EP 476 – Performing Notes with Desi Arnaz

NCS 476 | Performing Notes

NCS 476 | Performing Notes


We can all benefit from success stories of real estate investors who have strove to reach their goals in the industry. In this episode, Scott Carson talks with long-time note investor, friend, and student Desi Arnaz about his note business. Desi is a professional investor and Co-Founder of the ACI Legacy Group with over 40 years of experience in the real estate world. He shares his focus on performing and non-performing notes and how video has helped him to market for deals and private investors. He also shares his biggest advice to people who are thinking of getting into real estate.

Listen to the podcast here:

Performing Notes with Desi Arnaz

I’m excited to be here, but even more excited to have somebody on as a guest on this episode of the show that you’re going to love hearing from. We have a special guest, somebody that’s been a friend for a few years now. It goes back to my time of teaching in California when I was traveling across the country. A guy who has got a diverse background but came in, saw something and changed up what his focus was on with his background. I don’t want to take any of his thunder because he’s got a great story, but we’re honored to have our buddy Desi Arnaz joining us from San Diego, California. What’s going on, Desi?

Everything’s going pretty cool out here in California.

Why don’t you share a little bit about your background? You’ve got years of experience as a realtor out there. Why don’t you share your real estate/entrepreneurial journey?

I got my real estate license in 1980. I got my broker’s license at that time too. I owned a Century 21 franchise and I started flipping houses and investing in real estate. That’s pretty much what I did until I met you. I was either flipping houses or investing in real estate as a landlord or I also owned a couple of mortgage companies through my career. In 2013, I remember it was on the 4th of July. I was up early surfing the internet, waiting for my wife to wake up because we were going to go to the beach that day and I found you on the internet. I was like, “What is this?” You were talking about buying paper and investing in mortgages. Even though I had a bunch of real estates, I didn’t own any paper and I didn’t know anybody that did. I started delving into what you do and then it turned out you were going to be coming that next month to San Diego. I said, “That’s cool. That works for me.” I signed up for your weekend course, went there and my mind was blown. I said, “Look at this young guy, he’s out here doing it.” You made a pretty sweet offer for me, which I took advantage of.

One of the things I used to do as well too is I offered up, “If you come to one of my workshops and you do a deal within 90 days of the last day of the class, I’ll refund back your tuition,” because it was a great way. Desi did that. He went out and landed a deal in 90 days and sent me an email. He said, “I closed on a deal.” I was like, “I’m glad to refund that money back. It’s a great testimonial for my teaching.” I had stopped doing that because many people were closing deals. I was like, “I’m not making any money in my class.”

I felt bad that you weren’t making any money. To top it off, you flew from Texas to California to refund me my money. I had no expectation of that. I thought, first of all, I wouldn’t even get my money back and I didn’t care because I had done well on about six notes. I have done well on that trade, but you did it. I’ve been telling people about you ever since. I went on to do a little bit of getting out of my assets. By February of 2016, I sold the last of my rental properties, which was someplace in Georgia. I’m all paper. I wanted to save my retirement because I switched from nonperforming to performing.

I wanted to cashflow at my age. I’m collecting the cashflow and enjoying life, traveling a lot with my wife. My youngest daughter came to me and said she wanted to learn to do what we do. She had worked for me when I owned a mortgage company, but she quit when she was a teenager and said she wanted to get a real job working for somebody else. I said, “Go knock yourself out.” She came back and said, “Show me what you guys do.” That dragged me back into the business. I’m doing it with love. It’s a labor of love. That’s what got me back on track again. We’re buying a lot of stuff now, a lot for me but not by your numbers.

Everybody’s got their own business model. Everybody has their own numbers that they’re looking at hitting. They’re looking at completely different things. What I love the best is many years in real estate as a mortgage broker. We were talking the same language. People realize everybody’s in the paper game. It’s whether you’re on the wrong side of the payment stream, whether you’re originating or then you’re flipping to the other side like I did or Desi did and buying the distressed debt. You went from buying nonperforming to buying performing assets. You’re like, “It’s time for me to enjoy life a little bit.” You and your wife have been traveling. It’s what you worked so hard to get to.

I’m enjoying it. I’m loving it. It was a pleasure to me when my youngest daughter said she wanted to join me because I thought it was going to be my younger son. He seemed to have no interest. This is the business that people should be sharing with their children and their grandchildren. They should be teaching this stuff because you don’t learn this stuff anywhere. I made a lot of money in my day, but this is the best way to make money ever in my opinion.

You could do this business from anywhere and you’re in San Diego now. Are you buying a lot of California assets or doing some stuff? What part of the country are you finding your deals for you for the most part?

We just closed three of them. One of them is in Minnesota, the first one I’ve ever purchased in Minnesota. It’s mostly though in the Midwest and the Southeast, the areas you taught me.

Those are the areas where there are products. Minnesota is my homeland there. You’ve got to be careful there in the winter. What part of Minnesota? Do you remember what area?

It’s Cloquet or something like that.

They have those weird Indian names up there for the city. It’s a performing note, I take it?

That one is a nonperforming asset. We’re back to buying nonperforming because my daughter’s working the business and she’s built herself up a little staff. She’s got people here that do the due diligence for her and she’s got an asset manager that works under her. I told her I like mine performing but she’s young. She should be focusing on picking up some nonperforming stuff because she doesn’t mind doing the work. I didn’t want to do the work.

You’ve got that both sides of the equation there. Everybody needs to have performing notes because it’s a great way to build cashflow and pay your bills. I’ve had conversations where it’s one of the best things that people can do initially is figure out what their monthly overhead is and then focus on putting performing notes or semi-performing notes into that. If you need $5,000 a month to cover bills and everything, that should be your first number. Once you get that number covered, you’re technically semiretired. You’ve got the energy because it does take a lot of energy with the nonperforming stuff. It’s more labor-intensive with the workouts, negotiating with the borrowers, tracking people down and doing that aspect of things. Whereas a performing note is, “Let’s look at the payment stream, look at the values, the yield,” and go from there.

I like that, too. I love the fact that my money is working all the time in double digits. When I had my real estate, I never took the time to figure out my yields on my real estate until I met you. Once I did, I went back and looked at my portfolio for a few years and I was averaging between 7% and 10%, right in that range. After all the dust settled and I was a landlord dealing with all the headaches, now I make more than 10% on a regular basis all the time. As a matter of fact, if it’s not at 10%, I’m not even interested at all. I don’t have to deal with any of that stuff. It’s wonderful.

With you being in that area for so long and being well-known on that, are you getting a lot of realtors? What did you do to change what you were doing? Tell me more about it? Is it mostly investors from your network there that are coming to you saying, “Tell me more about what you’re doing,” and go from there?

Lately, I have had more realtors than in the last few months. I’ve had more real estate agents contact me than in the entire few years before. It’s strange and I don’t know where it’s coming from because I’m not doing anything to solicit any business from realtors. It’s not like I’m targeting them. Here’s how I work. If I have cash, then I don’t bring anyone else to the table when I’m about to buy an asset. If I don’t have the cash, then I’ll partner with somebody to pick up an asset and we’ll own it together. We’ll split the payments and split the profits that are made on the deal. This is the model we’re using is we’ll buy the nonperforming. Once it’s reperforming, at that point if I’ve got the cash, I’ll buy out my partner. If I don’t have the cash and my partner wants to cash out, we’ll sell that note.

How many months of seasoning are you looking for before you’re looking to start selling it or either cashing out either party?

We’ll collect payments for at least eight months.

You’re buying in the Midwest and buying in the Southeast part of the United States. Are you not buying anything in California?

I have owned two notes in California and I’ve done well on both. For the most part, I can’t afford a lot of this stuff out here. They want too much money for them. There’s not enough discount and I can’t get the yield.

Almost every day somebody will email me, calling me, reaching out, “I’m in California. If you’ve got anything in California, I’ll buy it.” I’m like, “If I find anything in California that makes sense, I’m not selling it. I’m keeping it.” That’s the thing that you’re not afraid to get outside of your market. Are you flying up to these markets? Are you just using local relationships or local vendors to help you with your asset stuff?

When I started in this business, I was concerned about how I was going to do that. Every single property that I owned, I’d been there, some of them multiple times to see the properties. Doing this, I have never gone out to see an asset before I buy it. I use local people to help me do my due diligence. I believe that by the time we’re ready to pull the trigger, which usually takes us several days to go through our process, I know more about the community and the people that live there. I know what’s going on. We talk to the city, the county, real estate agents and local business owners. We do a thorough due diligence process. By the time I’m ready to pull the trigger, I feel like I have no doubt. That’s what makes it easy for me to find partners because I can look my partners in the eye if I need the money and I can say, “We’re going to do this. The only question is do you want in?”

You’re taking those extra steps of calling business owners in the county, the city and asking them, “What does the area look like? What’s the city doing? Is there any weird crap we should know about?”

I found if I call them up and I say, “I’m considering relocating there and I don’t know the area,” and people will open up to you. They’ll tell you the good stuff.

You and I both know a lot of people are worried about investing outside of their backyard. You can’t go out, touch it, feel it and see it.

NCS 476 | Performing Notes

Performing Notes: Do a thorough due diligence and use local people to help you so that by the time you’re ready to pull the trigger, you know more about the people that live there and what’s going on.


The other thing that I do too is when I’m talking to the police department, we call the police department and the fire department, I ask specifically if there has been any incident at that property or nearby. That’s been helpful, especially if they think I’m moving there or even thinking about it. They tell me everything. I feel comfortable when I pull the trigger on one of those assets.

Have any surprises popped up from calling the fire department or the police department inquiring about an asset? Was there anything that’s on an asset you closed or an asset you didn’t close on that you found out?

There was one. It always sticks in my mind. I was looking at a place in Memphis, Tennessee. I was talking with a female officer there and she was telling me about the city and all that. She said, “What’s the address? Where are you looking?” I gave her the address and she said, “There’s a lot of killing going on over there.” She talked me out of it. To this day, I still haven’t bought anything in Memphis. I don’t know if the whole city is like that, but she scared me away.

Memphis was paradise a few years ago because 85% of the city is a rental community. Now you have to dive into Memphis and know it on a street-by-street basis, not just a zip code because there are a lot of properties getting trashed. You’ve been a landlord. You know how long-term tenants are. If they don’t care, they move from one place down there. It’s not their property, they don’t care about it. The last thing they care about is taking care of your asset. I’ve seen a lot of people pulling out and not dealing with Memphis. I stopped buying in Memphis a couple of years ago. We’ve got some other students that stopped because it was becoming too rough. Even though you might find a great asset, the surrounding area was too rough and there might be some killing going on there. You don’t want to be a two-gun alley. One of the things that we like to do too is asking what market rent is. If market rents are below $500, that’s usually a quick identifier to not even waste your time with it.

That’s another nugget there. I didn’t know that.

I only buy a lot in Columbus, Ohio, Michigan and stuff like that. We want to make sure it’s worth our time that if we do have to take the property back, it’s going to be worse and make some money on the deal if we’ve got to take it back as a rental. That comes from talking with local people in the area. We have a good friend in Detroit, a good friend in Columbus. Both are big turnkey operators. We found that being a good place to reach out to and ask about the city and the area. They both shared that rents below $500 are not worth your time. One of the great things I like about what you’re doing, because I’ve got my ear to the ground and I always hear great things from people, your name has popped up quite a bit that you’re sharing what you’re doing. You’re not educating people, but you’re taking the time and sharing what you’re doing with local people out there. I’ve seen a few more videos from you, which is great on some of the cases. Are you seeing some good stuff coming from some of that extra marketing that you’re doing now?

I’m shocked at what comes from YouTube and Facebook from putting out the videos. It’s been blowing my mind because I look at it as I’m sharing stuff. I was making my videos long. I’ve shortened them all up to a minute or two. I’m getting a lot more views and I get calls from people all over the world. I’ve got a guy in Switzerland that wants to partner with me on a note here. It came off YouTube and he has $500,000 to invest and his buddy is also a note investor who owns a few notes and he’s got over $1 million that they want to deploy.

You may not know this information, but are you the one that filmed it and edited it? Did you just film it and gave it to somebody to upload it and do the work for you as far as uploading it?

I was editing my own up until some time ago when a friend of mine suggested that I go and use Fiverr. I gave three people on Fiverr the same video to edit and then I chose the one that I liked best. Moving forward, that’s what I’m going to be doing. I’ll have somebody else edit it.

A 66-year-old can learn how to use YouTube.

I still don’t know how to use Instagram though. I can’t figure that one out.

You’re using YouTube, that’s a smart thing. You’re using your smartphone, an easy webcam, something simple technology-wise to record.

My smartphone and my selfie stick usually. I have a selfie stick that can also serve as a stand. That’s what I use.

Do you have any idea how many views the video that he reached out to you from has hit?

I don’t even know which one it was, but I did make a video called Introduction to Notes. It’s a long video, seven minutes, but I’ve had about 20,000 hits on that thing.

That’s what I was trying to get at and I love it because it’s seven minutes just talking. You’re having a conversation, sharing the 411 on that thing. It’s done tremendously well. It’s got those high key points, a basic information thing. Twenty thousand hits on the video, it’s phenomenal. That’s phenomenal for anybody, especially in our little niche of note investing. You’re not going to have probably twenty million, but 20,000 hits is a beautiful thing out there. We’ve got a few videos that have done well, but I’m happy when we start hitting 500 to 1,000 hits on a video. A video on YouTube led to potentially a $1.5 million in private funds is what you’re saying?

That was in the last many days and pretty much it’s been YouTube or Facebook that has brought me all my private funds. I did my first hypothecation deal. I’d never done that and I like it. It’s got a downside, but for the most part I like borrowing the money and then I own the note. I don’t have a JV partner or any partner. It’s like borrowing from a bank to buy a house.

What’s been the biggest surprise? Let’s say there was a stumbling block along the way. You came to the class there and you took some time off. Your daughter came back excited on things. Has there been anything thing that’s been a little bit more of a learning curve for you?

I would say this, it is more complex than it seems. People that just watch a few videos and don’t take on a mentor, someone like yourself, they are setting themselves up to fail, to lose money for sure. To possibly miss out on a real opportunity because if they fail or lose any money, they’re going to assume the business doesn’t work, but it does. I see these guys. They watch a few videos and they think, “I’ve got this. It’s not rocket science,” but they don’t.

It is a different mentality than coming from a fix and flip side or a landlord side. It’s attractive in some things, but it’s a whole different mindset being a banker versus a fix and flipper. We see a lot of people are looking for deals or not finding them on the fix and flip side or the REO side. They’re coming into the note side. They watch a few videos like, “I can do this. I’m a smart guy.” They then end up overpaying or missing something.

That’s what happens. They overpay and then I wait. If they want to sell later, I’ll buy it.

That’s been a big key. Would you say that’s been a big key to your success in finding some deals and following up with the sellers and buyers?

Follow up is the key. I use a software program to help me stay in touch with people. I use one called Kartra. I was using something different before. I was using Infusionsoft for a while. Kartra is good. It’s all-inclusive. I’m not trying to plug it or anything, but it’s a good system.

Are you using it basically to send an email out and then you follow up with people on a regular basis?

I’ve recorded a series of videos for different things to follow up with. It’s pretty simple. They’re all short, a minute-and-a-half at the most. I put those into some emails. If you were to call me up and we had our first conversation, you’re going to get a video from me in an email saying, “It was good talking to you.” It’s not addressed to you specifically but, “You’re going to be getting more emails from me. I’m going to be educating you a little bit about investing in notes.” I don’t try to make it as though I’m some guru, but just a little bit because most of the people that call me don’t know a whole bunch at all. I know that when I was a brand new investor in this, the only reason I had the courage to take the jump was that you were there. If you weren’t there, I doubt if I would have purchased anything. If you hadn’t given us your cell phone number, if I didn’t know that I could reach you, I know I wouldn’t have spent a dime.

Everybody’s brand new at some point, no matter what type of field you’re in whether you’re a realtor, a mortgage broker, note investor, fix and flipper. We’ve got to start somewhere. One of the most important, most valuable things is having somebody to reach out to. I was blessed that I could talk to you across the room for a few years before I started. That’s the thing I’ve answered phones. We have had conversations. You were so excited to get rid of those Georgia rentals. Those were the last ones. You were like, “It’s going to be a vacation once I get rid of these.”

I feel bad now for people who don’t quite get it, especially when I try to tell them. As I’ve gotten older, I have less patience. I don’t even try to convince people anymore. If you don’t see it, so be it.

That’s an important thing and I’m glad that you said that because sometimes people have to step back a little bit and realize we all have databases. We all have friends that we think would be awesome at doing some stuff in the investing community. Some people don’t get it. It’s not a bad thing and they are in their niche. They don’t see the bigger picture. It’s like, “Next and move on.”

My best buddy says I like putting my hands on my property and it’s fine. I’ve about got him to the point that he’s at least going to buy a note for his son. His son is about five years old. I said, “Get him a note, put it into some retirement account,” or something or whatever you call those things for the kids.

NCS 476 | Performing Notes

Performing Notes: A big key to finding deals is following up and staying in touch with people.


That’s an educational savings account or something like that.

At least let it collect interest and let it grow over the next several years. It looks he’s going to be doing that, but he won’t look at it. At the same time, he borrows money from me to do his deals. I’ll do private loans for him.

You’re originating the loan on his fix and flips and stuff like that in the note game.

We both used to do fix and flips together, that’s what we were doing.

Being in San Diego for so long, what are you seeing the market doing there? Do you see anything crazy with people buying houses over valuations? I knew it was getting crazy when they started inserting appraise value not dictate sales price.

You’ve got to agree to pay this price regardless of what it appraises for. It is nuts, but it’s also softening some. Now it’s a little steady, but leading up to the summer selling season, the market was definitely softening. Up until a couple of months ago, I was a broker support for a buddy of mine that owns a real estate franchise here in San Diego. He’s got 600 agents and he needed someone to help him answer questions for these guys. He was paying me a nice annual salary just to be there to answer questions when he wasn’t around or to help answer questions. I don’t sell a lot of stuff myself, but agents were telling me what’s going on out there is competitive. They’re getting destroyed by these one-percenters and all that stuff. The sellers are a lot smarter, too.

I see that as an industry that’s taking a major hit and I don’t see it looking anything like it does now several years from now. It’s going to look completely different. I’m glad that I phased out of it. What I also believe, having been through a few decades of this type of stuff, ups and downs in the market, now is the time people should seriously be looking at selling their real estate if they’re going to sell it at all. Now is the time to start picking up paper. Get out of bricks and mortar, you’re at the top of the market, and sell it. That’s it.

Tell them to focus on buying and then double down into cashflowing assets of some sort.

Even nonperforming, but now is the time to do that.

You bring up a valid point because when you start seeing people are getting more savvy and more of the flat rate listing agents, listing companies, brokers and stuff like that. I was talking with a title rep here in my building about how she thinks the same way, too. Realtors are getting squeezed out of the business. Everything’s going to be more online. When you look at Zillow, selling houses now and then even how we’re getting into the game. You look at Amazon coming out. They had an online listing service for a couple of hours before they took it down. That was a few months ago. That should tell you something that you’ve got to be looking for doing it. Do you see that a lot of realtors struggle with the marketing side or the long-term putting a business or putting a plan together versus the hand-to-mouth aspect of, “I’ve got to close something to pay bills?”

Most of the realtors that I have worked with don’t see themselves as being in business. They see it as a job. They don’t see it as they need to think about how they can build this business because it is a business. The successful ones, which there are some good ones out here in California, I know several that make $1 million plus a year selling houses. They have their whole businesses structured. They have people that do everything and they put systems in place that makes sense. Most agents don’t get it. It used to drive me nuts when I owned a Century 21. I tell these guys, “Even though I own this company, you’re an independent contractor, which means you’re in business for yourself.” You need to be thinking that way, but they don’t get it. People are too lazy. Everybody wants the money but they don’t want to do what needs to be done.

They want to do the bare minimum to get what they want to do. They don’t want to go above and separate themselves. That extra 5% goes a long way in long-term success for people. You are taking the time to film short-term response videos to people you’ve talked to or had the same type of conversations because they didn’t allow the same conversations that we have. That’s a system right there, recording it and putting online. Instead of having the answer to that same question 1,000 times, you record the video once and let it get viewed 1,000 times to save your time so you’re not working so hard. You’re enjoying life there in sunny San Diego.

I started something else too. I didn’t use to do this but what I would do when I had a partner that was going to go on a note with me, I would get them on the phone or on Zoom or something like that. We would go through the due diligence in advance. What I started doing lately was recording the due diligence and then I send it to them. We then have a quick conversation afterwards. Instead of spending 45 minutes on the phone, now I’m on the phone for ten minutes, and then we’d do the deal or we don’t. It doesn’t matter to me either way. I just ask for thumbs up or thumbs down. None of this stuff is like, “Let me think about it.” It doesn’t matter. I’m not going to hate you if you say no. If you’re wasting my time, I’ve only got so many Christmases left, maybe a dozen.

You hit something valuable on the head there. Don’t waste my time, either you’re going to do it or don’t do it. Give me thumbs up, give me thumbs down. Don’t waste my time. You also took pride in your time because you’re already going through due diligence on the front end before you even start marketing. You’re saving that information. You record the short PowerPoint or the Zoom call, which is easy to do. You’re sharing the video like, “Here’s what we found. Here’s what our due diligence is. Here is the good, here is the bad.” They can watch it on their own versus you wasting 45 minutes of your time for them to think about it. This way, you’ve saved an hour each time you send it out.

It’s been wonderful. My partners like it better. They don’t want to spend 45 minutes looking through this stuff either. Once you’ve done business with people a few times, it’s pretty much going to be a phone call. They say, “Do you like it?” I say, “Yeah.” They say, “Okay,” and that’s that. That’s what you told us the first day I met you.

It still comes out because you put the time in and you’re doing the due diligence. They respect you and they’ll go from there. It’s a win-win. Even if it’s something that has a tendency to go south, they know you’re going to step in, take care of it and make them whole in one way or another.

It is an investment and things can go sideways. I don’t care how good it is. It can take longer than you thought, but knock on wood we’ve never lost any money on anything. Maybe I haven’t done enough deals. I lost in real estate though.

The beautiful thing about buying notes is you’re usually buying a lot cheaper. You’ve got some flexibility there. What’s the biggest nugget you would give to somebody who’s thinking about getting in the note business?

Get with somebody who’s already been there, done that and you can document it. If possible, get a mentor, if you can afford it. If you can’t afford to get a mentor because what’s going to happen if you don’t get a mentor is you’re going to pay for a mentor, but you’re not going to have one.

You’re going to take the school of hard knocks mentoring and end up losing more money versus the speed to profitability or speed to success that a mentor can have. I’m a big advocate of coaching and things like that. I have coaches for a variety of different things, not only in my business, but in our podcasting and marketing. It’s been the best value that I have. Equal mentoring is a good thing. Asset protection is a good thing too to help you keep your assets out of a sling. That’s one of the most valuable things you can do. Not every deal is a home run, a lot of singles, doubles, base hits and you get a few home runs in there. As long as you know what’s going and you’re taking those little extra steps, it’s saving you from making those moments that you would’ve gotten hadn’t you called the cop in Memphis to avoid the killing. Have you honed your checklist of things that you’re doing and when you’re looking at an asset for the most part?

It’s fine-tuned and I call it a 57-point checklist, but I don’t know how many there are. I know that there was a lot and as far as honing it in, we’ve got it dialed in. I use software for reminding me what to do. I use Insightly because it gives me this checklist like, “Don’t forget to do this. Don’t forget to do that.” I can get through the due diligence. We divide our due diligence up into two parts. We call it pre-search, that’s preliminary research and then due diligence. The pre-search, we zip through stuff pretty fast. We might get a tape of 100 and zip right through that preliminary research based upon a few things that are important to me. From there, I will then go a little deeper on the ones that I like or the ones that you get accepted.

That’s such a smart way of doing things. That was a thing that saved hours and money and it allowed for me to get a lot more bids accepted, dividing that aspect up instead of trying to get everything done on the front end and not getting bids accepted. It’s making more bids, controlling the asset and then doing a deeper dive to make things happen. That’s smart. I’m so proud of you.

I learned that from you because I was doing it the other way.

I think everybody was at some point.

It was on one of your podcasts or one of your webinars or something and you were talking about splitting it up.

I did it wrong for a while. Have you got a city or an area that you love that you’ve been investing in, an area that anytime you see you love finding?

I haven’t purchased anything in Texas, but I want something in Texas. I’m never the best bidder. You guys are paying too much out there perhaps. I also like Florida and I don’t know why, but I’ve had good success in Florida. When I see things in Florida, like the three of them that I’m closing on are in Florida, two commercial and one residential.

Let’s talk about commercial deals. What type of commercial properties?

One was a doctor’s office and now it’s some other type of business but not medical. They’re both owned by a doctor. She came off of a mailing piece. You send out direct mail to people. We’re buying both of hers. She retired, sold her properties with seller financing. She wants to cash out and we got them at a pretty good price. I’m happy with the price and I know we’re done with our due diligence. I had a question. She did let me speak to the borrowers, which was nice. I called the borrower. We spoke for a few minutes, but he was in a meeting. He called me back and I was in a meeting. I understand he’s out of the country, someplace in Europe with his family on a three-week vacation. I’ve got enough information. I’m ready to pull the trigger.

NCS 476 | Performing Notes

Performing Notes: When you’re thinking about getting into the note business, get with somebody who’s already been there and done that, and document it.


That’s smart doing residential, commercial deals. I love it. The reason for Texas is we have such fast foreclosure laws here. Everything is almost $0.70 on the dollar greater with stuff here. I haven’t bought much in Texas in the last decade. I love Florida. I almost moved there. I spent a big chunk of time in Florida. I made a lot of money in Florida. Do you mind sharing what parts of Florida you’re closing on this Florida assets at?

I’ve been closing primarily on the Eastern Seaboard. We did one in Melbourne. I’m not that familiar with Florida.

Melbourne is by Cape Canaveral. It’s a great area there and that’s awesome. Eastern Seaboard like between Jacksonville and West Palm Beach. I’ve seen a lot of stuff up in that neck of the woods.

Everything we purchased has been up and down that coast. There’s another place called Bonifay. Have you heard of that?

I have heard of it. I’m not sure where it is, but if the numbers make sense.

The numbers make sense. North of Fort Lauderdale, we own something there now.

Desi, if somebody wants to reach out to talk with you, what’s the best way for people to get ahold of you?

I like to tell people to go to my website because all my contact information is there. My website is InvestBrilliantly.com.

What’s your YouTube channel?

My YouTube channel is Desi Arnaz. This is not my strength.

The reason I bring it up is that it doesn’t have to be a strength. It is a strength because you’re doing it and you’re doing things on a regular basis. It’s working. Marketing works if you do the work. If you’re spending the time and doing it versus wasting time on other things, it works for you. You did the video. It had 20,000 views. You didn’t expect to get 20,000 views. You expected, “If I get a couple hundred, great.” It’s going to save you time more importantly and you got a great side win out of it.

If people will go to my website, all of my contact information is there. My Note Vault is also there. Any assets that we want to sell, we’ll put them up on our website in something called the Note Vault. People can go there. If they want to buy it, fine. If they don’t want to buy it, it’s okay because they’re all performing. I’m collecting payments anyway. If you don’t buy it, I’ll keep getting paid.

You’ve got assets for sale on your website under the Note Vault. They go to your website and click on it. Do they have to fill something out to review everything?

They have to give me their name and email address. They will get one of my videos saying, “Thanks for going to the Note Vault. If you didn’t see anything in there now, come back again in a week.”

You sounded like you’re doing a little direct mail to owner finance note holders. Are you getting a lot of your deals from owner finance buyers or also getting direct from banks and hedge funds?

It’s mostly banks and hedge funds. I found a note broker in Florida that was willing to do the work to send out postcards, but he didn’t have the money. We did the money. He did the work. The calls came in. We got about nine calls out of that and it looks like we’re going to pick up three assets.

How many mail pieces?

It was 2,500.

That was at 3%, but it doesn’t matter. Now you’re getting three deals out of it.

I may get more because the doctor came from that. She’s also got a place here in California right here in Alpine, which is 30 minutes to 35 minutes from where I am. It’s a regular house that she wants to sell. If she gives it to me, I’ll probably list that property. If it’s selling for $500,000, every $15,000 counts. This stuff bleeds over into other businesses too.

It totally does. I’m tickled pink hearing all your success stories and things like that. It comes from the fact that you’re not afraid to put the work in and you’re willing to do that extra little bit that most people won’t do. That’s why you’re successful. That’s why you’re killing it and doing amazing things. I’m proud of you. It was the best refunded class I’ve ever done.

I felt bad. I said, “This guy didn’t make any money on me.”

Do not feel bad at all. I’m proud of you. That was the whole focus of that aspect of things and it’s a proud moment. I’m excited for you. Desi, thank you so much for being a guest here on the show. Check out Desi’s website InvestBrilliantly.com. Check out his Note Vault and definitely check out the Desi Arnaz YouTube channel. Make sure to like it, subscribe. He’s got some great stuff on there and doing some amazing things. I’ve learned from Desi. I’ve learned that you can do some amazing things and you too can build a life that will take you to the top. We’ll see you later.

Thank you, Scott. God bless you.

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About Desi Arnaz

NCS 476 | Performing NotesDesi Arnaz is the founder of the ACI Legacy Group, a San Diego based Note Dealership. Desi’s investment journey started in 1982 when he flipped his first house. From 1982 through 2013 his portfolio consisted of rental houses and small apartment buildings. But in 2013 he discovered Notes and has since moved completely out of bricks & sticks into paper. Today his company buys, holds and sells Notes all across the country.


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