This is a recording of a San Diego Note Investment Club meeting (YouTube, July 21, 2014) featuring "Coach G" speaking about non-performing notes and note investing. The clip begins with Gordon Moss reading a member email that mixes a loss (a bankruptcy/shortfall and legal fees) with a win (a $50,000 payoff). Coach G opens with informal remarks, thanks the organizers, and presents his main early advice: combine real estate ownership (single-family property) with note investing—"buy a property and buy a note"—because the property can appreciate/tax-advantage while the note provides cash flow. He frames the talk as practical, anecdote-driven guidance rather than a sales pitch for his book.
Chapters
I get the honor of introducing our guest speaker tonight. And he asked me to real quickly read an email to you folks that just kind of summarizes this business. And you read this just puts a smile on your face. So here's the email. Hey, Gordon, all is well with my note business. Then listen to what he says. I just got wiped out on a BK13. Thought I had plenty of equity according to Zillow and Eprazal, but my own appraisal came in about 9,000 short. If I had known, I would have held onto the note for a year and let the first unpaid balance drop and the fair market value increase. I had a lot of legal fees on top of this one. Also losing about 16k. All right, so all is well on the good side. I have a borrower that is selling her home and I'm getting a $50,000 payoff, enough to pay for the entire pool that I that came with this note and closing it next weekend. I see no reason that this would fall through. The champagne is on ice. I hope all is well with you. Thanks for all your help and support. So that's. That's Gordon. He's going to tell you how you two can have a collapsing. Great. No business. Please welcome Mr. Gordon Moss.
I like the feel of this room. Notice nobody sat in the front. Look at them in the back. They got their arms folded. That's where I would sit. I'd sit back there, put my feet on the table if I could. Nobody would notice. I wasn't an A student. I was a C student. Not that I couldn't do it. I just didn't see the point. So I think I want to thank Gary for putting this together. I think it's a great idea. I always want to support people who are out there on the edge doing stuff. There was a huge need out there and it's here tonight. You can see it. So thank you for having me as your first speaker. I'm honored, humbled. So thank you very much and thanks for everything else that goes with it. Alan, I just bought that camera a minute ago, so he set it all up. Great people. That's the best part of this business. I'll say it over and over again. It's the people. Great people. So this is a note investment club. This is not a real estate investment club. Let me do a quick poll here. Who's seen me speak before? Okay? A lot of you. And you probably heard the same thing. And I said tonight, I said, you. You know, I'm going to shift gears Here I've done a couple things in the last two weeks. I've traveled around the country, I've gone to all the hedge funds and kind of tested the water on the business right now. And I was going to bring that to you and say, here's what's the market, in my opinion, and in their opinion, here's a profile of some of the hedge funds out there, how their businesses are set up, how they're doing, how they feel about this market. Does that sound like something interesting? Okay. Okay. And let me just say, too, that, you know, I've written this book and I'm not here to sell the book, but if you do, I got the seven questions everybody asks and the nine questions you should be asking in this book. It's on Amazon and Kindle. So we're not going to talk about that tonight. This is kind of the next level class. Is that okay if you go back and look at the book, if that sounds something you need? I'm going to start by telling you the best piece of advice I got that took me two years to figure out. I was at a ski event with John Schaub, who's a friend of mine, and let me just say, you know, the guys like John Schaub and Jack Miller and Pete Fortunato, I call them the A team. I mean, they know the real estate game in and out, but they're also note guys. You know, note guys people get in the teens. We kind of look back at these people, say, I'm getting, you know, 8% or 7% kind of go, okay, you know, because it's frankly, ain't that tough to get that kind of return in this business. Bill Tannen speaking next week. And I'm guilty, too. We should all be a part of his calculator class to get that down. If you haven't got that down. It's a key fundamental skill to know how to get this thing going. So my real goal is this. I want to communicate this business. I want to make it not simple, but understandable to the most people. I mean, there's always going to be some rocket science who just gets everything or can't understand anything. And then there's the new guy who might not ever get it, but I want to just. If you ask me, Gordon, why are you doing this? What are you trying to do? I'm trying to communicate it. Well, so give me some feedback at the end. I'm wide open to your advice and how to make it sound better. Okay, here's the best piece of advice I ever got. Here it comes. Teryl Sheen. Taryl Sheen is a veterinarian in San Angelo, Texas, One of the coolest guys on the planet. And he came to the ski seminar and one night we're out there doing something and he says, you know what you should do? I said, what should I do? He says, buy a property. And a property to us means a single family house. We're single family house guys. I'll go into that later. He said, buy a property and buy a note. Buy a property and buy a note. Now, some of you that know me know that I've named my site realestateandnoteinvesting.com. that wasn't just a flippant thing that I did. I thought about that because I'm a real estate investor for 25 years and I'm a non performing note investor for the last six. But these non performing notes are that note on steroids. So Terry said, hey, buy a property and buy a note. And I said, that sounds like two debits to my account. That sounds harder. And he says, well, why did I tell you that? I said, okay, here comes the question, the quiz deal. He says, that property ain't going to cash flow. I said, oh yeah, it will. I said, you know, I get a thousand bucks rent and I get the mortgage is a thousand bucks. He goes, you don't own too much property, do you? And I said, well, I guess you own more. But the bottom line is it doesn't cash flow. Am I correct? It doesn't cash flow. So what does the note do? Cash flow. So the movie goes 20 years down the road. What happens? The note. Notes don't last forever. I see people saying, I'm going to be a note guy. That sounds cooler. Well, guess what? A lot of the wealthy, wealthy old guys keep this in mind. They're buy and hold real estate guys, but they used notes for cash flow. So 20 years down the road, that property might have gone up in value, the rents might have gone up, it might even be paid off the note, the $300 a month payment or whatever it was, $300 doesn't buy what it bought 20 years ago and it'll pay off. It'll go poof, it's gone. But if you're buying them both together, a piece of real estate and a note, tax wise, it's a beautiful thing. Cash flow wise, it'll keep your hair this color. That was the best piece of advice. And I struggled with that for years. I didn't get that. Does that make sense?
Okay.
Buy a piece of property. Buy a note a la Terrell Sheen. Thank you, Rich, for reading that feedback from my student. That was two weeks ago. Great guy. He's doing very well. But that's kind of, you know, you talked about your experience and it's an up and down business. This is not like this. It's a rocky road. If you've heard me speak. I read that story about Ernest Shackleton who put an ad in the London Times in 1900. Talks about darkness, cold, you know, small chance of success, pain, pain, pain. This is an exciting business. You know, it's not for the faint hearted, but it's. Is it worth it? Yeah.
