Which investments can beat the inflation we’re experiencing right now? On this episode of Note Night in America, Scott breaks down some of the numbers behind the high inflation rate of the United States. He shares the inflation rates for some of our most popular items, homes, construction, and how expensive water and coffee have gotten compared to each other. He also discusses the nine most recommended investments to beat or hedge against inflation and why real estate investments, especially why performing and nonperforming loans are amazing returns depending on your investment strategy, available time and resources. He also discusses some of the opportunities that he and his team have available for passive investors.

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Brace For Minimal Impact With These 9 Investment Options That Beat Inflation

Our topic tonight was all about beating the bank. We did a little discussion on this about filling your cup. I’ve gotten a lot of requests from people, investors, and friends who asked me what I think about the market with this crazy inflation rate that came out. I’ve been doing some research and things. People don’t know I’ve been working on some stuff on the down-low that I’m excited to share with you.

It’s an opportunity, but we all know your dollar is getting less powerful by the month. They came out this first part of January 2022 talking about inflation rising 7% over the past year. It’s the highest increase since 1982. Usually, it’s at 2% or 3%, but it blew up at 7%. There are a lot of things that are getting more expensive. You don’t have to look far to see something, so I went to pull some information. If you look at 1970, what’s a cup of coffee? God knows the average cup of coffee isn’t $2.19. Maybe it is if you are at the gas station or at the truck stop. Here in Texas, we have the Buc-ee’s so you can get a cup of coffee for cheap, but most of them are not over $2. $1.59, they say.

Inflation has changed the price of coffee over time. They say it was originally $0.25 in 1970. It’s at least $1.59 now. I don’t usually get a lot of coffee. I don’t buy Starbucks. I’ve got a place here in town. We usually buy a big bag of beans and roast those or have those roasted for ourselves. I thought, “Let’s look at the water. What are water costs?” This is the scary thing when you think about bottled water. If you’re buying a 20-ounce bottle of water, on average, it costs approximately $1.50.

When you translate that into gallons, the water costs approximately $9.60 per gallon when consumed in a bottle of water form. I spent some time with my mom over Christmas and New Year. She’s like, “I need you to go fill up my gallon buckets.” I’m like, “What’s wrong with the tap water?” “It’s okay but I like clear filtered water.” I’m like, “What’s this going to cost you?” “It’s going to be $0.25 for two gallons. She’s got one of those little water you pull up that you see at the grocery stores for $0.25 that fills up 1 gallon or 2 gallons of water. She’s using that for coffee and drinking water versus out of the tap because she’s on a well.

Think about that. $9.60 per gallon is four times what a gallon of gas costs here in Austin. It’s probably two times what a gallon of gas costs in California, but we have inflation. If you think that’s the only thing that’s crazy, look at all this stuff that’s up in 2021. That’s a pretty big thing from pharmaceutical preparation all the way up to automobiles and automobile parts retailing. Used cars are usually a good measurement of inflation but what I did is I broke this chart down so that it’s a little bit easier for you all to see.

On the lower end, you can see things going up like loan services by 7.3%, dairy products or your gallon of milk is going to go up by a little bit, and air transportation and freight are up by 6%. It hasn’t changed much. Inpatient care, health and beauty retailing, including optical goods is about the same. If you start getting soft drinks, that Coke is going to cost you a little bit more. Cigarettes and tobacco are 8.5%. Food and alcohol retailing like the bars and restaurants is almost 9% inflation plus they can’t get anybody in there to work either too.

I stopped at 8.9% because that was a big difference. Now, if you flip it to the next one, I don’t want you guys to cry. It can be a little bit scary. Some of these numbers are crazy. Equipment parts are up by 12.8%. Footwear, jewelry, and accessories are 16%. In portfolio management, if you’ve got a portfolio of some sort, the stock is going to cost you probably around 16% more. It is increasing fees. Water, transportation, or truck transportation, for all know, is getting expensive like in an auto and other parts.

Fresh fruits and melon is 16.8% increase in inflation. Fresh and dry vegetables are 20% more. Meat is costing you 20% more. Airline passenger services are 20.9%. Residential natural gas is 25.3%. Processed poultry is 26.2%. That’s why you see Wingstop going to chicken thighs because it’s getting expensive for those chicken legs and chicken wings that originally nobody wanted. Fuels and lubricants retailing, industrial chemicals, and jet fuel are up by 52%. It might be the reason why Frontier bought Spirit Airlines.

Automobiles

Homing and heating oil still it’s there. Number two is diesel fuel at 54.9% and gasoline at 65.8%. As I said before, automobiles, auto parts, retailing, especially used cars is usually a good sign of inflation is up 72.4%. We saw this when I was down at my mom’s house, which is just down in Corpus Christi, Texas, about three hours after Warren.

The dealerships there are not like in Dallas, Austin, Houston, or even San Antonio. She lives in the Aransas Pass. It’s a small little community, maybe 10,000 people. The dealership is like, “You can take or leave it.” What used to be a truck that was $20,000 decked out Ford, they’re selling for $40,000 to $50,000 or $60,000. We don’t have ships. The cost of supplies has gone up because the demand is still crazy but the inventory has gone down. We can think of a part of the blockade, but part of it is to deal with COVID and everything else. They see this thing drop before the last quarter. They were like, “We thought we saw a normal thing.” Now, people are a little worried about this.

Real Estate

You can look at other things out there. We all know real estate has been increasing but if you look at where they’re expecting home price forecast for the year, they expect someone to go up. On average, about 5% across the board. They looked at the National Association of Realtors, Zelman, HBS, the Mortgage Bankers Association, Freddie Mac, and Frank Fannie Mae. They still think we’re going to see increases on average of about 5%.

Other areas will be extreme but I also think a decline when you compare to what they talked about the last couple of years. That number has dropped. We’re already starting to see, especially home builders across the country, that a lot of the new listings in markets like Dallas and Houston are not from homeowners. It’s from builders having to list properties trying to get sold and they’re making some big price drops in areas out there.

Maybe you’ve seen that in your area or maybe not. I found this chart quite interesting if you think about inflation and what it would cost now. I’m assuming you guys will find this and I’m going to tell you, you may not like these apples. This was the analogy. First of all, we talk about it being 230 years or 220 years that apples are long gone. If you bought $100 worth of apples to get the same amount in this day’s dollar, it would cost you over $2,100 now, basically what bought you $100 worth of apples back in the day. $100 apple was like almost a forest. Now, you got to do a whole lot more. You see, especially in the last years, how much more expensive things have gotten.

We all know salaries have not kept up with that. The minimum wage has not kept up with that, but it has gotten dramatic. Sometimes, they say an increase in wealth and salaries is good because you’re spending money going from there, but who’s getting crunched? We all know the number of homeless is increasing. We all know the poor are not doing well. The Middle Americans are the ones that are seeing the biggest impact. You need to squeeze from the bottom side. You need to be making $25 to $30 an hour to get by in most major cities.

If you’re making $20 or less in Orlando, you’re at the poverty line for the most part. That poverty line keeps going up, but the wages and income is not increasing. I think it’s why you see a lot of people not going back to basic service jobs because they’re like, “I can do more or the government is going to pay me to stay home,” which I hope that’s not the case, but you get what I’m saying. Looking at the average gives you a bit of a chart to show you how inflation has risen over the last year.

 

In 2021, inflation was at 1.4% to 1.7%, and it’s dramatically increased as supply chains have gotten stuck. As I said, fewer goods increased demands, prices, and inflation by the average across the board. They say we might be at 8%, maybe at 9%. Prior to the end of 2022, there was like, “We’ll be at 2% or 3% by the middle of 2022.” Some people are saying, “No, that’s not the case.”

A lot of comments are like, “No.” You could predict that or you can hold out one hand and do something else on the other hand, and you know what you’re going to do. Your other hand is going to fill up faster. When you look at the cost of building over the last couple of years, the increasing costs of building residential and infrastructure are skyrocketing. As my buddy Jason Bible likes to say, “If you thought the property was expensive now, wait 5 or 10 years.”

Looking at the average cost of materials for the same house in the past twelve months, it’s become more expensive. On average, it is 26% more average to build the exact same house in 2021. It’s ridiculous because of the cost of goods. Lumber is rising, imports. All this stuff is going up. In some cases, it’s 50% or more. This is the thing that scared me. 15% of more and 15% of the country is a scary number.

If you look at inflation, rents are climbing, which is a good thing for us as real estate investors if you’ve got rental property. I’ve seen market value on a couple of our notes go from $600 to $1,000. Here in Austin, Texas, we’ve seen rents increase on rental properties of 35%, 40%, to 50%. People can’t afford that a lot of times, so you have people getting in trouble, and it rolls in with the same fact. You have this snowball of the issues taking place. This was put together by Zillow and Yardi. You guys are familiar with Zillow. Yardi is located here in Austin, Texas. They’re a company that does some rental software that we’ve used in the past. It may linger because rents are climbing.

Many of you are asking, “Where should you put your money?” Let’s talk about this. Obviously, with the banks. People talk about, “Should I put money in the bank?” When I asked a question, it auto-populates so you can tell that people are googling this right now. The average one-year CD has a rate of 0.17%, not even 1%. That’s the average one-year CD and the average five-year CD has a rate of 0.31%. The average one-year jumbo CD is at 0.19%. A jumbo CD is $100,000.

You can go to a five-year jumbo. It’s anywhere from 0.32% to 0.79%. Still, not 1%. 8/10 of 1% for a $100,000 jumbo CD that you’re going time for five years. Here’s the thing. When I was a banker for Bank One and JPMorgan chase back in 2003 and 2004, we saw rates at the 4%, 4.25%, and 4.8% stuff. Now, interest rates were higher and they’re talking about the Fed increasing rates a couple of times, but they chose the state level this time. I also asked the question. 0.06% is the answer. That was for a CD. What’s the average CD right now? I asked this other question. What’s the national average interest rate for savings accounts? It is 0.06%.

I find it funny. Many online banks have savings rates higher than the national average. The higher the rate, the more interest you’ll earn on your savings, but the point is, what are the fees? If you’ve got $1,000 in a savings account, you’re not making 1%, which should be $10 on a $1,000. If you’ve got a fee for $12, that eliminates the interest. Don’t think banks are stupid with annual fees because they’ve designed that to say, “We’re going to say we’re going to pay you some interest, but we’re not going to give you any interest.”

Here’s another thing. When you start looking at numbers on this and you start figuring this out, where is it going? As I said, if you had $100 in your savings account making 1%, you have $101 at the end of the year. If you think about that same $100, with what the numbers are going on right now, if you have a 7% inflation rate, your $100 is not worth $100. It’s worth $93. We are burning a hole in our pocket. If you start figuring it out over the last couple of years, the average inflation is 3% to 4% annually.

Search Engine Investments

You’re giving a 3% or 4% pay bump is keeping up with inflation. You’re not getting ahead for those that are working out there. What are some of the things you can do to protect your money? It was funny because when I pulled this information, it auto-populated. It was the number one in the search engine, investments that are beating inflation right now. There was an article out there. I’m not an accountant or an attorney. This is purely for information purposes only. I’m not here to give you any financial advice or stuff like that. You still want to talk with your attorneys and accountants.

These are some of the things they talked about that can beat inflation in some of the investments. The first thing was gold because when gold increases, it’s a natural thing. It increases the price and value, but gold doesn’t pay you a dividend or an annual interest rate. You can’t walk around with a lump of gold and try to get anything done with it. You could, but you probably can get shot, robbed, or beaten in the head.

Next is commodities. When we have increasing inflation, commodities are often a great place, but you’ve got to have quite a bit of money to play in that space. They talked about having a 60/40 stock-bond portfolio. You’re nice and balanced there, but in the article, when they were giving these numbers or what to do, I was like, “It’s barely keeping up with it if not losing money.” They talked about real estate investment trusts as being not a bad aspect, where there’s a fund going out, buying properties, managing the rentals, and paying you a pretty good return on investment, which is not bad.

The S&P 500 talked about that as well, but number six was real estate income. That’s a great way to exceed, beat inflation, or keep up with it. There’s obviously a variety of different ways you can be a real estate investor. As they said, the con is that you often have to have a huge amount of upfront money to play and make anything happen. You’ve also got to be very active in a couple of places. It makes sense.

They talked about the aggregate bond index. I found this interesting. They talked about leveraged loans or CLOs, which are basically a portfolio of subprime loans. You should invest in a portfolio of subprime loans because they have a high level of debt or low credits where the borrowers make these things. These loans also have higher risks of default and, therefore, more expensive to the borrower, which I found contradictory, but that’s okay. We’re in the note space.

Nonperforming Loans

Back in 2008, we bought a lot of nonperforming loans, and not all of them were subprime loans. A lot of them were A-paper loans, but they talk about these leveraged loan packages. It can be a portfolio, the average weighted rate is around 6% to 7%, and they can go up as interest rates go up because their interest rates go up. They’re making a higher interest rate loan to the borrowers and that kind of stuff. It’s investing. They were talking about subprime loans, whether it’s residential or commercial.

Number nine is TIPS or a Treasury Inflation-Protected Securities. They talked a little about that, but I’m not going to be going into that. What I found out interesting was number six, real estate income. I think we’ve seen that as rents and properties go up. If you’re owning the property or invested something, we’ve seen an increase. As values go up, you’re sitting pretty good on the property value. If you own a note and the value goes up, that’s a good thing because now you’ve got increased equity above what the borrowers owe you, which that equity makes something that the bar wants to keep.

 

Now, if they’re upside down in a negative equity position, that’s usually something that they’re willing to sign over to or potentially work with you to help them modify their loans. If you’re buying debt at a discount, it works out pretty well. What are some of the options? We start talking about some of these real estate investments. You could take your money out and lend it out on like a hard money loan or mezzanine loans as they like to call it. Now, you’re going to see on a hard money loan somewhere between 6% to 8% return because there are hard money lenders out there that will take your money and use your money. They’ll pay you 6% to 8% and they’ll lend that out at 10% to 12% plus 1 to 4 points.

A point is 1% of the loan amount. If they’re making a loan on a $150,000 house, It probably go to 70%. $150,000 times 70% is roughly around $100,000. If you got $100,000, you’re making 6% to 8%. You’re not making any points, and basically, you’re into an asset for roughly $0.70 on the dollar. If the borrower doesn’t pay, they then go to the foreclosure process and pay you back. A lot of these hard money lenders are taking in money, putting it in a fund, and lending it to another fund. It’s like a REIT there for you. That’s not bad if that’s something that you want to do.

This was a big sign to me in April of 2021 in Harris County in Houston and Travis County. You saw a lot of these hard money loan lenders having to foreclose because they got 26% to 30% more expensive to build-outs. The people that originally were on the loans did not have that calculated. Nobody saw that coming or they could not evict the tenants in there when they are rehabbing the property. Whatever it might be, you saw some issues with that.

Now, you could go tax deeds, which a lot of people love tax deeds, tax certificates, and that stuff. The return on that is going to vary by state, whether it’s a tax deed or tax certificate, if there’s a redemption period or not. Usually, across the board is about 12% or higher, depending on where you’re at. In some states, it’s higher than that, but you’ve got a 2 to a 3-year redemption period. You have to know each state’s a little bit different. You got to show up at the auctions, see what’s going on with that stuff, and do a lot of work on that stuff as well. Nonperforming notes are what we’ve cut our teeth on the last few years. You’re seeing a bigger discount. We’re not paying $0.90 on the dollar. A lot of people are over-financing stuff.

With a nonperforming note, depending on what state you’re buying those in, it’s going to be somewhere between a 12-month and a 36-month. If you’re buying in New York, it could be a 36-month foreclosure process. It may take you a few months to get the borrower back on track and then you’ve got twelve months or more seasoning. You’re looking at it over a twelve-month period, but it can be great returns. You’ve got to be hands-on with it, know what’s going on, and have the vendors in place. You got to be willing to communicate, which takes some time out of your schedule.

We have plenty of people there doing nonperforming loans in their spare time but what happens at a point of about somewhere around 15 to 20 notes? You’ve got to bring somebody on to help you out with it. Some people are like, “I don’t want to create another job. I’m tired of toilets, tents, and trash outs so I don’t want to do that.” That’s fine. I didn’t put rentals up here because a lot of people are like, “I don’t want to do rentals.” It becomes more of a bigger job for them.

Re-performing Notes

Nonperforming loans can be great returns, but as I said, it can be a lot of work. If you don’t have the time, you’re juggling on the job, and you don’t want to do a lot of work, there’s another option for you. That could be the performing note side of things, performing or re-performing notes. A performing note is exactly like that. It’s somebody who’s paying on time or has always paid on time. There might be a little glitch here and there if they’re seven days late. It is not really late. A performing note is basically on time.

I re-performing notes, which is what we do a lot of is we buy a lot of nonperforming notes, get them back on track and make payments for twelve months or greater. They’ve paid on time for years, usually paying extra per month or putting a lump sum down to reinstate or modify that loan, which is great. We love it because it is a pretty good return. You get by performing out straight from Fannie and Freddie for a 3% return.

You can also find deals if you’re out hunting down the deal somewhere for 8%, 10%, or 12%. Sometimes, it’s higher on the re-performing side, depending on what’s going on, but we’d like to set realistic expectations there. You could buy all day long at 3% right now. I guarantee you can find millions and millions of loans because a lot of loans are being originated in that amount. Banks and brokers are looking to sell stuff off at par close to that.

On the re-performing side, we’ve seen stuff. As I said before, if an investor came in, bought a nonperforming note, and worked it, they want to sell it now to get the capital back that they put into it plus some of the profits to go out and buy 2 or 3 more. They like that double-down effect. I love that. We do a lot of that, but we also bought a lot of re-performing notes and performing notes too. The beautiful thing about this is that it’s like investing on autopilot. You have a third-party servicing company that’s doing the collections and mailing out your payments to your LLC or your IRA account. They’re doing all the paperwork. If there are any questions, the borrowers call the servicer. They’re not calling you at midnight.

Nobody ever called the bank when the air conditioner broke. Nobody ever called Bank of America when the little Timmy’s rubber ducky got flushed down the toilet and your bathroom is now a river. For a nonperforming loan, what is an estimated ROI? A nonperforming loan will vary because it depends on which way it goes. The number one thing you’re trying to do with a nonperforming loan is trying to get it re-performing. We will take the principal and interest payment times twelve months and divide that by the purchase price to get a rough estimate.

With a nonperforming loan, we’re not doing anything if we’re not going to see at least somewhere around an estimated 15% to 25% return on the get-go. That will vary as we get deeper into due diligence, but when we’re looking at spreadsheets, that’s what we look for. If you’re willing to do the work and learn how to do this stuff, you can make nice returns. It’s just more work than a re-performing loan.

Retirement Account

Nonperforming loans are not for everybody. Some people are like, “I don’t want to do all that work. I would rather just write a check and invest on autopilot.” That is fine. There are ways for those types of individuals to do it. What happens for a lot of folks is they aren’t getting into the market because they’re not looking at deals. They don’t think they’ve got enough money. They’re looking at their retirement accounts or their IRA accounts that they rolled over like, “I don’t have anything I can put to work there. I can’t go buy a property because I don’t have the $100,000 or $200,000. I don’t have $500,000 in my market to get a dog house.”

Opportunities In Mid Level Market

I’ve never talked about this before. I’ve talked about it briefly, but we’ve got some opportunities. After looking at the market and seeing what we’re seeing out there, we see opportunities for some of you guys that are looking to make 6% to 8% on autopilot. We do see a lot of opportunities in that mid-level market. It’s keeping up with inflation. It’s giving you money. You’re not losing money on it. You’re keeping up and we see a lot of people who don’t want to do the work or they can’t do the work, but they would gladly make 6% to 8%, so their money is not losing anything on a monthly basis.

We come across performing loans that I’ve never been late. We always come across re-performing loans that have at least twelve months of seasoning. Seasoning means they’ve been with the servicer for at least twelve months, whether it was newly originated or been re-performing for at least twelve months. We see some pretty good deals. We’ve been working with a client of ours here. We’re looking at buying a portfolio of over 300 performing loans. There’s some smaller value stuff on that, but we got some investments from people that can be putting $5,000 to $100,000-plus to work, making a good ROI on autopilot.

 

A couple of things about how we do it. It’s a pretty simple process. We have our nose to the grind, our ear to the ground, and we get deals sent to us all the time. We come across a variety of different funds that we can take down. We see this stuff happen all the time, and we get portfolios sent to us that people are underbidding because they’re like, “I get all this extra work on my money costs and it costs me 12% or 10%.” What we do is find these portfolios of performing notes paying above a 6% to 8% return. We put it under contract, on our option, and under a loan sale agreement.

For those that are interested, we then reach out to our investor database that are like, “I’ve got some funds or I’m looking for something that’s re-performing.” What do we do? We turn around and sell that note to you and your LLC or your self-directed IRA. We’ll make sure, based on after-servicing costs, that you see at least a 6% to 8% return on investment.

Let’s say the note is paying at 9%. We’ll deduct our fee off of that 9% to where the UPB is where the balance is, and we’ll still make sure, based on the numbers, that you’re getting a 6% to 8%. Maybe the note is paying 10%. We’ll deduct the two points off it to make sure you’re getting 8%. We will find the deal, break it down and do the due diligence, give you the due diligence to review it for yourselves, and if you’re ready to go, we’ll wholesale you the note. A third-party servicing company will handle the payments, the statements, and all the stuff.

They’ll be set up there so your money starts coming in on a monthly basis on the 5th or the 15th of the month, depending on when the servicing company sends the payment. The beautiful thing is if the borrower has any issues, they’re calling the servicer. A lot of people are like, “Scott, what happens if the borrower goes late? The beautiful thing is that we’re going to be buying these and we are buying these below the fair market value. There is a bunch of equity above what’s owed and it is a little bit of a discount and unpaid balance, so if you do have to foreclose, you’re going to be made whole, at least at the foreclosure option.

If not, take the property back in a Deed of Cash For Keys and owning an asset that’s a lot more valuable than what you invested. We stay involved, my team and my staff. I don’t own a servicing company, but I’ve got staff members that used to work for Madison Management. They handle our portfolio. We will stay involved in case something happens with the borrower. If you need somebody to be more aggressive in the outreach, if the borrower does go late and your existing servicing company is not doing well.

Part of what happens in a servicing company is if it’s a performing note, they’re only charging $15 to $25 a month. If it’s nonperforming, they are going to be charging $90 to $95 a month, which can eat the profits, especially if they’re not paying. We get involved on that. We’ll stay on top of the situation for you and make sure that you’re made whole and taken care of. As I said, we don’t own the notes on these. There’ll be set up in your LLCs and your IRA counts. You’re purchasing the deal. We’re taking a wholesale fee off the top to help put an investment together for you.

In a variety of different states and cities, we’ve got some different opportunities that are available right now. One of the things that we’re requiring is making sure that either the tax and insurance are escrowed or the borrower is paying at and providing that to us before ever funding. We’re going to make sure the insurance is paid and that also the taxes are paid or escrowed in for that. A lot of times, your servicing company will keep an eye on that for you, depending on what servicing company you use.

Self-directed IRA Account

There’s a variety that there. We can use any self-directed IRA account, as long as it’s surely a self-directed IRA trustee or custodian. We would not recommend funding these in your name. We are going to require people to be using their LLCs to do this. As I said, we’re glad to help you identify opportunities that are going to pay you a 6% to 8% return on investment. If you’re interested in getting some more information and learning how to beat the bank any more than at 0.7%, 0.19%, or 0.06% and your money is burning a hole in your pocket, or it’s evaporating based on inflation, shoot me an email at Scott@WeClosedNotes.com.

If you’ve got $5,000 or more, we’ve got some opportunities that are short-term and some of those lower amounts that we’re working through. Also, if you’ve got bigger amounts, we’ve got some opportunities to help put a decent return in your pocket where you don’t have to do a lot of the work. You need to evaluate and make sure, “That looks good. I’m comfortable with that.” You’re rocking and rolling.

Once again, you’re not by yourself. There’s a servicing company to help you out there. If you need to, we’re glad to jump in the fray and get involved as well with the borrower getting back on track. If you’d love to talk more about this, schedule a call with me at TalkWithScottCarson.com. It’ll take you directly to my calendar. I’d love to visit with you for 30 minutes and talk about it. Let’s see what you’re looking to do and what kind of funds you want to put to work. Here’s the thing, ladies and gentlemen, if you’ve got money sitting in a savings account, a CD, an IRA account and it’s not making money, it’s just sitting there waiting for you to pull the trigger, you are losing money.

You choose not to take action is causing something to happen. You’re losing more. Fees are being deducted annually from that. You’re not making any money on that. It’s time to put the money to work. If you’re not going to do it, that’s fine. It’s totally up to you. If you want to go out, “I’m going to go find this stuff myself.” That’s great, but feel free to give me a phone call. I’d love to talk with you and see if there’s a way we can create a win-win scenario for you.

We do have opportunities right now for you to get you investing in. Some performing notes have been performing for over 36 months that are yielding a very good 7% to 8% return. The borrowers paid on time for several years. It’s a great opportunity for you to make a really good return. One is a small $15,000 unpaid balance on the value of a property of over $80,000.

Another one that gets $25,000 and the value of that property is $70,000. Those are not my deals. Those are from another investor who came to me and asked me if I would be willing to help him move these two assets because he’s trying to close out an LLC and move on. I would love to talk with you. I’m here to help answer anything I can and help you put your money to work with a variety of different opportunities.

Tony, you’re EIDL loan has to be used towards paying your payroll. We took a loan out as well. If you use the emergency loan, that’s got to be paid towards your payroll, whether you’re paying yourself or your staff. If we use it for something else, we got to pay the money back on it. If I’m going to use it for payroll to keep people employed, I don’t pay any taxes on it. It’s something to think about as well for you if you’ve got other funds and stuff like that sitting out there.

Robert asks, “Is anyone packaging these apps for larger investments?” You can do that. We’re not taking these individual assets and portfolio them together to sell to Wall Street. I had a conversation with a big fund about putting a fund together just for us. I have a fund that we’re working through right now, but there’s also a funny comment that would leverage what we raised to give us 2 or 3 times the amount of what we would raise to go buy bigger deals.

 

I’m pretty stoked about that. I’ll give you a great example. A BK Chapter 13 portfolios, there are some funds that are looking for BK Chapter 13s because they’re on a payment plan and they like to pull them together. As I said, our buddy Jack Krupey had a fund that he ran that way. It was a $150 million fund that just bought that itself. What you see a lot of these big REITs and funds, they’re looking for that $150,000 to $200,000 value assets or greater and only rubbing together. We see a lot of opportunities in that’s sub $150,000, which are great ways to get involved in either performing or nonperforming notes that spend a lot of people’s categories, especially with their IRAs.

Can one get into the note-buying business creatively? Yes, you can. There’s so much private capital on the sidelines not making anything. Ninety-five percent of what we have bought for years has been using other people’s money. There’s a lot of money sitting on the sides making zero that would gladly pay a flat return of 4%, 5%, 6%, or 7% while you’re going out and doing other things with that money like buying notes and using money to find that stuff. You don’t have to have a lot of funds yourself to dive into this. It’s part of what we’ll talk about during our one-day wholesaling class. I have to convert those potential wholesale buyers into funding sources for you in the future.

Once again, don’t forget to check out our one-day Wholesaling Masterclass. If you go to WholesalingNotes.com and get signed up. Use the code NNA to get it to half price. Anthony asked the question, do you buy nonperforming notes and at what sort of discount? I have around $75,000. I’d have to talk to you, Anthony, and take a look at where they’re at. What’s the equity on those? If there is any equity and how far behind they are. Feel free to schedule a call with me, Anthony, at TalkWithScottCarson.com or drop me an email at Scott@WeClosenotes.com.

I’ll be glad to talk to you about your two deals and what you have that you’re looking to get rid of here. Everybody, get signed up now for that one-day class. If you have any questions or looking to put some money to work, reach out to me. I’m glad to talk with you and help get the ball rolling for you. Otherwise, thank you so much for coming on. Although it was valuable for you, take the information and use it. Put it to work for you. The biggest mistake that people are making is inaction. That’s the worst thing you can do because if you take inaction, you are losing money.

You got to step up and do something. Either bring somebody aboard to help you put that money to work or go out and start your honing and kill yourself because Benjamin gets weaker and weaker. He gets nibbled and nibbled. You have to do something now, otherwise not have anything before too long. Thanks again for tuning in. Be safe and we look forward to seeing you all at the top.

 

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