EP 698 – Investing In Notes: An Effective Way To Diversify Your Portfolio With Scott Slackter

NCS 698 Scott | Note Investing

NCS 698 Scott | Note Investing


Many people think of stocks and bonds when investing, but some options can be just as lucrative. One such option is investing in notes. In the Note Closers Show Podcast episode, Scott Carson sits down with note investor Scott Slackter. Slackter shares his journey as a note investor and how he started by finding and brokering owner-financed notes. He also shares his passion for finding performing notes and arbitraging those deals with his investors.

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Investing In Notes: An Effective Way to Diversify Your Portfolio with Scott Slackter

I’m Scott Slackter. I’m the host of the REmarketing Podcast. In this episode, I’ll share with Scott my experience with buying mom-and-pop seller finance notes as well as one of the biggest mistakes I made in this industry. You’re going to love it.

I’m jacked up and excited to have you. We’ve got a fellow Scott on the show. He’s another note investor who’s taking a different approach to note investing. He’s not chasing institutional debt. He started his note investing career chasing owner finance notes. I didn’t have anybody on to talk about that. I’ve had Kristin Gerst and a few others talk about how to create some owner financing and buy that stuff. We had Will Henning from FNAC USA a while back.

I wanted to bring on somebody who is targeted one of their main focuses and talk about that strategy because we get a lot of questions from students like, “If I want to target owner finance notes, what’s the best way to go about it?” I was fortunate enough that Scott reached out to me to have me on his podcast. We had a great time. Scott, we’re honored to have you here on the show.

Thank you for having me. I appreciate you inviting me on. I loved having you on my podcast. I appreciate you showing up. The conversation we had and the information we talked about were pure gold. I’m happy to be here and super excited.

Tell us about yourself. Share your investing journey and why you settled on targeting owner financing. Let’s start there first. Give our audience a bit of a feel for where you’re from because you’ve got a different background than a lot of real estate investors. I want you to share that a little bit. It’s an asset for you.

I started working in behavioral health. I worked in a field called ABA, which stands for Applied Behavior Analysis. I was working one-on-one with autistic children and young adults and utilizing a science called Behavior Analysis, which has a lot of parallels to the investing world because we track data, implement some type of change, track the change and graph it. My job was becoming too stressful for me.

I was working 12 hours a week for 4 days a week. I was getting burned out. I said, “I need to find some other job.” One of the things I found was passive income. Passive income always leads you back to real estate. I started my investment journey by learning everything I could about real estate. The first thing I found was wholesaling.

What I found was when I was trying to wholesale, I was working two jobs. I wasn’t working a job part-time. The way it’s advertised is it’s like flipping houses without flipping houses. You can do this in your spare time. If you want to do it right, no you can’t. If you want to replace your full-time income, no you can’t because there’s a lot of competition out there.

In my real estate education, I came across a book called Simple Man’s Guide to Real Estate. To anyone reading and anyone I’ve ever talked to, I would recommend that book 100%. It was only $100. You get a free mentor for life through email. If you spend a little bit more, you get to talk to the CEO. The organization itself is a nonprofit Christian organization. They do charity.

That book had so many different types of real estate deals and different ways that you could buy a real estate that I had to read it multiple times to understand where the money was going, how the investor was profiting and how the seller was benefiting and moving on with their lives. One of the strategies that popped up was using a note to buy a house. I’m like, “What’s a note?”

It has a section covering how to buy notes. It’s not anywhere near as sophisticated as the things that we’re doing but I thought to myself, “What if I buy a note? Whoever’s note or mortgage that is, they have to pay me. Why am I trying to go from wholesaling to flipping to being a landlord to collect rent and finally get passive income when I could go look for someone’s notes if they’re being for sale?” Sure enough, I joined my local REIA.

Where’s home for you?

I’m from South Jersey. It’s not what people think. It’s not near New York. There’s not a big city. I’m surrounded by farmland and horses. New Jersey is night and day. It is almost like New York City. South Jersey is almost like Bumpkinville. It is night and day here. People meet me and go, “You’re from Jersey. You don’t have a Jersey accent.” I don’t speak with a Jersey accent. That’s for sure.

You joined your local REIA.

They had note training. There’s a guy in our space that you’re familiar with, Eddie Speed. I hooked up with him in his group and learn notes through him. He was mentoring me for a while. He’s the one who taught me everything I know. I’ve since moved on to another mentor but that’s where I initially learned about brokering notes from seller finance notes. I’m not sure you’re familiar with Serina Harris. She’s the one who wrote the curriculum for that.

I know Serina very well. She’s no longer there.

She’s got her own thing going on. She technically taught me to break her notes.

Serina is great. She’s also got her podcast. I don’t know if she’s active with it or not. It’s a story about her journey too. Let’s talk about that. You learn this stuff. For those that are thinking about getting into that aspect, let’s talk about your day-to-day activities. Did you find that was another job on top of your 48 hours working with autistic children? That’s stressful because my ex-wife was constantly doing that. She would get bit, punched and scratched. The kids were taller. She was a little itty-bitty person. It’s stressful. Are you still working full-time in ABA or you’ve been able to transition? What’s going on with that?

I’ve since been able to transition. I’m looking at doing different strategies in the note space like hypothecating, which was something that I wanted to do for a while. Talking with you is showing me some of your resources. Thank you very much for that. It’s giving me some sources to go to where that can be possible. There’s no shortage of notes out there. One of the things I saw as I was brokering was that there’s no shortage. What I have a shortage of is capital.

NCS 698 Scott | Note Investing

Note Investing: There’s no shortage in notes, only a shortage in capital.


There are all these people with their self-directed IRAs. They have money to invest but they’re not making the returns they want. Maybe they’re doing some real estate. Maybe they haven’t tied up in the stock market. Stock markets fluctuate like crazy. When you put your money in real property, especially in a note that has much more long-term income, it’s stable past market fluctuations. When markets do fluctuate, we have huge recessions. In the non-performing space, we have a lot more flexibility in what we can do to recover a note or still profit from it.

Let’s break it down a little bit. You’re looking for investors that have money sitting on the sidelines. You put them in performing notes or non-performing notes. What are you doing? What strategies do you use?

If I’m hypothecating, I want to put it in a performing note. As a passive investor, I usually give them between 6% and 8%. Usually, they’re thrilled with that. They haven’t been seeing that. That’s going to be long-term. That’s not going to change. When interest rates drop, you’re still getting 6% to 8% annually.

It doesn’t fluctuate, especially when you consider the fact that so many people have money sitting in accounts making 0% or 0.01% with Wells Fargo, Chase and Bank of America. The servicing fee makes a negative return in a lot of cases. You’re going out and finding performing notes at above 6% to 8%. How are you finding those deals?

I’ve had a relationship with a family of capital funds. I’ve utilized their inventory for brokering out to them. You have to stay on top of that because they’re flying. There are a lot of brokers associated with this space. There are other capital funds you can reach out to. I haven’t reached out to them yet. I was doing work with Condor Capital. It was another source that I was using. It’s pretty familiar in this space. I would find those notes that made sense for them. Once I figured out their investment goals and how much money they had to deploy, I would find the notes, go through the tape and source them out for them.

The way I run my business is I tend to run it when I have people investing. I don’t have any at the moment in the pipeline but when I do, I always tell them, “I pay for everything. There is a closing cost associated. There is a boarding fee with the servicer. I pay for that. I’ll set up the boarding for you. All you have to do is enter your bank information.” When I work with past investors, I always tell them, “It’s a one-stop-shop. I’ll bring you a couple of notes that fit your criteria. All you have to do is pick one. After that, we’re done. You sign the purchase and sale contract. We’re ready to go.”

You’re making your money on the spread. If it’s a note at 10% and somebody is happy making 6%, you’re adjusting the sales price of that note so that you’re cutting. They’re going to have a 6% annualized return. You’re giving your space for putting the deal together, servicing up, sending them all this stuff. Are you walking away, sitting there, hanging out and getting a monthly portion of the payment or saying, “See you later?”

Once it’s set up, I always check up on them to make sure the payments are coming in. I tell them, “At any time if there’s an issue or if it turns non-performing all of a sudden, reach out to me. I will get you resources.” A lot of times, servicers will but I will guide them through, “Here’s what you need to say to your servicer and the questions you need to ask.”

We also know that not all servicers are created equal. Some like to talk and others don’t want to talk to you.

Sometimes we need to tell them. If they need to do some type of loan modification or debt forgiveness and then recast the loan or if they need to do Cash for Keys, I’ll tell them, “Here’s what you need to tell your servicer.” Make sure they know what they need to do.

Before you got into buying some of these notes and hypothecating these notes out from the different funds, were you ever sending out or targeting mom-and-pop owner finance notes? We get a lot of questions about that. Can you share a little about your strategy for that, why that worked, why that didn’t work or why you think that’s still a viable strategy?

It’s still a good strategy. It’s just a different process. The central process looks like this. You would have already a relationship with a hedge fund or a capital fund that will allow you to do one-offs where you are ready to buy from brokers. You want to make sure you have a very good relationship with them and that they can handle their end of it. What you do is there are public lists you can buy of people who have seller financed their homes within any number of years you can define.

They did it within the last year or five years ago. You will get all the information on the list based on when the note originated and what the interest rate was and the estimated unpaid balance. You will get all that information. What you do is you go through a mail service and target those people. They will get the current address. You will send it to a mail service and have a mailer designed to flip everything together and make sure it looks nice and there’s a good ad copy in there.

I liked an idea you shared with me before about maybe having a link to a video put in there. My mentor shared with me that putting something heavy that falls out with something breaks the psychology of them opening and throwing away mailers because typically, direct mail gets a 3% response rate. It’s so ridiculously small. You will send out $1,000. You might get 30. In my first run, I sent out $1,000 and got three. That was it. That’s not my fault. That’s the fault of the ad copy and the mail itself, which means you have to go back to the drawing board.

We will touch on this. That’s why I stopped doing it. This was when I was first beginning and I didn’t know how to close a note seller to save my life. If you’re spending $1,000 and 3 people call you but your closing skills suck so bad, you lose all 3 and you’re out $1,000. It was an early mistake of mine too. My first list was in areas where the majority of seller finance notes originated from other real estate professionals or people related to real estate, which is like sharks trying to buy from sharks.

It’s not what you want to do. If Eddie taught me something, it was you want to set up a situation where you dictate the terms of the sale to the seller. You want a mom-and-pop seller or a real estate agent. The property was about to be an expired listing. The agent prior to that said, “Why don’t you try owner financing it and offering owner financing?”

They had no idea what owner financing is. They went ahead and did it. When you come out, talk to them and say, “You’re getting these payments,” they don’t understand that. Those are bought at a discount but that rate is negotiable and stuff like that. You have to explain it to them first. It’s much easier to close a sale that way, whereas real estate-based people are more like, “Here’s what I want. That’s all I’m taking.”

One thing a lot of people struggle with is when you’re dealing with a onesie-twosie investor. They sold it and don’t want to take a big discount, especially if they’re getting payments. It happens a lot but not always. Sometimes those situations change. People want to cash out. That’s the thing. I would love to know what the results and responses were, “We will give you $0.80 on the dollar or $0.70 on the dollar.” People say no or yes. What’s your experience with it?

NCS 698 Scott | Note Investing

Note Investing: When you put your money in real property, especially in a note that has much more long-term income, it’s stable.


What’s confusing is when people look at the discount, they get this big sticker shock. The first call from my direct mail was from a roofer from Erie, Pennsylvania, which is outside of Pittsburgh. It’s got a population of 1,000. I was the broker here. I sent all the information to the capital fund for their trade desk guy who went ahead and evaluated it. He sent it back. There was $70,000 left on it. He said, “We will buy it for $40,000.” A $30,000 discount is not bad, especially given the fact that, 1) It’s on a land contract and, 2) It’s in low-populated areas.

If you have to recapture the property, the chances of you holding it for a while are pretty high. He said, “I can’t do that.” I was new so I let him go and said, “If you ever want to sell again, we will re-evaluate it and get you a new quote. It’s no big deal.” An entire year later, he calls me back asking again for a price. This time, it was still about the same thing. It was about $43,000. This time, I had a little more experience.

He still said no but I said, “You see a $30,000 discount. We don’t earn that now. We earn that over the next 240 payments. If you do the math, the per month discount we’re asking you for is $83. We’re only asking you for an $83 discount a month. We’re not trying to steal from you but we’ve got to earn our profit too.” My experience is the sticker shock value of having to educate mom-and-pop sellers because they don’t understand.

Is it part of the policy as well to follow back up and send new mailers and postcards out to 1,000 lists regularly?

Yes. It wasn’t painful enough. He was tied to real estate because he was a roofer. We understood. He was probably in the Pittsburgh REIA. That’s my bet. I knew guys that were taking on passive investors. They would buy the note and sell them. It’s very similar to brokering in the opposite direction. He would sell them at par. I’m like, “You’re making them lose money. You can only profit from a note if you buy it at a little bit of a discount. Otherwise, you’re not even beating inflation. How are you selling these things at par?” He had a bunch of notes that baffled me. I did the math, which is one of my strong suits. I was like, “This doesn’t make sense. You’re taking money.”

You have that happened again. You have a lot of hard moneylenders that are selling stuff they want to sell at a premium. The notes read at 12% but they sell it where they’re seeing a 14% return. I’m like, “I’m not going to pay above the face value for a note. That doesn’t make any sense to me. If I had money sitting on the sidelines if you’re going to bring some people in, that’s great but selling at a premium doesn’t make sense. Selling at par is okay.”

That’s the thing that you run into. A lot of moms-and-pops are self-servicing the note as well. You start adding the cost of service. Performing would cost you $15 to $25 a month to service but there’s still that transfer and then getting the buyer, whoever is in the property or the borrower on track to start paying via ACH or checks instead of money order. There’s always a hiccup in there. People don’t always pay on time depending on the price amount of the loan or the value of the education. They’re not the savviest people.

There were compliance issues sometimes that have to be taken care of. I always tell people in the real estate space, “Please never self-service a note ever. Board it with a service or eat the costs. It’s $15 to $20.” If you want to go super expensive, Security National is one of the most expensive I’ve seen, which was the first note that I bought. It was based in Rockford, Illinois. It was paying $80 a month.

That’s for performing note servicing.

It was a rolling 30 but they were calling them every month, “You’ve got that extra payment.” You get the service and what you paid for. Most servicers that are good for $15 to $20 will accept the payments and send out the invoices.

You do all of that Dodd-Frank compliance. Let’s talk a little about that because you were chasing owner finance notes. Was that an extra step in the process of making sure that the note was Dodd-Frank-compliant? If it originated after 2014, you have to worry about that.

That’s where you go to the attorneys for that and call the underwriter. They will help you look that up, especially when you’re doing your originations. Another one that I find real estate investors don’t use often enough is RMLOs, which call the underwriter. He is an RMLO. He’s not that expensive. He does it for $500. He will tell you when they’re Dodd-Frank-compliant and ready to go for CFPB. If you’re buying a note and somehow you know it’s prior to 2014, sometimes it doesn’t hurt to send it over and see if they will look at it or some other real estate attorney who’s familiar with Dodd-Frank.

You want to make sure it’s also available to foreclose on and everything is written up properly in the disclosure so you have the right to foreclose. I’ve seen some crazy stuff on a single piece of paper. You’ve always heard the story about the note written on a napkin.

People think they got property when they don’t. They’re making the rules tighter. That’s the other thing. I have a colleague of mine who is getting involved in politics, lobbying and stuff like that so that politicians don’t restrict the things we can do in real estate and the note space. We have the Seller Finance Coalition. It’s very similar to that. They’re trying to make sure that it’s still a viable option because, in recessions that we have where people can’t afford a home, there are still some people working that can’t bank qualify. How else are they going to get a new house? You have to do owner financing. I don’t know how else to solve it.

The thing too is there’s a pushback. Elizabeth Warren is not a fan of owner financing. It was one of the big targets of the Seller Finance Coalition. I’m a part that donated to that every year since they started that to lobby against it. You have states like Pennsylvania. The Attorney General in Pennsylvania is cracking down on a contract for deeds written over 9%. They want you to go back and modify it to the bars to 6%. I’m like, “That doesn’t make any sense. You’re dictating to me my terms of selling the property when something was in a contract for deed.”

All they made was a harbor portfolio back in the day but they didn’t have to offer financing. They checked off all the terms. If it was pre-Dodd-Frank, borrower or buyer, beware of that stuff. I saw it best stated as Congress is a bunch of old mentally retarded people thinking that they own stuff and can tell us what to do. They don’t have a lot of common sense.

I might get in trouble for saying this but I knew a guy on YouTube who would run government simulators. He has this Sin City program. The AI was pretty sophisticated. He was trying different government systems for democracy, republic and democratic republic. You can combine them all. He wanted to go wild. He was like, “I’m going to try pure anarchy.” I’m not advocating for those. I don’t want to go to prison. What we found in the video surprised them. The government was broke but they had more billionaires per square mile than ever. It looks like when the government gets out of the way, people start making some money.

They get a little aggressive. They’re grabbing. That’s how all the Russian oligarchs came around in the Soviet Union. People grabbed specific resources or industries and took them over very aggressively. Russia allowed them to do that. We know what’s going on with Ukraine and stuff like that too. Anarchy can be a little crazy.

NCS 698 Scott | Note Investing

Note Investing: You can only profit from a note if you buy it at a little discount. Otherwise, you’re not even beating inflation.


He wasn’t able to build roads fast enough for the people who wanted to come in. I watched it. That’s why I remember it. I’m not advocating for anarchy but that was pretty interesting. For example, Elizabeth Warren is not a fan of seller finance but a common person is seller financing every day. They don’t know they’re doing it. I have a PS5 that costs $1,500. I go to Johnny. Johnny wants it but he doesn’t have $1,500. I go, “Johnny, how about you give me $20 a month until you pay it off?” That’s what seller financing is.

We have so much stuff that’s done in commercial real estate in terms of owner financing and stuff like that. I’m not the biggest fan of using owner financing as an exit strategy unless it’s the last strategy for you. When you look at numbers, it makes more sense to sell the asset, bring in the profit and go from there. You could use a deferred sales trust. That’s a type of owner financing and the opposite of the 1031 exchange, yet don’t have a big tax burden.

You should always check with your accounts and CPAs what exits are for you. It’s a strategy and a great thing to do. Me being technically the lender and you being the lender by notes, we are offering financing to folks that are in the properties either by modifying their terms or doing trial payment plans on the stuff we’re buying or working on a property that we don’t want to rehab. We don’t want to do big fixes so we offer land contractors.

What I like about a few of the mom-and-pops that I want to sell on owner financing is you have an option to give them the opportunity to sell their debt out. They don’t have to sell all of it. If they come into a situation where they need a down payment for a new car, they can go ahead and sell some payments to someone else and get that lump sum of cash and that new car. I like the flexibility that it offers sellers.

You’re talking about doing a partial sale on it where 1 year or 2 years of payments for our buddy Tom Henderson. He always offers, “I’ll give you 10 months for 12 months of payments,” which equates to roughly a 20% return on investment if you start doing the numbers for it. It makes sense. That’s a great thing. You won’t be able to buy a part from a bank. A bank usually is not going to sell it. Somebody can do an owner-financed note.

From investors to mom-and-pop holders, it makes a lot of sense too. What I love about it is if you sell a partial to someone, take that lump sum of cash and go buy another note. It’s a cycle going.

By using your small balances in your IRA accounts to buy a partial, you get a pretty good return for a period and then do the same thing all over again. It’s a smart strategy, especially with small balances on stuff like that. With what you’re doing and when you’re reaching out in hypothecating, what are some of the questions that you’re hearing from people about investing in notes? What are their fears? Do they think they have to be in the deal for 30 years? They struggle with the idea of a note, “I joined the property.” What are some of the things that you’re hearing from folks that you’re talking about when you’re raising capital?

The biggest fear is, “What if they stopped paying? What if the payments stopped coming in?” A lot of my conversations with them have to center around putting them at ease and letting them know that just because they stopped paying doesn’t mean the investment is over. We still have a lot of steps to go. They’re not paying now but we do have options.

I try to go through the different options of what we can do in terms of changing the interest rate, lowering the principal balance since we bought at a discount and modifying the loan. You’re going to be recasting it until it’s a monthly payment that the homeowner can stand with. A lot of times through that mediation because we’re dealing one-on-one, we have a pretty success rate.

I don’t want to say it’s 100%. We have a success rate of going up to people and being able to say to homeowners, “What’s going on? Give me the story. You were paying fine before. You’re not paying now. How can we help? If I lower the interest rate to this and your payments to this, can you afford that?” We can go ahead and have those conversations.

It’s not as scary as a mom-and-pop self-directed IRA investor might be thinking. I always remind them, “At the end of the day, the investment is still supported by the property. At the very least, you can gain possession of the property, turn around, sell it for a profit since we did our work ahead of time and make all of your money back and more. We can turn around and look for a better opportunity.”

That’s the thing people don’t realize. They often think, “I’ve got to be the person to go do it.” They see all these HGTV folks where they’re out there doing the rehab and the physical work. They’re like, “I don’t want to do that.” That’s the great thing about note investing. If you have to rehab a property, it’s not what you should have focused on. That’s why in buying the discounts and occupied assets, somebody is usually taking care of the property.

I saw our good friend Bruce Norris out of California who has been owner-financing homes for years. Years ago, he testified in front of Congress with the thousands of notes that he has originated and how this portfolio is less than a 3% default rate. That’s a pretty good case study for owner financing if you think about that. I was pretty blown away. It was half of what the normal one was at the time. Tell us about Sapiens Real Estate Solutions and your podcast. What are you talking about? What are you doing on there?

A bunch of colleagues and I have come together and formed a podcast called the REmarketing Podcast where we invite real estate professionals on to talk about themselves and their business and showcase what they’re doing in this market. We will ask them a variety of questions. You were on an earlier podcast. Sapiens Real Estate Solutions is my note investing business. I have a couple of sites. That site is specifically for if you have notes to sell and you want to buy, we can give you a quote and talk about buying your note from you and cashing that out. Even sometimes we can do a partial.

I have SapienRES.com. I have a course that I’ve put together and some materials there that will teach the very beginnings of the note business. It’s not getting crazy into detail but it gives you a good bird’s eye view of what it means to invest in a note. A lot of times that I’ve talked with note investors, I’ve found that they think that I’m a lender and then other people think that they can buy their mortgage.

I’ve got to put something together that explains everything and breaks everything down in its simplest terms so everyone understands. If you want to get deeper into it, I offer consultations, coaching and stuff like that. I have ScottSlackter.com, which has basic information about me and ways of reaching out to me. The podcast is the big thing. We have gotten a lot of good names so far. I’m hoping to get Serina Harris on. It has blown up fast.

A podcast is a great way to get out when you’re in people’s ears and you keep connecting with people. It’s a great way for you to add some great folks on. You can pick their brain. We had Dean Graziosi on our show and some other big names like Steve Sims, Greg Reid and Mark Victor Hansen of Chicken Soup for the Soul. We have had some other folks on there. We like to focus on note investors primarily and vendors there but it’s fun to mix in that stuff for marketing and mindset because that’s one of the biggest things about being a real estate investor. You’ve got to have a strong mindset.

I got into a wire fraud scam. A private lender reached out to me on LinkedIn. At first, everything seemed above board. We went ahead and drafted up the promissory note. I was going to pledge the note as collateral for the loan and hypothecate. Everything seemed okay and then things shifted the Bitcoin. I go, “This doesn’t look cool. It’s a weird offshore bank.” I have an IT security background before getting into working with the kids. I went and tracked everything. We tracked it back to South America somewhere. They were faking a bank in the UK. $31,000 was gone. Some of it was credit. I’ve had to keep strong to continue going and running the business.

NCS 698 Scott | Note Investing

Note Investing: If you buy a note before 2014, send it to some real estate attorneys familiar with Dodd-Frank.


What happened with that? Did they wire money, put Bitcoin in and purchase a note? What happened? Talk about that.

They asked me, “There’s this fee and that fee.” It went from regular wirings to, “We need you to turn it into Bitcoin and send it to this wallet.”

Is that to buy the note?

This was my first time hypothecating. I’m like, “Wealthy investors have offshore accounts. Why not? Wealthy investors were probably involved in Bitcoin.” I was scared all the time because this was looking fishy to me but I should have trusted my gut instinct. By that time, it was too late. I turned them into the Feds but the chances of getting my money back were zero.

Let’s talk about transactions and educational experiences here. You were buying a note from somebody. You had a note from a fund.

I was buying a note from a capital fund. I had three of them put together that I was going to buy.

That amount was $31,000 that you’re going to buy those notes for. Is that right roughly?

It was about $105,000.

You had a private investor that said they wanted to buy the notes or wanted to fund. How did that work?

He said he wanted to fund it. He was going to lend me the money to go ahead and buy. He gave me good rates. It was a 6% rate.

It’s one of these things that we see online a lot, “I can lend on anything. I’m willing to lend on these loans.”

It’s something like that. With most of the other people on LinkedIn that reached out, I said, “I buy notes. Are you willing to have that conversation?” They say no. He was the only one to say yes. I was willing to entertain the conversation.

You sign an agreement with him for 6% on the whole $105,000 or $31,000. What was that for?

$31,000 ended up being in fees. It was 100% in finance. It was at a $5,000 processing fee. There was this fee. What happened is once they sent it overseas, they’re like, “We have a transfer fee now.” I’m like, “This is not making sense.” I’m smarter than that but it was a gradual process, “Everything seems legitimate and then it’s going slightly off.” You hang in there a little bit longer thinking, “Maybe this is some rich dude who does things weird. Why can’t you wire the money into my business account and then we’re done with it?”

First of all, kudos to you for keeping going. That would have kicked a lot of people in the teeth and they would have never done anything. This happened a while back. It was your first deal a couple of years ago.

This is my first time hypothecating. This happened years ago.

That happens. You’re doing more deals, “I know not to do that. Let me keep rocking and rolling along the path.”

You will recover. The one that had happened in this business is that you will lose a lot sometimes but then you will make it back. It’s very similar to the stock market too. The stock market will take a dip. You get these emotional sellers. They sell out because their stock is worth nothing. Ten years later, it’s worth a gajillion dollars. There’s this quote by Warren Buffett that says, “The stock market is nothing more than a tool that takes money out of the hands of the impatient and places them in the hands of the patient.”

NCS 698 Scott | Note Investing

Note Investing: Investing in notes is still supported by the property. You can gain possession of the property and then turn around and sell it for a profit.


You’ve got to hold on there. More opportunities are coming down the way. You will pay that back. It sucks but not as long as you take it as a learning experience instead of being caved by it. A lot of that money was debt. Some of it was my money. I have to pay all that back. I’m working on doing that. You keep working on it and chiseling away.

The $31,000 is pure fees. Did you end up buying those three notes or not at all?

No. They didn’t have the capital without the loan. The account is still open and says I have it. It’s so funny. The website has not been shut down.

That’s the thing about Bitcoin. There are ups and downs. There’s still a lot of stuff that can happen. There are a lot of advanced schemes out there. We had a student who got a phone call from the IRS that he needed to go and wire them $2,400 to avoid the cops showing up. He ran down to Western Union and sent $2,500. It was a scam. I’m like, “Did you do anything illegal that you think the cops would show up?” They said, “The IRS called me.” I’m like, “The IRS doesn’t call and shake you down like that.”

They play on your emotions. You have an emotional response. They want you to get scared.

Barbara Corcoran, one of the sharks, the big real estate investor and short-haired agent that has been on there for years, got defrauded out of $400,000 on a deal. Somebody emailed her with a logo from the title company. They emailed her assistant and said, “Here are the wiring instructions for you to wire the funds over for the closing on this.” She’s like, “We’re buying a property about that much.” They wired over $400,000 to this fake account that was only open for a while. That will make you sick. Here’s why it’s always important to double-check, stick with your gut, fall through things and ask people and everybody, “Is this normal to go from there?”

I was working with Eddie at the time. If I reached out to Eddie and said, “What do you think about this situation,” he probably would have had the red alert going off right away. He would have been like, “Here’s what you ask them.” This is something that I’ll share with your readers because it’s gold. If anybody wants to do business with you, you simply ask them, “I’m interested in doing business. That would be great. Do me a favor, go back to your office and send me an example of the last three deals you did. How much money did you land? What property was it?” If they did the deals, it will come out like that. They’re recording them. If they didn’t do the deals, then they’re kicking your tires.

It’s the same thing with proof of funds. It’s asking investors, “If you want to invest in this, send me a pledge letter and a bank statement that shows your stuff and ID.” If it’s with an IRA account, it’s not hard to verify. If you know the person, that’s a different story but I still ask for pledge letters all the time from people that reach out, “How much are you looking to invest? Let’s jump on the phone and talk. Let’s do it via Zoom.”

If the money goes through an escrow account, you need to get that. If it’s coming from a separate IRA account and it’s not self-directed, you need to set up the accounts and get rocking and rolling because one of the filters is getting that phone call from the IRA company, “You have the account set up. The money is there.” They’re looking at your documents to fund, buy or sell. That’s a helpful thing. Kudos for sharing that story.

You’re welcome anytime. If my mistakes can turn into someone else’s lessons and prevent that in the future, I don’t wish that on my worst enemy.

Even on perfectly normal deals, things can happen in different cases. Deals could drag on longer. You get foreclosed on. You’re foreclosing on a borrower who’s dragging stuff out. It’s an act of God. I had a guy that bought a note from me in Florida. He didn’t even check the insurance cost on the water. It was ten times what he normally expected. It has taken longer to foreclose. The insurance costs and the time money is eating up all his profits. I’m like, “That’s one phone call you’ve got to make before you ever close. Know what your insurance costs are.” Scott, what’s the best way for people to reach out to you and connect with you?

They can reach out to me at SapientRES@gmail.com. It’s shorter than my business one, which is SSlackter@SapienRealEstateSolutions.com. You can go to ScottSlackter.com to get more information. If you want to learn more about notes and think about dipping your toes in the water, you can go to SapienRES.com and check that out. As always, go over and check out the podcast we did on REmarketingPodcast.com. Scott Carson was on there having a good time with me shooting it up. For the phone number, you can reach me at (609) 3213-348.

This has been fun, Scott. Thank you for coming and hanging out. Thank you for your experience and for sharing some insight for folks on the nick of facing things. If something stinks, ask.

Thank you again. It has been a pleasure and a blast to be on here. We will talk again in the future for sure.

That’s going to wrap it up for this episode of the show. Check it out. Listen to what Scott said. He shared some insights on not being scared of making mistakes. We’re all going to make mistakes out there sometime especially when getting started but don’t be afraid to reach out, ask and also understand what’s going on in the niche. What do you have to do for marketing?

What is the return on investment? What is your success rate going to be? It’s one of the most important things that you ask. Don’t take the advice of somebody. Ask somebody and figure out what’s going on. That can often be the difference between success and failure. It’s being excited about a strategy or not as well. Go out and take action. We will see you all at the top.


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About Scott Slackter

NCS 698 Scott | Note InvestingScott Slackter is a highly focused professional working in the field of Applied Behavior Analysis. He has been engaged in the field for 16 years and has a prior 4 years of experience in IT as a cybersecurity professional. His experience includes reviewing and analyzing data and other information that lead to formulating plans of action to ensure progress. His focus is always centered around risk management and beneficial outcomes for everyone he works with. His experience in behavior analysis gives him the ability to adapt to changing situations which makes him good at making decisions in many conditions.

He loves creating passive and stable investments for himself and the people he works with. His experience has given him the ability to quickly find the best solutions to people’s needs with their investing goals. He also enjoys showing real estate investors how to creatively structure a property purchase in a way that removes as much risk and out-of-pocket cash as possible.


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