Distressed Note Investing 101 With Scott Carson From The REI Mastermind Network With Jack Hoss

You are listening to the REI Mastermind Podcast. Join JD as he chats with industry leading real estate experts and professionals. We learn from their experience and uncover the strategies to their success that we can implement into our own businesses and we can drive immediate results. Today they share their experience and wisdom as we build the foundation to our own success. This is the REI Mastermind Network. Well, we have Scott Carson on the call and we, we're going to tackle a kind of a unique topic here today because I told you Scott, we are going to kind of do a level 101 on this because I haven't had a lot of talk around note investing and you talk, you specialize in distress notes. So this is going to be really interesting and you're going to have to talk to me like I know nothing about it because surprise, surprise, I know very little about this.

No. Well, you're not alone. I will tell you that you're not alone, Jack, because when most people think about notes, they think about basically owner financing, that kind of stuff. Or they think about dollar bills or actually a notepad where I take notes on when you look at this stuff. But yeah, you know, I've been, I've known across, I guess you say the world now the United States, at least for you as the note guy. And I focus on that small niche of it's a growing bigger every day with the market being like it is, but that small niche of real estate investors that buys distressed debt or as we call it, npns or non performing notes. And what a non performing note is, is basically it's a note where the borrower hasn't paid in at least 90 days, you know, they haven't paid 90 days. And usually we see stuff further than that. And when we buy that note, we, you know, I buy directly from banks and hedge funds and lending institutions out there and basically it's like a bank to bank transaction. I'm not a bank, but I become the lender when I buy that note from the bank. And why I buy non performing and some people like, well why would you ever invest in a non performing asset is we buy that debt usually at a pretty substantial discount, you know, 40, 50, 60 cents off of the value of the property or the value of the note, the balance of the note depend on which is less. And our goal, unlike many real estate investors, is really not to take the property back. We're not really, I mean, yes, we look at the property, the value, the comps, what kind of condition is in, where's it located, what's the rent rates, we have to take it back, all that kind of stuff. We do a big due diligence on the property. But our number one goal as a note investor is to actually keep that note for cash flow. And our big, big thing is I like to buy first liens on residential commercial properties where we can actually keep the borrower in the house if we can, and work with them to get back on track of some sort, you know, modification of forbearance, you know, whatever we have to do to keep them in the house. And then if they won't play with us or work with us, there's other ways. If they can't afford to stay, then we work with some extra strategies to get them out. And if they tell us to go pound sand or get ugly, then we just go the legal route as the bank and the lender have the right to foreclose. So I always like to say we're making America great. One defaulted borrower at a time.

Well, I want to make sure everybody has your contact information because you've already given quite a bit of information right up front there. So head over to we close notes dot com. And then Scott actually has a podcast of his own that is very popular in this niche. And man, I was looking at your podcast page and you have 500 episodes or something now. I mean, that's crazy.

Well, we actually, I recorded 670 the other day. We started off when we launched the Note Closer show podcast. We actually did 100. Our first 149 episodes were Facebook lives because I didn't want to do a podcast originally. I was like, well, we'll do a Facebook Live. It's easy. You know, I'm a one take kind of guy. They were like eight minutes to an hour depending on. We started off with, what are we focused on today? Be a fly on the wall in our office. What are we focused on? And we had such a great following on Facebook and YouTube as we started to share that more, that I had a buddy of mine that finally convinced me, hey, you need to turn this into a podcast. And there was really no other podcast out there. There was one that a student of mine started and they stopped it after a hundred episodes. And I was like, well, here's some uncharted territory. Let's jump in. And so we launched our first True podcast episode August 21st of 2017. And we've recorded over 500 and some odd episodes since then that are true podcasts. I got about 30 in the hamper that I need to get up and rock and roll. But we focus. Half the time, it's usually me teaching on a specific niche or topic. In note investing. We all know real estate investment is a broad nature, but ours, it dives down into that world of paper. How do you find the deals, how do you fund them, your exit strategies. And then we bring on the other half of the episodes, usually vendors or people in the industry. And then we'll mix it up with some mindset marketing or an occasional, you know, I guess you could say celebrity. We had Steve Sims on For Motivation, who's the author of Blue Fishing Made, Mark Mark Victor Hansen, his wife, Crystal Dwyer Hansen on what was a big mentor of mine early on, mindset wise. And then like tomorrow, I'm really excited. I'm actually interviewing Dean Graziosi is coming on the podcast.

Oh, wow.

Tomorrow. You know, it's just. It's such a great, unique. And I tell people it's a great place to kind of go learn. You know, it's a drip feed. I mean, I love teaching. I got workshops and other training that we teach on investing, but the podcast is really just a great way for people to kind of do a Vulcan mind meld with me if they want to sit through 500 episodes and see how I think and teach and because the market is so different. Such a crazy time right now. And it's going to be interesting to see what happens here in the next few months as well. What Biden does if he extends the forecast or the foreclosure eviction moratorium, where he lets it kind of expire and let banks and lenders start to go that foreclosure process. So we could spend all day talking here. What would you find valuable? What do you think your audience would find? Valve. We could go any. Well, any number of which way.

Yeah, well, that's just it. I mean, let's. Let's start at that. That beginning. Like, how did you get into this. This niche? I mean, that's a pretty big question. But it's something that, when you get into real estate investing, it's not something that would first come to mind.

No, I agree with that. I mean, when I first got started as a real estate investor, I bought my first house in 2001. And out of college, you know, we looked at 20 houses, ended up buying one for our primary residence. And then I grew up in a small town down in South Texas called Ingleside. And when I lived, there was like 3,500 people. My dad owned the whole. I mean, dad Owned the hardware store. So I basically grew up working with all sorts of contractors and understood how to build and rehab and fix things. And so we bought a couple of investment properties in Austin because, you know, we had great credit. And basically back in 2002, if you had good credit, you get basically 100% financing. And then the major employer in the area next, our two investment properties laid off a ton of people. So I went from being a performing, you know, investor to being on the wrong side of non performing notes. We were struggling to make ends. I mean, I got laid off at the same time. So trying to pay three first mortgages and three second mortgages on a private school teacher salary at the time doesn't make a lot of sense. So I empathize with people that are behind or struggling to make ends meet because I've been there. Anyway, we got rid of the two investment properties, kept our primary. I went to work in banking and a buddy of mine that I'd worked with beforehand started a mortgage company with a guy named a guy and a gal by the name of Bob Leoneni and Jamie Kayla out of Austin. And they were traveling. I got just meet with them and they were traveling the country speaking on creative financing and owner financing and notes and wraparound mortgages on the Runway grand circuit. And I said, this is what I want to do. So I left banking there for a couple years and started doing mortgages. And for four years from 2004 to 2008, I basically had like an apprenticeship. We were originating loans for investors on one side, but then also learning all the creative aspects of real estate investing. And I would say the right way to be a real estate investor. And then when everything hit the fan in 2008 and mortgages dried up, I sold my half of the mortgage company for a buck and just went out and started dialing for dollars, started making phone calls, the same banks that I was originating from, working as a mortgage broker and a banker before. And I started getting these lists, as we call it in the industry tapes, Excel spreadsheets, basically, where they may have one note on it or may have a thousand different notes on it that we could. I could cherry pick from. And so that's what I started doing. I just started dialing for dollars, getting list sent to me, started sharing my journey. I was looking at these deals with a lot of small apartment loans and commercial loans and residential stuff, and started sharing on YouTube way before, you know, podcasting. Right about the same time, podcasting was kind of getting started, but sharing on Facebook, sharing on YouTube, me walking a property, sweat running down the side of my face. And I just started buying dollars, you know, flipped one for six grand, flipped a wholesale, another note in San Diego for 35 grand, flipped another note in LA on a 16 unit apartment complex, made 100 grand on it, and just started sharing what I was doing. Because most people, they understand real estate investing like a fix and flip mindset, or flip this house or, you know, Joanna Gaines out of Waco, you know what I mean? Or other things out there. And that's. And note investing is not fix and flipping. It's a whole different mindset. And so I just started sharing my journey, sharing my story, and people really started to pay attention and people started asking me speak. And about 2,000, I ended up getting divorced. I wanted to get out of Austin and just kind of travel a little bit. And I came up with this theoretical journey that I was like, you know what, I'm a big baseball fan. I want to get out and see all the parks. Why not? I'm single now, I'm a little free, I don't have kids, I don't have a lot of overhead. I can get out of the town. And so I wrote down this mythical journey of all the 30 Major League Baseball parks and kind of wrote it down. I actually pulled up ESPN and looked at the schedule for the year and played it all out. Like I could do this in like 36 weeks. Well, about a week or two later in that same time frame, I had four investment clubs across the country reach out to me that were reading my blogs or recommended to me from somebody else. And they all asked me to come speak. I'm like, okay, when would you like for me to come speak? On note investing? And they gave me the dates. And by divine intervention, it all lined up perfectly when I would be in that town on this mythical journey. And so I was like, okay, all right, so somebody out there is watching out for me. So I sold everything I owned in Austin, went on the road, started speaking, and I also plotted the cities that I would be in to meet with bankers, asset managers at local banks to see what they have in their books. Because I could pull up their FDIC reports and see what they had and how much they had. Default. And just what I thought turned in 30 to 36 weeks turned into three and a half, four years of nonstop travel and speaking and buying notes. Really it was like a grassroots effort to build where I'm at today. Fast forward now 10, 11 years after that, and it's just been an amazing time. About over a half a billion dollars in debt. We've modified and kept a lot of people in their houses. The thing I'm most proud of is the fact too that we've helped launch this other wave of real estate investors. I just focus on the note side of the business and they have helped thousands of people stay in their homes avoid foreclosures by buying the debt at a discount and working to keep people in their houses. And that's the thing I get so excited about more than anything else. Just the movement and the people that we have doing so many good things across the country in note investing. It can be truly a win, win, win. A win for the banks because they get this debt, this non performing debt off their books. A win for the borrower who can stay in the house if they want. They'll work with us or if they want to leave, there's options for us and a win for us and our investors that we're buying notes right at a big discount and seeing deals, you know, six to 12 months before it ever hits the foreclosure market or before it ever hits the, you know, the MLS or anything else sees it. We're buying such a cheap discount, we can usually make a pretty good rate of return whether they re perform or you gotta go some sort of legal route. So it's just an, it's an interesting timeframe with the market being like it is. It's not exactly like what it was in 2008 with all the craziness going on in that market. But I will tell you this, I'm licking my chops and my spidey sense tells me the rest of the second half. This year is going to be a very, very interesting year if you're in the debt space. We're already jack, starting to see portfolios coming from banks and lenders on commercial and residential notes that we haven't seen in the last two years. So 2021 is going to be very profitable if you're in a note or debt game space.

So you know, just to remind everybody, head over to we close notes.com for more information. You stay to the end of the episode because I think Scott might have a special offer for you to take advantage of something that's coming up at the end of the month with that. It's. I find it really interesting that you're talking to these banks and it's a different mindset and a different challenge than what I would experience. I talked to a lot of distressed sellers, you know, but you're talking to banks who have the mindset of just, they just want it off the books. I mean that's really, I'd love to be in that situation.

It's an interesting conversation because one of the things, banks don't always sell notes year round. And if anybody tells you that banks don't sell paper, they're lying because banks do. All the banks out there sell debt now like bank of America, Chase, Wells Fargo, the bigger banks, they're not going to sell it to you unless you can write a $50 million check. Okay? But the biggest bang for the buck we see is that smaller regional size bank and those are the ones most impacted. Because the way that banks leverage deposits, leverage money, they're lending for every dollar they take in, they're leveraging it out somewhere between 15 and 50 times. So a non performing note that's not paying them cost them usually 10 times that in fees. And if they start having a larger percentage going on the default side, last time it was, they never expected us to hit 8% default rate. And then all the, you know, all the dominoes started falling down. Well, we're already at, we've been over at 8% for a few months now. You know, one thing that's been saving a lot of markets is appreciation still goes up and of course the government stepping to stop foreclosures. But that doesn't mean the banks aren't looking at what they're paying. I mean they've had a year time frame to see who's asked for a forbearance agreement, who's been paying, who's not been paying, as we say, who's been naughty and nice and they can really evaluate what they want to get off their books. And if they can get off their books, they would rather get 50, 60 cents on the dollar. Now what they owed, now that they go out and leverage that and rinse and repeat, you know, that 10, 12 times a year and give a discount to somebody like me to step in and buy that note and take on that problem. I guess you say problem child, but since I buy it at 50 cents on the dollar, it gives me a lot of flexibility to really have a nice conversation with a borrower. You know, the bank wants it off, we get it at a discount. Doesn't mean the borrower doesn't owe what they owe, but it gives us a lot flexibility because we didn't originate that loan. And we can really, oftentimes about 60, 70% of the time we can get the borrower back on Track and keep them in the house, not have to foreclose, you know, and that's really where we make the biggest bang for our buck, is actually in the paper side of keeping things rocking and rolling versus having to foreclose them. Each state is different in foreclosure timeframes. You know, here in Texas they do it fast in like 21 days. And then you look at like New York, it can take you three years to foreclose, which I don't buy there. But you have to know what's going on in particular states. Some people ask if you need a license to do this. A lot of states, if you have a third party servicing company that's handling the collections and they're licensed. That state that covers you. There are a few states. Illinois wants you to have a debt collector's license which is like 750 bucks for two years. Georgia is a bit of a stickler. They want you to have a mortgage broker's license unless you're funding the transaction with your self directed ira an exception. Kentucky wants you to have a million dollar bond, which just is a little expensive. We don't buy there. And then other states want you to have a mortgage broker's license in that state to buy debt like Washington State, Oregon, they do that. But we don't see a lot of stuff over in those states for the most part. That makes sense. Everything on the west coast is way overpriced, so we buy a majority of our debt. You know, if you're a football fan of Big Ten, the SEC, the Big 12, or the ACC networks, I guess you could say so the, you know, Ohio, Michigan, Indiana, Illinois, Missouri, Kansas, Alabama, Mississippi, Louisiana, the Carolinas, you know, Florida, as I call God's waiting room. We buy a lot of stuff in those states. For the most part.

No, you know, I suppose in the end it's, it's a numbers game for these banks. You know, it's just they, they have their numbers that they're running against these properties and it's in many times, yeah, they're selling it to you at a discount. But in the end, as far as they're concerned, they're probably not losing as much time and money as if they tried to hold onto this and then eventually foreclose and then try to sell. And I mean, you don't know what the state of the property's in. I mean there's a lot of things that they're taking into account that it makes it worthwhile.

Yeah, it totally does. And you gotta realize banks Aren't in the property space, they're not in the rental space or the fix and flip space. They're in the paper game. And everybody in the world for the most part, is in the paper game. It's just that unfortunately, most people are on the wrong side of the payment streams we're paying out versus paying in. And the banks, that's why they're so aggressive. If you become more than seven days late in your mortgage, that's why the phone starts ringing three times a day or start getting certified letters. Because the minute that mortgage goes beyond 30 days late, it now becomes less valuable, especially if it's a newly originated loan. They start losing 5 to 10% of the value of that note for every month or behind. And a lot of times we're buying stuff at six months to six years where there's been no payment. And people always ask, well, if something paid in six years, why hadn't the bank foreclosed? And these portfolios of notes, a lot of times will get traded and traded and traded. The secondary market, if you like, want to watch a good movie, go watch the big short. It's kind of like that big short or too big to fail or a couple or margin calls, another one. But these portfolios will get traded and a company will work on these loans for a while. Do 60, 90 days of reach out. The bars don't reach out. Then they look to sell that portfolio of whatever's left that they haven't gotten the borrowers to modify off to somebody else. Or I've even seen funds invest in a portfolio notes, and they didn't touch it for like two, three years, which is just a, you know, half the portfolio can be wiped out via tax foreclosure. So it's a different mindset that the banks have versus us looking at a property, okay, what can we rent it for? How much rehab do I need to put into it? A lot of times we're looking at assets all across the country that we don't ever see the insight in. And that's part of why, if you're a note investor, part of why I like buying occupied assets where the borrower is still in it. Because I know every property's gonna need paint and carpet and some cleanup. I just know that. Okay, but if it's occupied, it's usually gonna have the electrical, it's usually gonna have the plumbing, it's usually gonna have the air conditioner that didn't go off on vacation in the H vac heating unit this time of year. If it's occupied, it's gonna be warm inside, versus having a pipe burst. And now we have an interior water feature, you know, up in Minnesota. Fargo, it gets pretty damn cold at night. You know what I mean?

Right.

So that's part of the things that we like chasing those type of deals. Also, there's a lot of exit strategies, depending on what the bar ends up doing. And we have a lot more strategies available to work with a borrower, if it is an occupied asset versus a vacant asset. If it's vacant, they've moved on. Then we're working to foreclose or trying to track down the borrower to either do a deed in lieu of foreclosure where they sign the property back to us, or we'll even incentivize them by giving them cash for keys, where we'll give them, you know, 500 to 10,000 bucks to sign the property over to us, give us the keys, and walk away. So just, it's different mindset, different due diligence. I mean, we do have to track the borrower down and do some due diligence, the borrower and try to figure out what they're going to do. But it's just such an interesting day in the office. There's a lot of the same things we do in finding deals and raising capital for these. But it's also interesting hearing talking to borrowers that want to work with you. And that's always a great feeling when you keep somebody in their house. And then you also have borrowers that just. They should have been at home to begin with, you know?

Sure.

And they need to move you to move on.

You know, this. This is kind of a pretty. It might be a difficult question to answer, but could you kind of give us or walk us through, like, an example of what somebody could expect out of something like this?

Yeah.

No, I'd love to paint a little. Yeah, yeah. So picture.

Yeah, let's. Let's. Happy little trees. All right, let's. Let's paint the flowers. But now I'll give you an example. A deal that we're working on right now. Borrower owes about 125 grand on a house that's worth about 100, 110. Okay.

Okay.

Haven't paid in over 18 months. So they were in default prior to Covid. And here's the thing. Most people don't realize this, but before COVID hit one in ten American. Actually one in nine Americans is already 30 days late in their mortgage. That's pretty. One in nine. Yeah. Exactly.

Okay, so I didn't expect that number.

That's most people. It's scary, isn't it? It's totally scary. Most people don't expect that. But I mean 85% Americans are one missed paycheck away from being literally in default. So anyway, borrows 125, house is worth maybe 110. Right. Hadn't paid in 18 months. So we offered 50 cents on the dollar of the lesser of the value or the balance. Well, the lesser of it is the values at 110. So they're over encumbered by 15 grand. They couldn't sell it traditionally if they wanted to because they owe more than it's worth. So we offered 55. 50, 55 grand on the deal. Our goal is to buy that note. Like I said, the 50 cents on there, we get it at 50 grand and they got. We should throw some easy numbers on. Let's say it's a 5% mortgage. Interest rate on that they've got on their mortgage. Well, since we bought it at 50 cents on the dollar, if we can get them back on track. Say listen, John Smith. No, you haven't paid in 18 months. Are you back to work? I know you don't have the 18 months of payments. Could you start making your existing payment now? Yes. Great. Could you pay anything extra to get on top, get caught back up? Well, I don't know, could you pay an extra month or could you pay $200 a month extra on top of your normal payment? So the mortgage is at 5%. We bought it at 50 cents on the dollar. We get them back paying on time again, that's like a 10% cash and cash return over 12 months right there. Now if we get them to pay 100 $200 extra, that usually bumps it up another couple points. So we're looking at mid teens if we can get them paying a little bit extra. Now if we bought it at 50 cents on the dollar now, but now we have the borrower back on track. They're paying on time for 12 months. After 12 months of on time payments, which we're not collecting ourselves, we always use a third party servicer to collect it. They're licensed, they're not violating any CFPB laws. If we can get them back on track after 12 months, it's now considered a re performing note. And I could sell that note now back on the secondary market, back to banks, back to investment institutions somewhere at 80 to 90 cents of what's owed. All right, so now I bought it at 55 is 110. I sell it, let's just say at 90 cents on the $110. That comes down to 99,000. That's pretty good return. It's a $44,000 profit plus the 12 months of payments, plus anything extra that I get the borrower to bring any extra skin in the game. And you don't have to be a rocket scientist to figure out that that's a pretty good return on investment. If we can do that now, that's what we hope for. Let's go on the opposite side of the spectrum. If we buy that note at 55 and the borrower says, no, I don't want to do anything with the pound sand, then we go the legal route. It probably cost us somewhere around five grand to foreclose. We'll have probably about $1,500 in servicing costs. So we're in at 55 plus those costs. We're in at 61 houses worth 111. We'll list, you know, we'll foreclose, list the property. Probably around 85, 90 cents of value. Now, if we had. It takes a year to foreclose. Hopefully the properties come back up. I usually do it as a wash as far as appreciation compared to what we have to rehab. It's part of the reason we buy occupied assets is there's less rehab. And we listed at 85, 90 cents on the dollar at the foreclosure auction. We'll often get bidders these days because people are overbidding. So in at 61, we sell it at 90, 95. That's still a pretty good return on investment. 30, $35,000 in profit on our 61, $62,000 investment a year ago. So if we foreclose and nobody pays at the auction, then we will take a little bit more time and evaluate the market. Maybe we'll fix it up and sell it as a traditional reo. Some of our students are then that, no, I don't want to sell it as an re. I want to keep it as a rental. So they'll keep it as a rental or they'll offer up owner financing to other people, or they'll just, you know, if it needs a lot of work, they'll just sell it to a local, you know, weekend warrior or, you know, fix her upper special and make their money back plus some profit, move on. And now next time, instead of buying one note, they're using the profits to go buy two or three notes, depending on what they're buying it.

Right. You Know, this is, there's a lot of nuances associated with this and I can see where I'm going to have to point people to your, your content and your page. I mean you're over 500 episodes that are on your site. I mean there's a lot of detail here because I can't even imagine how a person would just get into this and randomly start calling banks and thinking that people are going to send you defaulted note list.

I'm so glad you said that, Jack, because a lot of people that I want to get in the notes, I'm just going to walk in my local bank, I want to buy your notes and it doesn't work that way. Small banks, you know, one off branches, yeah, it's the person that made the loan is off on the asset manager but they can't afford to take a big discount because they're such a smaller bank. And if you're gonna be down for dollars calling banks, you're not gonna call the customer service or loss mitigation. They're not even the right departments. The internal departments at banks and lending institutions out there go by a couple names. Special assets managers is one title. The secondary marketing manager. Secondary marketing department is another one. Whole loan trading for some of the bigger institutions out there, that's another department or chief credit risk officer. So those four of the titles, you could literally go to LinkedIn and type in those four names and find thousands of people on LinkedIn that you could reach out to. But the biggest mistake we see new investors doing is they can say, oh, I want to buy your notes and reos. And that's not the case. If you say REO when you're dialing for dollars, the switchboard operator or the person on there is just going to forward you to the REO department and you're just going to go into a voicemail box and tell you they're going to tell you to call the realtor. The non performing notes side, the distressed asset side is a different department, often in a different building, often in a different state. And so you have to know there's specific things you want to say and don't want to say. You never want to say, hey, I want to broker your deals. They don't need you to broker, they got plenty of people. You always want to say you're buying for your own portfolio and then know what you're looking for. I'm looking for non performing notes. And the more specific you are, the less likelihood you are to get a list because you got to realize These asset managers are dealing with trades information. You want to make it very easy for them to either just hit the download button or export all the content they've got on their portfolio to a spreadsheet and email it to you and then you can cherry pick it. But if you're looking for like, oh, I want stuff in one zip code in Austin, Texas, go do something else. Oh, I want to buy just in San Diego, California. I'm sorry, go do something else. Note investing is really, I hate to say this, but the most effective note investors aren't ones that are trying to do it in one city or one state, but they're looking at three to five states to start off with and then going from there as they understand the nuances of these. You know, the foreclosure timeframes in those cities, if it's a judicial state, judicial foreclosure and non judicial foreclosure. Also, as they get to know the cities and the markets, you know, each days on market you need realtors to pull comps for you. You need to have buyers there in case you do end up taking the REO back. You want to make sure that you're buying in cities usually of 25 to 50,000 or greater for the most part. Not a little small, less than a thousand people. So there's some nuances. The beautiful thing is it's not rocket scientists. You just have to basically approach it as a banker's mindset versus a fix and flipper mindset. And that's people that come from the fix and flip side will often overbid because they're used to looking at MAO, your maximum allowable offer. Well, let's take ARV times 70% minus money cost. We don't go off of ARV in the note business. We go off of as is value and the, as we call it UPB, the unpaid principal balance, not payoff, but prints and balance. So those are, that's a different mindset. If you try to approach notes from a fix and flip mindset, you'll, you'll overpay and get a lot of trouble. And that's not what you want to be.

Yeah, no, I, like I said, there's a, there's a lot going on here. I mean, we could spend an entire episode just talking about how people would have to build out their network associated with where these properties are at. You're talking about having realtors running comps. You're probably going to have to have even more relationships just so that you can cover your butt.

Let me share something with you there. It's not that honestly, you're exactly right. That's what most people think, oh, I'm going to be buying in 20 states. I got like no, you may look at stuff in 20 states, but here's the thing. There's a great tool called Google that will help you find Realtors. There are real estate investing clubs in just about every city out there or you can find meetup groups with investors. And so that's one big thing I teach is that we're really, we're not six degrees away from Kevin Bacon. We're one degree away from getting a hold of the right person or the right party. Then we have vendors too that understand the note business that you can reach out to and they can get you a realtor in an area to pull comps or do a BPO or get a title company to pull title on a property. So you can see whether liens out there. It can be overwhelming if you're coming from an uneducated space. But there are roughly about seven to eight vendors that we use on a routinely basis. For every note investor uses, they obviously use realtors title company. But there's also a whole variety of things that are there to make it easy for you. You don't have to do it all yourself. And so that fear is very normal for somebody approaching it. But it's actually, you're a lot closer to success and having a team than most people realize.

Sure. Well, if you like to learn more, I mean Scott has a virtual note buying workshop at the end of the month and I think he's going to be kind enough to even give it to you half off. Use the code Jack, but head over to weclosenotes.com yeah, we actually have two.

Things that we do. We've got one day kind of a teaser course offered every third Saturday of the month. That's noteweekend.com and it's usually 49 bucks. But if you use the code Jack, I'll give it to you for free. And then if you want to take my three day course like Jack mentioned, it's usually 5.99 for you and a spouse or partner. If you use the same code Jack, I'll give it to you at half off. And if you're a first responder or a past military, military, we comp you guys in. So you just got to email me and we'll be glad to comp the military and first responders in at no cost. It's our gift for saying thank you for Doing some good work for us.

Well, that's awesome. I'm going to make sure to include all of that information in the show. Notes. I always end with one last question. Is there a question you wished I would have asked you today?

One of the big things I think with note investing is you can't go get a note, can't go get a bank loan on a note. And so with note investing, you've got to use capital opm. We use a lot of other people's money. IRA accounts are a great source for investing. Raising capital is not hard. It's actually a lot easier than most people expect. There's a lot of private money sitting on the sidelines, and IRAs are a great way to do it. So that would be the biggest thing. How do you fund these deals? Private capital, OPM, IRA accounts, 401k accounts is how we get funded. I mean, sometimes get lines of credit with banks, but for the most part, you're going to be raising capital and it's easier to do that than most people think, ladies and gentlemen. It's not hard. Look, if you're in a group of 10, one or two or three of your people you're in the room with is in default in some sort of fashion thing about that being nationwide, there's a lot of opportunities on both the residential and the commercial space. Distressed debt. So I don't care where you're at, whether you're in Fargo or Fargo, North Dakota, or Freer, Texas, there's distressed debt. You just got to know where to look. And it's actually easier than you might think. So.

Well, I would, I would think that be the case, especially if you're buying property at 50 cents on the dollar.

I'm buying the debt, Jack, not the property, the debt. I wish, and I make my money to my negotiation. But yes, the debt, in this case, the pen is mightier than the hammer. So that's, that's the big thing. Yeah, there's a lot of opportunities. There's a lot of places out there. You just got to know what you're looking at and know how to do your due diligence and understand the options that are available to you and go from there. So.

Well, Scott, I really appreciate the education. I mean, I, this, this is very interesting. And like I mentioned to you before we started that I, we could, we can probably keep going. I mean, there's a lot to cover, but this kind of gives everybody kind of a high level. If you want more detail, make sure you head over to. We close notes.com and guys and gals.

Out there, do Jack a favor. We as podcasters love it when our listeners give feedback. So if you're listening to this on itunes, click that subscribe button. Leave them a five star review. We love getting feedback and Jack is doing an amazing job with his podcast and the guests that he's had on and just the knowledge. Take that five minutes and do Jack a favor. Leave a review, subscribe and make sure to tell one friend about his podcast.

Wow. I appreciate that. Thank you so much.

Thank you brother. Appreciate it man.

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