Larry Hoffman is a software developer who is looking to break into note investing. He recently took a one-on-one coaching program at WCN. Now, he’s more confident as a note investor and was able to raise a couple hundred thousand dollars in private funds. Now, Larry is the owner of LJH Investments LLC, a real estate investment firm that specializes in buying and selling distressed assets. Join Scott Carson as he talks with his student, Larry about his journey as a real estate and note investor. Larry shares his past investing experience and what attracted him to notes. He also shares his success formula for finding deals and raising private capital.

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Working For Yourself: Larry Hoffman’s Journey Into Note Investing

My name is Larry Hoffman. In this episode, I’ll share my journey as a new note investor and how in a short time, I’ve closed on my first deal and raised a couple hundred thousand dollars in private funds. I hope you enjoy the show.

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In this episode, I’m excited to have a guy who is a true note closer. He is one of our newest coaching students. He is doing an amazing job. He hit the ground running and soaked up things like a sponge. He had been learning for about two months. He has closed on their first deal. It is a great ROI not only for him but his investor. He also is raising capital like crazy, making offers, and contacting banks. Without further ado, I want to introduce a very excitable guy, somebody who you want to keep an eye out for in the industry because he’s making money and doing big things. He is Larry Hoffman.

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What’s going on, Larry? How are you doing?

I’m pretty good. Thanks for the intro. That’s awesome.

Let’s talk a little bit about what attracted you to notes and your background. You’ve got an interesting story, like many people. You were a very big investor many years ago and then you got kicked in the shins pretty good like everybody else. Let’s talk about your investing experience up to where you got to investing notes.

I started real estate investing back in 2006. I pretty much started out like a lot of the other people buying the properties, fixing them, rehabbing them, and then selling them. I would sell them conventionally and/or with bank financing, but then also along the lines, I was selling them under a rental owner or a lease option.

When the economy took a tank along with the housing market and people were getting laid off, that’s when it impacted me. It hit me hard. Unfortunately, not only did it hit me financially with real estate. It also took a toll on my marriage. It was one of the factors that led to my divorce. I took a little bit of time off on the real estate, and then I slowly got back into doing it. When I say slowly, I started out with the cooperative lease options and then wholesaling properties.

I then came across your show. I knew about notes. I’ve sold notes. I’ve created, taken back a second, and sold it on the market. I knew when I sold that second, I was going to take a bath. I’ve already made my money upfront. I sold the second, but I didn’t quite understand what I was doing when I was selling that second. I never thought about entering the space of strictly becoming the bank and buying these notes.

It was months ago when I came across your show. I read everything and anything I can read, and then I became one of your members of the WCN crew. I was soaking up all those videos. I was up for 24 or 48 hours just watching your videos one after the other. It was like a light bulb went off in my head. I was like, “I’ve been doing this.”

There’s nothing wrong with investing the way that I started. There are still a lot of people that are doing the BRRRR model, but for me, this light bulb went off in my head. It was like, “I’ve been doing this the wrong way,” at least for me. That’s when I signed up for your mentoring. It has been non-stop and great. I’ve been loving every moment of it.

You said you got a lot of background doing a lot of different things. When the market changed, many people had financial difficulties, not just in real estate but also family. That happens. I’ve been down that road. A lot of people have. One of the biggest things I want to commend you is you didn’t let that stop you. You took a little bit of time off work, figured some things out, and went into the workforce. You taught yourself programming. Isn’t that what you’re doing these days full-time?

Yeah. I graduated from the University of Cincinnati with an Electrical Engineering degree with a minor in Computer Software. I’ve been developing software for 26 years. I am in the software industry. I’m looking to break out of that and go back into working for myself. When I was doing the real estate stuff full-time, I was, in fact, working for myself. It was for almost eight years that I was full-time at it. I was making pretty good money at it. I took my eye off the ball a little bit with that economy, and that impacted me.

There were a lot of snowflakes that turned into a snowball that turned into an avalanche for a lot of folks. I know a lot of folks that lost everything because of their finance. They couldn’t get out of it fast enough because the market was crashing. You’re great at your job. You work from home. You’re doing stuff, but you also found out after you signed up for stuff that you might be a marked man here in a month or two, correct?

Correct. They are talking about layoffs. I’m not sure. I got to take it as it happens, but it’s one of those things where you can sit on the sidelines and let it happen or you can take action. A little bit before that came down the pipe, that’s when I reached out to you and signed up for your mentoring. My goal is to start doing real estate investing full-time.

The thing is, we don’t expect to replace because you make good money with what you’re doing. You don’t expect to replace that overnight. By no means would we ever say that. You were asking me. We were exchanging text messages. You were like, “Can I do this? Can we set up a place to play?” That was one of our first phone calls after the class. I was like, “Let’s talk about your goals and what you’re making, and let’s figure out.” You’re going to have some big checks in the nonperforming note space with foreclosures or deeds in lieu. The other side is to build that cashflow. We built it into two buckets and came up with a specific number of deals you need to do. It was 20 to 30 deals on the performing side and then 7 or 8 bigger checks on the deed in lieu and foreclosure side.

That’s the great thing. You’ve got a plan. We just need to go implement it and go from there. You’re a very coachable person. I will tell you that. It’s a joy because you are constantly doing something. I know in your spare time that you’re doing a lot of things and setting things up. When you were learning the notes side of things, what was 1 or 2 maybe thoughts that you had that you might have struggled with or you were like, “That might be hard,” and it has turned out to be completely opposite?

 

The big thing for me was finding the deals. Within your course and these virtual workshops, you go into great detail on how to find these assets. I thought that was going to be the hardest, reaching out to these people, especially banks and hedge funds. Who are they going to deal with? I‘ve been around real estate and I’ve done a lot of real estate deals over the years, but I’m new to this note space. I was like, “Here I am, new. Nobody is going to talk to me,” but that hasn’t been the case. It has been great.

The other thing is private money. I’ve had private money in the past. It was one of those things where when you get out of it and start looking for it again. I’m always amazed at how it’s having that conversation with somebody and telling them what you can do. You’re not guaranteeing anything but you’re like, “Here’s the deal. This is the type of return that you can get.” It’s following what you were talking about. It all shakes out.

Finding deals and then also raising capital in all kinds of forms are two of the biggest things that people worry about. They’re like, “How can I find deals in the note space when I can’t find them in the REO space? What makes notes so different about that?” They’re also like, “I can’t get my bank financing like I’m used to. Hard money lenders aren’t going to do this. How am I going to raise capital?”

You’ve done a tremendous job in raising capital for yourself. It’s good that you said, “I’m down to having conversations with people and sharing with them, ‘These are the types of deals that we do. If you want to jump in, that’s great. Let’s work on these together or you can fund it, pay a flat return investment, and go from there.’” How much in approximate funds have you raised or had people say they’re pledging to you over the next 12 to 24 months?

Initially, it’s going to be $50,000 right off the bat, and then with the potential of going up to $350,000 with this one lender I contacted.

Is he one of the first guys that you funded to deal with?

Yes. I have another meeting with the second lender. What I did was I sent out 77 letters. This was right before Christmas. You and I had this conversation. You said, “Don’t expect to get any calls.” I figured that because of the holidays and people are busy.

Let me clarify this for everybody that’s reading. We pulled up a list in the county that you’re in of people that had bought a property with their self-directed IRA. There were more than 100, but you sent out 77 letters with the IRA letter that we’ve provided in the sample case studies. You sent that out first, right?

Correct. Out of those 77, I had two people respond. I had lunch with one. We met for lunch. Of course, I bought lunch and he said, “That’s fine.” I’ll tell you the big thing, and this is something that I didn’t do in the past with the private money. I didn’t have this pitch deck or video. It’s a huge difference because he went and looked at that video. There were no questions.

The other thing is he is a seasoned investor. He has done this so he understands what’s going on. When we met, the only two questions he had were, “How much return am I going to get? How do I get started? Your video answered all of my questions for me.” The video is ten minutes long.

You can always go to our YouTube Channel and type in, “Building be a perfect pitch deck.” That’s what we did. We gave you the guts of what we’ve done and then you tweaked it with your branding and your story. It talked about the types of deals you’re looking to do and your vendor team, which has done thousands of deals in funding.

You’re not the guy going out knocking on doors and collecting. It’s a venture. You said one thing that he liked was, “You’ve got your team all set up with professionals.” You’re not just investing in Larry. You’re investing in Larry plus the team. That’s awesome. You said he went from, “I’m going to fund $50,000,” to already starting to ask, “When are we going to do the next deal?” We’re not going to disclose the interest rate, but we’ll say it was an above-average return on investment for him because the money was sitting there making nothing, right?

Exactly.

You’re not paying hard money fees or traditional investor shark loans. You want to keep that interest rate low as it is for a while, correct?

 

Yes.

You’ve also done a good job. We’ve been going to some of the different lists and identifying deals that have been stale on the websites but have turned out to be some opportunity for you there, correct?

Yes.

You got one that was twenty minutes away from you.

It’s ten minutes away. Scott is helping me work through this deal, and if that one works out, that would be the other one that this lender would fund for me.

I had known it had been sold 3 or 4 times. We found 3 or 4 sources for Larry to reach out to with every assignment. The note holder of this was a fund out of California. The person who reached out to you was like, “Contact this in-house person who handles all of our note deals,” which one deal looks like it’s going to lead to hopefully more. We haven’t gotten a list from them yet, but I know that company. I know they’ve got a portfolio that they’re constantly selling.

I was out of that list that I got, which was the one that I was specifically looking at that’s ten minutes away. As I was going down and looking up information, they happened to own another asset. That’s two from the same company. Not only is it going to be two, but there’s going to be a large amount that they’re going to have. They do commercial deals as well.

They got some pretty nice commercial deals out of California. Let’s talk about this deal because it’s a pretty sweet deal. A lot of people are like, “Notes are overpriced. You can’t find deals that make sense.” We know that the BPO on this came back better than expected. It was at $80,000 and the payoff on this was $41,000 and some change?

The payoff was $35,000 and some change.

The investor is funding $20,000 on this purchase plus some workout costs. Based on the cashflow on it, you were paying $430 a month.

It was $344.78.

Besides having to fund a little bit extra and paying the investor their fee, you’ve still got about $200 in cashflow coming into your end after servicing costs and taxes are paid on this asset. Besides hitting on the list, the investor that owns this knows a previous one-on-one coaching student. We’ve been working back and forth, so it made it easy. He wanted one price for that. We were able to get him to reduce the price on the note, too, correct? 

Yes, and that was all because of him being a former coaching student of yours. It’s so neat being able to work with you and then along with other students of yours because we all have this camaraderie. It’s awesome. I love it.

That’s what we love about the note nation out there. The note space is usually pretty friendly. Those that are doing deals realize that and go from there and do some things. You have raised conservatively a couple hundred grand from a couple of investments. Are you continuing to send out more letters?

 

I did. What I did was created a postcard. I took the letter, shrunk that down to a postcard, and then put my case studies on the front of that postcard and the ROIs on it. I sent that out. I’m still in the process of creating a newsletter. What I’m going to do is I’m going to have a printing company send out this newsletter every month. I’m trying to reach out to people. Either I’m going to write the newsletter or I’ll see if I can work with somebody else to help me write it.

I need to take myself out of the equation so I know it will 100% get done. What I want to do is I want to touch them every month. The idea is to have some articles on there and write some type of blog posts, and then on the back of the page, have a case study that I’m working on. The month’s newsletter is going to be the case that we’re closing on.

That’s a great idea for you. I’ve got a couple of resources for a newsletter I can put you in touch with. The way that we do our one-on-one coaching is a little bit of an investment for you. We had agreed to that. Would you say you’ve gotten your money back on it so far?

The answer to that question is yes, a million times over. Honestly, I felt like I got my money’s worth on the 1st and 2nd meetings. I’ve been involved in other coaching programs doing this real estate stuff. I’m sure you and other people tuning in to this show have taken them. There are people out there that’ll take your money. I knew right from the start, looking at your content and listening to all the free stuff that you give, that it was going to be a home run right out of the gate. To your question, it’s a 1,000% yes.

You decided to select the bond in our third-party financing option. How difficult was the process?

It was pretty simple. It was easy to do. That’s the thing. I chose to go that route because I can go ahead and pay for it, but I would rather finance it and use my personal money to buy it. If something comes along down the pipe, I can go ahead and buy that note and get more cashflow on it.

You spread your cost of education out over 2 or 3 years and then there’s no prepayment penalty once you close. Pulling the capital made it pretty easy. You were approved within four hours.

It was within 20 to 30 minutes. They called back and said, “You’re pre-approved.” Everything was done within a couple of hours and we were ready to rock and roll.

Everything showed up three days later. They’re mailing and then wiring that stuff for you, so it’s pretty easy to do. You’re doing some amazing stuff. You’ve also been spending time with your kids. One of the things I want to bring up is that other people at your work are probably starting to see a bit of a difference. You had one individual that reached out to you that was initially interested in funding, but then got scared and flaked off a little bit. Thinking back now that we’ve been through it, is there anything that you would do differently about that conversation with him?

It’s one of those things where I shouldn’t chase them. That’s the big thing. I tend to get overexcited on things. When I split my foot and make my decision on something, I will move heaven and earth to do it. That’s the thing that I need to do. I need to take a step back. Not everybody is like that. This individual I work with reached out. I’m a software developer. We have these daily stand-ups. I still own a lot of rental properties. We were talking about that, and he goes, “I didn’t know you did that.”

We had multiple conversations afterward and then he talked about investing. I chased him too much, and that made him a little weary. What I did was I backed off. He was on our stand-up not long ago. He was mentioning something to me about it. I was like, “That’s fine.” What I’m doing is I’m keeping him at arm’s length a little bit. I’m going to let him come to me.

I always bring that up because it’s a learning thing for everybody. We get so excited a lot of times that we can scare away some of our close friends. Not everybody has the same energy that we do. You’re excitable. You’re balls to the wall and focused. When you see an opportunity, you’re out there and making it happen. That’s why I say you’re so coachable because I would give you something to do over the last ten weeks of the holiday and say, “This week, focus on these two things.” You’d go get it done and then you’re like, “What else can I do?” I’m like, “We’ll start on this.”

You’ve got some great stuff. We’ve got your marketing planned down, as you mentioned a little bit about things you’ll be doing on a daily basis and working around some stuff. Before we had this episode, you were already talking about 2 or 3 resources of other deal flows in different parts of the country or different lists. You’re like, “I found another one that this company owns. This other guy owns this. I can reach out to that as well.” You’re out there and finding and funding the deals for you. We built that 6 or 12-month runway for you so that you hopefully put this stuff to work and start knocking off that big income goal. How old are your kids?

I have four. My oldest is 26, then 18, 17, and 15.

 

Have you talked to them about any of your investments, or have they shown any interest in your real estate stuff over the years?

They all know that I do real estate. It’s not so much. It’s one of those things that they don’t have an interest in. I did pretty well before with buying and rehabbing the homes. I made a pretty good living off of it. When they start seeing the notes and the cashflow, my older two would be more interested in it.

What’s a big goal for you in 2022?

It is to replace my job. I know that’s one of those smart goals that you and I talk about where you can’t say, “Replace my job.” Scott worked with me to have some very specific goals that I need to have and need to obtain. I need to talk to so many people each day and make so many offers so that way I can realistically hit that.

You’ve got a plan. We’re just working on that plan for you. Everyone’s plan is completely different. How many hours a week do you think you’re putting into your note and real estate business on the developing side? I don’t mean the rentals that you have because I’m pretty sure those are automated for you for the most part, but on your note business, how many hours a week are you putting in?

I would say between 10 to 15 hours a week. I know I should be doing more, but consistently, I work at least 15 hours a week. I do something every day.

The reason I’m bringing it up is that you’re working from home. You’ve got your job. You’re doing that full-time. You’re working around that with calls, which is great about working from home, but you’re still dad. You’ve got your kids every other week. You’ve got other interests you run. You’re a big runner. Your fitness and mindset are important for you as well. Do you have any advice for those that are reading that might be on the fence to dive into the note business and get started? Is there anything you want to share with them?

I would tell them that if they are thinking about it, do it. I would encourage anybody and everybody to sign up for your mentoring program. If they can’t do the mentoring program right away, then become a member of the WCN crew. It’s $97 a month, which is cheap compared to everything that you get with it. I still have a lot to learn within this note space, but I know where I was before starting with you and then looking at the WCN crew, becoming a member, joining the mentoring ship, and what I have now, it is leaps and bounds.

You can continue to spin your wheels. That’s the thing. If you’re serious about it, then you got to take that investment and put that in you and also in Scott. I knew after seeing the stuff in the WCN crew, it was going to be well worth it. It was one of the best decisions I made.

I appreciate that. Our WCN is our monthly $97 learning time where we’re online and do weekly calls every Monday with the group. You’ve shared some resources. They’ve shared their resources with a little topic. It’s great weekly accountability to keep it rocking and rolling throughout the week as the craziness and chaos of the world get in the way a lot of times. Do you mind if we post your website so people can reach out to you, see what you’re doing, talk with you, and pick your brain?

Yeah. For sure.

I will tell you this. Steph and I love talking about our students. We love bragging about our students. We especially love working with folks that are motivated and hungry. You’re hungry, motivated, and coachable. There is nothing that we haven’t given you that we don’t do ourselves or haven’t done a lot in the past to help us get where we’re at. You’re off rocking and rolling. We’re very proud of you. We look forward to your 2022 and all the continued success.

I appreciate that. Thanks.

That’s going to wrap it up for this episode. Hopefully, this was valuable. If you’re learning about Larry, there are a lot of opportunities available. He was worried about deals and capital like many investors are. You can find deals and funds. It’s easier than you would think. It’s always ten times worse up in your head than these four inches between your ears. There are still plenty of deals and money out there. You’ve just got to put the work in. You’ve got to take the action. If you do, we look forward to seeing you at the top. Go out and have a great day. Enjoy your weekend or week. We’ll talk to you later.  

 

Important Links

• Larry Hoffman
• YouTube Channel – We Close Notes
• http://WeCloseNotes.com

 

About Larry Hoffman

I’m the owner of LJH Investments LLC an Ohio-based real estate investment firm specializing in buying and selling distressed and toxic assets since 2006. My company focuses primarily on the purchase of performing & non-performing 1st and 2nd mortgages on residential and commercial properties across the United States in the 50 largest metroplexes. Our strategy is to purchase this mortgage debt at a fraction of current value (50% or less) and either negotiate with the homeowner or borrower to take control of the property or turn the loan back into a performing loan. Instead of rehabbing the property, our focus is to “rehab the borrower” and create a win, win scenario for our borrowers, the banks, and our investors.