EP 445 – Note Camp Commercial Launch

NCS 445 | Commercial Note Investing

NCS 445 | Commercial Note Investing

 

Real estate events are often costly and may require you to travel and spend more money registration and accommodation. For this reason, events such as the Note Camp Convention has been conceptualized. Scott Carson will soon be launching the event which shall focus on commercial note investing. Participants will no longer have to spend huge sums for a very attainable knowledge pool. Not so many people talk about commercial notes, but through this convention, learners will be able to understand the concept deeply. Some renowned speakers including Cory Peterson of Kahuna Investments and Mobile Home University co-owner, Frank Rolfe, will talk about due diligence and investing in multiple mobile homes respectively. Discover more what you could expect in this new Note Camp Convention and how it could provide wisdom on commercial note investing.

Listen to the podcast here:

Note Camp Commercial Launch

We’ve got a major announcement. We were supposed to have Note CAMP 7. What the original schedule was is to have our online Note Investing Summit to take place. We decided, “Let’s go a different route.” The reason for going a different route is for a couple of reasons. One, there are too many note events out there. You have a lot of people spraying up to do their version of a note conference and their version of a distressed asset conference. There are so many out there now. Everybody is watering down the industry. If you look at it, they’ve got the NoteWorthy Investor Summit twice a year. One time is too many. Distressed Mortgage Expo is twice a year now. It’s one too many. When you have two events that are back to back weekends, they’re in the same area and they only generate somewhere between 75 and 100 people at it besides their vendors, that’s not doing anybody any good. It doesn’t do the investors good. It doesn’t do your vendors good because they paid to have a booth there. It doesn’t help your investors because you have people that will split their time so you watered down the market, which is unfortunate.

Lack Of Marketing

It used to be just the NoteWorthy Expo taking place in Vegas at one point. It had 700 to 800 people. It was a great event. It dwindled down, lack of marketing. We did the East Coast event where we help Jack Sternberg a while back. We had 245 people attending. It’s not bad for a first-time event. It’s gone from there. You have the NoteExpo popping up. It’s a great networking event for any hosts everywhere with note school. You’ll have a couple of hundred people, but even that was down. You have Paper Source Convention taking place or the Note Symposium, it’s officially called. That’s a great event that Bill Mencarow had been going on for years now. It probably has 400 plus people at it. It’s in Vegas at the Tuscany. That’s the only downside, it’s at the Tuscany. It’s a good event. Bill knows his stuff. He’s doing it once a year. He does it in the middle of April. You’ll start running into the IMN Convention. Now they want to have some stuff. You’ll also run into other people who want to put events.

Starting The Online Note Camp Campaign

Part of the reason we started doing online events is we want to make it easy for people to travel to. What’s funny is people are like, “Let’s put an event.” I’m like, “You don’t make a lot of money in events when it comes to a convention.” You’ve got a big overhead. You’re paying $84 a gallon or you’re trying to bring sponsors. It’s not the same thing. If you only have 100 people that show up, that’s a tough pill to swallow too to do everything. The industry needs to shake itself up as a whole a little bit. Everybody can do their own thing. If you want to do it twice a year, do it twice a year. That’s fine. You have to set expectations that you’re going to be able to have 100 people at it. People aren’t going to fly all the way from the East Coast to the West Coast twice a year or vice versa from the West Coast to East Coast. People are very fickle about the coast that they spend time on. It’s what it is from everything that we see. This was part of the reason that we decided to do the online Note CAMP, campaign for Content, Actions, Marketing and Profits. That’s the four pillars of Note CAMP, Content, Actions, Marketing and Profits. It still has been a big hit.

We did it twice a year. We decided that we need to tighten up a little bit. The previous six, we averaged over 500 people in attendance. Our peak was 1,100 the second time we did it. It was great. The thing that comes with it is I don’t want to put an event where the same speakers are speaking at the same conference. There’s nothing fresh. That’s what I see happen a lot is the same people are speaking to the same events and the same vendors. Why am I going to pay my $300 to $400 to go to an event that I could go cheaper or I could wait around? I know who’s going to be there. I don’t need to travel. I’d rather advise you to stay home or go do something fun. Maybe some people are flying to Vegas for fun, but they’re not planning on going to an event. That’s the thing. When you figure out air costs, hotel costs and other things like that, it’s a little aggravating when you see all this stuff added up. I’m like, “Let’s be sensible here. We’re going to put on an event once a year. Just be smart. Don’t be greedy. It will be once a year.” That’s what we have done too.

We decided that we were going to do Note CAMP 7. We were going to push it out a little bit and just do it once a year. That’s what we’ve done. We have done it once a year. A lot of people feel the same thing too. “Why do I want to go to a ton of events and see the same people? My budget is tight,” especially when you start looking at the holidays and things like that. That’s why we’ve decided to push Note CAMP out and reduce it to once a year. We also wanted to do a thing that was going to be fresh and shake it up. Steph and I sit and talk about things, what we want to do in our business and what we want to do for our note family from those all across the country. We love the online stuff. We were the kings of online events. Nobody puts on an online event as we do. We do a great job. It also has to be something that’s going to invigorate people to come to it. It has to be something that people are going to be working toward or enjoying and using it. We decided that this next Note CAMP, we will push it out a couple of months. We’re going to be turning it into something a little bit different.

Talking About Commercial Notes On Events

There are all these other residential conferences. People talk about residential notes. Nobody is talking about commercial notes. Nobody is talking about that aspect. They’re talking about owner finance, they’re talking about first and second partials, and a lot of stuff but nobody talks about commercial notes. Many people don’t know the first couple of years in the note business, that’s what I was doing. I was buying, selling, trading and rehabbing commercial notes either it was an apartment or mixed-use or strip malls and a variety of different things. I did commercial notes. A lot of my clients at that point are buying or funding commercial deals. We got away from that as the market rebounded, but we’re starting to see an uptick. I’ve had more or less come in on commercial assets I haven’t seen quite a bit, which that tells me something that the banks are looking to move the stuff off their books. Some stuff is good, some of it is ugly, and some is down just pure fertilizer. What you have to realize is it’s like anything else. You have to work through those. You have to work through those assets. You have to work through those types of deals with due diligence and see if it makes sense. It’s going to be a little bit long-term.

What we decided is to turn Note CAMP 7 into Note CAMP Commercial. The dates for Note CAMP Commercial is the last weekend in July 26th, 27th, and 28th 2019. It’s a three-day event. Note CAMP is usually a four-day event, but we’re doing Note CAMP Commercial for three days. It’s our first time to do a purely commercial event. We’re not going to split it up into two Zoom rooms. We’re not going to split it up into two different meeting rooms. We’re going to do one event to make it very easy for people to join in because one of the great things we’re doing is it’s not going to be the same old. We’ll have a couple of people on here that had a little bit crossover on the residential and commercial side. They may be some people you’ve seen on some of my episodes in the past. We’ve got a lot of new people coming on board. I am excited, especially with some of the different asset classes that we’re going to be talking about. No, we’re not going to sit here and hammer apartments to death. Everybody else is doing that already.

Inviting Prominent Speakers To The Camp

Everybody wants a multifamily investor. I’m not saying we won’t have something on teaching that because we do. We have my very good friend, Corey Peterson, the big kahuna, joining us to talk about this. Corey is an amazing individual and a down to earth guy who I’ve known for years. He’s done a great job, so we’re excited to have big kahuna Corey Peterson joining us on Note CAMP Commercial. You’re going to love how he teaches. He’s a great guy. He and Shelley are great friends of Stephanie and me. We love them, so we’re excited to have them on. You’re going to enjoy what the big kahuna shares and learn some of the due diligence. I didn’t want to bring on people that were going to be a pitch fest. There are a lot of pitch festers out there. They are people that will just do NLP you to death and we didn’t want that. We wanted to stick to the four pillars of Note CAMP, content, actions, help you with your marketing or how to find deals, and help you make profits with the aspect of things. It’s a big class.

I see a lot of people are diving into mobile home parks, especially on the commercial side. They’re looking at mobile homes on an individual basis, but they want to take it. They’re looking for mobile home parks because of home affordability out there. We’re ecstatic at the guy that I reached out to see if they would be on. They said they would be on here. I’m so honored to have this guy come speak. I reached out and said, “Would you be interested? Here’s what we are going to be doing.” We are bringing on the nation’s largest owner and operator of mobile home parks across the country. We’re bringing on Frank Rolfe as a speaker to share his insights, to share his education, to share what he loves about mobile homes and why not. A lot of people are interested in that so we went to the top, the crème de la crème and brought in the largest company, the largest guy that’s doing this to help share some great nuggets on this stuff. Frank Rolfe will be speaking at Note CAMP Commercial. That’s a big win for us. That’s a big thing.

I reached out to a local guy that I admired for many years. I visit him for a couple of times, but it’s been awhile. We’re excited to have David Buttross from Austin, Texas to come on and speak. David owns a ton of residential and commercial properties here in Central Texas around the country. He’s a big advocate of using paper and owner financing for his projects and buying distressed debt and stuff like that. David RSVP with me to speak on Note CAMP Commercial. David is well known around Austin, Texas. I thought, “Why not? Let’s reach out to him.” He was like, “I would love to speak at Note CAMP Commercial.” I’ve got several asset managers with different banks, special asset managers under distressed commercial side. I’m double checking to see if they can speak on the event as well too. They’re a couple of big guys that I’m ecstatic about that I’ve been buying from and buying commercial over the last few years. We’ve got Yakhin Israel, who used to be the Head of Special Assets Commercial for Fifth Third Bank throughout Florida and the southeast part of the country. He’s now at CCIM, commercial real estate agent in Florida, but he used to manage that. That’s how we met. He’s interested in being on. I love to hear the background of to-dos, don’t dos, and things like that.

NCS 445 | Commercial Note Investing

Commercial Note Investing: When looking at commercial properties, it’s all about the management side once you take the property back.

 

We have Sari Zuhn, who is a local commercial property manager. She manages several hundred thousand square feet of commercial space here in Austin, Texas. I’ve known Sari for a few years. She knows her stuff. When you’re looking at commercial properties, it’s all about the management side once you take the property back. We’re excited to have her on talking about the do’s, don’ts and things to look for when you’re diving the commercial side. I’m excited at the all-star lineup of people that are coming out. We’ve got Joel Block from Bullseye Capital. He just RSVP to me and he’s excited to be on speaking. He was like, “I’m going to be at another event that time, but I will make time to speak to your audience.” We do have Alex Goldovsky. He reached out to us immediately when he found out what we’re doing with ProTitleUSA to talk about the title, title reviews and things like that, especially in your commercial properties because it’s a whole different ball game than the residential side of things.

Panels and Pechakucha

We’ve got a couple of attorneys, Shawn Yesner, a buddy of mine who used to represent banks on foreclosure side and now he’s on the other side of the ball. He has reached out to speak on the event too, which we’re ecstatic about. I would love to put a feeler out there to Note Nation, whether you’re on our Facebook group or YouTube group or you’re listening on the podcast or across any of our different radio networks across the country. If you have bought a deal, bought a note, bought a commercial property by buying the note, getting owner finance or some sort of creative topic, not just apartments but another commercial property of some sort, I would love for you to reach out to me. I’d love for you to email me at Scott@WeCloseNotes.com and tell me about the deal because one of the things that we’re going to be doing is have some panels. We’re also going to do some PechaKucha things. We’re going to bring on some investors to share some of the different commercial deals that they’ve got or some case studies and walk people through that stuff. PechaKucha is a speed dating meets TEDx.

I’ve spoken at Podfest before in the PechaKucha where I had five minutes or ten minutes to get through eleven slides while we were going to go through some case studies for different investors. If you’re a hotel investor, if you’re in mixed-use or self-storage, we’ll love to have you on to talk about the deals. I almost forget Alia Ott and Terri Garner, who are friends of mine and previous mastermind students, who run Investors In Action. They’re going to be coming on to talk about self-storage facilities, how they use self-storage, how they invest, how they find their deals, and provide some great training involved with that. They verified as well. I’ve reached out to a very large hotel investment fund. I’ll have a phone call with them about their CEO speaking at Note CAMP Commercial. We’re stoked about some big people coming in and being on Note CAMP Commercial sharing nuggets, sharing content, sharing actions, sharing marketing and profit generating ideas.

If you want to take your note business to the next level, if you want to get out of the residential and move on to the commercial side of the ball game, it’s a different animal. Lucky for me, I had some great people that educated me on the commercial side of stuff beforehand. We’re spending more time on that now. I’m always still diving in the residential stuff. I made some counters back and some assets we’re selling as well. I would love if you have a topic and would love to share with me what topics you’re looking for in the commercial note side. I’d love for you to reach out. Shoot me a text message at 512-585-3810. Go to our Facebook profile, go to our YouTube account, go to Instagram. We know that there is a big gap in education when it comes to commercial note space and we’re trying to fill that gap for you. We’re trying to bring on experts, we’re trying to bring on and talk about different case studies that we’re working through. It’s going to be a beautiful thing coming in there. We’ve also reached out to some different finance companies that are specializing in specific commercial debt.

One of the big things I would like to do is bring together a platform for people. If they’ve got the commercial assets they’re getting on their books or off their books, they’ve got to list in to be able to share that off there. We’ve got a private Facebook group just for those that are signed up. I have to tell you, it has been overwhelming to see the number of people that have signed up already in our first 24 hours of launching this thing. Over 50 people already RSVP their seats. They’ve taken advantage of the extra early bird special 50% off. The normal ticket price is $699 to the Note CAMP Commercial. People are signing up at 50% off. All you’ve got to do is go to NoteCampCommercial.com. This will either go to take you directly to the checkout page or directly to the website where you can check out the list of speakers. We’re finalizing the website as people are getting their headshots over to us and their bios and things like that so we get them uploaded onto our website.

I’m a little tickled about this because we’re doing something different in the industry. We’re taking it to a different place. We’re evolving. We’re trying to prep our note family, #NoteNation, #Carsonite, to take their business to new levels because there’s going to be plenty of commercial stuff. There already is plenty of commercial assets out there that people are looking at and they’re like, “I don’t know where to look at.” We’re trying to bring some great people together. That lineup would fill a day or two of just content, but we’ve got three days. It’s Friday, Saturday and Sunday. I’m looking forward to what people are going to get out of it and the great knowledge that we expect our note campers, our camp counselors as I like to say, educators and speakers will be bringing to the table to kick butt and take names.

If you go straight to that website, we’ve got a limited number of early bird seats available. Once we hit that number, the price will go up a little bit if you want to take advantage of that and get signed up for the extra early bird tickets at 50% off. One of the things that we do is record our things. The recordings will be made available almost immediately to those that are part of it. There will be a lot of bonuses. I know that just about everybody that I’ve talked to who’s coming on has something. Some people have some classes and some workshops. They’ll be giving some substantial discounts to those. We’re also offering some giveaways, books, classes, cheat sheets and things like that. Someone says, “It’s a great idea. I’ve heard people ask you about doing commercial notes quite a few times.” Most of those times, when people have asked me that, I’m like, “You need to walk before you run. You need to learn how to crawl before you go to a full sprint.” It’s a different ballgame in the commercial. If you’re trying to make money, residential is still going to be the better way to do that immediately, especially if you’re trying to leave a job. Build up your reserves and build up your money on the residential side because that’s a faster way to make money. The commercial side takes longer. There’s more due diligence.

We had a good coaching call on our Note Night in America for our WCN crew members where we broke down some assets. We dove into some stuff that we saw. One was a property down at Raymondville, Texas. Another one was a twelve-unit apartment complex in a rough area in Chicago. There was a mixed-use unit also in Chicago and some other things. There’s an administered trucking company property in Cleveland that we looked at, which is not a bad deal if you live in Cleveland. It’s important that people realize and at least have an understanding of what they see. A lot of people are going to end up dropping hundreds of thousands of their own dollar on some commercial assets or probably not. That’s why we are bringing in Joel Block on to talk about that. I’m trying to get Jillian Sidoti on as well to talk about some of the regulations and things like that.

It’s a different ballgame. You don’t necessarily have to have all the pieces in place. If you’ve got a team, it’s better to make something of something versus 100% of nothing. I see too many times, note investors get something on their books, they have no clue what they’re looking at, and they don’t know what to ask. I had someone call me about a property one time. It’s an office space. I was like, “Is it occupied? Is it lease? What’s the seller looking for? Do they have rent rolls?” They were like, “I didn’t ask any of that.” I was like, “I can’t help you until we have that information to look at.” That’s the beautiful thing about cashflow. It’s the capitalization rate. Do you want to buy on a high capital rate or do you want something in low capital rates? The assets that we see are coming off of the books more so from different banks out there. There’s a lot of opportunity for those, especially if you’re in an area or you know what’s available if you take a little time to dive into it and work with it.

I’ll give you a great example. Dan Handford was in town for an event. He’s from Multifamily Investor Nation. He had a meetup. We were visiting with him. There was a commercial realtor. I was talking to them. They were picking my brain about the note business. He was talking about the Houston market and some of the different things he sees. I was like, “Have you thought about this?” He was like, “No, I’ve never even thought about that. That’s a great idea.” I was like, “Let’s announce it.” I seek counsel, but I don’t ask for advice. I seek counsel for people that I admire and respect. I’m honored that some of the people that I mentioned to you have said they’re good to go. They want to be a part of this. We want you to be a part of this as well no matter where you’re located. That’s the beautiful thing about what we do with our online convention, especially the Note CAMP Commercial Convention, NCCC. It’s because of the fact that there are so many different things going on in the commercial space and you need to know what’s going on in the financing side and on the legal side. There some great advantages when it comes to the commercial side, especially if it’s occupied, and taking over the mortgage. You have the right to collect rents with the bank.

NCS 445 | Commercial Note Investing

Commercial Note Investing: There some great advantages when it comes to the commercial side, especially if it’s occupied, and then taking over the mortgage.

 

There are some deals that we’ve taken in that we didn’t do any work on that we started getting the rents in completely and immediately manage the property. Once we took over receivership, the seller didn’t have any cause to be using that property as an ATM anymore. One of the things I’m looking for though is if you have closed on some commercial deals, not apartment deals, not something where you closed on where you invested $50,000 as part of a deal or you’re invested into a commercial fund. That’s not what I’m looking for. I’m looking for people that are owner operators or people who have taken down commercial assets that don’t need apartments. I’m looking for somebody with a hotel. I’m looking for other people with self-storage. I’m looking for other people that are doing some other things like hotels, self-storage, mixed-use, industrial, gas stations, restaurants even. It’s something we would love to talk with somebody about and maybe even have them speak on it, what they look for, and how to substructure those deals for our note campers or our people that are attending out there.

If you know somebody, feel free to reach out to them and give them my information. It’s Scott@WeCloseNotes.com. I love to schedule a phone call and talk with them. We’ve got some time. We are still months out from the event, but we’re already excited because we’ve got over 50 people that have already signed up for the event. We are expecting to see somewhere around 500 plus people be a part of our Note CAMP Commercial Conference the first time out the doors. Note CAMP will be once a year. We’ll go back to a residential one in 2020. We’ll just flip flop on one residential and one commercial to keep it fresh and less stagnant. We provide a lot of great content here in the show. We bring on a lot of great speakers, vendors, educators and things like that. Our education is second among in the industry when it comes to the residential side. We’ve got some cool things out there. I don’t think anybody is tapping into the commercial side when it comes to things. This is going to be our first foray into it with an event, but we are excited to see what’s happening with our audience and the people that come on board here.

The normal ticket price is $699. Get signed up by going to Note CAMP Commercial or even NoteCAMP.Live. It will take you there as well. You can get an early bird seat by 50% off. I would love to hear any topics you’d like to discuss. I’ve reached out to a couple of commercial land developers as well on what they’re doing and see if they’d be interested in coming on. I’d be willing to bet they’d say yes. I’ve reached out to DeadX. I’ve reached out also to FFN. We’ve exchanged a few emails back and forth with both of those. We’ve got some commercial agents and just about anybody I can think of. Everybody was like, “We want to be a part of it.” If you’re reading this, do me a favor. Take advantage of this opportunity. It’s going to be great content and great information. You’re going to get the replays if you’re signed up. We’ll include that there. We’ll also have some special bonuses as well if anybody else is interested.

I’m stoked about the Note CAMP Commercial. One of the things we will be doing as well is we’ll try to get a bunch of those people that have RSVPed to interview them. We’ll bring them on individual episodes here as well. You’ll hear from the horse’s mouth directly on some of their expertise, what they’ll be focused on, and some of the nuggets that they’re going to drop to each and everybody at the Note Nation family out there. My big goal too as well is to get some different commercial lists so that our private group turns into its own mini note mastermind when it comes to commercial note space. If you’ve already signed up, that’s great. Look for an invite to our private Facebook group and we’ll give you a chance to start networking with other potential commercial note investors out there or people that are already doing that as well. We’ve all got to get started one place or another. Might as well get started now so you can learn it and when everything does take a dump and some of the different things are coming up, you’ve got an opportunity to dive into some stuff.

It’s like the list I’ve got. There were assets that were just 30 days delayed in default all the way up to the stuff that was two years plus delayed. I’m like, “Why is the bank not done anything with these things? They’d rather sell the note than do the foreclosure.” That’s a true story. They would rather sell the paper than sell the asset. I’m stoked about that. If we’ve got time, we may even do a whole quiet secluded thing with a banker. Maybe they won’t disclose which bank they work with, but we’ll do a Q and A type of thing with them so that people get to ask all sorts of crazy questions or questions about buying distressed debt and buying distressed mortgages on the commercial side of things, timing, due diligence, what’s going on with their institution and go from there. I’ve got the feelers out with some guys that we’ve bought from our lists on a regular basis. I think that would be fun. It’s something anonymous but can answer questions freely. You’ll ask the banker on some of the different things that they’re able to do, to talk about and go from there.

Commercial Short Sales

Our Note Mastermind student rock star, Liza Banaag took action and made a bid already on a commercial asset. I’m not going to explain what it was, but we’re stoked about this one. I don’t know if she’s going to get the accepted offer on it, but she’s got an offering in getting the ball rolling. It all starts with making offers. It all starts with making offers when it comes down to it. One of the things also too that we’re probably going to talk a little about is commercial short sales and what goes along with that. Do you have Cash for Keys? What are the exit strategies? We’re going to talk a lot about loss mitigation and servicing on that side. What’s the thing to look at when you’re doing that? What are all the different strategies? You’ve got little different bankruptcy laws when it comes to commercial assets as well. Someone says, “Have the banker behind the screen like deep throat.” That’s exactly right. You do not see the man. He’s totally behind the screen. That’s exactly the idea. Why wouldn’t you do that?

I’ve got a couple of asset managers that I know that have moved on, but it would be great to reach out to them and say, “I’ve got an opportunity here if you’re interested.” We’re all seeing the commercials. It’s a totally different creative aspect of things. We have bought and sold different apartment complexes, we have bought beer barns, commercial note, strip mall, mixed-use. We bond and sold a ten-unit apartment complex above, eight units office spaces and medical office buildings. I’ve got friends that are buying distressed notes on golf courses. David Buttross is going to talk about that. He bought distressed debt on a golf course outside of Austin, Texas. He bought an office too. That’s one of the main things I think about. We brokered a twelve or fifteen story building here in Austin, Texas. That was a good chunk of change. I split it with a few people, but still a nice chunk of change when it comes to it. There are a lot of great things that you will see. It can make things happen. Just be a little bit creative outside the box. You never know what’s going to happen.

I’ve got Chris. He’s bought some commercial assets by getting the sellers to offer 0% financing. We’re going to work through some of those case studies as well. He’s agreed to be on. You can hear the excitement in my voice, but it’s not about me. It’s about what you are looking for, what our Note Nation, what our signup. Those are getting signed up. We’ll be sending a survey out. What’re their strengths? What’re their weaknesses? What are they looking for? What kind of assets are they looking for? What parts of the country are they looking for assets? We’ve got commercial property managers like our friend Sari. She’s got investors and property owners that are all across the country that she works with and it’s a whole different ballgame. I’ve seen what she has to do with some of the property management and some of the assets here in Austin that she manages in different places of the country. We’ll talk about a couple of commercial realtors. We’ll talk about title representatives and some great things out there.

I love to hear what you are interested in any particular asset class. We’ll talk about multifamily. We’ve got the big kahuna, Corey Peterson. Jason Bible is going to talk about some smaller unit stuff. I’ve got Dan Handford and we’re going to talk about some of the due diligence and some department stuff that he’s doing. We’re going to rock and roll this. You should know me. We’re going to come with two guns blazing to deliver great content out there. If you’re interested, go to NoteCampCommercial.com. That’s the website. You can go to NoteCamp.Live as well. It should forward you over to the website for you to check out there. The official website will be up to help you see some of the different amazing speakers that we’ve got on the hook come and speak for three days. Some of them are joining us from different areas. We’ve got people from the East Coast and the West Coast. We’ve got people from Chicago and people here in Texas. We’re trying to hit all four corners of the United States, for the most part, to get into the commercial space.

We’ve got a couple of commercial realtors that are going to be on talking about some of the things that they’re looking as they’re brokering or dealing with a bank. I’ve got one commercial agent that we’re working back and forth on a couple of deals with. She’s going to talk about what’s going on, what people should look at, some things to keep in mind, things you should ask, and things you should not ask. I’ve also jumped on the Scotsman Guide. I reached out to some financiers or some institutions that are funding different commercial assets to see if we can get a couple of people on to talk about some of the difference when it comes to commercial underwriting. What are the different things that come to mind versus go and get a mortgage or going to traditional lending package? What goes into a commercial package that you want to have to make it attractive to banks? That’s one thing. I used to do a lot of commercial lending back when I owned a mortgage company. We’re doing a lot of smaller commercial stuff. It’s not some bigger stuff, but $1 million plus or less for the most part, especially under $1 million. We did a lot of stuff. There’s some great stuff out there that we’re excited to do and get into.

NCS 445 | Commercial Note Investing

Commercial Note Investing: The commercial is a whole different space when it comes to being an investor in it.

 

You’ve got to realize there are a lot of different niches inside the commercial space and a lot of people like to focus on one or two niches and that’s great. There’s nothing wrong with that at all, but we’re excited to be doing this and expecting to lead the industry in this event as well too. I was so honored Bill Mencarow, on his way to the airport, saw my email and reached out to me. The email says, “Scott, when I finished up with this in a couple of weeks, we’re glad to help promote your event.” I take that as a sincere honor, especially he was in Houston. He lives in Kerrville, but he was flying out of Houston to take the time to call me on that. If you’re going to be at the Paper Source Symposium or attending, that’s awesome. It’s a great event that Bill Mencarow puts on. We’ve been a big advocate of that for years. There are a lot of events out there. If I was a new note investor, these are the ones that I would look at attending. I would attend Paper Source at least once or twice. I would go to the NoteExpo that Eddie Speed puts on once or twice. They’re different. You’ll get more vendors at NoteExpo than you do at Paper Source. Paper Source got more great contents especially on the owner finance, junior liens, and even some first side of things. I don’t think there are a lot of nonperforming notes because that’s just not what Bill’s stuff is, but performing, definitely.

Eddie has got a lot of vendors. It’s going to be a little bit more tailored towards their note school and training, but it’s still a great networking event for the most part. If you’ll have some of that hits your coast that’s in your backyard, go to it. That can be the Mortgage Bankers Association meeting in your state so go to it. If it’s NIS, go to it if it’s in your backyard. If it’s IMN that’s in your backyard. They have got symposium that you want to go to, that’s great. Just expect it to be a lot of panels and not necessarily a lot of stuff that you’re going to dive into being a new investor. Our goal is to provide a springboard to helping people take their business in the next game. We’re not talking to stop doing residential. That’s not at all what I’m saying, but helping people take that next step in the commercial space. If you’ve done commercial deals, if you are in the process of what we’ve closed off and stuff, you’ve got some stuff that you’ve taken down with the note space or a couple of stuff, I’d love to hear from you. Shoot me an email at Scott@WeCloseNotes.com. We’ll see what the fit is because we plan on having our Note CAMP PechaKucha case study thing with a lot of investors who are closing deals and sharing some things. There are great speakers and it’s a great event.

Signing Up For Note Camp Commercial

Just go to NoteCampCommercial.com. Once you get signed up for there, you’ll see an invite into our private Facebook group and that’s where we’re going to live stream the episode. If you can’t make it in person, we’ll be using Zoom. If you have ever been on one of our webinars before like Note Night America, it’s the same thing. You’d be able to watch, interact, ask questions and network with other people there. We’ll live stream it straight to the Facebook page as well all the way to Facebook groups so that you’d be able to network and be able to communicate with other people there. In that way, you can watch it on your phone or you can watch the replay there. The replays will be provided a couple of days afterward, but you’ll get replays usually by that following Tuesday or Wednesday. It depends how dead I am on Monday and how much time we spent on Friday and Saturday night after the sessions to get everything downloaded and ready to roll the package for you. We will have the Note CAMP Commercial podcasts available as well in a couple of months afterward. We’ll spend a little time on that.

For those that are interested, we have uploaded 27 to 30 sessions from Note CAMP 6 to the Note CAMP podcast. Those are the processes of being uploaded and edited onto iTunes, Stitcher, and all of our other podcasting platforms for our Note CAMP podcast as well for you. A big shout out to Alexandra Hazzard and Tom Hazzard out there who produced our podcasts and helped us get that uploaded there in a timely fashion. I know I should have had them uploaded earlier, but I always like to wait a little bit to see how we’re going to roll things out with Note CAMP 7. I don’t want to let too much out of the bag, but with this being a totally different event, let’s get it all uploaded. You can go back and listen to that if you want. This is a whole different animal. The commercial is a whole different space when it comes to being an investor in it.

I’m open to suggestion. If you’ve got something or a case study or a topic you’d like to see covered, let us know. We want to help you more than anything else. We want to provide the content you’re looking for. We want to help give you the action items, the checklist, the due diligence sheet. You can’t learn everything about commercial assets in a three-day online convention. We understand that and we get that, but this is a springboard if you do find somebody that is providing some content that you want to sign up for, there are some opportunities to take some more shots. Our speakers will have 75 minutes to speak and the 60 minutes has got to be directed at content providing great nuggets that can be a checklist and due diligence. It’s got to be meat and potatoes content. They’ve got fifteen minutes for questions and answers and also, they’ve got a class, a workshop or training program. We allow them to sell. No, this will not be a pitch fest. I can promise you that. Speakers are aware of that. We’ve got some great people. We’re limiting the number of speakers that we have to less than a third offering up some workshop or things like that. We want it to be content. We want to provide actions. We want to give you some marketing things to show you how to make some profits and commercial paper.

If you want more information, go to NoteCampCommercial.com and get signed up. There will be a little bit about what’s going on or just drop me an email at Scott@WeCloseNotes.com and take advantage of the extra early bird seat. We would love to see 500 plus, but we’re going to try to make it right at 500. Once we hit 100 tickets sold, the price goes up. Once we hit 200 tickets sold, the price goes up. I wanted to give those opportunities to get the biggest and steepest discount right now while we’re working through the website, working through the Facebook group and some other things for you to take advantage of. You could say you get an under construction discount. You’ve got to rent an apartment in college and the property is under construction so you’ve got a bigger discount because you’re on board. That’s what we’re going to do. You’re not going to have to spend thousands of dollars flying. You’re not going to have to spend hundreds of dollars on hotel rooms. You’re not going to have to spend three days or four days away from your family. Maybe some of you do.

We’ve had a couple of people that live across the country, rent a hotel room in a new place just to get away from their family. I don’t necessarily agree with that, but if you want to do that, get good Wi-Fi. You could be sitting on poolside and learning about commercial notes the way we do it. It’s one of the things that we’ll do. I’ll give you an example. One of the first deals is an eight-unit apartment complex in San Diego. It goes back to 2008 so the numbers are different. The bank’s appraisal was $699,000 or $700,000. The existing borrower owed $548,000. The bank was willing to sell it to us at $375,000. They’re willing to sell it over 50% of the value on the note purchase that was fully occupied. The tenant hadn’t made a payment in six months. It’s not the greatest of assets, but it was in a nice little area in the historic Adams district in San Diego. There are a lot of six units, four units, eight units and a little small apartment complexes in that neck of the woods. At $375,000, we market it out to our list of investors.

We had a couple of people who respond. Matt Harper, who was a gym teacher in San Diego, left that because he was doing a good job in investing. He and the two of his partners pulled their funds together and purchased this asset from us for $415,000. In less than 30 days, we were able to flip that note for $35,000 wholesale fee. Matt was stoked about that deal because he lived in San Diego. He knew that area. He and his partners worked out where they were able to get the borrower pay off the asset and come back to the table with money. It took a lot longer than 30 days. It took him about six months to do that. They ended up getting a check for $548,000 and almost got a full pay off. For $548,000 pay off, they paid $415,000. That’s a good return on investment in six months. It’s over $135,000 profit for them that they split three ways. That’s a good return on investment. Matt did the right thing. He took his wife to Hawaii, left the two kids at home but traveled to Hawaii. He had a great vacation there and he was off and running doing some great things. Matt is a friend I’ve talked to a lot, but I know that he’s out doing other things in the commercial space as well. I meant to reach out to Matt and see how he’s doing and rocking and rolling some things.

I bought a note from Capital One. I bought a four-unit strip mall. We got the note under a contract that was here in Austin off of the Airport Boulevard in I-35 and inside of that, you had a coin-operated laundry. You had a check cashing place. You had a pizza place and Domino’s pizza. They all had long-term rent. That’s one of the things when you’re looking especially at mixed-use and stuff. You want to see how long the tenant is going to be in place for it. Their lease is brand new, they’ve been there a while because that’s a great way to tell cashflow. If they have a lease or five years, you’re not going to be able to go to the push rents on them. We’re able to negotiate that note at $0.50 on the dollar. We made 10% to $65,000 wholesale fee because we flipped it to somebody else who was willing to buy. The borrower hadn’t made a payment. He had other properties that were underwater so he was robbing Peter to pay Paul on that asset. That was a nice little deal. I only just looked at two ways. It was a nice $30,000 payday for me. It’s sweet on that deal.

Multifamily Assets

I once also negotiated a commercial note deal on a beer barn. It was in Alabama. It was the cruise distributor. They were renting just a regular metal building from the property owner, but the property owner wasn’t paying the mortgage to Capital One. It’s not a Capital One deal. We got them to negotiate my buying the note at a discount. We went to the actual owner of the distributor and they bought the building. They bought the note from us and we walked away with a $40,000 wholesale fee on that one commercial side. That’s the nice thing in the commercial deals. The wholesale deals on those are good, but the beautiful thing is that we did the work. We did a lot of the due diligence on that. I was pulling the rents. I was talking to the bank like, “Do you get the servicing statement? What was the deal?” I was looking at the collateral files. I was making sure we get to look at that stuff. We’re having an attorney to look at that stuff to add value to our packets that when we market it to our investor’s database, it will take off. The commercial has been overpriced in the last couple of years, but I started to see it come down except the multifamily side. Everybody I talked to think that multifamily is the most overpriced asset right now. That doesn’t mean there won’t be plenty of multifamily assets in six to twelve months to buy that is in default.

NCS 445 | Commercial Note Investing

Commercial Note Investing: One of the big mistakes new commercial investors tend to do is they try to manage everything themselves.

 

Once the people are overpaying me, I realize they can’t squeeze any more blood out of a rock to come back in and try to make profits on it. There are a lot of opportunities there. We negotiated a 300-unit apartment complex in Indianapolis. This was with another bank. We negotiate this in the purchase of $3 million. We sold it for $330,000 and I had to split that three ways. That $300,000 is not bad. That was in 2010. The good thing about this, especially in commercial, is they give you more time for due diligence. It’s not like in the residential side like, “You’ve got seven days to close. You’ve got ten days to close.” No, you’ve got 30 to 90 days to close. I was dealing with Palmetto Bank out in South Carolina. We had a student who had taken over self-storage units from somebody else in the actual borrower. We reached out to that bank. Since he had a different name that was on the mortgage, we were very surprised to see Palmetto Bank’s number of list of their nonperforming commercial notes including that self-storage. He knew it was nonperforming. It was only about 60% occupied. It had five offices in there that weren’t quite up to date. He was working through that. He took it over and put money down so he’s getting some cashflow off it.

We were able to negotiate the bank selling the note. They sold it at $0.60 of the unpaid balance, which we were able to go find an investor to put that money up as the lender of the property. My student went from being on the subject to now being the owner of the property with a lien against it. It made sense for me because that number on that mortgage is a lot on the cashflow for about 20% whereas he was in the whole 10%. It was 10% to 12%. It just wasn’t covering a lot of costs and other things they had. It was a beautiful deal allowing him to be able to take that property and turn it from a nonperforming to performing side because he had the numbers and the financials. The bank, even though he filed a quitclaim deed with a transfer of ownership, they didn’t kick in the due on sale clause.

The insurance they showed them is on there. You’ll rarely see a bank that was listed so you can have your asset on it. You’re the borrower technically on the deal, but sometimes you do. Sometimes you see some of that stuff and you can make some things happen out there. We’ve done some other things. We found a shady deal one time. There were 72 units Best Western Hotel in Dallas that they converted it to an apartment complex. They’ve done a crappy job to it. The guy that had bought the property was on the hook with Capital One. We discovered fraud. We helped to sort out a fraud case. He wasn’t even a doctor. He said he was a doctor. He ran around raising capital from people in a Ponzi scheme that was backed by this apartment conversion. It was the conversion that he was doing. It was a hotel to an apartment trying to go with the content. It wouldn’t pass because it wasn’t individually metered. It just needs a lot of work. It was a rough area. The guy committed fraud. We worked with Capital One. The district attorney from San Diego on this deal to try to help them figure it out.

We were looking at buying this note. We’ve done some due diligence. He went and committed fraud by showing a fake assignment of the mortgage to his entity from Capital One. He signed our name to it of some sorts. I’ve brought it before the asset manager of Capital One and said, “This borrower committed fraud on an asset here in Texas. You should foreclose on this stuff, but here’s the district attorney from San Diego.” We got a phone call and he said, “I’m the district attorney from San Diego.” I was like, “I didn’t kill anybody. What’s going on?” He got off the phone. He couldn’t give too much information out until he heard me say like, “Are you talking about this Dr. David or something down there in San Diego with some of the fraud that he’s committing?” He goes, “I didn’t know which side of the fence you’re on. His side or offside.” I was like, “That’s okay.” The district attorney calls to say, “Can you tell us what you do exactly?” I was like, “Do I need to talk to my attorney?” It all worked out for the better part of things. We were able to help that guy go to a district attorney, file charges, and send the guy to prison for doing some shady stuff.

You’ll see some different stuff with commercial assets. You’ll see some different stuff with commercial loans. Oftentimes when they fall behind, it’s because either the market values have dropped or vacancy or they have poor management. That’s the big mistakes I see new commercial investors do a lot of times. They’re trying to manage it themselves. Honestly, you can’t do it all. A note investor can manage 20 to 30 assets if you’re doing it all yourself. Other than that, you’ll get too strapped with time and reaching out to vendors and following up and things like that. Performing notes are a different story. You need to bring on staff. You need to bring on property management. You’ve got to bring on people that will help support you when you’re going to dive into the commercial asset games. We’ll have some great case study that we’ll be talking out through it and not just mine but a lot of other people’s as well too. I love to have you be a part of Note CAMP Commercial the first time. The first one of them is out of the books and out of the blocks.

It’s on July 26th, 27th, 28th. It’s a Friday, Saturday, Sunday from 9:00 to 5:00 each day. I want you to come and join our 20 to 30 plus speakers and join the Note Nation community on the commercial side. We’d love to help you with your game. Just go to NoteCampCommercial.com and signed up for the extra early bird seat at 50% off of the $699 prices. Sign up now while those extra tickets or extra seats are available. Once they’re gone, they’re gone and the price goes up. Go out, make something happen and we look forward to seeing you at the top.

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