Closing your first note deal can be scary and nerve-wracking. But it doesn’t have to be if you’re prepared and you know what you’re doing. Scott Carson gives a rundown on his very first experience of closing a note deal and wants to inspire everybody else that they can do the same, even better. He shares that it helps to be highly motivated, and when you find a deal, you have to work through it. Post it everywhere, email your contacts, make this deal known to everyone and understand it from the inside out. Scott says that you’ll be more confident when you know your deal, and people will see that right through you. Learn from Scott’s first-hand experience to successfully close your first note deal.
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What You Need To Keep In Mind If You Want To Close Your First Note Deal Successfully
I’m glad to have you all here. It has been a great day. Things are rocking and rolling along. I’ve got a little skip in my step. I enjoyed putting this webinar together. Sometimes, when Monday night rolls around or even Sunday night, I’m like, “What am I going to talk about the next day?” As I was looking through things, those past moments, something popped up that I was just surprised about. This day is the anniversary day of one of the first big deals that I did with a huge bank. One of the big ten banks out there.
I thought, “What a great thing to talk about,” because I remember how scared shitless I was to get this deal done. How nervous I was in submitting the bids, making the phone calls and going from there. I thought I would share a deal and walk you through it a little bit as best as I can. It was enjoyable going through my emails to find lists and finding things about this deal, things that sprung up from it. I encourage you to ask questions and if you’re scared or nervous about doing your first deal, you’ve been educating yourself, you’re overeducated, you’re over motivated but under delated.
We’re going to have fun here. I encourage you to pick up the phone. Give me a holler at TalkWithScottCarson.com if you’re one of those that are hitting mind blocks and struggling a little bit. Hopefully, you’d all know that I care. I love each and every one of you that are on here but I want you to experience the type of day that I had because it’s a great day. Not only closing on a deal but getting approval on a couple more and seeing some other things pop up really makes it a great Monday. I’m honored to have you here. I love you all. Let’s get into the content.
Closing your first note deal. We all have to start somewhere. Ladies and gentlemen, I can’t get you out of the starting blocks. The sad thing out there, with all the people that we’ve taught over the last few years since 2010, 5% of people take action. Out of that 5%, there’s about 1% of people who do this on a full-time basis and have an economic impact on their bottom line. I’ve seen people that have closed deals, they make $30,000, $40,000. They stopped doing it and go back to their job, which blew my brain out. I don’t understand. We all got to start somewhere. People love looking at deals but they get confused or scared to take action. We all love jumping on Watermark Exchange or Paperstac or LoopNet or NoteExpo to look at deals. We go into the workshop, “I want to look at the spreadsheets,” but then it’s like, “What am I going to do? How do I make a bid? What do I do next,” which is just pick something and take action.
I’m going to walk you through exactly what I did on this first win and how you can basically just do the exact same things that I did to rinse and repeat. Step by step of exactly what I did. They’re going to be a few things I’m going to skim over. I’m not going to dive into looking at the collateral files. I’ll give you a brief look at that stuff but guys and gals, you can replicate this. This is not a difficult thing to do. I’m going to tell you, I was a scared little man when I did this but I was very highly motivated.
When I think back in 2010, I’d been divorced for two years. I had a couple of deals that were eating my freaking lunch as the market was crashing out there. I had a couple of rehabs. I was living in a 5-bedroom, 4-bath, 4,400 square foot house on an acre, me, my dog and my cat. Princess, the Golden Lab and Mr. Bill, the great Tabby. There were rooms that I’d rehabbed that I never stepped into once we finished repair and it was eating my lunch. I bought it at $180,000 and it was worth $300,000. The market tanked and it went down to where it was worth $150,000 and I was into it for close to $200,000.
Another deal that I was so excited about. It was my dream house. I was set up and it became a nightmare. I think a lot of people go through that. The idea is you don’t have to be the sharpest tool in the shed if you keep it simple silly and focus on a couple of things that we’ll go through the night. I know it can be overwhelming when you get all sorts of lists in and exit strategies. It’s pretty simple.
When I was looking at this deal, I was thinking back to how highly motivated I was when I was looking at this deal. I was calling asset managers three days a week. I didn’t have much else going on, trying to get rid of these two investment properties. It was not fun. Here’s the thing. I had nothing to lose. I had nothing to lose. There’s nothing I could do that would put me in the worst situation, basically, not at the bottom of the barrel but it was bottom walking up. I love this deal so much. It was different than me just dealing with little small onesie-twosie here and there. This was a major bank. This was a feather in my cap and it pushed me to do some bigger things and going from there.
I’ll start here with a deal I lost. It all started with this four-unit. It’s the new picture of this property now on Airport Boulevard. It is a coin-operated laundry. They had a payday check place and there was also a Domino’s Pizza in here. This was a property here in Austin, Texas. I saw it on LoopNet. I was excited about it. I had money lined up to take it down and then the note got sold. I’m like, “What do you mean the note got sold on this?” I was familiar with debt, note investing, wrapped around. GreenPoint Mortgage sold the note. I’m like, “Really?” I went online. I pulled their information and GreenPoint Mortgage was a division of Capital One. What’s in your wallet? I was like, “Capital One is selling small commercials. They’re not selling residential notes.” I would say maybe doggone determination just to say, “I’m going to get on that list. I’m going to find out and see what else they have.” That’s what I did
It all started with this deal getting pulled out from underneath me. I was going to flip the property and it got sold. I don’t remember the specific details of it but I remember I was disappointed but it led to something else. I knew that Capital One was selling notes because that’s what happened. I could see the assignment. It’s some of the things I’ve talked to you about before in previous workshops. I started reaching out. I would spend Tuesday, Wednesday and Thursday of the week calling asset managers. I would say dialing for dollars, like something out of The Pursuit of Happyness or The Wolf of Wall Street knocking out 50 to 100 phone calls.
From that point on, I spent at least three weeks calling an asset manager four days a week. Over the three weeks, I made it a special purpose trying to track down Capital One. I wasn’t just calling Capital One but over those three weeks I know that there were at least 70 phone calls I made to Capital One trying to get to the right department. I joke about this. I got transferred so many times to Pakistan or India or call centers and I have to start all over again. Finally, leveraging Linkedin, get bounced around and probably the process of elimination of every extension at Capital One, I got into the right person on the phone, Amy Grasso. She’s no longer there. She’s moved on for Capital One but I have to give a lot of credit to Amy.
We had a great conversation on the phone. She sent me a nondisclosure agreement which I signed and got back into him and then she sent me this list, the first huge list of small-balance commercial loans. Small balance, not a residential loan. Small balance, sub-million for the most part. I found that list. I have been looking and looking in my emails for this list over the last month or two because I can’t find it. I was almost pulling my old laptop trying to see what’s on there. I finally tracked it down in my email and I was just laughing at it. I’m looking at this list and seeing the limited information on the spreadsheet and I was able to pull something out of my womb but making something work.
I didn’t have it near the information that you see on spreadsheets now and I had to become the Sherlock Holmes of the deal to try to find it up. Here’s the first page. This is page three and you hear me talk about this. This is a 31-page. There’s a cover page to it that was basically blank but 32 pages and this is a small font. Can you agree? It is so freaking small and it’s all their balances. It’s mostly under $1 million. There is an apartment in LA, 533 Fedora Street. This was a nice one. I ended up flipping this one and making $100,000 on this. This was a sixteen-unit apartment complex. I get this listing and I’m flipping through it. I look at Texas, I flipped back to California and I see San Diego. I Google it. It’s 4725 Mansfield Street. $468,000 was the balance, they said. It was originated in 2006. It was interest-only at 7.13% over a 30-year term. They were 80 months through it.
The original appraisal was $720,000 and the appraisal had gone down to $699,000. That’s all the information I had on this originally. I’m like, “Okay,” but 31 pages of stuff and I picked this one out of there. If you Google it and there it is. That’s the apartment complex. Picture of what it looked like that day. I found this photo in the mass wealth of photos we’ve taken and I cracked up about it. I started my due diligence. I started doing due diligence on this spreadsheet by Googling it and looking at it. I found out it was an eight-unit apartment complex. It’s 811s. I called the for-rent sign on the photo and they told me that they had seven of them rented and they’re renting for about $800 a month. It’s very similar. In this area, it’s the historic Abrahams area in San Diego. There are a lot of these small apartment complexes all up and down the road.
It’s similar properties, comps and pretty easy to find them comps on this thing. If you Google the addresses, we’d find plenty of investors there that wanted to buy in the neck of the woods. What they didn’t show is what we found out is the appraisal of $699,000 and UPB, $468,000. There was a second on it for $100,000. I borrowed $468,000 plus change. They didn’t pay it on in quite a few months and they had a private second for $100,000. I’m sitting there thinking, “It’s worth $699,000. What’s a number I can get it to undervalue or get an under contract for that maybe I can flip.” Because I needed cash. Who doesn’t need cash? I was looking to pay some bills and get some things taken care of. I’m like, “It’s operated. Michaela Jimenez is the borrower’s name at the time. I said, “I got to find a number.” I’m like, “What should I offer?” I made an offer at $375,000 thinking it was way too low. You don’t have to be a genius. It’s a pretty good price on a comp of $699,000.
$375,000 divided by $699,000, it comes out to 53.6% on an apartment. These days, it’s unheard of. Everybody would slice their grandmother’s throat in California to get one of these things. Besides the fact that it was cashflowing pretty well. I remember writing up my LOI and sending it to Amy. They said yes. I was so excited but then I was like, “I’m scared.” I was like, “I’m excited,” then you go, “What do I do now?” I asked for 60 days’ due diligence and they came back and gave me 45, which was great because I was afraid I have to do it in 30 days, which might be tight. I didn’t have a lot of experience. I didn’t have to put earnest money down. I thought I’d have to wire in earnest money, which I didn’t have in my account and they’re like, “Send us a wire when you closed in 45 days.” I was like, “Thank you, Jesus.” I can make this work.”
Loan Sale Agreement
I signed the loan sale agreement and I got busy marketing. There’s the first page of the loan sale agreement between GreenPoint Mortgage and Inverse Investments. My address is North Highway 183. It’s the PO Box. It’s just down the street here. You can see the price on page two, $375,000 that we agreed upon. I’m like, “I don’t have $375,000.” I’m thinking this is a price that I could probably flip. Have you ever done a deal that you’re like, “If I get this done, I can make this happen,” but it scares you to death a little bit? Everybody feels this in your first deal, your first flip and your first commercial deal. I had done some onesie-twosie residential flips and notes. I flipped a lot of property here in Austin, Texas but this was technically the biggest asset especially being outside of Austin. It was one of the bigger deals that we’re doing. I was pretty.
I’m like, “Let’s get rock and roll.” What happened next? The clock is ticking. I started and immediately reached out to my coach, my mentor at the time. It was not the best experience. He was too busy. He was out of town. This is a guy that I learned the note business from and made a lot of money. The mortgage company wasn’t around. I wasn’t working in his office anymore but we’re still close. I reached out to him and I was like, “Can you help me?” He was too busy. I’m like, “I’m going to have to do this on my own.”
I called a local friend out in San Diego. I said, “Do you mind? Can you drive by the property and take some photos for me?” She did that. She went by and took some photos and sent them over to me. I was like, “I’m going to try to wholesale this and make $50,000 in my pocket. I’m going to try to put $50,000 in my pocket. I’m trying to wholesale it for $425,000. That should leave plenty of meat on the bone. $425,000 divided by $699,000, that’s still at $0.60, $0.61 on the dollar. It’s not too bad. $50,000 profit is a good thing. I posted this everywhere without the address.
Find A Deal And Work Through It
Here’s the thing I want you to pay attention to. You can all go to Watermark Exchange, Paperstac, other places, find a deal and work through it. Start posting it, taking different photos of it or other photos online and literally start marketing it to find somebody to buy it from you and then go sign their contract if you can, if you want to do that, wholesale. The big thing here, I had my name on a contract. I was invested. None of this is like, “Maybe.” I had my name on a contract and I was going to blow a major opportunity if I didn’t close on this thing. I posted it to Craigslist.com to Meetup groups that were around barely. If you don’t remember the old Postlets.com. That linked to 60 other real estate websites back page and from others. I posted to the Facebook group. I posted it to my LinkedIn profile. I even wrote a blog about the deal on my old blogging thing called HubPages.com.
I took it another step forward. I pulled up my spreadsheet. Those business cards, those archaic paper things you get when networking, I was diligent about keeping a list of every contact I made. This was before they had the Card Scan thing. I went onto my spreadsheet and I pulled everybody up that lived in California. I sent an email out to them. I BCC’d everybody on my list in around San Diego and Southern California. As I said, I didn’t have money to pay for MailChimp but I sent it out through Gmail. I sent it to every investor that I know in my database. What happened next? Capital One, at the same time, sent over a copy of their appraisal, their BPO, their loan docs, payment history and all the due diligence. Guess what shows up in my office? The CD-ROM. I’m like, “What is this?”
It said Mansfield on it. I cracked up. I was looking at it, pulling this information, looking through things, looking through all the stuff. They’re doing my own diligence so that I could talk about the deal. I know the borrower was eighteen months behind. He has not been very kind to the guy and the servicers that we’re calling. I knew the deal inside out. I knew that the market rent was right there. I knew there were some upsides. He was a little below. He could probably get $900 to $1,000 a month instead of $800 a month. I knew that he had some upside to what he was doing.
What’s great is with the marketing I did, the first week I had six people reached out and called. Four of them signed NDAs. Two people didn’t want to sign an NDA. I’m like, “I’m not going to disclose the address. I’m not going to give you all the due diligence docs. No. I’m not going to share a copy of the contract until you sign the NDA.” Four of them did. One was my buddy, Matt Harder. Matt is a funny story. Matt at the time was a new commercial investor. He was looking for some stuff there in San Diego. He lived in San Diego. He was a teacher in San Diego. I don’t remember what grade he taught but this guy is absolutely fit. You can wash your clothes on his twelve-pack abs. His wife, a lovely lady. They had three young kids. He was a relatively new note investor. I had met Matt at an event that he’d come to in Austin that my mentor was teaching at. He was one of the guys that emailed out. Matt didn’t get my email. For some reason, he didn’t see my email at all but he did see my post on social media.
Post In Multiple Places
The reason I bring that up is some of you guys only post on 1 or 2 things or you’re scared to send an email blast out. You got to post in multiple places because if I hadn’t posted on social media and relied on my emails to go out because I was comfortable with that, Matt would have never funded the deal. That’s not saying I wouldn’t have a few other people do it but I felt much more comfortable because I’d known Matt. We’ve eaten dinner together. We’d hung out a little bit at a different event. He knew me on a first-name basis. I knew him on a first-name basis.
He saw all my posts on social media, he signed my NDA and once he signed my NDA, I was glad to share everything. I think it was a Dropbox folder where I upload everything to. He started looking at it too. He provided proof of funds that he could fund on the deal for the most part. He’s looking through this and he comes back to me. He said, “Scott, I really want to do this deal.” I said, “I can only pull together $410,000 between me and my two friends.” I was like, “Can you close by such and such date?”
He was like, ‘Yeah, I can close.” I said, let’s do it. I’ll give you a $15,000 discount. It may seem big but 100% of $35,000 was better than 100% of nothing. We didn’t take long. It’s like, “If you can close before we were supposed to, we can do this. I’ll give you a discount because I know you and we’ll do some other deals together.” He was like, “Awesome.” He can close in 25 days and he realized the clock had been ticking. Ten days had already gone by for me to market it, 45 days total. I had 35 left and I asked him, can he close in 25 days. Why did I bump that up? If he flaked, if he couldn’t close, I still had ten days to go to my backup offers. That’s ten days to do things.
We agreed. I sent him a new loan sale agreement. I basically took the loan sale agreement that Capital One sent me and I just changed the parties around and I up the dates. He knew what I had it under contract for. He knew that I had under contract for $375,000. I disclosed that. It was a good enough deal. I wasn’t going to argue that much about making a commission. If he comes back to me like, “You only make three points.” I’d tell him to go shove it because I knew that $35,0000 is still a nice chunk of change but I was still leaving plenty of meat on the bone. We opened up an escrow account. I literally went to my bank and said, “I needed to open up a separate account just for this one LLC. Is there a savings account?” They were like, “Fine.”
Some people would have a real estate attorney do that for you. It’s $500. On day 24, Matt wires in the money. I remember the joy of logging into my Wachovia account at the time and seeing $410,000 sitting in your account. If you’ve never experienced that before, I hope you do at some point because it is a joyful thing. It’s not all mine but what I did is I mainly went down to the bank and I wired $375,000 to Capital One’s account. I transferred the $35,000 to my other business account. I notified Capital One, I called Amy and said, “Here’s the wire confirmation sheet,” signed back. We call it the bill of sale. That’s what BOS stands for, Bill of Sale. They just received it. I sent that to Matt. I emailed that to him and said, “Here you go. It’s so you know, we wired in,” and he’s like, “You’re good to go.”
I pulled the money into my account and did a happy dance. I called Capital One on name changes. I said, “I need to change the names on the assignments.” Capital One didn’t want to do that. The attorneys like, “No, we agreed to the contract or the inverse investments so all the assignments that we do have to be inverse investments.” I’m like, “Okay.” I called Matt up. I said, “Can we do double AOMs? They don’t want to change. Is it all right when they send it to me that I just create a new AOM?” He’s like, “That’s completely fine.”
The next day, Capital One sent me copies of the assignment on mortgages. I wouldn’t use those copies. I create my new AOMs. I went to the notary. I signed and notarized to from my LLC to Matt’s entity. It was pretty easy. It was two assignments and everything would go along with it. What happened next? What if Matt didn’t close? What I’ve done if he hadn’t funded on the 25th? Besides going, “Shit,” and running around, I would have reached out to my backup. The other guys and gals that had signed NDAs, I had two backup buyers and funders ready to roll. They knew they were in a backup position. They were happy to do the deal at the $410,000. I wasn’t going to sit here if they’re going to argue, “We wanted it at $405,000. I would have gone to the other person or I would have marketed back to a couple of other people as well.
They signed an NDA. I gave them all their due diligence docs. I said, “Your backup offering on this.” I have a guy ahead of you. He was the first one. If he doesn’t come through then I’ll go with you so be prepared if he doesn’t fund.” What did Matt do? He funded. It was great. I notified the two people and said, “The guy funded. Let me call you in the next one.” I ended up funding deals with both those other two people. They were really happy. Matt did something that took him and his two business partners about eight months to wrap up the deal. They reached out to the second lienholder and were able to negotiate that down from $100,000 to $25,000. They ended up making $148,000 in profits. They split that three ways, which is not bad.
If you’re making $148,000 divided by 3, it’s almost $50,000. If he brought a third of $410,000 divided by 3, that’s $136,000. We’ll just say $49,000. He made about a 36% ROI or better than that if you analyze it because it took him eight months to do that. He was a smart guy. He left his three little kids home with the grandmom and he took his lovely wife to Hawaii for a week. They lived it up. They had a great time. The beautiful thing about Matt, he is no longer a teacher. Making $48,000 in one deal in eight months for him compared to what he was making as a school teacher in San Diego. He was like, “I’m doing this full-time. Thank you, Scott. This is great.” Now, he’s an investor. He stopped teaching. He does all these IRONMANs and the kids have grown. They’re absolutely beautiful kids.
The important detail about this that everybody in here needs to understand is to know your deal. You will have so much more confidence if you act like you’re buying it yourself and you know the numbers. The people that are buying it from you whether you’re wholesaling or flipping the contract or somebody taking it off, they’re going to love it more when they know that you know the deal. In some cases, I’ve wholesale properties but stayed into the deal for a little bit on the backend and it helps me walk myself through it. “I’ll walk you through it. Here are the deals and we’ll go from there.” Put it under contract and don’t be afraid to ask for more time. Here’s the one big thing. If I would’ve been able to close in 45 days, I would have asked for more time. “I had my funder fallout. Can I come back with you? I got two backup buyers.” That’s why the backups are so important.
On a commercial deal, 30 days is pretty normal for a one-off. On a residential deal, one-off should be 7 to 14 days at the most. Not 30 days, not 45 days for a one-off residential note. For a commercial property or something like that, that’s normal. Banks are used to that. I don’t mind pushing and say, “Can I get 60 days?” They’re like, “What about 45 days?” If you want 45, ask for 60. If you want 30 ask for 45. What’s the worst, they say? They’ll give it to me in 30. I could’ve done it in 30 but I want a little bit extra time just for who knows what. Know the profit potential for you and your buyers. That’s an important thing. I took a little bit of discount. I gave Matt a discount. I could’ve made $15,000 more probably if I got down to it but it was more comfortable knowing that it was a win-win.
It was a win for me at $35,000. It was a win from him as well. He made a little bit more money in the long run. If you figure out the return on investment, I came out good because I made $35,000 with $0 invested. Matt made $49,000 plus he had $140 000 of his money into the deal. Keep that in mind. Know what’s in it for. I knew the cap rates. I knew that they were pleased. I’d done the due diligence for them and put it on a silver platter. Be flexible. If something comes in a little tight, “I could have put it into the screws but let’s do a deal. Let’s make a win-win.”
Don’t Take No For An Answer
Here’s another thing. Market it everywhere. If I just relied on my email, Matt wouldn’t have called me. If I had just posted on social media, other people would have seen me. Market the deal everywhere and don’t take no for an answer. I should have said this on the front end. I can’t tell you how many times I got told no, 50, 60 times of no, we don’t sell notes. I’m like, “That’s BS. I know you do.” I know you sell one-off stuff. I know you’re on the small side of things. I didn’t take no for an answer I pulled my hair out and I would start fresh the next day. Always get back at buyers or funders just in case.
This is the big mistake I see people. They get lazy in marketing. “I’ve dealt with this person.” I had another student of mine like, “I sold this guy twenty houses before.” I said, “Houses are different than note deals.” There are a lot of differences. I wired $375,000 to an account and I didn’t have an assignment until the next day. It’s not closing at a title company. This is different. It’s not the same thing. Make sure when you do get the social proof, you take that screenshot. I probably use that bank statement showing $410,000 in my account. It was proof of funds for two months. It helped me. It gave me confidence because then I went and made more offers.
Once I got that first deal done, Capital One and I had a great relationship. I bought numerous deals from Capital One and Amy Grasso over there. My next deal was a 24-unit in Houston then I made $50,000 in profit, wholesaling the note as well. A 21-unit and a 50-unit in DFW that we ended up making $30,000 and $75,000 on. I sold a beer barn. They had the small one. I saw that was a beer barn so I put it under contract at a big discount and I flipped it for $10,000 to the distributor and it was a win-win.
I had five different deals sent to me from Capital One that I think I made over $100,000 between those five. They contacted me when they had another buyer flake out. This is one of the most important things about following up and being able to close or just get rock and rolling. I remember getting a phone call. She was like, ” Scott, my apologies. I didn’t send you an updated list. I’ve got a couple of deals. If you can come close to what we’re looking for, I’d rather do the deal with you because I like working with you”. She loves when I would send photos. There’s this one 70-unit apartment complex in Miami Beach that was just a shell. It was something like a crack-ass and I mean it seriously. When I sent my realtor out there, he took pictures. He called me back and goes, “It’s a crackhead.” He took these photos and you see crack crackheads peeking out from the mattresses. The windows were shot out. I forwarded that over. I get a phone call from Amy and you can hear her and the other people laughing at the photos. They’re like, “How much are we going to have to pay you versus you paying us for this.”
That’s the kind of relationship you want to develop with your asset manager. Capital One got tighter and tighter and then they pause all of their commercial sales for a while and it started back up. They also referred me to two people. I got referrals from other funds and institutions that contacted me because Amy referred them to me because she’s like, “Call Scott, you have a deal fell through.” One of those was a six-unit apartment complex in West Palm Beach that we made a chunk of change on. It was also funny. You never know what’s going to happen but I did get a phone call from the San Diego district attorney’s office one day. The guy’s asking me and he’s like, “Can you tell me what you do?” Did he introduce himself? I’m like. It turns out there was a guy that was using a note deal and raising capital from 30 people. He was calling himself a doctor when he wasn’t even a doctor.
We were able to help the San Diego District attorney stop this fraud case. We got Capital One involved. The guy was creating false assignments and false entities. It was a weird situation but it was helpful. The biggest thing too is you have other things happened. Being on the list, I ended up getting connected to 468 other note investors on Capital Ones because Amy’s assistant sent an email blast out and CC’d everybody instead of blind CC’ing. She copied them so I had another list of investors that I could reach out to.
You never know what you’re going to get if you keep pushing. I can’t tell you how many other deals and stuff like that. I like to say it’s a million-dollar relationship with a big bank like that because it is. If you think about, you’re getting funds in and how you’re moving things and the profit. This is why I tell everybody that I see, “The banks will sell to you if you know what you do.” I had a LinkedIn profile. I knew what to say but I didn’t have a lot of experience. At the time, $375,000 was the most expensive property that I ever bought at that time of control. If I had to put 1% down and here’s my $3,700, I wouldn’t be able to do the deal. I was able to work it. That’s what I love about notes is that list and I’ve got the full list. I want to share with you just a little bit. When you see lists like this, this is just not your usual spreadsheet, a note investor list.
You see the cities like California, the light industrial, the mixed-use with residential, mixed-use without residential and the multifamily. They do this by state. That’s California, Colorado, Connecticut and Florida. All this stuff in Florida, we picked up quite a few in Florida from this list. Going through this, you don’t know what you don’t know. This is what I get so excited about, ladies and gentlemen. This is the kind of stuff that you’re going to start seeing again because it’s a small balance commercial stuff. This is the stuff that’s clogging up the arteries of the banks and you can rinse and repeat. I’ve had closings that I didn’t get done in 45 days, that I pushed to 60 days and Capital One is willing to work with me on it. They’re like, “That’s fine. Close on it when you can close on it. This week or next week. We know you’re good for it,” or deals with like, “I can’t do this due diligence. This property is horrible.” They’re like, “That’s fine. No problem. Get the next one.”
I shared this with you because of these types of deals, think about this. Thirty-one pages with roughly 20 to 25 assets per one. They’re all at least usually somewhere between 200. That’s a lot of deals out there if you just can reach out to it. Somebody asked me, “Why did you pick California versus Texas?” I’m like, “I like San Diego.” This 3232 East Abrams Street was the next one. The 1625 Grigsby Avenue was another one we did. We made a bid on this Cleveland Street one. San Diego was one because I thought it would be the easiest and I want to do a deal in California but these three Dallas were the next ones on my list that we took down. You never know what you’re going to see with a conversation.
You’ll get a list like this, great. I’m glad to help you out with it. I’m glad to walk you through it to make it successful but I’m not going to do the heavy lifting for you. You’re going to have to go out and find things. Even with these REOs, these are the small balances. This is all their big stuff, their big balance stuff. What I’m trying to get at, ladies and gentlemen are that you guys are all capable of doing this. You’re all capable of taking your game to a whole other level if you’ll just stick with it, get rocking and rolling and make some things happen. I want to open it up for questions, comments and concerns. I think that property’s probably been sold 2 or 3 times.
Matt has bought quite a few other deals for the most part but what’s funny is that commercial deal helped me out in doing so much more. I just had this confidence and I’m not afraid to make offers on the big stuff. I ended up buying a $1 million condo loan in Naples and now the condo was a house. If you know the markets and what’s going on, I wouldn’t buy an average house and the house was $400,000. I might do that. I prefer the lower balance stuff, $200,000 and under. If you know the markets, know what’s available and know a deal when you see it, great.
Know Your Money Cost, And What You Have Available
To this day, if I had that same type of deal, I know I could make it. I’d probably flip it for $100,000 this time. I don’t think I’d hold onto it because the cap rates are so low in that neck of the woods but you never know. Know your money costs and what you have available. You learn more by pushing yourself outside of your comfort zones than you ever will be by hiding out and staying in your safe place. Safe equals broke. You got to get out there. You got to expand your horizons. You got to make offers, ladies and gentlemen. You got to go out, find deals and make things happen. Questions, comments and concerns from you. Hope it was entertaining, if not educational, for sure.
We have a question, “Marketing the deal everywhere after you signed the NDA. Is there a possibility that the banker might see it?” I’ve had that happen a couple of times, once or twice, when a banker saw it. It wasn’t any of my own deals. It was a student. What she did stupidly is she was connected with the asset manager on LinkedIn and she used the actual full address. She didn’t take the address off, change anything up and shared the wrong thing. I’ve had people contact me. I signed the NDA and I had it under contract. I was marketing simply to help raise capital. That’s the thing. I didn’t share the address publicly. I didn’t say I was with Capital One at the time. If you signed that NDA, “You’re just trying to market. You’re trying to make some things happen.” If you’re connected with the asset manager on LinkedIn, I don’t know necessarily if I’d be posting it to LinkedIn. Does that make sense?
The idea here is it’s better to ask for forgiveness than permission. That’s why I don’t put the address on the assets. After you closed on it then that’s when he would put the address down. “I have a single-family home. We’re $38,000. The ARV is about $140,000. How do I buy the note?” I’m not into the fix and flip stuff. I don’t care about ARV. Who’s the bank? It all comes down to who the bank. If the bank is willing to play ball, great. You got to contact the asset manager. You may want to sign up for our Note Weekend class at NoteWeekend.com. It would be probably better for you to sign up for our Note Buying for Dummies Workshop to go more into that versus trying to teach you how to buy a note on a Monday night conference call. Thanks for asking.
Someone says, “I know a lender who would lend me 50%. What websites can I go to fund may be a multifamily note?” Here’s the thing. You’re probably not going to find multifamily notes just sitting down on the websites. If you do, they probably don’t make a lot of sense. Multifamily is the most overpriced asset classification. It’s ridiculous and stupid numbers. Go find you a single-family note. Look at what you want to accomplish. What do you need? If a lender is going to fund you 50%, is that 50% of the purchase price? You still would need to come up with the other 50%. If you’re using your own funds, great. Kudos but if you need other people’s money, go find an asset manager. Go reach out to people. This is the stuff that we preach. Go contact banks, jump on Lane Guide and on a variety of things. Anything we’ve talked about in Note Buying for Dummies, that’s the best thing.
You can go to WeCloseNotes.com and look at the training. You’ll see the drop-downs to the Virtual Workshop or you can go to NoteBuyingForDummies.com. It will take you there as well. Get out. Start contacting people. Go to some of the websites we talked about. We talked about some of the lending platforms or the note platforms on the 20-Day Note Investing Challenge too, guys and gals. Here’s the thing. I dial for dollars. I got yeses. I got noes. I had some other things that came in and flipped the smaller stuff. Most of you aren’t taking action. Most of you are sitting in your comfort zone, you’re not doing the simple things and you’re playing in at this instead of treating this as a serious business.
For those guys and gals out there that get serious especially in the next 90 days, we’re going to see some things burst when they finally stop this foreclosure moratorium. There are opportunities everywhere. There’s a lot of opportunities to the small balance commercial space, not apartments but student housing, other places out there. Empty hotels, you can turn them into apartments. There’s some opportunity out there for you too. Check out our virtual workshop. Don’t have to wait until then. You can get signed up and we get to replace that to you ahead of time so you can watch and learn and be much more ready to rock and roll. Marketing is all about sharing it everywhere. I look forward to talking to you guys. Thank you again so much. Have a great evening. Go out and take some action. We’ll see you all at the top.
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