EP 690 – Banks Are Robbing America, Become Your Own Bank Now!

NCS 690 | Banks Are Robbing

NCS 690 | Banks Are Robbing

 

If you look at the news today, it’s clear that you are having your hard-earned dollar pulled away. The banks are literally robbing you and you’re just sitting there smiling as they do it. But that’s not the end of the world. You can still go out there and do something about it. In this episode of the Note Closers Show, Scott Carson breaks down how banks and Wall Street are robbing Americans of their savings and hard-earned money. He discusses the arbitrage between banks offering low yield, “high savings accounts” and how your everyday American is losing thousands of dollars in investment opportunities. Scott shares the different opportunities and why it is important for educated investors to share the power of becoming your own private bank. These things can help Americans truly earn an above-average return on their investments and savings.

Watch the episode here

 

Listen to the podcast here

 

Banks Are Robbing America, Become Your Own Bank Now!

I’m excited to be here with you. I wanted to talk a little bit about some of the stuff that’s in the headlines. It was that all the large institutions, Wall Street, the banks, Chase, Citi, and Bank of America all reported record earnings in Q4. That caught me by surprise. I don’t know about you but many banks are short-staffed. When I started thinking about it, I was like, “Something doesn’t sound right.” They made record profits in Q4, which was supposedly a down quarter for most folks. I started looking at things and the a-ha light went off. How are they making these types of profits?

I look back at it. You have to think about this. As Americans, we are saving more than we’ve ever saved before. Balances on savings have gone up dramatically over the last couple of years. People are saving more for a rainy day in case they get laid off. They’re saving for emergency funds. I guess Dave Ramsey is probably pretty excited about the fact that a lot of people are saving, which is not a bad thing. You should always have a bit of an emergency fund. The big caveat is that the banks are literally robbing us and we’re sitting there smiling as they do it.

What do I mean by this? If you look at something, you walk to your local bank or go to the website of whoever you bank with. When you look at the reports of all the bigger banks, especially Bank of America, they had record earnings and record distribution to their stockholders. It comes down to the fact that we’re giving them money and they’re not paying us anything. I look at my bank. I pulled up the high yield savings rate, CDs and checking. They’re giving you a 0.01%. If you’ve got a relationship, they’re going to double that to 0.02%, not even a full percentage point for hundreds of interest rates for you to deposit money with them.

Do you know what they’re doing with that money? Do you think they’re just letting it sit there? No. They’re taking that same money going out and lending it out on mortgages at 3% or 4%. They’re lending it out in consumer loans at 7% or 8%, used cars in the mid-teens or even credit cards at 18%, 19% or 20%. They’re paying you 0.02% and they’re making 20%. Is that a 19.8% difference? No. It’s a 19,800% difference.

That’s why they’re having record numbers because we’re giving them more money. We’re giving them interest-free loans for them to go out, run around, invest in everything, and make all this money. They have record profits. I don’t know about you, but when I was doing that, and then I was preparing for my Note Night in America episode, I highly encourage you to go over and check out the show or register for our next webinar at NoteNightInAmerica.com, I got sick because I started comparing it. I said, “What’s a high yield saving?”

The best savings account in America was 0.5%, half of 1%. It was with Charles Schwab. What’s the high yield savings account? When I was a banker back in the day, I know six CDs or Certificates of Disappointment, as we like to say, aren’t like what they used to be. When I was a banker back in 2004 through 2008, CD rates were somewhere around 3% to 5%. I would have people that would come to my bank, moving hundreds and thousands of dollars from one bank like Bank of America across the street to my branch at Chase for a 1/8 interest rate difference. It happened over 4 1/8 or 4 1/4. It was like the CD wars back in the day.

That aggravates the crap out of me because if you look at the high yield CD, it’s 0.7%. If I have $15,000 and I have it in high yield savings, how much is it going to pay me in a year? 0.7% times $50,000 is $350 a year. That’s all that you would make an interest in. That’s a high-yield savings account. As a real estate investor, if I’m looking to invest where I have people that want to bring in money, they want to partner with or I’m going to use their money for funds, I give them 6%. Six percent times $50,000 is $300,000 a year.

What Can You Do?

If somebody doesn’t know anything about private lending, I hate to say this but ignorance is bliss sometimes. Their ignorance is costing them anywhere from $2,500 to $2,700 a year in lost returns. As real estate investors, we need to be shouting from the top of the roofs that we have opportunities. What can you do with a 6% return or money at 6%? You can do a lot. I know that many investors are used to paying 12% to hard money lenders. They’ve partnered with other people or other investors, and the investors want to make 12%. I get it, but you have to stop that mentality.

“How am I going to find the money to fund deals?” You got to market. In one episode we talked about how to market more. You got to realize that there is so much money sitting on the sidelines. No wonder the banks are getting bigger. When you look at the fees they charge for little things, it’s a negative return on investments and a negative interest rate to us, then we got to fight inflation. More people are looking at their bottom lines. They’re looking at their statements. They’re listening to the news and they’re paralyzed because they don’t know where to turn to. They don’t know what opportunities are available to them.

NCS 690 | Banks Are Robbing

Banks Are Robbing: The banks are literally robbing you and you’re just sitting there smiling as they do it. You’re giving them money and they’re not giving you anything.

 

There are a lot of deals out there at 6%, you can buy performing notes or turnkey properties. They are going to be yielding better, but 6% money is pretty cheap. You do not have to jump through all the hoops of getting qualified like a bank does and have a FICO score and a loan-to-value aspect. You still want to make sure that you’ve got a good deal, but you don’t have to go through all the qualifications, two years of seasoning or employment and all that stuff, and have a FICO score of 600 greater.

There are so many IRA investors out there, people with money sitting in an account making nothing because 0.01% is nothing. The banks aren’t giving us anything there. We’re handing it over to them. They’re going out and doing their business. They’re robbing us straight to our face and laughing all the way to higher returns, but it doesn’t have to be that way. You have the opportunities as real estate investors to start educating people and sharing with them like, “Here’s what it’s costing you per year.” The bank might pay $250,000 to keep a balance of $50,000, but if it can make an above-average return where I can pay 8 to 12 times what your bank is offering you and you walk away with $3,000 versus $250, what’s what makes more sense, making $250 or $3,000? These are no-brainer questions. These are the things to ask.

Not everybody is sophisticated. I get that. Not everybody needs to be in real estate. This would be a very passive aspect of things, but you’re not going to pay them more than that because they’re not doing the work. If they were going to go do the work, they wouldn’t be worrying about 0.01%. Most people unfortunately are very financially uneducated out there. That’s what has gotten us in the trouble in the past. They don’t know what they’re invested in. People don’t know the opportunities. I know a lot of investors obviously want to make 12%. This is one thing that we as real estate investors were probably guilty of. We’re surrounding ourselves with like-minded people at investment clubs and real estate clubs, and we’re all looking for at least 10% to 12%.

We’re not only with that group of people. You can brainwash yourself thinking that’s all that’s available. I’m probably guilty of this as anybody else because I’ve done that in the past, “I’ll give you 12%, make it a no-brainer.” When there’s a lot of money, he who holds the gold, makes the rules. If you’ve got a deal, you’ve got the gold. It’s not the people with the funding. That’s no longer the gold these days. The gold is putting money into an investment that’s going to pay a decent return on investment or above average compared to the bank. That’s your real high-yield investment. It is much better than the banks are offering.

There’s no FDIC insurance. You still want to do your own due diligence and make sure you’re not financing above 75% to 80% of value. In case something does get off the bars, you’ve got some room in there. If you do need to foreclose, you’ve got to have some clauses in the stuff. It’s good to have an arbitration clause in agreements, but setting things up on a servicing agreement with a third party to handle all that stuff will take a lot of the workout. There are so many performing notes out there or newly originated notes with a little bit of seasoning.

What I mean by seasoning is that’s where somebody has got a note and they pay at least 3 to 6 months on time. That’s what we call seasoning in the note business. Those can be phenomenal deals. Six percent is not bad, but as soon as I got 4% because the guy was making zero, it’s all about what you can negotiate. If somebody’s happy at 4%, why pay them 6%? Beat them. I got more deals for you to fund than your normal thing. There’s plenty of capital out there. That’s the thing. You can’t be greedy in this business. You’ve got to pivot and adjust your plan to make things happen.

Put Your Money To Work

Somebody asked me, “Are you sure there are investors out there that are happy making 4%?” I’m like, “Yes.” Here’s the thing to look at. This has gone from the research that we have done. Every year, I look at our top 40 or top 50 markets out there. You are spending time on our channels. We can see where people are spending the most amount of time and where our audience is at.

I picked the top 50 cities and states across the country. We do some research with some of the data companies to find out the number of IRA investors and investors in specific markets. That number is going up, so we know how to spend our best marketing buck. One of the things that we found from doing this in 2020 is that there are a lot of people out there. There are millions of people that have an IRA. I don’t know what type of return they’re getting.

I don’t know if it’s an investment or sitting there idle, but from talking with the likes of folks that run Quest Trust, Equity Trust, Nuview, and things like that. Overwhelmingly those self-directed IRA companies that have assets under management, about 30% to 40% of assets under management are making zero. They’re making zilch because they’re sitting in non-interest-bearing accounts waiting to go to work. People get all excited about doing a rollover. They want to do some work. That sounds great. They take a class and you know what happens? That’s the easy part.

NCS 690 | Banks Are Robbing

Banks Are Robbing: People will listen to the loudest person out there. If the news is just blasting loud negativity, there’s nobody there to come along and say, they’ve got the opportunity. You have to be the one to do that.

 

Do you mean I have to go out and market to find a deal? I’ll just leave it there, so I’m ready when it’s ready to rock and roll. We’ve all been there. We’ve all had that. Those are opportunities for you. If you’ve got a deal, “I’ve got a deal. I’ll put you in it. This deal is going to pay 4% to 6%.” At least you are putting your money to work. If it’s not making anything and it sits there for another year, did you make zero or did you lose money? You lost money because you start adding in the annual fees and other things.

You lost money by not putting the money to work. We have seen that start to work when other students of ours or as we start sending out letters to people that have pulled the trigger. People have had an IRA and pulled the trigger by buying a piece of property. It’s easy to go to the county records, the appraisal district, and the county recorder’s office to do a search by self-directed IRA companies that will pull up, people who have lent money in other IRA, or who have bought a property with IRA.

These are the people that I’ve pulled the trigger, but they also understand the value of putting money to work. That’s one of the easiest ways for you to raise capital out there. If you play the law of numbers that a lot of people aren’t making anything, or they’re making zero to negative, even those that have taken action or 30% of those that take action are still sitting there making nothing, then you add in another switch to it. We found that roughly 67% of people that have an IRA have at least $150,000 or more.

That number of people that have an IRA is a lot bigger than those that have a truly self-directed IRA with Equity Trust, Quest, and things like that. It’s the largest tsunami or wave of potential low interest. It’s high yield to them but low-interest money to you guys to do what you need to do. You have to share it. You have to start going out and talking with people. You got to start sharing things, “How is that working for you? Did you read this? Did you read that?” The banks make record earnings and the news is doing all the marketing for you that you need to. They’re sharing the doom and gloom over and over again, how bleak it is out there that people need to do something.

People are just looking for things. If you’re a movie fan like I am, in The American President, Michael Douglas, Kirk’s son, talked about the fact that in the absence of true leadership, people will listen to the loudest person out there. We all agree that our leadership in Washington, no matter what side of the aisle you land on is not very good. If the news is just blasting loud negativity, there’s nobody there to come along and say, “I’ve got the opportunity, hope, faith, and something that can help quell this and put you on the right path.”

That’s you. If you’re reading this on the different platforms that we roll this podcast out, you have an opportunity. I’m willing to bet you’ve got a bit of an investment bug and an entrepreneurial bug in you. You just talking to people. If you don’t like talking to people, I get it. Maybe you need to send a letter out. Maybe you need to do a video where you just do it once and post it to your website. People are begging for opportunities and people are looking for them. There has never been a better time to make things happen. They always say, “More money is made in a down economy versus the up economy.” Here’s the opportunity of a lifetime. This is where you can become that private bank.

Creating & Finding Opportunities

You can stop the raid on America. Maybe that’s a bit extreme, but I’ll live with it. You can help people become your own private bank. I’m paying them 4% to 6%. You taking that money going out and making 4% to 6%. If it’s performing, you’re making not just 4%. You’re making an infinite rate of return because you’re making money using somebody else’s money. Your arbitrage in those funds that somebody is giving you, they’re happy at 4%. You’re paying them way above what their bank is giving them. You’re also putting them in a passive return. The servicing company could pay out monthly or quick pay quarterly, whatever you want to do. You have the opportunity to do that.

You have to take action. It’s just a conversation. If you’re looking to do this, reach out to me. Schedule a free call with me at TalkWithScottCarson.com. That’ll take you straight to my calendar and we can talk about what you’re focused on and what you’re looking to do. If you don’t want to do this, but you’ve got money burning a hole in your pocket. You’ve got money that you need to put to work, “Do the same thing. We can talk about your goals and some strategies, and share them with you. The opportunities we’ve got are some our students have done.

We helped train thousands of people over the last ten years. We’ve trained the who’s who in the note industry and done an amazing job of that. We’re very proud of our students going out, kicking ass, and taking names. One of the biggest things I heard over the last few years is there are no deals. I’m like, “There are no deals if your money costs you 12%. There are no deals if you’re not marketing for cheaper funds.” If you do market, you can put some deals together because people right now are desperate for an opportunity. You find an opportunity that makes sense. You do your due diligence. You never want to put somebody in a bad deal. I get it.

NCS 690 | Banks Are Robbing

Banks Are Robbing: If you do market, you can put some deals together because people right now are desperate for an opportunity. You find an opportunity and do your due diligence.

 

You have the opportunity to put some things to work and start making a great return also helping people make a great return on their retirement, their savings or checking accounts, their certificates of disappointments, and their old 40(k)s that hopefully don’t turn into a 101(k). They can put that money to work and get rock and rolling.

I don’t care what market you’re in. There are opportunities. There are some markets I don’t like to spend my time in. Those are primarily the very long foreclosure states like New York and New Jersey. I don’t buy a lot anymore in Chicago because it’s difficult to foreclose there. Kentucky has got some weird laws when it comes to buying notes. There are a lot of opportunities, whether you’re in California, East Coast, or West Coast. The cheaper your money is, the more opportunities you’re exposed to.

One of the major mistakes I made early on was saying, “Let’s do 12%,” or go split seas. Don’t even do that. I should never have done that. I remember Julian told me, “You don’t need to do that.” People aren’t going to work. Give them 6% to 7%. They’re happier than a pig in slop. That’s the truth because if the people are going to do the work and they used to make 6% to do nothing, that’s a win-win in my book.

What are you investing in? What are you looking at? It doesn’t just apply to notes. It can apply to rentals, fix and flips, Airbnbs, commercial and syndications. You can do some good by raising capital and putting some money to work. You should open up your whole eyes and opportunities to a variety of different places to go to work, whatever your focus is, whatever your niche might be. Mortgage interest rates are low.” What I saw was an average of a 30-year mortgage right now. Six percent is a little more, but that’s still cheap compared to the 8%, 10%, 12% to 18%. It was back many years ago. There are still opportunities out there.

NETR Online & Networking

If you’ve got a 9% or 10% cap rate on a deal, that 4% money is still phenomenal. You’re doubling what you’re paying your investors. That’s usually a good win across the board there for you. One of the easiest ways to raise capital for that is by going to the county records. Go to NETR Online. It pulls all the county records together all across the United States. If you go to NETR Online, you’ll see a map of the state. If you want to get on official public record. It will ask you to pick a state and a county.

Here in Texas, I would pick a Travis County, then I would look at and go to the central appraisal district tech, Travis county Appraisal District. I would go there and ask for a name. I would type in Equity Trust or Quest Trust company. Those are the two biggest self-directed IRA custodians up there. There is all the good stuff there. There are 50 different companies out there that handle true self-directed custodians and self-directed IRAs. I guarantee if you do a search for 2021 or 2020, you’ll find 135 to 150 for each name.

If you go over to the recorder, which is where people are filing their mortgages or their deed of trust and stuff like that where they’re lending money out of, you’ll find another double amount. You can find roughly somewhere around 400 to 500 IRA investors who have money, pulled the trigger, and looking for deals. You instantly have something in common with them. They’re a real estate investor and they’re smart. Some of them may want to hire you, but in the law of numbers, I guarantee if you send out 100 letters, you’re going to have somebody respond and you can close the deal. All you need is one with $25,000 to $50,000 that will pay for the whole shebang.

This is one of the easiest drip marketing campaigns you can do. You can talk about sending out something once a month, a letter, a postcard, a past deal, or a current opportunity. Those are simple things to send out to and share the content, “Here’s a deal that I’m working on. Here’s a lunch and learn webinar. Here’s an asset that I’m reviewing or an asset that’s in your neck of the woods. We’d love to fund with you.” Taking a look at things, re-evaluating, and looking at things through a new set of eyes is one of the most important things I could tell you as a real estate investor can do.

Look at that stuff. Take the time. If you’re struggling, take a look at things. I had a coaching call with one of my students. He’s been trying to buy performing notes. I asked him what his money costs were. The guy wants 10%. I’m like, “What’s the mortgage payment on this model?” It’s 10%. I’m like, “There’s no room there for you. What are you going to make, $50 a month?” It’s the difference between what you’re funding versus what the UPB is. There’s no money there. You go give blood and make more than $50 in a month. You could go down here to the barbecue place. They’re paying $28 an hour for a slice of brisket. That would be something I would do. That’s awesome. I still can’t find enough people that can slice brisket.

NCS 690 | Banks Are Robbing

Banks Are Robbing: Get out of the water. Real estate investors are like sharks. They all want to make above-average returns. If you’re just with fish, get into some new waters. Go out and network.

 

The Banks Are Stealing Your Money

The point is you have to go back to your investor who wants 10%. Are they active? Have they done anything? No. I said, “Who offered 10%?” “I did it.” You got to go back and say, “I made a mistake. I can’t offer you 10% because I’m getting bombarded with people at 4%, 5% or 6% who want to go to work. What would you do if you were in my shoes?” I would take the 4% or 5%, not 10%. Do you want to get into the deal or do you not want to get the deal? He’s like, “Most of my marketing doesn’t have a big social profile. It’s in these Facebook groups.” Get out of the water. You’re dealing with a bunch of sharks. As real estate investors, we’re sharks. We all want to make above-average returns. That’s why we get into distress notes, fix and flip property, or things like that.

Get out of that water. You’re just fishing with the sharks. Get into some new waters, go out and network, go out and talk to people, pull a list and send it out. It’s easier than you would think. Raising capital is easy if you get out and share what you know. You are putting things in place to protect their investment and opportunities. We’ve got some opportunities to learn if you’re looking for stuff. We do have a one-day class. Already over 50 people RSVP for it. We’re excited about this. It’s a one-day class, the cliff notes version of note investing. You can get a ticket by going to NoteWeekend.com. We do have our three-day workshop, which is much more the nuts and bolts. You can get a ticket to that by going to NoteBuyingForDummies.com.

It’s an interesting time out there. We all know this and look at the news, the articles, and the quarterly report filings, it all speaks volumes that we as Americans are having our hard-earned dollars get pulled away. It’s getting more expensive for food and the cost of goods. We can thank all that big pile-up in the Gulf for the confusion and for not delivering things. It’s getting expensive. You have to take in those costs and realize, “I can’t pay as much on my money.”

You’ve got to either go to work and make 6%, or you can make 12% on nothing. If you start talking to people and they’re saying, “I’m making above-average returns.” How is that working? “I did a flip. I made 20% on my flip.” Congratulations. How long did it take you to do that? “It took me four months to do that.” What did you do with the rest of the other twelve months? “Nothing.” You didn’t really make 20%. You made something like 8% or 7% when you analyze that all out. That’s the point. Wouldn’t you rather be in something that’s paying you 6% or 7% year-round without you having to do the work to go find it and deal with contractors? I bet when you go look at it, you probably didn’t make 20%.

When you look at your hourly wage and what you had to do, you probably made less than that. You probably would have made more money flipping burgers at In and Out on a part-time basis than flipping property. When people start giving, “I’m making this.” Great, how’s that working? Is that working well for you? My ex-father-in-law worked for ConocoPhillips for years. This goes back over a decade. He had $3.5 million in company stock. He was getting ready to retire. He worked for another five years and retire. Guess what happened? He retired and he should have cashed out the stock. He kept it there in the stock and reduced in value by roughly 60%. He lost 2/3 of it in value. That’s not what you want to have to happen.

A lot of people are sitting in silence, making nothing. That money is eating away at it a little bit each month. You got to get it out and put it into something to make some things happen. I’ve always agreed. with Dave Ramsey. You got to put some money aside for the rainy day in case of emergencies. You should be saving on a monthly basis. If you’re starting off, it may not be a lot. You can put in $100 or $200 a month. I get that. Let’s start putting money away aside. You look to do partials or maybe you can do some small mezzanine loans on some investors for some quick fix and flips. You could maybe take over some subject-to deals with very little down.

There are opportunities if you know where to look. That’s one of the things that you do want to use in real estate investing clubs and things like that. It is finding education but then go find the deals, go find the money elsewhere, and a whole lot cheaper rates for you out there. I’m honored that you guys take time to read this. Please hit the subscribe button. We’ve got such a wealth of information and some amazing guests out there. We look forward to continuing to share the knowledge and help you guys take your note or real estate business to a whole next level.

Check out our weekend class at NoteWeekend.com. It’s a one-day class. If you can’t make it live, don’t worry about it. We’ll send you the replays and you still learn everything you need to do in that one-day class for you to get started. Look at taking the class. Thank you guys so much. Go out. Take some action. Take this knowledge. Go share it. Go take advantage of what’s going on in the markets and what the news is doing to help you build your bank and stop the great bank robbery dead in his tracks. We’ll see you at the top. Bye.

 

Important Links

Leave a Reply

Your email address will not be published.