0230: We Close Notes: How to Buy Real Estate for 40% Off By Breaking Into the Secret World of Real Estate Note Investing with Founder and CEO Scott Carson

Hi, this is Scott Carson with wecloseknotes.com and you are listening to EA interviews.

EA interviews episode 230 inspiration, transformation, success stories and the imperfect action round. Seven days a week. Join Mario Ficcini for today's expert Authority Effect interview. Do you want to invest in real estate? I bet you do because you know real estate is not going anywhere. Everyone needs a home to live in. They need commercial buildings, they need this. So if you're thinking about investing, how do you do it? What's the best way to do it? Well, that's why I'm excited to have best selling author, speaker and CEO Scott Carson on the show today because he's going to explain how he helps investors close deals with notes and how you can too. I'm going to bring him up right after we thank our sponsor. Every business needs a book, including yours. Visit freebusinessbookpublishingcourse.com today to learn the seven steps to publish and promote your nonfiction lead and profit generating business book and eight weeks. Once again that's free business book publishing course dot com. Here he is ladies and gentlemen, Scott Carson. Scott, how you feeling today?

Hey, I'm doing a wonderful Mario. Honored to be here. Excited to be here I should say and just, just blessed I'll put it that. How's that sounds a blessed blessed day. Hope everybody's having a great time out there today.

I will take that and I know we're going to have fun. We could talk about anything and it's going to go great. But I am wanting to know why should someone get into real estate investing? Did I even, is that a word? Whatever I said why should anyone get into real estate investing and why should they do it with notes?

So that's a really great question. So right now with so many defaults and people not paying their mortgage, it's a great time to be buying real estate. It's a great time to be buying in distressed assets. And the reason I love note investing and it's been my priority primary niche of focus for the last decade plus last 12 years is the fact that in a note investing side, when you buy the note, you're really not buying the property, you're buying the receivables. And so when I buy a note or in my case a non performing mortgage where somebody hasn't paid their payment in 90 days at least, if not longer, we are buying that receivable from the bank at a big discount. It's like, you know, it's like a clearance rack I guess you could say, we're buying that. No, that shirt still looks good in the clearance rack. It's just that it didn't fit with the right thing with the bank. So we buy that debt, that mortgage, at a big discount. We then become the bank and have all the same rights that a bank does. And we make our money by working to keep the borrower actually in their house. And so we love to, when we buy the debt, since we bought it at a discount, it gives us a lot of flexibility to reach out to the homeowner and say, hey, what happened? Tell us your country western song. You know, did you lose your job? Did you get divorced? Did grandma get run over by a reindeer? You know, whatever it might be.

Okay, Forgot the dog. There's always a dog.

There is the dog, but I love dogs. So, yes, dog ran away with the ex wife. How's that sound? But you buy that debt at a discount, it gives you a lot of flexibility to work to keep the people in the house. And so if you can reperform or modify the loan, that's usually a really good return on investment. If as far as monthly cash flow. And then if you get them performing for a while for 12 months, then if you bought the note at a big discount, usually 30, 50, 60 cents off, you could then turn around and sell it at 30, 40, 50 cents on the dollar profit after 12 months. So everybody's in the note game. Whether you believe it or not. If you've got a car loan, a student loan, credit card, you owe Bubba Joe down the street 500 bucks or a mortgage, you're in the note game. You're just on the wrong side of the payment stream. And our goal has been to help make America Great again, one defaulted borrower at a time for the last 12 years.

And how well has it been going for you?

It's been going well. I mean, obviously the country went through a bit of a shakeup in 2008, 9 and 10 with a great recession, but we bought a tremendous amount of notes over the last 12 years, over a billion dollars in distressed debt on single family homes, apartments, commercial property. We buy debt on just about every type of residential commercial asset. And when we buy the debt, we're seeing deals directly from banks, and we usually see them at bigger discounts. And we usually will take these deals down 6 to 12 months before your conventional investors, the people that love to watch Flip this House or Flip or Flop or your landlords, we'll see deals that they'll never end up seeing because we Bought the debt, became the bank and then worked out some sort of win win with the borrower.

So you're saying at a deep discount early on and I heard you say 30, 40, 50 cents on the dollar. So it sounds like there's a pretty substantial margin in there. What, what are you doing to help the people and what are you doing to help the people get back into it? How do you structure it? Where if they still owe 23 years on a 30 year mortgage, how do you get them to get back on track and then get caught up again? Because I'm sure you and them don't want it to take longer. Do you keep that note for the next 20 years or is there a point where you can sell it back to the bank and you take your profit?

So yes, basically we don't hold on to stuff for 20, 30 years for the most part. Usually it's 12 to 24 months. And our biggest goal is let's give some numbers to it. I'll actually give you a deal in Detroit, Michigan. I love Michigan. Okay. Bought a lot of real estate up in Michigan, from you know, Bay City down to Michigan. I buy a lot in Flint, you know, I just don't drink the water. You know, out west to Jackson or Kalamazoo and all over Michigan. I love Michigan. But anyway, we bought a note, a borrower owed 120,000 on $100,000 house. They were upside down, they hadn't paid in a while. Okay. Or. And then the property value dropped a little bit because there's foreclosures. So they owed 100, they owed 120, $100,000 house.

Was the house worth like a buck and a half originally or something that.

Well, it was originally worth about 110 back in the day, but it dropped off in value because of foreclosures and things.

So either way they are really not in the right direction.

No. And when you add in they had made mortgage payments in over a year that went into that $120,000 balance too. They've been laid off.

You know, or working part time. It was a variety of things. So we bought that debt at 50 grand. So they owed 120 plus some change. We bought it for $50,000 because we usually pay 50% of value house as is value was 100 borrower. We reached out to him immediately and said, hey, what's going on? You know, the beautiful thing is when we buy this debt, we see a lot of the behind the scenes numbers. We get to look at the loan documents, the paperwork the call history between the borrower and the bank, if they were friendly, if they were not friendly, if the borrower mailed in hardship letters or tried to, you know, tried to do a variety of things, we get those to look at. And this borrower trying to do a loan mod for a couple years. And so we knew immediately that they wanted to stay in the house. When we had our realtor drive by the property, take a look at it was in good condition. They had the flag out on a holiday, little kids, toys. They had some emotional equity in the house, but not any equity. They were negative equity. So when we bought the note, we reached out to him immediately. And we use third party servicing companies. I'm not the one calling immediately. It takes third people, third party people to do it. They're licensed to do that. So they reached out the bar, picked up the phone, they said they wanted to stay in the house. We found out what happened, you know, job loss and their businesses shut down. And they like, we'd like to stay. My servicing company's like, well, could you start making your existing payment? And he's like, yeah, I could do that, but I'm upside down. I'm like, we'll get it. So listen, if you make, if you start making your existing payment, I think it was like 575amonth. Start making your existing payment of 575amonth. After 12 months, we'll recast the loan, we'll remodify the loan. Okay, so what that means is after 12 months of payment, we would forgive, we would reevaluate their property. And so if they say it went up to 110 instead of 100 and they still owed 120, well, we would forgive that 10 grand in debt. So that they were basically, in some cases we've bought loans where they had like a 9% interest rate where we said, okay, pay for 12 months on time and then we'll reduce your interest rate down to 6% or 8%. In one case, the lady who lived in a house for 18 years refinanced out, put some equity out of the property. Back in 2006, her husband had a heart attack, was out of work for two years, and they had been trying to do a loan mod for four years after this refi had taken place. And I reached out to her. This is when I actually reached out because she had literally written this long letter trying to do, I mean there was four letters trying to do short sale because her loan had been sold four times from one bank to another bank before it came across us. And the bank that we were buying from, basically written as debt off. Basically, you know, they owed 60. We paid 12 grand for the note. The house was worth, like, 35. Okay. But she had lived in it for 18 years. Okay. Raised her three kids, husband, and was getting back to work after having a heart attack. But so I said, okay. I said, sheila. Her name is Sheila. And I said, could you start making your $400 a month payment? And they're like, yeah, I could do that. I said, okay, could you bring. I mean, you haven't paid in a couple of years. Could you bring. Could you bring five grand to the table? She's like, no, I can't do that. Well, could you do 2500? She said, yeah, I could do 2,500. Okay, 2,500. Could you make $200 extra a month on top of your existing payments to get that 5.5grand in the first year? She's like, yeah, I could do that. Okay, if you do that 2,500 at the table, your existing payment plus $200 a month at the end of the year, I'll go and drop your interest rate to 0%. Okay? I'll drop it down from 8.5 to 0%, and I'll drop the balance of what's owed from 60 down to the 35, the value of the house. And if you make your payments with a little bit extra, you'll have the house. Since you're going to be paying 0% interest, every penny you pay is going to work with principal. You'll have the house paid off in six years versus 23 years. Okay? And she was like, oh, my God. Yes. Her and her husband showed up our attorney's office about a week later. They signed everything. He cried. The closing table, okay? Because they were trying to, you know, they had four years of stress. Can you imagine that? Four years of stress worrying about if it was gonna be foreclosed. And you're doing all this work to mail in these documents, and then the loan gets sold to somebody else. You start all over again. And we came. I talked to her in 30 minutes. We had this basically arranged just like this. And she just paid off her loan last month with me. So I bought this loan six years ago. We were about six months into payments, and I get a letter from her around Christmas. I actually got a Christmas card from her. And it was basically, they let me say, hey, we thank you. We're so thankful. And as I said, she had three kids. Well, her Eldest daughter had just had a baby and they named the baby Carson after me for helping them stay in their house. So we love to do a lot of good if we can. I want to keep people in their houses. I'm not the big bad bank that wants to foreclose. I actually make more money and get a high return on investment by keeping somebody in their house, keeping the property up to date, keeping the neighborhood values high because a foreclosure will depreciate the neighborhoods. And then there are people that won't work with us that we do have to go the legal route and foreclose. But I would rather I always give borrowers the opportunity, hey, let's keep you in the house. What can we do to make it a win win? Yeah.

And I think most people want to do that, but it's just, you know, it doesn't take much to have one thing go wrong and then this thing go. I mean, you change just those numbers. You change the interest rate, like you said, from nine down to six, or if you're at six and magically it goes to nine and then you get behind on one. Now it's harder to, you know, it's just like, what do you do you need some, you need the people like you that are helping out. So you said you kept hers for six years.

Yeah, because here's the thing, I paid 12 grand for the note. It was. And she paid five grand basically in the first year, in the first 60, you know, six months and then everything after that was gravy. So I made, golly, what did I make? I made five grand a year for six years, 30 grand plus the six. So I made, you know, almost 40 grand on a $12,000 investment over basically five and a half, six years.

But normally when you're doing 100 grand or 150, 200, whatever the case is, you'll give it back to the bank.

After I don't give it back, I will sell it on the open market. I'll sell it if the borrower's been paying on time. If we bought it at 50, we can often sell it at 85, 90 cents on the dollar back to, to lending institutions that are looking for performing paper. Real estate investors that want to use their self directed IRA for a good, you know, 6 to 12% return on investment without having to do a lot of work. So that's usually where we sell it to other investors and other funds.

So they're looking for basically customers. And you say, I have one that I've basically been coaching for 12 to 24 months. Here you go.

Well, no, I won't say coach. I'm actually the bank. I said I have a borrower. I have a note here that I can sell you now.

Well, maybe I was meaning coaching in the sense where it's like they don't need to fight with the person you've trained them on. Here's how you make the payments.

I mean, yeah, and you're right, you have to retrain them because a lot of times people get used to not making a payment for a while. They. It's hard to get them back on track.

Well, there's no hope. But you give them that hope when you're going, hey, can you do 2500 with an extra 200 bump? I mean, that's. There's your 2,400 over the first 12 months.

Yeah, exactly. And so that's. It's a numbers game. And I can get creative in a variety of ways. You know, and we can usually work out a situation that makes sense with the bar if they're just willing to work with us. And that's, that's the magic in the note business is actually a lot of real estate investors chase the property. And don't get me wrong, the real estate's very important because if I do have to foreclose, I am going to take that property back. And so the value's got to be there. It's got to be in a spot that's not a two gun alley or anything like that. Can't be in like.

You know, below eight Mile Road there in Detroit or other places that are rough. South Columbus. I know the area, man. I know. Trust me. I do a lot of research on what we're buying distressed debt at. But that's the thing is before COVID hit, 1 in 10Americans is already 30 days behind their mortgage before all this chaos. And right now we're looking at 1 in 11 borrowers in America here are at least 90 days behind in their mortgage. And the banks and the government keep kicking the can down the road with, you know, allowing delays, forbearance agreements, stuff like that. That's a good thing. But you have to look at the flip side of the coin. It's just not the borrowers that they're trying up. It's also the investors behind that. The people that bought the property maybe financed it, or landlords that have tenants that aren't paying. It's two sides to every coin. And we're going to see a huge wave of defaults Hit the open market here in 2021, not only in residential, but also commercial. So it's a great time to be a note investor because you can often pick up a lot of real estate at steep, steep discounts that nobody else sees.

Now when you're saying there's going to be a lot of defaults hitting, do you feel 2008, Nine is going to happen again?

If I had a crystal ball, I'd be in Vegas at the casino. I think it's not going to be as extreme. In 2010, at the worst point, we had 15 million Americans that were underwater their mortgage. 15 million. Okay. Right now we are at about a 9% default rate. So one out of 11 borrowers is really in trouble now. In trouble. We'll have difference of opinion on what bank they're with, what kind of loan. If they're an FHA loan or a Jimmy Mac loan or Fannie Mae loan or stuff like that. Those government insured loans, they'll probably just delay and say, okay, we'll give you another six months to forbearance. Another six months. I just read an article yesterday. One of the things that we track that roughly about 85% of those in forbearance have done really well and a big chunk of them but half and have gone off of forbearance. But then they had to get back on forbearance 60 to 90 days later. And so you see people going back to work. Oh, we're going to tighten up the city. Okay, you're laid off again. And so, okay, you know, that we're going to, you know.

So it sounds like a different kind of uncertainty because you're saying we were at 15% last time and now it sounds like 9.1%.

Yeah, 9, 9 to 10%, depending on who you talk to. So it's, it's the.

Do you think the institutions back in the day, though, were a large part of the problem? It just wasn't the volatility and all that or.

I mean, so what you had happening is you had a lot of banks back in the day that didn't. They were giving all these subprime mortgages. Okay, subprime didn't have anything, but you had a lot of a paper pristine credit buyers too, that went in default. You had a big property value drop that was affected back in 2008, 9 and 10 as well. We don't have the same property reductions right now because the market's really strong. They're keeping interest rates basically at zero for the most part. So it's a good time to go borrow some money. But what we see is the biggest difference these days is the haves and the have nots. Right now, those that have good credit, those that are paying, they're trunking along like normal. It's that first time home buyer. It's those that are your employed in like your service industries, your waiters, your bartenders, your travel agents, hotel, you know, service industry stuff, those are the ones that are struggling the most to stay on top of this. So, and we research about 50 of the major cities across the country over the summer and it's consistently in that $200,000 valued house and below. That's where we see the biggest trouble. Now 200,000 can mean a whole lot of difference whether you're in LA or in Detroit, you know what I mean? In LA that might buy you LeBron's doghouse. In Detroit I'll buy you a really nice property or like six really nice properties depending on where you're at. So it's really come down to a microeconomic level. What's going on in that state, what's going on that city. And looking at the price points, I think we are going to see a lot of defaults. It's already out there. And you also look, we have record defaults and student loans, credit cards, auto debt and medical debt is also kind of that paper house or I said to say that, you know, stack of cards is kind of tumbling in on itself right now as people are running out of resources to charge the card or they're $600 a month check they're getting from the government, hasn't showed up in a while. And it's going to be an interesting time here over the next 90 days.

If someone's thinking about getting into it, how long would you say it would reasonably take for them to.

Understand it enough where they could start making some traction? And then when they get to a point of competency, how long do you have to wait before you're seeing profits with it?

Well, this is not a big thing here. This is not a get rich quick thing at all. It takes time like anything else. You've got to do your due diligence. You can't watch HGTV and become a note investor because you'll end up overpaying for deals. Okay? So you've got to get some learning, gotta get some education. We teach classes on a regular basis on this stuff and literally about 2,000 YouTube videos and podcast episodes out there going through specific stuff. So roughly we Get a lot of students that come over that in 30 to 60 days to start grasping the concept, start making some offers. And then when you buy a note, it could take you 30 days or 60 days to get the bar back on track. But then if you've got to foreclose, it'll depend on which state it's in because every state has different foreclosure timeframes. Like New York, New Jersey, two years to foreclose, at least. Texas, we do everything fast here. Fast highways, fast foreclosures and fast execution. 21 days to foreclose here in Texas. So it's a little bit faster here, but it's also a bit more expensive because the banks realize, oh, you can foreclose fast. We want a premium on that debt. Whereas if you're selling in New York or New Jersey, they'll give you a much bigger discount because you've got that 12 to 24 months before close.

Now where would Sweet spot be with the maybe three months to six months or maybe a year where it's a little bit lower, but. And what is the premium for Texas? I mean, are you paying like a large premium? Because I'd always rather go to the speed, but if it's cutting into profits substantially.

So here's the thing, it's all about the borrower in this case. So, like, I don't mean I love Texas because it's fast to foreclose here, but I buy a lot in. I'm in Michigan because it's still a relatively fast, non judicial foreclosure state. I buy a lot.

How long is it?

Michigan's like 90 days to foreclose.

Not horrible.

Not horrible at all. Ohio could take you nine months to foreclose. But it all comes down to the bar. And that's why we do so much due diligence on the bar. Cause a lot of times with one phone call, one letter, just the bar, having somebody new to talk to can result in about a 50% success rate with them getting back on track. Like, okay, hey, I'm not the guy that gave you this loan. I understand you've been through a country western song. Your dog is crying, I get it. But let's not make you cry. Let's get you back on track and let's do a fresh start here for you. What can you pay? Do you want to stay and you know, pay, you know, stay?

What if they say I don't want to stay? Then you just foreclose and you're done.

No, no, we'll give Them a say, well then sign the property over to us, we'll forgive you that 120 grand debt and let you walk.

Okay, but you just got a property that's worth 120 for how much?

For 50 grand or 30 grand. Okay, so I got it but now I've got to probably, I could probably repair it a little bit, clean it up and then sell it. But still I just, I get these BFD.

That's like 110% profit.

Yeah, I don't like to give away those type of results because people get too excited. But yeah, if you could get a deed loom or even cash, allegedly they.

There now we're good.

There you go. Where I can give somebody. So instead of it cost me three grand to foreclose, I'll give them three grand to the bar to walk and I'll cash in and have an aria that I can sell and make some good money on the mls. Or I keep it as a rental. Or I could offer up that property and offer it to somebody for owner financing as well too.

I was trying to see on the full screen for me what you're doing there. If I could see it.

That's awesome. Oh, you got one of them.

A little noisemaker here. Best 10 bucks I've ever spent in San Francisco and I've used, I've probably gone through like six of these but it's the easiest sound machine or any for my podcast or yours.

That is killer.

Next time I see I'll have one for you. How's that sound?

That sounds real good. Because I'm like, what is he using? I'm like, is it the X keys? Is it an elgato stream deck? He's got something there. I'm like I gotta peek, see what it is.

So let's talk about the money. You say, does someone need 100% of the cash up front? Do they borrow from the bank? If you say, hey, I can get this property for 50 grand, it's 100, 110 or it's a 200 grand for 100. Where do you get the financing from there? Are you always fronting the money or do you have partnerships with banks?

Very good question. You're not going to get a loan from a bank to go buy a non professional. They're not going to do that. So it's got to be cash.

Okay, I guess that, I guess that makes sense. If they're the one giving you the non performing note, they're probably not going to fund you to.

You will on commercial if it's a commercial note, a lot of times a million or greater, you might be able to have them negotiate them financing the purchase. Especially if the operator or the business or the property owners walked away and you're stepping in.

Why commercial and not residential?

They don't want to deal. It's not worth their time to do it on a $50,000 asset or $75,000 asset. But it is a million dollar loan is nice to have on the books that they don't want to lose. So it all comes down to that number size. Now for residential, if you're buying residential loans, then you're going to have to bring cash to the table. And we leverage a lot of people's, other people's money through other people's IRAs. We'll use some of our own funds. You know, we've got a fund that we're putting together to raise capital from a bunch of people and then we can go buy portfolios like we've done in the past. And that's where it comes down. We tell people like, look, there's so much money sitting out there. And in we see that roughly about 75%. If you look at people that have an IRA of some sort, an individual retirement account, 75% of those that have an IRA account have more than 150 grand sitting on the sidelines. And most of the time it's making less than 4% interest. 0% in most cases. So like you said, if I, you know, if I got a deal that's worth 100, I'm picking up for 50. I'll market it to real estate clubs, or I'll jump online and market that to investors in my groups. Or I'll jump on LinkedIn and join and say, hey, I've got a deal. Anybody interested in putting some lazy assets to work? You know, do you have a cd, a certificate of disappointment that you want to get an above average return? Or do you have a 401k that's.

Now a 101k so they can pull money out of what they have. And they might say, here's 20 grand, 30 maybe, here's the full 50. And then they don't need to do anything. You're taking care of the note, you do it. But you say, give me 50 grand in a year from now, I'll give you 55, 60.

Well, it all depends what are they looking for? So that's part of what, you know, if somebody's making zero, they might be happy making 4% because otherwise they'd be listed. So he's making.

But if they're at 4, you might put them at 6 or 8.

Exactly. You know, in some cases, we had some investors that bring larger chunks. We might split with them and go 50, 50 on the deal. Okay. It just varies on the situation on the individual deal and what it'll hold.

So realistically, whether someone has a pile of money sitting around, they want to do this, great, all. All the better. But if they don't, there's still solutions. Do it if they have the desire to. You know, you can help people. And obviously it sounds like it's profitable.

Well, it is if you know what you're doing. You got to have your vendors like anything else. You're not. If you're a jack of all trades. Like, if you want to be the guy out there that's ripping up carpet and painting a house and in trying to sell it yourself, this is not the business for you.

Yeah, that's the flipping.

Yeah, that's the fix and flipping. Or if you're a lazy landlord who's tired of toilets, tenants and trash outs and termites. We get a lot of landlords that come into the note business because it's still a cash flow business without having to do all the work. And so the biggest thing I could tell people out there is if you don't have the money or don't have credit, that's fine because the bank doesn't care what your credit score is. When I started doing this back in 2008.

I was in bad shape with everything that hit the fan in 2008, 9, 10. So I just started dialing for dollars, calling banks, getting these lists sent to me, doing some due diligence, and then marketing them out to people in my local meetup groups, my local real estate investment clubs, people that I know and said, hey, here's the deal. Here's what we're doing. You want to partner with me on it? And that's how we raise a lot of capital. And flash forward 10 years now we've closed on over a billion dollars in distressed debt. And I was the educator of the year in my field back in 2014. And we've helped a lot of people do a lot of good, not only for the borrowers across the country, but for themselves as well. A lot of people that we've taught have left their jobs to do this full time because they love it. Other people, they take this up as a side hustle. You know, they love what they do and they want to invest a little bit Here and there. And so this is an opportunity for those that are interested.

And it sounds very long term too. You can make a career of it. It's not just, oh, I'm doing it for this year just to get by or something. I mean, you could. But it sounds like it's actually better long term.

Yeah, well, that's the thing we always say in the real estate. As a real estate investor, the evolution people ever, you know, it becomes from the chimpanzee as a starting off new investor to somebody at the end who is a banker. The banker always wins. Okay? And that's really what you are as a note investor. You become the bank. And that's why the banks are the biggest buildings. And nobody calls the bank because bank of America at midnight when little Timmy flushes his rubber ducky down the toilet. Okay. They don't call the bank the bank, though. When you look at how banks arbitrage funds, you know, they take in and give you a half of 1/10 of 1% and then lend it out at 6% for car loans or mortgages or 18% on credit cards. If they're giving you a half of a percent, they're not making 17.5%, they're making 3,600%. So if you know how to arbitrage it and you can really work it out. Yeah, we like to tell people, don't do skinny deals. There's a lot of deals across the country. They can be better bang for your buck. We get a lot of California investors. Like, I want to buy in California, you know, the land of fruit and nuts with all the droughts, just a bunch of nuts now because the fruits all dried up, way overpriced. Like what I would pay for one note in San Diego. I could buy almost a whole block in Flint, Michigan. And just knowing how to leverage your money, looking at deals, working with local professionals like realtors, servicing companies, attorneys. If you have to foreclose and kind of trying to put this thing on autopilot as best you can, what would.

You say is the better deal or does it depend on what you want? Is it the block and Flint or is it the one property in Cali?

I would say when you look at how you can leverage your investment over eight or 10 properties, I would pick Flint all day long because the rent rates, if you had to take the property back and keep it as a rental, is going to come out strong, very strong. And I've done the work. I have driven Flint. I've stayed in Lansing last summer two Summers ago I flew up into Michigan and looked at 60 notes that we either owned or were buying in a three day period. So I've been through that neck of the woods. I've always loved the north. I'm originally born in Minnesota, so I have ice in my blood. I'm gonna go down the floor to get some looska fish. It'll pop.

I just think where you can leverage, anytime you leverage your money across multiple doors, it's better than having just one door. Cause if something goes wrong, I'll give an example. Let's say the San Diego homeowner who's got a $250,000 or a half a million dollar house there, they're going to be a little bit more sophisticated. And you know what they're going to do? They're going to hire an attorney to drag out the foreclosure process as best they can because it's cheaper for them to pay their attorney $1,500 a month to delay, delay, delay versus you know, 10 grand a month mortgage payment. So I like doing that because if I buy 10 assets, I'm probably going to have six, you know, five, six, maybe seven of them, start performing pretty easy for me that I can make, start making money in 90 days. Whereas that one asset, it's like a flip of the coin whether it's going to go my way or it's the go deal that I wish was on the highway.

Is there any other states that are really good?

Oh, well, let's see here. My favorite is Michigan, Ohio, Indiana, you know, they're all six to nine months to foreclose. I do love Texas, but it's overpriced here for the most part because the fast foreclosure state. I am a big fan of God's waiting room. Florida, okay, in Florida, back up 12 years ago, it took forever to foreclose there, but it was on sale. I was buying a lot of stuff at pennies on the dollar that it took a year to two years to foreclose. But by the time I got around to foreclosing and going through the legal process, that property had really accelerated in value. So I was really making a killing on it. So I like, I like God's waiting room. As I say, Missouri is a great state. We get a lot of California investors like Missouri because it's roughly 90 days to foreclose. The way I look at things is if you're two hours away from like I'm in Austin, so I'm about two to three hours away from 90% of the country. So it works really well for me. But the states you do want to avoid, you don't want to buy. New York because it's roughly three years of foreclose. New Jersey's at least two years. Kentucky, Kentucky. While it may be cheap to buy real estate there, for the most part the state requires a million dollar bond and that's not cheap to get. So I don't buy in Kentucky. Illinois is a good state except for Crook County. Okay. Chirac in Crook County, AKA Cook county takes forever to foreclose and it's such a messed up legal system there that if you're an out of state investor who's trying to foreclose on a local borrower, the judge will always side with the local bar and give them time after time after time again. So it takes forever to evict or foreclose in Chicago. So I like other parts of Illinois, I just don't like Chicago as you can tell. But for the most part just you know where the deals are at the Rust Belt, the Big ten, you know, conference part of the United States is where you see the most amount of.

It sounds a lot like if the numbers make sense and it's not too long, you know, anything over a year sounds like it's. You better be a high profit margin.

Well, exactly right. And, or in an appreciating market and getting it in a big discount and then you've got cheap money that if your investor is looking for 6% and they're fine not getting money for a year return, but you know, they want a big return at the end, it works out fine for that.

What would you say for someone that's looking to do 50 to 100 grand deals versus 500 to half a mil, it sounds like there's more smaller ones and you can maybe turn them quicker, get positive with them quicker. But what, what can you expect if you're looking at a half a million dollar to a million dollar plus deal?

So I'm a half million, a million dollar plus, you're going to still, you're probably going to pay. Well not probably, you are going to pay a higher percentage because the banks will look at you probably paying somewhere in the high 50s if not high 60s of value. Okay. A lower value property below 50, you're going to probably paying somewhere between 25 and 30, 30, 40 cents on the dollar. Okay, so that's a big difference. It all depends on the asset too. Where is the bank in the foreclosure process if it's already done. Great. Then go with a higher end value. You're gonna have a higher payday. Big checks are always nice, but slower. All depends on the borrower. It's slower. They may file bankruptcy, which they're probably going to do that they've got some emotional equity on a bigger property and then that can drag that out for. For either a Chapter 13, which is like a loan mod that gives them five years to work out and get back on the track. So that's like you buy a performing note and keep that in mind, you better bought that at a good price and make sure that the principal and interest payment that's coming in makes a good ROI for you. Whereas if you bought 10 at 50 now you've got, like I said, that leverage across the board, a little bit more security. If you do have a bad apple, it doesn't screw up your whole return.

Is there an amount that you just don't advise going over like 2 or 3 mil? Because it's just almost never in your favor.

So yeah, if I'm gonna end up, if I, if my goal is to buy the note to get it re performing and the borrower back on track, I don't usually go above 200 grand is the value. I prefer 150 and below because that's, because that's really about 90.

Because you know you can turn them around and get them back on track. Where if you know it's already foreclosed now you have some other factors.

Well, if it's already foreclosed, it's just the property. Yeah but when you get that higher, higher, higher values, they're always gonna fight you. The borrowers are always gonna fight you. They're just gonna give, like I said, a little bit of money to their attorney each month versus paying the 10 grand or 20 grand a month.

I bought a note. I'll give you an example. On a Property was worth 2 million, okay. The borrower had been in the house, he built a house and a ton of equity, okay. He went to the bank, took out a refinance loan where he pulled half a million dollars in equity out. He went down the street, bought a half million dollar house and moved into it and then never paid another mortgage payment on his main house again.

You know. And so you have to keep that in mind. What the, what's the bar gonna do? And that's why we look at so much due diligence on do the cities.

Play in a role. Do the cities play a role in the type of people? Because for Someone to do that on a hundred grand, half a mil or a mil, that's a personality.

I mean you, you can't just say everyone that has a half a million dollar house acts like that. But that's kind of a, that's. I'm trying to behave, but shame on him.

You're trying to be PC here. So let's just say on those, it's like Miami beach, okay? High end condos in Miami Beach. They are a lot. There's always difficulties there. And I'll just say the big, big three parts of California, San Francisco, Louisiana in San Diego is where those troubles happen the most.

So don't do. Wow, that's astonishing. But I'm glad you narrowed it down because, I mean everyone's got PETA customers. The trick is identifying them and not having them come back. So.

Well, that's, and that's, that's the truth. I mean I've had great borrowers in high end homes and worked with me, but it's just you have that when you start running that higher end people have friends with the initials of a Squire after them and they're willing to just drag this out as best they can. And that's why you get that churn and burn people. We do the most amount of good with that first time home bar. Like I said, we. I love keeping people in their houses.

Yeah. And I like the transformation story that you're sharing too because it's like the goal isn't to kick them out. You just want to turn it around and you can, you can help them. I mean, if someone that, that's clearly someone with a half a mil, buy a new home, that's clearly someone that doesn't really care or want to help or do the right thing. But yeah, you know, when you have someone who, it's just, hey, we got behind 200amonth.

You know, good for them for keeping the home for 18 years.

Well, and that's the thing is that that showed a lot of them. You know, that's a thing that you don't see on a spreadsheet. You know, you don't take that consideration. A lot of times I look at that, I'm like, this person's been there for a long time. If they've got little kids, they don't want to move them and into new school districts. For them to move out of that house and move into an apartment, they got to put first and last month's rent utility deposits. That's three to five grand in a lot of cases. Look I would say, look, let's keep that three to five grand with you or put it with me and stay in your house without having to move.

And you got them to pay off the house in six years instead of 23.

Yeah, exactly. But when you're in such a financially illiterate, illiterate society these days, people just don't know their options.

And it's sad because.

What you're saying, it sounds like, you know, just simple money management. I mean, I'm glad you're helping them because those are the people. It's like if they're willing to help themselves, yeah, do everything you can to help them. But the sad thing is the person with that half million dollar place probably just has a little bit more financial literacy and knows what to do. And you know, so not saying it's right, but.

Well, then you look back. There's a lot of people.

We try to be good people, but there's a lot of people 10 years ago that were approved mortgages in houses that they should never been into. You know, you could fog a mirror and get financed on a mortgage. And so you had a lot of that. People are taking advantage of the situation, which is fine. If you can afford it and keep it up, great. But if you're a stripper who's got four mortgages and trying to pay in dollar bills every month, that doesn't work so well after a while. And you look at these, you know, a lot of people want to blame the adjustable rate mortgages, the ARMs out there, there, well. Or the subprime mortgage.

All those have gone.

Gone, Ladies and gentlemen, Arms have been back for a while. They've been back for several years now. Subprime mortgages have been back for at least five years now. They just call them non prime now. So it's not. I hate to say it, but you asked me do I think a lot of what's going to happen? I was like, what happened a decade ago? There's a lot of similarities. For the last six months, my spidey sense of like, or actually six months prior to Covid, I was like, oh, I'm seeing history repeat itself. I'm like, oh.

Because there's still unfortunately a lot of people making so much money from it, they don't care who they screw over.

We'll just rename it.

You bring that. Yeah. Well, here's the thing.

No, it's something totally different.

Okay. It's totally something different. Would have put a different name or slap a different sticker on it, but you had all these guys that lived through, you know, the executives and stuff like that, banks that lived through the Great Recession 10 years ago and they've retired. Well, you got these new guys that are coming up and gals who want to give good returns to their investors. So they start bringing back these same type of options, these lenders and these debts, you know, cmbs, MBS Mortgages, Mortgage Backed securities, doing all this stuff to get high returns and you start seeing defaults again, you start seeing the stuff come up. And bank of America has been one of the biggest, guiltiest parties out there. The big four, Big five, Chase, Citi, Wells Fargo have all been there. But like before COVID kicks in, I was talking to a guy over at bank of America Mortgage and they were doing FHA loans, which is your first time homeowners, basically loans that usually got to bring three and a half percent as a down payment. Well, bank of America is donating the down payment and then paying up to 10 grand towards closing costs. So people that when an FHA don't use the gray scores, they get into a first time home without having any skin in the game, they lose their job or they get reduced in hours. In a lot of cases now they're in default. And that FHA product, the first time homebuyer is the largest percentage of defaulted mortgages across the country. Last month it was like 15, 16% of all FHA loans originally last two years are already in default. That means they already 90 days or later on their mortgage.

So essentially the banks are the ones investing in their own. Note going here we'll front you because there's a 15% chance it's going to really go in our favor and if not, it's still in our favor.

Well, banks don't want to own real estate, so they don't. They make these loans with the idea that they're going to keep going, keep going, keep going. But they get greedier and greedier and greedy. So usually, you know, five years ago they required you to pay that 3% down you to bring that to the table. And the banks, they make their money on notes. They don't make money on real estate. It's a non performing asset to take the property back and that's. But they're very aggressive. If you start being late. So like a minute you're more than seven days late in your mortgage, they start calling you.

I see. So it's not so much to get the property, it's just that we can increase revenue by 12% if we get more aggressive.

That'S correct. And they're so they're looking more at the 84% or 85% of the new business they'll get, not the 15 they're losing.

Yeah, exactly. Well, and that's the thing is banks don't want to be above a 5% or 6% default rate because then the federal government starts stepping in and said, okay, what are you doing? Are you doing predatory loans? Do you not have enough? Because you guys, banks, when they start having non performing loans, they have to start pulling in cash reserves to offset those losses. And for every dollar they have to keep in house, that costs them 10 to 15 times that in fees that they've been charging by leveraging it out.

Okay, yeah, because they have a very unique lending model that would be illegal for all of us.

So they don't want to lose even a dollar.

That's like. Well, that's the whole point. I mean if you gave, it'd be like you giving me a dollar, me lending that out 15 times or 20 people, you know, or like right now, like back in 2008, the banks were leveraged for every dollar they had and they had it leveraged out 15 times through a variety of products. Well, prior to the beginning of this year, do you think that number was higher or lower?

Oh, higher.

It was higher. It was 50 to 1, 50. So that's, I remember when it was.

19 to 20, I thought it was like a 19 to 20 to 1 and now it's 50 to 1.

No.

So every dollar they lose, they're losing 50.

That's the opposite of what you get.

They're leveraging out, they're making 50. It's leveraged out 50 times in different products.

Well, that's what I mean. If they're having to go into their own reserves to cover their losses, they could just not have the losses, keep it and.

Wow, that's nuts.

They'll start cutting out programs or stop being programs. That's why they'll sell debt. They'll sell non performing debt off to it as a big discount because they'd rather get that 50 cents on the dollar in now that they can go lend out and make up versus trying to ride this out for 6 to 12 years or 6 to 12 months additional and then who knows how long beyond that. So wow. That's why banks would rather us step in, take over their problem children and try to work it out. And that's where we make our money, is working out the problem children.

Well, clearly you're successful with this. I Want to ask you real quick, how did you get into it? What were you doing problem prior to 2008? Because I heard you say dialing for dollars. And you, you were already at a very intellectual point at that point. What were you doing prior?

So I, I start, I graduate college, Southwest Texas State University, south of Austin, Texas, San Marcos, the Bobcats. With a business degree. I wanted to be, actually I started off in college, I want to be the next sportscaster, you know, the next Dan Patrick from espn.

But got a business degree, went into finance.

I went into financial advisor, worked for Smith Barney for a little while and then I went to working for JPMorgan Chase, big bank. I became a mortgage banker with them and opened up about 20 different banks here in Central Texas. And a buddy of mine started a mortgage business with another real estate investor who was traveling the country teaching creative financing and other things. And I said, that's what I want to do. So 2004, I put my notice in and then for four years I was basically originating loans, you know, new loans, refinances to real estate investors across the country. Every other weekend I was on a plane and we were flying out to another real estate expo of some sort. And you know, these big events I used to have 500 to 1500 real estate investors at, we were doing loans for a lot of them. And then so I was very fortunate for that four year period not only to make a lot of money in the mortgage space, but also had like an apprenticeship with the investor who was our sponsoring broker. He taught me so many different things, him and his business partner, he and she were just. I learned so much stuff about creative financing and the note business. So that when everything changed in 2008 and the music stopped like that, I literally said, okay, here's a dollar for my half of the mortgage company. And I just started calling banks and lending institutions, 50 to 100 a day to start tracking down these lists of non performing notes that I knew that they had. It took a while to do it, but it's been well worth it.

Is it easier now?

Oh, it's so easier now than it used to be. I mean, you look at all the tools that have created in this new kind of secondary market over the last 12 years that we didn't have 12 years ago. I mean we had one thing. I would pull a list and I would literally like Tuesday, Wednesday, Thursday, I would knock out 50 to 100 phone calls each day. And so by Friday I was talking like I'm a FUD because my tongue Was so swollen for making so many calls. You know, something like the Pursuit of Happiness with Will Smith just dialing for dollars or Boiler Room. It was like that. And I got lucky enough that I knew that Capital One was selling some notes, some smaller commercial stuff, because I saw a deal here in Austin that I missed out on. And so I started dialing for dollars or Capital One. 70 phone calls over three weeks. I got hung up on or transferred to the wrong spot in India like 69 times. And I finally got the right spot. And I talked to this lady in New York. She sent me a non disclosure agreement to sign. Then she sent me over a 33 page PDF and it had every small balance commercial loan that Capital One had in their books all across the country. And it was so small, font was like six point font Mario. Okay. And so I like had to get a magnifying glass to try to read it. But it was a million dollar relationship. I flipped the note. My first night flipped was in San Diego. It was an eight unit apartment complex that was worth 700. I got under contract for 375. I flipped it for 415 in 24 hours made 35 grand. There was another 21 unit in Houston, Texas. I got under contract and flipped it for a $50,000 fee. You know, that led to a lot of great things happening here and there. It's just been an amazing wild ride since then. And along the way I've had a lot of investors have seen the deals that I want to do. And we started teaching people how to do this in 2010 as well.

Wow, that's fantastic. And I remember it wasn't with notes back in the day, but I remember just lead list. It's like it was the yellow pages or whatever and you just dial. And then it was like, oh my gosh. There's online companies that aggregate list that you can just buy, but it's still just like spreadsheets. People don't realize information and data. But Yeah, I remember 10, 15, 20 years ago. It's like, what's your excuse now? I don't want to. Well, that's different. You're lazy. Go away.

But that, that is it. Work is a four letter word. Note is a four letter word. So it's still a lot of calling. It's a lot of LinkedIn. LinkedIn is such a very powerful tool that we use to find and connect with bankers. And then it's email. So it's all marketing now. One of the biggest things that I tell people these days, that's different than 10 years ago is that everybody's in the media business these days, doesn't care if you're in notes, real estate, books, whatever. We're all in the media space. And so you've got to get in front of people in some sort of fashion. So the three biggest tools that we use is still down for dollars, but we use LinkedIn. We use, oh my gosh, email, like Mailchimp or Infusion, something you got to email on a regular basis. These asset managers. And the third thing is actually surprisingly, is video or our podcasts. We get a lot of people, we leverage the power of video. Like I'll film a short two minute pitch video, but what I'm looking for, and then I'll attach that video Link in a LinkedIn message direct to asset managers and then they know what I'm looking for, which video, they'll call me a lot, you know, they'll call me back, oh, hey, I saw your video, here's what I got. You seem to know what the hell you're doing and you talk like you know what you're talking. So here you go. And go from there.

Wow, that's huge. Yeah, videos, great. But people don't realize you can send it in emails and messages and it works just as great. It doesn't mean it has to be on YouTube. And for John Q. Public.

Well, and that's, that's the biggest thing. If you record like I record one video, it's 2 minutes, 10 seconds long. It saves me having to have that conversation a million times. I'll jump onto Octopus CRM and I can automate sending out a hundred invites to asset managers the first of every morning. And I'll probably get a 10% open rate, click through rate on the videos and out of those 10, I'll get two or three people that will reach out and say, hey, I've got something for you to take a look at.

When did you start using the video? Ooh.

I mean, I've been big on video like training and stuff like that for years, but I just started using this about a year and a half ago.

Okay.

With asset managers, the banks on LinkedIn. I mean, I've always done. I mean, I've been doing a Monday night webinar via Zoom for a couple years now, four or five years now. And I've done video on my podcast like yours. I do a lot of video with my podcast and leverage YouTube and Vimeo besides. Just the audio side of things. But that helps too. When they see I'm A host of a podcast with 600 episodes and a million plus downloads. Like, oh, he might know what the heck he's talking about. Let me send you what I have.

And I'm like, oh, you didn't start last night, huh?

Look at that. Yeah, exactly. You've been around for a while. Or you, you know, like, I was just talking to a banker today who's down in Fort Lauderdale, and he was talking about what it used to be. And I said, well, do you know this guy or do you. Where you're at? Do you remember this? And he's like, oh, my gosh, yes, I remember that event. You know, there's a lot of smaller events.

See, and that's what's great too, is the longer you you've done, it's like, hey, I remember that event in, you know, spring of 2010 or so. And so. And you know, it's, it's great to be on the cutting edge, but it's also really great to be established where you don't need to do every last little thing in the world.

Well, that's the thing too. A lot of people ask me that same question. Well, I don't have any experience. That's okay. If you don't have any experience.

Make it.

Exactly, but leverage your vendor's experience. So, like, I've got an attorney that's done 60,000 loan modifications. I've got a servicing company that services 5,000 other investors. So that's the biggest thing in the note space is you're not the person having to go out and fix the door like you would in a fixer flip or the roof or paint it. Hey, I got a servicing company at 10:1. I just need to basically find the deals and raise the capital for it and market for it. I've got a team behind me that's gonna take care of all the dirty work.

Nice. Well, I have one last question for you before we thank our sponsor and go to the imperfect action round. And it's the wheel of whatever.

I love this. I love this. Good stuff. Yes. Bring it on. Ask me anything.

So.

It's got a nice flywheel on that one.

Yeah, they're, they're, they're ABEC 12 bearings.

Very nice.

Who is a company you'd love to work with that you haven't yet?

Ooh, the company that I'd love to work with. I haven't yet.

I mean, we can do that. Or who would you like to kick out of their house that.

Well, let's do this. I'll give You a story.

I love stories.

You're gonna love this story. So back to you're not gonna buy a note from like Citibank, Chase, Wells Fargo, bank of America. They sell in like 50 million dollar portfolios and they usually sell them like Goldman Sachs. Okay? So 10 years ago, before I, when I was wet behind, the year I was dialing for dollars, I was calling Citibank every Friday. And I knew the guy who was in charge of this, Adam Rubenstein, he's still with Citibank. Okay. And so I probably called him 60 times over, like a two month period, leaving voicemail after voicemail. I had a business partner who called, said, let me try it. So she called in and said, you know, this so and so you talked to my partner. You know, I loved it, we'd love to talk about buying some notes from me. And then she thought, she hung up on her phone, said, Adam Rubenstein, Adam Rubenstein, Adam Rubenstein. I love that voice. I love that sound. It just flows off my lip. Rubenstein, Rubenstein, Rubenstein, Rubenstein. And I told her, I was like, listen, did you hang up the phone? Please let me hang up. She's like, yeah. And she looked at her cell phone. Oh no, I did not click. I'm not shitting you. Thirty seconds later, the phone rang. Caller ID said, Citibank, Adam Rubenstein's office. And he was on the other line and he started laughing. He was literally laughing. I'm like, okay, okay, biggest bank at the time, laughing at us. And he's like, okay, what are you guys looking for? I said, well, we're looking for non performing that we buy like 50 cents on the dollar. We can go up like 20 million. And he's like, that's great. Call me back when you can fund $50 million and we'll talk then click. And I was like, always laughed about that because you, you leave an impression. If you're dialing for dollars or reaching out, it's okay to be personal. You don't have to be perfect. And to this day I can still drop Adam an email every like once a quarter. And he will respond back to me because I'll just, Rubenstein, Rubenstein, Rubenstein. And he'll sit lol back at me. So I, that's been a big goal for me. Get our fund and get to the point where we can fund a portfolio from Citibank is when you buy those big bulk packages like that, you've got to have a big team, a big network, but also you get some pretty, pretty good discounts on some stuff. So that would be my biggest goal right there.

You're going to do that?

I think I will do that this year for sure.

You're for sure?

Yeah. Yep.

Good for you. That's awesome. Thank you for the story. We're going to thank our sponsor and come back for the imperfect action round. You've heard me say every business needs a book, including yours, and it's true. And that's why you should visit freebusinessbook publishingcourse.com today to learn the seven steps to publish and promote your your nonfiction lead and profit generating business book in eight weeks. But you know what, don't take my word for it. Take it from a few of my authors like Lori, I went from having.

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Hey, their words, not mine. Visit freebusinessbook publishingcourse.com to get started now and I look forward to hearing your transformation as the next video success story. Once again, that's free. Businessbook publishingcourse.com and we are back with the Imperfect Action round. Scott, are you ready to take imperfect action?

Bring it on baby. Bring it on.

60 second or less answers the first question. What is the fastest path to the profits?

Fastest path to the profits would be buying actually performing notes at a big at a discount you can buy performing notes to start performing for you and get rocking and rolling using either your own funds or other people's funds out there. So that's always what we tell people. Like, listen, buy some notes that you can start getting cash flow immediately to start covering your bills. If you can cover your bills, you'll feel a lot better on that path process.

That's correct. Number two, what is your prospect's biggest problem and the fastest way for them to fix it?

The 4 inches between their ears. In my case, 5 inches. It's a mindset issue most of the time. A lot of people come from the corporate job where they're not having a market, they're used to just doing what they used to doing. And as an entrepreneurship, you got to do a lot of things, you got to do a lot of marketing, you got to do reaching out on a regular basis. And a lot of people aren't comfortable with that. And it's not difficult to reach out to people. Everybody puts their pant legs on one leg at a time. Everybody has, you know, wipes their ass with toilet paper. So you just gotta realize everybody is an average Joe. Just gotta get out and talk to people and have conversations.

Number three, what is the best way to maximize customer lifetime value?

Oh, just give. Just give and give and give. You always want to add value.

If you love books, I'm a big fan of what Would Google Do? It's a great book that talks about how when Google launched their platform, they didn't hide their coding. They actually opened it up to allow people and developers to go out and create things that would plug in to their platform in Chrome and stuff like that. That's one of the biggest things, is we give a lot of information. And I think you should do that too. Give away your best stuff, you know, give away your best stuff to really help those out there that want to achieve big things. Because listen, only 10% of people will do anything at any given time and Those are the 10% you want to work with. So give them the goodies. Trust me, they'll pay you back tenfold if you make it a relationship where you're giving and have a servant mindset. A servant mindset leadership model.

Love that. And if you don't know Scott in person, you should. He is awesome and he's exemplified that since day one. And I'm excited that I was able to get him on the show. I have a couple more questions, but I just wanted to say that because you're saying exactly what you live and you know, I think sometimes people say, sometimes people feel it's like, oh, you know, they know all the right answers. But there's a stark difference from people. I know that just they have all the right answers. They can go good on camera, they can, they have all the right answers to do they actually live it. If there's one thing I haven't brought up a ton from doing the show, launching expert authority effect interviews. It's. I've seen the behind the scenes of how people do stuff and frankly, I have a spreadsheet of all 200 some + episodes and notes on it all so.

Well, I'm the first one to tell you not every deal goes great in my neck of the woods. We have some deals that go south. It's mount taking care and doing and realizing you got to take care of people. You know, you're in real estate, at some point you're going to get sued. I've had borrowers sue me. I've had renters sue me. I've investors sue me. But we've always worked our best to follow through.

Yeah, you're setting the bar to I want to help you. And we're. You said it early on. You know, we're not trying to kick people out. And that's why I was joking with the wheel of whatever. But the reality is you're setting the bar high. You're not trying to screw people over, you're trying to help them. But yeah, I've experienced in my, with hundreds of clients over the years myself, it's about one to one and a half percent are just like absolute treacherous. And you know, it's like everyone's, it's. Nothing's perfect. But for the other 98 to 99% gain, you'd be stupid not to want to at least try and do it.

So that's why I tell people, when you can come to the realization that not everybody is your client, that people kind of fall into three categories. This is the best bit of advice I got from a mentor of mine, Gregory, who's the author of Think and Grow Rich three Free From Gold and a variety of other things. There are three buckets of people out there. You have the people that love you. That's the group that knows you. They love you, they adore you, they're going to work with you. That's a great bucket. You have the opposite side. You have a bucket of people that are going to hate you. No matter what you do. Your age, your sex, your color of your skin, what you wear, they're just gonna hate you because they have a dark hole for a soul. Unfortunately for us as marketers, a lot of times we're marketing out. We'll get negative comments from that dark soul hole. Dark hole over a soul group. You know, it doesn't mean anything. We get so many people that love what we're doing here. We don't focus on it. We focus on that one bad review or that one person says something like about, screw that person. If they're not writing your checks or they're not being responsible for your living, just unfriend them, ignore them. And what you have to focus to be happy. The group that loves you and then that middle group that doesn't know you.

Get to know them.

Exactly. Get to know them, understand what their issues are, solve their problems. If you can save them time or save the money or solve a problem, you've got something valuable there. And if you keep focusing on those two groups over time, that third group will get tired of talking bad about you or saying ugly things. Eventually they'll come into the middle side. Or the one side starts saying, oh, yeah, I knew you 10 years ago when you did that. Yeah, I remember you 10 years ago calling me an idiot. Yeah, exactly. All right. But hey, revenge is a, you know, sweet. Serve cold and just keep rocking and roll.

Yeah. And even I'll add on this personally, even if it is someone closer. This and that, it's like no matter what they're doing, even if they're in a position of authority over you or something, don't let it continue. Cap it, don't instigate it. But it doesn't mean you need to accept it for 10 or 20 years either. Because if they're just negative and toxic, they're just negative and toxic. So.

Well, and that's the thing too, is most times people that will say something, they've got their own issues they're dealing with.

Yeah. They're not even going to remember until a decade later when their story in their mind is, oh, I remember the. Watching this. And it's like, okay, benefit of the doubt.

But. Yep, yeah, exactly.

Excellent. So you had mentioned one, but I want to ask for Expert Authority World. What other books would you recommend? Actually mentioned three of them. What other books in addition would you recommend that have made a difference in your life?

Oh, one we give away a ton of copies is Outwitting the Devil, Think and Grow Rich. Outwitting the Devil by Sharon Leichter and Napoleon Hill. Have you read that book?

Great book.

Okay, good. It's like one of my top three. Love it. Sharon. I actually, Sharon Lecter is a friend of mine. I actually met her in an event and talked with her a few times and hung out. Actually was working to help buy a note from one of her relatives a few years back, which is kind of funny.

Oh, no kidding.

That's a great one Tribes by Seth Godin is another one. I think everybody needs to read just. Absolutely. I read just about anything that Seth puts out. So those are probably the two other ones that we probably give out the most. Of course, thinking Grow rich is great. The Art of Not Giving an F is another great book that you should read. Everybody out there, never split the difference. Another one if you're in sales or some sort of product, that's another great book everybody should read in negotiations.

Excellent. Where would you like people to learn more?

Scott Easiest way is to go to our website weclosenotes.com it's weclosenotes.com you can always catch me at scottclosenotes.com and I'm on all the social medias as at one Scott Carson and check out our podcast the Note Closers Show. If you like podcasts on real estate.

Excellent. Well, I've thoroughly enjoyed this, appreciate you for sharing and glad we got a chance to connect again. I look forward to seeing you in person and appreciate it.

Mario, you are doing a great job brother. And if you are watching this, go ahead, hit that subscribe button. If you're watching this on YouTube, you're listening to this on anywhere you get your podcast, hit that subscribe button and leave him a five star review while you're at it. You know we love to hear that feedback. He didn't pay me for that stuff, but I tell you what, he should have.

Oh, I appreciate that. And you know what? That little ding love that. You're awesome.

It is better.

So appreciate it.

Anytime brother. Anytime.

All right, Expert Authority World, we'll see you. We have another great episode here today. I'll see you tomorrow. Have a great day. God bless.

You're already the expert, but have you transformed your expertise into a tangible asset that will generate and qualify leads while increasing profit for you 24 7? And if so, how well are you promoting it? With the Expert Authority Effect publishing method, it's easier and faster than ever. Visit freebusinessbookpublishingcourse.com today to learn the seven steps to publish and promote your nonfiction, lead and profit generating business book in eight weeks. Visit freebusinessbookpublishingcourse.com to get started now. Once again, that's free businessbook publishingcourse.com hey, thanks for listening to today's episode. I hope you got a lot out of it. I know I sure did. If you haven't done so already, I invite you to subscribe to the show and also be sure to check out eainterviews.com for complete show notes, the full interview video experience, links to the resources we mentioned, and more. Have a blessed day and I'll see you tomorrow. I.