884 Scott Carson: Buying Distressed Debt: Nice Guys on Business Podcast

Here's what you can look forward to on this episode of the Nice Guys on Business.

So let's start with the last question. We'll work our way forward to that. So if you're, look, if you're in the real estate game, you're a realtor. Mortgage broker. I mean, mortgage brokers do really well with what we do because it's very similar to what they're doing. Realtors do pretty well too. You know, if you're a fix and flipper, we get a lot. They do pretty well if you're a landlord. Landlords are tired of dealing with, you know, toilets, tenants and trash outs and termites.

So they do really well broadcasting live from their mother's basement. It's the Nice Guys on Business. Need an education on how to grow your business? The Nice guys are here to help learn about great customer service, networking and how just being nice can help you prosper. Now here are your hosts, Doug Sandler and Strickland Bonner.

So it's always great to have another podcaster on the Nice Guys on Business podcast. And Scott Carson, he is the host of Steven Scott. If I'm wrong here, it's called the Note Closers show podcast. Is that correct? To make it more confusing, I mean, I hope your real estate transactions are less confused. Well, you know what, you're probably pretty good at all the, like the technical side of things, right?

Yeah, I'm pretty good. I mean, it's funny the name kind of spawned from what we basically do. We've always like to highlight our niche of real estate investors. And so hey, let's focus on note closing, people.

So the show is called the Note Closer Show Podcast. Scott is an expert in real estate and real estate investment and that is his world. And he's also the CEO of weclosenotes.com and they specialize in buying distressed debt and mortgages. He's an expert in this field and has been involved in buying over half a billion dollars in mortgages. And I think that Scott, seeing his backdrop as he entered the zoom screen, it looks like he spent about 10 million on the backdrop of that just alone, he's done over half a billion dollars in mortgages in 10 plus years. I'm excited to have him here. He is a friend from New Media Summit. Welcome, Scott, to the Nice Guys on Business podcast.

Hey man, thanks for having me. I'm honored. Happy New Year. Obviously it's been a while since we talked, but excited to be here since.

This show is going to probably air in somewhere in the Area of May. I think the Happy New Year really fits in really well here, Scott. Happy Mayday, Cinco de Mayo, whatever it is. Happy 4th of. We just cover them all. And Merry Christmas for 2019 for you also, Scott. Hey, Scott, I want to start here because oftentimes I can tell a lot about a guy if I get the answer to this question. What is your go to karaoke song?

Oh, man. Go to karaoke song. Golly, that's a good question. Either is I'm going to sound cheesy. Probably a little bit of Journey. That's good. Hypnotized by Notorious.

How is your note? How is your b? How are you with Biggie?

I like Biggie. I, you know, I think he gets. He got a raw deal. But. Yeah, that's.

Yeah, I just happen to have a track of Hypnotized that I'm gonna pull up here. Are you ready to go? If I could actually, if I could do that, I would be an awesome podcaster, wouldn't I?

Oh, man, totally. Now you gotta do a little bit of work on there. If I remember at New Media summit, I asked you for some Guns n Roses and some Motley Crue. You didn't have that much.

Well, you know, as far as getting up on the dance floor and playing Motley Crue, maybe Guns n Roses, Paradise City or something like that, might. Might have been a good dance tune. I don't think I know what Motley Crue song can you actually dance to without killing yourself. Maybe not a lot there. Probably not a lot.

I don't know. But as far as karaoke, I think those would probably be a little bit.

I think you're right. I think you're right. So, Scott, so share a little bit about what we close notes.com is all about. And then I want to get into it because this is an area that has eluded me my entire life. Real estate, mortgages. I mean, I've had mortgages before and my uncle has always told me, dougie, real estate is the way to go. And I just, I don't know. Either I haven't been able to put the capital behind me or I just, I just have a little bit more risk adverse. So why don't you share a little bit about weclosenotes.com let's start there.

Yeah, no problem. So I used to be a mortgage broker here in Austin, Texas and was doing mortgages for real estate investors all across the country back in 2004, 2008 at a big business. And then of course, when the Market went south in 2008, 9 and 10. I jumped from the origination side of creating mortgages and started contacting banks and hedge funds and started buying mortgages. We had a lot of people that weren't making payments on their mortgages or were upside down. And when a borrower stops making payments, the value of that mortgage goes down quite a bit, but the underlying asset is still very valuable. And so what we do is we buy this debt at a substantial discount from the banks. We then become the bank, and then our goal is to reach out to the homeowners because we're usually only buying occupied assets. And our goal is to try to get the homeowners back on the right track with either a modification or a trial payment plan, or trying to get them somewhere where they can start paying again. We're pretty creative. A lot of times we'll end up forgiving some debt or reducing payments or reducing interest rates. It's a, you know, every, every mortgage is kind of a country western song, as I like to say. Never know what happened to the borrower. But I've been doing that for over, golly, over 11 years now. And one of the. The premier educators actually in the business as well as we've taught a lot of thousands of thousands of real estate investors how to kind of come to the dark side of real estate investing and become the bank. And, and really our big goal is not to buy property, rehab the. The property. Our goal is when we buy a note on a property with a borrower, our goal is to try to rehab.

So help me. Let's walk through. Let's just take that through a real life scenario here. So I lived in a house in Ellicott City, Maryland for, I think we were there for 15 years. About 10 years into this, our next door neighbor, they got divorced and she stayed in the house, but she was not working and she stopped making the mortgage payment. So eventually the house was foreclosed upon. They moved out, and the house then just sat empty for a couple years, probably two or three years of that last five years. So they owned the house still. The bank took the house back. I think there was some tax debt and some other stuff involved. So let's say that the house was worth, I don't know, a half a million dollars, and they might have owed the majority or more than that. So what happened? Because they may have refinanced or the market went down and then. I think that's probably what happened. The market went down and then, and then they were just sunk and they had no other option. So take me through where you come in. So the bank took the property back. They don't know what the fuck to do with the property because they, well, take me through there, just get me beyond that where I am right now.

So we usually step in before that. So to this situation, when the bank forecloses, there's really no mortgage involved anymore. They foreclose subject to the terms of the mortgage and the collateral on that loan is the property. They take the property back and then usually banks will list it for sale and then sell it off to somebody else. Right, but what we do is we get list. Banks will literally send me lists of the mortgages where people are behind. It could be three months, it could be three years or more behind where they haven't made a payment in a while. And then what we do is then we'll step in and figure out the price on that mortgage on that asset. So let's use those numbers from that example. You said let's say the house is worth 500, they may owe 600. Usually we're buying with their upside down or owing to the property's worth. And so we don't usually, we usually somewhere come in around $0.50 or below of the actual value of the property.

Is the bank accepting that because it just seems like they wouldn't want that, or do you just deal directly with the homeowner? No, you've already taken.

No, we don't touch the homeowner because the homeowner still owes 600 grand. All right, so we deal with the banks and yes, the banks will deal with it. Now don't call me and say, hey, I got a Bank of America, I want you to buy it. It's the bigger bank of America, Chase City in Wells Fargo. They don't want to sell one off mortgages, they want to sell a large portfolio like 50 million. And that's probably what happened to this asset that you're talking about. Your next door neighbor probably was part of a bulk portfolio that somebody owned or a fund owned. They just never got around to moving the asset for a couple years because they own thousands of property. So. But what we do is we'll come in and based on our number, $600,500 value, $500,000 value, we'll probably offer like 250, $250,000 to the bank for that mortgage. Alright. And depending how far, usually they're 12 months or further in default when we buy stuff like that. The bank would rather get $250,000 in. Now. Now they can go out and loan that money out and really do that loan three, four or five times to make up points or make up fees on their loans. Because that's what banks. They want to be in the loan business. They're not in the property business. Okay? That's why they have all these big buildings and all the nice marble, because they're in the loan business. And the velocity of capital, for every dollar that comes into a bank, they can leverage it 15 to 50 times in loans.

Okay, so give me just a little thumbnail sketch of that, because that just seems. Okay, so now they have this. They're getting 250 grand, but now what happens? So now they're able to. How do they make money from that?

Then we'll take that 250 back in house and they'll loan that out once a month. They'll leverage it, loan it all out, make three to five points on it. Every time they loan it out, a bank wants to try to rinse and repeat their mortgage loans rather than having.

Their 250 grand, even though it's only 50 cents on the dollar for that property. They're not dealing with that property anymore. They have their money back and they have their inventory, which is money, not houses, back in place. And they can lend that money in and out to a lender or to a borrower that' going to end up paying that money rather than defaulting. And they're. And they're. And they're making points on the money when they loan it up front anyway.

Yeah, exactly. And plus, you realize this, Doug, if there's only, you know, for consumers that keep their money in, like a Certificate of Disappointment CD, all right, they're making like less than 1%. Think about this. If they're lending out money at like less than 1%, like 1/10%, but they're making loans at 6, 7 12% on auto loans, like 18% on student loan, credit card debt. They're literally making 20 times what they're lending out, 40 times what they're lending out versus what they're paying to their investors.

So let's now move this instead. And I appreciate the explanation there. I have it clearly now, which, which is why some, I think it makes sense for a bank to. To work with now. But they're only. Are they only working with you in. In bulk? So they're only working with you in, let's say, if they have 50 properties at half a million dollars that they want to move, so you're buying A block of these or can you actually buy them individually from the bank?

It all depends on the size of the bank. So we deal a lot with smaller regional banks that are lending in like three to four different states. And we buy a lot of one offs from individual funds because there's a lot of different real estate investment funds, firms or REITs that have bought portfolios of mortgages. You know, they bought a $50 million portfolio, they want to try to flip 5, 10 million it really fast to bring back in some capital. So we'll, we'll carve out, but we buy like I'll give you an example. I'm looking at buying a portfolio right now at 64 homes that are valued somewhere around 40 to 80 grand each. The mortgages, they've been performing for 12 months. Actually. We're buying, performing. We're actually going to buy the whole portfolio like $0.73 of value for $1.5 million.

So what's the benefit to the bank there? They just get their inventory, their money back. But they seem to be doing it at a loss though. Was it a bad?

Well, this specific fund bought these over two years ago. This fund bought it at like 12 cents on the dollar because they were non performing. They then did the foreclosure. They then put people into the houses, they offered financing to the borrowers. So they've held these houses for 12 months. They've made cash flow. Now if they bought it at 12, these are performing nuts that they're selling, you know, 65, 70 cents on the dollar. They're making that chunk between what they bought and now what they're selling them for. Because it's once a, once a bar starts paying on time again, Doug the bank or funds like me, they look now as a reperforming asset, now as a non performing. So it reaches out.

Okay, I got it, I got it. So why the hell do you need a podcast man? You got all this other shit that's going on. What is the benefit?

That's a great question. That's a good question. Literally we have an education arm of what we do. And because it is such a niche segment in the real estate community, I mean everybody knows about Flip this House or HGTV and all those fictional stories that take place on tv, but they don't know about the debt game. And so I started when I started investing in notes back in the heyday to 8, 9 and 10, when everything was hitting the fan, people are like, well, how do you do that? You know, people have the very similar Questions like you do. So we started teaching people how to do it, and we offer workshops every quarter. And we got some online training stuff like that. And I just started doing training videos, you know, videos every day about what we're doing on it. And literally, I decided, I said, well, I started looking at what our best marketing was for. Attracting clients, attracting money, attracting students. And it was video. It was all the videos that we were doing. So we started November 1st of 2016 just doing a Facebook live a day. What's going on in. We closed notes, you know, just a couple minutes up to 30 minutes. And then that evolved where some buddy of mine that produces my podcast now, he's like, you should really do a podcast. Because I'm like, well, no, I don't want to do all the extra work. I don't want to do the editing. He's like, it wouldn't be any extra work to you. You just film it and throw me the video and we can literally get it produced for you and online. And all across the place. I was like, oh, okay, done. So we started doing videos, you know, a podcast video every day, again, kept doing it. That's where the note closer show kind of sprung up. And it has really amazed me. We've had now been going for, like 16 months. 17, 16. 17 months. 230,000 downloads for our little podcast. What a great. Yeah, a couple hundred thousand views on Facebook and YouTube as well. And so it's really become such a big thing these days. It's really helped us revolutionize what we're doing. Literally, I'm turning down speaking events at expos or conferences because we get a bigger bag.

And it's easy to see why Scott and I've had a chance to hang out with you at New Media Summit now, and it's like, you've taken this. I guess this subject matter that could be pretty confusing to a guy like me. That is not. I know a little bit about real estate, but not enough because I was a consumer in the real estate market. But from an explanation perspective and from your personality, you're just a nice guy. You're a good guy. I can tell there's no underlying hidden agenda that you're trying to get to. There's no, oh, you can make millions in real estate. It's like, it's. You just. You understand it, you know it. This is how you make your money. And you're like, hey, if other people want to learn about it, I'm happy to put a course together. But shit, if you don't want to, then I'll just make money doing what I do anyway.

Exactly. That is so true, Doug. I mean, I will tell you this too. This niche of nest investing is not for everybody. I probably dissuade lot of people, as many people as I teach. So you don't have the skills to be in his business. You need to go back and get some more education somewhere else. It's probably better if you really want to dive in, it's just write me a check and I'll.

And that's just it. So, so tell me, like who, like who is the ideal, the ideal person to get involved in this and how do you get started if you're somebody that has no experience in it but just knows enough just to be like fucking dangerous like me, you know, I know enough to say I have a couple of bucks in the bank and I would do this through shit. It was somebody else that I met at New Media Summit. I won't mention his name because I don't want to put him in an awkward position if he's a listener to the show. But he was in the financial game and he was more into the timing, the market, understanding the market, doing short trades and not short trades, but doing short term trading, not day trading, but more like week trading, month trading. And it's like, no, no, no, no, no. This was not in a spot where I could even get my hands my head around the process of it, let alone having to get online to understand what candlesticks were and all that. Fuck, that was shit, man. I. No way was I going to do it. Real estate is something at least I kind of get a little bit. So who's the ideal client for you? Who would you shy away from, have shy away from doing this? And how does one get started if they were even interested in this? Just in the real estate game, in the finance game with you.

So let's start with the last question. We'll work our way forward to that. So if you're in the real estate game, you're a realtor. Mortgage broker. I mean, mortgage brokers do really well with what we do because it's very similar to what they're doing. Realtors do pretty well too, you know, if you're a fix and flipper. We get a lot. They do pretty well if you're a landlord. Landlords are tired of dealing with toilets, tenants and trash outs and termites.

The four teeth.

So they do really well. No more teeth. Exactly. You think I've said that a few times. But anyway, if you're looking. This is such a niche industry that you really need to get a lot of education. And we have literally thousands plus videos, webinars, podcast episodes, stuff like that online for you to learn from. So that'd be the first place I'd start. You can go to weclosenotes TV and literally start looking at a lot of our videos. That would be the first place I would go. Those that are over analytical engineers kind of struggle with our business because they like everything working in a specific number range. You know, everything will flow. And with what we deal with, it's not cookie cutter. You know, one asset I buy may turn into a re performing note. Another asset that I buy turns into a short sale where we're selling it off. Another one we've got to foreclose. Another one we're giving a borrow cash for keys. So a lot of engineers struggle with what we do because they overanalyze the deal and they kill the deal before.

They get too many options for them. They need a mathematician's degree in order to really totally fuck it up.

Okay, I got it, I got it. Exactly, exactly. And it's not that difficult a lot of times. The thing too is when we're buying a portfolio of notes like these 64 houses or 64 mortgages I'm getting ready to buy, I'm not going to see the inside of the house. There's people living in there. That's good enough for me. I mean, I can tell a lot about the inside of a house by looking at the outside. You know, what kind of cars the bars drive. Is the power on? We can call the utility departments to figure out if they're on time. Is the grass mode? Are the Christmas lights still up or down by now? You know, is there a Christmas tree still sitting in the front yard? We can tell a lot about the interior of a house by looking at the exterior. But the fact that we buy it at a discount gives us a lot of flexibility on the back end to really get creative. We're buying it 40, 50 cents on the dollar. I don't care if I have to foreclose and then spend 10 to 15 grand on the inside to get it fixed up to sell it off because I'm still sitting in a good spot. But our ideal really what kind of our avatar falls into is, and this is not narrowing it down, but just telling kind of average, it's 35 to 65. Somebody who is college educated, owns a house. Is a homeowner interested in real estate also worried Maybe a little about the retirement. Their 401k is maybe now a 101k.

Hey, I just got my. It's funny you say that. I just got my statement for my, my sep. I'm a, I'm self employed so I got my. Yeah, and what's so fucked up about it is like, you know, every cent that I put into that sep last year I lost that and another 15 grand. And I'm like, what the hell, I could have used that money every month. But you know, it's like I don't even want to look at my statements when I get them, so. But I'm wondering, I'm sure the same thing happens in the, in the notes world. It's just a matter of, you know, when and timing and everything.

So anyway, it totally is, Doug. I don't, I'm not gonna sit here in line say I make money on every deal. That's not the case. Nobody does that. Never. Everybody. If anybody out there ever tells you that in their every piece of real estate they make money on, they're either not buying very many or they're lying. Alright? And the fact is that we have a portfolio and I'm proud to say that on the majority of our assets we do make money. We make pretty good money on it. On those that we don't make, that's okay because we just take our profits from the bad deals and we make sure and cover in the bad deals or we get rid of those assets as fast as possible. So it's not being a bane on our existence. But you know, people, you gotta have a little bit of money to get doing what we're doing because there's due diligence, there's some marketing costs. You probably want to attend a couple conferences that are out there in the note space to get rocking and rolling. But we have a lot of people that get started, they got 50 grand sitting in a self directed, an IRA or old CD that they roll it over to a self directed IRA company and they use that money to kind of get started buying a couple assets here or there. We're a big advocate of raising private capital. I spend a big chunk of my time teaching other real estate investors how to raise capital from other people. And so there's plenty of other money sitting on the sidelines. There's really $7 trillion in retirement funds. Well, maybe 6 million after last year or 6 trillion after last year, but just waiting to be.

So how do you, so how do you take somebody that says hey, I don't really want to learn about all of this because I just don't have the time, the effort, the energy, whatever to do it. But I do have. Now, this isn't me, but I'm just saying this could be somebody in my community that says, but I do have $50,000 that I don't want sitting right now in an IRA. But I've already put it in my IRA. Take it out to do this. Or is that something, this isn't like IRA backed, is it? Or set back.

No, no, no. So what I would tell them to do is they would need to move that money to something to a self directed IRA trustee or custodian. They couldn't keep it with Schwab or, you know, agent words or any of those because I mean, while those companies say that, you know, their IRAs are self directed, they're only allowing you to invest in the funds that they choose for you. And so there's like 40, 50 different trustees or companies out there that will take, allow you to roll your money into a self directed ira, which you can then pick what you want to invest in, whether it's real estate or notes, or you want to lend it out at 12% to somebody else out there or a whole variety of things that you can do. And we use a company out of Houston called Quest Trust Company.

I wasn't even aware that that was an option. I always thought you had to put your money in a specific account so they don't feel like there's any funny business that's going on. Not the funny business is in mortgages. But you know, I just like, I had no idea. So that's, that's a, that's a new, a new thing for me in my knowledge bank now.

Yeah, I mean, you'd be surprised. There are a lot of people that don't know about that. And it's, I mean, if you've got an old ira, you can roll it over. Not gonna get tagged or anything because you're basically moving it from one IRA to a different IRA account. You're not cashing out or anything.

But it's just, but it's just self directed. So now you go to the self directed thing and you say, okay, I want to invest it in, in Scott Carson. Or do you say, what do you.

What I'm looking at funding, I want to buy a couple notes. And the beautiful thing that Quest will do or any of these will do, they'll say, okay, great, here's paperwork. Who's the money going to go to? What's the investment look like we're going to need these specific documents. You know, the copy the note, you know, copy the deed and the joint venture or the funding agreement and then they'll wire the money out. So we have people transferred in, we set up the documents, paperwork for them. They sign off on it. Quest reviews and documents make sure everything looks good, that you're not violating anything.

In your opinion, how safe is the, how safe is the, what's the risk as compared to let's say the stock market? And I'm not holding you to this, I'm just, I'm just, I'm just curious.

So let's. The stock market can go up and down on a rumor, right? Right. Okay. You know, it comes and you're, you don't really control. You got to get lucky. And honestly in today's world, the guys that are out there day trading, yeah, they may make some money, but we all know that a lot of day traders have won it and then lost it all. They're not really professional traders. With real estate, with what we do, we're buying an asset, we're literally buying a house. There's something tangible there. All right? And the fact that we're buying the mortgage at a discount of what's owed, we have a lot of flexibility there. And what we can do as far as you know, say the house is worth 100 and we're buying that note for 50. Well if the market goes down 10, 20%, we're still sitting. Okay. Because the house is still worth 80 grand. And if need be, I can turn around, you know, if the borrower doesn't pay, we foreclose or offer cash or key to go away. So besides the fact that we're buying a tangible asset, that's the first thing at a big discount. The tangible asset at a big discount. We can provide proof. We have realtors that are running cops and things like that. We know that.

So hold on, before you move on though, who is managing that for me? If I now put 50, let's take that 50,000 doll dollar thing that we said. I move 50,000 from a, from a static that affirm that I can't do anything with, to the self directed thing, get the approval, go through it, give you set it up so that now you, and I'm assuming you help with paperwork and all that stuff, kind of move that over. You take that shit. Where was I going with this property?

Yeah. So there are servicing companies out there for the mortgages. So like you get a statement if you have A mortgage in a house. You get a statement every month from a company. If you don't pay that, you start the phone, start swinging on the 8th of the month. We have those same type of relationships, we have those same vendors. So we have a company in New Jersey that handles all our assets. They're the ones they're calling. They're the one collecting from the borrower, making sure. And then they send us, you know, they send us a wire each month with the incoming payments. They also let us know who's paid and who hasn't paid. Those that haven't paid, they're the ones reaching out to them, getting the pay. Then they don't respond to the bar, tells us go pound sand or F off. Then we move it to our attorney.

So are we only dealing with weclose notes.com or am I dealing with.

That's all you're having to deal with. Because we make most of our money on when we buy assets, more buy.

Okay, so we're not. So we. As the investor. If I'm one of those investors that takes that 50 grand and back again through the self directed IRA, through your company, you hire all of those vendors. I'm not dealing with any of those people. I'm not dealing with the homeowner. I'm not dealing with the management company. I'm only dealing with closed notes. So why do you. This may sound stupid, sky, because maybe the answer is obvious, but why do you need us? I mean, other than for our money. But I'm assuming that you probably have a lot of capital of your own involved in this. Why do you?

I do. I'm constantly putting in. And I'll give an example. So Warren Buffett, the guy that we all know, not Jimmy, Warren Buffett. Right. He uses other people's money to go buy deals. Yeah, absolutely agree with that. The other people he's used just have a name like Chase or other places like that. I'm constantly buying assets. We're constantly raising capital and doing that. Yeah, I make a very good living at what I do. I love what I do. Been doing it for a while, but I'm always looking at buying assets. I mean, the last couple years we've averaged over on average closing on at least one deal per day, if not more for the last four years.

And a deal is not one property, or is a deal one property?

For me, when I count one deal, it's one asset. Like we closed on 400 plus assets last year. 500 plus assets. Over 500 properties basically each year so we're constantly buying, constantly bringing in new investors and stuff because we're constantly buying new assets.

Who would be the typical. Who would be the good person for you? Someone that has some discretionary IRA savings kind of thing. I mean, obviously it seems like the guy that's pretty cash rich but has no investment. But who is that? I mean, it's never that guy.

Yeah, our ideal investor is somebody who's making somewhere between 75 and 250 or more a year. They don't have the time. You know, they're making good money, but they don't have the time on the side to do anything. You know, college educated, you know, the interest in real estate, obviously real estate retirement, is what we see as some of the characteristics of our kind of ideal avatar. You know, we usually. We see a lot of people that have O in their titles, CEO, cfo, CTO or their manager or something like that out there. And, you know, one of the things that we love, that's part of the reason why we started teaching Doug. It gave us a way to really help educate our investors so they know exactly what we're doing. And as they ask questions, they kind of know what the ropes are. Because this is not your typical, like one week deal. Most of our deals are gonna take like 20.

But that's realistic. I mean, for somebody to say. I mean, for me, I've been in the IRA SEP world since 1986. It's not like I'm. And I'm not planning on taking that money out until, you know, let's say for another 15 years. So for me, I look at it and say, all right, well, what's the worst thing that can happen? The worst thing that can happen is you. Not that you want to lose your money, but I mean, have you seen a situation where somebody puts in 50 grand and they walk out with nothing?

No, I've seen that with other people.

I mean, aside from somebody taking their money and doing something dishonestly with it. I mean, in the real estate game, I mean, is there any doubt that. Just stay in the game long enough and it will come back.

That's the key. That's why we tell people like, this is a 12 to 18 month, because this take us a while if we have to foreclose. Each state's different about their foreclosure timeframe. Some take 90 days, some take nine months or more. And this is why we always do our due diligence, checking the value of the assets. That's why we also put insurance on the Property. So if there's an act of God, we're paid off. We have attorneys that handle all the paperwork so nothing is messed up. And then we have amazing group of vendors, like I said, our servicers, our attorneys that handle the foreclosure process and collection process. We're not buying anything.

So take me through the process. Just if somebody is interested, just so. Because I know I have. We have a lot of real estate agents in our community and I, you know, you've piqued my interest personally as well. So what happens? What's the process look like when somebody is interested in doing this with you? How do we do it?

Well, we usually schedule a phone call, a one on one phone call for me to visit with them, kind of get a feel for the background. We'll have them fill out some profile sheets, tell us a little about your experience, your past. We want to make sure the money that you're using isn't coming off a 0% interest rate right now. Okay.

Yeah, I gotcha. Okay.

And so it's just talking kind of getting a feel for them. And then, you know, like, usually what happens, like, hey, I got 100 grand. Okay, well, let's start you off at like, you know, 30 to 50 grand. Let's get you started with something. Let's not take the full amount because you may not like the way I work, I may not like, you might be a pita, a pain in the ass, you know what I mean? And so we'll just talk with them. We'll find a deal or two. We'll send kind of a breakdown, a deal status on, hey, here's where we're focused on. Here's what the assets are. Glad to get on the phone and answer any questions about the specific assets that we're putting them into. We're not pooling money. That's a big thing. And people realize that we're not taking 12 people to buy one note. It doesn't work that way. We always try to keep one investor per one deal, and then we go. Then you fund the deal. You wire the money into us or the bank, depending on where we're funding it through, and then we go close on that asset, we buy it and we start to work out. You start getting quarterly updates like you would with your statements and things like that. If the payment, if the asset starts to pay, like if we buy a performing note and they're paying immediately, great, you're gonna start getting a check or a wire to you every quarter. If it takes a little bit Longer for us to foreclose, depending on the deal. Then as we foreclose and we sell that asset off, our investors get their money back first. Any expenses are then paid.

And then have you seen anything get tied up in, let's say legal or, you know, that? So somebody puts 50 grand in and they're like, hey, we'd love to get you this money back, but right now something happened with this property and we can't do anything.

Yeah, it happens. I have don't. I don't buy in Chicago.

Really?

Is that serious? Chicago's horrible. I call it Crook County. I mean, I have. I do not like that. I don't buy in New York or New Jersey either, because it can take two to three years to foreclose. There's so. But the beautiful thing is, if something like that happens, what we have in our agreements that we've outlined say if after 12 months, if you'd like to get out of the deal, that's fine. We'll refund back your money plus interest rate to a percentage, depending on where you're investing.

Got it. Again, it sounds like you have a lot of experience doing this. It sounds like you understand how this market works. What's the downside? What's the potential?

Down, but good, good, good question. There are things that can happen, like I said, act of God, if you're not using. I mean, sometimes your borrowers leave and they vandalize the property, you know, and, you know, hopefully you've got your insurance on there that covers the vandalism and stuff like that. Not every. That's what I see. Some people, they just get regular flat insurance and it doesn't cover some of that stuff. Things can happen. Like we. When we look back at 2008, 9 and 10, when they're. I bought a house here in Austin and six months later it was worth half what I paid for it because of all the foreclosures in the market. You know, that market values can affect what you're doing. Sometimes things, crazy things can happen too. Like you may have, like the state attorney general. South Carolina may suspend all foreclosures for 12 months in that state, which they've done before. You know, you have legal laws that'll happen like, oh, hey, you've now got to go. I mean, not University of Georgia. State of Georgia requires you to have a mortgage broker's license to buy debt there. Well, in other states they don't require that. So just keeping up with what's going on in the market, you know, sometimes the Borrowers will start paying on time, and then they'll just go quiet. You know, it happens. And you got to start trying to track them down their vendors and try to get them back on track, or they.

But again, I think what I'm hearing you say is that as a guy that's getting involved in this, you're handling. You're the one that's handling it. I mean, I'm not going. I'm not dealing with any. You would never say. Or maybe you would. I don't know. Well, listen, we got this tied up in legal. If you want to talk to the attorney to speed it up, you can. But do I ever deal with any of your vendors?

Not. You know. No, you don't. They're not. I mean. No. Okay. I mean, we're going to provide updates. Like, you know, as stuff pops up, we'll copy in an email. Hey, here's. Just so you see what's going on with the attorney. You know, attorneys are gonna release information to you anyway unless I give them permission. But the thing is that we're full disclosure. We share what's going on. You know, that's. That's the beautiful thing with what we do, is that's what we do. We make our money. And I can do this business from wherever I'm at, because all I really do.

All right, so I'm gonna ask you a question. I don't mean to put you in the hot seat here, but I. But I'd love to know, because I think that if anybody would be doing their due diligence, they would be asking this question or they would at least investigating it. Have you had any negative reviews that. That were legitimate in the last, you know, 12 months, 24 months?

No, I've not. If you look, you won't find anything negative on me. Class and stuff like that. I will not say. I'm not gonna sit here and tell you that every deal has gone smoothly. We've had some deals that have gotten drug out, but we've always paid our investment back and took care of it.

Sounds great. I mean, Scott, you're a good guy, and I know that your service is legit, which is why I wanted to have you on. And when I had a chance to meet with you at New Media Summit, when we did the mastermind afterward, I'm like, this is a really nice guy. Scott's a really nice guy. And the couple of chances I've had to talk to you, I really. You've backed that up because you know how sometimes you get Involved. And I know you do because you get guys on your show that probably do this with you is we know better than you and we're just going to roll over you. And it's like, no, I've not felt that at all. There is no hair going up on the back of my neck thinking, what's he doing? What's he selling? So hats off to you.

Breathing. Yeah. I mean, that's the thing, is it's an investment. I'll tell you that. You have to be prepared. Things take a little bit longer. I'd rather, you know, under promise and over deliver versus over promise than under deliver.

Right. I got it. I love it. So if someone right now, today was in a situation where they had money sitting in an IRA that is underperforming or not doing what they think it should be doing and they want to do this, do you have to go through your course in order for someone to do. To get involved? Or do you. Is that just a. That's just a second line of how you attract business to you is the second line.

I track business. Like I said before, somebody's interested, give me a phone call. We can visit. There's some things I'll have you fill out and I'll talk with you. Some people are fit. Others I'm gonna be like, I'll have. Somebody called me the other day, I got 50 grand I want to put into this. And I'm like, well, what's your experience? And they, you know, they really were, I hate to say ignorant. I'm like, listen, no offense. I think you need to get more education. You don't have to sign up for my classes, go watch my videos or go. Go do this. But you're just not a fit for where we want to be. I'll give you an example. So my custom said, I only have 50 grand. This is my last 50 grand I really needed to make. You know, I'm 70. I need this to work. I'm like, I'm sorry. Right?

Yeah. Because there is some. It could get tied up. You could lose it. You're not looking to lose it. And it's never. It's not how you stay in business by losing your money. And it sounds like. It sounds like you're not just a guy that is the. Running this company. You're a guy that actually you. This is. Is this your investment vehicle?

Yeah, this is where my money's tied up as a note. Yeah. I'm not one. I'm not like Susie Orman who tells you to go do something. And then the other, other thing, I go put it in like municipal bonds when I tell you to buy stocks.

I didn't know she did that.

Did she do that? Did she do that? I'm not out flipping properties. I'm not out dealing with landlords. I'm not buying apartment buildings. This is exactly what I do. And for the last decade I've carved this niche out because it really didn't exist over a decade ago. It and I was a noted of the year a couple years back. I was been in Inc.com, been featured in Inc. Magazine, quoted in the Wall Street Journal, Investors Business Daily. The list goes on and on. It's not the big thing. I love the fact that we help a lot of people and I make the joke we're making America great again. One more time.

If you're not convinced that Scott actually does what he can do, just check out some of his information on weclosenotes.com or watch his YouTube channel or some of the videos at weclosenotes TV. I got both of those right, didn't I? Okay, that's great. Just check it out. And Scott, I think you and I are going to have a conversation because this sounds like something that would be. You'll tell me if you think I'm qualified? I have no idea. I think I am, but I have no idea. So you'll let me know. So thanks for being on the show and sharing your insight, your message and man, I love where we're going. So thanks for sharing.

Hey, thanks. Thanks for having me. And I ran into Strickland.

I know you go to the podcasting meetup or something with him or did you meet him somewhere else?

Well, yeah, we started one here locally just to connect with other podcasters and he showed up. So it was great seeing him there as well a couple weeks ago. Excited to see you guys here. Are you going to be in a new meeting?

Hell yeah. They wouldn't have a DJ other than me, would they?

I don't think. Yeah, so we'll.

We'll get together in February also, we'll.

Talk about this a little bit more.

So again, thanks for watching. Being on the show today, perfect nice guy community. Never underestimate the power of nice or the power of a nicely underperforming mortgage where you can take some money and make some of your own. So special thanks to Scott Carson. All of his information, including his access to his website and to his videos will be right in the show. Notes Steve o', Brien, Go ahead and take us out of here.

For the.

Nice guys on business. I'm Steve o'.

Brien.

Just when I thought I was out, they pull me back in.