EP 461 – Taking A Leap Into Note Investing with Note Mastermind Member Eric Ham

This is the no Closer show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property for pennies on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now here's your host, CEO of We Close notes Scott Carson. Good morning, good afternoon, good evening everybody. Welcome to this episode of the no Closer Show. As always, Scott Carson, your host, excited to be here today with a investor who's knocking some things out, doing some great stuff, who's made a bit of a transition recently. I just do stuff. We got Eric Sham joining us from the City of Angels, right.

Pretty close. Long Beach, California, just south of Los Angeles a little bit.

And Eric, for those that don't know who you are, talk a little bit about your background. What were you doing over the last few years before you got into being a note investor?

Yeah, so I was basically in it for 20 years, system administrator, doing a lot of the back end people like their email and their websites to work. So I'm on call and hey, it's down, okay, I got to fix it. Comes with a job and it's fine. But you know, 20 years. Got kind of tired of it. I'd been following your courses for a couple years, met you at a couple events. And then last year it said to my wife, Sarah is like, hey, what do you think if I quit my job? And she's like, no, can't do that.

Hang on a second. She probably said what the hell are you thinking? Not just no, she's in the audience. Is that right, Sarah? Yeah. She's like, yeah, okay.

Pretty close to that. Yeah. So I mean it took a couple months in figuring out how we're going to do it. What would the numbers look like and basically came down to in November, put in my two week notice, figured, yeah, then come out to fast track and go from there.

Now you did the smart thing, you figured out some numbers, right? So what's been your biggest, what's been your focus? Is it performing? Is it non performing? What's kind of been the focus of the assets that you're going after?

So I'm looking at both performing and non performing. First CFDs to do right now. Just basically anything that makes the numbers work that I'm looking at now.

Are you funding these with your own money? Are you using other people's money? Are you using your own money and then bringing other people's money to bring your money out? What's your focus of that.

Right. So obviously having private investors to fund the deals right now it's just been my money. My first deal I did a JV with my self directed Roth with another WCN member to do that and that was a non performing CFD in North Carolina which Borrow has come back performing so far. So hopefully that'll be good exit later this year. But of course that's only my ira. It doesn't help my business and the money coming in. So then picked up a performing CFD in Dayton, Ohio a week and a half ago. So get some off of that and then hopefully get a investor to come back. And then just this Friday funded a non performing first in Detroit again with my own funds and now I've had some folks reach out to be interested and now it's just closing that and reaching out to more people.

That's awesome. So what's been the biggest kind of surprise coming from years the it because I know that when we were sitting through the fast track and it was actually a little bit. You're a very even keel right? Unless we throw barbecue out there, right?

Yeah, definitely some good barbecue out here in Texas, that's for sure.

But the thing what was probably the biggest aha moment or the biggest, maybe the biggest surprise coming from working a regular job and then what you were doing to where you're doing it now, what's been the biggest thing that's kind of been like the biggest hurdle for you?

Well I think initially it was just when I was looking into this and found out about notes is like seriously, they're just gonna let any person off the street just buy a note? Like I didn't think that was possible. Like who does that? And it's like no, you're gonna have to have some kind of special licensing or something with the bank. Some super secret handshake kind of thing that you'd have to do.

It's a good old boys club.

Exactly. And the more you look at it it's like no, you just put your work into it and you reach out to asset managers and network with other folks and you can actually do it. And so it's just put the time and the work in. And it happens now that you've been.

Doing this for a while because you were working on getting some deals closed, you ended up co funding another or finding another deal from another WC member to pull the trigger.

Yes.

Has it gotten a little bit easier for you pulling the trigger or find some deals over the last couple months?

It has. And I Mean, going into. I knew it's not a get rich quick thing. It's going to take time. We had budgeted and planned out at least a minimum of a year to do this. We'd be fine to do that. In worst case scenario, okay, I go back and get another job, you know, in it, it'd only be a year out and I wouldn't be that far behind. But coming from that, I mean, I'm very technical. I'm running the numbers all the time. I think probably initially is like, I want that perfect deal. I want that perfect. And so I get tapes and I look at bids and put. I wouldn't put it in because like that. I think that's going to work.

You're talking yourself out of deals, basically.

Pretty much. Pretty much. And I think honestly probably just in the past month kind of changed. That mindset of like. And actually listening to you and other folks is you just got. It's a numbers game. And I mean, put out 100 offers or 100 bids, maybe you get 10 accepted and out of that one is for real. And then just realizing that it's like, okay, I just, that's what I need to do. I need to play the numbers game, put more stuff out there. And that's what I've been doing now. And yeah, I think that's kind of.

The biggest change that's a good thing because I think a lot of people get into especially they're using their own funds, they want the perfect deal. It's got to be perfect. Well, on the front end, you don't always know if it's gonna be perfect. Right, Right. The more you dive into it, the more bids you've analyzed, more deals you've looked at, you've gotten more comfortable. Correct?

Correct.

Right. So I would love to know. I'm sure Sarah was a little nervous on the front end. Like we said. Hell no.

Oh, yeah.

She got a little more comfortable.

She has seeing that now. Okay, this, this is for real. This isn't just something I made up and some guy on the Internet who does this podcast thing and coming out and seeing other folks. I think that's what's helped is I try to explain, of course. And like, this is what I'm doing. This, what I'm looking at, these are the numbers that I see. But it's one thing to hear from me, I think, and then to see other folks in the group, hey, other folks are doing the same thing or they're having the same struggles or this is how they overcame it. And okay, there is other folks you can rely on to help you. It's not, you're not by yourself and.

That'S the thing they oh my God, what are you doing? Is a normal kind of reaction from a spouse, especially you leaving. And Sarah, you're working full time, right? Sarah, what's her line of work?

She is a children's social worker.

Okay, that's a little stressful. That's a little stressful.

I give her amazing credit how she does that job. There's no way I'd be cut out for that. But she does amazing well helping out kids.

She, she's definitely hiding her angel wings back there doing that because that's, that's a high stress thing. Especially imagine in Long beach and southern la in that neck of the wood.

Yeah, they, it's sad to say but they will probably never be out of a job. So.

But it gives you some idea which were you guys long term plans on this? I mean obviously your work, you've got a one year plan to get this to get close to replacing your income if not beyond that. But what's kind of your guys goals as a couple going forward?

Yeah, so I mean we talked about that a couple days ago, you know, did an exercise of going over three year goals and varied from things of for now it's like we'll still stay in the same house. We got two young kids that are going to be in school. So I mean they've got their friends. We're not going to plan on going anywhere anytime soon. You know, potentially takes off. Maybe she would have the option to quit if she wants to. But I mean where she is right now in her department, she loves doing it so. But at least that'd be an option there and yeah, I mean at least for the near term, you know, I'm looking at probably like 20 to 30 notes is what I'm shooting for this year. It might not equal the salary that I had, but just the projections we have right now, it's close enough and we should be okay.

Well that's the thing too. If you're getting 20 to 30 notes you're going to have some that get re performing and some that you end up having to take back and foreclose out and get some bigger checks on. Right, right. What are your favorite states that you're looking or the states that you bought in now? But also what are your kind of your top five states?

Yeah. So top five states right now is Michigan, Ohio, Indiana, Texas. I see here now and pretty much everything that I've heard and seen is like, oh, it's hot for that. So I'll definitely look at those. And then I'd probably add Florida as well.

Okay, there you go. God's waiting room is always nice there for you. Exactly. So you're using your own money, you're starting to raise private capital. Eight people, different stuff. How's the marketing been for you? Has it been a difficult thing and learn how to market a little bit different? Different set of skills?

Yeah, it's a completely opposite mindset for me. It's that creative brain part that I mean is there, but it's not my strength. I'm very analytical doing it, but I also know that's my weakness. And seeing and talking to other folks too. It's like, well, yeah, if you try this and you do that and you put this post and you link it to multiple places, it's putting your name out there, people knowing what you're doing, just getting more information of what's going on, just hitting that broader audience. And again, it goes back to. It's a numbers game also. Just like it's number game on doing the deals, the more people you can get to. So it's like I go to a bunch of local meetups where I'm at, try and join some other groups that are online and then, yeah, just spread out. Hey, this is what I'm doing.

What did your coworkers say when you said you were leaving?

Well, the first thing they said, they're like, what are you gonna do? I'm like, oh, I'm gonna go into real estate notes. And they're like, oh, real estate agent. Yeah, no, what's a note? And it's like, okay, same question I had initially, like, what's a note? I don't even know what a note was the first thing that I went to. But yeah, I think it was all just kind of a shock. And maybe half of them were like, yeah, yeah, you're just kidding. You'll be back here in like two months or something. Like, this isn't for real. And the other half are kind of looking and like, huh, we know Eric doesn't really just like jump off a ledge for nothing. So he's probably thought about this and huh, I wonder what it really is. But like, they didn't really come to me and like ask the full details. I think it was more just kind of like shock of like, oh, he's really going to do it. Well, yeah, maybe it will work.

Have anybody reached out to you? Find more Information or as you marketed and, and post things.

Yeah. So I've been getting calls. Some previous old co workers, some even more recent friends that I've met at in meetups and in local area places around me. And it's just in, you know, guess you'd say like the dating stage or something of just getting to know each other. Hey, this is what I do. Hey, what do you do? What kind of things do you like to invest in? And it might not even be real estate. And that's cool, you know, it's like, okay, what do you do? And then because for me also, it's like, I'm not going to put all my eggs in one basket. Yes, this is my business, but I still want to be interested of what are other people investing in out there for the longer term.

That brings a good question. What else are you investing in?

So I've got some stocks and mutual funds, kind of things that are out there. I guess that's probably the main part right now. But I'm just keeping my ear open for other possible opportunities just to kind of diversify.

Makes sense. So let's talk about a couple of the deals that you closed on. So you said you most recently just closed on one in Michigan. Just recently. Or Daytona.

Yes, so the most recent one, as a matter of fact. So the mastermind was going on Friday to Sunday. I was telling the seller, hey, I'm gonna be out of town. I'm flying on Thursday. If we can close this deal Wednesday. Awesome, let's do it and I'll wire you the money. Well, unfortunately, you know, back and forth. I get the contract late Wednesday night, I sign it Thursday night, send it back to them. We're in class Friday and I'm like, well, I just really want to get this deal done. So lunch break comes, go downstairs from the hotel, find one of those little bird scooter things that you know are taking over, invading everywhere.

Yes, definitely invading here in Austin.

Yeah. Causing traffic issues. Take this little bird scooter down, find the Wells Fargo locally down here, walk in there and I'm like, hey, I'm from California, but hopefully you could help me here. Oh, yeah, yeah, you're fine. You're a Wells Fargo customer. Boom, get the wire done, get back here, scarf down lunch and continue on class. So that one scooting to higher returns.

I see right now there.

Exactly.

So let's talk about the numbers on it. So what's the non performing note or contract for deed?

Non performing first. Okay. The unpaid balance was, it was 113,000.

Okay. And the value of the property?

30 day quick sales, probably around 50, 55.

Okay, and what'd you pay for the note?

24,500.

Okay, so under 50%. So roughly about in the mid 45. Occupied. Vacant.

It's occupied.

And what's your goal?

Well, my business goal in general is I want to help out the homeowners. There's folks that have fallen on hard times. Banks are very strict in their rules. They're not going to be flexible. That's part of why I like this business to go in there. I mean, you've talked about it before with multiple. The win, win, win situation. That's really what I want to do. And so every deal that I'm going into, I want to do it to work it out with the borrower, see what they want, whether they want to stay. Great. Here's some options. Are you just over it and you're done with the house? You want to walk and no foreclosure bankruptcy on your credit report? Sure, we can figure that out as well. Looking through the servicing notes, which there is some really good information in there. And so what I found out was a couple years ago, the previous note holder had accepted a short pay from the borrower. So the guy tries to go out, get a refinance, doesn't qualify. Tries to go get a personal loan, doesn't qualify. So I'm already looking at this like, well, what are my chances of that happening? Probably pretty slim. So the main part is they haven't paid in almost 10 years.

Wow.

Which initially scared me. I'm like, that sounds like way too. Because everything else I've been looking at is maybe like one or two years delinquent. So asking you, asking some other people like, hey, is this even like, can you get anything off of this? Like, it seems like way too old. And you know, it's pretty much like, well, just make sure taxes are current, which in this case they're not. He's behind my two years. His pattern seems to be he won't pay for two years. Gets the notice saying, hey, it's going to go to tax sale next year. And then he catches up. So he's in that cycle. He hasn't paid for two years again. So again, just factor that into the price. But after all that and the due diligence and pretty much figured, you know, I'm just going to go straight to foreclosure. Talk to the attorney. He's like, yep, as soon as you get boarded, we'll get it Started for you. Give me the timelines because I'm like, okay, if they file bankruptcy, I need to factor in some more time. But yeah, just ran all the numbers on that and it's like it's still going to be a good deal for me to do that.

And it was where again? Ohio, Michigan. Where was it? Detroit. Okay, cool. Good condition, good looking house.

It's all right. It's not the best one on the street. The roof needs a little bit of repair. I mean there's some shutters on the front but I mean these folks have lived there since I think like 1974.

Oh, wow.

So it's been a long time and it's going to need some work. I mean after repair value is coming in probably about 85 and as is being 55. So there's some wiggle room in there.

Now would you accept the one month that came to the table and won't start paying on time again? Because I imagine their payment, you said they owed 100 plus. Imagine the P and I payment's quite a bit higher than market rent.

No, their P and I right now is under.

Oh really? Wow.

So market rent's in there is probably about 850amonth. And their current P and I is I believe around 650. Because the loan was from 2001 when they got it. Yeah. So the loan was 2001, 2009 mortgage company came around and did a loan mod for them, dropped the rate, dropped the payment extended from 30 year to 40 year. They still couldn't pay on that. And that's part of too in the. Because I thought it was going off the loan mod numbers and it wasn't matching with the original was. Then I found out, well, no, since they never paid on the loan mod, it's basically null and void and it falls back to the original one. So I'm like, okay, so they've already tried that, so I'm probably not going to offer that to them as well.

Now, as you go into your local meetup groups there in Long beach in Southern California, are you finding a lot of people that are looking to do notes that are interested in hearing some of your stories again?

I think just an education thing like most people are like, what's a note? So I spend most of the time trying to explain what it is and what I do. I mean they understand wholesaling and flipping and out of state rentals, but notes, it's still just an education thing at this point.

What's been one of the biggest things that's helped you with your learning curve the most. Has it been networking, like with the WCN crew or the Mastermind or just spend some time doing research on things?

Probably a combination, but I guess probably my biggest one would be the Mastermind. So we did Fast Track in November, and then it was less than a month. We did Mastermind in December, but it was still like drinking out of a fire hose. I'm like, wow, okay. All this new information and these new acronyms and it's like, I don't know, I'm writing all these notes down. Okay, I think I can do this and try that. And then now coming to this Mastermind in April now helped reinforce, like, okay, I'm a little more focused. This is what I'm going to look at. I mean, sure, you could do 4 million different options, but you kind of need to focus in on what you want to start with.

That's been helpful though. Definitely. Yeah. Yes. That's the good thing. I mean, other people, Karen and Jeff, that were just. I said the same thing ago. December was their first Mastermind. Deer in the headlight look like, oh, my God, what are all these crazy people doing? They gave Sarah an opportunity to kind of figure out what's going on with other people too, you know, talk to other spouses and things like that, which is great. I want to know something. A couple kids.

Yes.

Right. Have you thought of putting some notes in any of their stuff, like a self directed IRA for them or anything like that?

I have toyed with the idea because the returns would be pretty amazing to start it off this early to do it. But so, I mean, we have money set aside and we're saving for them for college. Where it's at right now couldn't really shift over, but it's definitely on my radar of something maybe to set up in the near future here.

What's been the biggest aha moment for you since you've bought? How many deals have you funded now? Bought?

3 now.

3 now. What's been the biggest aha between getting your first round of bids out and close on your third one. Become easier as you've closed?

Yeah, I would say it's become easier. I mean, I think there's probably like a fear factor initially of. And I know you say I put multiple bids in, but in my mind it was still like, well, what if they accept them all? I don't know, the money and yeah, I'm trying to get out there, but I'm thinking like, well, I'm still going to have to fund this myself and now just realizing, well, no, okay, put out the multiple bids. You're probably not going to get them all back. You're going to play this dance of countering back and forth anyways. Then within that time you've got people that you can reach out to and say, hey, I've got this going on. Is someone willing to fund a deal here?

That's good to know. What's your goals for the next 12 months?

So I'd like to do 20 to 30 deals. Definitely need to get better at the marketing, the social media stuff and toying with the idea. Maybe getting some help since there's something just part time or just in a small job here and there kind of thing. Because even though I was in it, yeah, I understand the tech. I did the back end side, so I'm making sure the systems are up and running kind of things. It's like the wizard of Oz behind the curtain or something. Like, you know, pay no attention to.

The man behind the green curtain.

Right, right. You know, everything's going, working, but it's like, well, how does that really work? Well, because I'm behind the scenes doing that. So seeing the front end part of it, social media and Facebook and Instagram, it's like I understand the concept, but it's still a learning curve for me to be able to do that.

Did you have those set up beforehand or didn't do much on that beforehand?

No, I just had like my basic Facebook profile, personal one. Nothing else. No Twitter, no Instagram, Facebook business. Well, I had a LinkedIn as well for years from just other colleagues putting stuff out there. But not maximum. I think I had like a whopping like 20 connections.

Yeah, I don't think it was. I think it was sub 100 when you were in Austin. Yeah, but you've grown that though, in the last couple.

Yeah, now I'm up to just over 1100 connections.

Nice. Good stuff there. Good stuff there. I would say Sarah gotten a little more comfortable here recently. I think she has. Definitely. She's over there smiling and cracking up at it.

I think so. I mean, I'll admit, probably what, maybe end of February, beginning of March, you got those conversations like, hey, what's going on? Like, nothing's happening, nothing's coming in, no bids are being accepted. Like, is this just not gonna work kind of thing.

And that's the normal thought process. Normal stuff.

Yeah, right. But just keeping with it and working it out. And yeah, I think the last month now it's like, okay, this does work. There's deals out there to be made and do it and now we can adjust and try and grow that even faster.

I like that. It's a really good point there for you. What advice would you give to somebody out there that's listening right now? Best advice you could give them, Tell them if they're looking to get in the notes, what's the best thing you can tell them?

Yeah, I would just say get whatever education you can. There's a bunch of information out there and really just talk to people about it. I mean, I'm an introvert. So I walk into a room with people and I'd be happy to sit in the back and talk to nobody. So it's like doing this is like, wow, okay, I'm gonna take an extra leap here to try this. But yeah, honestly, I mean, tell people what you do. There's people that I've talked that I've been friends with for years, they're like, what are you doing? Again I tell them like, oh, that's so cool. I wish I could do that. Or I've always wanted to do like something in real estate but I never know what. Or it seems, well. So Southern California, right? Very overpriced, very hard market. If you're wanting to do fix and flips there, which there's some people, but people are getting priced out, you got to go for even higher and higher. So folks are in rentals. You're not getting a lot of return on your money to do a rental. And of course California is a very tenant friendly state. So you get a bad tenant in there and you're losing money off of it. Just telling people, hey, there's opportunities outside of California. You don't have to focus where you are to do that. There's so many resources online and available that it can be done.

Yeah, that's good. A wealth of information online. Dive into it, get educated. I think it's one of the most important things to do because you've never. This is not a get rich quick scheme.

Definitely not. No.

It's going to build wealth over time, but it takes time. Learning curve to everything, right?

Yes.

Awesome. Well Eric, you're doing a great job. Keep up the great work. Two thumbs up, Sarah. Yeah, there you go. Like that. That's good stuff there. How's the best way for. What's the best way for people to get a hold of you? They want to reach out to you.

Yeah. Best option probably my website, voyagernotes.com have some basic info in there. And again, part of the weakness part of, like, I don't really do websites, but I know how kind of. So, yeah, I need to update that a little bit. There'll be some info, but you can contact me through that or LinkedIn, of course. Just look me up Ericam on there. It should be linked to me with Voyager Notes as well.

Awesome. Well, keep up doing the good work and thanks for being on the show, man.

Great. Thank you, Scott, very much.

Awesome. Alright, but it's gonna wrap it up for this episode of the Closer show. Check it out voyagernotes.com or check them out on LinkedIn as well. Otherwise his contact information will be below in the show notes or on the website weclosenotes.com but until then, go out, make something happen, and we'll see you at the top. Bye. Sa.