EP 459 – Note Mastermind Member: Scott Van Kampen and Dennis Doherty

NCS 459 | Teamwork

NCS 459 | Teamwork

 

If you want to go fast, go alone, but if you want to go far, go together. Scott Van Kampen and Dennis Doherty from Second Chance Property Investments touch on the advantages of working in teams in the real estate and note industry. Find out how to make your marketing help raise capital and mitigate the risks in buying deals outside of your market. Moreover, discover the most significant factors that people need to look at when closing deals in Michigan or Detroit and the secret sauce to making a team work.

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Note Mastermind Member: Scott Van Kampen and Dennis Doherty

We have two guys that are doing some great stuff up in Detroit Tiger land. We’ve got two very avid Tigers fans when it comes to baseball season. You are literally knocking it out of the park as well with some of the deals that you’re doing. I’ll shut up and I’m going to let you guys introduce yourselves. We’ll start first with you, Scott.

I’m Scott Van Kampen from Detroit, Michigan. It’s great to be here.

I’m Dennis Doherty also from Detroit, Michigan. I am also very glad to be here. Thanks for having us, Scott.

Talk a little bit about you guys prior to being in the note space. You’ve been in for how long now?

We’ve been in a few years. Before then we did vacant land, we did fix and flips. We dabbled in tax sales. We started with the notes in the second space. We bought a couple of seconds, had some experience with that, not necessarily so good. We got started about a few years ago with strictly first position.

Dennis, one of the great things I always like to use when people are working together is there’s usually a yin and yang to a good successful business partnership. You guys have been working together for a while now. That’s a little bit of time. Have you guys ever had any arguments?

We’ve come close a couple of times. I think on our last flip got a little pressure at the end. That’s what drove us out of that aspect of the business.

Why? Is it because of the fact of values, rehab amounts or pricing?

Values and finding properties that would fit the model became an issue or maybe the time involved and also the materials being put into the projects. You have to realize, “I’m not going to live in this house. Let’s just flip it for the market value and get out.”

Are you both doing this full-time or do you have full-time jobs as well? How does that work during your week?

We both have full-time jobs, at least 40 hours a week. I’m probably closer to 50, 60 sometimes. It all depends on time. We still make it work.

We communicate a lot on the telephone during the week, the day and night. We try to structure a Saturday morning one-on-one every week.

That’s really good. That’s the way to stay in communication and then see what’s going on. When you guys are getting in tapes, do you have specific things that you’re working on or is it the thing with Saturday, “Let’s get together to see what we’ve got or we’re going to make offers on?”

We definitely do that on Saturdays as well. We’ll still go through tapes during the week and talk during the week and see what we like, what we don’t like. Usually, Saturday is when we get together, we go through the tapes in specific.

What’s been the biggest surprise for you guys? I’m sure it’s maybe a little bit different here of coming from the fix and flip background. Several years of real estate investing, you probably had a few different things that we’ve worked on. You worked on as everybody else does. What would you say has been the biggest surprise of coming onto the paper side?

With me personally, it’s a little more complicated than most people might think it is. There are a lot of t’s to cross, i’s to dot and things like that. You’ve got to know what you’re doing. Fortunately, we have one of the great leaders.

You guys are doing a great job. You are taking action. The teaching stuff like that, people a lot of times will come in and take a class but they get so sidetracked. You guys have really focused and put away a one-man band or two-man band trying to focus on everything. You focus on that one side now.

We have weaved off a few times. We’ve got sidetracked. There was no doubt about it. That’s what I think is so good about these masterminds. It re-focuses you, re-energizes you and put you back on track.

Scott, how about yourself?

I totally agree. There are definitely days or times when we may not be doing everything that we need to be doing. That’s what’s good about working as a team, as the other person picks you up, kicks you in the rear end a little bit, get you moving along and get you re-focused again, so that’s great.

It keeps you accountable to each other. A lot of people are working by themselves have a tendency to drift a little bit more, but you’ve got each other especially if you’re meeting on a weekly basis like, “I need to get this done or I promised I’d hold him accountable if I’m accountable to do that.” You’re married as well too, Dennis?

No.

I know you’re married and your wife is very supportive of everything. She’s a very gracious and awesome lady. We’ve met her before. The thing I want to get at here and ask if you guys have had a little bit of a slower start when you were starting out. Making a few offers here and there, but then you were also very busy after you came to the Fast Track. How many deals have you closed now?

We’re at 25.

It’s not bad. Over how long a period?

It’s been a year-and-a-quarter.

That’s not bad. That’s pretty good. I like that. Twenty-five notes, that’s good. You’re getting those numbers down. What are your guys’ big goals for the next several months?

It’s 50 notes.

NCS 459 | Teamwork

Teamwork: Masterminds re-focus, re-energize, and put you back on track.

 

Where are you guys buying, Dennis? Where’s your market for the most part?

We have quite a few in Pennsylvania. We have several in Michigan, a couple in Indiana. We’re in Missouri. Ohio, we have one or two. We have assets in Alabama.

Are you guys going after occupied assets primarily? I would imagine you’re not afraid of doing a little bit of work coming from the fix and flip side.

We have one that we’re involved in a major rehab and it’s been a little bit of a headache and you didn’t realize it was non-occupied, got to the property per se. It was quite a surprise once we opened the doors and it’s been quite involved. It’s been going on for several months, but we’re finally at the point where the rehab is underway. It looks like it’s going to turn into a rental property for probably a year at least.

You get to make some good money on that or if it was a little bit more of a surprise on the rehab side once you got into the property? Is that why you keep it as a rental for a while or what?

We initially tried to sell it. Once we made sure that the borrowers are out, we cleaned it out and we originally had it listed and we wanted to go ahead and sell it. Where we needed it to be, the market just didn’t bear it. Plan B, we’ll go in and do the rehab and we’ve got a great realtor in that area who’s also a property manager. She manages her own rentals and other people’s rentals as well. It seems like a win-win situation. She’s watching over the rehab for us and she’s getting ready to get a renter in there for us.

Where is the property located in case we get any readers out there?

It’s in Sharon, Pennsylvania.

That’s not a bad area there for you. Out of the 25 deals that you guys did, are they a non-performing, maybe just some deeds in lieu? Are you selling them or trying to keep for cashflow? What’s been the makeup of the 25 so far?

We have several now that are performing. We’re letting them perform at least for a little while. We’ll figure out what we want to do from there. We’ll get with JV investors that we have on them and get a feel for where they’re at and what they want to do. We’ve done a number of forbearance plans and got them re-performing again, so that’s always great. We still have some that we’re trying to work out.

Is it a big surprise for you guys at 25 assets versus beginning? What’s been the biggest learning curve for you?

Probably the involvement and the time of the record keeping and the paperwork. We’re at that point now where we’re talking about hiring an assistant.

That makes sense because there are a lot of moving parts with the paperwork and taxes and invoices and things like that. The payments are coming in and payments are going out.

Keeping on top of everybody, making sure they are paying. If they’re not paying, that we get back on track with them and get out to them again and find out what the issues are.

When you started off, did you plan to be buying assets in those many different states or just worked out that way with bids?

It just worked out that way. We found some good assets that we liked, did some outreach to get realtors out in that neck of the woods. We have other investors in the Mastermind group and the WCN Crew that we reached out to and get good information on. Once you have a good base there, why not try it? If the asset is good and it’s in a good location and you’ve got your people there.

People that speak the same language and look for the same thing, that’s huge. Out of 25 assets, have all been one-offs or did you buy some that were three or four in a pool?

The last pool was five notes.

Was it from banks, hedge funds, private sellers?

Hedge funds and some private sellers as well.

Are you funding these deals with your own funds or other people’s money?

A few are funded with our money. The majority is funded through a joint venture.

Has that been a difficult thing or was that something that took a little time to get over?

That was the biggest surprise how fast and easy the money came. Find the deal and the money will come.

Did you start marketing that out too? For those readers out there, I think that’s one of the things a lot of people struggle with is like, “Where am I going to find the money?” That’s normal like, “I got so much in my account but I bid on this much.” You can hear it. “I think your honey hole tightened up a little bit right there too, but that’s okay. What has been the biggest bang for buck, marketing to help raise the capital? Is it sharing with your networks or emails or your local network?

It’s emails, being real in your email and telling people what you’re doing, why you’re doing it, the mistakes you made. I’ve made plenty of mistakes and I’m upfront with the people I email out too. It’s getting out there and emailing to them. They call you up and have a good conversation with them and find out what they’re looking for.

I think a lot of it has to do with the way he put the marketing together though. We still have a lot of work to do on our marketing aspect and that’s huge. Basically, the way he’s broken down the deals on our deal analysis that we send to the investors. It’s user-friendly, easy to understand the different exit strategies and where the money’s coming from and how it’s laid out.

It makes sense because you speak in terms of everybody understands, makes it easier versus talking above people’s heads. I have a question for you because you came to the Fast Track and you came to your second or third Mastermind. I want to know what you thought before you came to the first Mastermind.

NCS 459 | Teamwork

Teamwork: Find the deal and the money will come.

 

“What have I got myself into?” I say that because back in our flipping days, we paid a lot of money to a guru and we’re very disappointed. It ended up going nowhere and I swore I’d never get involved again. I’m the one who held him back a little bit at first. After the initial involvement and getting into the Carson and program and so forth, it’s just been amazing.

That’s good if you had a lot of people help you guys out with things. Giving you advice and giving you vendors or realtors or stuff like that or even driving by, if you need somebody at St. Louis, Mike is always good to drive-by for. From where you guys are living up in Michigan, there are a lot of assets. What are some of the biggest things that probably people need to look at that they wouldn’t know from not living there in Michigan or in Detroit or those areas?

Personally, I would recommend learning the demographics of Detroit, especially if you’re in the City of Detroit. There are a lot of great pockets of Detroit and there are a lot of bad areas of Detroit. Everybody will know, either through a good realtor or someone in the network reach out to us that we pretty much know the city and the good areas.

It’s just the zip code by zip code for the most part and street by street. How often are you marketing out to your database? Is it a weekly email or just as you have deals available?

It was weekly. Unfortunately, earlier in the year it dropped off a little bit, slacked off a little bit to more monthly. We’re ramping that back up again. We slack off a little bit and we get re-focused and we get right back into it.

That’s normal for everybody, especially at the beginning of the year, especially going through the holidays and getting back on track. It’s a normal asset for everybody.

I think accountability as a team has played a part in us keep driving it forward.

That’s a huge thing. That’s a really great asset to have. You guys have known each other for a long time. You probably know each other’s thinking part of the time. What’s been the easiest asset of the 25? Do you have one that’s been easy to deal with and the one’s been difficult?

I would say the one in Gaylord, Michigan that was in bankruptcy was the easiest.

It was a Chapter 13 bankruptcy.

You bought the note. You knew it was in BK 13?

Yeah.

Is that a note or a contract for deed?

It’s a note.

You know it’s BK Chapter 13. Basically, when you’re buying the note, it’s like you reach out to almost immediately. Had the BK plan already been set up?

Yes.

Was there money that’s collected almost immediately once you bought the note or no?

Once we transferred it over the BK 13 to us, we just got the money coming in.

It was easy-peasy.

Easy-peasy versus have to go out and fix and flip and stuff like that. In Michigan especially Detroit, you get a lot of growth going on there, a lot of rehabs. I also understand, and it’s from my own experience, that when you’re on the outskirts of a city that’s going through a lot of growth, it’s a little harder to find contractors to get jobs done. Is that correct?

Fortunately, we haven’t had to do a lot of contractors in Detroit, so I wouldn’t know the answer.

There are some out there. It’s difficult to find them because a lot of them are really busy, but there are definitely good ones out there and it’s a matter of asking around and trying to find them.

What’s your long-term goal? You probably have a long-term goal you’re thinking about. It’s probably re-evaluating it from month-to-month, year-to-year.

I think we both have a little bit of a long-term goal. I’m a little bit older than Scott. My vision is retirement and go off the grid a little bit at that point. I’m focused on more of a supplemental income and retirement. I think Scotty wants to keep growing this. Our business arrangement will probably have to change a little bit down the road because of that.

It’s still a good thing ramping up, get to the point where you’ve got what you want coming in. You’ve got a number. We’re involved in different numbers. With you buying in multiple states, what’s been the biggest hiccup from buying in those different markets? There are a lot of people probably reading, “I don’t want to buy my own backyard.” Most people I like to say if I lived in Michigan, Ohio, Indiana or Illinois, I’d be buying my own state a lot of times because there’s often a lot of inventory. You’re not afraid of going outside your market. I would probably want to ask this question. Coming from a fix and flip side, where you are going to go out and see it, touch it and feel it. How difficult was that for you to buy something outside of your own market?

It was a little scary from my viewpoint. I think with the Baldwin Advisory Group, the hotlist, that’s my goal coming out of here. Get into our markets where we’re buying and set those vendors up, set that up so we have immediate reach out available whether it be a realtor, contractor, whatever we need in those markets. That’s my goal after this is to set that up as quick as possible.

How about yourself, Scott?

I think it’s scary at first, but it’s about getting to know the area before we buy in it. Even if we weren’t in St. Louis before, it’s a matter of getting out there and making contacts and finding out what’s a good area, what’s not a good area. Everybody has their opinions on different particular areas. It’s just a matter of asking for it.

NCS 459 | Teamwork

Teamwork: It’s difficult to find contractors because a lot of them are real busy, but there are definitely good ones out there and it’s just a matter of asking around and trying to find them.

 

Especially coming from Detroit, you as not being from Detroit, what do you think? We look at Detroit a whole lot different than someone from St Louis.

I like Michigan. I haven’t preached about Michigan for a couple of years now. We jumped on a plane and spent a weekend. I would have loved to meet you for a beer on a Saturday night. The text messages, we’re trying to squeeze out the last of 50 assets to look at. There are some great areas up there. It’s not all the frozen tundra of Eminem and 8 Mile Road like a lot of people think of. A lot of great blue-collar, salt of the Earth people live up there and some great value homes, a lot of pride of ownership all over the state, and some great stuff out there. Any other tips or suggestions you want to give somebody who’s thinking about getting in the business from the fix and flip side or any advice to somebody who’s looking to dip their toes in the notes?

I don’t know about the fix and flip side. I tend to want to stay away from that.

I’m saying anybody who’s come from that background.

I would say it’s a lot easier, a lot less time involved in this space versus that. You’re dedicated in that side to one property for how many weeks to get that thing fixed and then sold. This side, you dedicate a little time to the paper trail of it and chase it down and get things going and then you’re back and moving on to something else.

You can run multiple deals at the same time versus a hurry up and wait. Scott, do you have anything?

I completely agree with that. It’s a whole lot easier working on multiple ones and if you slip and fall on one, get right back up. With fix and flips, you’ve got all your eggs in one basket pretty much or maybe a couple. It’s definitely better, the more the merrier.

What’s the best way for people to reach to you or be able to connect with you or find you?

Probably the easiest is by email or phone. My email address is Scott@SecondChancePropertyInvestments.com. My phone number is (248) 765-3986.

Reach out to our website, SecondChancePropertyInvestments.com.

Do you mind if they reach out to you if they have any questions or looking at buying some assets?

That’s wonderful. It would be great.

I’m proud you guys are doing it, 25 assets. Do you have a whole lot more you’re going to be taking down?

Absolutely.

Go out and make something happen. Thanks, I appreciate it.

Thank you.

Go out, take action. Don’t worry if you’re going to stumble along the way. Trust me, it’s a little bit easier than fix and flip side. Finance deals and be able to work multiple deals at the same time versus just dealing with everything with one. See you at the top.

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About Scott Van Kampen

NCS 459 | TeamworkScott is a Michigan CPA who has been in corporate tax for more than 25 years. He graduated from Western Michigan University with a Bachelor’s degree in Accounting and Business, and Grand Valley State University with a Master’s degree in Taxation.

Obviously, numbers are his strength and come in handy when determining the numbers behind the deals and Exit Strategies. A true benefit is the relationships that Scott builds in teaming with our outside professional team.

 

About Dennis Doherty

NCS 459 | TeamworkDennis graduated from Ferris State University with a Bachelor’s degree in Business. After a successful career in restaurant management, Dennis has been involved in Multifamily housing, Fix and Flips, and many other property rehabilitation projects.

Dennis brings his long term knowledge and history of managing these projects from start to finish, as well as seeing the bigger picture to create the best outcome for all involved in each and every project.

 


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