If somebody has bought one note, very rarely are they only going to buy one. This is why finding past and present note buyers and sellers can really help you land more deals. In this episode of the Note Closers Show, Scott Carson shares three different ways to find past and present note buyers and sellers. He also shares how he and his coaching students are leveraging county records, past note lists, LinkedIn, and note platforms to find individual deals that lead to larger lists of note deals. Join in and learn lead sourcing taken to the next level!
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Lead Sourcing – 3 Ways To Find Note Buyers & Sellers
I know it’s been a little while since we’ve released an episode as we are obviously enjoying a little bit of summertime, but also working to come up with new content and topics for each and everybody out there. We get a lot of questions in and putting those questions into potential episodes is one thing that we’ve been excited to do in the past, and we’ll continue to do so here into the future. It’s hard to believe we’ve hit 700 episodes. Once again, thank you to everybody out there who’s read an episode. Check out our YouTube channel or check out any of our episodes on our WeCloseNotes.com website.
When It Seems Like There’s Nothing Out There
This episode is designed to help you get over that hump. We all have that hump, “I’m not finding anything.” One of my biggest pet peeves is when I attend conferences or Meetup groups or I see comments in Facebook posts and Facebook groups, it drives me bonkers. “You can’t find any deals. There are too many note ambassadors. Damn that Donna Bauer, Eddie Speed, and Scott Carson. They’ve added too much competition in the market.”
Here’s the thing, ladies and gentlemen. Competition is good, but there are a lot of deals to go around. There are still a lot of opportunities. If you look at the numbers we had at the end of 2021, $81 million-plus mortgages across the country. We had about a 4% default rate. That’s still roughly 750,000 homes in default for bars, at least 90 days behind.
That’s a lot of distress debt out there. A big chunk of it is government back loans you’re not going to be buying. A big chunk of it is Bank of America, Chase, Citi, Wells Fargo, those big companies that aren’t going to sell it to you to be at a one-off basis. It still means thousands of other distressed deals. Maybe not a traditional one, maybe a contract for deed. Maybe it’s an owner-financed deal as well. Here’s the situation. I’m not amazed by this anymore because I see it over and over. I’m guilty of this. We all like low-hanging fruit. We all like the path of least resistance. How can I do one thing and end up with a ton of opportunities?
We’ve been blessed and gotten fat and bloated like Garfield the cat over the past few years. This is prior to COVID of having companies that had lists of deals. They buy big portfolios. They keep what they want to and then they would look to sell off what they didn’t want to keep or couldn’t get work down in a timely fashion.
Most funds, that’s their biggest goal. They buy portfolios. They work to get notes re-performing. They hold onto those. The ones that can’t get re-performing, they’re looking to sell those off at a percentage above what they paid. If they paid $0.40 to the dollar, they’ll try to sell it at $0.50 on the dollar because they can do that in 90 days. That’s a 40% cash and cash return to stuff they don’t like. That’s a people thing to have on the performing side.
Leads That Lead To Leads
That’s cashflow. That’s generating a nice income. Here’s the thing that always bugs the crap out of me. If you’ve been a note investor for longer than two years, if you’re brand new, this is a strategy that you can do as well. There are all these tapes that I’ve gotten over the years. The tapes come from different funds, banks, stuff like that. Same on those tapes, the addresses. I can go to the county records and do a search and either deed search or, if the property was sold, it’s no longer the note I’m looking after anymore, but I can see who bought and sold the note if I’m doing an assignment search. If it’s a contract for deed, I can go see who the investor was that bought the contract for Window Rock, one of the other bigger funds out there.
It was all on a portfolio of contract for deeds. That leads to thousands of note investors out there. I get it. People are inherently lazy most of the time, but here’s the thing. That means there’s a paper trail. You can go out there. Let’s say one of my competitors got a list of notes and I happened to get their list or had an address. I saw them selling on a platform. All the notes that are available on different platforms out there, you can see who loans it. You can see who the last recorded assignment of mortgage was, or if it’s a contract for deed, who’s the investor on it right now.
A lot of times, you see what they paid for it in a contract for deed. You can go to the county records, which most counties across the country, excluding California, Baltimore, Virginia and Maryland. They’re a little quiet. Arizona is a little quiet on your name searches. You can’t do a name search for the address, but you can do an address search. You can go to the county assessors to search to do parcel. Literally go on to the county recorder’s websites and find out who owned that note or who sold it, who owns it now, who they buy it from, who they bought it from before. This leads to multiple sources for deals. Here’s the thing, if somebody has bought one note, rarely are they only going to buy one. It’s like a glaze. Once you buy one note, you can’t eat just one.
This is one of the things that always cracks me because I see these platforms at listing webs. Listing assets have been on there for a year, six months. I laugh. I’m like, “Those sellers on there, their full-time gig is not being a note investor because if they were, they wouldn’t be listed on websites would be working out or they’d be marketing that to their own database on social media.” A lot of these guys, there’s the name there, they may track down that person’s LinkedIn or Facebook or social media, track that owner down to the note and see what they have. See if they’d be willing to take a lesser price and we’ll be able to see if they’ve got other stuff on their books that they’re looking to get rid of. This strategy works.
I’ll give you a little example. Larry Hoffman, one of our coaching students, saw one note in Cincinnati on a platform. We jumped online. We tracked down that the note had been sold three times. Granite Loan Solutions held it before it was listed. Before Granite, there was another company and then there was another company before that. Where do we find it? One deal led to three potential sources.
Granite Loan Solutions is no longer in business and Revolve Capital, they’re not selling anything in a discount that makes sense. That’s fine. They have their business model. It’s fine, whatever it is. The other two companies that were on that assignment chain were still a business. We reached that one, which turned out to be a California fund. That fund had another eight assets at this one seller that they were looking to sell off their books.
Note seven were performing. One was nonperforming. One was sub-performing, but they sold them at a discount, performing at 60%, 65% of value. It was a great deal because they were motivated and getting these off their books. What else do they have? A portfolio of seconds. They didn’t know the pricing point on that. Seconds aren’t a game. What they wanted was with the price. It also led to more deals.
They had another one of their clients. Their investors had some notes that they were looking to get rid of. It’s led to well over 30 potential deals, from taking that extra step to check the assignment chain to pick up the phone. By all means, it wasn’t one phone call, “We’ll send you everything.” It took some follow-up on Larry’s part. Over a month of back and forth.
He ended up closing on eight deals for more than $200,000. It’s going to yield them something like $3,500 a month in cashflow and a pretty good chump of change. The thing I’m trying to give here, so few people do this. Most people get busy talking or are working on one note and continuously working on that. That’s fine.
Look Further Than The Listing
Honestly, if you self-service, you’re shooting yourself in the foot as a potential for screwing up things. There are so many opportunities out there when it comes to finding more notes in 2022. That’s the thing. We’re seeing tapes come in. When I get a tape in, I immediately go in and see who the owner of that tape is or who is the most recent assignment that’s been filed to.
If it’s the person I’m talking to, great. If it’s not, I know that this person either has purchased and was looking to flip it real fast or they’re a joker broker. What I can do is also go a little bit further back and find out who did they buy this from. If you look at the assignments, oftentimes, what’s on the assignment.
What’s so great about an assignment is it has to be signed and notarized. You will often get a name in clearly typed out ink on the assignment, the name of the person who is responsible for the assignments. It may not be the exact person selling the asset, but if somebody important enough to sign off on the assignment chain. What would you do? You can stock that person.
You can social sleuth. Find that person online. Contact the bank of the lender, “I need to speak with John Smith, the VP.” John Smith will often lead you to talking to somebody else. Here’s the important factor. Here’s where investors fail over 52% of the time. They never follow up. You have to follow up with these people with a phone call, email, text message if you got it, phone message or LinkedIn message if they’re on LinkedIn. These people are busy like anybody else.
I remember when I was a banker and a financial advisor, I was slammed. I dropped everything I was doing to answer your email immediately. We, as Americans, have zero to no patience. If people don’t respond back, “I know they got my text message. I saw that they started typing. Why didn’t they respond back to me?”
This is the thing that you have to work at. If you’ve made a contact and you know it’s the right contact, you’ve got to put it in your calendar to follow back up. You got to put it on your schedule, “I need to call this person on this day. I need to send them an email, a phone call, send them a letter, smoke signal. I need to get the Pony Express,” whatever it might be to get to that right person. Those little steps that most people won’t do, “I don’t have the time for it,” they’re not seeing deals. They’re the ones that are at the conferences or the ones that are online complaining about the fact that they’re not seeing any deals. It gets freaking frustrated.
I’ll literally give you an example here. If you jump on the county records of e major city, the Rust Belt, like Indianapolis, Detroit, let’s go to Columbus, Cincinnati, Akron, Dayton and Cleveland. You could go over to Chicago or Champaign, Illinois. You go over to Anderson. You could go down to the South Bend or West Lafayette. There are many of the major cities and most of the major markets across the Rust Belt states.
If you go search for Harbor Portfolio in the deed search or the county records, Harbor Portfolio was one of the biggest sellers of contract for deeds years ago until they sold off. If you do that search for the last couple of years, pre-COVID, I say 2014 to 2018 would be the hay day, you will find a list of investors that they sold to.
You’ll probably even find some stuff that I bought from them. That gives you a list of LLCs. It may give you a list of some borrowers who may not necessarily contact the individual borrowers in some of these deals, but you would look at the LLCs on that. Jump on and do a Google search for Amy Ventures, Hide Funding, Inverse Asset Fund, whatever the name. You can see they bought it up. I’ll tell you right now, most of the time, when people buy one note, they’re buying more or they have a portfolio they’re looking to get rid of. Many people have had performing notes that maybe still holding for cashflow, but they may also have some nonperforming stuff.
If you’re a serious note investor, at some point, you’re going to have nonperforming. Those are relationships that you want to make and follow up with. Get they’re contacting so you can drop into a drip marketing campaign, “What do you have this month? What do you have this quarter? Something that I do as well and another step that you want to take is you could jump on and go on LinkedIn and type in note investors. I’ll start sending messages and invites to other note investors. “I’m an active note investor as well. I want to see if you had anything that you were looking to sell, performing or nonperforming.” I’m actively buying for my own portfolio. That has led to deals coming in, literally led to a conversation, a guy I’m calling after 5:00. He’s on the East Coast.
Every Opportunity Is An Opportunity
I would probably call him again, but he’s like, “Nonperforming notes, we’ve got some available for sale.” That’s the thing that you have to realize, ladies and gentlemen. There is plenty of opportunities. There are still plenty of loans being originated right now. Think about all the crazy things. Not necessarily the government loans and the low-interest rate loans are going to be exactly attractive to note investors because they’re at 2%, 3%, 4% less or extremely nonperforming.
There’s still going to be a price gap between what people want to pay for a nonperforming note and what our money costs are. Here’s the thing that’s working in your favor too. There are a lot of people that got money dwindling away, evaporating from the crazy market. Inflation is up again for the worst in many years. Every $100 is being dwindled down to $92.
Gas prices are $5 on average across the country. Gas is back more expensive than water. People have money. If they’re not put that money to work, they’re losing buying power. Instead of getting 10% or 12%, people happily get 6%, 7%, 8% now. That reduces your money cost. Those that are paying 12% or half the deals should allow you to go out and buy some assets that turned out pretty good.
Even if it’s a seriously nonperforming note, if you can get it to perform, or you can buy it for $0.50 on the dollar, which you will be able to, don’t worry. You’ve got cheap money. It may very well work for you because if somebody is getting something. I hate to say this, but a certificate of disappointment at 1% is out. PR is beating inflation.
If you sit there making nothing, it’s making nothing. I’m never going to say CD is a great investment vehicle, but at least it’s getting me something. It’s holding. It’s buying value for a year or five years. People out there are nervous. They’re scared. Gas is up. Baby formula is about to be sold on the black market. “I got some shredded carrots. I got some mushy applesauce for you. It’s more expensive than a hit of an eight ball.” Anyway, what I’m trying to get is people are looking for tangible assets that will hold back. Paper is the perfect investment for folks. You don’t have to do the fix and flips.
You don’t have to deal with tenants and evictions. You’re buying notes. You have to foreclose if people aren’t playing ball, but that’s a huge opportunity out there. If you’re getting tapes in from a fund, do a search, or if you’ve got old tapes in an inbox because I save every tape I’ve ever gotten. It’s one of the first things that I do. It’s also a way for me to be able to tell if the tape is active or old.
I had one tape that had the same two Texas assets sent to me from seven different sources in the last few days. I was like, “You don’t own this. I’ve seen these assets directly from the slide before your joker broker.” If you’re getting tapes in, take a look at them. Spend a little time because if the investors sold that tape off to a lot of people, those are potential people to reach out to.
I’ll give you a great example. There’s one fund right now. I’m not going to mention any names. They had a list of 900 assets, 903 to be precise, of nonperforming, some performing. The seller said that he sold everything on that list except eighteen notes. Congratulations, that’s phenomenal. You meet a lot of investors. Ultimately, it was somewhere around 50, 60 investors that ended up buying. I made some offers on it. Something comes back, the product’s fine.
The thing is, I will spend time in the next 60 days, I will go back and start tracking down assignments, so they could file. I will track contract for deeds that have been filed. Name changes on those 900 assets because it will give me a list of investors, note buyers that may ask about nonperforming or performing stuff, where they bought a portfolio.
When they gladly recover some of their initial investment with a little bit of profit and sell the note to me on the 60 plus that I made offers on. Here’s the thing, ladies and gentlemen, it only works if you work. It only will work if you take the time. Carve out a couple hours. The beautiful thing is if you’re working a full-time job, ladies and gentlemen, that’s okay.
If your 9:00 to 5:00 or your 7:00 to 7:00 is booked because you got to get up, get the kids to school or the kids out of bed, you got to get dressed and go to work and then commute time after you’ve punched the clock at 5:00 and you’re not home until 7:00 and you’re sitting there, you can literally get on your laptop while you’re watching the NBA finals or whatever you’re watching on TV at night with your spouse, do a little research and find this information.
If you pull up the assignment, you see that it’s a Texas asset or a Texas LLC, or a Florida LLC, or a Michigan LLC, it’s going to give the address and the name. It may very well give you 2 names, 2 entities, and 2 people that signed off. Those are gold mines for your long-term investments. You need to start building that list of potential note investors, reach out to them, and make connections. You don’t have to spend $1,500 to fly across the country to Dana Point, California, for the IRONMAN convention. You don’t have to fly to Miami Beach or over that neck of the woods for IMN and connect with 200 potential investors.
No, just go to their website. They’ll tell you everybody that’s come and then start connecting with those people. That’s another tip for you. All these hedge funds or all these services conferences share their roster. Maybe they don’t give first name or last name, but they give you the people’s ID or their company name and the job. That’s a wealth of information. “A special asset manager for Access Bank. I might want to reach out to them. A special asset manager for Umpqua Bank, let’s do a search for that on LinkedIn and find out the 1, 2, or 3 people or more that have that job title currently. Let me reach out to them.” You could always reach out to them and say, “I met to connect with you at IMN. I didn’t get a chance to. I’d love to talk with you.”
It’s a warm call, even though he didn’t go. Most people know there are a lot of people they don’t meet at an event. That is one tool that works handily out there. I highly encourage you guys to take a little time. Do a little marketing. Do a little sleuthing because if you’re one of these individuals and you know who you are, who’s out there saying, “There are no deals. I can’t find nothing. Too many note investors are overpaying,” it’s simply because of the fact that you have not evolved.
You have not pivoted was the word of 2020. You’ve got to pivot your marketing and what you’re doing. If you’re not seeing enough deals, it’s from 1 or 2 things. You’re either not contacting enough asset managers or you’re not making enough phone calls either on social media or email or phone calls and doing the whole dialing for dollars.
I know this is an evil thing. The thousand-pound telephone of dialing for dollars is still one of the highest revenue-generating activities that you will find. This is why you have a lot of fix and flippers and people are getting more aggressive and making phone calls out to distressed borrowers. You have to have a distressed mortgage to have a distressed borrower. You have people that are passing away and you’ve got reverse mortgages where people are dying off.
Look Out For Garage Or Yard Sales
That’s a potential investment play. It is a note deal, but you’re more of an REO play on that. We’ve bought some reverse mortgages and worked with some of our students to buy some. Those are great investment opportunities. You subject-to deals. Here’s the thing that you’re looking at. I may do a separate episode on this.
If you’re getting the paper, I know the paper’s a foreign thing, but if you’re getting your American Statesman or Austin American-Statesman or whatever the local paper is, flip on over to the garage sale listings or the estate sales or the yard sales. I guarantee if you track this, you’ll start seeing an increase in yard sales and garage sales, especially now going into the next couple of years as we enter the bear market as we are in recession, because what’s going to happen? Everyone has been living fat and happy high in the hog, as we like to say over the last several years. Market value is going up. People with cash and equity. What would they do with that equity? They go and buy toys or use them for other things.
Now, that number turns. Yes, property buyers are going up, but people are paying more for baby food, gas, water and real estate. Cost of goods are increasing with inflation. People aren’t working as much, or we all know that salaries, hourly wages aren’t going up as they used to be. It’s not going up proportionally to what everything else is costing.
What happens? You have people that are turning to garage sales. They’re turning to the marketplace of Facebook. They’re doing yard sales because they got to pay the bills, some form or fashion. Garage sales could potentially be sitting out in front of the card table, selling off their knickknack, Paddywax, give the dog a bone deals may very well be a distressed property or somebody who is struggling to pay their mortgage.
You should never go up and yell at them. “Are you selling your stuff because you can’t pay your mortgage?” That’s not a good thing to do. It’s embarrassing. You might get very well punched in your big nose. You deserve to. There are times over the last several years, we’ve approached sellers or people aggressively. “Any reason you’re selling all this stuff or anything like that? How’s everything going?”
You will usually have somebody start rattling off. “I can’t keep up with things.” Her husband or wife got laid off. “We can’t afford to stay here. We got to sell this stuff because we’re moving. We’re downsizing. We can’t afford to live here anymore.” “Is there something I can do to help? I’m an investor. I’m in real estate. I help turn problem properties into profitable solutions for all parties involved.”
That’s something to think about. That’s potential deal flow. There are still so many deals around you. There are many distressed deals, whether it’s stressed notes or tracking down previous buyers, sellers, new buyers or new sellers of notes from the county records. Yes, you can check the foreclosure lists. That’s a potential thing, but that’s usually 6 to 12 months down the road. Look at this foreclosure list for those banks that have stuff they’re foreclosing on it as potential leads for the other stuff they have coming down the pipeline.
We were searching up the Bauer Financial list. We compare it quarter to quarter. Bauer Financial will show you the banks, what they have in default in 90 days, but they will also have a column on their spreadsheet when you download this or purchase from BauerFinancial.com of what they have in 30 to 89 delinquencies or lates.
That’s usually a number equal to or greater than what they have in default. That’s coming down the pipeline. There are lots of opportunities out there for you. If you are an active note investor or somebody who gets off their ass to market, instead of sitting and bitching and moaning, which you can sit there and bitch and moan all you want, if that makes you happy, that makes you happy. It’s not going to make you richer and happy. I’m sure as hell not going to help you as this market continues to evolve and you’re even crazier. Take a tip from the note guy here. Go out, market, take some of the tools, take some of the tactics I’ve shared in this episode and apply it.
You can apply multiple or one of them. I don’t know what your schedule is and what your focus is. Somebody asked me the other day, “Can I do this to find seconds?” “Yeah, if you know who the seconds are.” Seconds are way overpriced right now. You’re going to make more money, high returns, bigger checks, and more opportunities in the first position spot. Yes, it’s the same thing. People that have money are looking to put their money to work.
Right now, it’s always easier to raise capital in a bear market than a bull market. Why? It’s because people are scared. If you educate them and teach them what you’re doing and how you’re doing it, they’re not going to run with it. They’d rather write you a check, strike you a check, or wire you funds to get involved. They’ll be happy making an above-average return. An above-average return may be as little as 5%, 6%, 7%, which is cheap money out there for us as investors to go out there and make it pop at returns. Go out, take some action, ladies and gentlemen. I hope this episode was helpful for you.
Once again, as always, thank you so much for reading and sharing this episode. I’d love to hear if you have an idea or topic. Feel free to email me at Scott@WeCloseNotes.com or take the time and schedule a call. I’d love to hear from our readers by going to TalkWithScottCarson.com. That will get you directly to my calendar. I’d love to book a phone call. I’ll give anybody 30 minutes to let you pick my brain or talk about where you want to go or if note investing is the right side. As always, check out our education, our class schedule at WeCloseNotes.com. Go out, take some action, everybody. We’ll see you at the top.
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