Creative Real Estate : From Land Flips To Mobile Homes Parks with Jay Chekansky

Hey, you guys, what's up? Welcome back to the New and Experienced Investor Podcast, the podcast that brings real estate investors from all walks of life together. I'm one of your hosts. I'm Alex Barnett. I'm the new guy.

I'm Joe Homs and I'm the experienced guy.

Yeah.

Experience this week.

This week I've been playing bad cop. Yeah, yeah, I don't know why, but it's a very pivotal role. You're a good cop. I've been playing bad cop.

Yin and yang, it's all part of it. Yeah, um, we have an awesome guest in studio today, Jay Chikansky, and, um, we're going to talk about pretty much everything real estate. The guy's done it all. Every time I meet him, he talks about some other thing, some other deal that he's done. I'm like, How long have you lived? You're like 32 and you've done it all. It's insane. So, um, super excited. Um, we actually met at a meetup and we can talk about that later, but before we do, let's talk about our meetup that we have coming up. Um, February 26th.

Thank you. Yeah, February 26th, the end of the month, Hangar 24. And we'll have a special guest speaker there speaking about purchasing properties out of the country. Yeah. Should be exciting.

Yeah, it's pretty cool. They have some projects going on in Bali, Thailand, some other place. But yeah, should be really cool. But yeah, let's go ahead and jump on into it. Jay, thanks so much for joining us. Super stoked to have you.

Yeah, no problem. Thanks, guys. Appreciate it.

Awesome. Um, bring the mic up just barely a little bit. Yeah, right up. Yeah, awesome. So why don't you go ahead and, uh, just introduce yourself to the audience? How'd you get into real estate? How have you done so much?

All that. Yeah, so got into real estate in 2015. I was a mechanical engineer in the automotive industry, and on a Friday afternoon after 10 years of burnout, I walked in and said, we're good here. I'm not, I'm not coming back on Monday.

Wow.

Yep. So, so left that career. And prior to that, the first house I bought for myself, I would come home every night and medicate myself after sitting at a desk all day working on house projects. So redid kitchens, redid bathrooms, flooring, paint, roof, yard landscaping, all that stuff. So in 2015, It was either, you know, take the money I had in the bank and take a year off or invest in myself and buy a house to flip. So first house I bought was actually a seller finance deal. Bought it with seller financing, did most of the work myself, flipped it, made some money. But in the middle of all that, actually funny story, I listened to the first 180 episodes of the BiggerPockets podcast because I was just close enough to the elementary school next door to get their Wi-Fi signal.

Nice. There you go.

But realized in that first house that doing all the work myself, best I could do is 2, maybe 3 a year like that. So, uh, from that point on, you know, just got a little smarter. Uh, next couple houses, uh, hired out help, did some work myself, and then ran into a little pickle where I had 2 houses going at the same time. Neither of them were going very well. And, uh, I say that those 2 houses flipped me. They flipped me upside down, shook all the change out of my pockets, my bank account, and ran into a position of not a whole lot of money left in the bank account. So that was where I had to learn how to start doing deals with other people's money.

Mm.

Yeah. And that is where— that was kind of the beginning of this hodgepodge of deals that have been done through these years.

I love that. I mean, just the part where you just woke up. I mean, what was the— you probably had been thinking about it for a long time. What was the straw that was like, I'm not coming back in on Monday?

I was just done.

OK.

It was probably like— I was in the auto industry for 11 years. And I think the last 10, I was quitting. I was just quitting in very slow motion.

Right.

No, and then like the— I took 2 and a half months, I think 2 and a half months after that, I was on a car trip. I listened to Rich Dad Poor Dad.

Yeah.

And I finally realized that everything that I had been thinking and feeling about going off and doing my own thing and not having a boss, and it was like that book finally gave permission to go pursue that instead of trying to contort myself, like my life and my mindset and who I am into this corporate mold That just wasn't me.

You know, I find that the most honest people that I talk to about real estate have had some failures. And how much did you learn about those 2 specific failures that you changed your mindset, lifestyle, whatever it was? What happened during those failures that, you know, got you successful?

Yeah, so if I just fix those houses, sold them, made money and kept moving forward, I wouldn't have learned the lessons that I learned.

Right.

So like I mentioned a few minutes ago, had to keep going and survive in the business with no money. I had to figure out how to start doing deals with other people's money. Another one of those properties, it wouldn't sell on, you know, on the MLS. I ended up selling it with seller financing. One of the properties sold with seller financing, originated a note, And then had to go through and sell that note to a broker to recoup some of my money and figured all that out. And I'm like, oh, wow, I can charge more for this house with seller financing than I can on the open market. Now I've got this paper asset that has liquidity to it and options to what I can do. Just opened me up to an entirely new realm of the business that I would have never— maybe not never, but— wouldn't have been exposed to and wouldn't have had all of those problems in front of me to solve creatively if I hadn't run into that situation.

What was the interest rate on the note that you created and the length and how much of a, I guess, a bath did you take when you sold it?

I didn't take a bath. I made money.

Really?

Yeah. Yeah. So that was a house I sold for $100,000, got a $10,000 down payment. And a $90,000 note at a 10% interest rate, 30 years fully amortized.

Okay. And then you said you sold the note. Did you take a loss on that?

I sold the note at a discount.

Yes.

Yeah. So I went from 10%, like a 10%, to sold it for 10.5%. So it was a very small discount.

Oh, okay.

Yeah. Yeah. It didn't take— you don't— like, usually you don't take baths. You sell at a discount. But when you go into these deals that you plan to exit with selling finance, you know, you're considering all this stuff.

Yeah.

In your underwriting.

Yeah. Yeah. No, I, I know a guy that buys notes and, you know, he's, he's like me when I, you know, we go try to find a property to flip. He's buying it at 60, 70 cents on the dollar.

Yeah.

But, you know, that's his, that's his business.

That's what he does, right?

You know, so it sounds like you planned a little bit more, that you didn't take any, any bath or a loss at all.

You know, To say I planned on that one is the wrong—

Okay.

It's the wrong terms. You know, it was more of like a, like a figure it out as I went.

Yeah.

Fortunately, so I had a private money lender that lent rehab funds on that particular property. And she was very, very versed in the note space. And there were many times where we would— her and I would be standing in the kitchen of this house, like talking about, okay, what, what can we do here? What are our options?

Hmm.

So I got some good, I got some good guidance on the first one.

Yeah.

Yeah.

That's good. That's, yeah, that's important. What about, you said your first house you ever bought was on seller finance?

Yeah.

So how did you know about that or how did that come to be?

Yeah, I actually, uh, got connected with a good wholesaler that had structured that deal.

Okay. Nice. And this is all in North Carolina, right?

Yeah. So all, all the investing I do right now is North Carolina, South Carolina, and Eastern Tennessee.

Gotcha. Okay. And you're doing that now virtually, 'cause I see you got deals coming up all the time.

Yeah.

So, um, You found that seller financing, super powerful, using other people's money. Who were the first people that you started approaching with maybe, I guess, little experience and saying like, hey, gimme your money, let's do a deal?

Yeah. So I was living in Asheville, North Carolina at the time. Great REIA there, lots of good subgroups. And one of 'em was this private money-focused subgroup. And I'm in a room with, you know, every month, 20 folks that are private money lenders. They've got self-directed IRAs or, you know, just high net worth folks with money and capital to deploy. And you just repeatedly show up to these meetings and people get to know you and understand, you know, who your character is. And actually, on one of those deals I mentioned earlier that did not go as planned, You know, I had a private money loan for part of that and never missed a payment to that, no matter how sideways the deal went. And then this particular lender, you know, has been a great reference for me moving forward in terms of vouching for me with new people because of the way I handled myself and her capital throughout, you know, the adversity I went through.

Yeah. It's like when you get into that space, I think some people think like, oh, somebody else's money, man. You know, I, my butt's not on the line, but really it's like you gotta treat it more than your money because this is gonna have lasting ramifications for your reputation and everything.

Exactly.

And if you play it right, then just like you said, you got an amazing ref— reference. Now people are lining up like, hey, when's the next deal? Now you got people coming to you. And so, uh, you know, then, then you're just, it's all about deal flow at that point.

And that's exactly it, right? When, when you pay people back and you pay people, people on time, Opportunities open up for you.

Yeah. I think people have a, a big block when they're first starting out saying like, I have no money. You know, like what would you say to those people? Like, like I have no money, so how can I get into this?

Yeah. Go find a deal. Right. If the deal's good enough, we tell 'em the money will always find you.

Yeah.

Or you'll, you'll find the money, I should say, if the deal's good enough.

Mm-hmm.

Right. Yeah. Yeah. And, um, like one thing that like draw me to you, um, when we met at that meetup was you were getting into mobile homes and you did a lot of this, the wraps with mobile homes. Can you touch a little bit on that, on why maybe a mobile home is a good investment vehicle?

Yeah, so manufactured homes on land, this isn't like what you see here with homes and parks and stuff like that. These are 1,500 to 2,200 square foot manufactured homes that are on 1 to 3 acres. outside of good markets in the Carolinas, outside of Charlotte, outside of Greensboro, outside of Raleigh-Durham, outside of Greenville and Spartanburg. And manufactured home space, most people won't, you know, won't look at it because they think, oh, this thing, you know, it's a trailer, something like that.

Mm-hmm.

But the margins are really, really good. Like unbelievably good. The demand is very high. People want, 3 bedrooms or 4 bedrooms. They want an acre or 2. They want to have chickens and goats and ride dirt bikes around and stuff like that. They don't want to be penned up in the city. So it's kind of found this, found this market. It's been really good. Like I said, the margins are great. The cash flow is amazing. We're doing a real service to the community by creating homeowners with the seller finance vehicle rather than just another set of renters. So there's a pride of homeownership. People take care of things much better. Right. It's a little safer for, for, for families and stuff like that to have a good-sized yard instead of having to play in the street and stuff like that.

And are those the deals that you're doing now or, you know, you know, tell me a current deal that you're doing.

Sure.

Yeah.

How you put it together and all that.

Okay. So actually, a deal that was supposed to close today got delayed to Monday. So we'll, we'll go, we'll go through this one. This one actually came to us via a wholesaler. Look at the numbers. You know, we underwrite— basically what we're looking to do here in the underwriting is, can I sell this property with seller financing with a monthly payment to someone that's about the same as the market rent in the area? Right. Because I think that if you put— if you juxtapose someone where it's going to be $1,800 a month to buy or $1,800 a month to rent, what do you think they're going to choose?

Buy it.

Buy it.

Absolutely.

Yeah.

Okay, so we bought this house. We paid $62,000 or $67,000 for it, something like that. It was a model year 2000 manufactured double wide sitting on a little over 2 acres outside of Spartanburg, South Carolina. So $62,000, I think was the number. $25K rehab. We did that. We borrowed, we borrowed $100,000 from one of my private lenders to do this. So that included the acquisition costs, closing costs, rehab costs, anything that we miss along the way. All right, that $100,000 is secured in first position. We make interest-only payments to our lender every month, and that is for a term of 4 years. Okay, selling that with seller finance, right? So we take, um, you know, we'll run comps and see what, you know, what this thing would sell for. Uh, when we rehab these properties, we always do it to FHA standards because we will get You know, offers from people with lenders in place. Lost my train of thought. Okay. Seller financing, right? So borrowed $100,000. Sale price was $200,000. $25,000 down payment. So that's a note of $174,900. That's at 10%, fully amortized over 30 years. So that deal, right? Oh, I'm sorry. Fully amortized over 15 years. They wanted to pay it off quicker. So that's like an $1,880 principal and interest monthly payment over a $1,275 monthly interest-only payment. So it'll cash flow $600 or so. No, I'm sorry. $100,000 at 10% is $883 per month. So this thing's going to cash flow almost $1,000 a month for us. $25,000 down comes to us, $1,000 a month cash flow. We'll season the note and hold it for as long as we need to. And when it comes time to pay off our private lender at 4 years, we'll talk to them first, say, hey, if you like how things are going, do you want to renew for another 4 years and just keep the money working? We'll continue to cash flow that. Or what we can do is we can sell off a portion of the, of the promissory note to pay back the $100,000. And that's just a math problem on a financial calculator. We can hypothecate the note, which just means we pledge the note as collateral and get another loan from another investor to pay off $100,000 and pay that, you know, pay that new loan back with the cash flow from the property. We could sell the whole note, cash out. And then what we do is we would take the difference between the $100,000 owed And let's say the $150,000 that we get for the note. So we'd take the, you know, that $50,000 comes back to us. Our lender's paid off. And the note buyer is now the holder of that note. And that mortgage is secured in first position.

So I don't know. You're kind of—

That's amazing.

You're kind of doing a wrap.

That's exactly what it is. It's a wrap.

Okay.

Yeah, we're wrapping a seller finance second Around that private money first.

Okay. Got it.

Oh my gosh.

And then you, you pretty much don't have any of your own money in there. So, you know, the $100,000, obviously, and you sell it for $200,000 and you take $25,000 out of the deal. So then you're wrapping the rest of it. So you're okay with leaving the 75% equity that you have in there, that, that's your, your Your plan.

That's the plan.

Yeah.

So, and the reason for that is, is we've got options. The, the lowest amount I'll make with a seller finance exit is typically the highest I would make if I just flipped it and sold it. Right. Does that make sense?

Yeah.

Okay.

Yeah.

And from there, now I've got, you know, I've got the cash that came in. Right. So if I was just doing a wholesale deal, I don't know. I don't know what you guys get out here, but $25K on a wholesale deal is pretty good over there. It's good money, right?

Yeah.

So I'm making a wholesale fee with the down payment, and then I've got this paper asset that pays me $1,000 a month.

Right.

And I can hold that as long as I need to, to either pay off me and then pay off the lender or make some other arrangements. But the real beauty is now I've got this paper asset And I can use that. It's liquid. There's, there's, there's a liquidity, liquidity portion to that that I can go and I can pledge that as collateral. I can trade that paper. I could use it as a down payment into another property, things of that nature.

Nice.

That's cool. I mean, how many of these have you built up or are active right now, would you say?

Like active in my portfolio?

Yeah. Ballpark.

It's These, these, these, uh, these deals cash flow very good. I choose to hang on to as many as I can.

I've asked Jay this like every time in a meetup, and I think he has an answer like that. He's like, it's, it's, it's good. Things are good. Things are— oh, that's good. Awesome.

The strategy parallels to other— it isn't restricted to just like, you know, cash cow manufactured homes in North Carolina. The strategy can be used, uh, anywhere.

Yeah.

On anything. I actually just, uh, just earlier, uh, well, about a month ago in January, we actually sold 2 mobile home parks that we bought with seller finance and resold with seller finance.

Wrapped the whole park.

Nice. Yeah. So you were from there and, and you moved to California.

Yeah.

And you're still doing deals there. Why? I mean, I don't want to pry, but why'd you move to California after Like doing a lot of deals and stuff there. Obviously for the weather this week.

Yeah, that's exactly it. Now, so November 22, I'm sorry, September of 2022, learned that we had a little boy on the way.

Congrats.

Yep. So she's from out here. Mother's out here. She's got some other family out here. And the decision was made that in order to get her the necessary support, during pregnancy and his first year or so, be a little closer to family out here.

Nice.

And it's worked out very well.

Nice.

Over in Charlotte, North Carolina, where we were living, it was just her and I on an island with no family anywhere nearby.

Oh.

Yep.

Got it. Well, that's awesome. Welcome to California.

Thank you.

Fits right in. Golfing, bike riding, living it up, doing yoga. So I noticed like a part of your bio, you, you kind of mentioned that you're always like self-improving. And then I think ever since I've known you, you were going to like weekend little masterminds, you're always at meetups. Um, how important is that, would you say, in your career?

Uh, way up there, right? Um, I'm just not, not really a guy that's excited about doing the same thing over and over and over again. I want to conquer new stuff. And to do some of that stuff, to gain the courage and the confidence to tackle that newer stuff, you got to keep expanding your horizons and your education and your knowledge, your network. I mean, think about how much of your career has come with growing your network and expanding your network and stuff like that, right?

Yeah. Yeah, no, absolutely. Yeah. I think most investors are like that. You know, you get tired of one thing and you say, okay, well, let's go tackle something else. You know, I already know how to do this. Yeah.

Well, I mean, some people would say like shiny object syndrome. There's all this stuff. And then maybe in the beginning you're like jumping from thing to thing to thing. How have you been able to stay focused yet do so many different types of deals?

Hmm.

Who says I'd stay focused? Oh, maybe you're just effective and, you know, It was—

—that you just can accomplish it.

I jokingly say that for 5 or 6 years, my niche was taking action. I'd see an opportunity, I'd say yes to it, and I'd figure it out. And I think it's part of my nature and my personality. I don't know if it's necessarily the best path forward. Maybe figuring out one thing and getting good at it would have been better for me. But this is the path I walked down. I mean, the other thing is, is when I stepped, you know, stepped away from doing all the work myself, flipping houses and hiring all the work out, I would sell a house and I would have to take 2 months off until flipping the next house to recover from the brain damage.

I know what you're talking about.

I, I, I don't— I just don't connect at that level, right? Um, whereas when I speak with folks that Invest in notes. There's usually a higher level of financial acumen. And I liked having conversations with those people.

Right.

So.

Absolutely.

Take, taking action until I figured out who I wanted to be when I grew up.

Yeah, there you go. And, and kind of like what you said, so you learned the wrap strategy, seller financing, then you just applied that to different vehicles. One of 'em is even storage units.

Yeah.

Right? So talk a little bit about that.

Bought a self-storage facility in August of 2022. And it was a deal where a business partner of mine had sent a letter to, you know, to this particular owner. And she held onto it for like a year and a half and called out of the blue.

Hmm.

So we went and met with her. And, you know, there's something so important about meeting sellers face to face because you can ask questions to understand what their motives are, what they're hoping to accomplish, what they want to do. And then gaining some of that information allows you to solve their problem in ways that they may not have known. So had the conversation about seller financing with her. She'd done a really good job of taking care of this facility, except for when it came to managing it and— I'm sorry, managing the tenants, managing the books, advertising, stuff like that. Right. So physically, the place was very well cared for, but from a management standpoint, there's a lot of value to be added there. So I was able to structure a seller finance deal, ended up putting— so we bought it for $1.3 million, put $200,000 down, and we've got 10 years of interest-only payments at 6% interest.

Nice.

Yep. And, you know, there was some back and forth, right? We sat down multiple times. She would ask for something. I would ask for something in return, right? She wanted a bigger down payment. I asked for 90 days, no payments, right? Because I told her that the money that was going to— the extra $50K in down payment she was asking for was going to go towards repairs and updates and stuff, you know. And I told her updating her collateral. So just, just some give and take, right? But if I hadn't done a handful of those smaller seller finance deals, both buying with seller finance and selling with seller finance, you really wouldn't understand how to structure a deal like that and present it to someone. You know, that was a 7-figure transaction, right? You don't just show up there and ask a seller to formulate an offer, a seller finance offer for you, right? I needed to have the knowledge, the wherewithal, and the confidence to sit down and deliver this offer to her and to negotiate and to work back and forth and structure it where it was a win for her. She's got great cash flow in retirement without the headache and hassle of managing a 100-something unit Storage facility.

Nice. I love that. And then, I mean, what'd you end up— what'd you end up doing? Wrapping that one?

No, we kept it.

Okay. Yeah.

Okay. Kept it. You know, added something like $600,000 or $700,000 of value right off the bat. Sweet. In the first 5 or 6 months, right? That's equity. Can't eat equity.

Yeah.

But, you know, the real beauty is here is we've got, if need be, 10 years. 10 years of interest-only payments. And, you know, given that time, it's for us to do the value-add work to get, you know, 1 or 2 years of strong company tax returns to go and refinance into something longer-term fixed.

That's great. Wow. The power of—

Interesting. You know, the down payment money, Actually, so I talked about the liquidity with these seller finance notes. I'd put a couple of them together and was shopping them around to a group of folks who are, you know, private lenders and note buyers and stuff like that. And one of the, one of the gentlemen I reached out to, he calls me back up. He's a private lender on a number of my deals. He's a note buyer. He's just one of those, you know, guys that thinks creatively from a finance standpoint. But he calls me up and he goes, he goes, JL, I'll buy the notes from you for the— help you raise the down payment money. Or he goes, why don't I just put up all the down payment money and you break off a piece of equity? So that's what we did. Attracted, attracted the full down payment money, bought $1.3 million of self-storage with no money out of pocket.

Oh, when you coming out with your course, dog?

Now you did this while you were living there, or are you—

This, this one was ours. While I was living there.

Okay.

Yeah, that was while I was living there.

Yeah. Okay.

Yeah, about 20 minutes away from the house. So it was close enough, like the first 2 months of owning, it was close enough for me to drive back and forth every time somebody called the phone and said they want to lease a unit.

Okay.

And then, then we brought a professional property management company in place to take all the calls and handle all that stuff.

Yeah. Heck yeah. Um, I know, I mean, that's become like a pretty big, like, topic recently too, the self-storage. Do you think it's like viable still, or where do you see that as a general— do you follow that?

Yeah, you know, for a year and a half or so, it was a, it was a buyer's market and sellers just didn't know it. They thought they were still going to get, you know, a 4 or 5% cap rate like they had been offered for the previous 3 years or whatever, from, from COVID up to I don't know, the middle of last, uh, uh, end of '22, something like that. So what I'm seeing for, for deals to get done is, um, a lot of folks are using seller finance to get the price that they want, and in exchange offering that new operator cash-flowing terms that help them make it make sense.

Yeah.

But there was a period where You know, you get, like, you get emails from these, from these big brokerages and they're pushing 5 caps in a 9% interest rate environment. And I've never made that math work.

Mm-mm. Mm-mm. Yeah. I mean, it sounds like you, you got a lot of your deals from, from wholesalers, but I know you also, you do direct-to-seller marketing as well.

Yeah.

And you had a really cool thing that you told me about where you had You had somebody go down to the courthouse, get the eviction records, and then you would— you wrote a note. What was the note that you sent? I love that.

So yeah, had a girl that used to work for me, and I would send her to 4 or 5 county courthouses in the area all around Charlotte. And she would physically dig through one by one, like the wet ink eviction filings. You know, which these courtrooms— or courtrooms— courthouses, they have to give it to you if you ask for it via the Freedom of Information Act. And right there, right? This is information that hasn't made some monthly list or anything like that. Name of the owner, phone number, mailing address, everything. So she would write all this stuff down because you can't bring phones into these places anymore. She would handwrite it all down. And go back. We had, uh, had her handwrite in like nice blue ink cursive on lined legal paper, just a simple letter. And we scanned the letter high quality and reprint in blue ink on more lined legal paper. And then all she had to do was fill in like, Dear Joe, and the address. And it would say, Dear Joe, we know that tenants and toilets are a real headache. if you ever want to sell your rental at 123 Main Street, give us a call. Thanks, Jay. My phone number. And that was how that mobile home park that I told you about earlier, that was where that lead came from, from one of those letters. This woman was having to evict someone and she got a letter. And just write, like, the whole idea there is to reach out to these folks when They're, they're in pain of owning rental properties, right?

Oh yeah. Yeah. It can be painful too. I know.

That's not good.

I'm getting a tired landlord already.

Yeah. That's not good.

I get it. Yeah. It's the whole thing. And when you're like going back and forth to the courthouse and the, you know, everyone's being an a-hole, um, you're like, oh yeah, I'm done. So what could you get me?

Yeah.

That's, that's genius. Um, because I mean, I think you're right. Like by the time it gets to all the lists, then like the swarms come and then it's just like free for all at that point. Yeah. So being the first point of contact, it's awesome. Are you still doing that?

Haven't done it in a little while. Uh, it's just something that had fallen off the table. Yeah. But it's a, it's a great strategy. It's low cost. It was costing me $15 an hour, right? So what's that? Maybe $150 a month between Her travel to the courthouses, time there, writing the letters, mailing them out.

We actually ran into an eviction. It was our eviction. And we had a guy out there changing the locks. And Alex came up with the idea that, like, this is a really good lead here because the guy was telling us he does, like, you know, 5 or 6 of these a week.

I gotta call that guy still.

And I was gonna ask you. It's like, have we followed up with him yet? You know, it's like you came up with the idea and I thought, that's, that's amazing. That's a great idea. You know, it's almost like what you just said. This guy is out doing the evictions and stuff, and if we catch him at the right time, he might be able to provide us with some leads.

Locksmith. Yeah, he was a locksmith. He was like, yeah, I do like 7 or 8 of these sheriff lockouts a week. We're like, oh yeah, I've seen a couple. Like, yeah, make it, you know, make it Sweet finder's fee. Um, what's your, what's your, I guess your main source of deals right now?

It's direct-to-seller marketing.

Okay. Yeah.

Nice. What are you like texting, calling?

Text, letters.

Okay. Yeah.

Um, Google PPC.

Oh, okay. Getting into the PPC game. Are you running that yourself or you gotta— oh, okay. Gotcha.

No, I've got a, I've got a partner that handles that stuff.

Okay, cool. Are you seeing that that's pretty, um, I mean, is that a good lead source?

It was. From a profit-per-lead standpoint, they were some of the best ones. It's just you're at the whim of Google. And they make one little change to their algorithm, and you're dumping a ton of money into marketing and getting no results. And that's kind of what started to happen. Something changed in last September. And we turned it off for a couple of months.

Yeah, yeah, that is the— that's the tricky part. I mean, it's the same thing with Facebook. That's where I think like I've been seeing a lot more people talking about direct mail again because it's just like right to the person's door.

They're not going to turn off the USPS.

Yeah, exactly. So, um, I mean, if you have a niche list, then it kind of makes sense, you know, that just, just keep sending them. Yeah, mailers. Yeah.

Um, I mean, look, Looking at numbers from last year, cost per contract between direct mail and SMS, it worked out to the same.

Wow.

Wow.

Yeah.

Interesting.

That's surprising.

Crazy. Like, within like $15.

Wow.

Wow.

And that's like, so, I mean, that's a great point. If you're not tracking this stuff, that's all in your head. You're like, well, we sent out this many and, you know, it's like, Tracking all that stuff is so important. I guess that's your engineering side?

Well, look, I avoided it for a long time.

Okay.

And then realized that some— I'm going to have to— if I'm going to turn this into— convert it from a full-time hustle to an actual business that can be scaled, then yeah, you're going to have to track your numbers and know it. And it makes decision-making so much easier, right?

Yes, exactly.

If your spreadsheets— My stuff's probably at like a 95% accurate accuracy point, right? Um, it makes decision-making so much easier because the numbers don't lie, right? Whereas you might have recency bias where, oh, Google PPC is, you know, it's working great, let's, let's turn that up to $500 a day.

Yeah, that can suck you dry real quick. Yeah. Wow. Um, so it sounds like you've, you Well, like we talked about it, constantly improving. What are some, like, what have been the best, I guess, mentorships or courses, or have you gone that route, or is it all just meeting up with people personally and then getting knowledge from them?

No, it's been, um, you know, I, I've attended a lot of, uh, seminars that Pete Fortunato and Bill Cook have put on, and those are, those are like the, the, the creative finance guys that, that I looked up to. I had a moment years and years ago where I got to spend some time with Bill. And I noticed that guys like Bill Cook and Pete and Andy Teasley, these guys, the knowledge is leverage guys, there was an easiness to which they lived their life. And then I also had opportunity to spend a good bit of time with a gentleman in Charlotte that runs a big operation. And I remember him telling, you know, like, kind of stressed out, you know, we were just having this casual conversation. He was kind of stressed out. He's like, I got a whole— I have to wholesale 5 houses a month to make payroll. And I'm like, wow, I don't know if I really want that. You know, I'd rather, rather be able to scale with knowledge than having to scale with people and and all that stuff and all that that entails. So, um, you know, I mentioned those guys in those seminars. Um, Jimmy Napier has this, you know, easy book to read called Invest in Debt. Um, Mitch Stephen, uh, he, he has a podcast. He sells a course as well.

Okay.

Or I'm sorry, he sells a mentorship. But, uh, he was a seller finance guy that, um, just, you know, kind of laid everything that he knows out in his podcast and You know, binge that for years.

Amazing. Okay, these are like new names to me.

Yeah, me too.

That's good. Yeah, because they're not like on like YouTube, like, what's up, dude? Like all those guys. Yeah, more sophisticated gentlemen maybe.

Yeah, I mean, it's, it's guys that have made tremendous amounts of money and had tremendous amounts of impact before the internet.

Yeah.

The good old days is what I call that.

You weren't around.

Yeah, I was. Before the internet? Sure.

You were still in elementary school.

No.

Yeah.

Okay, maybe, but still, I remember a time. Okay.

Do you remember when the first computer came out?

Yeah, 1972.

How old were you?

I wasn't born yet.

Yeah, see? Hello. Yeah.

Yeah, but I think we did have like the original Mac.

Did you?

The gray one? The IIe? Oh, I don't know.

Yeah, I don't know.

I'd have to ask my dad, but—

Oh yeah. Yeah. It was probably a IIe. Yeah. That's right. It wasn't a Mac. It was—

Oh.

Just an Apple computer. That's what they called it.

Right. Yeah.

IIe.

That's right. Okay. Um, I have some videos I'm gonna bring up, not of you.

Okay.

But, but I just kind of want to get your reaction cuz you have this like well-rounded knowledge of real estate, so. Let's, uh, how are we looking on that, producer?

Good.

Nice. Let's bring the first one up.

Within market fundamentals, we talked about, you know, population growth, household income. Those are important. But one of the ones that's kind of harder sometimes is what are the biggest industries or what are the biggest employers in a city? So asking ChatGPT or something like that question can be really helpful. And one of the ones I like the most is, this is kind of ambiguous, But is a metric I personally care a lot about when I look at markets is what is the regulatory environment like? Like, are there any landlord-tenant relationships or laws that I should know about? Are there any bans or restrictions on short-term rentals that I should know about? ChatGPT does a pretty good job identifying those things within market.

So it just reminded me we're talking about technology. Are you including any of this ChatGPT craze into your Investing? No. Do you plan on it? No.

What about AI? I refuse to use it. Oh, why? Yeah. It, it is making people so fucking stupid. Yeah. It is unbelievable.

But, but it's the biggest new craze, so how can you still get deals done?

Yeah. It's just, yeah, it's, it's just like what I just said, right? You know, there, there's a, there's a group of guys still doing deals that used zero internet and zero technology. I think that a lot of that stuff, can it add your business? Sure. But if you're, if you're, if you're a person that relies on ChatGPT to write an email for you, you're probably not going to be a person in this business very long.

Oh, okay. Expand on that.

It's just, just from a standpoint of That thing, like that stuff, ChatGPT, it's a crutch, right? It's a crutch for not, not doing your own push-ups, like writing your own email, writing your own, figuring, figuring your own stuff out, right? Gotcha. Like I joke, I joke around and say like, you've got to do your own push-ups, right? This, this business will test you, right? It's been testing me the 9 years I've been in it. I'm still getting tested. And if I'm unwilling to put in the work to write my own email and figure that stuff out, what's going to happen when things get really hard? You're going to go to ChatGPT, you know, when you're in the middle of losing $60,000 on a house flip?

Yeah.

Is ChatGPT going to say, Jake, you know, now's the time that you have to go figure out how to do deals with other people's money. Here's a strategy. No, you got to figure it out.

Yeah, I agree. Yeah. And it's, it's, it's interesting. I think it's more of like a buzzword at this point. Because when you do use it, all it's doing is just getting some basic language that's been already written up to a certain point and then, you know, just regurgitating that.

Yeah.

So I totally agree. But it's kind of interesting that some people are, are starting to use it, or it may be BiggerPockets wants clicks, so they put AI and ChatGPT into the keywords.

Um, I mean, I don't, I don't, I don't think BiggerPockets likes AI. Oh, ChatGPT. Because I'm on the forums all the time and you, you really can't use ChatGPT on there because there's a, uh, there's a way that you can say this looks like ChatGPT and then they'll check, and if it is, they'll take your post off. They're looking for actual Live answers from somebody is what they're looking for.

Yeah, like real content, real thought.

Yeah, I don't think they like— yeah, I mean, I'm programming ChatGPT so that if somebody asks a question, you know, it gets directed to me. Right. Okay. But other than that, yeah.

Yeah. Yeah, no, and that makes sense because then at the end of the day, it's just like bots talking back to each other in a very simple level. And that's kind of where I think it may be heading at a certain point, but, um, it, it is, if you wanna call it a crutch, that's, yeah, that's like a cheat code.

That's what it is. Yeah, I, I agree.

Yeah. And I mean, what the best thing about real estate and, you know, like learning from experienced guys, it's like, it's the same process basically, except now you can just get all this data at, you know, I guess a bunch more data than you could have back in the day. Yeah. But it's the same process. You're still meeting with the seller. You're figuring out the problem. The seller finance hasn't changed. The math is the same. So, yeah.

I'm, I'm sure that there's very profitable ways to incorporate that into a business.

Yeah.

I mean, I've looked at all the videos. I'm like, I see them and they're like, you can make an extra $500,000 with ChatGPT today. And then you look at it and it's like, go to Canva and like, you just, Like type in a picture and then you print it on a t-shirt and like, that's it. Okay.

We've got Stephanie in the chat. Okay. She says, I love a guy that speaks the real truth, parentheses, this statement provided by ChatGPT.

Oh, nice. That was a little joke from Stephanie. But yeah, Jay tells it like it is.

I think all true people should. Yeah, I do.

Um, America's got a problem with diabetes, so why sugarcoat things? Yeah. Oh, and he's got jokes.

Yes. Awesome. You want to throw another one up there? This is fun. I like this.

It's so funny that that you took that last video to to the ChatGPT question. I thought it was going to be about regulatory regulatory something something or other. Yeah. Okay. Yeah.

Well, that's coming up next.

Nice.

She's producing.

When you walk around downtowns in America right now, they are empty. In particular, these office buildings downtown— workers have not come back to the office yet. Office occupancies are still 50% below pandemic levels, and that's now causing a big issue in the economy because it's causing lots of defaults on commercial mortgage-backed securities. The owners of these office buildings are going into default, giving the buildings back to the landlords, and there's nearly $3 trillion in commercial mortgage-backed securities out there. Mortgage-backed security debt that's owned by banks. And that debt is now going bad. And it's not only office buildings, it's also retail strip centers where the default rate's over 10%. It's hotels where there's a very high default rate. In 2023, what this means for you, you're going to see more of these banks cut back the lending, which is going to cause job losses and the recession to get worse. The people who are thinking that this recovery we're seeing in stocks and housing is legit, they don't know what they're talking about. They're not paying attention to To this CMBS crisis that's hitting America's downtowns, it's hitting the commercial property market, and it's going to cause the banks to trigger a crisis. When you walk around—

yeah, interesting video. All right, I've seen him before. No, who?

Yeah, he's, he's, he's pretty much out there all the time, you know.

So there's commercial fearmongering like that? Yeah, that's what gets the—

no, absolutely.

Yeah, that's clickbait. Yeah, yeah. I mean, and it's not just commercial, he does it for single-family residences. Uh, yeah, he's like, you know, Dr. Doom.

Yeah, yeah, Doom gets clicks.

Yeah.

So is that— was that just a video that he, that he posted, or is that an ad for something?

No, it's just a video. It's like the short, like, it's just like, you know, he's a YouTuber.

Yeah, you know, I'm sure he gets money for that.

I mean, the thing about people not going back to the offices is true, and yeah, because didn't commercial take like a big hit? Kind of.

Office space did.

Office space did. And then, because I think people are coming in and now converting those into housing where you can.

That's difficult to do. You almost— you're almost better off just tearing the whole stupid building down and starting all over again. Because, you know, in a commercial building, you could have 20 stories, and how many restrooms you have on each floor, you know, maybe 2 or 3. If you tried to convert that to single-family or condo-type living, you'd have to have kitchens, you have to have bathrooms in each floor, you'd have to pipe all that stuff. It's just cost prohibitive to do something like that. So I agree, there's an issue, there's a problem. I don't know if it's as bad as he indicates.

No, people are going to be in the street living in boxes, Joe. And that doesn't alarm you?

Well, no.

If mortgage-backed securities go bad?

If these buildings are empty, then, you know, move in the homeless there or something.

I think that, yeah, that's San Francisco's doing that.

Yeah. I don't know. What do you think? You're the guest.

Yeah. Hot seat questions here. I didn't know what I was walking into. I really don't follow the commercial stuff like that.

Okay.

very much at all. I'll, you know, stuff will come across my bow and I'll look at it and go, oh yeah, makes sense. Offices is hurting. Everybody worked from home for 2 and a half years. Yeah, makes sense.

A big, big picture. Do you see— do you see disaster headed, uh, our way? You know, what if you're looking at it—

We can take this a number of different ways.

Like spiritually?

Recession. He's talking about recession, you know, depression. Do you see any of that?

I think, yeah, I do see it. I think we all feel it. You're looking for evidence of what I just said?

Yeah. In 2008, you could see that we were having issues. Banks are out there giving warm body loans, I used to call them. Prices were just shooting up for no reason, you know. So it's almost like you could see it right in front of you, what was happening. Um, I don't necessarily see that right now.

So here's, here's what I've noticed, uh, just in looking at my portfolio and paying attention to different things. We've got an uptick in people being late with rent, an uptick in people being late with mortgage payments. And that all started kind of moving in about a year ago. I think I started seeing it. It's still not, you know, like, from my standpoint, it's okay. Like, I can absorb some of that stuff, but I just kind of noticed it. And then just paying attention to how far my dollar goes right now.

So usually when stuff like that happens, if people are losing their jobs left and right, you know, the employment rate, I think it's like 3.4%. It's like, if you want a job, there's a job out there for you. So Is the government not telling us the truth? Oh, we're getting into conspiracy theories.

No, the government tells you the truth all the time.

The government tells you that— did you see in 2023, they had to adjust down 439,000 jobs that were overreported?

Yes.

And what part of that number is made up of people working 2 jobs to make ends meet?

Yeah, interesting question.

I agree, I agree.

I don't think— uh, look, it's not all rosy and peachy right now. I think it's just been, uh, instead of a step change that we saw in 2008, I think this is more of like a slow grind down.

Do you see a difference between California and where, you know, South Carolina, where you're at? With— you were talking, you know, payments for rent and all that stuff. We do property management here. And honestly, we're good. I mean, everybody's paying on time. We just finished raising rents on most people. We're— I'm not seeing that here. What are you seeing maybe that's different?

What am I seeing that might be different? I don't know. I don't know.

But you kind of sense something's going on.

Yeah, just sensing it.

Okay.

Yeah. Like I said, not like this huge overnight change. It's more just like this slow grind down.

Got it. Do we have another video?

Well, I was going to just add one thing that they that he touched on was the lending was gonna get, you know, chopped down and the banks were gonna not lend as much, which may be true. But if you have the ability to go raise capital and you have those connections at all, you don't really feel that stuff.

Yeah. So from a, from a day-to-day business standpoint, I'm, uh, banks can do whatever they want. It doesn't really impact me that much because I'm borrowing money privately and I'm reselling With seller finance.

Right.

Right. The beauty of what I'm doing right there is 65% of the people in this country do not qualify for a Fannie or Freddie loan. That's my buyer pool.

Right.

So while, while everyone else is fighting for the 35%, I've got this massive untapped pool.

Mm-hmm. Yeah. Love that. Love it. Love it.

And, you know, the banks are not in the business of owning properties. They're in the business of lending. So You know, they're just going to get rid of them. It's, you know, yes, you're going to be able to buy stuff a lot, uh, you know, less expensive than you could, but, um, it, it's going to be like 2008, but I don't think that bad.

Right. Who's the dude that bought up all those, uh, office buildings, um, way back in the day? He's like the biggest owner of— and then he sold it to BlackRock. You guys know what I'm talking about? He did that.

From New York?

Yeah. Is it Sam's? Yeah, yeah, exactly. So he went and bought up like— yes, and then it became like, you know, like the front stores, right, in all the major cities. Yeah. And then he sold it. Yeah, to the devil.

Yeah, those guys have really good crystal balls. Yeah, you know, they sell it really high and then he'll probably come back in and scoop up all this stuff at a really low price. Yeah.

You know, it's like you see an opportunity, you know, every time. I guess it doesn't matter what the market's doing because you can find opportunity wherever.

Yeah, he has a good book, Sam Zell, right?

Yeah, yeah. How we doing, producer?

Good. We got another video and I picked this one. It's a little more, uh, lighthearted. Nice.

I'm here to tour the home.

Yes, so nice to meet you. Tell me, what brings you in this neighborhood? Gonna love it here. Good people, good neighborhood. Yep. Follow me. These are hardwood floors. I'm gonna ask you to take your shoes off right there. The liberty of printing out a copy of the home information for you. Oh, thank you. You're welcome. It comes with a dishwasher. The bathroom was just remodeled recently. They added a shower.

Oh, I love the green.

You know, I don't really like gas. This is lovely.

Did you know this is where George Washington was birthed? Mmm, this is wine. Oh. The owner of the home used to laugh. Put on some orange. We're gonna go see the river. Just imagine yourself drinking a glass of wine with your friends. So how much are they asking for this? The owner's asking about $150,000.

$150,000?

When do I have to make an offer by?

Whenever, there's no rush.

Where's, where's the house?

You're looking at it with a little renovation to do.

That's the house?

Yeah, they're prepping.

How much are you asking for it?

About $800,000.

$800,000 grand?

Yeah, yeah.

Okay, nice. Yeah. I would say agents are feeling it right now.

Yeah, they are. Yeah, that's good.

I like that. That's cute. It was cute.

Thoughts, Jay, on the retail real estate market from the guy that does nothing, nothing retail?

Well, you know, you end up putting a deal together and you sell it at retail. Value, right? What do you mean? Well, the deals you're selling are at retail prices. You're just throwing the creative financing component into it.

Yeah, they're actually slightly above retail. Oh, we'll see.

Yeah, yeah, yeah, yeah, yeah.

I mean, as far as what's going on out there from an agent standpoint, Pareto's principle, right? Get yourself into that top 20%. Mm-hmm.

What, like, do you have like a go-to agent that you use to list your properties, or is it one of your partners?

So most of what we do, we'll keep the dispo in-house. And yeah, yep.

Facebook Marketplace?

Facebook Marketplace, Craigslist, Zillow. Nice. Yeah, that's where, like I said, These folks, they're not— they don't qualify for Fannie or Freddie stuff. They look for these homes in different places.

What do you do to qualify them? I mean, you must do due diligence.

Yeah. So they do go through underwriting. Okay. It's third-party, third-party ability to repay. And that is where tax returns, pay stubs, credit is run, stuff like that. If you've got a 600 credit score and a, you know, a very low debt-to-income and you're self-employed and you're making $180K a year and you actually report it, like, it's pretty good, but you're not going to fit in that Fannie or Freddie box.

Yeah. What third party, I mean, like, what does that process look like?

So we use a company called Call the Underwriter.

Oh, oh, I've heard of them.

You've heard of them? Yeah. They've got a portal where, where these buyers, they upload their documents, they run them through ability-to-repay calculations. And at the end of that, I get this package that demonstrates that, you know, like we have paperwork showing that these folks have the ability to make this payment within certain guidelines. And that helps with if it— if I come to If it comes to the point where I have to sell a note, I've got this package of paperwork that goes with it. It's Dodd-Frank compliant. It helps with the value of my, of my notes and having to sell at less of a discount because it's better quality paper. We pay for basically bank-quality promissory notes and mortgages to be drafted from another service provider. And So the whole idea here is, is number one, doing the right thing and making sure— I don't want to take these houses back, right? I don't want to— I don't want to take these folks' down payment money and then 6 months later take the house. It's not what I'm here for. I want to cover my ass and do things as legit and above board as possible to the best of my ability. And I want to have good quality paper that I can sell, trade, or pledge in the future. To other investors in my network.

Dodd-Frank compliant.

And it's, and it's looked over by Tony Soprano.

Oh yeah.

Yeah. If he ever has a problem, he just calls Tony and they take care of it.

Yeah. He sends 2 guys with baseball bats.

That's right. They'll pay up real quick. Yeah. You mentioned Dodd-Frank compliant. What is that?

Oh, Joe smiles. That, that, that's like the, uh, stemming from, from 2008. And now no one in America is responsible for their own financial decisions.

Oh, perfect.

Some licensed third-party operator.

Oh, amazing. Okay.

Yeah, takes on that responsibility. The, the lender and the, uh, and, uh, the underwriter take on all that.

Gotcha.

So it's all on you now. Amazing place we live in here.

Yes, it's named after 2 senators.

Yeah.

Barney Frank.

Chris Dodd, Barney Frank. Love those guys.

I think Barney ended up going to jail after a while.

Of course.

Yeah. Republican and Democrat.

Right.

You know, it's like—

Got their legacy in there and then they're like, we're out.

I actually listened to somebody on YouTube the other day and he was telling the truth. It's like, we can't get anybody to do anything and do it, you know, correctly anymore. It's like the Republicans aren't doing something that they should be, and the Democrats are the same way.

That's the whole game though. You got to make it look like they did say we should have term limits, which I agree.

Oh, that'll never happen. I know. Yeah, I know. But I think we should. Yeah, yeah, get them out.

Get them all out and start over. Awesome, Jay. I don't want to keep you because I know you have a sweet, sweet child and wife at home. Um, thank you so much for joining us today. If anybody wants to reach out and maybe invest with you? Maybe you can like drop some terms that you got, any deals coming up, and then how they can reach out to you.

Yeah. So with, with every new lending opportunity that we have, I put together a 3-page lending overview. It basically gives folks all the information on the property, the loan I'm seeking, the terms, what my exit strategy's gonna be, what I expect the entrance rehab And resale numbers to be, and that goes out in an email to everybody that that's on my preferred lender list. More than happy to to add anybody that they want to that. They can simply go to appmountaincapital.com. So appmtncapital.com. There's a little thing on the on the front page there. Your name, your email will add you to the list. And then usually you know what happens is is few lending opportunities will get sent out. People will look them over. They'll have additional questions. We'll jump on a Zoom call. I'll walk through this stuff. Some case. studies, things of that nature, just to increase their knowledge and what is capable. There's so many folks that don't know what, you know, like what they can do with their private money or private funds or their retirement accounts.

Right.

Rolling that. Like, my lenders are made up primarily of 2 big groups of people. They are mid-30s and 40s, high-wage W-2 earners, really good at their job, that want to do a little diversification from the stock market, right? And then I've got another group of folks that have self-directed IRAs and they're looking for consistent, repeatable, predictable cash flow in retirement.

Mm-hmm. Okay. What if I don't, I don't even want to get on the Zoom call. I'm just going to give you like $100 grand cash. What can I get in return?

I don't run a fund.

Okay.

I couldn't take all $100K.

No.

It's one house. One house, one lender.

Okay.

One note.

Oh.

One mortgage.

Gotcha.

So you're, yeah.

In first position.

In first position. So if something were to happen to me—

With the house.

Whether I get run over on my drive home tonight.

Okay.

Or something else, you're protected in that first lien position. Your interest, your capital protected in that first lien position.

Nice. I like that.

Nice. You know, so when I speak with new people, They're like, well, what happens if you stop paying? And I go, what's the worst thing that can happen in our arrangement? Do you know?

You get the house?

You get the house back.

No. The worst thing financially for these folks is if I make every one of the payments I owe them on time.

Oh, yeah.

On time.

Gotcha.

The best thing that could happen is they take a house back at 50 or 60 cents on the dollar. And resell it. That's where they're going to make their most money.

Yeah, you're right. I see what you did there.

So yeah, if anybody's interested, I'm, you know, I love talking about this stuff. More than happy to, uh, to jump on a call with folks. But yeah, just reach out at mountaincapital.com. It's just a little website I put together showing a little bit about what we do, a couple of simple case studies and an overview, and then a way to get a hold of us.

Amazing. Thank you. And I think we're gonna try and get, uh, Jay at one of the meetups coming up. Okay, so sounds good. Yeah, looking forward to it. Thank you guys. Oh, oh, sorry.

I do have a few questions.

Oh my God. Okay, let's go. All right. Okay, if you guys aren't— let's go.

All right, uh, I'm gonna go with the last one first because it was about what you were just speaking about. But Mimi asked, can you give details of one of your last lending opportunities, numbers, terms, etc.?

Sure. So most of these deals land in the 45% to 65% loan-to-value. Okay. And that's going to be for the purchase, closing costs, and rehab that we asked for gross funded at closing. You know, I mentioned, you know, we borrowed $100,000 on this deal that was reselling today. We've done another deal, Recently bought, bought the house for $45,000, ended up putting $40,000 of rehab into it, and we sold that for $250,000 seller financed, right? So, so from a lender standpoint, you know, that's like a, what, a 40% loan-to-value there?

That's good.

Somewhere in that ballpark. Really good numbers like that.

And what about like the, the, the length of it? I know you said one, you like keep your money in for 4 years. Is it just varies?

So, you know, tossing some generalities out there, 2 to 5 years, 8 to 12%. Okay. And that's going to be dependent on the length of time, quality of the assets, stuff like that.

Nice.

I mean.

Okay. Mimi also asks, what are your thoughts on note hypothecation?

I feel like Mimi should have a one-question limit.

No, no, no, no. We let it all hang out.

That's— I believe that's my beautiful fiancée. I have a feeling it is. Peppering us with questions like this.

She knows the right questions to ask.

So, so from, uh, note hypothecation, right? It's, it's just a— it's a fancy term in which I'm using one of the promissory notes that I hold as collateral for a new loan. Okay. It's really good for me from the standpoint of That's a loan. I'm realizing capital, but because it's a loan, I'm not paying capital gains on that.

Mm-hmm.

And in a hypothecation, uh, with, you know, some— the investor being the lender, I'm still the one in the middle managing the deal, servicing the loan. I shouldn't say— we use third-party loan servicers. But what I'm trying to say here is I'm, I'm still the one operating this deal so that in the event that something, something happened, something went sideways, a borrower stops paying, I'm still the one in the middle in a hypothecation arrangement. And I'm going to be the one operating that deal to get it back on track. Whereas in the event of a note being sold, that's on, that's on the note buyer. I'm out.

Gotcha. So it's basically a note with an operator. Is that what you're saying?

Or hypothecation is it's a loan.

Okay.

Pledging the note as collateral.

Gotcha.

And the advantages, the advantages in that arrangement as, as the, the lender, okay, is I'm still in the middle of the deal operating things. Whereas if it's just a note buyer, right, that's on them. I'm out.

Interesting.

I hope that made sense.

Yes, it did. Taking it all in. Okay, amazing.

All right, and last but not least, we've got Liz in the house and she says hi.

Hey Liz, what up? Hey Liz. Okay, awesome. That was a great way to bring it home. Um, I guess, okay, maybe you could leave us with, uh, because we do have a lot of like new listeners, like what, what's one Thing, like what one thing of wisdom you can give them?

Sure. So, um, I was listening to a CD set by Lonnie Scruggs called Deals on Wheels, right? It was all about him seller financing mobile homes, like in the '70s or something, right? And this was a CD set, right, that I had borrowed from someone else. But these words hit me in the face and they stuck with me ever since. He said, take the time to learn how money works or you'll always work for someone who does. So that's what I did, right? We're— we say we're in real estate, but the truth is, like, this is a finance game. Someone— I heard someone say real estate are the clothes that my finance business wears.

Mm.

90, 99% of what we do revolves around the finances of this business. So take the time to learn how money works.

Yes. And that's the one thing they don't teach in school.

They don't. Yeah. And he talked about CDs. Do you, do you know what CDs are? Oh, Joe, come on. I'm just curious. You know, it's like, yeah, he's taking us back in time.

I know. CDs are the big old book with all the pages.

Yeah. And then— so you do remember him. Okay, just want to make sure.

Oh man, the experienced guy over here. Wow. Okay, well, that's— that I like that as like giving that to the newbies. Yeah, because it's usually like the take action, sort of take action, like it's all about taking action, which you did mention, but learn about finances. Otherwise it's like You're gonna be working for someone else for the rest of your life.

True.

Yeah. So, um, thank you guys so much for joining us. Producer, are we clear for the send-off?

We are clear.

Alrighty. Um, that was, that was knowledge-packed. I'm gonna go back and rewatch that and then also be emailing you on the side and texting you as well like I normally do. So thanks, Jay. Um, Mimi, thank you for letting us have Jay for a couple hours.

Yeah, he is here.

He is here. He is here. And we can't wait to see you at, um, an upcoming meetup. And, um, yeah, thank you guys for tuning in. We'll see you actually in 2 weeks cuz I'll be gone next week, but in 2 weeks. Oh, that's right. I'll be back. Yeah. Anything else?

Gonna educate yourself.

Gonna educate myself.

Let 'em know where you're going.

I'm going to, um, results-driven 2-day seminar thing. Um, just basically about like running, uh, your real estate business as a business and kind of shadowing them. So should be cool.

But 2 days? But you told me you were going to be gone a week.

Well, yeah, you go— it's actually 3 days, and then we're getting there a day earlier so we can go into their office and see how the whole thing works. And then it's like 2 days of—

okay, just straight grind. Got it.

Yeah, but, um, we'll catch you guys. Yeah. Oh, thank you.

See you later.

All right, see you guys.

If you want some more advice on real estate investing, reach out to us one-on-one.