nearby. That works very well too when you look to add insurance in the property. Many of your insurance companies don’t want you to have a property manager within 100 miles of the asset. You want to have a property manager that’s closer than 100 miles. If it’s a realtor down the street, they can drive by, take photos for you so that who’s going to have a vested interest in your asset because they’re going to get paid off it when you sell it. That’s a great thing to do. Realtors is the first thing. The second thing is investors. What I mean by investors is this. You need to have investors that are looking to buy the asset from you or maybe looking to invest with or maybe looking to fund the deal. Everybody’s a buyer, everybody’s a seller or everybody’s a funding source.

You Need To Have Investors

The reason you also pick larger markets is you want to find real estate investing clubs in the area. You’ve already got the assets, you don’t need to find deals. When you’re buying a note, if it’s nonperforming note, it’s likely at some point probably got 40% to 50% chance that won’t get reperforming. You will have to probably foreclose on it and then sell it off retail. The reason you want to be around or near real estate investment clubs in the cities that you’re investing in when you’re buying is that’s the pool. That’s the source for you to sell this as an REO. This is the pool for you to sell it to a landlord to give you a higher percent. This is a source for you to identify potential IRA investors to buy your reperforming note. That’s a lot of reperforming note. You’re going to add investment clubs by going to Meetup.com and connecting with other meetup groups. That’s what I do. I believe in the last check I had 100 plus meetup groups that I’m a member of. One of the things I would highly recommend is you adjust your email settings so you’re not getting bombarded with emails from the meetup groups. Have a specific email address that you’ll use for that meetup group.

One thing when selecting a meetup group that’s important is that it’s got a discussion board. It’s got active members and then also, it’s a nice caveat that they hopefully publicize their mailing list. Only about a half of the meetup groups now are doing that. Someone figured out that they can hide that. It’s a great thing to have a mailing list where you can mail out to everybody in the group. It’s extremely helpful for you to have that feature so that you can touch base with everybody or send an email out. That message boards are a must. If you see a meetup group where they don’t have a message board, they don’t have a mailing list, it’s not worth joining. There is not a way to communicate. I know a lot of meetup groups want to be able to focus better to do a website and its sponsorship and membership, that’s what they use it for. That’s totally fine. If you’re buying in an area on a regular basis, it probably does not hurt for you to join the meetup groups.

One great thing for you to go and take a look at your properties, you may want to align that when that meetup group is meeting. Real estate investors call this meeting, so you can kill a couple of birds with one stone. You’re looking at the assets and then swing by the meetup group. You’ll find a lot of great people at the meetup groups who get recommendations for attorneys, you get recommendations for realtors there too. That may be something to do on the frontend when you’re going out looking at assets. Identify when a meetup group is meeting as well and go out there. In the meeting, you may be able to find everybody you need to know by talking with the president of the club or showing up and say, “I’m new to the area. This is what I’m looking for. I need a realtor. I need a lender. I need a title company.” Those are the great things out there as well. Also reaching out to a local title company in the area. You may be able to find a realtor. A hard money lender and things like that as well too.

Have A Local Hard Money Lender Underwrite The Deal

One thing that is important too that’s a valuable asset is having a hard money lender locally if you’re looking to sell the REO off and it needs some work. One of the great things that I like doing is if I take an REO back and we’re looking to try and sell it and it needs some work is I’ll reach out to local hard money lenders and have them underwrite the deal. I would say, “What kind of loan will you do and then let’s pull some numbers on this asset? What’s the ARV? What’s the market value look like? How much work does it need?” Those kinds of things and then I’ll get a hard money lender to say, “Here are the numbers, here’s what we would approve on the deal.” That’s a valuable tool to use when you’re marketing that asset later on, “This is a pre-approved for hard money loan with Longhorn Investments or Noble Capital or Streamline Funding.” It’s a very valuable thing that can help you with you moving an asset faster to somebody who doesn’t worry about going and getting financing that’s already in place. It’s a great thing to have out there as well.

NCS 369 | Picking A Note Market

Picking A Note Market: IRA investors are very valuable. They’re great to have if they’ve pulled the trigger, especially locally.


One of the great things that I also am a big fan of doing when I’m picking out markets and see what’s going on is try to stay above the 10,000 or greater population. You want to look at and see what’s going on and days on the market once you get a CMA from a property manager or a realtor on the asset that you have. You want to make sure the days on market aren’t over six months. You don’t want it to be over 180 days. That’s a slow market. That’s also a market that you’re going to probably have to price the asset below value to get a 30-day quick sale price. That’s one thing to keep in mind too when you’re talking to agents. When you find an agent in the area, ask them to pull comps on an asset traditional. Then also have them give you a 30-day quick sale price. If there’s a big discrepancy in what the value there is and then the 30-day quick sale price, you know that’s going to be days on market holding. You have to hold that asset when you want to get full value. That made a lot from buying the asset no matter what it looks like. Hopefully, when you’re buying non-performing notes, if it’s occupied, you can then get the property reperforming that solves all issues out there.

Jump On The County Appraisal District

One thing that you may want to do as well is take it one step further and jump on the county appraisal districts in search for IRA investors in the area that you could market to. What I like to do is IRA investors are very valuable. They’re great to have. They pull the trigger, especially locally. If you can send a letter out to them, “We bought this asset in your area. It’s a non-performing note or performing note. Are you looking for deals? We’d love to talk with you.” That is something that’s very valuable. It doesn’t take much to do. You could go on Vistaprint and print more like 50 custom postcards for that one asset or 100 for that asset in the area and then market it out, drop a quick postcard or drop a quick letter out. You could do an easy mail merge once you’ve pulled the list of IRA investors off the county appraisal with the county clerk’s website for people who have lent from their IRA and then do a mail merge. Send it out and drop it out, “We just bought this asset in the area,” and have a nice photo of the property. Here are the details. We’ve got more deals like this. If you’re interested in buying this asset from us let us know.” It’s not difficult to do.

A lot of people when they start looking at assets especially if they start selling them, they start going that route. Especially if it’s a condo or if I’m looking around an area where there are other investors in the area. Taking the addresses of the IRA investors and mapping them in BatchGeo to see how close they are. That’s a pretty cool thing to do. That’s a very valuable thing to do with your time. It also helps you out with your marketing, so you know there are a lot of investors around the area that I can map, or they may be right next to me here. They may be down the street from the asset. I see some people like that. It’s an easy thing to do with BatchGeo besides just pulling a list. There are other companies that can pull IRA owners on. I’m not going to give that away. Those are a little bit harder for a sale on an asset because you’ve got to educate those people out there. That’s not what you want to be doing in the education side, especially for moving deals on a regular basis.

Market To IRA Investors

Let’s do a little recap here for you. Beginning of five cities, 10,000 or greater population, finding realtors, finding Meetup groups or real estate investment clubs, going in and networking with real estate investor clubs to find your realtors, your hard money lenders and your title companies. Then also jumping into the appraisal districts to find your self-directed IRA investors who would pull the trigger on an investment and then marketing to them. That’s some of the easiest things to do. This is why I tell people often times you don’t need to be buying in five or more states when you start off. You can start off with one or two. What’s going to happen if you start doing this on a regular basis? You’re going to eventually have more investors than you’ll have capital, which is a great problem to have. That means you’re going to start reaching out to other markets. Often time investors want to get their money working and they want to make a good return on investment. Offer them up to the assets you’re working through and you’ll be able to start adding deal flow because you can go to another state. You can do the same thing in another state. You may not have to work so hard on the front end because you’ve already built a great pipeline, probably capital, IRA investors. You’re also reaching out to your local database of banks or hedge funds and say, “I want to buy on Ohio, I want to buy in Michigan. These are the two states I want to buy. Do you have anything on your portfolio?” That’s about as narrow down as I would go if you start going to states.

You’re reaching out to banks and asset managers, “I’m looking for anything in this state.” I wouldn’t go to cities, I would not go to zip codes for sure. That’s a big mistake I see from several note investors. Somebody reached out to me and said, “I want to buy this zip code.” I’m like, “Good luck.” “Can you send me anything?” I’m like, “I’m not going to even add your name to my list.” I’m not going to take the time to sort down for specific zip codes like that. That does not make sense. It’s too minute. It’s not worth my time. It’s not a good thing to do. Another thing that I would also highly recommend that you do. I would get a map of the state that I was investing. I had in a cork board and then I would add my assets around. I did that for Florida for quite a bit when I was living down in Florida. I had a cork board map of it, push pins of where my assets were located. That helped me too when I was looking at other assets. I still do to this day when I’m mapping stuff. I get a list of Ohio assets in, I’ll map them. What I’ll do is I’ll add the address that I already own in Ohio and I re-classify them on my map, say A for the ones I’m buying or B for the ones I already own. Then when I went to BatchGeo, I’ll validate it by A or B and it gives me a map. It will show the red dots are the ones I’m buying and the blue ones are the one that I own already.

NCS 369 | Picking A Note Market

Picking A Note Market: Get the word out and talk to people about some of the case studies out there that are available.


It helps me identify opportunities for where I already have a realtor for that asset, “Jane, I’ve got an asset I’m buying that’s near 123 Main Street. Would you take a look at it? Here’s a couple more address,” and realtors love that. That’s a great thing. When you’re feeding them multiple assets or business on a regular basis, they love that. It’s a great way for them to do less work because they can use the same vendors. They can make a few phone calls and do the same thing, or they drive as far, but that’s a good thing. If you’re owning an asset in a lot of the same markets and you’re mapping stuff, don’t be afraid to pull your addresses that you own already over in that BatchGeo map. You just need the addresses, you can leave all the information you’re mapping for, the assets you look to buying, but adding the assets that you own already, it makes it very valuable. A spreadsheet that you can look at and you can get a bigger picture of what your portfolio could look like with the added inventory on there.

One of the best things too is you may want to take the time to reach out to the local real estate club once you’ve bought in a few. You may want to reach out to the president and see if they’re looking for a speaker in the next year. “I bought assets in this neck of the woods. I love to talk about the note business. I’m buying in at your market. I’ve got some case studies. I’ve got some deals I bought in your backyard. I’d love to come out maybe share what we’re doing.” That’s an opportunity for a lot of people and you’ll see that happen in areas from time to time. We’ve had some of our note students, our coaching students who have given presentations at different REIAs that they’re part of. I know Karen Peterson has done this. I know Robby Woods has done this in the past and a few others have done it to their REIA groups about some of the deals that they closed in their backyards. It’s been very beneficial for them. People invest with them, people know who they are.

Reach Out To Radio Guys And Podcasters

They’re locally networking and making some things happen, raising capital, and all that good stuff. They also become in your database for a variety of things. Everybody is a buyer, a seller, or a funding source. That’s the big thing to keep in mind when you’re looking at that aspect of things out there is how can you take your business to another level? Another thing that you may want to do as well, if you have a couple case studies or deals you’ve closed around the area. You may see if there’s a local radio show. Sometimes the market is with big enough populations and they have their own radio shows and there are people on LinkedIn. They have radio shows that you can reach out to, “I bought some assets and I got some case studies. Are you looking for guests?” I guarantee a lot of the radio guys or even podcasters are looking for guests and stuff that makes sense. I get bombarded weekly with people that want to be on the podcast here, but they’re not niche focused on notes. They may be on other things.

I had somebody that was like, “I’m a fix and flipper.” I’m like, “We’re not a fix and flip show,” or this guy, “I’ve done a lot of wholesale deals,” “We’re not a wholesale show.” Keep that in mind, it’s something that we’ve used in the past, “I’ve got some assets that can be used for some case studies in your market. Would you like to have me on as a guest? I may be a valuable guest for your show, talking about some of the case studies out there that are available.” That’s something that you might want to look at doing. It can be very valuable getting the word out and talking to people. One thing you’ll also do, I’m a big proponent of going onto LinkedIn. You may want to go to Facebook groups as well. If there’s a Facebook group for that audience, like the Ann Arbor Real Estate Investing Association or 713 Houston Area Investors Group on Facebook. It’s a pretty big group that you can post to.

When you start getting on those groups that are so big like that though, people stop looking at it because they become a post-fest. Nobody takes the time to go through and look at a lot of those postings. I’ve been removing myself from some of those groups because there’s nothing active going on. There’s not any networking going on like our WCN Crew page is seen and we’re pretty excited about that. When you’re picking a market, those are some of the great things that you can do to help you leverage that market, to help you make some things happen, to help you find the people you need, raise the capital you want and close more deals. The best thing I can recommend for any of you guys and gals who are looking to new markets is look at who you would be using in your market. The vendors, what you would do in your backyard, and apply that to the same thing in other markets. It’s a lot easier than most people make it out to.

I was talking with somebody in Rochester when I was up there talking and he was like, “I can’t invest.” I was like, “You can. You just choose not to.” He looked at me all funky. I was like, “It’s not that difficult. You do the same thing. If I was investing in Rochester, Minnesota as I would invest in Rochester, New York. It’s the same people. The same things you do there. There are investors there. They’re like you, so reach out to them. Find somebody through that.” That’s what so great about our mastermind group is there are people that invest all across the country. It’s such a great network of people to reach out to you. Does anybody have somebody here? Does anybody have anybody here who does this? A very valuable network and that’s the thing that comes down to invest in other markets. Use the network, build a network or tap into one. It’s often easier to tap into one than having to create a brand-new network out there. If you reach out to other people that invested in those markets, they often have the attorneys, the realtors, the title companies, the people that you need to make your activities work. They probably won’t give you the private money investors, but that’s something that you can do very easily as well. Hopefully, you have a great day. Go out and make something happen and we’ll see you at the top.

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