How Does Your Portfolio Compare?

 

Investors have always struggled to track their traditional Wall Street investments with their Main Street portfolio of active and passive real estate investments. Tracking your cash flow and asset growth (or decline) has often taken several websites, spreadsheets, and creative math to find how your hard-earned dollars are working. That is especially important in today’s market, with Wall Street investments getting hit hard and the real estate markets also in decline.

 

So how do you make sense of where you and your investments are at in today’s crazy market? We’ll answer that tonight on Note Night in America while sharing with you a tool to help you track your investment gains and losses to help you know where you are exactly.

 

We are excited to have the CEO and founder of Vyzer.co, Litan Yahav, joining us tonight on Note Night in America. Litan will share his story of being frustrated with tracking his Wall Street and Main Street investments and how his passion for disrupting markets led him to create the complete package of Vyzer for all investors.

 

Want to talk to Scott? Book a call with him HERE.

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Watch the episode here

Listen to the podcast here

 

Vyzer: Your Tracking Solution For Wall Street And Main Street Investments With Litan Yahav

Hopefully, you are doing well. It seems like the markets have had a little bit of a ghoulish feel to them with all the upheaval in the housing markets. Everybody is like, “The sky is falling.” We had a little bit of correction here in Austin, Texas. It’s amazing how everybody thinks, “It’s crashing. It’s failing.” It’s an interesting time to be a real estate investor or an investor as a whole out there. I’m honored to have you join us here.

We’ve got a great topic. It has a lot of merit with what’s going on in the market because I get questions all the time from people on how we track our stuff, “How do you track your active and passive stuff? How do you track your stock markets? How do you track your Wall Street and your Main Street stuff?” We will get to that. I’m glad to have you all join us here. Hopefully, you’re healthy, safe, and rocking and rolling along here. If this is your first time joining us, we are glad to have you. The show has been around in some form or fashion for years now. I’m excited.

Make sure you check our other two podcasts out there. We have our major one, The Note Closers Show. We released an episode that we did with our special guest. It’s a great episode. I highly encourage you to check it out. There are lots of great stuff, tips, and suggestions on The Note Closers Show as we come up on 1.2 million downloads. We are also releasing weekly episodes every Wednesday with the Note Camp Live podcast from Note Camp 2022, which is hard to believe we had.

We’re releasing an episode every Wednesday on there. We’re doing daily episodes of the Note Closers Show every Monday, this show, and then also the replays. Every Wednesday, there’s Note Camp 2022. You have roughly seven different episodes to fill yourself with all the knowledge when it comes to note investing. We’ve got some amazing guests, including our special guests.

I know that you are out there kicking ass and taking names. You probably are wondering how the heck you keep it all together. The biggest thing I want to bring up is if you’re investing and trying to flip stuff to buy in and get out of stuff, and you’re a speculator, you’re going to get burned. There are people already getting burned that bought at the peak of the market.

You have to realize investing is a long-term game. You’re going to get some peaks and valleys, but the stock market always keeps going up. Our housing prices keep going up. If you’re investing in taking action in the market, you will be able to find some amazing deals out there, but how the heck do you track it off? We will get to that here. I see our special guest over there lurking. I imagine he’s probably got a glass of Italian wine somewhere in the Italian countryside. He’s probably here in the United States. He was in Italy where we talked.

You have to give our special guy some credit. This guy is an absolute market disruptor. He’s a former officer in the Israeli Navy. He served his country, which is great. He has also been a disruptor after he disrupted the global diamond industry. This is an interesting story. A lot of us feel like we’re disrupting the market as note investors out there for you that you are doing real estate, finding deals, and then changing the way things people look at things. You’re going to love what we talk about.

He later sold that company, made some money on that stuff, and started investing actively and passively here in the United States in Ohio, Michigan, and a few other places as well. They actively realize, “I like the passive side of things.” He’s also investing passively in several syndications here in the United States. He’s the Founder and CEO of Vyzer.co. He is a badass. We are honored to have the man, the myth, the legend, and somebody who’s changing the market out there. Mr. Litan Yahav is joining us here. What is going on, Litan? How are you doing?

I love your enthusiasm. I’m in Vegas now at a conference. I flew in from Israel. I’m flying to Ohio for another event. I’m grinding.

I was changing emails with Danielle earlier. She’s like, “I’m not going to be on. It’s 3:00 back home in Israel.” I’m like, “I can understand that.” What’s your favorite thing, coffee, Red Bull, or tea? What’s your thing to stay awake?

I’m pretty hydrated. I’m drinking too much coffee. I’m good. Don’t worry about it.

You’re good but there are quite a few different time zones in a few days there for you. We’re honored to have you on. We spent some time going through some stuff and things like that. Do you want to come in and talk about a presentation, bring up the website, or talk a little bit? What would you like to do?

First of all, I love what you’re doing. It’s very different than a bunch of other mainstream real estate investment shows, podcasts, content creators, and stuff like that. It’s super interesting. I also love to get your input. You see a whole different side of things when you talk about real estate investing. Maybe I’ll give you a quick background. I’m 40 years old. I’m married. I have three amazing kids. Sometimes they’re terrorists, but overall, they’re fun. I was born in the States. I’ve been in Israel since I was nine years old. I served in the military there for six years.

I founded my last startup years ago, which went well. I took the money that we made from selling that company. I started actively investing. In the beginning, my co-founder and I bought a few single-family homes, long-term rentals, which turned out to be short-term rentals, and then bad deals but mainly because they were active even though we had a property management firm. It was hard. It was also bad luck and bad decisions but we decided from that moment on we were only doing passive stuff.

Since then, we have invested in a lot of real estate syndications as LP or limited partners, which means we provide the cash. We’re equity partners and aren’t involved at all. We find people we trust and invest with them in the US and Europe. It has been going well over the past few years. Things are changing now across the board. We have not invested in notes yet. We look for people we trust. They do the due diligence, find deal flows, and then send us a presentation. Are we in or out?

We have not had the privilege to invest in notes yet, but one of the things that we have experienced is over the years, our spreadsheets became insane for tracking those passive investments. These are good problems to have, but when you want to be passive, and you’re rigorous over the passiveness, you start to deal with, “I got an email from this general partner I invested with. This is the distribution that we’re going to get. It’s amazing but I don’t even remember how much I invested. Is this on track?”

 

Even if I remember only a few weeks later, it will appear on my bank account as a distribution. I’m going to forget what it’s even related to. There’s a lot of mess there. A few years ago, we built a platform for ourselves to automate that. A bunch of friends wanted it as well. We said, “Let’s build another startup around it.” That’s what we did. That’s what Vyzer is about. I’m happy to dive into different aspects of that. I can dive into the product as well. What do you think is the most interesting?

You hit the nail on the head there. We deal with a lot of folks that come from other backgrounds. Nobody is born out of the womb a real estate investor, a fix and flipper, or a landlord. I’ll speak from my opinion. When I first got into investing, I lost money. I thought I would be the next landlord and have some rentals. I paid the full retail value for my two tenants and the rental properties. I thought it was great because I had great credit scores. They got laid off, and then I got laid off. My company closed.

I empathize with people that are struggling, but you see things a lot going on. I’ll share a little bit of us feeling so close to a lot of banks and talking with the asset managers in institutions large and small. We do most of our marketing as outreach. We’re reaching out to asset managers, “What do you have in your books?” Default rates have been pretty low over the last couple of years with everything. With everything we have happened with COVID, the can got kicked down the road for two years of making people have to pay. I’ve always said, “You can’t do that.”

You will have some people that would love six months to get back on track. They have been laid off. They get a new job. They’re back on track. That’s great. We like working with people, but there’s going to be a specific portion of people that don’t get back on track. They keep taking the free lunch and saying, “President Joe is going to save me.” Years ago, it was, “President Obama is going to save me.”

What’s funny is I track our inbound. When banks and asset managers start to call me and some of my other colleagues in the business asking what we’re buying, I take notice of that, “Why are you shopping and stuff?” In 2021, there’s a major servicing company out of Florida. I won’t mention their name. There are millions of dollars. They have been buying debt for years. They started calling me and asked me if I wanted to buy some performing notes that haven’t been performing for a couple of years at $0.80 on the dollar. I’m like, “What is going on here? What aren’t you telling me?”

Most of the stuff was in Florida, which has a little longer foreclosure timeframe of 12 to 13 months. It can get bogged down. I was like, “What are you telling me? What are your quants telling you that you need to be getting out of this stuff ahead of time because of the foreclosures, COVID, and stuff like that?” We are seeing that. A lot of folks are saying, “There’s not going to be this huge wave of foreclosures.” I would agree with that. Here in the United States, we’re seeing distressed stuff even though they announced that distress was at a lower rate than it has been in years.

People can’t afford the other things to live on. Gas is expensive. The cost of goods, food, and other things is going through the roof because of inflation. It’s hitting them in other ways. At some point, people are going to be making that decision, “Do I pay to put food on the table? Do I pay my mortgage? I can’t survive. I’m paying my mortgage but I have to survive to feed my kids and put gas in my car.”

We are seeing that in waves. There’s a thing that we track called the BauerFinancial list, which is a third-party banking company that tracks all the FDIC quarterly reports that banks are filing. We see how much in default each bank has in 30 to 89 days, which is the second wave. I track each bank that has at least five branches or more. There are almost 1,600 different banking institutions out there. I look at where they’re at branch-wise. You are seeing bigger defaults starting this tidal wave.

Things are happening a little faster here in Texas because it’s a faster foreclosure state in Houston and Dallas, not so much here in Austin but we have started to see a little bit of pickup. Other areas across the country are starting. That wave of distress is starting to come up in a variety of other things, not only credit card debt, student loan debt that’s not being erased, and other things out there. I’ve been excited for 24 months because we see more stuff coming in at discounts that we haven’t seen in a while.

There’s still a little bit of a gap between what banks want to sell stuff for and what I want to buy it for but in the fourth quarter and the first quarter, I’m rolling out my sleeves to buy as much as I can because we know that there’s this tidal wave coming. These banks do not want to hold this stuff any longer, both residential and commercial. There are a lot of opportunities out there if you know where to act and you have the availability to take stuff down. That’s a long-winded answer to your short question.

Everyone around me is in that mode of, “A huge opportunity is coming. We need to sit on cash and then start to gather all this distressed stuff.” I find that it’s the community around you that talks that way but most people don’t understand that when there’s a crisis, that’s when it’s time to buy, whereas most people see a crisis and think, “This is the time to sell or to sit on more cash to get through it,” but the idea is that for people that are privileged enough to have some cash aside to invest, this is the time to roll their sleeves up. Let’s find these opportunities out there.

 

I want to find people who do that because I don’t have the mindset to go and find those opportunities. I find people I trust to do that. I’m willing to pay the premium or the fee for them for whatever they want. I want everyone to win. There are dangerous times ahead. Interest rates are going up. The inflation at the end will go down but it’s going to create a recession for sure before that happens. I’m still sitting on that cash to see where the opportunities come up from.

Vyzer was built in a sense specifically for the passive cashflowing investors because when you look at the 1,500 budgeting apps in the US alone like the mint and personal capitals of the US, they’re all built for the mass market and for people that are more inclined to see what their net worth is and if the stocks or bonds of their portfolios went up or down. For most people, that’s enough but when you get into that mindset of, “I want to generate passive cashflow,” then you’re stuck with a spreadsheet because no one is going to help you track cashflow.

You can pay a bookkeeper or something like that a lot of money a year relatively. That for us wasn’t a solution. For example, many people who are in that mindset of wealth creation and creating cashflow, it’s like, “I want to make sure my cash is deployed. I want to sit on cash but I want to look for opportunities but I also want to make sure when an opportunity comes up that it won’t create a situation where I’m cash poor.” You’re in wealth creation mode. You don’t want to sit on too much cash but you don’t want too little either.

One of the jokes in the industry of those more accredited high net worth is this. CPAs will joke saying, “You’re rich but you’re cash poor because when something comes by, and there’s a capital call or there’s something that you need to pay, you don’t have the money because you didn’t plan it.” There’s a huge component in Vyzer about planning cashflow and then scenario-planning based on that to see, “What’s my situation? How will it look in the future based on my assumptions?”

For example, you buy a note. That note is supposed to generate monthly or quarterly cashflow. You have multiple of those notes but you also have other assets that generate positive cashflow or negative cashflow. You put them all in one place and then see the effect of everything together and how that will look in the future. That’s important for people that are in that mindset. Are people that do invest in notes more sophisticated than the mass market?

I would say so because you have to take a different approach from a banker’s mindset on the cashflow aspect of things versus the property. For most investors, it’s a tangible asset. You buy a property. You’re going to sell it or rent it for one thing. That’s pretty easy but with notes, maybe they’re a little bit more of a gambler. You have to evaluate that borrower, “They didn’t pay. Can they start paying? Do they have the ability to pay? Is the paperwork there?”

There’s a little bit of a social sleuth in there too to determine what the borrower has shown as behaviors in calling in and what they have put on paper as far as hardships and stuff like that. It’s looking, “If they pay on time for twelve months, can they pay some extra? What are the yields on that stuff? If they don’t pay, what’s the route to go? Where is it?” It’s going to vary too by the state it’s in, whether it’s in Texas. It’s faster.

If they don’t perform, we can get them out, foreclose, or evict them evict pretty fast but if it’s in a state like New York or New Jersey, you’re stuck with that bar for three years. If you’ve got to foreclose. That’s negative cashflow. You don’t want to be burning cash and servicing a note without something happening. Each market is a little bit different.

It’s a little more sophisticated because you don’t want to necessarily end up with a property but the property is the tangible asset that’s securing that IOU and mortgage. You’ve got a little bit of a different mindset. When fix and flippers come into the note space, they have a harder time because they’re often overbidding for assets because they think they’re going to take the property back.

I’m like, “That bid is not going to work any good because you’re thinking about the after-repair value. We’re the bank. We don’t want to end up with the property.” It’s a little bit different mindset of that banking mindset versus the fix and flip or the property owner side. It always pays to be the bank because, besides taxes, the bank always gets paid and is either getting paid or taking the property back in some fashion.

Do you usually buy in bulk? Do you buy single notes?

It’s a mixture of both depending on what the bank has available. I bought anywhere from a one-off note to 330 notes at a time. It’s a little bit different due diligence. It’s a longer due diligence period. On one note, you could have 7 days for due diligence or up to 2 weeks. In a portfolio like 330, we had 90 days upfront and then another 6 months even after we closed on the portfolio to evaluate everything and swap bad assets out with good assets in a lot of cases.

When you say 300-plus notes, my mind is like, “How the hell do you track that?” It’s not even a segue into what we do. Do you know which property and the name of the owner or the borrower underneath each of those notes?

There’s a servicing company that does the collections as far as in and out but if you don’t have that service, you’ve got to have that in most states to be a note investor. You have to be a licensed debt collector. Your servicing company has got to be a licensed debt collector. We get a spreadsheet download every month. It’s all line items. You have to take that and then run your spreadsheet calculations. I was like, “This is awesome.”

Out of 300 notes, we had 200 in Sunny that paid on time this month. We’ve got 67 people. We have to reach out to them and get back on track or start the foreclosure process. You’re putting them off with attorneys and paying us fees. It can be a bit of an accounting nightmare if you’re not tracking things and you don’t understand where everything can go for the most part.

My gears are moving, “We need to add some functionality to Vyzer to accommodate those types of scenarios.” There are so many aspects when you build a technological product like this. There are so many things you can build in so many directions. If you don’t focus, then you’re going to do a lot of nothing instead of being amazing at something. I love that. First of all, that situation is crazy. It’s interesting to me. When you see that spreadsheet, do you look at the bottom line like, “What’s the value of these notes? How many are in default? What’s the average return?”

 

We calculate that on a monthly basis and stuff that’s coming in. We start looking at it on the 5th, and then the 15th is when we start looking at it. We’re looking, “What’s the value of the property? What’s the unpaid balance of what the borrower owes?” What we’re buying off is the principal balance but then we have to look at the legal balance too. Those numbers always constantly change. We evaluate where we’re buying as far as the percentage of the value, the percentage of UPB, and the percentage of the legal balance.

Sometimes the legal balance doesn’t matter because they owe more than the property’s worth. You’re constantly having to compare those numbers to what’s the balance of the debt versus the balance and the values of the property. You’re looking at that too and then figuring your ROI off of that. You always have to figure in some default rate too. You’re not going to collect a specific amount because they’re going to go to foreclosure. I’ll give you an example.

When we buy a portfolio, if it’s all owner-occupied, I’m going to probably get 65% of the borrowers back on track of some sort. The other 35% is going to be either them signing the property over, us giving them Cash for Keys, or we end up foreclosing. That can vary on a case-by-case or state-by-state level. I like to break the portfolios up into each state because then you can figure out, “That’s going to cost me $2,000 to foreclose here in North Carolina versus $6,000 in Florida.”

The number that we use to foreclose or servicing costs is what our budget is to provide Cash for Keys or deeds in lieu to make it a little bit simpler. I have a $6,000 budget to give this person cash to walk because I can get the property back sooner. It’s all about selling the asset off. I don’t want to retain the rental property because that’s another management issue, “What is it worth? What can we sell it for at the auction?” Bring that capital and investment back, pay our investor off who funded the deals, turn around, and either reinvest it by doubling down, buying 2 or 3 more with it, and going that route.

Are there funds that do this?

There are funds that do this.

I hear you talking. It sounds like a full-time job.

It’s why I tell note investors, “If you’re going to be full-time in notes or buying notes, you’re not going to be dabbling in rentals, Airbnbs, or wholesaling. It’s a bank.” That’s why banks are banks and not property preservations or short-term rental stuff. The thing is I can do this business anywhere, which is great. I can be here in Austin or Las Vegas, Spain, or the middle of the Atlantic Ocean. The third parties are all doing this stuff. We’re getting a spreadsheet on a weekly basis figuring out where everything is at and directing people from there.

Are those service companies more reputable than the others?

Some are great and some suck. Some are horrible because you’re paying anywhere from $15 a month up to $95 a month for a nonperforming note. Many of them are performing bare necessities for phone calls a month and then some à la carte fees depending on which type of strategy they get to. If they get the bar back on track, there’s a fee for that. If they do a foreclosure or a settlement, there’s a fee for that in a lot of cases. What I did a couple of years ago is I hired a couple of gals from servicing companies that worked and then brought them in-house. It was a lot easier to track that. I had a higher success rate in workouts and getting people back on track versus relying on somebody who doesn’t work for me to report once a month on a spreadsheet.

I would love to dive in. Did we go through the platform the last time we talked?

No. We visited a little bit there on stuff. I wanted to save that.

I’m excited to show you this. This is Vyzer’s platform at the moment. It’s what you see after you sign up and add your info. It’s pretty straightforward at this point. It’s showing you your net worth, assets, liabilities, and cash. The platform and the data are created in multiple ways. You can sync your investor portal. This is holistic, not just for note investors but mainly for people that have more complex investments. The mints and personal capitals are for the mass market.

Once you get into the more sophisticated type of investing, then it becomes more complicated. Many times when you invest like me as a passive investor into these funds or general partnerships, you’re going to get a username and password to a portal. You have multiple portals to log into. The idea for us is to create synchronization through these portals. You can see your bank accounts, brokerage accounts, and all that stuff in about 16,000 institutions.

One of the cool things that a lot of our members are using now is the Magic Box. I don’t know if everyone knows what a family office is. A family office in a sense is a term for something. Ultra-high-net-worth individuals or people with $50 billion to $100 billion will build a team to help manage their wealth. The idea of having that type of team is that you throw everything at them, and they do everything for you, not just the act of managing, selling, and trading stocks and bonds.

They go over all the documents you get from your different investments. They will log into your account and do everything for you. The idea here is to create a virtual family office. The Magic Box is one of the portholes in that. You can throw in any financial document, any note, any Excel spreadsheet, or any PDF. We will analyze, upload, and update it automatically for you. It’s this white glove service where you don’t have to do anything. You can add manual stuff, real estate investments, or private loans.

That’s a great thing because a lot of folks out there are owner-financing properties or lending money out of their individual retirement accounts to investors like me and others to fund transactions on a passive aspect too. That’s good.

These are the more asset types of loans. A note would probably go into the private loan, a managed fund, or something similar. We don’t have a category dedicated specifically to notes. It’s something we’re working on. Probably I’ll reach out. We’re going to work on it together to get all the specific parameters. If I’ll dive into a private loan, then there’s the borrower, John Doe, with a loan or a note.

The idea here is you add, “What’s the interest?” If you threw in your documents, then they will automatically appear here. You won’t have to put in anything manually. The idea is to create also a manual approach for people who want to do it manually for interest rates and how often is the interest repaid or the principal. This tries to take in an umbrella of different types of loans. It needs to be robust. I’m sure this isn’t exactly terminology for the notes that everyone does. It is more focused on any type of loan that people give.

The beautiful thing about that stuff is it’s all numbers, the basic parameters, your principal and interest, the number of payments, the years, the present value, and the future value. It’s all calculated the same.

You see your net worth divided into asset classes and what’s the value of each asset class on real estate. You will see, “How much is my allocation into real estate? What’s my performance in real estate? How much contribution distributions have I done per specific asset?” For example, this is a real estate syndication where you put $200,000 in and then see how much you received overall in the past. My assumptions from this asset are also here in the asset info area showing me my expectations in terms of annual cash-on-cash return, how often distributions if I have any additional commitments, and all the attributes for a specific investment.

What’s the holding entity that I use to invest in this property so that we can then filter out? Show me all my investments through this specific holding entity or all the investments that I did from a specific date. Depending on the granularity you want to see, you can deep dive into it or go high level. All my documents will be in one place. This is on the asset level. If you go back up, then there’s the class level and then the overview. There are so many things we’re adding to this which will add more robustness.

I see you’ve got the liabilities in there too. People can upload the statements from their mortgage themselves, even their credit card statements, and their W-2 form too.

You can link your bank account or your lender into Vyzer as well. It will appear here automatically. You can define also the interest rates for those loans. Everything will appear in your cashflow. The cashflow is the area in Vyzer that aggregates everything into one place and shows you what’s your cash position, what your expected cash events are for October, for example, what has happened or what I approved that happened, how it will look moving forward over the next few years, and what will happen.

“There’s a peak in January ’24. These are all my expectations for cashflow for January of 2024.” You can plan ahead of time. We will let you know ahead of time when there’s a liquidation event coming up or if there’s a big expense coming up because you plan on a balloon payment on a loan. You have that overview but then you can add what-if scenarios there, “What happens if I invest $400,000 into a fund? How would that affect my cashflow moving forward? My 2021 taxes are coming up. That will be $50,000 because I didn’t plan it correctly.”

Everything will appear in one place to make it so much clearer to make decisions. This has been a game-changer for us and all the members that have been using Vyzer because there’s no way unless you build a crazy spreadsheet. If you forget to update it for a month or two, then you can throw it out because it doesn’t match reality. That’s the cashflow side of things.

There are a few aspects we’re building out into this that are still in our pipeline. I’ll give you a quick peek into one of them. This is a prototype to show you also not just what you have but what people like you have in Vyzer. How much money is tracked here on Vyzer? At the moment, we have a little more than $1 billion tracked in the platform. This is a prototype. You see $195 billion but the idea is to show you how much money is tracked on Vyzer, how many people are using it, and what their asset allocation looks like over the different asset classes. There are 52,000 people that are invested in real estate.

 

Let’s dive into that and see where they invested. These specifically are funds or real estate syndications. How many people are invested in each of them? If I dive into one of them, for example, Ashcroft, which is a reputable syndicator, which specific investments have people done through Ashcroft? We create a whole dialogue where people can communicate with each other anonymously based on their actual investments. One of the biggest problems that we have found in the private markets is a lack of transparency. There are so many alternatives. It’s insane.

Fifty thousand of these companies or general partners are in the US alone, ranging between ten investors to thousands of investors. Blackstone, KKR, and Apollo are top-notch in the rest of them. I’ve spoken with endless of these firms. You will ask them, “How do I know that you’re legit and that you’re good?” They will say, “I can send you our information. I can also connect you with five of our investors.” How do I even know those five investors aren’t friends of yours? Maybe they’re legitimate investors but they were only in good deals. You’re not going to connect the ones in the bad deals.

Share that information anonymously. The cool thing is we have had some of these general partners approach us and say, “I love this. I want all of my investors to use Vyzer so that when you launch this benchmarking side, we’re going to already have a track record.” That’s mind-blowing for them because they have no way to show people without them saying something. You don’t trust them if you don’t know them.

That’s the social proof that everybody is looking for. Those are the testimonials and Yelp likes in a basic aspect where everybody can come together and do it anonymously too but it adds credibility to the investment for the company.

It’s also not just people rambling on about their investments. You will probably sit with a group of friends for drinks. There’s that one friend that said, “I did an amazing deal. I made 55% IRR.” It might be true but let’s see the numbers. I want to see the actual cash in your bank account and the documents that justified that. That’s where we come in because the information here is based on people’s actual investments. It’s not what they said they did but what they did base on transactions and documents.

From a privacy standpoint, this is only if people opt for it. People can opt-out. None of this information won’t be shared. They won’t have access to it either. This is might sound like a cliché but we’re all military background people. For us, security and privacy are above everything but we pay hackers to try and hack us to make sure that we can sleep well at night knowing that everything is secure. That aspect of privacy is super important as well.

We have heard that more people want to share the information as opposed to those that want to keep their cards in their chests. This is going to be amazing. We hope to get this out in a few. We want to add insurance, taxes, and different asset classes and create more functionality with the platform. We want to generate your balance sheet and personal financial state. A lot of these people go and take loans to buy properties. You need to generate a personal financial statement for that usually because many of these people don’t even have W-2 incomes.

The idea is to have the ability to export the information from here either directly as a document report or as a spreadsheet. You can send it to people and give access to your CPA to log in and see your information so that there’s no ping-pong. They log in and see it. We’re not trying to replace the tactical personas in the investment world because there are going to be people that do that. A financial advisor will probably manage my public portfolio better than I’ll do it on my own for sure.

We don’t want to do that in the platform because we don’t want any conflict of interest. I don’t want to try and convince people to trade here and do anything. That’s also why the business model of this is simple and straightforward. It’s a subscription model. It’s $1,000 a year or $100 a month. There’s a 30-day trial period and 90 days of money back. I don’t want anyone to use Vyzer if they don’t get value from it. People that are using this are like, “This is so cheap.” That sounds like a marketing aspect but it’s not.

We wanted it to feel super cheap because we wanted to bring a ton of value. The more people that use it, the more value they will receive because of the benchmarking side of it. We need money to maintain the product. We have raised about $6.5 million in venture capital, which gives us enough runway but we want to be self-sustainable and profitable so we can keep building this and bring a ton of value to people. That’s a quick overview of the platform and what we’re building in the value proposition.

 

Besides some of these funds, have you had syndications come to you that you’ve invested with, “This is a great way to roll it out. We want to roll this out to all of our syndication members and investors as well.”

In syndication, there’s a general partner of the syndication and then the limited partners or the investors like me. We have spoken to dozens of syndications, operators, and general partners. I was surprised. The vast majority of them want full transparency. It’s a fun fact to know that they want transparency. They’re not allowed to have full transparency because of the SEC because you can’t blow out all your information to the world but if LPs use Vyzer and then the LPs display their information to themselves to get value but also anonymously with others, then the syndicator gets that reputation.

We have had them reach out to us. We have had a bunch of different players in the industry reach out and want to use this for different aspects. We’re focused on what we’re doing now. My customer will never be the general partner or the syndicator. I don’t want them to pay for this because then I’m going to have a conflict of interest. I’m going to rank them. I don’t want a syndicator who has a bad ranking to come out to me and say, “I’m paying you money. Get rid of my ranking because I don’t want a conflict of interest.” I hope that makes sense.

It’s a great way though if they’ve got their LPs on there for them to have transparency as much as they can on the deal, communication, and stuff like that. That’s phenomenal.

I was blown away when some of these GPs saw this, reached out, and said, “I want all my LPs to use Vyzer because of that. I want to have a track record. I trust that it’s a good track record. I want it to be publicly reviewed here.”

Most of those LPs aren’t invested in one thing. They’re invested in a variety of different investments as well too. It’s a great way to keep it all friendly under the sun.

That’s the objective here. People will share not just that information but they will track everything. It might start from one but then they will get the value from one and then add hopefully more so they get full visibility of what they have. It will expand on that. That’s what we call a network effect in the startup world. The more value they get from putting information, the more value they want to contribute to it and the more people will need to use it. This flywheel hopefully will create a ton of value for a lot of people.

 

As a note investor, I’m paying $90 a month to manage one nonperforming note from a servicing company. Your costs are way cheaper. The value exceeds way what you’re charging for it. I’m giving you a little bit of perspective on that. For folks, I’m like, “That’s awesome. I could put everything in one spot. I can put my stuff in on the loans on there and track that stuff.” We could apply this to the industry in a lot of cases and value that stuff.

What do you do with the 300-plus notes and all the other stuff?

It’s a report from four different servicing companies with a spreadsheet calculating it all together on a portfolio-by-portfolio basis at the end of the month. We evaluate and then run our numbers quarterly to see where everything is at. We have a bit of an idea of what we’re doing monthly on it but we do it quarterly because people will oftentimes get caught up. They will pay it a month or two months at a time sometimes. That’s why we do it on a quarterly basis. Our payouts are quarterly to our investors.

Do you manage that as a business? Is it on a personal level? Do you get the overview of your net worth including those notes? Is it like, “All my notes are on one side of it, and then there’s a different document that I use to manage my personal net worth.”

There are two separate things. I have the stuff that I own, stuff that I’m partnering on with investors, and then other real estates that I own separately. It’s a different bundle. I have to evaluate it individually like most people are doing but this is something I’m going to start using.

When you partner with investors, do you buy a chunk or a bulk of notes together? Each investor pitches in a different amount of money.

We do syndication on a portfolio. We’re in the process of working on getting a Reg-A approved. We’re going through all that SEC stuff, which is pretty close. There are a couple of things we could be doing but I’m excited to get that approved by the SEC. That will take it to a whole different level. We have been working on that for months. I’ve got such a good brand. We did such a great job marketing.

I don’t think it will be difficult for us to raise capital. We do them on individual deals. If we buy a pool of ten notes, we will bring in different investors. They will say, “You’re going to fund these three individually. We agree with you. We will fund these two with you. You will individually fund these five in a lot of cases depending on what they’re looking for.”

We’re sitting on deals that will be 24 to 36 months because that will give us time to get the bar back on track and have them turn into a paying note for 12 to 18 months. We determine after that payment history, “If we bought it at $0.50 on the dollar, now we could sell it to Wall Street at $0.80 or $0.90. If we buy in a state that takes a little bit longer to foreclose, then they file for bankruptcy. That gives us enough time to go through that and set realistic expectations.” To under-promise and over-deliver is what we like to do.

That’s the best way to do it. Be conservative. What type of IRR do you expect from those types of deals?

If it’s an occupied portfolio, we’re looking to see at least 25%. We’re expecting to give half of that to our investors. We’re retaining the other half. If it’s going to be vacant assets because we will end up buying some vacant stuff in foreclosing, that’s closer to a 15% to 20% yield because there are more capital cost expenditures in that with the rehab than the foreclosure costs for the most part.

You’re the first lien in all of them.

I’m only buying first liens. That’s all I buy. The only things that wipe us out is God and taxes. Insurance covers half of that most of the time. Unless you’re buying new stuff in Florida that nobody is insuring. We had the same thing happen in Houston a few years back. That’s the thing. We try to set our numbers conservatively on that. I’ve gotten in trouble in the past. It was going to be a twelve-month deal. It took 24 months. We have changed and learned from this.

During COVID, nobody expected to be able to foreclose for two years. That was a lot of explaining. People were very understanding. You need to communicate to your investors what’s going on. Most people understand that as long as you’ve got a solution. That’s what people want to hear more so than anything else, “Shit is going to happen. How are you going to fix it?”

From a syndication perspective at least as an LP, one of the most important aspects is who you invest with. As long as you find people that you can trust and that will not screw you over when shit hits the fan, that’s what’s most important. Things happen. It’s all right as long as there’s communication and it’s all fully transparent. Shit happens but it’s so important who you invest with.

 

That’s the thing. It’s under-promising if you see somebody over-promising. BlackRock had two real estate funds that crashed. They rolled them into something else without any type of transparency. Was it $500 million or something like that between the two funds? They overpaid for real estate. Was it 40% or more of the S&P 500 or zombie companies?

They’re burning more cash than they’re making. Sometimes it would be easier to have a barbecue pit, dump your wallet in there, and light it on fire. We’ve got a question here, “Is there a level that you’re looking for or a specific investor size, accredited and sophisticated?” This guy goes, “I’m not a credit investor but I’ve got a bunch of real estates that I’m looking for help on tracking.”

The segment that we’re looking to serve is a little ambiguous. At the end of the day, when you have to segmentize people with complex portfolios, people that are accredited usually have a net worth between $1 million to $20 million but that doesn’t mean that they have a complex for sure. You can have $15 million in investible assets or your net worth and have a simple portfolio. It’s the stock, public markets, a house, a car, and a boat. That’s not complex. You can have $500,000 or a few hundred thousand, be scattered around a bunch of different properties, and have a complex portfolio. At the end of the day, if it’s a complex portfolio, then we can bring value. If it’s not complex, then we probably won’t.

People are asking, “How do I get signed up?” It’s easy. The website is Vyzer.co. If you put in the code WCN, that’s a 10% discount off of the signup for you. It’s Vyzer.co/wcn. Take advantage of that. You’ve got a trial period there for folks to test it out and play around with it as well.

When you sign up, there’s a short questionnaire to make sure it gets set up for you. There’s this demo account. You can play around with it without any credit card or anything like that. You sign up and play around with it. Once you decide you want to start using your information, then there’s a credit card. A 30-day trial starts.

When you show the account, there’s a whole variety of different investments on there, syndications, funds, and real estate. It even had a little small part down there for the crypto aspect of things. You’ve got every asset class in there. You may not have the notes but you’ve got the stuff in there based on what you showed. It’s easy enough to fill in that stuff there. You’ve done a great job. How long have you been working on this?

We founded the company. We launched a beta version of this at the beginning of 2022. We went live. Building a consumer software product this complex is hard, but the feedback we’re getting from the market has been amazing. That’s pushing us forward with this. Things are going well. We have been working on this for a while. We have an amazing team of engineers, designers, products, and people in marketing. It’s an amazing team. Most of us are based in Israel. We have some people in the US.

We’re working hard. We’re involved with our community of members and adding features and functionalities based on conversations and input from them. For example, there are two aspects that were added. One of them was the ability to add in your percentage of holdings. You’re a group of people that don’t want to put a minimum. Many times, these syndications have a minimum of $50,000 or $100,000. You don’t want to put the whole thing in. You get a group of friends or people together. Each one chips in $20,000. There are five people. You put in $20,000, but you’re a group.

How do you track that? We added the ability to add in a percentage and create an entity within the group and how much percentage you are within that. That helps track it. The whole filter aspect is also something we added so people can generate those reports based on filters, “Show me everything.” We’re always talking with our community and adding more functionality based on that. There’s a lot on the long road map and a lot of stuff that we’re adding down the road.

I love that feature because that’s a great feature. People are using their self-directed IRAs. They use a little bit from their traditional and solo 401(k). They may partner with their wife’s IRA and stuff like that to be able to track that stuff. That’s great that you’ve integrated that feature. What event are you in Las Vegas?

It’s called Money20/20. It’s the largest FinTech or Financial Technology event. There are a bunch of banks here and a lot of investors. It’s mind-boggling. There are so many people here. The event hall here is two football fields. It’s crazy.

Where are you at? Caesars Palace?

The Venician. It’s pretty massive. It’s going well though. My friend and I are out here meeting interesting people. Danielle and I were at BiggerPockets, which was also pretty amazing. We have been starting to go to these events to interact both with customers and other players in our industry to see how we can provide as much value as possible. We want to collaborate even with some startups that provide tax planning because that’s a whole world on its own.

Once you open the tax aspect of it, it’s like Pandora’s box. There are a lot of liabilities. We want to make sure that we’re doing that well. We’re going to probably partner with someone on that to bring that value to the table. Down the road, we’re thinking about adding some more functionality. This is a year or two, but once people use it and all their information is in it, why don’t we also provide liquidity?

If someone has a private position in a private company and syndication, they want to liquidate that position for a discount, “I have a $50,000 position in this syndication. I want to sell it for $45,000 because I need the cash.” Maybe someone else on the platform wants to buy it from you. We can facilitate that. That would be a ton of value, or if someone wants to create their joint venture and investigate it as AngelList does. There are a bunch of things we want to add and bring a lot of value down the road. Some of it will be in-house. Some of it will be with partnerships.

I’ll be sending you and Danielle a few more names to reach out to some folks in the industry and things like that. You could add value to there with what you’re doing. The website is Vyzer.co. Check it out. Play around with it. It’s an amazing tool. I’ve been blown away by it. I’m looking forward to using it more as well with what we’re doing out there. Litan, thanks so much for coming to the show. We have to get you some sleep and coffee, so you’re ready to rock and roll, brother.

This is amazing. Thank you so much. Keep up the amazing work.

Thanks. You too. We will be in touch shortly on some things. Take advantage of Vyzer.co/wcn, get your 10% discount and get signed up to start playing with it. Go out and take some action. If you control your money, you control your future. Take advantage of it. The best way to know is to know. Put it all together. You say, “I don’t know.” You need to know where the opportunities are and what you have so you can act when opportunities present themselves. Go out and take some action, everybody. We will see you all at the top.

 

Important Links

• The Note Closers Show
• Note Camp Live
• Note Camp 2022
• Vyzer.co
• BauerFinancial
• Ashcroft
• Blackstone
• KKR
• Apollo
• BlackRock
• Vyzer.co/wcn
• Money20/20
• BiggerPockets
• AngelList

 

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