Discover the Lucrative World of Note Investing with Scott Carson from Texas Real Estate & Finance Podcast

Well, what. What is up? Americans online. So, pop quiz time. Do you know what industry makes the most money with the least amount of time involved in doing so? And just a hint, it's actually not real estate. Nope, it is everyone's favorite industry in the world. Banking. Yes, those slimy little bankers. And by the way, I'm a loan officer, not necessarily a banker, so it's not particularly me. But banks are in interest on every single loan and debt that you take out. Then they get to sit back and wait for the mailbox money to arrive in. Well, what if I told you that you could be a banker and collect mailbox money the exact same way, and it doesn't take as much money as you might think to do so? And. And right now, with interest at record high levels, it's not a bad place to put your money. Well, today we're going to show you exactly how to do it. You've tuned into the Texas Real Estate and Finance podcast, and I'm your host, Mike Mills, a North Texas mortgage banker with Geneva Financial. And while you can find me here almost every Thursday talking to experts to help you expand your real estate empire, when I'm not doing this, I'm helping your clients buy and refinance their homes. We do construction loans, bank statement loans, DSCR investment loans, ITIN loans, rehab loans, and everything in between. So if you have someone that needs some help getting money for their next great real estate investment, please give me a call. We'd love to help you out. And give or give me a call to learn about all those loans that I just told you about. If you're not familiar with them, I'm here to have. I'm here to help any way that I possibly can. So today's episode is all about how you, as an individual can put excess cash that you have to use and make money work for you instead of you working for that money. That is the game ultimately. So stop trading your time for money and start putting cash into good use. And. And if you're listening right now, you're going to be one step closer to making that happen. But before we get rolling, please help me. Please help your friendly neighborhood podcaster out. If today's episode unlocks ideas and inspiration for you to take that first step towards financial freedom, then hit that like button, tell a friend, and drop me a comment. I'd love to hear what you guys think and how we can keep bringing you great insight from many people way smarter than me in and around real estate. I'm here doing this each week for you guys and would love to hear your opinions, even if you think I should just shut up and stop talking for a while because I already hear that around my house every single day. So I'm pretty much used to it. So do me a solid and LSCs like Scott, like subscribe, comment and share. I would greatly appreciate it. Now, on today's episode, we have a great guest. He's an investor, an entrepreneur, a marketer, a nationally syndicated podcast host, and the owner and managing member of Weclose notes.com, an Austin based defaulted note buying company that finds underperforming notes on residential and commercial properties and purchases those notes from for his and his clients portfolios. And he's here today to tell us how the game works. So please welcome Scott Carson to the podcast. Hey Scott.

Hey, what's going on, Mike? Glad to be here, honored as always, man. Just, I'm here to deliver some value to your audience today.

Well, I appreciate it, man. I know that you're a busy guy. You've got a lot of balls in the air as they say. So I appreciate you taking a little bit of time out of your day to share your insight with us. Now, before we get into kind of your backstory a little bit, I want to get right into this. So I want you to tell everybody, number one, what is note buying? Okay, where do you find these notes and kind of how does it work? And then, and then at the end of that, I want you to kind of give us an idea of what the actual cost is for like an individual that wants to get into it. How much are we talking about on a minimum level to have an outlay for?

Yeah, no problem on that. When people think of note investing, they often think of primarily like, oh, I'm going to own or finance a property to somebody is what a lot of people think. Like, oh, I, I don't want to owner finance, I want to sell a property. Well, owner financing is one aspect that's origination. I mean that's, you could do that all day long if you have a property and have a hard time selling it or things. Very common. There's another niche of it that I focus on and that is buying notes, buying mortgages. Now I don't buy a lot of owner finance notes. There's people out there that do that. But I actually go a little further up the food chain. I buy debt. I buy mortgages on residential, commercial properties direct from banks, lenders, hard money lenders, any type of mortgage company out there that has stuff on their books they're looking to get rid of. We buy this stuff and I've been doing that since 2008 and that's what my niche is, is actually going direct to banks, hedge funds, lenders, and taking a look at their, their problem children, their naughty notes. As I like to say that where people aren't paying, whether it's six months or six years or beyond, that, that they'll, they're looking to get those off their books. And we'll buy usually at a very significant discount off what's owed.

Right.

And then we make our money by either a going back to the borrower and since we bought it at a discount, we can work out some sort of negotiation, loan modification, forbearance plan to keep them in their house, which is what we'd like to do 70% of the time. The other 30 of the time is be some sort of. If the bar won't play ball with us or they've already moved on and won't respond, then we have the right because we are now the bank. We're those sleazy bankers as you mentioned in the intro.

Hey listen, I am too basically.

You are. You are. Exactly. But we, we have the right then you to foreclose or we'll give them cash for keys for them to get the property and walk away from. And like I said, we've over the last almost 16 plus years been doing this since 2008, bought over a billion dollars in debt, constantly seen. So I mean literally just 30 minutes before we jumped on here, I got a tape of 188 non performing first liens in 20 different states that I can cherry pick. And most people think, you know, they've heard this a little bit. I mean if you're a fan of movies, the big short kind of talks a little about where they're buying debt.

Yep.

I'm kind of like Christian Bale's character in there. Listen to rock and roll and drumming out my desk every day looking at spreadsheets. But most people thought you used to have the 5, $10 million because you only buy like a big portfolio or pool. That's not the case. There's a lot of lenders out there that want to sell stuff and they understand they have to sell it off in individual notes and so you can buy.

So tell me if I'm right on this and I'm not sure how this would work, but I, I see how it could make sense. I think where you have a bank, let's say I'm a big hedge fund and I've got, you know, a handful of loans that are just not performing very well. And I want to either foreclose, get rid of them, I got to do something about those loans. Right. And a lot of times the process of foreclosing on somebody or the process of collecting is very laborious. It takes time, it takes money, it takes manpower, it takes people to do that because you got to contact these people on a regular basis and stay with them. You got to maybe go to their house. I mean, you got to do all kinds of stuff to get that money. And so if I'm a billion dollar hedge fund or $1 billion bank and maybe it's a $200,000 or $300,000 loan that's a part of a bigger portfolio, how much of my time and effort do I really want to spend chasing down that money? And if I can get half of that money back and then now I've got freed up capital to go do something else with it, then that's, that could be attractive to me to sell that off to somebody else like you, who would then have the process and the systems in place to be able to track down the collection side of it or go through the foreclosure process a little bit smoother and faster because it makes more sense for a smaller guy because you're more agile. Is that kind of how it works?

Yes. On the back end of that, most of your large, most lenders will always have a servicing company, whether they're servicing the mortgage in, in house or they'll have a third party servicing company that they're paying, you know, 90 bucks a month plus fees for non performing or 25 bucks a month to collect on the performing side.

Right.

And so yeah, they'll have third parties. I've got third party servicers that, you know, that's one thing about buying debt. You have to be a licensed debt collector in most states to do that or have a servicing company that's licensed in that state to collect that working on your behalf. Okay. That's the big licensing requirement in most of the states. There's a few states that still want you to be an individual mortgage broker. Texas, Texas, you actually don't need to have a mortgage servicing license, although I do not recommend that. Okay. I think you get, we're the wild west, baby.

We can do whatever we want.

Well, but you know, we do everything fast in Texas. Fast, fast highways, fast foreclosures and fast executions, you know what I mean? But it's smart to have a third party do it for you. Because then, you know, they're, they're keeping track of the payment history, they're tracking everything in the spreadsheets, they're sending out the freaking Dodd Frank compliant documents that you got to have.

That's what they do. They specialize in that.

So let them. Exactly. And whether you've got one or a thousand notes, there's different servicers that will cater to you whether you're a newer guy or a small guy or a bigger guy, you know. Right. So, but yeah, going back to your thing, these lenders out there, these big banks, let's just use an example like bank of America, the Death Star out there, you know, they'll buy, I think.

Chase, I'm putting Chase in the Death Star category. And then we're going to put bank of America as like one of the, you know, one of the Galactic Empire things. You know, Amy Diamonds becoming Darth Vader the emperor real quick.

Yeah, he says one thing and does another on the other side. So, but the big, like Big 5, bank of America, Chase City, Wells Fargo, Indy, Mac or One west, now those guys, you're not going to buy anything from them. I mean they're gonna only sell them like $50 million tranches or $100 million. So they'll buy a portfolio from, I'll give you an example. Like bank of America bought all countrywide stuff years ago at like 20 cents of the dollar. Okay.

Yes.

Well, if they worked it out and got those non performer, those people back on track, they could, they waited around a year or two years, they could sell that note now that the bar is back on track, paying as a performing note. Yeah, they bought it at 20, sell it at 80 cents in the dollar back to somebody else in the market. So not only do they get cash flow, but they got a huge upside on that aspect of the increase from 20 of what was owed to 80% of what was old.

They can do something like that because they have so much capital that if they got to wait something out for a year to get it back to performing to be able to do that. They can, right?

Yeah, I mean we, we do that on a smaller scale. I mean we'll buy the numbers now. We'll buy at 50, 60 cents on the dollar. We'll, we'll get the bar back on track, have them make 12 months of on time payments, bring a couple of months on the front end for some skin in the game. And then after 12 months of on time payments, now we can turn around and either sell it back to Wall street or back to individual investors or to mortgage funds that 80, 85, 90 cents on the dollar. So we just made 20, 35 plus the cash flow, plus the down payment. Now, if the book, if, if it's a good yield, we'll hold it for cash flow for extended period of time. It all. It depends on what our underlying money costs are with either the, the fund that we're using with our own funds or somebody else's funds. And then if they don't pay, well, that asset is worth 200 grand. You know, they owe 225. We paid 50 cents. We paid 125 for it. Roughly, if we foreclose, we're going to be sitting in a good position because there's 70, $75,000 in equity that we technically made between what it was owed and what we paid for the mill.

Well, and especially right now, man, because I would imagine, like, with the, with the amount of equity that Americans are sitting on in their home. And look, let's be very clear, okay? When you're doing this stuff, you're doing it somebody that's having financial issues for whatever reason. So it's, it's not, you know, I don't want to make it to sound like that, you know, this is all about money. I mean, it is, but to a certain extent, you know, obviously there are human beings on the other side of this. But that being said, you know, Americans have a ton of equity these days. I mean, it is a massive amount because we've had such a great amount of appreciation over the last couple of years that it's really exploded as far as equity is concerned. So, you know, if there are out. If there are people out there struggling with these, with these notes that maybe they don't owe as much compared to what they, what they. What the house's value is. I mean, there's a lot of, you know, there's a lot of margin to be made there because there's so much equity right now that it would seem like it's a pretty, you know, it's a pretty good spot to be in if you have the funds to be able to go around and find these.

Well, and that's the big thing is we're the bank. The equity doesn't necessarily belong to us. It belongs to a homeowner in a lot of cases. So we're not bidding off the value, although that is important.

Sure.

We're only bidding off of what's owed and that if you have to foreclose.

And now you've got this asset, you.

Know, and that's in every market. You got to know, because like here in Texas, if you're, you know, let's use the same, say it's worth 300. They only owe 200 payoff. Well, we probably pay 150 for that.

Right.

Well, our highest bid, the auction will be 200. So it sells for 250. We only get the 200. That other 50 is going to go back to the homeowner. And about 70% of the time we actually don't, we don't want to foreclose. We actually make a bigger yield by keeping people in their houses. The banks don't. Yeah, exactly. Well, I call it wires. We don't get checks, we get wire transfers. You know, the 15th.

Yeah, I guess I'm operating, you know, I was born in the 90s or I mean. Yeah, so I'm sure, you know, same everybody. Yeah, yeah, we're operating in a different, different world these days. But.

Yes, but, but these banks, they're, you know, like, I'll give you the, like the list I got in just a few minutes ago, 188notes, 85 of them are vacant. We know that. The bar either vacant or deceased. Well, that bar is probably not going to get back on track.

Right.

You know, so we're gonna have to foreclose or work with them to do like a cash for keys or dealing, depending on where, what state it's in. Like some of these were in Florida. Well, that's about a 18 month foreclosure time frame. So we're gonna bid more aggressive or cheaper on that area versus Texas, which is only like a 21 day foreclosure, you know, so.

21 days in Texas, I didn't know that.

Oh, it's fast, baby. I mean, if you don't file the foreclosure notice at the county, 21 days prior to the first, the next, first Tuesday of the month, you've got to wait till the following month. So. And an interesting note, an update just recently here in Travis County. Travis county is the first county here in Texas where the taxpayer foreclosures are no longer going to be done on the county steps. They're going to be actually done online like a lot of other states are doing here in traffic earlier this week.

So now you don't have to physically go down to the county anymore and bid like you're at the cattle. The cattle.

You don't have to walk in with a bag full of cashiers. Checks, you can do it all online. So crazy.

It's just, it's, it's amazing to me. We're literally in 2024 and you know, you're like, and today we just got this. It's like, why does this take. So, I mean, it's all regulation, I get it, but it's just insane.

Yeah, I was in Florida. God's waiting room has been doing it for years. Yeah, well, okay, so.

So I think I have a pretty good idea of how this works. I mean it makes a ton of sense, you know, obviously. So. So let me ask you, you know, you've been doing this for a very long time and you don't have to give away all your secrets, but you know, a few of them, where, how do you, how do you find this stuff? I mean, obviously you're establishing relationships with banks and you've been doing this over the years and investors. But where do you, you know, do you just have, have built up a huge network over the last 20 years? Like how do you have access and know where these notes are?

So that's a really great question. Yeah, we used to do a lot of dialing for dollars. 50 to 100 phone calls a day and asked to get this. There's basically the four names of specific departments inside of banks. Hedge funds, insurance companies that handle debt sales or note sales. If you're dealing with like bigger banks, they're going to be less special asset department or their secondary marketing department. Okay. If you're dealing with a regional bank, a smaller bank, like I'll say like an example like IBC here in Texas, International bank of Commerce, you would call and ask to speak to their chief credit risk officer. All right. If you're looking at maybe like an insurance company like MetLife or something like that, they would have somebody called the whole loan trader. Now you can literally go to LinkedIn and type in these four names. Special asset manager, secondary marketing manager, chief credit risk officer, whole loan trader. And you'll see people that pop up. These are the people that you reach out to on a regular basis. And so that's what we teach. Like literally go to LinkedIn, start typing in, you know, doing searches and start reaching out to them. Hey, I think you're the right person who handles your note sales. Do you have any non performing in your books that you're looking to get rid of? You know, and you'll be surprised that some will have, some, some won't. It's just a matter of following up with people, you know, on a drip marketing campaign. That's, I mean, that's what's different about kind of what we do as a real estate investment side of things. And I come from before the fix and flip side, that stuff where you did a lot of direct mail and all that stuff and bandit signs. That's great. That's just the 20th century. We're in the 21st century. You got to start marketing like it's a 21st century. So we do everything with basically like LinkedIn and then emails, just hey, dropping an email once a month. What do you have on your books? And what I love about this facet, which is different than most, is that most investors, when they're chasing like foreclosure lists or disruption, it's like one distressed borrower, one property. Well, we don't do that. I don't talk to borrowers who are in trouble on the front end. It's always dealing with the bank. So the banks then will send me their list. That may be one note, it may be five notes, it may be 900 notes every month that I can literally cherry pick. And so it's allows for us to have a much higher rate of deal flow.

Right.

Because we're getting them from these sources on a regular basis. And it also leads to higher yields on our returns because we're buying them at cheaper than what most people are buying foreclosures and stuff right now too.

Right. So you're getting. So essentially what you're doing and what you have done, which is why this stuff, it takes a time to build is, is you've established these relationships. And now because you've reached out to so many different banks and entities, they basically put you on their list essentially that says every time, every month, once a month, once a week, whatever they send out, we've got these lists call us. I mean it's, it's, it's, it's really like wholesaling notes. I mean that's what it is. Right? You're, you're just.

Yeah, exactly. Wholesale is kind of a dirty word a lot of times. But yeah, we buy for our own portfolio. We don't want to be called a joker broker. And so banks, books want to, in banks and sellers want to deal with direct buyers. They don't want to send it out to somebody and then get blasted out to 30 people.

Yeah, get, get out. Put. But I mean, yeah, I get what you're saying. You also be careful selling it to you. They're saying.

Yeah, yeah, exactly. Yes, you guys sign non, non disclosure agreements because you're getting literally on these spreadsheets or tapes that we call it, you are literally like, it's the borrowers exposing, you know, opening their kimono income, debt ratios, not so much debt ratios, but you will see payment histories, you know, FICO scores. Yes. You know, information. And that's public record. You know, you don't want to be just blasting that out to everybody and, you know, you find out, oh, hey, you got 30 people calling you. I'm like, what are you talking about?

Yeah, you know, but that goes back to. You've established the relationship and the trust with these places. So they know, you know, you, you know, you're not doing this stuff. This is, you wouldn't be on our list if you were. So we're not. We're gonna send it out to people that aren't.

Yeah. I mean, that's the great thing about LinkedIn is people can see who the heck that's calling them. You know, you can see profiles. They have anything to do with real estate, you don't have to be a Note broker for 30 years to have success. You got to show note investing or some sort of real estate investing side. And we teach this all the time. As long as you pass the smell test, they'll send you a list because they realize you're looking at a spreadsheet on the front end and online. You're not really going to look at the property immediately. You're not getting to your access. So they're going to. There's a. I like it. Because there are a lot of less risk and bidding on the front end side. You ain't got to come up with earnest money, down payments and stuff like that. You're making a bid. If they accept your offering, then you start the due diligence process, reviewing the collateral file the property value and then evaluating the borrower to see their credit worthiness of either staying in the property and starting to pay on time or knowing that you're going to have to go that foreclosure route to legal process to get the property back.

Right. Well, I mean, it, it sounds like something that if you, you know, can, can do the legwork and learn how to do it. I mean, you know, again, it's, everybody's always looking for how do I make money right now? Right. And it's, and there's, there's nothing that exists that you don't have to put a lot of time and effort into to make, especially if you're talking about a, a lot of money. If you're talking About a little bit here and there, sure. If you're making a couple hundred bucks a day doing something, fine. But if you're talking about the type of money that, you know, people are like trying to get rich on, this isn't something that's get rich quick. I mean, because it is not at all time. You're on the phone, you're calling people, you're, you're putting the effort, you're trying to collect your for. I mean, you're doing all that stuff and that's a lot of work.

Well, that's, that's where, that's where servicing comes in. Once you buy the note, you turn it over to a servicing company and they do that heavy borrower outreach on a monthly basis for you. So my goal is to find deals and then also raise capital from investors that want to make a 7, 8, 9% return on their money. That's great because if I buy this known and get it reperforming, it's going to turn off a 16 to 20% cash and cash return to me.

Right.

So that I can pay my investors. And I'm still realizing the difference. And that's what I do. And then I handle the sir. I keep the servicing and the legal stuff to the attorneys and the servicing people that are doing that. Exactly. And then if I have to take a property back, if we don't sell it at the foreclosure auction, the bar signs over, then we'll put it with a realtor or local rehab crew to fix it up to sell it off and go from there.

So, okay, so with your company, we close notes. So you guys do obviously a couple things. I think you, you obviously buy and find notes yourself that, that you invest in. I'm assuming you have a fund. You know, I would imagine you have your own money that you play with. I'm assuming you have a fund that you play with. And then I hate to say play, but you're. Whatever you want to call it. And then you also coach and teach people how to do this. Right. Is that the three aspects of it? For the most part, Exactly.

I mean, years ago, I'm giving lists and then I cannot possibly buy every one of these things.

Right.

And so we found it much easier when I started marketing, doing videos and talking about the specific deals that we're working through. People often when they see this, I think they're going to buy the house. Like, no, no, you don't end up with a house. You're the bank on this. You got to understand there's a difference to being a note investor versus the property. So we started teaching people how to do that, and they're like, oh, some people like it because it's different. They can do this from anywhere. They don't have to be local to where they're. They're buying and investing. It gives them much more deal flow. Second thing, it also helps us raise capital because people now understand this concept versus fix and flip or stuff like that. So that's, that's kind of the big thing. We make the majority of our money from real estate and doing the deals. Yes, we make some money from the education side and teaching people, but it's literally deals. We're constantly buying on a regular basis and going from there. Not. We didn't buy deals two years ago and not done anything since then. Like a lot of us.

Yeah, yeah. Well, I mean, you're, you're, you're making money, you know, through transacting with these deals. And that's where the, the vast majority of your revenue is coming from. But, you know, like you said, you can't buy everything. So there's a lot of deals out there to be had that maybe either you're limited on funds or you're limited in an area or whatever the case may be that having a network of people that you can go out to and say, hey, look, if you want to do this, here's how it works. Here's what you get done, you know, and helping them and holding their hand through the process. So, so then my next question is, is, you know, somebody hearing this is going, man, I probably need half a million dollars to be able to even start doing this. So what, you know, realistically, like, what is your, like, entry point to say, okay, if I wanted to do this, you know, maybe even, okay, how much does it cost to get the coaching so I can learn? And then what's the cost? If I just wanted to say, hey, so here's part of it. Like, we were talking a little, a little bit about this before we started, but I'm really big on learning how to do something, right, Knowing what it is and, and how it works. But I'm not always necessarily big on actually doing it once I learn it, because there are certain things that I just need to understand the mechanics of it. So then when I pay someone else to do that work for me, I know what the value is. So I can say, okay, yes, this is worth paying someone to do this, or, this is not what, this is not worth what I'm paying you. To do it because I know what it takes. So just having the know how doesn't necessarily mean you're going to go out there and start. Look, you may just say, okay, I get what you're doing now. I want to give you X amount of dollars and you go do it. Because I feel comfortable now. I understand how it works.

Yeah, exactly. So we have people that have their own money, that invest their own money. That's great, totally fine to do that. Use your own money. I not against it, but I'm opposed it a little bit because Those that have 250s, half a million or they use their own money, they'll buy until that money is gone and then they'll sit around waiting for those deals to end before they get the money back. I'm a big proponent of going out and raising capital immediately. So if you've got five grand to start things that you'll need that for, like marketing a website, some other things like that to get the ball rolling. But you can find private investors all across the country, most of them just by just going to the county appraisal districts and typing in like a self directed IRA company's name and find people who have lent money out of their IRA for real estate deals or note deals. So it's pretty easy to do that. But yeah, I mean our class, you know, we've got a three day workshop we teach once a quarter, it's like anywhere from 600 to a thousand bucks. It's online, we go through case studies, we show you how to find them, we show you how to fund them, we show you how to flip these deals or turn them into profit. And then we've got someone on coaching that varies depending on where everybody's at and stuff like that. But our biggest goal is literally to give you the tools so that if you want to, you could reach out on LinkedIn after hours or automate through like an octopus to start reaching out to investors. Most of our people are doing this on a part time basis, five to 10 hours a week around their full time career and getting started. I mean like I'll give you an example. Like what get a student. Larry bought his first note. It was on a duplex in South Carolina worth 80. The guy owed 40. He paid eight grand for it and the guy reinstated in 30 days. And so guy brought eight grand to the tables making a 450amonth payment. You're not gonna get rich on that. But that's a great return. Yes. For Larry, John, John and Veronica out of New Jersey they put about 200 grand of their own money in. They bought 20 notes in 30 days. And it's re. It's yielding a gross 33 return and a net 21 after their closing costs and stuff like that. And they're like, they're ecstatic about that. Yeah, but they were very busy. They, they helped, we helped them find the deals, we helped them go through the due diligence and stuff like that. So they're bought. They bought it. I think it's in like six different states that these different notes are at. So it's just, you don't have to have a lot of money because there's a lot of great deals in other parts of the country than say like Austin, Texas or Dallas. Real estate here is a little bit more expensive. It's not saying we'll find something, but if you buy, yeah, you know what, you can buy one, you know, one note here in North Austin, which the median home price is 500,000 bucks, you might be able to buy four or five or six notes, say in like Columbus, Ohio or Lansing, Michigan or a note or two in Florida. God's waiting room, as I like to say.

Say I missed. When you said that earlier. I was like, God's waiting room was. And now you said it again, I'm like, oh, that's where all the old people are. That's.

Yeah, but see you in states like Florida, it's a longer foreclosure time frame, so it may be 12 to 18 months. So I'm gonna get it cheaper than I would say in a fast market like Texas.

Right, but you may have to wait a little longer on your return is all.

Yeah, yeah, but that's the thing is when we look at our. Everything's a trade off. Exactly. It's going to be. It's not a 90 day buy fix and flip and sell deep. No, yeah. These are longer term deals that I tell people expected to be at least 12 months. If you set yourself up for 12 months in non judicial fast foreclosure states, you're going to be okay. Anything above that expected to be two years to buy, foreclose or work it out to get the bar back on track before you can turn around and sell that asset foreclosure process. But bigger time frames, bigger discounts can turn to bigger, bigger yields too.

So I mean, I mean it sounds like you can get involved for, I mean, very, very little money. Actually. It doesn't take much at all. And even, I guess is there even a facet to where somebody Says, hey, look, I don't have a ton of money, but I have a ton of time. And if you can teach me how to find these deals and I can find investors and I can put these things together, then I can make a little bit of a spread there too. Is that.

Oh, yeah, that's, that's what we teach a lot of times. Like, listen, hey, there's a, there's millions and trillions of money sitting on the sidelines making zero. Like you think about all this. Well, let's just talk about stuff directed IRAs for a second. Like Equity Trust, Quest, Pensco, they've got billions of dollars and on average 30 to 40% of the money that they have in IRAs is sitting there making zero percent, waiting for somebody to reach out to. These people say, hey, I got a deal. You want to fund it, make 8%, you know, not to do anything is pretty good.

You know, well, the amount of cash, I mean, I, you know, read this. I mean, Warren Buffett's a great example. Not that you're calling up Warren Buffett, but, you know, he's got, I think I saw the other day, something about 25 to 30% of his entire, you know, holdings in cash just sitting on the sideline right now because. Which we'll get into in a minute. You know, the market Overall, the, the U.S. economy is very much starting to turn in a direction. And I think, if we're being honest with ourselves, it's been turning in this direction for a while. We're just now starting to actually see it reflected in the numbers because the, the government is like, well, we can't keep hiding the, or, you know, hiding whatever word you want to call it there. You know, fudging the numbers when you're.

Just printing money and not having things behind in a lot of cases, at.

Some point that is all gonna stop. And, and when you're heading into a market like that, when, when, when the tide is turning, there's gonna be opportunity to, to gobble up some things that are not going well because people are going to run into financial hardship. And that's where this stuff kind of comes into play. So, I mean, I think we're very much headed into a market where, you know, it could be 12 months, 24 months, I don't know, but it could be six months where this really starts to, to be something. That's a, that's a good avenue. Well, I mean, but I mean, a really good avenue.

So here we've already been it for the last 12 months. I see stuff six.

That's what I think.

Yeah. Six to 12 months ahead of what the retail market does.

Yeah.

And that's what, that's why we're not going to see a huge foreclosure tsunami. These all, you know, we're not gonna see all these REOs, real estate owned foreclosures hit the market. It's just not going to happen because banks and lenders are selling the stuff off to funds investors like me. And we are working out with the homeowners as best we can.

Yeah.

Okay. And yes, we will foreclose on some, but it's not going to be like it was in 2010. And here's the thing, if you look at especially like the commercial markets, we could get into that, but there's already looking at some of the big discounts. Like the Roosevelt Hotel In New York 18 months ago was like a, a loan for $200 million sold for 25 million. The debt sold for 25 million.

Is that where all the immigrants that were shifted into New York estate?

Probably if they were smart they would do that and then get the government to pay. But that's that, it's funny that you say that, but that is the, that's why BlackRock has bought all those homes in New York State because they get a ridiculous amount per refugee government money and the numbers are three to four times what normal rent would be to come in. So it's just ridiculous. The government's literally like, okay, go buy these and we'll pay you four times that to put somebody in there that doesn't speak English.

Well, we've had this, I've had this discussion multiple times. I have an investor here locally that I talked to a good friend of mine, his name's Conrad and he does not a ton, but a fair amount of Section 8 housing. And you know what he explained to me in this process? Process is like, you know, when you do section 8 housing, if you can get it to qualify, number one, there's a huge list of people that are trying to get into it. Number two, the government pays you 80% of your rent and you get that check the first every month like clockwork. You can count on it showing up in your account. The, the, the tenant is required to pay 20% of the difference of what, of what the, the rent is and they're absolutely going to pay it because if they don't, they will get kicked out really quickly and someone else is going to fill that spot immediately. So it is a great way to, I mean, look, I Hate to say, but when you're on the government teat and they're sending you money every month, it's a pretty, pretty good spot to be in.

Yeah, I mean that's.

You're getting paid.

Yeah, exactly. I mean, owning the rental side and that's great. Every market's a little bit different. Like Miami Dade has a 90 day window before you get your first check, but you get all 90 days up front in a lot of cases there.

Oh, wow.

I don't necessarily like owning real estate. I mean, wrong. You're still going to own some. I like being the bank because I don't deal with toilets, tanks and trash outs. Yeah, yeah. You know, we still deal with some evictions but we, we deal with it. And I like being the bank because the bank always gets paid. You know, the thing that we worry about, the biggest risks to this if you're new is you always going to double check taxes because taxes will wipe you out, you know, tax, foreclosure, and then also making sure you put insurance on these properties because if the borrowers don't keep insurance on it and they trash it, you're going to need your insurance to kick in your first place. And in some states, like I'll give you an example, like Houston, Texas, which has been ravaged by hurricanes in that area. It's a tough insurance spot there.

Yeah.

Florida, the insurance costs have tripled in the last couple years because it's because of all the hurricanes down there. So it's hard in some places those costs are definitely skyrocket. So you got to adjust your numbers.

Yeah, I'm curious about that. I mean, that's a facet of real estate that, I mean, we know because we do it every day and you know, but you know, I get, when I talk to homeowners about this on, you know, a regular basis about getting pre approved, I've up until the last probably 12 months. I've never really, I mean, I always bring up insurance because it's a part of it, but it was never like a focus of it. It was like, hey look, I, I like I had the same spiel. If you're buying in Texas here where I'm at, if you're buying a house between 200,000 and 450,000, your insurance is gonna be about 200 bucks a month. Could be 175, it could be 225, but it's going to be somewhere in that range and doesn't matter what provider you use, as long as they all have the same Coverage, you're going to be paid about the same. Well, now I'm having to completely adjust that. And now I'm spending a good 10 minutes talking about insurance because I'm like, look, not only are the variances going to be dramatic from where they were because now that Same spiel of 200 is probably 250 to 275amonth. But if you've had, if you've got bad credit and with some companies, if you've had claims on other properties, not even on the house that you're buying, or if the house that you're buying has had claims on it, your premiums are going to go up. And then what the insurance companies are doing now is they're adjusting the, the, the, the, I don't know, my deductibles. They're adjusting the deductibles to 1, 2, 3%. So the premium. Because most consumers, they just look at the dollar. They look, oh, that's a good price. And they don't ask questions because insurance is boring. And then they look up and they've got a 3% deductible on a $500,000 house. They have a roof claim and got to come out of 15 grand out of pocket for a $25,000 replacement. And they're just like, what the hell? And you're like, yes, this is what is happening. So from your point of view with these homes that you're, I mean, you're not the homeowner and you don't own the house, but you own the note. And the insurance obviously is the asset, you know, the, the values tied to the asset. How much has that been impacting you guys?

Very much so, because we have to put, if you, if you're, have a mortgage on your house, you're, you need to keep insurance on there. If you don't have updated insurance, like you're getting a nasty letter from your lender saying, hey, you need to get it on or we're going to put something called force place insurance and you're going to pay us to protect your ass.

Yeah.

And in states like Florida where the insurance costs have tripled, like going from 10 grand a year to 35, 40,000 a year.

Insane.

That's insane. But that's also because the major insurance like State Farm Farmers have pulled out of there. So you have a lot of smaller companies filling that gap, but they don't have the cash reserves. Can't take a billion dollar, four billion dollar loss like those companies did. And you're struggling with that, so you have to keep that in mind.

Well, even, I mean it's crazy the amount of, I mean just, just in the last week, right, we were here, you're in Austin in North Texas here. Yesterday was about as sunny of a day as it could possibly be. And we were under a tornado watch for that for like six and seven hours. And like I was even my son was at a baseball practice in here in North Texas. We were outside, it was again bright, sunny, not a cloud in the sky. And the lightning detector goes off because coming this way there's this mountain of clouds that we couldn't quite see that was headed. But you look at what's happening in Nebraska and all these, with these tornadoes that are just ripping through things and you're just going the, the weather activities that are, have, have kind of ramped up and you know, I don't want to get into climate change and all that but, but it, it is, it has gone up and then the cost to repair that stuff is really what's caused the biggest issue. Because you know, I have an insurance guy that I talk to all the time who works for Allstate and he was telling me that, you know, if this was five years ago and there was a tornado that came through the Midwest, it might be, you know, 500 million dollar, you know, depending on how many. Now it's a billion dollar claim because the costs have gone up for the same amount of area in the same repairs and there's.

Yeah, and that's the thing too is rehabbing homes. The cost to rehab home go has escalated, doubled in a lot of cases. I mean the cost of replacing air conditioner going from like 6 grand to 13 grand, you know what I mean? To replace one single unit and some different flips that we've done. I mean I don't like to flip properties because of that. I like being the bank. I like controlling it. I like to make, you know, I like to buy. It's a gig property. Don't get me wrong, we do rehab some properties, you'll take some stuff back and get it cheap enough. But the point is I like pretty much clear properties and keeping people in their houses and just stepping in and getting that cash flow. It becomes a simpler aspect of things. And then I'm not dealing with, you know, the, the days on market too has changed dramatically. Not dealing with that interest rate shock for people to buy.

So do you turn around and ever, ever do you turn around and actually if you have, say you have 20 loans that you've had for say five years and they're all performing pretty well at this point. Do you turn those around and sell them back off to bigger entities as well?

Oh yeah, yeah. We'll usually look at the 24 to 36 month mark, sell off basically. And it'll varies on when we're buying the nuts. We're not usually buying newly created notes. We're buying stuff that's been around for a few years. So we don't like to really hold on to notes that have, that are halfway through the 30 year period, you know, start getting that 15 year time frame. It'd be that change in what's getting paid. It's not all interest, it's a lot more principal.

Right.

So depending on what we borrowed or what we paid for, that's usually the point. Like we'll buy above that. Below that we're not going to buy it because it's just, it squeezes ability for that cash flow to be different a little bit.

I didn't even think about that too, that, that part of it. So the longer somebody's had a note, the less interest they're paying on the back end because they're hitting the principal. So you're not earning as much of a yield as you have would on the front side of a note because the interest is at such a greater level. Okay. Now I, I didn't even, didn't even, never even cross my mind.

Now in some cases where we've bought stuff at 20, 30 cents of the dollar, we can hold it forever. You know, for the most part it depends on what you paid for exactly. I mean I, I bought this one little note up in South Beloy, Illinois a couple years ago. Lady owed 60, the house is only like 35 because the market had tanked. I paid 12k for the note and we modify, we modified the loan so that a, she brought a couple 2500 to the table in the front end. She brought another two grand over twelve months paid start making her normal payment of 450amonth. Well in the first year I got ten grand in on a twelve thousand dollar investment. That's a pretty good yield to me. You know what I mean? I didn't want to own this little property.

Yeah.

So we literally just, we reduced her interest rate to zero and every dollar, every painting she made went to principal. So instead of taking her like 33 years to pay off the full balance of what was owed, she paid it off in six years. And those are good stories. I like helping people stay in their houses and Pay stuff off because we've made it. We made money on it.

See, you're not the slimy bank. You're the guy helping people buy their home.

I try to. You know, I always say I. I can be your white knight riding on that white horse. But if you want to. Want to work with me. Oh, you. You don't want to talk to my attorneys.

Well, no, that's good, because, I mean, look, here's the problem with, with big banks, right? And, and. And we're. I'm. I'm the big first one to be like, I hate the big banks because in many cases, you are a statistic on a spreadsheet, and you're not a human being. You're not a person that's out there trying to, you know, make their way through. You are just somebody that is a number that they don't give a damn about, that they will do whatever they have to do to. To collect their money, and that's it. But if you can get with someone that is. That is a human being that has a heart and a soul, that really, hey, look, we're not doing this for free, right? You're in. You're in business to make a profit and make money. That's what you do it. Otherwise, why, you know, you're not. You're not. You're not just a philanthropist here, right? You're trying to run a business.

Yeah, I don't. I don't. I don't. I don't run a charity. I donate to them. I don't run.

Right. But in the process of doing that, if you can also find ways to help people keep their homes, well, that's fantastic. Like, that's great. And, you know, in that case with that lady, I'm sure you made your initial return. You probably felt great about it, and you probably could have continued to make more, but you elected to go, you know what? I'm gonna help this lady get this house and pay it off. So I've already made the money I've wanted to make on this. Now I want to, you know, get some warm fuzzies, and that's what I'm going to do.

Yeah, I mean, the thing is so different is that we see all the notes. We see the servicing notes where that bar is called in. We'll get copies of all, like, their hardship letters that they send in. If somebody's been trying to do, like, a short sale or a loan one, we'll literally get all copies of it. So, like, we'll literally get a loan File like this. This is one loan file. This is technically what we bought. We bought this loan file, which gives us access to the property. And I could see in that one example that we've been trying to modify her loan for four years, and her loan had been sold four or five times.

Yeah.

And the companies that bought it since she owed a little bit. They. She was way loud, way down on the totem pole as far as priorities. And I approach it a little bit different because I was once a distressed bar back in the day. I almost lost my primary home back into 2002, being laid off and dealing with that. And I was like, oh, I always promise if I got this point, I'd help people. So I like helping people. But, you know, pay, you know, stay, you know.

Yes. You're still running business. You're still running a business. And look, there are people out there that deserve help, that work, that are trying their best to do the right thing and just get, you know, get the raw end of the deal sometimes. I mean, those people are out there, but there are also pieces of, you know, what out there that are not trying to do that, are trying to scam the system and run a game and do whatever they can. And those people don't deserve help. And, you know.

Exactly. And we get, you know, most. That's the great thing about this industry that I like, is that actually we. To keep people in their houses, you're actually going to make a higher return. It's just one of the great things of working with people. There's some people, like, we bought this one note with a guy and paid in five years, and we could tell he was a slime ball. And it took us almost three years to foreclose because he played every legal play he'd make. We knew we were still going to win. And that felt good to foreclose and evict that guy.

All right, you're throwing high fives around the office.

Oh, yeah. We're like, yes, finally it's done. We got rid of that guy. But for the most part, like, look, I'm not joking. 65, 70 of the time, you want to keep people in their houses, people have gone through a financial hiccup, and we're seeing that again taking place. You know, when we talk like a week ago, you look at record defaults and credit card auto loans, student loans, if Uncle Joe's not paying it off for you, if you're one of those lucky bastards out there. But so people are struggling to put more food on the table. Or just the basic necessities.

I mean, the lowest savings rate we've had in 30 years right now.

Yeah, it's. It was. It was record high, and then I was down record low again. You know, appreciation is going up, but people can't pay for the, you know, pay for their necessities on equity. You can't do that. And so we're seeing an increase in debt. If you think. If you look at that number, it's about a 3% default rate where people are over 90 days late. Okay, about 3%. That means there's about 2.5 to 3 million borrowers who are at least 90 days late. Well, 1 out of 10, it's about a 9% or 10% default rate late. Right. Where people are rolling 30 days behind, and that's not a good sign where they're just trying to. They're just treading water.

Yeah.

You know, and that's the most difficult. And that's just the residential side. Commercial is a whole different ball game on stuff. But it's. You got to realize that people need help, and if I can come in and, okay, I'll forgive some of the stuff that you owe, they haven't paid. Can you come to the table? Can you meet me halfway? Let's. Let's literally create a win win here, you know?

All right, so I feel like I want to get into. I want to get into the economy a little bit because you doing what you do, you have a little extra insight into stuff. And like you said, you're ahead of stuff. And I've got a lot of theories on where we're at with things. But before that, you know, we've. You've given us a ton of information about this, and this is. I've learned more in this 43 minutes than I. I've ever, you know, learned with something like this. So. But I want to know, like, how did you. How'd you get here? Like, where. Where did you. Where'd you come from? How'd you get into this? And how long did it take? You know, what was your. What was your path to becoming a. We closed notes Jedi.

How'd you get the note, Jedi? Somebody called me the other day for the May 4th. So I was a banker for JPMorgan Chase for a while after I got my assets out of a sling back in 2001. And a buddy of mine that I worked in the finance industry before, started a mortgage company here in Austin with a couple real estate investors that were traveling the country on the speaker circuit, teaching People about creative financing, owner financing and note investing size. So from 2004 to 2008, I had like a four year apprenticeship. Not only were we originating loans for investors all across the country, but I was also learning that creative side of real estate investing. So when all this hit the fan in 2008, I sold my half of the mortgage company for a big walking buck because that's about all it was worth at that point. And started just calling the same lenders that we had originated from and started contacting more banks. I would be making 50 to 100 phone calls, you know, three, four days a week to get, make these connections and get into the right departments. Started getting lists sent to me. And then I just started, you know, bought one note and wholesaled it, Bought one note, foreclosed, bought a couple notes and flipped it. And just the point where we started doing, you know, deals on a regular basis because it is definitely a niche what we do.

Yeah.

And just started, you know, started teaching people, started doing videos online. We launched a podcast a few years back. It's the number one podcast for note investing. We've got the number one YouTube channel for note investors out there. I'm a big believer in giving people the tools to go out and succeed. Because if somebody gets a tape in, or as we call it, a tape is a list. If they don't know what to do with it, guess who they're going to call. They're going to call me and I'm going to walk them through that. Neither a, let's help you move this stuff. We'll help you raise capital for it. Or hey, I'll buy some of the stuff. Or hey, I know somebody that'll buy this stuff from you.

Do you know who Alex Ramosi is? Have you heard his name?

I don't. Yep, yep, exactly. Mr. Tank top. Yep, exactly.

Mr. No strip.

I think he's sponsored by them. That's why he wears it all the time. Yes.

Well, if you look at him and you don't know what he talks about, you're like, okay, well who's this D bag, you know, and what's he doing out there?

Whatever.

But if you actually pay attention to what he's doing, I, I mean, obviously he's making a ton of money, so it's brilliant. But, but you know, he talks about how, look, I'm gonna give you all the tools. I don't hide what I'm telling you. I'm not. There's, there's no secret playbook that I'm not giving you access to. He makes so much content about everything that he has done, from his gym launch to what he does with his investment company now and everything else. But he also says 90% of you aren't going to do it. So I'm going to tell you everything you need to know, but you're not going to do anything about it. So it doesn't affect me. And he's like, for those 10% of people that do, he's like, once you get to a place where now you need to scale and you need some money, give me a call, because you've done exactly what I've told you to do. You followed it to a T or put your own spin on it. And now I'm ready to invest in what you're doing, because I can help you scale, and I'm going to win, and you're going to win, and everybody's going to be in great shape. And. And that's the thing with stuff like this, you know, and everybody's got their own little niche to some extent. You don't have to hide the secret sauce. You can give it out to everybody. Maybe you charge a little bit, just like, hey, I'm going to put some time into this, so come listen and I'll tell you how to do it. But it's not. It's pennies compared to what you're making doing the other stuff. But when you find that little nugget or that little diamond in the rough, that. That really wants to get into this, and you can partner with that person and go with it. I mean, that's. That's where things really scale and explode. And. And I'm sure that you've had multiple, you know, situations over the years and doing this so long where you've run into people that you've interacted with. You're like, hey, look, I'm gonna show you how to do it. And then you're like, go figure it out. And then they call you back a year later like, okay, I'm ready. I've got this, this, and this. You're like, oh, damn, let's go. You know, I can help you grow. And go.

That's the most. That's what I get excited about more than anything else when I get phone calls from people, hey, I closed my first note. Or I got this bar to do this, or I raised. I. I raised my first capital from private investing. That's the one that always gets me excited about it.

Yeah.

And I laughed a few years ago. We've got, you know, It's a smaller niche of investors that do this. Maybe 40, 50, 000 people in total across the country that do this outside of like the big Wall street firm, stuff like that. But there's, it's so true. Maybe only 5% really do anything with anything. You know what I mean?

Yeah.

And, and you just got. It just got to be, it's got to be consistent. It's not sexy sending an email blast out once or twice a month to asset managers and then following up with those that open. But that's how you get ahead is the follow up aspect of it. Yeah, there's not an MLS for notes. You can't go to an MLS and buy a note. There's a few websites you can take a look at, but you can get better deals and better inventory and better returns by putting a little bit of that dreaded four letter word to work work. You know what I mean?

Yes. Well, and you know, that's, you know, one of the reasons I do this show and I've kind of shifted it a little bit to, you know, I used to do a lot with real estate, you know, professionals like realtors and brokers, and I still have them on from time to time to talk about business and what's going. But, but really where I, where I want, you know, to take this. And what I've been doing is like there are so many facets of real estate that if you know the business, right, even a realtor, a mortgage lender, you know, title, whatever, because it is a business that forever. Which is part of the reason we're in this lawsuit situation that has been shrouded in lack of information because the general consumer does not understand because they don't do it very much. They only do it once, you know, every 10 years or whatever the average is these days, eight years. And so it's such a thing that if you've been doing it for 20 years or 15 or 10 or whatever, and you know, house values and you know, neighborhoods and you know, parts of the country or whatever, that knowledge is so incredibly valuable and you can leverage that knowledge in so many different ways. And so I've talked to so many different people, including yourself and many others that are like, hey, you can do this, hey, you can do this. There's this other way that you can make money. But just like anything else. And look, I'm not up here preaching because I'm just as guilty as everybody else of, hey, I've got a great idea, let's try this, this and this and I look back a month later, I'm like, I never did anything with that. So please, I'm not up here talking about be like me. I'm guilty of it probably more than anybody. But it always comes down to if you put time and you put work into something, it, it can, it can breed and create money and, and you know, progress for you. But it. Everything requires work. Everything requires work. There is nothing that's get rich. And if it is, if you're getting rich quick, you're probably going to get poor quick. Really good too if you get too deep into something like that.

And here's the thing, when you invest in something you need to understand what that niche is. You got to understand it that, that people get taken advantage of when they don't understand the concept. They don't understand how it's different. Just because somebody's on social media blasting how awesome they are and they got a private helicopter or a private jet doesn't mean you should invest with them because your investment is probably funding that jet and helicopters not going to the actual deals. You gotta be careful about the no names, you know what I mean? But you gotta but understand it. And yes it's. Every niche is different. You can't. Oh hey, I got 20 years as a realtor and no investing is different. Or I got 20 years of mortgage broker. That's good but it's, it's different. There's some interesting. You got to learn, gotta take some time and the best.

Unless you have a base of knowledge to start with.

Right, exactly. That's a base is a base is better than none. Definitely. Yes. But you don't have to have that. There's different things out there. If anybody's interested, I've got a free one day class I'm glad to give away.

Yeah.

If you go to noteweekend.com go there, sign up for it. It'll send you access to my one day class. About three and a half hours of just me going through the Cliff Notes version of our bigger class to see if this is something you're interested in. If you're not, great. You'll still learn something from it about being a note investor. The note known industry because it's being talked about. When you see stories in the media about all these lenders or all these banks going out of business, stuff like that, you'll understand a little bit of why that is and where their assets are going.

So yeah, yeah, well and we'll put all this in the show notes too so everybody can get access to them and see it. So, you know, just check in the comments and show notes too. But I mean, I look, I speak from personal experience on this, so. My wife's a realtor. I'm a lender. We've both been doing it. I've been in lending for about 15 years. My wife's been a realtor for about seven or eight years. And we, we bought a house. We bought a lake house in, in Cedar Creek Lake. Well, actually our first house was in Whitney and then we bought a second one of Cedar Creek. But the only reason we bought our second house was because we had a TV show reach out to us and ask us to be a like on. It was like a hdtv. It's called Lakefront Bargain Hunt Renovation. So I have an episode out there my wife and my family were on. It's on the Magnolia Network that we did. It's runs and reruns. I get text messages from friends all the time like, hey, we saw you on TV again.

Nice.

But so you watch us, you're like, hey, these realtor, lender, like, they, they got this figured out. Well, guess what? No, we didn't. Okay? Because when we bought our Whitney house, you know, the idea was we were gonna, we were buying it for us and the kids to go there, but we were gonna Airbnb it when we weren't there. So that way it was, would at least pay for itself. It wasn't like this big money making deal, whatever. But when we, when we renovated it, because we did, we spent way too much money. We, we did it in the way that we wanted it to be, right, instead of the way that it made most sense and most economical. And we basically kind of did the same thing to a lesser extent, but a similar thing with the Cedar Creek house. So the amount of money that we put in was not commensurate with what ultimately we made. I mean, we still made a little bit, but, but nothing close because we, we knew how to do renovations, we knew value of properties, but we didn't know a ton about it. And so because of that, we made mistakes. Now those mistakes and the errors that we made, you know, we improved on the second one and you know, we'll improve going forward as well. But it's still, there's a learning curve. And even though we had the experience and had gone through all this before, as far as, you know, being in real estate, being in mortgages and lending and finance, and there's still so many facets that you don't realize until you get into it and do these things. So having a base is important, but you're still going to make mistakes. But then if you have a, you know, a Scott on your side to call up and be like, hey, man, I'm screwing this up. Can you help me? Show me what I'm doing wrong here. That's always going to be a big benefit.

Yeah, I mean, that's a very, very, very common mistake. With new people that get into real estate, do the first stuff, they over rehab it. You know what I mean? Oh, I'm gonna put in granite. You don't need granite. You can paint, rebuff the one that's there. You ain't. I'm gonna put in nice flooring. No, just put damn laminate down. You know, there's some different things that's okay if you learn it. You went to the school of hard knocks, you learned that aspect of it, and you're more knowledgeable on the next one. The biggest thing that you said, though, is making sure you have somebody that can coach your, mentor you along the way. I mean, you've got mentors, I've got mentors. Those are valuable people to talk to and bounce things off of. And so surround yourself with those that are doing what you want to be doing. You'll go a whole lot faster and further. Instead of trying to be a lone wolf out there. In a lot of cases, yes.

Yeah. Don't try to reinvent the wheel. There's people that have done it and done it well. So go learn from them and educate yourself as much as possible. And these days with YouTube and the Internet and. Great. I mean, you can. You can basically get a free education, you know, across the board, or you can pay to streamline it. You know, those. That's generally how it works.

Exactly. Amen.

All right, so I do. Before we wrap up here, I do want to get into your thoughts on the economy as a whole. So I will tell you kind of where I've been, and I'm always telling people first because I want validation to make sure I'm not crazy on this. But I personally actually sold out quite a few of my investments, whether it be stock holdings. And I was. I did some crypto stuff, too, and, you know, put a lot of cash on the sidelines. But I did this back early in 2023, like, pretty early on, because I was looking at everything, and I'm going, okay, inflation's going through the roof. This is. This is going to be a problem for the economy as a whole. And as things get more and more expensive as housing gets more and more expensive. I was concerned about our industry, which was rightly so. And then I was also concerned about, you know, people's ability to spend and what that would do for the market on, you know, on the, on the aggregate. And so I was talking about this for. I've been talking about this for about 18 months. And I was like, okay, I'm taking my money out because I don't trust where things are going. Now, hindsight being 20 20, if I had left my money in, it would be worth a lot more at this moment in time than it would then. Right? But I still think we are very much headed in the wrong direction. And when I see things like the job numbers, I get very frustrated because when you look at how these, how the bls, you know, calculates these and puts these into equations and uses birth, death, birth, death models and uses all of these, you know, fuzzy math.

Fuzzy math.

They're not lying, right? They're not telling falsehoods. They're just changing calculations and how things are measured to get the result that they want. And, and I don't want to say, you know, Democrats, Republic. I don't. It's. It's whoever's in charge, okay, they're going to spin the story in whatever direction that is beneficial for them. And as we head into an election year, which is where we're headed, it's now important more than ever that they make everything look good. The problem is, is that I feel like they've kicked the can down the road for so long that now all of this is coming at the worst possible time. If you're, at least, if you're on the, you know, in the Biden administration, if you'd have just taken your lumps back in 2022, when things were not maybe, or 2023, when things were not really that great, and just, you know, raise the hiking cycle a little bit, cut back on government spending and kind of, you know, felt a little pain. You might have been coming out of it now, but now I think we're getting into the worst part of it because these number, these fuzzy math numbers are actually starting to show that there's some real weakness. So what, what is your thought on that?

Totally 100 agree with it. You. Everything's more expensive. We're not making more, technically more money in a lot of cases. So that's the numbers. They. They say we're in a better spot. No, look. No, we're not. They can. We're not. Everything's More expensive appreciation.

Government spinning through the roof.

Those are the things to look at the buying habits and what's really going on. I mean it's great. Oh yeah. Let's have a 20 minimum wage. Well that's right. But we're going to lay off 50 and replace you with a the robots yet. You know what I mean? ATMs, we are. What's sad is that we have turned a lot of us into a gig economy or a side hustle. Common a lot of the side hustles are not meant to be main bright earners and those people that are in that aspect of things you gotta. They're the ones struggling the most.

Well that's where all the job numbers have come from.

That's exactly right.

We haven't added a full time job to the economy since August of 2023.

We have not exactly. Not one at all. We've lost a lot.

Yes. We've lost several hundred thousand.

Yes, we have. Exactly. So that's the thing you look at. Don't just take what they spout out there. It doesn't matter who you vote for what side of the Republican, Democrat. There's a lot of taking place. It's. They were just the numbers for that. Look at the SpaceX. No full time jobs. Much more increased cost of this inflation is up. Yes. We have kicked the can down the road two years, three years and that's what we're seeing is the results of them printing billions of dollars to do stuff with. The only way things are going to get fixed is a. My big belief is we have to quit bailing out every other country out there first and foremost. Okay, we don't need to send it. We're not going to but we need to because we need to bail our folks out first. You know we need to slow down the boards, not shut it down. Slow it down a little bit.

Just get it managed. I mean that's it. Just manage it. System in place.

Exactly. Don't. Don't get me wrong. We need people coming. We need immigration coming in because they're.

Yeah. Because now our birth debt, our birth rate now is down below 2.

Exactly. But. But we just can't have an open door and a free for all that doesn't work in anything. So there's policies that have to change dramatically. Some people. There was an interview I think with Max Tucker the other day talking about how if you look at signs there's any republic has gone through things that's like a downfall. I don't believe that. Hopefully we can Correct it because we're smart enough and we don't deal. It can be fixed in a relatively fast period if we just had common sense. But common sense is not common. A lot of cases. So here's the thing. Having cash is not a bad thing. It is good to have. Because if they ever do go to, what do you call it, where the banks freeze accounts, which we've seen that in different countries and seen was that not inflation is deflation.

Yeah.

Is it inflation? It's good to have that. It's good to have. You know, I'd have, I'd have some extra stuff there because when you look at what they do and all the fear mongering that they play into, like, oh, Covid was way out of proportion. We didn't. All the truths are coming from that. Or the whole thing with the freaking moon sun thing a month ago. Oh my God. Careful. Go fill up your gas tanks. No, that's stupid. That doesn't help. That makes it worse.

Yeah.

You know, having cash is not a bad thing. Yes. Oh, it would be worth a whole lot more now. But I'm not a fan of putting in things where a rumor can adjust what I own.

Well, and that's the problem right now with the market. Every, every market right now. We see it because I pay attention to the bond market every day, right? And what always happens, or I should say what has been happening very regularly, is that we'll get an inflation number, we'll get a jobs number, we'll get a GDP number. That shows that everything's. Inflation's high, jobs are plentiful, and we're GDPs through the roof. So the economy's booming, so the bond market just goes in the tank, right? And we'll get those headlines and then, and then over the next two weeks, before the next report comes out or week or whatever, it starts to creep back up because they, they see the headline, they react, and then they get into the data and they go, wait a minute, this isn't exactly what they said. And then all the revisions come out, right? Like in the third quarter of last year, my. One of my favorite follows on Twitter and Danielle DiMartino Booth, I think she's awesome. She's a. She runs QI Research. She's been on this stuff for a very long time. But, but she was talking about back in 2020, at the third quarter of 2023, they've done so many revisions now that they showed that we had an increase in that quarter of like380,000 jobs. I remember the exact number, but now with the revisions, we were down like 300, 000 jobs that, that. And, and so she's, you know, basically says that the recession started back in the third quarter of 2023 and now we're just working our way through it and, and we won't realize it or they won't say it until we're past, you know, probably past the election, quite honestly, but even beyond that a little bit once some of the numbers actually start to actually come in versus what they estimated. And, and you're going to see that when you look back on this period of time, you know, that we, it things weren't great and people aren't. Because when I talk to people every day, they're struggling, you know, they want to buy a house. Well, they can't because they don't make enough money. The house is too expensive. And now I've just eaten up 60 of their household budget for a mortgage that they can't afford.

And now, now they got to come up with additional 3% to pay the, the agent who's helping them buy the house too.

Oh yeah, well, that's a whole other thing that now, you know, and, and again, I'm the champion of Realtors, obviously and the real estate industry and so I have a bias on this. But, you know, I hate seeing MSNBC and CNN these like, oh, these, the home buying is going to be so less, much less expensive and these realtors have been robbing people. I'm like, you're crazy. You're absolutely insane. Because all you're doing this new rule possibly, and we'll see how it, you know, changes or, you know, how it evolves. But if you're putting it, once the market shifts, rates come down and we become in a very heavy seller's market, which it isn't going to take much to get there. Sellers are not going to pay buyer agent. They're not going to. Right now they are because we're in this weird place where there's plenty of opportunity for to do that. But when we get, if we get back to like what, what it was in 2021, and not because of interest rates, but because of lack of supply, which is where we're at. Rates could go down to 5% and we could be very much in that market. Well, then a seller is not going to pay our buyer agent. So who is, who's going to pay them? Because the buyers can barely come up with enough for their down payment closing costs. Lenders are not going to Finance those into the cost of the home because that's that we learned those lessons in 2008, basically. So that's not going to happen. So all you're doing is making it harder for the average American to buy a house, which has always been what the path to wealth has been for every American since the dawn of the country is ownership of real estate of the place that you live. And now you're taking that away and that is terrible.

Couldn't agree more with you. And when we, you look at numbers that came out like last week ago, point to home, looked at the top 100 plus markets and 68 of the top hundred markets doubled in values in seven years or less. That's a lot of equity. That's a lot of growth. Homeownership is usually the biggest investment. Most folks out there homeless Castle. But a lot, for a lot of folks, it's becoming a nightmare because they can't afford to get into it so they got to pay escalated rents. Just. That's why I always say, listen, if you can get into a house, afford a house, get into it now and refinance later on, you know, it doesn't need to be the dream home, but a home is better than nothing. And I think a lot of folks like, oh, I want the dream home now. No, no, get your starter home. I mean, you know, my mom and dad, when they bought their first house years ago, their interest rate was at 12 and a half percent.

Yeah.

You know what I mean? Rates are still low compared to that, obviously.

Well, but that was an eighty thousand dollar house.

It was, but, but they made a lot less money than they did now. So that's all relative it message. So that's what I'm saying is be smart. Maybe you need to Airbnb or couch surf or bring on a roommate to afford the first time. There's nothing wrong with it, nothing ashamed about it, but, or go to the tiny house routes. You know, there's a whole lot of different things you can do out there, but it's, it's just not the same thing. And things have to evolve and we have to evolve. The way we look at the numbers and the, the falsehoods that they spit out to make, you know, to, you know, promote their, whatever point they're trying to make in a lot of cases.

Yeah, it's an agenda. I promise you.

It is all in the base.

Yeah, and it's terrible too because now I see these articles come out in the Washington Post and New York Times and you know, these different Outlets that say, you know, Gen Z and millennials, they really just want to rent. They want to have mobility, they want to have flexibility to be able to move from place to place. And they don't want to be tied down to a place so they don't really even want to own. They want to rent. And I'm just like, that is complete and utter horseshit. There is nobody, especially maybe when you're young, like, you know, in your early 20s, sure. But once you have kids in a family and you want to settle down, you do not want to do that. You want to have a place of your own. You want to have something that you, that is yours, that can build wealth for the future. And this idea that they're trying to, to sell us, that people just ultimately want to rent, I, I just, you know, it's so frustrating, but you got to be aware of it. And that's the thing is like, I, I, there's not a whole lot we can do about it other than what you can do for yourself. Find a house, get a home in whatever way possible. But you got to know what's happening because that's going to help form the decisions on how you move forward.

Yeah, Amy, I couldn't say any better than you just did there, Mike. Totally, 100% agree.

Well, Scott, we went off on a tangent there, but I appreciate it. Thank you for, for hopping on with me today. I've learned a ton. I hope the, the audience gets a lot from this as well. Like I said, we'll put all of your information in the show notes, have access to your class and all the stuff that they can check out as well. So you're a wealth of knowledge. You've been doing this for a very long time. You're obviously been podcasting for a while, so you got that process down as well too. So we've been a great guest. Anything you want to leave everybody with before we take off?

Make sure, guys, if you like what Mike is doing, because Mike is kicking ass and taking names, make sure you hit that subscribe button, go over and leave a five star review. That's the most important thing. We as podcasters love to get that feedback, that gratification, seeing that, hey, what we're doing is actually making sense because oftentimes you feel like we're speaking to avoid. But go do that first. And if you have any information or want to book a call, you always go to weclosenotes.com's main website and make a phone call with me. I'm always glad to talk real estate investing and point you in the right direction and give you my unbiased opinion on what you're doing to help you succeed versus failing.

Well, I always believe surround yourself with people smarter than you and you will have a lot of success in life. So I appreciate you joining me, Scott. This has been great. I'll be back on Tuesday for our next market update. We'll dive into interest rates in the housing market like we always do, and then back on Thursday again. So if you didn't catch this, you want to pick it up again, it'll be on Spotify and Apple Music tomorrow or Apple Podcast tomorrow, and we'll go from there. But anyway, Scott, have a great weekend. Everybody else, have a great weekend, and we'll see you next time.