EP 460 – Advice For New Note Investors with Note Mastermind Members Phil and Melanie Jacob

NCS 460 | New Note Investors Advice

NCS 460 | New Note Investors Advice


Notes in real estate have become very lucrative these days and some entrepreneurs are making their mark with it. Scott Carson interviews Phil and Melanie Jacob about their note business and what advice they would give to new note investors. Phil and Melanie are the owners of the Phil Jacob and Associates, LLC. They talk about how they started their note business, what services they offer to clients, and what their long-term goals are. Non-performing notes are their bread and butter, but they also cater to performing ones. As they discuss the surprises and the challenges they encountered along the way, they also share their process for getting done as well as organizing and creating content.

Listen to the podcast here:

Advice For New Note Investors with Note Mastermind Members Phil and Melanie Jacob

I’ve got two special guests. I have Phil and Melanie Jacob from Michigan, Detroit area. These two people are doing an amazing job. How long have you been invested in us?

It’s for about a year.

You’re getting ready to close on your ninth and tenth deal, correct?


It’s exciting. Tell them a little about yourself. What are you doing now or your background? We’ll go from there first.

I’m a project manager with Ford Motor Company and I spent about a year researching the note space, watching videos that you’ve done, Scott. Within that year, I asked my wife if we should invest in this and we’re doing this in order to build out our 401(k) as well as help pay for education and stuff.

Melanie, you were like, “What’s this note thing that Phil has an idea?”

For me actually, as a registered dietitian who ran a counseling practice for over fifteen years, when Phil told me something about numbers, investing in real estate, I was like, “I don’t know anything about this. This is not what I am.” I was thinking I was able to do my business and do that. It’s like I wanted to do something with my husband and try to experience a partnership. When I finally said yes, we went to Fast Track and everything was born, every term, every acronym.

I’ve never seen somebody take so many notes straight up shorthand like, “Can I record this and then take notes on the notes that I’m getting the notes on?” You are definitely like, “What’s that?” You gave me that crazy look.

When you discuss some of the marketing strategies and the concepts around marketing, I was like, “Why didn’t I use this before? Why didn’t I know this before with my other business?” What I’ve really embraced is that piece of it. I love it. I enjoy it. He’s the numbers guy and I’m in the marketing and sales.

What’s been the biggest surprise for you with your first ten deals?

The biggest surprise, I’d have to say that with our first note, we didn’t follow your recommendations and we’ve purchased it on more of a rural area. It’s been a surprise at how long it’s taken to come to a point where we can proceed in closing out that note with the foreclosure. On a positive side, our first note, we actually followed everything you had suggested. We got a forbearance agreement and it is now turning into performing note in our town of Detroit.

You talk about marketing. You embraced that to a point where you stopped doing what you’re doing before.

I’m still a registered dietitian, but I don’t practice anymore. I don’t have a counseling office anymore.

You’ve got two not so little ones.

We’ve expanded our kids. We have two kids and one’s in high school, so there’s driving, activities and after school. What I like about this job is that I can work from home so I can have the home base, cook a family meal on the table and have some grounding family time, but then I could still be using my talents and making a difference for them.

You got asked to speak at your local real estate investment club on a couple of things.

The first occasion, we went to a real estate meeting and there are pillars of education and one was on marketing. We had been following some recommendations that you gave. My most surprising thing was that people read the stuff that you put out. One thing we committed to is writing a small newsletter every week, we did it consistently for over a year and people are reading. With that, people saw that we were in a way marketing, but we were just telling our story. When the rehab of that came up and they were like, “Melanie, would you talk on this marketing concept?” I’ll share what we’re doing and I’m not an expert, but I’m doing some basic things and I think it was well received in the Ann Arbor group.

You are basically taking a lot of things and you have an email goes out. What else are you doing marketing-wise?

We have the email that goes out once we write it. Sometimes he starts it, I finish it. I start it, he finishes.

We also connect to people through LinkedIn. Of course through the REIAs, meeting people and sharing what we’re doing.

Also through Instagram and Facebook. We have a business Facebook page and now we’re trying to do cross-posting more on the LinkedIn business page, which is brand new, which you recommended.

I want to come back a little bit because you said people were reading it. What do you mean by the reading? Are they coming up to you at the REIA clubs when you’re out speaking or what?

We’ve had people actually recognize us. We can also look through our CRM and MailChimp. We could see we have somewhere between a 20% and 30% open rate every week.

You’re consistently doing that. What were the struggles? You’re excited and things are working out, but let’s talk about some struggles. Let’s get this diamond to the meat that people always like to hear. You guys had a little bit of struggle to get rock and rolling and get some momentum going.

It took us about six months to close on our first deal. In those six months of just trying and practicing and putting some things in, we’re like, “Something’s wrong. What are we doing wrong?” We were making the connections but it just didn’t seem like anything was happening. We were a little nervous about bidding and putting the deal out. To try was scary. Picking up calls from banks and talking to banks is also a little bit out of my realm of expertise.

I’d say that for me, one of those big challenges is when I come across something that I’m unaware of. What is the implication of the statute of limitations and stuff? The blessing has been that we’re part of these masterminds. We’ve had people we can call and talk to and get advice from on how to address the different challenges that come on.

That’s always good to have people that reach out to. How are your ten assets spread? Are they all in your backyard or how are those spread out?

NCS 460 | New Note Investors Advice

New Note Investors Advice: Platforms like LinkedIn and Facebook allow you to meet people and share what you are doing in the note business.


We have one in Illinois, one in Terre Haute, Indiana, two in Lansing and three in Detroit.

Three more on our self-directed IRA.

Where are those three in your IRAs from? What areas?

One is in Illinois. There’s one in Ohio and one in West Virginia.

That’s what I remember from what you mentioned. I didn’t hear the West Virginia one. You got a little bit of a diverse area. Are they performing or nonperforming? What do you like now that you’ve been doing this for a little while? What’s your bread and butter?

I think nonperforming is really our goal, our bread and butter. The two that we’re closing on are performing notes because we want to get the cashflow started and building it in our self-directed IRA. We’re trying to have a balanced portfolio. The 70% nonperforming, 30%, performing notes.

The people that want to partner with us usually like a little bit of different types of assets.

What do you mean by different types of assets? Is it like a condo or a three-bedroom?

Single-family resident nonperforming notes with six $60,000-value. They just say, “This is exactly what I want.” They know what they want. Some people are getting started and they want more value add for their money. We’ll start with nonperforming.

We had one investor who wants to have notes that go to foreclosure. It’s good to know that we have such a diverse set of investors.

You basically build the list, different contacts and if you have something that falls into that category, you’re reaching out to that category of investors and say, “We’ve got a deal.” It’s pretty fun. That’s good. That’s smart. It’s the way we’re supposed to be doing it. What’s been the biggest surprise? Do you have a crazy deal with your assets? Is there anything going on in your assets or is it all been normal?

I’ll talk about Illinois.

Tell me it’s not in Chicago.

It’s not Chicago, but you did mention we needed a buyer’s license in Illinois. We bought in Illinois and we didn’t realize how complicated the application process was. We had to figure out how to get that application filled out properly. We had to get a lawyer, we had to have him review the application, but this seemingly took months because we didn’t know where to go or what to do or the P-tax form, which is when you record a deed in this one county, they have this thing called P-tax, which nobody even heard about. We had to find the recorders that knew what to do and things like that. The good news is that when you reach out in WCN, you can call anybody pretty much. They’ll say, “Did you try this? Did you post on Facebook? Do you know anybody that does this?” Sometimes you don’t get it the first time, but I think persistence is the key with most barriers when you hit a barrier.

That’s definitely the case. Don’t give up or just wait until you have to repost it. They’ll ask a question a different way sometimes. What are your long-term goals? What are you looking for the note business to do long-term wise? Are you still planning on keeping working at Ford or what’s the goal?

Phil has a good job at Ford. We’re grateful for the opportunity. With me working as privately without insurance, we have a great opportunity to have insurance and then me working full-time in the note business. Right now, that’s working out great. He comes home on the weekends, he works on it, maybe an hour in the evening and I have the time during the day. The good news is that the kids, my teenager has the opportunity to do some social media postings for us.

They help you out there. They’re getting involved, they’re seeing the things you’re doing. I don’t suppose you’re driving to West Virginia to go look at the asset you bought there. Have you driven by any of the others that you bought?

We’ve driven by the ones in Detroit just to check them out because they are in our backyard.

It helps when you’re looking at your due diligence to actually see the eyes on that stuff than relying on what realtors and other investors and others.

We build those relationships with the realtors or if you have a realtor who knows another realtor, then they are more likely to help you out. For the Lansing assets, we have a number of opportunities to get some good CMAs, pictures, comps and things like that. It’s nice to be able to still drive. I think I sometimes get a call from WCN, “Could you drive by?” I’ve been able to do that a couple of times. One of the things I like to do is actually go to Detroit. We get a big tape or a big list of CFDs. I go right to the city. I know the people there. I go up to the tax office. I hand the list to the lady and I say, “Could you look up these taxes on these assets?” It could be ten, twenty assets and she does it. She prints out every single one in five minutes. Depending on the time of year, the line could be shorter.

Careful or you’re volunteering there.

I usually do. I say, “I’m going to the city. It’s the first five people limit, and this many assets for a person,” because I can do it fairly fast. You can go to the kiosk and look up the water bill. I like that. I go with a friend so we make it a lunchtime field trip.

What goals are you looking at with your note business? Is there a number of deals you’re looking at doing or focus more on the performing side for cashflow? We’ve talked about some different things.

Our goal is to get up to 30 notes before the end of the year or by the end of the year. We also want to primarily have those as nonperforming but with a small portion performing so that we can build in the cashflow.

You’re hoping that a nonperforming turn into performing?


That’s a thing. It’s not just nonperforming. You’re rehabbing the borrower. You’d be buying something that’s occupied. You’re not doing rehabs, so that’s occupied that you can then modify the borrower, we’re getting back on track and you got cashflow without having to do the heavy lifting. That’s good.

I think we also want to work with other mastermind students to purchase pools of assets versus leaving it as ourselves.

NCS 460 | New Note Investors Advice

New Note Investors Advice: Build relationships with other realtors because they are more likely to help you.


Have you raised capital with somebody else or are you doing it mostly with your own money right now?

We’ve raised capital from a few other investors, as well as what we have on the asset.

That makes sense, 30 deals in the next twelve months. You guys are here right now in Austin, Texas. This is your third mastermind. What’s the biggest thing that’s drawing you from the first time that you came? What’s the big difference?

For me, who doesn’t have any background, I need to hear things multiple times to really grasp it. I needed to actually do hands-on deals to come and go, “I can do this better. I can do this differently.” Some simple tools you may only get 50% of the time when you’re hearing it for the first time, so I think I’m going to come back even after a year of doing this. I’m going to go back home with ten new things to work. I told Phil, “I need this mastermind. I need a shot in the arm. I need to get going again with some new ideas.”

That’s a nice thing. You come in, you get a little bit reinvigorated, you meet some new people that maybe haven’t showed up yet or new to the group for different areas of the country, new personalities. It’s a great rejuvenator and now you’re expanding your network across different markets too. You said something. We did a sing a skit called the Mastermind Theater where we talked about a short sale and all the parties. It was quite the Chinese fire drill up there. You said that was really helpful, seeing me break it down piece by piece, person by person and deal by deal.

When you actually don’t come from a real estate background, understanding all the different players, all the different roles they have, who does what, when and the timing and what power they have to make decisions, sometimes you can’t really process it. I will just say for the visual of ten different people, I’ll look for my social media post on this because I did take some screenshots. We’re going to have little screens of different people playing different roles from the investor to the note, to the house, to the realtors, to the investor and to the short sale department. It helped me understand it and I still want to go back and watch it again and then I’ll remember it even better.

What’s been the biggest thing that changed for you the last three masterminds?

I think the biggest one has been how we do marketing. That’s definitely changed from the Fast Track. I was very nervous and to the point where a lot of that basic communication is easier to do, more natural but you keep challenging us to change with the market. It’s putting me out there on edge.

It’s a beautiful thing because the roles are reversed. It was to be marketing Phil’s company. That was the specific thing. It’s like, “I’ve got a LinkedIn profile. Do I need to start another one? Do I need to make a fake one or a pseudo name?” I’m like, “No, let’s not do that.” They’re like, “I can run this marketing because it works, whether it’s working for the real estate stuff or my health background and all that good stuff. Marketing works across the board.” Is there a nugget from the marketing we’ve talked about before lunch or after lunch that you enjoyed?

I love the geo-marketing. I think that is going to save so much time, energy and the opportunity is unlimited. I couldn’t believe you’re sharing that. That was a tidbit of mastermind tips. It’s the golden nugget.

It’s been great that you are taking things we are talking about and you’re very coachable. What do you have here, Phil?

This is our pitch deck.

You’ve got a blue binder with fifteen pages, it’s your pitch deck.

It talks about notes, talks about us and the different deals we’ve done. In the end, we have a few examples and our NDA.

How’s that worked for you?

It’s worked really well. Actually, I should let Melanie talk about it since she’s the first one to actually put this into practice.

I saw you show us how to do this. I was like, “I can do this.” You did set up the template. We work together. He knows how to do the templates. I put this together based on the format suggestions. When I was speaking at the REIA meeting, it wasn’t a topic about notes, although that’s coming. You did bring that up. When you kick off and just tell a little bit about yourself, I said, “We’re not going to talk about notes, but if you want to hear a little bit about what we’re doing at Philip Jacob and Associates with real estate note investing, I’m just going to leave this in the back and you can pass it around.”

Do you only have one copy?

One copy, but it was maybe 30, 40 people over an hour and a half. It went all around the room. People came up and said, “I didn’t know that this is what you do.” It was a very good opportunity. The other thing is that for any investor, I think we could shorten it and make it that concise and I think it would be a great thing.

Basically, you got your profile sheet, Phil and Melanie Jacob. You flip over the next page.

Our theme, our first building partnerships for real estate success.

It’s a nice photo. There’s a little bit your background. You’ve got your sole focus on the business. You’ve got, “Why we buy mortgage notes,” and flip the next to what you are not. That’s a very important thing. A lot of people have misconceptions about what a note investor is.

We only fix and flip. We did rental and we’re not doing it anymore.

You get your network here with basically your network of vendors and people on our team. I like it, Healthy Note Investing. That’s perfect.

Next time, it’s a vegetable there.

Put that definitely in there. What you’re looking for, the ask, and then you dive more.

Let’s continue the conversation.

Leave contact information and then some sample deals. It’s pretty simple and you have your NDA. That’s great. You had 34 people look at it. How many people out of 34 reached out to you to work with you on something?

NCS 460 | New Note Investors Advice

New Note Investors Advice: When you do not come from a real estate background, understanding all the different players and their roles and power can be daunting.


We’ve got one that’s an active investor that wants a deal that we’re looking for now.

I think it was about twelve. Twelve people signed up for the newsletter.

33% of the room. That’s good.

We put in a little Bit.ly link so they could log in and get something for free.

What was the freebie that you gave away?

I did a very simple 30-minute video on how to use Canva. It was about marketing.

That’s good. I like that.

We try to share some of the things that we do. I hope some people take it and some people are asking you to help them with their Canva or help me show me how to do it. That’s a way to build those relationships with people who you’re going to see on a regular basis.

You have some of the videos so you don’t have to repeat yourself 30 times. You repeat yourself once. It’s done once and seen infinite times basically. What’s a hurdle that’s still tackling you? Any difficulties, any things you’re struggling with still?

For me, I did my own bookkeeping or I had someone to do my own bookkeeping with my other business. We’ve hired Debbie Mullins who’s a great resource to help us with our bookkeeping. I want it all lined up and so it’s a little bit more complicated because you have to keep everything all lined up. I’ve spent a lot of time on that. That’s how I want to spend my time. I’m trying to learn so I could train somebody else to do it. That’s been harder for me. It takes a lot of time and energy.

I think our next step has to be bringing on board virtual assistants to help with some of more mundane type things. We’ve had challenges in keeping up using a pipe drive as our CRM and keeping track of that, making sure it’s really fully updated. If we do that, we’re not as effective as we could be or should be. We find that we fall back on writing stuff on an actual calendar on the wall versus just doing everything.

At least it’s getting written down though.

If I have my calendar, my whiteboard and then we connect, usually we have Saturday morning, “This is what we’re going to do this week.” We work throughout the week on focus. It works.

Everybody’s got their own different thing especially. How many hours a week are you putting in? Oftentimes we’ll get a, “We’re working on something tonight. I’ll wait for Phil as he’s driving home.” That’s fine. Let’s jump on a three-way call.

He’s got calls at night so he can’t get on it.

What’s some advice you would give to somebody who’s out there thinking about getting into notes right now? What’s some advice you would give to somebody who’s maybe brand new, that has no background experience in real estate?

You have tons of initially free videos that you could learn basic things to get started. The Fast Track I think is absolutely essential to get into like an intensive and then actually maybe working with a partner. We have a partnership because we’re married. We’ve worked together, we’re opposites. We complement each other. I think if you’re a single person trying to do this without real estate background, I would highly recommend you find an accountability partner or someone you could check in with every week or split the duties or something so you can build that momentum. Maybe you each have your own business but you’re working together. Don’t be afraid to ask advice.

This is something Scott says a lot, just do something. The reality is that is true. If you try something, you’ll learn from it and keep on improving and get to where you need to be. If you don’t take that first step, if you’re trying to be perfect, it won’t work.

That was something that you guys struggled with a little bit for trying to be perfect before you took the step.

We didn’t even have a website when we started and that was okay because we had a little hiccup in the beginning with it and so we hired someone different. We started the newsletter. Even though we didn’t have a website, we were like, “When we get the website, we’re going to put that link right here.” Don’t be afraid to get everything perfect before you start too because it will come together as you’re doing it. One thing we do is we share a little bit about us as we go and we just changed our new newsletter format based off of some of the feedback and that we tried to share a little bit about as we go and then value add like, “What is a note? Why do they sell notes?” It’s simple concepts that answer some questions.

People don’t know about it. You’re talking like a different language. Actually, you lived overseas for a while too. You lived in Chongqing, China. You mentioned we had some conversations for the Fast Track, how different it was and some of the things. You’ve been there for how long?

For almost eighteen months. It was like a whole different world.

I loved it because I was working so much as a counselor, counseling very medically compromised patients with anorexia. I found myself drained by the end of the day and then coming home to my family and not being able to give time to my kids. When I went to China, I was like mourning and grieving my identity. After about three to four months, I came out of this fog and I was like, “How did I do that?” I’m still a big advocate. China allowed me to stop, reframe and refocus, not to mention the good food in Asia, not necessarily China, but we like Chinese food. We also went to Thailand and Malaysia and all these other places, India we got to travel to, but also that we were able to spend more quality times with family. That became a priority on my return.

That’s allowed you guys to have that connection as you’re doing this too, maybe a little flexibility on the front end. What’s the best way for people to reach out to you? What’s the best email?

NoteworthyDeal@Gmail.com. I have a cell phone number. If you want to reach me or just start with your mind, you can look it up on the website at JacobAssociates.com. You can follow us on Instagram. You could look up on our Facebook page, Philip Jacob and Associates and on Twitter.

I’ll tell you this, I’m very proud of you closing the ten deals in your first twelve months. It’s a great start, especially in a busy schedule. You had some learning curves. Would you recommend this as a great way to be invested in real estate?


We look forward to a lot of good stuff from you.

Thank you, Scott. You’ve been a great teacher, mentor, and inspiration for so many.

It’s good because you guys are taking action. That’s always a big thing. It’s not me giving you the tools. Those that want to succeed will go out and use the tools. You’ve done an amazing job. I’m very proud. Everybody’s proud of seeing the growth that you guys have. Keep killing it.

Important Links:

About Phil and Melanie Jacob

NCS 460 | New Note Investors AdvicePhil Jacob has been a real estate investor since 2003. In different roles at Ford Motor Company, Phil has learned to work with teams to minimize risks and improve the business case. He holds a B.S. in Mechanical Engineering from the University of Texas at Austin and an MBA from Rice University. Phil enjoys traveling and having an impact on people.

Melanie Jacob is a serial entrepreneur who has been a real estate investor since 2015. She is also a registered dietitian who owned and operated a successful private nutrition practice for over 15 years. Melanie is an author, speaker, and nutrition Subject Matter Expert (SME). Her priority is family and wellness with a mind, body and spirit approach. She enjoys ethnic dining and travel with her family.


Love the show? Subscribe, rate, review, and share!
Join the Note Closers Show community today:

Leave a Reply

Your email address will not be published. Required fields are marked *