EP 462 – A Note Investor’s Journey with Note Mastermind Member Liza Banaag

NCS 462 | Note Investor Journey

NCS 462 | Note Investor Journey

 

We all come to note investing for different reasons. For Liza Banaag, also known as the Note MD, it was a life-threatening curveball that made her realize how she was one event away from bankruptcy. From there, she started her journey of creating passive income out of real estate – from doing fix and flips to buying and selling. In this episode, Scott Carson talks to this note mastermind member and a former medical doctor about her journey as a note investor, going deeper into what attracted her to the notes industry and sharing about a deal that got a pretty good bid.

Listen to the podcast here:

A Note Investor’s Journey with Note Mastermind Member Liza Banaag

I’m excited to have a special guest. She is now known as The Note MD, our friend Liza Banaag, joining us.

Scott, how are you?

How are you doing? I’m doing good. How about you?

I’m doing great. Thank you.

For those that don’t know Liza is doing some great things. A relatively new note investor, but not a new real estate investor. You’ve been doing different real estate for years though.

Mostly buy and sale and some flips. That’s about it.

What’s your background though? Why The Note MD?

First of all, thank you for having me here. I am a physician and I practiced wound care and hyperbaric medicine for about twenty years. Things were going great. Things are doing well and I got a good income, but sometimes life throws us a curve ball. In 2016 I was diagnosed with breast cancer. I had to undergo surgery and three months in recovery made me face my mortality and future. I realized that you’re only one event away from bankruptcy and total financial destruction. I thought since I love real estate, I wanted to do something that would create and increase passive income. Since I’ve been in and out of the real estate, I thought I’ll just focus. In November, I met you and in December, I went into your training. I did all this stuff and here I am.

You funded a couple of deals and you got involved on a bigger and better bases all the time. We met at a local REIA meeting that Charles Wilson runs. Therefore, we were talking. You said you did some fix and flips, buying and selling, stuff like that. What got you out of that? Is it because the market here is a little bit tighter or expensive or what?

There’s heavy marketing about fix and flip. Everybody’s doing that. Besides, it’s a lot to deal with the contractors and the materials. My micro management is just making me nervous.

It’s pretty easy to micromanage a fix and flip deal. You’ve got a lot of the parts and if you don’t, sometimes your defenses can get away from you.

It’s just too time-consuming and at the end of the day, I’m dead, then I rise up again and do the same thing.

What attracted you to the net side of things? What attracted you here to be in the paper business?

I would like to have a home business. One is you don’t put everything in one basket. The same amount of money that you spend in one fix and flip, you can invest in multiple. You can do everything from your backyard at home, everywhere, anywhere, which attracts me. That’s mainly what I liked about it and the profit.

That’s the thing too, as we get older, we do face our mortality. You had a scare there but doing well coming out of that. You’re wanting to do some stuff, built some wealth only for yourself, but also your family too.

I want to get my children out of the working class. Work and if you did money, work some more. I want them to enjoy life because it was late for me to enjoy life. I want them to enjoy life earlier and so does the grandchildren.

How old are the grandkids?

The oldest is eleven and then I have four and five. I think the only girl will be one year old and one other will be two years old.

You’re also very active in learning more about the IRAs. You go to Quest Trust events quite a bit. Have you started accounts or worked with the parents, start accounts like Roth’s for educational savings accounts and things like that for the kids?

I’ve started one and I have opened up Roth because without that education, I was told all the time that because I’m working, I can’t do Roth. I found that I can. I started that. I have the traditional self-directed IRA.

You’re moving down to the valley. You’re up here for the mastermind, but you’re moving down in the valley and you’re looking now for residential but also commercial assets. We had this tape. We talked about breaking down and doing some commercial due diligence. There’s one down near where you’re moving to or where you’ve moved to. Let’s talk about that deal a little bit because you’ve got a bid. We got to an outstanding bid and I think it’s actually a pretty good bid point. What’s the value of this property? It’s a little bit of a unique situation.

The value is really all over the board. I see from $60,000 to $130,000 and we drove by the place. The place is nice. It looks like it’s occupied and there is no obvious structural defect. I’m excited about that.

It’s not really a convenience store. It’s a little Mexican restaurant for the most part.

With an apartment.

Is there an apartment attached?

Yes.

I did not know that. You’re not giving away the location of it yet. The unpaid balance on this asset was only $30,000, right?

Correct.

They haven’t paid in about a year if I remember correctly.

It says that the due date is January of 2019.

That’s right. 90 to 120 days late, but they’ve had this property for sale for quite some time.

I think two years.

NCS 462 | Note Investor Journey

Note Investor Journey: Enjoy life earlier before it is too late.

 

That’s correct. It like $130,000, they dropped it to $125,000. The bank is motivated to get it off its books so they don’t want to foreclose on this property. It’s a weird, not your traditional commercial property.

There’s not a lot of comparable in the area. I think I’m the only one who knows where that is.

You get a bid in at $15,000 because the UPB is only $30,000. There’s a lot of equity. I think there was a strong bid for the bank to come back and say whether they’re going to accept it or not. What do you want to do with this? Are you wanting to modify, take the property back and tell the borrowers like, “See you later?”

Since there are occupants, we have to find out that the occupants are the owner. If the owners, we’ll try to work with them and see if we can do some modification if needed but get them to pay. If not, I don’t want to lease it, but I’ll probably do either owner finance or just sell it outright.

Are you willing to keep the existing business in the place in there?

There’s no business going in there.

Is there not at all? Is it empty then?

The apartment itself.

Do you know what the market rent rate is for the apartment?

I think it’s $400, $500.

It is $500 times twelve. $6,000 on a $50,000 investment, that’s 40% yield on that. You could have some expenses and stuff like that. That’s not a bad return on investment if you can get into that for that.

If we foreclose it, then we will sell it cheap.

Just have it sold at what’s owed on it so you can double your money that way if you need to. That would be good. In South Texas, you can foreclose pretty relatively quickly because they’re already past that 90-day period there for you. What made you come up with The Note MD? Do you like doing workouts? Do you want to do some more workouts with the homeowners and with the borrowers?

That’s the goal. Bad things happen to good people. We like to be able to help. Sometimes we know that even if we wanted some good for the homeowners, they don’t want it themselves. It depends. We’ll try to get the field. We have some companies that we work with who would be able to talk to them, work with them on our behalf. If we can work something with them, then it will be easy. If not, then we’ll have to do the plans A, B, C, D.

What’s been the biggest learning curve for you getting into this?

It is understanding the financial terms. It’s like medical terms, you have to understand. Now that I understood it, it’s a big switch to a different field.

What about marketing? Has that been a challenge for you too?

Yes, I have always tried to be below the radar in social media. Now I have accepted the fact that I have to go out there and market.

When you came for the Fast Track, it’s like a second take a video worked perfectly for you?

Yes. That was it. I tracked back.

You ran for the hills, scared.

I think I did another one after that. Sometimes in the business, you get away from it, you chase rabbits and then you find yourself alone.

You’ve had to move too.

I did a move and all these different issues and things coming up. That’s why I like The WCN Crew. You can keep in touch with everybody and they keep you accountable and all that.

The Facebook group is a great way to stay plugged in something. That’s about 940-plus people being a part of that in a good way. You post there, you ask questions on a regular basis, which is great and people respond.

They do. You don’t have to consider the time of day because if somebody comes out there and sees it, they just answer. You get the answers immediately.

This is your second Mastermind. You did one in Cape Coral. Do you feel a bit more comfortable now than when you did then?

Yes. Now the things that I have learned through Mastermind fast-tracked. I learned a lot, but it’s all jumbled up. In this mastermind, it’s finding its place in my brain, so I probably would be able to function better.

There are a lot of things. You were like, “I want to do this right now,” and you came into the office, so I was like, “That’s fine. Let’s relax.” It was like, “I don’t want to talk to the phone. I want to come to talk to you face to face.” I was like, “That’s fine. Come in.” We visited for an hour. I was like, “It’s all right. Relax.” You were like, “No, I want to do this now.” I was like, “Let’s do it now then.”

I retired, that’s why I need to get on track.

Have you reached out to any of your doctor friends? You’ve got a little bit of a more of an advanced network than most people have because you do have relationships with doctors and other people that are looking to invest money. Have you tapped into that any sort of profession?

That’s funny. Even I’m in the medical field, I’m isolated from everybody because our clinic is away from the hospital. There’s not much interaction with the doctors. Now I’m focusing. I’m finding out places where I can communicate with them and reach out to them. In fact, I’m trying to get an audience with them at least for fifteen minutes to show what I do.

NCS 462 | Note Investor Journey

Note Investor Journey: Sometimes in business, you get away from it, you chase rabbits, and then you find yourself alone.

 

What are you planning on doing? Are you putting together a pitch deck like what Melanie and Phil were showing here?

Yes, like a PowerPoint presentation. Have them sit down and show them what I do.

What advice would you give somebody who’s coming into the note business, coming from either a different background with not much real estate experience or somebody that’s coming in and got some real estate experience and see how a little bit different that is?

Get your education and a mentor. Get a good mentor. I have one.

I appreciate that. Thank you. The thing is you’re not afraid to ask questions. I think that’s one of the big strengths that you have and that’s a good thing. Honestly, that’s a good thing. We always said there are no dumb questions. The only dumb question is the question that was not asked. You talk with people, you are communicating and you’re asking a question not just with me but everybody else and you’re taking it seriously.

The first difficulty that I have when I entered this space is I don’t know what questions to ask. I was listening and listening and now that I dove into it a little bit, then the questions pop up.

That’s a good thing because you’re like, “Now, this makes sense. I know what to ask.”

Now, I know what I’m doing.

You were going to the networking events pretty regularly and you’ve built some networks with that. Has it been helpful?

Yes.

What’s been the biggest surprise that’s been shocking to you or maybe give you a little bit of a kick in the shins?

It’s a positive one. The biggest one is if you do what you’re told, it works.

What’s that?

When we did the Mastermind and the Fast Track, you told us to call and email. I’m not good at emails so I made phone calls and then social media and I got responses. I’ve got tapes, which I almost fainted when I received them. I’m like, “It does work.”

Were you calling asset managers or calling banks or calling off the lists?

Banks.

Do you know how many phone calls you made before you started getting some tapes then?

It’s through social media.

Did you connect with them on LinkedIn?

Yes.

How many people did it take you to connect with before you got your tapes?

No, I don’t know, but it’s like two days off the limit in the LinkedIn and I got them already.

Is it residential or commercial?

It’s residential.

Are you making small bids off of those or just working for them still?

I work, some of them. Some of them didn’t really pan out, but I’m encouraged because then if I’m getting responses, I only need the response. Once I get a response, I know I can push through.

It then becomes a numbers game.

It is a numbers game, but when you don’t get anything, you get discouraged. When you get responses, then you move on.

What’s been the biggest surprise? What’s the biggest thing you’re taking away from Austin for the Mastermind?

How easy it is to market.

Is it getting easier for you to market?

Yes, through using technology.

NCS 462 | Note Investor Journey

Note Investor Journey: Note investing is a numbers game. When you don’t get anything, don’t get discouraged. When you get past this, then you move on.

 

I saw you over there messing around with the geo marketing. You had a whole table peeking over your shoulder excited at you.

That makes it a lot easier. Technology is not my forte, but it’s easy to learn, so it’s easy to use.

There are no excuses not to learn a new trick.

That’s true. When I call you, I tell you, “I did this. All this.”

You’re very good. We talk on a regular basis. We talk a lot, be it like Facebook Messenger or we email back and forth or jumping on a phone call and go from there. What are you going to use the geo-marketing for or which aspect solves you? Like doctors conventions or things like that with your background or other things?

Default is doctors, real estate, single moms and homemakers.

With your background, what advice would you give to somebody if they know doctors? Is there anything that would be like a hot button or make sure you respect their time, get to the point? What advice would you give to somebody who wants to talk to somebody coming from the medical field?

What I have noticed is most doctors who are in real estate, they buy and sale retail. I can offer them this note business, which is easier, faster and a lot more secure. I think it’s more secure than fixing and flipping.

It’s probably a nice continual return to them versus having to do a lot of work with fix and flips and then also, “Is this taking time from you or would you rather make some passive returns that are pretty above average?”

Introducing them to the self-directed IRA to use for their investments because a lot of them are on the 401(k)s. Like me, I let it sit there watching it and then panicking when things are going down and you’re helpless because you can’t do anything. This one you have and with multiple properties or assets that you invest in, if something falls apart, then there’s some cushion. There’s a lot more cushion.

The leverage across multiple assets is nice there too. Plus, I’ve often found too that doctors are great doctors but not the best when it comes to business owners or investors too.

They rely mostly on regular investment in the 401(k). It scares me because I don’t understand that and I don’t care to learn to understand that because it’s not in my radar.

If it’s something you enjoy and you dive full head first into it?

Yeah. Real estate has been in my mind for a long time, since I was born.

Mike has been very supportive. He came to the Fast Track with you. He’s very busy.

He’s busy working and teaching. I do this on my own and it’s like a hobby. Like Confucius said, “If you do something that you like, you’ll never work a day in your life.”

You’re doing a great job. I see a difference in you in the sense of the last mastermind and it’s a good thing. I see you coming in. You’re a little nervous the first time. You didn’t know exactly what to expect but this time you’re walking with a little more and strut in your stuff, which is good. You’re talking a little more, which is great. You’re asking more questions and it’s a good thing to see. You’re getting some experience and rock and rolling doing some great things. What’s the big goal for the next several months for you, Liza?

I’m really pushing marketing. I believe that if you do marketing, then you fill your pipeline and then the goal is 60 to 100 into the next several months. Hopefully, be able to replace my income in the next few years.

We look forward to your continued growth. We look forward to figuring out what the asset manager at the bank wants for that property and their commercial note.

I’m still waiting on that one.

The same here because I’ve got a couple of bids in some other assets with them as well too. What’s the best way for people to reach out to you if they want to pick your brain or ask any questions of you?

They can send me an email at Liza@TheNoteMD.com.

Thank you so much for sharing.

Thank you.

Keep up the good work and we’ll visit back with you in a few months and go from there.

Thank you.

Thank you, Liza. Have a great day. Go out and make something happen. Don’t be afraid to go learn some new tricks. She’s doing a tremendous job out there. You’ll be seeing some big things from The Note MD in the future. Otherwise, have fun and we’ll see you all at the top.

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About Liza Banaag

NCS 462 | Note Investor Journey

The Company was established at the beginning of 2016 and specializes in investing in distressed real estate assets including properties and mortgage notes. The Note MD purchases mortgage notes nationwide.

Do you have a house or mortgage note that you need to sell? If so, we would love to talk to you about it and see if we can put together a deal that makes sense for both of us. No games. No gimmicks. Just straight-up, old-fashioned, honest business. We take pride in what we do.

 


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