EP 473 – Getting Started In Notes

NCS 473 | Getting Started In Notes

NCS 473 | Getting Started In Notes

 

Getting started in notes and Immersing yourself in the note investing space can be tricky because you have to figure out a lot of terminologies and other details. Get your education on as host Scott Carson breaks down some of the things that you can do on a part-time basis as a new note investor with ten to fifteen hours per week. Books, magazines and the like can help you with your notes investment, and Scott presents some titles and even videos that you can read and watch. Further highlighting some of the things that a new note investor should seriously consider, he also tackles the hows of raising capital, building your network, creating an entity, and relying on local experts. Finally, Scott advises that if you want to have a goal set for yourself, you’ve got make it achievable, measurable, and specific.

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Listen to the podcast here

 

Getting Started In Notes

We’re in the process of working through some asset sales and doing some good stuff with that. I’ve been in a lot of phone calls and a lot of emails and I get a lot of questions from newbies and that’s a great thing. That’s not a bad thing. It’s a good thing. I love talking with new note investors especially new real estate investors. If you’re new to note investing and you’re new to real estate, you’ve got a little bit of a learning curve that you’ve got to go through before you pull the trigger on a note deal. I’m a big advocate of having a lot of information and education especially when it comes to real estate. There’s a lot of moving parts and a lot of terminologies, especially in the mortgage space and the note investing space. You’ve got to figure out what goes on there.

I get a lot of people that have reached out and say, “I want to get into real estate. I want to get to notes but I’ve never done anything before.” That’s where I tell people like, “Let’s start from that point.” When you’ve been doing this for a while, you take for granted on where you’re at and where others are at. I see this happen a lot when people are giving presentations. They’re speaking over their audience. I don’t want to do that. If I am and have done that in the past in some episodes, I apologize. This is a great opportunity here for me to go back. Let’s talk about some of the nuggets or some of the things that you’ve got to do to make sure you’re not doing something silly or shoot yourself in the foot later on as a note investor.

Getting involved in note investing is a great place and a great market. I’m a big advocate of this. I know people get into real estate because they want to change their situation. They want to do something different. They either want to make more money because their current job or endeavors aren’t making enough or they’re going through a life change and they want to do something different. I’ve talked to a lot of real estate investors who are landlords, wholesalers, and people that are tired of doing the fix and flip side. They like to get something a bit more passive. That’s the first thing that I tell people that are either new to real estate specifically notes. Figure out which lane you want to be in. It’s okay if you’re in a couple of lanes but try to stick to maybe one or two lanes at the most.

Surround Yourself With Significant People

Some people are like, “Scott, I don’t even know which lane.” I get that. The second thing besides trying to figure out a lane is you need to start surrounding yourself with people that are doing the business, not just people that show up to a real estate investment club meeting who can link you out and never pulled the trigger. I’m talking about real people who are pulling the trigger, making deals happen, and been doing it for a little while. How do you find those people? Going to your local meetup group is a great spot to get started with or your local real estate investment clubs to get started with, but you’ve got to show up for a while. You can’t just show up one night and try to get everybody’s information and say, “I know what I’m doing.” That’s not a good place to be in.

What you want to do is show up. You’re going to need to show up at real estate investment clubs and meetup groups for a while. I’ll give an example. Here in Austin, I host a podcast Meetup group. We call it the CenTex Podcasters and we’ve had anywhere from 80 people show up. It happens during the summers in real estate clubs or meetup groups. We had six people show up and half of the group was doing something and the other half was listening, which is okay. It allowed for those that are seasoned to share best practices, how to avoid some mistakes and a lot of great content. Everybody walked away with some great action items to implement into our podcast. It’s the same thing in real estate and notes investing. You’re never going to know everything. I don’t know everything. I know a lot, but I don’t know everything. I’m constantly learning different things because markets are changing. State and foreclosure laws are changing. Rulings are happening. Foreclosure laws are happening. Different markets are rebounding with new values or new opportunities.

You may be in a market that may be different. If you’re in Austin, Texas, it’s not a great note market for distressed note investing because we’ve got such fast foreclosures. This is why when I traveled to different parts of the country, I try to find a local real estate club that I can go and network with and hang out. If I’m speaking at the event, that’s a great thing too. A lot of times, I like to go just to network. I like to be a normal Joe like, “Listen to this speaker.” Maybe there’s a new topic that I can learn about. Maybe there are new people I can network with locally that either can be buyers, vendors, maybe a seller for the deal or potential funding partners. That’s the thing you’ve got to look at when you go to a meetup group. You can’t be a wallflower on the wall and not interact. You need to connect with people and you need to take business cards. That’s one of the most valuable things when you’re a newbie, whether you’re a new investor or new to notes. You need to start surrounding yourself with like-minded individuals.

I talked on Note Night in America about how you want to go to meetup groups, you want to go network, especially if you’re doing this as a side hustle. That’s your ten to fifteen hours a week that you need to do networking and building your audience. That’s so important in the note space. There are other things that you can also do to build an audience as well. A lot of people use LinkedIn and are leveraging LinkedIn connections. They’re going out there and looking for note investors. This is a great thing that I have done over the last couple of years to help me expand my network of not only note investors, but real estate investors. You can go to LinkedIn, type in note investors, and you’ll start building network or connections that way.

Another great spot to do that is on Facebook. There are several great groups on Facebook that are note focused. You can check those out. The WCN Crew is a great place. My business page with a lot of followers is a great place to go to as well under Scott Carson or We Close Notes. You can also go to BiggerPockets. BiggerPockets is a phenomenal place to connect with like-minded individuals and start building those connections. It’s a phenomenal place to look in the marketplace and see what people ask them questions and having a lot of people commenting back on that stuff as well. Those are great sources. Everybody should be doing that, whether you’re brand new in the game or you’ve been in for ten, fifteen or twenty plus years. There are constantly people coming in and there are constantly people leaving the industry and that’s with anything. It’s not just with notes and fix and flips or Airbnb. People come in and come and go.

You want to constantly be doing that because it’s the lifeblood of the business connections in this space. Those are a couple of things that we do. Building your network is important. You’ve got to do that whether it’s through LinkedIn or in person conversations at real estate clubs. Those are important things. I would also start looking at some local conferences and expo and see what’s going on in the industry, whether it’s going to NoteExpo coming in November in Dallas that HP puts on, Note CAMP Commercial, which is an online event but great networking here at the end of July, or going to Distressed Mortgage Expo, NIS or IMN. There are different meetups across the year. Find a couple and start planning that into your database. One of the most impactful things that helped me take my business to the next level was when I went to the NoteWorthy conference when it was in Las Vegas. I collected about 400 business cards. I made about 400 connections in the three-day period.

It was a busy time. I was going around and connecting with people, but those 400 people became the lifeblood of my database for the next year. I’m adding people, connecting people, wholesaling assets, selling deals too, or buying deals from those people as well. Those are one of the most powerful things that you can do. It’s all about networking. It’s all about this stuff, especially for a brand new person, the more information you can hear and talking to people that are closing deals. That’s one of the biggest things you’ve got to do. Find out who are closing deals. If you find somebody who’s great, ask and say, “Who else should I talk to? Do you know that person? Would you introduce me to that person? I’m constantly making connections on a regular basis with people. Introduce me to them.” I got a text message from my students in Alabama and he was like, “Do you know this?” He’s somebody that I met down in Marco Island, Florida when I was traveling around the country. He’s a friend of mine from down in Marco Island, Florida.

It is a small world and it gets smaller every day. That’s why it’s so important. You can’t be an introvert. You’ve got to get out and talk to people. You’ve got to surround yourself with great people. You’ve got to go out and network. You see a lot of increase in Masterminds. We have our mastermind that I’ve had for ten years now. Masterminds are popping for a variety of reasons. Masterminds have been around for the most part. The start is off with networking events, your lunch and learns, your BNIs. They are one of the largest masterminds out there and because it’s a mastermind, people get together on a regular basis. That’s a very valuable thing. If you’re brand new to that, that’s a great place to go to.

Start Reading And Watching Relatable Stuff

Another important thing is to start reading, start watching, start to download as much stuff. Read the articles on BiggerPockets. Read some of the articles on LinkedIn. I’m a big proponent of two websites that I like a lot. It’s the DSNews.com and HousingWire.com. These are two good places that I get a lot of news on a daily basis. It’s one of the first things that I look at and check and see what’s going on in the industry, seeing what’s in the news, what’s in the announcements. It helps me not only educate myself on what’s going on in the market, but it also helps me create content either for a blog, a podcast episode, a posting to my database. There are lots of great information on there that you can use. Those are great ways to start inundating yourself. Go back and read articles for a while. Ask some books. We’ve got a good note and bolts book. If you want to get a copy of our 72-page book, How to Buy Real Estate for 40% Off: Break Into the Secret World of Note Investing, it’s a great book, you can get your copy by going to the NoteBlueprint.com/FreeBook. It’s usually $19.99 on Amazon, but it allows you to download a free copy of it. This is an easy read. This is a toilet bowl reading. It’s 75 or 76 pages. You can read it on a two-hour flight or read it in two bathroom breaks for the most part.

NCS 473 | Getting Started In Notes

Getting Started In Notes: The most important things when you get started are the resources that are readily out there. Try to learn as much as you can.

 

Read Invest in Debt: The “How To” Book on “Buying Paper” for Cash Flow by Jimmy Napier. It’s a great book. You can buy this online. It’s a phenomenal book. This goes through a lot of the creative financing strategies and stuff like that on creating an originating book. There are more books popping up every day. We’ve got a new book coming out, A Loan Tales in the next few months. We’re finishing up the writing side of it and the chapters and then we’ll have a lot of case studies. A lot of people love case studies so we’re finishing that up. You have to inundate yourself. A lot of people talk about the rule of 10,000 hours. You don’t become an expert in the field until you spent 10,000 hours inundated. I get people all the time like, “We’ve been binge-watching your YouTube videos. We’ve been binge-listening to the podcasts.” There’s so much great information out there. One of the things that we have done is made it easy for you to be able to download all our Note Night in America webinars. If you pull up your cell phone and text the word “notes” to the phone number 72000, that’ll send you that link and ask for your email. That’ll give you a link to download our Note Night in America podcast episodes and also our webinars going back a couple of years. It will be downloading all those webinars.

You’ll be able to listen to those videos and watch those. That’s a great place to get some great information to get started. We go through a variety of things. Setting up entities, having a business plan, and putting your business plan and your goals. That’s a valuable tool. Text the word “notes” to 72000 and that’ll send you a quick a link to a PowerPoint. It will also give you access to our Note Night in America webinar videos on our YouTube and Vimeo channel so that you can download those. You can watch those at your leisure. That’s over 80 plus hours of videos for you to get started with. The biggest thing I can say is just dive in. Learn and find out where people are getting their deals. There are some online portals that make it easy for you to look at deals. You can go to Madison Management or servicing company. They’ve got a sales portal with assets listed. You can work through some of those. Our buddy Val Sotir from Watermark Trading Exchange has a portal with assets that are on there. You can take a look at it.

What I love about Watermark is it has five different exit strategies that you can work through them and start getting your feet wet underneath you. I don’t necessarily go to FCI Exchange. I’ve got some things on there. I happen to like those other two. I have my buddies Rick and TJ at Paperstac.com. They’ve got a portal with assets that are available for sale that you can take a look at. They’ve done a good job of the step-by-step process if you’re going to bid on something and providing the due diligence. Those are the things to go to. Lots of people do webinars. You can see a lot of Facebook Live videos going on. Just start connecting with other people. Our buddies, Chris Seveney and Gail Greenberg, have the Good Deeds Note Investing podcast. It’s a great place to listen to as well. We have to realize that there are lots of resources out there and that’s one of the most important things when you get started. Try to learn as much as you can. That may take you six weeks, it may take you three months, it may take you six months depending on what your schedule looks like.

There’s nothing wrong with that. We all had to start somewhere. The thing is it’s so much easier now to learn the business than it was a few years ago when I first started doing this stuff. It was different. You had to attend a lot of workshops. You had to spring for some coaching or education classes. These days, you don’t necessarily need to spring for so much because there’s so much available online for you. Start understanding self-directed IRAs. I would be spending a lot of time on the Quest Trust Company website looking at their videos and a lot of their training calls. They’ve got an amazing education schedule, especially with our Quest Expo coming up on August 23rd to the 25th. If you use the code Carson 19, you will get a nice discount off of their ticket price. Start connecting with people. Learn asset protection. Those are some of the biggest things that you can focus on.

Look at a lot of our videos on servicing and workouts. We’ve got a lot of that stuff that recorded online for you. Just ask questions. “Who’s focused on this? What’s the best way to learn about this?” You could explore our website and type in a keyword at the top and it will often give you videos or podcast episodes of specific niches that we have out there as well. We have asset protection. You’re going to be in business. In the real estate side, you’re in business, you have to start acting that way. You need an entity. You can’t be going out and buying assets in your own name. You can, but you can put yourself at huge risk. Utilize an LLC and S corp. Talk with an attorney, talk with an accountant, and find out what they think might be best for your situation. You need to have an entity. I’m not talking about a DBA. Scott Carson is doing business as We Close Notes. We Close Notes is S corp.

You have to go out there and create your entity. It’s inexpensive in most states unless you’re in California which is $800 a year per entity. It’s just a cost of doing business. Create an entity and start doing the things you need to do. I would check out a Laughlin Associates or their Corp veil protection. They can give you a lot of great stuff. Aaron Young has gone through all the different things you need to be doing with your entity as well. It isn’t to overwhelm you. When we were at the CenTex Podcasters meetup, my trainer Thomas Dean is starting a podcast on fitness stuff. He’s brand new and he says he’s not tech savvy. As we were talking about different websites and links like that and I was like, “Relax. It’s an onion. Peel back one layer at a time, one bite at a time. Let’s get you started and get you rock and rolling.” Start getting an education and start networking. Those are the two most valuable things that you can do in any type of real estate investing or any type that you’re diving into.

In any type of side hustle, you’ve got to surround yourself with like-minded people. Start learning the business and learning and speaking the language. It’s such a valuable thing for you to focus on. Besides that, we talked about the third thing in an LLC, I start diving in and start working through some assets. When I first started, I would get a list of assets in from banks and I would start diving into it. I’d have dry eraser boards. I used to have an office with three and a half walls. I would spend nights there breaking down assets. What are the rental rates? What’s the value? What are we looking at? What do they say is the numbers on this? What’s the existing mortgage payment? What kind of mod rate are we going to see? I’m working through and breaking down the assets and doing some due diligence online. I’m looking at the values and pulling the numbers.

Google Your Questions

If you have a question, you don’t have to stop what you’re doing. There’s a little tool called Google that you want to use when you’re looking for something online. If you have a question, google it. Go to the groups and ask those questions. It’s such a valuable thing to be able to use. Some people forget about it. I get people all the time that are like, “I didn’t have an answer.” Use Google. Ask the question. Go to YouTube and type in the question. Go to your groups and ask the question. There are so many ways for you to get those questions answered. The excuse of “I didn’t know” these days doesn’t make sense in the long-term. Go out, learn, take action, start asking questions and networking.

As you start learning, you need to start narrowing down your lanes. We talked about what lanes you want to stick in. Some people have become experts in specific niches. Some people love the Airbnb side. Some people are on the wholesaling side of things. Wholesaling is not a bad way to get started if you have zero capital. The more you learn about marketing, the more you learn about sending out as you build your audience and you’re sending out emails or updates, you’ve got to tweak your system a little bit. You can often raise capital easy for your deal versus just selling off a note at a wholesale and making a quick $1,000 or $5,000. You don’t have to leave so much money on the table for somebody else to take advantage of. You can take advantage of that money and make those profits in your bottom pocket.

I’m not the biggest fan of wholesaling. We still do a little bit, but we’re usually buying assets and deals. We’re wholesaling our extra assets off our books or part of tape and going from there. The important thing is to figure out what line you like. Figure out what works. If you’re so scared to be outside of your market, then figure out what works in your background and what works in your backyard. What works in Phoenix is different than if you’re in Columbus, Ohio. If you’re in California, it’s a whole lot different than if you were here in Austin, Texas. That’s the thing. You’re networking with people. “What’s working in this area? What’s working in nowadays market?” The thing you don’t want to do is to fall into the big gurus coming to town and trying to sell you on something. It works in Columbus, Ohio but may not work in Columbus, Georgia. What works in Austin, Texas may not be working in Austin, Minnesota. What works in San Diego, California may not work in San Diego, Texas and then vice versa. You’ve got to keep that in mind.

A lot of the big guys that you have to pay for $30,000 or $40,000 don’t do that. You can get a lot of great information online. You can still take a lot of local workshops. You can take a lot of local people that are working. If you’re working in different markets or you’re in an area that you don’t want to miss, let’s say you’re in California, “I can’t invest here.” What you need to look at is, “Where are the states I should be investing in?” You need to look at maybe taking a weekend or a three-day vacation and flying in one of those cities that you should be invested in and learning. Dave Payerchin in Columbus, Ohio is a buddy of ours. He’s a great turnkey company down there in Ohio. My buddy Mike Jordan up in Detroit. If you were to reach out to these guys and say, “I want to invest in those areas, would I be able to come in and take a look at your operations? Would you be able to show me around?” They’re looking to sell the property. They’re looking to provide either property management rehab skills or helping you out with different things. That makes sense to them too. It’s got to be a win-win. If you show them the ugliest properties in the block and you’re trying to buy those, they may not want to waste their time on those. If you’re investing in Columbus, Ohio where rent rate on a property is less than $500, he’s not interested because you need two guns to be collecting in those areas.

Rely On Local Experts

Rely on your local experts. What’s a great way to find local experts in different markets? Jumping on meetup groups and looking for meetup groups in those markets. That’s a very valuable tool. It’s like, “What’s going on in those areas?” In the meetup groups, you’ll find people on there. You’ll find people that run those groups. Those are great people to reach out to, presidents, people that operate these clubs. “Could you give me a referral to such and such? Would you be able to give me a referral to a hard money lender, a wholesaler, to a title company in the area or to a realtor?” Using meetup groups is such a valuable tool when you’re looking at buying in different markets. Focus on one or two states to get started. Look at the biggest cities in those states. Ask me if it makes sense. “I’m going to be buying in Idaho.” In Idaho, the only thing I’d be buying there is potatoes. You’re going to see a lot of deals there. If you’re going to look for deals, here’s where I would love. Look at Missouri or maybe look at Kansas. Maybe look at Ohio or Michigan.

NCS 473 | Getting Started In Notes

Getting Started In Notes: Stand up because success isn’t all about getting things right the first time around.

 

If you’re in a state that’s got a lot of deals, you’re lucky. You don’t have to leave your backyard. I joke with my buddy Bill Griesmer like, “You should be the note king of Ohio because there’s so much good in a buckeye staying up there.” For those that are in Michigan, you’ll see a lot of deals there. Our buddy Adam Adams in Dallas. He loves Flint. There are opportunities in specific markets and that’s one of the things you want to know. If you’re across the country, you want to join a meetup group. You may want to find out if a real estate club is meeting on a regular basis and time your trip out to be able to network and go to that same unit group. You can maybe build your team in a night there locally and then follow up with people there afterward. You can use Zoom or go to the webinar. You can have conference calls with your team from all across the country. You don’t have to be in the same room. There’s nothing wrong with being in the same room and pressing the flesh to meet some people or breaking bread or having drinks with people. There’s nothing wrong with that at all.

If you are limited on the time that you have, you need to use the online tools and social media tools. Some of these networking tools will help you maximize your time and make it productive. That’s why if you’re headed to an area, meet with an attorney that’s in that state that’s foreclosing. Take the opportunity to say, “Are you going to be in town this time? When will you be in town? Can we meet?” Go from there. Everybody starts brand new. Everybody had to learn how to walk at some point. Everybody has fallen off their bike. Everybody needs to learn and put their pants on one leg at a time or their underwear at one hole at a time. Learn how to tie their shoes. Everybody starts a brand new at some point and it’s okay to do that.

When we started this show, one of the first things I wanted to do is like, “Who are some of the groups that I need to join?” I started searching, “What are the big podcasting conventions?” I went with them. I went to the network. I’ve made some great friends there amongst people. Those are such valuable things to do and it’s worth a $300, $400 or $700 to me because I can go there and I can follow with a lot of vendors. I can have a lot of people on my team. I could make new relationships or new friends to help me get over that learning curve a lot faster. One of the most successful things I’ve seen people do is finding an accountability partner. If you can find somebody maybe who’s on the same level or same thinking level, have them as your accountability partner and you’re going through the same things. It helps for two things. One is accountability and secondly, it can help you do some great things and maybe leveraging or removing costs. You can split your costs in half because a lot of times if you’re going to the convention, they will offer you plus one. If you’re buying a software package or it’s something you’re going to use, let’s split the cost so it makes it a lot cheaper for everybody.

The thing you’ve got to keep in mind getting started is just to start surrounding yourself with people and know what’s going on. Make sure they have the same motivation levels. I’ve seen people come together who wants to be accountable, but they don’t have the same motivation levels. If you don’t have someone who has the same motivation and same driving factor, if you’re the one with all the energy and the driving force going forward when you’re getting started, you’re going to be frustrated if your partner does not have that same type of drive. It’s as if going and working out on me. If they only workout once a week and you won’t work out five times a week, there’s a little bit of motivation. You’re going to have a lot more success a lot faster by doing it multiple times. That 10,000 hours is going to go by a lot faster for me versus the once a week.

Ask Questions Regularly

I’ve seen people coming together trying to do things and some people were moving faster and others are moving a lot slower and they get frustrated. You have to communicate. Communication is one of the most important things that you need to do as a new investor. You need to ask questions on a regular basis. Ask questions and don’t be afraid. The question you’re asking, “Is somebody else’s probably thinking of that same question at the same time?” There are no stupid questions. The only stupid question is the one that you don’t know. Everybody starts somewhere. Everybody starts brand new. Everybody starts off some things. If you’ve got some goals that you wanted to accomplish and you want to get started, you’re like, “Where did the year go, the first six months ago?” It has flown by. If you’re not where you were when you look back at your January goals or your New Year’s resolutions where you have pin somewhere, you have to look and start reevaluating what you’re doing. What’s your time been worth to you? What have you been doing with your side hustle? What have you been doing at those meetup groups you’ve been going to? Have they been circled on your schedule? That’s the thing I look at.

If you want to have a goal set for yourself, you’ve got to set it and make it achievable, measurable and be specific. Don’t say, “I want to make money before the end of the year.” Is that $5 or $5,000 or $50,000? Look at what you want to accomplish. Think about it. Take some time and write it down. It’s okay if the first six months of the year you sucked because of things. There are a lot of things that happen to people. It’s okay. Don’t kill yourself. Don’t be down on yourself. Stand up because success isn’t all about getting things right the first time around. The most successful people are the ones that have failed the most. Those are the ones that are falling down six times and got back up seven. You’ve heard that comment. You’ve heard that phrase before. Do yourself a favor. Stand up, brush yourself off, and move forward. Everybody does this. I’ve been guilty of failing in the past.

Overcome Failure

I fail all the time on things, but that doesn’t stop me from continuing to move forward. It doesn’t stop me. I’m like, “Let’s figure out what we’ve got to do and keep moving forward. What are we doing right now that we can fix and keep moving forward?” If you have deals that are dragging on longer, don’t hide from it. Work your best way. Figure out something. Maybe you just need to talk to somebody. Maybe you need to pick up the phone and say, “I’m stuck in something and I have a mind block. Can you help me with this? Can you help me get beyond my mind block? Can you help me overcome this obstacle?” A lot of times, an unknown can be this huge hooking figure looking over us when realistically, all you need is somebody to come in with a little needle when it pops up.

You have to realize that experience by you tapping other people’s experience, not only will they often help you get there faster and that learning curve won’t be steep. You’ll go from 0 to 60 in six weeks versus six months. They’re going to help you avoid those potholes that they’ve to bang themselves on. They’re going to help you avoid those hurdles that they’ve run into and be like, “If you’re doing this, don’t do this because this is going to be a pain in the ass. This is going to slow you down. You don’t need to worry about this. Focus on the most important things.” Do yourself a favor. If you’re a brand new person and somebody experienced the spot that you’re looking, I’m talking about your best friends that don’t have a clue. I’m talking about your drinking buddies or your friends at the martini and manicure hour. Talk to people who are where you want to be and doing the things you want to do. Ask them, seek their counsel and you’ll find often that they’re going to give you great counsel. Go do this.

A lot of times when we’re starting off with things, we have an idea of where we want to be and what we want to do. That’s great. You need to put that stuff down. You need to jot it down. The best practice is making a list of the people you want to talk to. A lot of people are scared to get started with their podcast or get started to make an offer. I tell people, “Plan on making offers. Start making them out. Make a bunch of offers.” Film a lot of episodes, get them done, get them in the hamper. It’s going to help you get things to rock and rolling. Take that list. If you’ve got that list, take that to one of your coaches or one of your peers that you look up to and sit down with them. I guarantee they’ll be glad to look at your plan of action. They’ll be glad to say, “What you need to do is focus on this and not this.” A lot of times we overthink things. We think about the worst possible thing. We think about the worst possible outcome. A lot of times it’s just a figment of our imagination. You need to make them in and say, “That’s not going to happen.”

How To Raise Capital

A lot of people think this and they go from there. That’s one of the biggest things. Some of the big things that people are worried about is raising capital. Oftentimes, it’s a lot easier if they do the right things in raising capital. Focus on the deal side. Focus on the marketing side. People will oftentimes be like, “I don’t want to send an email blast. I don’t want to make offers so I have to raise capital.” You’re going to raise capital a whole lot easier if you’ve got a good solid deal that can be justified with numbers. You’ll learn more about that than you will with theory. The theory is great, but the theory doesn’t pay the bills. Making offers, making bids, working with people, your peers, their accountability partners. Maybe going to local investment clubs, local networking groups, special interest groups where they’ll have side times to meet that you can come in and visit. Spend an hour of lunch or an hour of the day working through issues or working through assets. That’s a great thing to think about doing and I highly recommend that you do that.

Take in your list and take in your one-page business plan. Let’s not make your business plan 30 pages. You don’t need that when you’re getting started, whether it’s in real estate, podcasting or whatever you’re focused on. Tell them what your focus is. Ask them if it makes sense. They have experience and ask for references. “Who else can I talk to? Do you know anybody else who would be interested in investing with me?” When I was getting rocking into coaching, there would be a list of people that I would talk to. We’d make a list. If you’re going to be a new real estate investor doing some fix and flips, you need talk to a mortgage broker. You need to talk to a banker, you need to talk to a title company, you need to talk to a realtor, you need to talk to hard money lender. You need to also make sure and find two investment clubs that you can go to on a regular basis.

If you’re going to be rehabbing, you need to start looking at rehab curbs because you’re probably not going to be the one swinging a hammer and nailing on the nails. If you’re jack of all trades, you’re a master of none. That’s the thing you have to realize. There are so many great vendors or so many great people out there in any field of real estate investing. That’s their expertise. Rely on them for their expertise. I don’t go and start doing title searches. I refer that to ProTitleUSA. I’m not going out pulling comps. Now I do online values quickly, but I’ll use a software that helps me out with that fast. If I need numbers, I’m going to reach out to Jill Raff. I’m going to reach out to any of my other realtor friends that are going to pull comps for me because they know exactly what to look at. If I’m looking to close on a local closing, I’m going to reach out to my friend Kelly Murphy or Kelly Burns. I’m going to reach out to the experts. I’m not going to try and do it all myself. That’s one of the biggest things that I see most investors or most entrepreneurs struggle with. They try to do it all themselves.

NCS 473 | Getting Started In Notes

Getting Started In Notes: Not every deal is a home run and not every deal is basic.

 

You have to realize you are not in this by yourself. There are a lot of people going through the same things. Many people that are ahead of you have gone through that before so don’t be embarrassed to ask questions. Don’t be afraid to say, “I have a question. I need help.” One of the most valuable things you can learn is the asking question side of things.” Let’s talk about a little bit more nitty-gritty specifics of getting into note investing. You’ve got to figure out what you want to focus on. Do you want to focus on owner finance notes? Do you want to focus on institutional debt? Do you want to focus on first or second? Do you want to focus on performing or nonperforming? Do you want to focus on the residential commercial? We talked about what states you want to focus on. That all goes into helping you narrow down that lane.

I’m going to give you an example. If you want your lane not to look like the rush hour in Los Angeles where it’s eight lanes wide, you want to narrow it down where you’re on a one lane highway and that’s all that you’re focused on. That’s a very valuable thing to keep in mind. Narrow it down. If you’re trying to be something on all things, a lot of investors struggle with it. They say, “I’m going to go to another conference or another workshop. I’m putting another tool in my tool belt.” If you’re wearing a toolbelt but all you need is a plunger, it’s a waste of time. I want to learn about the education side. I want to learn more. I get that, but at some point, you have to quit book learning and start diving in. You would not go to school for twelve years to be a brain surgeon and then just sit around and be a typist. They don’t make sense. At some point, you’ve got to stop learning and start implementing. That’s why I mentioned how valuable it is to start making some offers. Start getting the word out. Start talking to people. Work through an offer and then ask them, “Scott, does this deal make sense?”

I see all these fancy spreadsheets and ROI calculators. You can kill every deal. You can over analyze every deal with death. Most people do. The idea is to keep it simple. What’s the value? What’s the purchase price? What’s the optimal strategy? It’s probably likely going to happen. If it’s occupied, that’s great. You’re going to modify it. If it’s vacant, then it’s a rehab. You’re going to have to foreclose and either you’re going to take it back that way or foreclose and then you’re going to have some rehab costs. Better expect that. It’s going to be more than you expect because a vacant asset is going to have some work done. I guarantee you their condition may have walked off and the copper gowns may have showed up. You may have Jumanji in the backyard. There are a lot of things that you’ve got to do. There may be some water bills or other things you’ve got to get taken care of or city fines on making assets. Keep this in mind.

Those are things that go into your strategy and it’s also the things that go into your due diligence process before you close. That’s the beautiful thing about note investing. Whereas in traditional real estate, you’re putting down earnest money and you’d be a week or two weeks before that earnest money goes hard before you close. You have an inspection for all your notes, but you don’t have the earnest money for the most part unless you’re buying a big portfolio and you’re going to put 5% or 10% down or something like that. They’re not going to ask for earnest money most of the time. Sometimes the banks will depend on the size of the asset. If you’re buying a one off note, they’re going to want you to fund your due diligence period for the collateral review. You want to take a look at that to get a full value on that stuff. You want to see what the neighborhood looks like. You want to look at the servicing notes and what’s the payment history. Those are all important.

That goes into you making an offer or fading your bid or maybe canceling. It depends. Not every deal is a home run and not every deal is basic. Some of the best deals that I’ve done are the ones that I’ve walked away from in the past. One of the best deals that I’ve walked away from was also one of the deals where I learned the most about on as a newbie investor. I grew up in Corpus Christi, Texas. It’s a small town called Ingleside, but I lived in Corpus Christi for years. Dad had a local hardware store in Ingleside so we moved from Corpus Christi. Here in Austin, Texas, I’m going to local real estate investors club and getting brand new. I get my feet wet taking the counsel and the advice given by the peers that I respected to start going and learning new stuff. A deal pops up from a couple of guys. We are talking about 29 units property down in Corpus Christi, Texas. I don’t see much stuff in Corpus Christi, especially being in Austin, Texas. They say the value is $1.1 million. For 29 doors, I could possibly see that. They were wanting $550,000. They want $0.50 on the dollar. $29 is a nine-plex or five-plex and a bunch of duplexes and triplexes.

I was like, “Okay.” This was on a Tuesday night. I asked them to email me the packet. I was looking at the deal and I do what I do. I reached out and made a phone call to one of my real estate friends who’s a realtor back home on Corpus. I sent her the addresses and she pulled some quick online comps. She goes, “It’s probably worth about $1.1 million to $1.5 million.” I said, “I like that. It has a little bit more value,” and then the guys had the rent rolls. I’m in Corpus so I’m not driving by all 29 doors. I’m like, “I’ll submit an offer of 500 or 550.” I had the idea that I have to take a look at it, but I don’t have the money. As I took the deal into my office when I was working for a couple of investors, I still share with them and they were like, “Make an offer.” I was like, “What do you mean make an offer?” They were like, “Just make an offer. What’s that going to hurt? If you think it is $1.5 million and you can pick this up somewhere around $500,000 or $550,000, that’s $0.30 on the dollar. Worst case is you’re at $0.50 on the dollar. That’s not a bad day.”

I spent an offer at $500,000. I go low ball. It was Tuesday night and I submitted my offer on Thursday evening. The weekend went by. I was not thinking about it. At Monday morning at 9:00, the phone rang at the house and the three guys were on the phone and they were like, “We like your offer.” They offered $500,000 and said, “Can you come to $515,000?” I said, “Sure. I’ll go up to $515,000.” “We’re going to send you the contracts to sign. We’re going to earn some money of $1,500.” I was like, “I want to drive by the assets.” The following Friday was a weekend thing. It was a long three-day weekend. I go, “Yeah, no problem.” One of them had seen the asset and the other two guys have not seen the property. We will all go down to Corpus and take a look at the asset. I was like, “that’s great. It’s perfect.” I went to the office on Monday and I was like, “I got the offer accepted. How are we going to fund it?” My friends were like, “What do you mean we were going to fund it? You’re going to get the funding.”

They were like, “You vet some people. You can raise the capital of $500,000 or $515,000. Is that difficult?” I was like, “Okay.” I started thinking about this, “I know people down there. I had known a contractor down on the local hardware store for years. I know a lot of the great electricians if it needs some work. I believe in this deal.” I started dialing for dollars. I picked up the phone and I called the people that I met at my networking clubs, other real estate clubs I’ve gone to, other conferences I traveled to, other people that I knew that thought had the money or the people I respected. In six hours, I got three yeses to people. I raised over $1.8 million for three people. They put up to $600,000 because I figured, “We better budget a little bit extra for some rehab and some stuff.” Me and my buddy were going to drive down at Corpus and take a look at this deal. We started thinking about, “If it’s the units, we can owner finance it and sell for a lot higher. We can sell those notes off and keep some seconds and we make some profit.” You’re caching paychecks before you are even writing a check to close on things. Let’s face it. We all look at that because you make your money on the buy.

We met the guys at the first address. It looked great on the outside. It looked the same in the picture, but it was a total mess on the inside. We went inside and the walls were bulging and the sealants were falling in. It looked like a fun house. The marble split in four directions. It was so confusing which way to go because it was a bad floor. The guys said, “It only needs $10,000 in repairs.” I was like, “This seems like $15,000 just to get it up to the $10,000 repairs.” We went to more and more properties of these 29 doors and they got worse and worse. There were some nice duplexes and nice triplexes, but there was a nine-unit apartment complex that was leaning side. We had to cut the bottom of the door off to get it to close. I did not want to be the slum lord of Corpus Christi, Texas, let’s put it that way.

We didn’t close on it. We drove back to Austin feeling horrible. I was like, “How am I going to tell my people?” I had done the due diligence. I had taken the time to drive down there. When I called those three investors and said they were interested in funding the deal, I told them, “We’re not going to do this deal because of this distance.” They were like, “Thank you very much. We appreciate it.” That’s the most important thing that you can do. They respect it and they’ve all invested with me on other deals and we all have been happy in different things and that’s a beautiful thing. I learned so much from that trip to Corpus Christi, Texas. I learned confidence in talking to people about the deal. I put the numbers together in my own outside of what they provided. I double checked that stuff. I picked up the phone and shared my knowledge of the year. I live there. I could spend time on the weekends or double check things. I’ve got realtor lined up. I’ve got some property managers lined up. I’ve got contractors that I know that’d be willing to help us out with the deal. That’s one of the most valuable things that I can tell.

Take The First Step

I see a lot of new real estate investors that are scared to take that first step. They’re scared to take that first action. They’re scared to go out and knock on the door if they need to. They’re scared to make a phone call to the asset manager. They’re scared to send an email blast out. They’re scared to film a video on what they’re focused on. You’ve got to get out of the blocks. A lot of people buy tickets to an event. Investors go to these workshops. They go to conferences and they’re the trolls online. They’ve paid for a ticket to the event, but they’re not in the game. They can have their opinion. We see that right now, especially with the NBA Finals going on. You have all these sportscasters especially since Kevin Durant tore his Achilles tendon and he’s coming back in from five weeks out. It’s like, “Blame the doctors, blame the warrior, blame his team.” He can’t blame anybody. He went on to get back in the game. He knew the risks. He got an injury. He’s not mad at anybody. It’s just a fluke thing, but you have all these experts and all these talking heads that want to give them advice. That happens. It’s so aggravating.

You see that on social media, you see that investment clubs, you see that everywhere. Quit being a talking head and be an action taker. Start walking and start doing the things that you need to do. Quit talking the talk and start walking the walk. The best thing that you can do is align yourself as an investor with people that are walking the walk. They’re not just talking, they’re doing it on a day in and day out basis. They’re not the ones like, “I’ve only closed on five deals because I teach a workshop. I may have closed on this last month.” What does your servicing look like? How many assets do you have with your service? How many assets have you closed in total? How many deals have you flipped? How many deals do you wholesale?

NCS 473 | Getting Started In Notes

Getting Started In Notes: The more narrow you are at your focus, the easier it would be to take action.

 

If you’re looking for an expert in that lane that you want to focus on, go find them. Somebody is doing it. It’s been around for a while. What you have to do is find success because someone who’s brand new and they’ve only been on the upside and not been through a downturn, it can’t help you in the long run. Markets go up and markets go down. That’s the true story. We all know that markets go up and markets go down. You need something that’s been around for a while. When I first started, I was only in the down market working my way up. I’ve been through the down market before. That’s how I got started. People that have just been around for the last year or two, it’s been a great time to see that market go up. What happens when the market goes south? You better adjust your numbers. You better adjust where you’re at and what you’re doing to market yourself. Those are great questions to ask people.

What happens when the market goes south? What happens if there’s a downturn in our state? What happens if this happens? Take those what if questions and ask your peer. Get clear and accurate answers to it because you know what’s going to happen as you’re out talking to people. You’re saying peers and the people that you network with are going to ask you the same question because they’re going to come from a lack of knowledge base. If you have a lack of knowledge, you come from a place of fear. What is the FEAR? It’s the False Evidence Appearing Real. People are fearful because they don’t know. This is what happens when you’re talking to friends and family members about what we’re doing. They don’t know so they get fearful for you. They want to protect you. They don’t know what you’ve been through. They don’t know the hours you’ve put in on YouTube watching crazy people talk on there or the books that you’ve read.

You have to be willing to ask those questions. Ask one of your peers like you would ask those questions to your professor or your instructors. Ask them and make a mental note because you’re going to be answering those questions later on. It’s part of the reason we started doing videos and focused on questions on a regular basis. That’s part of the reason we’re doing this episode of the Note Closers Show. A lot of people are asking questions like, “Where do I begin? Where do I start with?” I’ve been finding myself and answering the same question multiple times and I’m like, “It’s time to do an episode on getting started.” Where do I begin? What do I do? I had a great call with a lady who was watching on YouTube and listening to the podcast. She reaches out to me and we set an appointment.

We talked for 30 minutes. She’s from Atlanta. She does not like her job in the medical field. She wants to do something different. She was like, “I don’t want to fix and flip. I don’t want to do that stuff. I don’t want to be a landlord. I like the idea of notes side of things.” I was like, “How many hours a week are you working?” She was like, “I’m working 60 hours a week.” I said, “You don’t have a lot of time. You probably need to focus on performing notes. You can be using your own funds or other people.” She was a mixture. I said, “Use your own funds for some performing notes to start off with it.” There’s nothing wrong with that. It’s a great place to get started for somebody who’s passive or if you’ve got an IRA. Somebody was reaching and said, “I’ve only got $4,000 in an IRA with Quest.” I would not be transferring to a checkbook IRA because you’re going to drop $1,200 or so on that stuff.

Find somebody who maybe has a small second or someone who can use that $4,000 on a small mezzanine loan on a rehab project. A lot of people are buying assets and they need a little bit of extra boost to get stuff done. That’s a great thing to do. $4,000 can pay for an AC. That’ll pay for a carpet and you can make a decent return on that for a short-term period. Be a micro funder. That’s not a bad place to get started. That’s what I’m trying to get at. This is all about what do I do to get started? That’s the thing I would tell you. It’s the same old thing. Network, educate yourself, ask questions, surround yourself with peers and people that will give you counsel and not bad advice and then take action. It all comes down to taking action. The more narrowed at your focus is, the easier it would be for you to take action. The wider you are, the more confusing you’re going to be. I’ve seen it happen. I’ve seen it from some of the best investors out there.

Our friend Lori is a realtor out of Atlanta as well. She came to one of our masterminds. She’s been a longtime friend and she gets to list 500 and she blitzed. She freaked out because she didn’t know where to begin with 500. I said, “Let’s narrow it down. Let’s do some filtering.” Spend some time because we’re getting rid of the stuff that wastes your time. This happens across the board. Everybody wastes their time on things. We can all be more productive. You’d be already to be more productive. Those that are the best at what they do are the ones that say no the most. They say no to distractions. They focused on the yeses, they stuck in their lane, they’re one or two lanes, they’re a lot happier, a lot easier to get things done. I want to encourage you all to do that.

If you’d like to get more information, you can go to NoteBlueprint.com/FreeBook to get a copy of my book. There will be a download. If you’d like to get more information on some of our training, you always go to NoteBlueprint.com. You can watch that webinar. My buddy Stephen Epstein and I talked about what goes into that blueprint. We also span it down and see all the different training modules on our online training for you there as well. I encourage you all to take action. If you have a question, feel free to reach out. Send me a direct message on social media on Facebook. Drop me an email at Scott@WeCloseNotes.com. I’m always glad to answer and help you out any way I can. Otherwise, go out and take some action. Don’t be afraid to get started. We all start one day from ground zero and move forward. The sooner you do that and the sooner you take action, the sooner we’ll see you at the top.

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