Jim Ingersoll Interviews Gordon Moss

All right, everybody, this is Jim Ingersoll coming to you from snowy Richmond, Virginia, which is unusual. We got our first snow of the year. Actually it snowed a little bit when I was on the IRA cruise, but I got to miss that one. Of course, I'm from the Buffalo area so I grew up in this stupid white stuff. And first thing in the morning about 6:30, I got to shovel my driveway for the first time this year. Of course, that's nothing for any of you guys that are in the northe or Chicago or Boston or even New York City that's getting slammed this year. Can you guys hear me? Okay, let me know if we got a good signal. Make sure you can see my Facebook group here on your picture as well. We had a ton of people sign up for this call, like 135 or something. I think it was a record. Lisa Masterson, it is great to see you tonight. Always good to hang out with you. And Gail Perry, thanks for saying hello. Ralph Forrest says visual audio is great. Rich says Jim is loud and clear. Lisa says it is sunny in Florida. Lisa, I am ready to come visit. That is for sure. Let's see who else we have here. Anthony and Barb and Bill and Bruce. Let's see, Curtis Dale, Daniel Darwin Brunson, it's good to see you tonight. It was good connecting with you in LinkedIn this week as well. Ed Bracken and Perroz and Gail Perry Harginder is on again. Let's see Jim Black and John. John and John. Lots of Johns. At least five of them. Hello to all of you and to Johnny, Juan, it's good to see you tonight. Juan and Justin, Ken Shoemaker, always a pleasure. My call, Nick Sirocco from Long Island. You've had your share of snow this year. I know that. See Randy and Richard and Ron. There's a lot of people signing in right now. Victor Grimes, how have you been? Thomas DeGroote and a whole bunch of people are signing in and saying hello. And it's good to see everybody. John and Rudy and Richard and Victor, everybody's saying hello. Hello back to all of you guys. I've had a lot of interactions with a lot of you guys in the last two weeks. Tons of you guys requested that extra giveaway during the last call, both the probate video and the special report. So I enjoyed emailing that out to tons and tons of you guys. If you didn't request or get it, just send me an email and I will send it to you. Is fine. Also this week I got the pleasure of working with or hearing from Connor again and Bert and of course, Ken. It was good to see your comment in our site. And Patty and Marlene, Jonathan Green, thank you for your service to our country. He's in the Air Force currently up in the snowy area of Boston, Massachusetts, who's getting ready to move to Colorado. And all you guys that are in our group that are serving in the military, we really do appreciate you. Joanna. It's good to see you on here, Frank. Frank is in Washington, D.C. just up the Interstate 95 from me. Victor said it was great info. Hello from Flower in Mound, Texas. I'm not sure where Mound is, but it's good to see you tonight. So let's go ahead and show you my slides I've got here right here and all right, so there you guys are. As you know, there's actually over 1500 members in our group, so I can't put everybody's picture onto this, but it's the essence of a mastermind. And we love doing these calls in a mastermind format because neither I nor any of you need to be the very smartest person in the room. And on this picture are a bunch of friends of mine that have been past guests as well. So you'll recognize some of them guys. And what's cool is there's a lot of synergy and a lot of sharing of information. And when you pull all these minds together and all these vast experiences in all these different markets all across the United States and Canada and other places, we can all learn a tremendous amount from one another. So thank all of you for being part of the bank of Elimination blueprint. I love doing these masterminds, as you know. So as we're warming up here, tell me what you've been working on, what you've learned, who you've been meeting, how you've been growing your network. If you haven't been doing any of that, I hope you've been reading. So tell me something you've been reading or somebody you've been talking to and just give me an idea what's kind of going on in your world real quick as we let everybody else sign in. So who's been doing deals? I got an email from Ben.

Ben.

And I was just going to read this to you really quickly. He says, hey Jim, I bought two properties two weeks ago. I used the joint venture agreements on one deal and had another investor sign on to an agreement for future deals. Thanks for all you do. This course was well worth the money and I appreciate the support you give us. So that was good to see. It was good to see that he did. He's got two deals lined up, both without banks, both with private money and probably self directed IRAs if I was guessing. And he's got more for another one. Same thing with Joanna. Johanna's been working on some deals as well. As well as so many other people in our group. So tell me, what have you been working on? What offers have you been making? What have you learned lately or what have you been reading? I've been reading. We got a very special guest tonight and I've been finishing one of his books and I also purchased another book that he recommended that I just about done with as well. So that's what I've been reading and we can tell you more about that in a minute. Lisa Masterson said, been working on getting more private money from people we know. Been working very well with a local competitor of mine. Working with a competitor. All right, that's good, Lisa, that's good to see. And Lisa, you are lining up a ton of private money for your deals lately because I remember it was two weeks ago today where you contacted me via text and we talked on the phone and emailed back and forth and you lined up a whole bunch there. So that's awesome too. Let's see. Justin said, I'm reading more Tim Ferriss. That's a good choice. Let's see. Ken Shoemaker said, meeting with a joint venture partner next week and I'm confident on this one. Way to go, Ken. You are going to nail it. Lisa said, that's correct. Okay, good. Well I'm glad you guys are out there looking at stuff, making deals and all of that stuff. That's good. That's where it starts. You got to make offers to make deals and make some money that way. All right, so here's our upcoming Mastermind schedule. Tonight we have a very special guest I'm going to introduce. And just about 60 seconds here is Gordon Moss from beautiful San Diego, California. And we're going to talk tonight about capitalism and then tie it into note investing as well. And then two weeks from tonight is Jack Shea. Jack is a master on real estate options, land trust, personal property trust, basically just ways to protect all of your assets from the people that would love to steal them from us. Believe me, that is another Mastermind call you will not want to miss. Then after that, Quincy Long will be coming back and we're going to take some advanced topics in self directed IRAs. And then in April we have Trevor Mock is going to come on and we're going to talk about SEO, search engine optimization type stuff and how it applies to getting leads through your investing sites. I think it's going to be awesome. And then my buddy Lisa Masterson has been many of you guys have requested Lisa to come on and talk about seller financing. And then in May, it's hard to believe we're talking about May already is Jeff Watson. And Jeff is an attorney from Ohio. And you're going to absolutely love having him as part of this group. So we got an incredible amount of powerful masterminds coming up. So tonight, without any further ado, is my buddy, Gordon Moss. Gordon comes to us from the beautiful city of San Diego, California. It's my favorite city on the west coast. And Gordon actually began his career in real estate back in 85 and he started off as a commercial real estate broker in beautiful Orange County. He's been an avid student of all the masters of real estate and investing. Now over 25 years, he and I share a lot of the same mentors and we both learn from a lot of the same people. And I'm sure some of those stories will come out tonight. He also owns and manages a sizable portfolio of properties and Notes and he does this full time. And he's passionate and very active in real estate investing. And notes loves to do these things in tax free accounts like Roth IRAs. And Gordon, by the way, is also a fellow published author and you can find his book right on Amazon. It's called Performance Anxiety, which I think is an awesome title. And he's working on a brand new book right now. It's called Enjoy Capitalism and we're going to talk about that some tonight. But tonight we are going to dig into the world of investing in junior liens and how that fits into your overall investing strategy and why you would want to know about this really incredible cool niche that provides phenomenal returns and works really well for a low investment amount. So with that, Gordon, I just want to welcome you to our mastermind. It is so nice to have you on here with us. Can you hear me good here, Gordon?

I can, I can. And thank you, Jim, for having me. Can you hear me?

I can hear you. Can all of you guys, we got more than 70 guests on right now. Can you guys hear Gordon? Okay, I think everyone can hear you fine. Just speak up nice and loud. He had trouble signing into the webinar service tonight, so he's doing it via his cell phone. Gail and James and Rich all say you're Loud and clear, Gordon. You're good to go.

Perfect. Perfect. Okay. Well, let me say just thanks again, Jim, for the invite. I'm honored and humbled to be a part of your group and to be speaking to it. Some of the people that you mentioned are common friends. Jack Shea and those guys are just amazing people, pillars of the industry and great guys. I mean, great people. So I just want to say thank you for the opportunity. It's amazing to hear you talk to your group. I've caught and flirted with doing this, but I always said I never had the impetus to do it. So it's great to hear the way you seem to relate to your group. So you're inspiring me. So thank you again for having me on.

This is a great group to connect with. I love this group, Gordon, and I mean that very sincerely because I see so many of them doing deals. And when I see people do deals and they do them the right way and they do them without banks and all the liability that goes along with getting a bank loan nowadays, I do get excited. So, yeah, people are learning about self directed IRAs and how to build that accounts and things like that. So it is exciting to see.

I love this name, Bank Elimination Blueprint. What a great theme. I mean, keep that right. Top IRAs, whatever, do it tax free, but get the banks out of the equation. I love that. And you and I both have been inspired by people that thought that way for decades. Should I start with just kind of who I am and why should you care? And a little background to start with. Would that be a good idea?

Yeah, yeah, that'd be perfect, Gordon.

Okay. Okay. Well, Jim and I were on the IRA fund cruise together a little while ago and I actually made three little TED talks, three little speeches that I made. One was on the Junior Lean business, which as Jim mentioned, I wrote a little book called Performance Anxiety, how to Create a Fortune in Non Performing Notes. And it's on Amazon and Kindle and you can Google it or whatever. Go to my website. I also did a speech on Enjoy Capitalism. And as Jim and I were saying earlier, I borrowed that from one of our mentors, Pete Fortunato, who's just a king. And the reason that came to me was I noticed so many Americans, in my opinion, who don't enjoy capitalism. I mean, they get a job, they don't like it. I did that for a while and we have so much opportunity here that I said, you know what, I'm going to put this down the way I think about it, to Inspire some other people to get out there and enjoy what we've got. Because after traveling around a lot, you really realize that we have such opportunity here that we really don't see. We don't take advantage, in my opinion. The last piece that I did there on the cruise, Jim, was on marketing. I know you mentioned a couple things on marketing. I wasn't sure what the direction of the call would be or what the group is really interested in. But I've got some thoughts on that too. On my.

We love marketing. I always tell people, gordon, my thing is nsm, everybody on here has heard it because it means never stop marketing. We're always marketing for something.

You know, we were having dinner last week at an event in Colorado and I brought my 16 year old nephew and Jack Fullerton, who, you know, one of my mentors, he leans over to my nephew and he says, if there was one thing you should study in school, guess what it is. And I didn't even know the answer. And he said, marketing. If you could just pick one thing because the best marketer WINS. I mean, McDonald's does not make the best hamburgers. They're the best marketer. And that's what it's about. It's about marketing.

That's a great way to put it, isn't it? I don't think Starbucks has the best coffee either, but I keep going too, so same thing, right?

I don't think Microsoft made the best software, but they were the best marketers. I think so, yeah. All right, let me give you a little background. Who am I and why should you care? As you mentioned, I got started in the mid-80s. I got out of school and I didn't know what to do. And the person that I rented from, who owned the building and a boat and a car and the whole thing, I said, mike, what do you do? And he says, well, I'm in commercial real estate. And I said, well, can I come work for you? He said, no. So I went and said, okay, well, I'll find somebody else. So I hunted that down. I always had a passion for real estate. I never really knew why, but it was kind of in my gene. I said, that's a way to be independent, to make money if you wanted to, to build wealth. I didn't know exactly why then, but it just seemed like the right thing to do. So I did it. And I spent seven years, the first four of which struggling, making no money in the business. I was basically a slave to cold calling for these people. But you know what? I Didn't quit. I persevered, which is a big theme, as we all know in this business. It's not easy, never was, never is. But it's worth it, in my opinion. But after a while, I persevered. But, you know, I went to a real estate club, Jim, that Jack Fullerton put on in Orange County. It was called the Commonwealth Group. And Jack Fullerton was a Jack Miller fan and a John Schaub fan and a Pete Fortunato fan and a Jimmy Napier fan.

All of our buddies you just named off, like, everybody I learned from over the last 10 years. That's awesome.

Exactly. So I walked in this room one night, I said, okay, I'll give it a try. I go to the investor meeting and I walk in there, and I was very unimpressed. The room was full of these old beat up guys that didn't dress very well. And they looked just. I said, this is not my group. Something's wrong here. But I realized after a while that these guys had all the money. And I was like, wait a minute here. I'm here with these hotshots all day with their silk suits and their fancy watches and everything. And they don't have any money. They look good, but they're broke. And there's these old beat up guys that don't dress too well. I said, that's a lesson there. So after a couple meetings of meeting Jack Miller and being unimpressed, frankly, because he didn't look too good and he didn't. He looked like a crook to me, but it took me hearing him five or six times say, wait a minute, this guy has it. And, you know, I was a big time commercial broker. I thought I was. They were talking about single family houses. I said, single family houses. I mean, those are for housewives. You know, I'm beyond that. But I soon learned that that's the best piece of collateral on the planet. And as John Shaub says, people don't get tired of living inside. And when we had this big downturn, all the properties kind of imploded. Had I been a commercial guy, I would have gone broke. But I owned single family houses. I was a buy and hold guy, as they taught me. And because of that, I survived and I have prospered. So I am now because of those guys, because of their influence, a single family house guy. I try to buy with options. I avoid banks, as you say, and I'm a buy and hold guy. So those are kind of the themes that I learned from these guys after going to their events. Over and over and over again. The first couple times Jack Miller said subject to, I was like, subject to what? What is this guy talking about? But it took me just going back and back and back and then meeting people like you with the guys in the room. The best part of a Jack Miller seminar was the guys in the room kind of like your group. Different ideas and they're of the same mindset and they believe and they encourage you. So that was great experiences for me.

We all really believe that your network becomes your net worth, but you might as well choose it and build it with people you enjoy doing life with.

Yes, yes. So let me kind of tell you the first kind of story that happened to me because I started hunting. I started hunting for what they had framed my mind on. Single family houses with an option, meaning a little bit of money down. I wouldn't put $100,000 down into a $100,000 deal. I would put a little bit of money down. If I made a mistake, which I did and still do frequently. I didn't lose everything. I could live the fight another day. So an option and a single family house and buy and hold. I took one of those late night courses. I forget his name right now, but I read everything they gave me. What was his name? It doesn't matter. But the bottom line is there was one thing on there that stuck out. The VA foreclosure. And I said, okay, here's the deal where I can buy these Veterans Administration's foreclosures. As an investor. I put a little bit of money down. An option on a single family house that I was going to buy and hold. They gave me long term financing with 5% down and I could buy all I wanted to. It wasn't, you know, now this is a bank financing deal and I realize that's a bad thing, but that was a good start for me.

Everybody's got their starting line.

Yes, yes. So just kind of a framing of where I came from of how I started in the investment business. So let me tell you the non performing junior lien story in kind of a capsule and we can expand upon it later depending on how deep you want to get into it. Once again, my book is kind of a high level story of my adventure from the last five years. But here's the story. So as I told you, I'm hunting for single family house opportunities with an option. So about 2008, all these bankers made too many loans, right? I said, how can the little guy, the little fish like me, get to play in this environment. Well, so I went through all of the mortgage banker meetings around the country. They had them every quarter. I went through all the loan servicing meetings all over the country. I went to the distressed debt meetings for about two years and I kind of met the good guys, met the bad guys, met the guys I could deal with and not. What I found was they wanted, in my opinion, too much money for these non performing first liens on these defaulted properties. They wanted in good areas, they wanted 70, 80 cents on the dollar or they were trying to throw their trash away, in my opinion. On these properties in Cleveland and Detroit that weren't too good.

Well, there's a lot of bad paper out there too, isn't there?

A lot of bad paper and people should be aware of that. And on my website, Jim, I blogged about that. I've done videos about that for the last five years. That's all free. Anybody wants to look at it, go to realestateandnotenvesting.com you can see my story for the last five years.

I've got it up for everybody to see. So, you know, great.

What I found was that when I had to pay 70 or 80 cents on the dollar for a non performing first lien, I could pay 10 cents or less on the dollar for a non performing junior lien. And when I first heard that, I was like, you got to be kidding me. I mean, junior lien, I mean this is risky enough and now I'm going to buy.

So you said 10%. I mean that's a heck of a discount bill. So if it's a $50,000 second mortgage in default, you could pay how much? Yeah, I mean that's a good deal, a lot of upside.

Let me tell a story about that, Jim. Would that be the best way to illustrate, give you an example? Yeah. So somebody buys a house, right? And it's a nice house and the backyard might not be anything special. So one day the wife says, hey, let's put a pool in the backyard. So the husband says, okay, let me go down to the bank and talk to them. So he does. He goes down to the corner bank and says, hey, we want to put a pool in our backyard. We've gone to a contractor, it's $50,000. Can I get that loan? Yes, you can. Now that loan is a junior lien. Now on his property. He has two loans on his property. His primary loan that he got when he first bought the property and now the junior lien for his pool. So all is good. He gets the money he builds the pool and life goes by. Maybe three, four, five years goes by and something changes. Maybe somebody loses their job, maybe one of the spouses, they're a double income household and one of them lose their job. Bottom line is this, they can't afford to pay that junior lien anymore. So what happens is I would go to the bank and say, hey, I understand you guys do pool loans in the neighborhood. Is that correct? Yep. Okay, well, did they all work out? Well, most of them. Well, how about the few that don't? Well, we don't talk about those. Well, if you did talk about them, what's the deal? Well, you had a couple that don't pay. What do you do with those? We don't talk about them. Well, how about this? What if I was to take them off your hands and I'm a stand up guy, I'm a respectful guy. I would not abuse your borrowers. I understand you're a community bank. So they would sell me that loan for not much. They don't put much value on it. To them it's a non performing junior lien, a very weak thing. So I buy that $50,000 loan for $5,000, maybe less. Now I would call up the borrower, say Joe Smith, and say, hey, we need to work something out. What were you paying before? We were paying $600 a month. What happened? My wife lost her job. So you can't pay $600 a month? No. What could you pay? Well, we could easily afford $100 or $200. Let's make it $100 for $100 a month from them. I'm still making a great return on my $5,000 investment and they still owe me $50,000. So when things change or they refi or they sell the house, whatever it is, I can get paid off. That's the best story I can tell Jim. To make it kind of simpler of what a junior lien business is, there's a lot of different tweaks to it. It can get exciting with all kinds of bankruptcy stuff and foreclosure stuff. I kind of go over that in the book a little bit.

You can do things as a private note investor that a bank won't do. The bank's not going to call them and say how much can you pay? And then modify their note, right?

That's exactly it. I build a relationship with them. The most important word in my opinion in this business is relationship. Our relationships with each other, our relationships with our buyers and sellers. My relationships that I develop with These borrowers, when I first call them, they think I'm a monster. They think I'm a bad guy. But I've had people write me a letter saying this was the most professional, respectful, dignified relationship I've ever had. And Gordon, you know, you've done things for me. For example, you know, I got sick five years ago, that's why I couldn't pay. And when I stopped paying again, you called me and said, what happened? And I said, well, I got sick again. I said, well, why don't we take three months off, we'll put the payments on the end when you come back and get your job, we're going again. We'll get it going again. They say you can do that. And I say, yeah. And they say, you know, you can do things a human can do, things a bank can't do. And I love your theme once again, you know, bank elimination. What better way to eliminate banks than to turn around and take their problems, which they create themselves through regulation and everything else. And we can help other people, number one, and benefit very well. So I think it's a great example of your theme, bank elimination with helping people.

It ties right in. But you're right, you become the bank, Gordon. But you didn't, but you paid 10% value. So you got a 90% discount on that non performing. Now, now, not all of them work out and sometimes it's hard to reach out and connect with those homeowners. Right. And so you've learned some tips and some tricks and some ways to wake people up.

Yeah.

When they're trying to avoid you. Right. You want to talk a little bit about that next?

Yeah. You know, let me kind of lay it out. I look at it like blackjack. When somebody goes to play 10 hands of blackjack, do they plan to win all 10 hands?

Not me.

If you bought 10 junior liens in a pool, you bought 10 of them and say three didn't work, that'd be okay because you can make five or six of those. Rock star. The return is so good, it'll cover the ones that didn't work out and a lot more. So that's the way I look at it. It's not a perfect game, it's not an easy game. But you know, I have another theory about. I say, what if your biggest fear wasn't? What's your biggest fear in these junior liens? Well, one, you can get foreclosed on and wiped out. Two, they can file bankruptcy. That sounds like a bad thing. Both of those things have happened to me a lot. And let me tell you, they're not that bad with bankruptcy. It's actually better for me because the borrower wasn't paying me. What the court will do is appoint a trustee and he'll pay me. So I'm like, I'm not getting paid now they're in bankruptcy. Now I am getting paid. That's okay. But with foreclosure, if I do get wiped out, if the first forecloses and wipes me out, then guess what? I can file a judgment against the person personally. Maybe not get the money right away, but I've got it down the road. So all these bad things about it are interesting, but your question was about waking the borrower up. And I've got a whole strategy about that. I've developed a couple things.

Because sometimes you buy these Junior Lean notes and you have every intention to build that relationship with them, but they avoid you because they're going to run and hide and they don't know you're a good guy. They think you're another banker, right?

Yes, yes. Or worse. They think I'm some scoundrel that's out there, you know, trying to rape and pillage the world. You know, they think I'm just one of these bad guys. What I'll do is I'll start a mailing campaign. I'll send them a letter and say, join our satisfied customers. I developed a thing called the Shock and Awe Package from George Bush. I said, I want to let them know that I exist, that I'm wide awake and that I'm not. The old bank just kind of letting this thing slide, that we need to do something here. So I shock them by sending a FedEx box out. And in the box is a package that has a copy of their note, a copy of the deed of trust or mortgage, a nice letter saying up front what I plan to do. A demand for payment, the copy of the assignment which shows that I own the letter because I was getting objections all the time. They'd say, I don't have a note. I'd say, yeah, you do. And they'd say, well, who are you? And I'd say, well, here's who I am. And so they say, well, I never signed that. No, you did. Right on page two. So let's get by all that stuff. So the Shock and Ounce package was a way to deliver a package to them. And they could say, well, I never got it. I said, well, no, Jim Ingersoll signed for it at 3 o' clock on Tuesday. Let's get over that. So I had all these objections. I would send a door knocker out. I got all these things set up to go after the people, find out if they're still in the house, see what the condition of the house is, see if they have what I call emotional equity. Emotional equity kind of talks about a home as opposed to a house. A home is a place where people mow the yard and plant the rose bushes. And they're married couple and they have kids and they go to church, and that's their home. So those kind of people, I kind of. I like those kind of people because they're fight. They'll fight for their home. And, you know, sometimes we have to threaten them. Sometimes we say, you know, we need to do something about here. You can't just ignore me or tell me to go to blank. Whatever. You can't do that. That party's over.

Yeah. It's not an option, is it?

It's not an option. So. So. And again, they don't all work out. You know, I don't mean to paint any kind of rosy picture here. This is a very tough business. But once again, by the way, we've been taught it's a single family house, which can develop an emotional equity. People in the house. It's an option price, in my opinion. It's a small amount of money that I'm risking. If I pay $5,000 for a $50,000 note, am I going to lose that sometimes? Yep. But it's better than paying 50 and losing all that or paying more and losing my whole nest egg. I don't do that. I do options on single family houses, which is what Jack Miller taught me. So this theme, you know, this whole junior lean deal fell right into what I was hunting for.

So talk a little bit about the different types of, you know, the emotional equity versus the other stuff, because that's important. I think it's an interesting perspective.

It is. It is. You know, you would think, okay, let me kind of give you an example here. Let's take a note. Let's take a house. The house is worth $100,000. Okay? There's a first on it, a first lien for 150. Now, in many areas of the country, that exists and it has for a while now, there's $150,000 debt on $100,000 property. Now on top of that, there's a $50,000 second that we talked about. So that's way out of the money, way underwater. Why would anybody pay me the Junior Lienholder. Why would I, first of all buy that in the first place? And why would anybody pay me? Here's the answer. Emotional equity. It's their home. You would think, logically, they would tell me to go pound Sam. They would say, hey, dummy, can't you understand that we're underwater? We don't have any equity. What are you talking about? That's not the way it goes. You know, I tell them, I say, I'm here just to work something out, get some kind of monthly payment from you, you know, get you back in the rhythm again. They pay me. So that's, you know, you can buy those for cheaper, the ones that are underwater like that. So that's just an example of something illogical. A lot of things we think make sense and they really don't. That's one of the things that I couldn't wrap my brain around to start with. And it's kind of a complex topic, but emotional equity is a big part of what I do. And once again, it comes around the fact that people like to live inside. It's their home versus their house. And they'll fight. And I can see that ahead of time. I look at their credit report, I do a little study on them and say, well, he spends $100 at Home Depot every month. I wonder what he does. He buys fertilizer and rose bushes for his house. Okay. He pays his other debt. Okay. He's got three car payments. He doesn't need three cars. He could sell two of them and pay me. So there's all these different ways I can look at the credit report and hunt for this emotional equity concept. And it's a key part, it's an interesting phenomenon.

So could you go through the steps of how this sort of works, Gordon? So you find, let's say you find the Note. It's a $50,000 note, and you're able to buy it, I guess from a hedge fund or somebody like that for the 5,000. Right. Or you buy a package of them, but just take one as an example.

Yeah. Okay, well, let me just kind of talk about the big theme here, okay? Let's say I'm buying Wells Fargo's debt, okay? Wells Fargo is a big bank, as we all know. I think they're big out there, too. They sell $100 million a day in non performing notes. I don't have $100 million. I'm not that kind of guy. But a hedge fund is. So what I've done is found the hedge funds that focus on My niche once again, by going around the country. I was out in New York and New Jersey and Pennsylvania last spring, visiting my friends and talking to, seeing what's going on in the hedge fund. See what's going on. I develop these relationships, but so I don't usually buy from the bank directly. I buy from a hedge fund.

There's different size hedge funds, too. Like, so if Wells Fargo is going to sell off $100 million of bad debt, it's going to go to a large hedge fund, right?

Yes, yes. And Mike would. Yes, yes. So, you know, at first you would think, well, I can't play in that field. Well, wait a minute here. That the hedge fund paid 2 cents for it and they're going to sell it to you for 10 cents. That's good for them. They have expenses, too. And you need to get in there under the covers and find out what motivates these hedge funds and who the good guys are and the crooks are, and avoid the bad guys. That's how I would buy from a hedge fund and the hedge fund I have a relationship with. But they would make me sign a document, a non compete, non disclosure, that would say, okay, Gordon, we're going to show you this pool of notes so you can look at them and decide if you want them. Okay? Now they'll also give me the credit report so I can see Joe Smith's credit report. I can see that he's paying his first. I can see that he spends money at Home Depot. I can see that he's 45 years old, that he has a job, that he's got a wife and a kid and a dog and a whole deal. I can kind of see that. I'm like, okay. And kind of look at my risk that way. So that's what I've done historically. I bought notes from other people. I bought notes from hedge funds. I bought notes from all kinds of people. But that's kind of the way I get the notes. Now I've got them. I usually have to give my money to the hedge fund, wait a little while, and then they'll give me the note via an assignment. Now I own the note. I go and record it in the county, wherever the county is, to let the people know that I'm actually legitimate. Because their first question to me will be, who the blank are you? And I'll say, well, I'm Quixote Ventures. And they're like, prove it. I say, well, it's in the county courthouse. You can have your attorney look whatever you need to do. But I am the owner of record via assignment. I own your debt. That's one big hurdle of me building a relationship with them and getting over the stigma that I'm not a good guy and I'm out to crush them.

All right, okay, so now let's just go back through real quick. So Wells Fargo takes $100 million of bad debt. They sell it to a large hedge fund, say, $0.02 on the dollar. Then the hedge fund will break it into a pool, into different pools, and you may buy a pool of those notes at, say, 10 cents on the dollar. You're given the borrower info, the collateral info, and the credit report. So you've bought it on assignment, the pool. Now you've got to start reaching out to the homeowner. Right, and let them know who you are. And that's the next step.

Yes. What I would do, Jim, is I've got a program called notesmith, and it's designed for a smaller investor. And basically I put it in there and say, okay, well, Jim owes me $50,000 at this interest rate. And so what I do is I'll start mailing them a letter every week. And they can see that whereas last week they owed me $50,000, now they owed me $50,186.27. So by them delaying and not calling me, the debt is accruing. And it's one interesting nuance of the note business, as opposed to the landlord business. When you have an empty house or a deadbeat tenant and is not paying, you try getting that rent money back. It doesn't happen now with a note, it accrues. So if it's been five years since he paid last, say if I have a $50,000 note that hasn't been paid for five years, he owes me 60 months worth of payments on top of the $50,000, one little bonus. And you know what I'll do is I'll negotiate with them and say, you know what, Jim, you not only owe me $50,000, but you owe me 18,000 in arrears. What are we going to do about that? If you can work out with me here, if you can prove to me that you'll pay me on time, I might be able to talk to the big guys here and have that reduced down and laugh. If you can prove over three years that you can pay me on time so I can do a lot of things with that arrears thing. But I let them know through my letters that by doing nothing, they're hurting themselves. They need to talk to me, they need to reach out, they need to get this thing going. It ain't going away. It's a bad distant memory in the back of their mind. But I'm wide awake now and they need to work with me. That's kind of the way it goes.

All right, so you're going to try to find them. You know, is it hard to get? I mean, you don't have the phone, all you've really got is their address, right? And you hope they still live there. And then, so you send them a letter a week. If they don't respond after how many weeks, then when do you, when do you go to the shock and awe?

So I have this theory about that. I used to start that way. I said, well, I'm going to try this for a while. I'm going to try mailing them for a while and then I'll do a skip trace on and maybe get their phone number and try to call them. Do that next. And then I'll, worst case, I'll send a door knocker out, which is really cheap for $60. I'll go out there three times, knock on their door and tell me what's going on and then I'll do the shock and off package. But I said, wait a minute here. You know, some things are going to work with some guys, some strategies with other. And they're all cheap. Those are all cheap solutions because the next solution is file a foreclosure on them.

All right, before you go on, how do you, how do you find the store knocker? I mean, you just, you have a service that does this or do you just go to Craigslist? I mean, what do you do?

So there's a company out of Laguna Hills here in California, it's called ncci. And what they do is, I think they hire these residential brokers around different areas and send them out for $60 to knock three times. And they'll have a phone in their hand and if they knock on the door and Joe opens the door, they'll hand them the phone. They'll say the lender would like to talk to you. And that works sometimes. Or they'll tell me, they'll say, well, you know, there's a truck parked in the front of the yard with no wheels on it. You know, they'll tell me things. Or I said, I almost got shot going to the front door. Or the two neighbors, we talk to them too, and actually one's the mother in law and they live down the street now. Or they got thrown in jail or whatever. So having a door knocker, having a physical presence can let you do this business nationally. Let me make that point, too. This is a national business. Wells Fargo has notes all around the country. So, I mean, I've got a property in Annapolis, Maryland, right now. I've never been there that's closer to you, I think, but I'm working on it right now, so. But, you know, I don't really care about that because I can. I can virtually do almost all this stuff through this door knocker service and other things.

All right, so now you're mailing a letter once a week, and you're gonna. And then you send the door knocker three times. If nobody answers the door, nobody responds to those letters. Then you go to phase two, which is shock and awe.

No, my point was I do all at once.

Okay, you do both those at the same time.

I do five things. I send a letter, I send a sock and awe package. I send the door knocker out. I research what it takes to foreclose on that property all at once. And so I've spent maybe a couple hundred dollars right out the door all at once. I want to blast you just, boom. That's my experience, because something's worked. I don't want to delay. I just want to do everything at once.

Boom.

And then spending money on a foreclosure, that's a whole different game. If I've exhausted those first four or five avenues, then what happens? Normally, Jim, very few of them will actually call you with all these letters and door knockers, that doesn't work, frankly, that well. What does work is when they're threatened with foreclosure, then they'll call you and say, what the blank is going on? You say, well, you know, you haven't responded to us. You forced us to take action. We don't want to do this either. We don't want to foreclose. We don't want your property. But our investors will force us to move forward if you continue to ignore us and be irresponsible. If you want to be responsible, we'd love to work with you, work something out. That's our real goal here. Sometimes it takes that to get them off the dime.

All right, so then you've got their attention. After you do those five things, one of them is going to work, usually, and get their attention, and then you can start to do a workout, a modification, get them to begin making payments at some level, right?

Yes, that's the goal. If I can just get you on a rhythm. A lot of them will say, well, I don't have any money. Well, sometimes we have to go to a short sale with that situation where they've got no income, but most of them do half the day, they don't have much. So we'll take a small amount of money, $100 a month, just to get them started and kind of train them to say, okay, you know, we need to develop a respect here. You disrespected the bank, and you're disrespecting me. We need to respect each other. So $100 a month, every month, will prove that you get it, that you want to keep your home and build a relationship with us. That's a win win. So if I can get a payment that works.

If they've got the emotional equity you talked about.

Right, Exactly. Exactly. I'm really looking to get these people just paying me something steadily and kind of rehab them that way. I'm not rehabbing the property. I'm rehabbing the people and trying to get them back going again. Because $100 a month, that's fine with me, because one day, my $5,000 investment, something will change. You will move, you will sell the house, you will refi, you will buy something, and we'll make a big thing there at the end. Because a lot of these people don't have $50,000 to pay this off. They can't get a refi. So it's usually a monthly payment. That's usually the solution here that we start with.

All right, I'm taking notes so everybody can see it as we go. Gordon. Okay. So you reach out to them, you establish that they do have that emotional equity, you begin to build a relationship, begin to get a rhythm of making the payments. And then someday, once they do that, they'll sell the house, refi. Die, the house will burn, something will happen, and you'll actually get paid off the full face amount of your. No. Right.

Yeah. That's one of the exit strategies. A lot of them, some of them, frankly, just are in a bad situation and they need to leave. And so we'll get involved in a short sale, and we don't make the biggest profits there, but we usually get our money back in more. So it's either a short sale, we can foreclose if we have to. I have taken properties back from second position. Talk about no bank financing, eliminating banks. I don't.

Right.

You could pretty much, you know, I foreclose. But first will call me and say, what just happened? And I'll say, well, they weren't paying us, so we had to foreclose. And they said, well, you still, you know, somebody owes us the money, they owe us the money. I say, exactly, they owe you the money. We own. We own the property. So we worked out things from time to time where we make payments on that sometimes or not other times we've taken the property. We paid the first off, depending on what we wanted to do. But it's also, Jim, an acquisition strategy using an option on a single family house. I bought a property here in San Diego. I only paid like $5,000 for the junior lien. And it's a $400,000 house first. It's 250. It's still there and we own the house. So things like that. As far as eliminating banks, I really have a passion.

Tell us that story. How did that one you're talking about right there, how did that work?

Okay, so there's a property here about 10 miles east of where I'm at. It's a 1961 kind of a beater old house. And we bought the junior lien, let's call it 50, for $5,000. Those are round numbers. There was a first for 220. At the time it was worth about 280 or so. The lady that was in the house, her husband left her and she wasn't good. So she was going to leave and move up north and take her son and move in with her father. So she said, hey, I quit. White flag, I'm done. So she wasn't paying the first or the second. So we foreclosed from junior position and now we own the house, subject to the first. Now the first is I'll go ahead and say gmac. And GMAC turned around and started foreclosure on us. And we said, wait, wait, wait. We said, tell us. We wrote them a formal letter and said, hey, we want to do something about this. We want to own the property. We'll pay you off, we'll make payments, whatever it takes, just let us know. They ignored us and we notified them correctly and you have rights as a junior lien holder and as a new owner. So they foreclosed illegally. So we sued them and they have recently come back and said, okay, you're right. We should have come back to you and given you an offer. We foreclosed illegally. So we're going to get the property now. We've got it anyway. But there's a dispute. There's a cloud on title right now. But that property now has done very well over the last three years. It's gone up. It's still empty. They went in and they basically recarpeted it, retiled it with granite countertops, made it real nice. And we're like, this is great. We're watching them do this, going, this is real nice. So that one is. We're still working on it. These are not easy deals. They take a long time. But I don't know how you get to, as I put, jam your foot in the door of a deal you don't belong in with a $5,000 investment and make it spread like that, Potentially that's that sort.

Okay, so there's a. There's. There's. Okay, so you got five steps to get their attention and start to build that relationship, get them into the rhythm of making the payment. And then there's. There's several different exit strategies that could happen, which is really interesting as well. Do you like doing these types of deals in like a Roth IRA or where do you normally do them?

Yeah, the whole IRA thing, as you and I know, here's the issue. Loans. Income from loans is taxable. Taxable, we don't like that word. And so the bottom line is if you do it in your ira, regular Roth, whatever is either tax deferred or tax free. That, in my opinion, is the way to do investments in loans. So that's what I do. I did this in my ira.

All right, so can you give me a little bit of a case study or give me some of the numbers on how this might work out? On one that you remember, how are the actual returns when you go all the way through the process?

Yeah, yeah. So I try to make this simple because it wasn't simple to me at the beginning, but it really is simple. I had my brother helping me here, and he's like, oh, boy, what if they say this and they can't afford that? I said, here's the deal. I said, if they've got a house and they can't, it's a regular house and they can't afford to pay $300 a month, they probably don't belong in the house. So just keep that in mind, that if they don't have any money at all, no income, no future prospects, they're probably a short sale candidate. They're probably not going to be in the house. We'll go find an agent, we'll sell the house, we'll make enough spread in there to cover the second and make a little profit and move on what normally happens, Jim, in these payment plans is once again 300 bucks a month. Can you afford $300 a month? That's it. So as far as interest rates, as far as. Don't make it complicated. I don't make it complicated anymore. I've done some zero interest for these guys. That doesn't sound too smart, Gordon. Well, guess what? It's all they could afford. And it's about working with the borrower and not being like a bank and not doing anything fancy with a double flip and a back twist. Frankly, they don't like banks anyway because they've been treated that way. They've been treated with all this fancy stuff and everything like that and hoodwink. So I just tell them I'm a simple guy. Here's the deal. We'll give you a 2% interest rate. Payment is $300 a month. How's that? Yep, that's good. Let's go. Okay, so your average deal, let's call it. Let's say you bought 10 $100,000 junior liens at $10,000 apiece.

All right? So you're going to buy 10 junior liens at how much?

Let's call it a million bucks. You've got a million dollars of debt that you only paid $100,000 for because you bought them 10 cents on the dollar. You bought a million dollars worth of unpaid principal balance. A million dollars. Ten of them. So ten hundred thousand dollars loans at ten thousand dollars apiece. So you paid $100,000 for a million dollars in debt. Does that make sense?

All right, so you bought 10 loans at $10,000 a piece. So it's a million dollar face value for 100,000 bucks.

That's exactly it.

All right, Got it.

And then let's say you got six of those paying you $300 a month.

Okay? So six of them begin paying at 300amonth.

Yeah, yeah. And say two of them went to short sale, and you got, say 20,000 for one and 15,000 for another one. So you got 35,000 back because those are done. Two of them didn't work out. They're still kind of hanging out there. But you got six of them paying you back at 300 bucks a month. And what you've done is reaffirmed the debt on those six loans. So let's take one of them on one of those deals. You went to Joe Smith and said, hey, Joe, here's the deal. We bought your junior lien. What we paid for it is irrelevant. It's $100,000 junior lien, you owe us $100,000. So what we're going to do is this. We're going to send you a forbearance agreement which says Joe Smith owes our company $100,000. You're going to pay us $300 a month for X amount of months and get this thing going. So what you've done is you've done that six times just to be general. And so you reaffirmed $600,000 worth of debt at 300 bucks a month. You've got two back in short sale at 35,000. So you got some of your cash back. You got 30% of your cash back.

Because I'm typing here. So Joe Smith, we bought your junior lien, you owe us the hundred thousand, and we're gonna, we're gonna do the forbearance agreement at $300 a month, and you're gonna do that on six of these. So all of a sudden you've reaffirmed, you've, you've activated $600,000 of debt, right?

Yes, they have written the thing that says I OWE Jim Ingersoll $100,000 six times. That's 600,000. So your $100,000 investment, now you've got $600,000 in debt. Now are you going to get all that? I don't know, Maybe, maybe not. But at least they're paying you 300 bucks a month. You got a chunk of your money back. You've got $35,000 cash back from the short sale, and you've got two more kind of hanging out there that are just whatever they are. So that's just kind of illustration. If you bought a good pool of notes, that's a pretty good pool right there. I'm not saying that always happens or whatever, but you asked me for kind of a swag, and that's kind of a swag to try to make it make sense.

So on that $100,000 investment, what do you think a realistic rate of return would normally be? Is it how much percent? I mean, obviously it's a double digit return, but how double digit?

Well, you know, I like that thing where I don't hunt for things unless I can triple my money, double my money, excuse me, in three years. So somewhere in the 30s is kind of my guesstimate. That's what I hunt for. Anything more than that. I find most of those to be shiny objects in the world as far as reality, but less than that. This is a risky business. This is a risky business and it's hard. It's emotionally draining. I've gone to these collection companies that do this full time and it's a dark environment. There's like a black cloud spinning over the office space. And these people aren't happy. I mean, they're getting cussed at. It's not, not good. And they don't. They're making 10 bucks an hour. Oh yeah, I'm calling Joe Smith again and have him cuss me out again. Yeah, that sounds like fun. I think I'll skip that. I think I'll just sit here and drink my coffee, you know, so it's not an easy business. I don't mean to make this sound easy. It's not easy. It's the opposite.

In order to double your money in three years, using the rule of 72, that's a 24%. You got an average 24%.

Yeah.

So the ones you get to work out are going to be very high rates of return. But the couple that didn't work out have a huge impact either. Because it's a pool, right? It's like a portfolio.

Exactly, exactly. So that's the best kind of swag I can give you. And I hate to sound, you know.

No, it's good.

Yeah. But you know, that always happens. No, I've had better pools than that. I've had worse pools than that. And. But I'm still doing it, you know, if you look at all the things I am and could be doing, this is what I'm doing. So.

And I think, you know, you're doing it inside of self directed IRAs. I mean, and so if you do it inside of a Roth, that, those, that 24%, you're going to double in three years. Those distributions are going to be tax free forever.

Yeah, it's good.

So really it's a lot more than 24% because you don't have to pay any taxes on it, right?

Yep, yep.

And so that's, that's the beauty of it. And you know, like, like a hard asset purchase, you're buying it with, with instant equity because you're buying it at a huge discount, 90% off.

Yeah.

And that also helps you minimize your overall return. But like, and Gordon, I really appreciate your saying it isn't for everybody and. No. And it is a lot of work.

Yeah. My Ernest Shackleton quote. I love this quote. Okay. Ernest Shackleton was a gentleman from England who entered the south pole in 1900 and he wrote an article in the London Times, an advertisement. Let me read it to you. He's trying to get the people to go with them. He says men wanted for hazardous journey, small wages, bitter cold, long months of complete darkness, constant danger. Safe return doubtful. He said honor and recognition in case of success. And he thought nobody would respond to that. But they really respond. He had tons of responses to that. He did go to the south. They tried to, they didn't make it. They got stranded. His people did for two years. He went back and got them. But it just, to me it's. I try to make, I tell people, I say this business is not for the faint hearted and it's not, you know, for the timid. So it really is not, I got to tell you that. So I would like to lay that story out there that. Yeah, is there an opportunity? Yes. But is it tough? Yes. For warriors only. They only need to fly.

I like that. Cash flow warriors, right?

Yep, yep. I'm like you. I mean, I'm a maniac. I love this business. I have a passion for it and I just love hunting down opportunities like this. Jack Miller talked about options. I got his options courses beginning in his advanced and you know, from his seminars, that was his big theme was a little bit of money. Don't risk what you got. Just risk a little bit because you're wrong most of the time. Nobody can predict the future. And a lot of things don't work. A lot of these great ideas, they don't work or the market changes. But don't risk, don't lose. Warren Buffet always says the second rule of investing is don't lose. And so is the third rule. Don't lose. Keep what you got. Just keep what you got. Build a pile, live off the passive income and don't lose.

Hey. And as just a little bit of a lead in to our next mastermind, call. What did Jack Shea challenge everybody to on the last cruise? Was it. Were we supposed to like double our IRAs between this cruise and the next one?

I thought Jack was a good guy, Jim, years ago. And he gave me one time and he said, and he said, you know Gordon, he says you should double your IRA every year. And I was like, thanks Jack. I was like, I lost sleep that night thinking, how am I going to do that? How am I going to. What's he talking about? And he talked about, you know, buying realtors commissions and doing this and doing that. And I was like, ah, you know, I can't see myself doing that. You know, we all have to find a fit for ourselves that we're comfortable with that works in our market. So I just thought, hmm. And it's kind of like the same thing with this single family house and option and buy and hold. I was like, how does that. How am I going to do this? So Junior lien was my deal. Jack's the one that inspired me to do this, and I'm kind of his poster boy now, so. Yeah, but that's what he said. Double your IRA every year. And I lost sleep about that for a couple weeks.

I mean, it's good to have big goals, right?

Yes, yes.

Big goals are good. All right, I'm going to jump into some of the questions. Unless you got more to add there. Gordon, I think you did an incredible job summarizing this whole business in a very concise amount of time. The perception of the no business is that it's really complex and you've got to be a financial whiz, and it's really hard, but you really boiled it down to some easy to apply steps and things to understand. But it's awesome. It's also an incredible relationship business because you got to have relationships to buy the notes. You've got to be able to create a relationship with somebody you don't know that's defaulted in order to create the return you're looking for. There's a lot of people skills in this business, isn't it?

You know what? People don't think that real estate's a people business. And if there was one word you just said it, relationships. That's the most important thing. People always say to me, they say, well, where do you get the notes? And I say, well, I build relationships. And they go, yeah, yeah, we heard that. But where do you get the notes? And I'd say, how many relationships that I have? And people go, yeah, but where do you get the notes? And I said, it's related. People don't want to hear that. They think it's some rocket science or it's some strange thing. It's relationships. And you got to get out there and get to know everybody, go to these meetings, shake everybody's hands, figure out who the good guys and the bad guys are. And then the ones that you like, they got to like you, and they got to know, like, and trust you and believe that you'll fund that when you say you will, and you know that you're not a whiner or you don't suck the air out of the room, that kind of stuff. You got to build relationships. It's the key to this business, that's for sure.

Absolutely. Well put. And that's the whole essence of our bank elimination blueprint too, Gordon, because everyone wants just like a silver bullet for connecting yourself to doing deals without banks and without using your own money. But the key always comes down to building relationships and building what you and I both know is the most powerful weapon, which is your financial friend network, right?

Absolutely. Absolutely. I didn't understand that when Jack Miller first talked about this financial Friends, I was like, yeah, I have friends, too. But the stuff they do together, you can't even conceive of what they're talking about until you get into it and start doing it and realize that if you have a trust level with somebody, you know, like, and trust these people and they'll err on your side. And you don't need everything in writing. I mean, the writing is only as good as the guy that wrote it down. You're going to sue somebody or just, you know, no, you're not going to do that. You have the right people with the right mindset that you trust. You can do so many things.

It all comes back to that. I completely agree. Hey, before we go to questions, and I see you guys typing in your questions, which is awesome. You just keep typing them in. We'll get to them in a minute. Gordon, talk a little bit about capitalism and what inspired you to write a book on that topic and how that ties into everything you're doing. I mean, you're looking to double your money every three years. That is capitalism.

Yes. Yes. And more specifically, I call it Enjoy Capitalism. I took a trip over to Europe in the fall with all these guys that we talked about. And you're over there at the European Union there in Bronco.

Are you going again this summer?

I am in the fall, actually. We're going to Spain this time, which is going to be great with these guys. I mean, the best part of it is the people we're going with. You can go to some terrible place and be with these people and just have a great time, but we're going to be in a great place, too. So it's unbelievable. But, you know, you're over there. And to me, they've given away a lot of their freedoms, in my opinion, to these, you know, bureaucrats. And I don't mean to get into politics, but that's all right. And even here, you know, in my opinion, we're giving away a lot of our freedoms, and I don't agree with that. I realize we need regulation. I get that. I mean, we kind of lost some of that maybe that everybody got greedy On Wall street and things imploded. I get that. But just the fact that you talk to people from Asia or something, and, you know, the government tells them they can have one kid and that's it. Can you imagine what they would do around here if they told you you could have one kid? You know, people would ride.

Gordon, have you ever been over.

I've been to different places. I'm into China, okay?

I have been to China twice, and communism rules. I mean, it is real. They got the red flag. I've been, been there, done that, seen it, and talk to the people there very privately. And what you're talking about is real. That's why everyone wants the American dream.

I have a friend who has these teenagers come over to his house and stay at his home and go to high school here in America because they're trying to get into an American college from China. They're from wealthy Chinese families, and when they first come, we always talk to them and they go, oh, yeah, China is the best. China's the best. It's much better than here. After about two months goes by, you go talk to them again. They're like, you know, something better here.

Yeah.

All these freedoms that we take for granted. They, you know, they don't have them over there. And it takes a talking to somebody like that. But, you know, people come over, these alien people, and they basically, they'll start a business. They'll say, you guys don't have a clue what you've got here, how much opportunity you have. Because we don't. We don't even have a chance. There's no chance over there. If your dad was a peasant, you're going to be a peasant. That's it. And, you know, I get into this, that whole thing, and I won't go into it in detail, but Steve Jobs or Elon Musk. Steve Jobs ran Apple. Musk runs Tesla and everything else. Those guys, they do this because they love it. That's one thing that. One of my themes of this whole enjoy capitalism thing is that I see people sometimes say, yeah, I want to get into real estate because I need this, this, this. And I go, yeah, so you need this. Why don't you just go do that? They're like, well, real estate will do that for me. They don't have a passion for the business. I have a passion for the business. I have a passion for building a plan like I did and fulfilling it. That gets me going. The money is great and the passive income is great. But my point is, I see most of those people fade away. They really don't love the business. I really get into it, as you can sense. I get enthusiastic about this. And one of my mentors was. I met John Wooden, the all time basketball, college basketball coach. Yeah, in the 80s. He was retired and I was somewhere and he was there too. But my point is this. I read his books about success and his whole thing was. And here's the key point. This is a daily grind. I try to make the points all the time. Not a big fluffy point. This is hard. This is hard. It really is. It's a daily grind. You're going to have bad days. You are. A lot of them might be bad, especially doing something you're not comfortable with, something you're new at, whatever it is. But he talked about, somebody came to him one time and said, how is your team going to be this year, coach? And he goes, well, I won't know that. I couldn't tell you that. And they said, well, why not? He said, well, I won't know for 20 years. He said, coach, I asked you about this year. How's your team going to do this year? Did you not hear me? And the coach will go, no, no. He goes, it's more than about basketball. The most important thing is how these guys turn out as men 20 years from now. If they're the right kind of guys, if they have the right direction, if they have the right morals, if they're good guys, if they're good fathers and whatever they do in their business. But he was talking about the fact that you've got to find something that you like to do, that you love to do, and then do it every day, grind it out. He talked about practice and he would say, you know, during the game to his players, he would say, don't look over at me during the game. It's on you. He says, I had you at practice five days this week. That's where I molded you. That's where I gave you everything that I can give you during the game. It's on you. So my point is this. If you're looking for a big ending or what real estate can do for you, I would do something else. Because you got to like practice, you got to like every day grinding it out. And that was his definition of success, was grinding it out. Every day getting a little bit better, every day working on making yourself better. And this whole thing about enjoying capitalism, you got to enjoy what you do because if you don't, you won't love it, you won't talk Like I do. I mean, I get all passionate about this. You can hear it in my voice. I just love it. And I tell people, I say, you know what, Find something else. Because as John Wooden would say, success is not making a million dollars or whatever your goal is. It's about doing it every day and getting a little bit better. So I don't mean to preach or anything like that. That's part of my. Yeah, my enjoy capitalism thing was the fact that most Americans seem to get a crummy job that they don't like and just kind of do it and, you know, they end up with nothing at the end. I'm sure people like David Salps told that story really well about how most Americans end up with nothing. You know, they patch you to death. The retirement guys, the stock guys, they don't have your interest in mind. They have their interest in mind. You've got to take control of yourself. You got to learn something that makes money. You. And I think that real estate and notes are probably the best avenue for the little fish like us out there enjoying capitalism, getting free to where you can do whatever you want to do. You can go to Europe or not. Hang out with people that you want to. Not have a boss telling you what to do. Can I give you my top five John Wooden isms?

Yeah, I'd love to.

So John Wooden once again was a basketball coach and he would tell his players these things, these different statements, and the players would come back 20 years later and say, you know, I thought he was talking about basketball, but he was actually talking about life. So here's the first one. Failing to plan is planning to fail. And I've got a 20 year plan. Jim, I think you saw it there. It was to create 20 free and clear assets. I wrote it down and those assets included single family houses and now notes. Once again, if I bought that $100,000 note for $10,000 and I can get it, paying me $500 a month, there's one. And I had 19 more to go. And so, you know, I've done that multiple times, done that plan. But you need a plan. I know that's kind of the. Everybody says that, but failing to plan is planning to fail. How about this one? Happiness begins when selfishness ends. I love that one. I mean, what you're doing, you're giving to people. I think some basketball player on the court might have thought, you know what, he's telling me to quit shooting because I know I'm a good shot. But the team will win and Benefit if I pass the ball and not shoot every time. Happiness begins when selfishness ends. But the guys came back later and realized, no, no, he's talking about life. It's about giving. How about this one? Basketball or Life is not a game of size and strength, but of skill and positioning. When I first started this whole thing with the junior leagues, I said, how am I going to play? I don't have $100 million. I'm not a bank. How am I going to get in there? These banks aren't going to talk to me. But I just persisted and I said, okay, well, there's a hedge fund at a smaller hedge fund. Okay, I'll find a way. But it's not a game. You would think. I'm not a billion dollar size and strength guy. I'm a skill and positioning guy. That's basketball, and that's life. How about this one? Things work out best for those that make the best of the way things work out. I love that one.

Things work out best for those that. What?

Things work out best for those that make the best of the way things work out.

There you go.

You know, how about this one? Be quick, but don't hurry.

It's like Peter Fortunato says, real estate is a thinking game, not a running man's game. Yeah, yeah.

Yes. And, you know, let me tell you that Pete story. My favorite Pete story is this. It's the lawnmower story. You've heard that one where Pete used to go in Florida down there with his children. He had guys growing up in elementary school, and so they would have field trips, and they'd go to Busch Gardens or wherever they would go, and he was always there with them. He would coach the basketball team. He'd be on every field trip. And I think a couple of times, the kids would look at him and say, Mr. Fortunato, we really like you and we're so glad you're here, but we're a little worried about you. I mean, our parents all have big jobs. They're never home. They work 70 hours a week. And you're always here. What's the deal? You sleep under the freeway underpass. I mean, how do you make a living? And he would try to inspire them and tell them that it wasn't about getting a job and paying taxes to the government. It was about being an entrepreneur, that we have that opportunity to enjoy capitalism here in America like nowhere else. And so he told the story of a lawnmower. So what he did was, I think he went to one of the schools and said, hey, can I speak at the 12 year old assembly you're going to have? Yeah, yeah, you can speak. He told the story of Jimmy. And Jimmy lives in the neighborhood and Mr. Smith lived next door. And Jimmy went over to him one day and said, hey, Mr. Smith, would you pay me $10 if I mowed your lawn? I noticed it was kind of high. And Mr. Smith said, you know what, you seem like a good kid. Okay? So we agreed. So there was just one problem. Jimmy didn't have a lawnmower. And so he went into his dad's garage and he borrowed a pair of hand clippers and he got up at 6 o' clock one morning and started. And about 6pm that night he by hand had clipped the entire yard, made his $10. He did that two weeks later when it had grown again, made another $10. And he did that four times to where he had $40. And he didn't go out and spend the money on a new bike or his girlfriend or something. He basically went down to the swap meet and bought a lawnmower. So with that lawnmower, Jim, he mowed the lawn. The next time it took him one hour, not 12 hours like it had with his dad's hand clippers. And he did that a couple times. Then he went over to Mrs. Jones house and did the same thing. Pretty soon without spending the money on seed capital, he had a whole set of lawnmowers. He had four lawnmowers. And he also had some kids that liked the idea they were actually mowing the lawns for him. So here's little Jimmy, six months down the road, is retired on the passive income that these lawnmowers have produced in his neighborhood. I love that story. It just kind of tells how being an entrepreneur, kind of the Tom Sawyer story about painting the fence, you know. And so I love the way Pete tells that story about enjoy capitalism. That's where I got the idea about it. And I go back and forth about writing this book, but it's inspired me. So that's my story.

Good. And you need to write that book. You know, my second book, my first book was not particularly easy to write. And yeah, I wrote my own book. I assume you did too, right, Gordon? I did not everybody does, as you know. I really did. I wrote both my own books and the first one was. Was kind of a chore and the second one was a lot easier. But I have no plans to write a third one either because they are a lot of work, they take a lot of time.

They do that easy.

But second one for me anyways, was way easier than that first one. All right, let's go. To make sure you guys check out Gordon's website. Real Estate Known Investing Calm. It's an awesome title. Gordon's also really good with SEO and getting traffic and stuff. But let's see what kind of questions you have. Let me go back here just a little bit. Let's see, Rich and Ken, Raul, Victor Grimes. Gordon, how do you protect yourself when the person files bankruptcy? And in that case, the junior lien holder could sue. How do you work through the bankruptcy stuff? You said you've been able to navigate through that. It just sort of delays your payments, but you end up getting them. Right.

It's a great question. Can I tell it form of story. And once again, that theme is, I think the best way to answer anything and talk about things is in stories. Let me tell it this way.

I read that book, by the way.

Did you really Lisa Kron's book?

Yes, sir.

Yeah, it's called Wired for Story. That hit me, Jim. You talk about my SEO and everything. I can't even sell Facebook or LinkedIn. I don't do any of that stuff. I'm not good at that. But I'll tell you what I am good at. Following the advice of a guy who said regarding websites. Here it is. He said, create great, unique content. Great, unique content. If you do that, Google will find you, people will find you, and you'll be a rock star, because nobody else does that. So I've worked really hard to create great content. And that's it. That's my SEO and it works. I dominate the word note investing, Google, and I don't pay a thing. And all these guys around me are doing pay per click and everything else, and I don't do it. I don't pay anything just because my content is good and I'm specific. I wasn't trying to be Mr. Real Estate. I was trying to be, you know, the notes, a junior lean guy. So I wrote about that. To get back to the question about bankruptcy.

Yeah, bankruptcy.

Yeah. So it comes under the theme that I talked about earlier about what if your biggest fear wasn't. What if your biggest fear. Fear wasn't. One of the biggest fears that I had was bankruptcy. So now in my conversation with the borrower, they'll say to me, they'll say, hey, you know, I'm thinking about filing bankruptcy. And I say, well, I encourage you to do that. The phone gets quiet when I say it.

I Bet it does.

Yes, it does. And I tell them, I explained to them, I say, here's the deal. I say the bankruptcy judge will require you either in a chapter seven or a chapter 13. Those are the two forms of consumer bankruptcy to file this information. And it's everything. I mean, I know everything about you. I would not lie about it. They don't lie about it because it's a felony for them to lie to the bankruptcy court about what they have and what they don't have. So it goes on a system called pacer. Public Access to Court Electronic Records. And it's public record. So now I know everything about them. All the stuff they wouldn't tell me, I know everything. So once they file their plan that the judge approves, the bottom line is the court will appoint a trustee in a chapter 13 and they'll make them pay me. So now the guy that wasn't paying me has to pay me. He pays the trustee, who pays me. And the trustee has remedies that I don't have. He can garnish his wages, whatever it is. And the minute he stops paying me, the guy falls out of bankruptcy and now we're on again. So I have to hire somebody to represent me in a bankruptcy. I can't contact him directly. No problem. I don't. I hire somebody to do it. That's okay. It's just one of the rules. But bankruptcy can be a really good thing, and that's in my experience with it. Does it delay things? Yep. You know, these notes aren't perfect. This is a bumper car game. You kind of go along and just bump your car down the road and it's like, boom, boom, boom. If you're looking for perfection or that type of thing, don't look here. People always ask me, what if this happens? What if this happens? What if? And that could happen. But it's rare. The bad things are rare. The things you think are the worst, the things that you fear. Bankruptcy, foreclosure, have actually been a good thing a lot of times. So that's just one story. We could talk about bankruptcy for a week. Am I a bankruptcy attorney? No. Once again, you don't need. Yeah, so that's my answer.

All right, got a couple questions from Justice Nana here. It says, is there a website you like to use for buying pools of performing or non performing notes? I think I know the answer to that. And then also, when you do contact these homeowners, in your five steps, do you just say, you're Gordon Moss, note investor, or how do you brand yourself in that respect.

Okay, okay. So the first question was, do I say get on the Internet and hunt for different sites for notes and let me kind of address that. I'll make it real simple. I call them joker brokers. There are a lot of people out there.

Like pretender lenders.

Yeah, exactly. They're not the real deal. Don't waste your time. Now you can go to different sites. FCI has a site. There's different sites out there. Loan, mls, just Google loans. And you'll see five different sites. Go study their stuff. I never bought a good note from those guys. Okay. Usually they're shopped. They're for people that aren't informed. All these joker brokers out there don't have a clue. They don't have control of the deal. They'll say something like, oh yeah, my brother in law's friend had some notes and he wants to sell them. But don't waste your time. So once again, what you do is you start building relationships with the five groups out there. I'll give some to you right now. Go to Partners in Payment Relief. Go Google that they're in Pennsylvania.

Real quick. Okay. All right. First one was Partners in Payment Relief.

They have a website. They'll ask you to sign up, they'll send you one note, probably too high, but it might not be a bad way to start. You can buy one note. I have not bought from them, frankly, ever. But you can go there. Usmr, US Mortgage Relief there in Pennsylvania, close to Philadelphia. They, they've got notes. So. But once again, you know, this is a little clubby niche business. We all know each other, we all talk about each other. You know, I was going to give you one more name, but I'm not because they're bad guys and I don't even want you to do what? Well, yeah, so. So the whole thing is.

That gives them a couple things to go out and look at, right?

But in general, let me just say that all those sites out there, you need to build a relationship once again. You need to get out there and know the people, sit face to face with them, take them to lunch and get to know them and have them get to know you and say, hey, yes, I've got some money, I know what I'm doing. I'm relatively new. But I got the theme down. If you spend 30 hours on my website, you will know more than 80% of the hedge funds out there and 90% of the world out there just by doing that. I've written articles about it. I've got video about it. So just by doing that. But the joker brokers on the Internet, I would avoid them. And the other part of the question, I forget now.

All right, see. Oh, when you, when you're introducing. When you go through the five steps.

Yeah.

And you're introducing yourself to these people and trying to get them to reach out to you through shotgun awe and knocking on the door and sending letters, how do you introduce yourself? Do you say, I'm Gordon Moss, note investor. You're note holder. Yes.

Here's what I I position myself as the manager, and I'm an employee just like they are. And I have a boss who's overbearing and a jerk. And I report to the president. That's what I tell them. I report to the president. I kind of do. I am him, but whatever. And then I also say, I've got legal, so I've got a legal department and I've got the president. So here's the bottom. Here's the way I say that I can't make a decision. I'm their advocate. I'm here to help them. Here's what I I'm here to help people who want to be helped. Are you one of them? Because if you're not, I've got a stack on my desk. I'm busy, like you are next. I mean, I don't have time to talk to you. You can call me back when you're ready to be civil, when you're ready to show me respect, when you're ready to get something done. I'm here to do business. I'm your advocate. I will go to the president and I will make my case for you. If I can tell him that you do what you say. You've already proven you don't pay your debt. If you're not going to call me back on time, if you're going to be belligerent, we're not talking. I'm here to help people who want to be helped. Are you one of them? So that's the way I position myself. Because if they come back and say, well, we want to offer you $10,000, I say, well, I can't make that decision, but I'll get back to you. Or I can take it up the chain to our investors, to our president. And then they say, well, what's this foreclosure thing you're talking about? And I say, well, our legal department are. They're maniacs. I mean, they don't care if you have equity or not. They'll Start foreclosure on you. So if you want me to pull the file off their desk, I can try to do that. If you show me that you want to respect me, that you want to work together, and I'm busy. I got a stack of files. I'm here to help people who want to be helped. Are you one of them? If you're not, click, you can call me back. That's the way I position myself with the borrowers.

So as an employee, as a manager, and, you know, I do the same thing with my tenants, and, you know, I don't want them to know that I own the house, you know, through a land trust or anything. You know, I want them to say same thing. Gordon, I'm an advocate of yours. If you make a request, you know, I'll run it up the chain, which is usually to my wife. You know, I'll try to go to that for you. You know, if you don't pay your rent, our legal department will get involved and you will get evicted. It's actually a pretty similar approach.

I got it from you guys. Exactly. That's exactly where I got it from. You know, it doesn't pay to be the guy in power. It doesn't pay. It pays to be just like them. Got a bad job with a bad boss. You're doing your best just like them. Let's get through this together, and I'll try to pick it up the chain and get some results for you. I'll do my best if you'll work with me.

Yep, if you're credible. Hey, we got a great question here from Daniel Ward. This is one that I hear a lot in the no business, Gordon. It says, don't you need to buy out the first mortgage if you're going to foreclose on the second mortgage?

The question is, do I need to buy out the first mortgage if I'm going to foreclose? So the answer is no. Now, I can do multiple things. Let's say I'm in second position, which I normally am. And you're like the little brother. You're the guy at the table who gets to eat what's left over when the big brother is through. That's the perception that you're in a weaker position, but you're actually not, because you can actually stop the foreclosure by bringing it current. You can go to the first and say, I understand you're starting foreclosure. What will it take to bring this loan current? And they say, who is this? And I said, this is a junior lien protecting my position. And they go, you're not the borrower. I said, I just told you, I'm the junior lien protecting my position. If you foreclose, you wipe me out, so I'm not going to let you do that. And they said, who do you think you are? And I said, I'm the guy in charge, believe it or not. You don't believe it, but you're going to in a minute. Because if you accept my payment, the foreclosure just stopped. So in a lot of ways, you can control the foreclosure from the junior position, which shocked me when I first heard that and understood that it changed my perception about this business. So let's say I do foreclose in second position. What happens to the first? Well, it depends whatever I want to do. I mean, I could pay it off. If there's equity and I really want the property, I could just go with cash or a loan from somebody else, whatever, pay it off. Or I could start potentially making the monthly payments on it. Or how about this? I tell the story of that guy. Let me tell you this story real fast. So in Las Vegas, which is a market close to me that I've invested in over the years, maybe in your market, too, for four or five years, people didn't pay their mortgage. Their first mortgage, they didn't pay, and they just sat there and the first didn't do anything. So I said, this doesn't seem right. This doesn't seem fair that I paid my mortgage, I do everything right, and here they are not paying their mortgage, and. And they get to stay in their home. So I said, how do I become that guy? How do I become the guy that doesn't make the payments? So I said, why don't I foreclose in second position, which I've done, and now I don't make the payments and nobody calls me and they leave me alone for years. That happens. Believe it or not, I became that guy. But my credit isn't on the line. I didn't sign up for that loan. I have the loan subject to somebody else's loan. Isn't that sweet? So I collected rent for two years on properties where I was that guy. My credit didn't get ruined. I just didn't pay and nobody contacted me. So those are a couple examples. You can pay it off, you can not pay it. Depending on what happens if they start foreclosure, you can work with them. I told you my GMAC story earlier, so I hope that Helps.

No, that was good. Anybody else have questions on notes? This is a really, really unique niche. It works really good in self directed IRAs and things like that. But like Gordon said very transparently, it's not for everybody. But the fact is nobody should be like a one trick pony. And that's why a lot of people start off like wholesaling or fixing and flipping houses and they never do anything else. And then the markets shift or make a change or you get a deal you don't know what to do with and you pass it over. It's good to know how to do all these different things so you can maximize your strategies. And this is just another one that I wanted you guys to have a lot of exposure to some great content tonight. Any other questions tonight? It's starting to get late. It's 10:30 Eastern Time here in Richmond, Virginia. Otherwise, Gordon, do you have any, anything you want to close out with or. I think everyone should go to your. Go to your site here, Real estate and note investing and grab your giveaway. The seven most frequently asked questions and the nine you should be asking 16 questions. But yeah, go ahead and close her out.

Yeah, you know, let me just kind of throw out my own little personal business principles, business philosophies, if I could. I coined, I didn't coin it, I actually stole it, a phrase that I really liked. And here it comes. Stay small, keep it all. Stay small, keep it all. Now, I've worked in corporations where I had 100 employees. I was never a good boss. My employees never liked me, I never liked them. I never liked the people that I worked for. I wasn't a good fit for that. I didn't like the fact that it was like this adversarial. So I said, how can I, you know, I don't need to go have a 10 story building on the freeway that's got Gordon Moss on it. I don't need that. You know, I'm sitting right now in my little office in my house with my computer. You can do a lot of things virtually today. You guys know that. And I just said, you know what if I got a check for whatever, $10,000, and I got it here and I had to pay the office building and the secretary and the three people that worked for me. And obviously I end up with nothing. I'm like, wait a minute here. Stay small, keep it all. And this business, in my opinion, allows you to do that. And it's my theme because when Jim calls me next week and says, hey, we're taking the boat out. Can you come fly out here? Yeah, I can come. I don't answer to anybody. I've got friends with these big companies and they've done very well. Now it's 20 years later and it's like they work for the employees. It's like they can't shut things down because these employees put them through the hard times and now they're kind of beholden to the employees. And I'm like, man, I don't like that either. So making a billion dollars, it sounds kind of good. But frankly, I don't need a billion dollars. I don't know what I would do with it. So this stay small, keep it all.

Business principle along that keep it all theme. Gordon, I'm going to go back to this again because we're coming into hardcore tax time.

Yeah.

Learn to work and invest where you, where you, where you do really well and you, you know, you, you can avoid paying all those taxes if you're careful and you learn, learn how to do it. Things like Roth IRAs, self directed IRAs and all those others.

Yes, yes, yes, exactly. I mean the Jack Shays of the world, I guess in a couple weeks will be great for that. Jack, she is the master at 1031 exchanges at trust and all that. Jack is an amazing guy.

Along with Keep it All, it goes back to protecting your assets and that goes right into the next mastermind, really. We're going to talk about personal property trust and land trust and all of that.

Oh, beautiful. Well, your guys are very fortunate to have someone like yourself who gets all this stuff at a high level. So they're very fortunate. But you know, I can, I can keep going with stuff or just kind of.

Oh, it's exciting. I know.

Yeah.

Gordon, I've had a really great time and, and I really appreciate your being on with me. Are you coming on the next IRA cruise?

Yes, I am. It's down in Puerto Rico. I actually lived in Puerto Rico for two years in San Juan a long time ago. So I'm looking forward to going back to my old elementary school. And yes, I am, I will be on that IRA cruise. I will be there.

And I just pulled up the website here and I like the way Walter put here, invest in your network. That's the theme. And I'm going to be there as well, Gordon. And we're going to leave out of San Juan, we're going to go to St. Croix, St. John's and all the way through the Caribbean, which I personally love the Caribbean. So I am super excited to go. Check it out if you're able to join. Gordon and I and others from our community are on there as well@irafundcruise.com Gordon. Gordon, thanks so much for being with us. I really appreciate it, and all my best to you. Enjoy the west coast and enjoy doing your deals. All right, we'll catch up again soon.

Thank you, Jim. It was my pleasure.

All right, guys, see you later. Bye. Bye.