EP 527 – Halloween Episode: Scary Note Deals

This is the no Closers 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. Welcome to this episode of the Note Closer Show. As always, Scott Carson. Excited to be here with you today. Today's episode, we're going to label this the Scary Note Stories as we around Halloween. And I know so many people love to discuss that and what's going on and, you know, get dressed up and decorate their houses and work costumes, stuff like that. Well, I thought I'd take the time here in this episode to share some of the, ooh, scary ghost stories or sorry, scary note stories that have happened with some of the deals that we've done. Exactly. Some of the deals that'll make you run and you just go see scared as things are broken into. And I've actually been shot at before, you know, up in Gary. So what I thought I'd talk about today are some of the deals that we've done the last 10 years have turned out. It's really just going to be scary. I guess the first one is going to be is a note deal that we bought in Dayton, Ohio. This goes back about five years ago in Dayton, Ohio. We picked up this note, part of a portfolio. And when we value a portfolio, you rank them basically highest value down to the lowest value. Well, this is one of the bottom of the barrel dregs. When I say 5 years ago the market was a different place than it is now. I mean, Dayton's one of the cheaper markets being buying assets in or real estate in right now. And this asset, I think we picked it up for, remember, currently like 4 grand, it was maybe worth 10 to 15 if I remember correctly. But anyway, we finally get around or working through it and we send a realtor out. A door knocker reached out to the borrower. The borrower hadn't responded. When we bought the note, they had not made a payment in two years. Keep this in mind. Hadn't made a payment in two years. We bought the note cheap. We finally get around door knocking, servicing, nothing there. When the bar, when the door knocker showed up, there was a pile of mail and newspapers at the house. When you see that, what's that tell you? That's a sign that a house is vacant. Right. Nobody's there, nobody's picking up the mail, nobody's turning off the newspaper. But the power was still on and the light on the front was still on. So the power is still being paid by somebody. Door knocker showed it twice. Knocks, no response there. No response from any of the borrower. Next door neighbor tells us that nobody's been at the house for a couple years. So we go ahead, I send a locksmith out to meet my realtor. I said hey, let's go ahead. They're not there. We're gonna go ahead and winterize the property to protect our investment. So they open the door, break the lock, go to replace the lock. And the house as the realtor says, looked like somebody had been living it but just had not been there forever. I mean things, you know, everything, there's still furniture in the house, there's still stuff, places, but it had a funky smell to it. Well, lo and behold, she goes into the bedroom and has opened up the closets and finds the borrower in the closet hung. Well let me say this again, crumpled on the floor in the closet. He'd hung himself in the closet. Eventually, over time a couple years goes by what's going to happen? You're going to decompose and the skeletons would fall on the ground. Let's just say she was pretty scared. She didn't want to go back in the house later on. And we ended up selling the house to a local investor who I believe turned it into a rental. If I remember correct, that's what he did. But yeah, that was a little bit of an interesting thing. Luckily we bought it cheap enough. We did disclose made for an interesting story in buying that asset and selling the asset. Luckily I mean we sold to another investor so we didn't sell it to his mom. Pa coming in, don't know if the place is haunted, you know doubt that scary one. But if you think about that, that's gotta be sad. Somebody take their life. Now this happens. Probably more than you would expect. People passing away in a house, people dying. I mean it happens, people get old. But this guy was in his 40s and for him to hang himself it was sad because he was still living in the house and made a payment. So we were trying to, they were trying to go back and figure out figured he'd been in there well over a year, year plus anyway of being in the house and he'd set up his utilities at least the power anyway on auto draft is what we thought because that was why it was still kept paying when we called the city. Oh no, I'm still showing pants. Well, he must have been set up on ACH Automatic clearinghouse. And sure enough, he was. So he's still been withdrawing money from his account. Just to think about how sad there's been. No family, no friends. Even the neighbors check in on you. They said that the guy kept himself pretty quiet and just didn't do much. So that was probably the scary of the scaries that I wasn't there for. Now another deal that really disgusted. It just makes my skin crawl thinking about this. This is a property in Salt Lake City, Utah that I was working with a couple investors up that neck of the woods. Spent some time up there. We were. We found this property needed a lot of work. It was pretty trashy. A lot of stuff was still in it. Hoarder lived in it. So it was full of trash and junk. And it took a lot. It took five dumpsters of hauling crap out of this house. Now even with the junk, we tried to get the junk guys to come help out. The junk guys refused to haul the stuff off because it was just such a roach infestation. It was so bad. I mean we were helping out with this. I can remember getting in the suit, you know, literally cover herself in the suit, one of those zip up painter suits because we just didn't want to be around it and just stunk the high heaven. Well, we finally cleared everything out. We go to knock out this, retain this wall. It's just a kind of a pony wall. Not really a pony wall. Pony wall is only half one. But this is a wall that was basically just there. But not a retaining wall. Wait. So I remember taking the sledgehammer and I'm standing in the doorway and I go. And I hit it, hit the wall and my sledgehammer goes through it. But what happens is it started raining down cockroaches on me. It just started raining down roaches. Just thinking about it just rained down roaches on my head and on my body. Luckily I was wearing a plastic. One of the most disgusting things I think. Well, I know the other investor, she went in the corner and vomited because she was so. Ugh. She's like, oh my God, it was so good you did. But it was just nasty. It was just a. A horrible house. Luckily, I mean, we ended up clearing it all the way down to the studs, ripping the carpet up and doing all that stuff and then sold it and made some nice money. We ended up having. Not having to do the full rehab on it because People came in. First of all, the neighborhood was so excited to see this house get cleaned up. It was the light in the neighborhood. It was the ugliest house on a nice neighborhood. And so the neighbors were coming out. We actually ended up selling it before we finished with it and still made a nice profit. Before we put the carpet in, before we put the final paint and appliances, we had it sold. So we wanted to buy it that bad. And then they wanted to finish it out by putting their stuff into it. So that worked out really, really well for us. You know, to get a financing, we had to put, you know, appliances. But the minute it closed, we pulled our appliances out and they went and put their own appliances in. They finished it up. So it was pretty cool that way to get things done. But that was a house that we picked up for 65,000. We put about 35 into. So we're in for 100. It was worth about 175. We ended up selling at 150, but made a nice profit and split it two ways between me and the other investors on that stuff. But to this day, it's still the worst. I can still remember. I can still. It just makes my skin crawl just feeling about the horror of that. Not a fun time. I mean, literally, as soon as I hit that in the wall hand, I basically made for the door and headed the heck out of that house there. I decided, oh, look, that okay, now we all have our first kind of deals. I think that's one of the things that, with this next story that I want to share with you guys is that, you know, when we're so many of us are going to workshops, when we're brand new, we're reading, we're going to networking events, we're going to conferences or expos. You know, you're going and learning from people and what to do, what not to do. And back thinking back now to 2005, 2005, 2006. It goes back 13 years ago, 13, 14 years ago. But it's actually right around this time of the year now. I think about it. Yeah. So like many people, when you go to investment clubs or go out to your first expo, they tell you what to do about foreclosures or pull into stressed houses, things like that. So we bought a foreclosure list. You know, I printed up some letters to send out at the same time I was running the mortgage company as well. And so I pulled up and this goes back to when World Savings was around. World Savings was a bank that was doing Mortgages for people about 30 different states eventually got bought by Wachovia, and then Wachovia obviously got bought into Wells Fargo. But anyway, World Savings, one of the things that I would do as a mortgage banker, mortgage broker is I would pull lists of people that had purchased houses or deeds that had been filed five years previously. Now, why five years? This is a. If they filed five years ago, then they probably were within time. They hadn't refinanced, and they probably had a little bit of equity values increasing a little bit. So that was the play we did. It worked really, really well. It's a great, great tool to get refinances into our mortgage pipeline. Was just sending out letters offering up people. And then World Savings, what I did is I could do a very streamlined mortgage for whoever was in there. So we. That's what I did. Pulled the list up. World Savings, we're good clients. With them, I can streamline the mortgage, make it some extra points. And so that's what I did. I sent letters out to World Savings clients, and I also sent letters out the foreclosure list. Now, I didn't. I just sent blank letters. It was like 100, 200 letters at a time. And I remember printing letters off, stamping them, sending them all out. But anyway, one of the things that I do at the bottom of my. Where I used to do, don't do much of this anymore, is I put my smiling face at the bottom of my letters to the foreclosure. Say, hey, I put my picture on the bottom. So, you know, I'm a real person with real solutions. And I think that really adds value, especially if you're gonna meet with somebody, somebody to call you up. They like having a face. A face to a name is always a good thing. Why would put the same picture on my email or my signature that I sent out to the mortgage leads? Well, lo and behold, I get a phone call literally four days after we dropped the first mail batch. Foreclosure. First 50 letters out for foreclosures, not 100 was 50, actually. And I get a phone call and it pops up this Walmart payphone on my caller ID on my office line at the house. And I'm all excited because the only person that was calling that was telemarketers or leads. So I answered the phone. Lane says, this Scott Carson. I'm like, yes, it is. And she's like, awesome, can you come over and see me today? I got your letter and I could use your help on my house. I'm like yeah, yeah, you know, what's the, what's the address? And she's like 207silcove. And when you come here to tonight, I need you to go and ring the doorbell and then go stand by the garage, okay? I'm like, watch. There's lights and dogs and they bark. And so what I'll do is I'll meet you through the garage. I'm like, okay, that's fine. Sounds good. So hang up. It's like at one o' clock on a Sunday. And what do I do? I jump on my county records. I'm looking at it, I'm like, oh my God. It's like a four bedroom, three bath, like 2,000 square foot, two story house. @ least a quarter, if not a half acre fenced in backyard. Cause at the end of a cul de sac. I was living in Round Rock at the time, I was like, oh my gosh, this, this looks pretty exciting. I could see that World Savings was the lender on it with a first and a second mortgage. So I ready, I get in my truck, I grab my forms, you know, my due diligence checklist and stuff like that. You know your due diligence checklist when you're looking at an asset. And I'm like, my God, this is going to work. So I drive over, married at the time, and she's like, okay, awesome. Just tickle to death that this is actually really works well. So I drive over, sure enough, it's an okay looking two story, kind of Kaufman Brody house. Don't know what Kaufman Brody, they're KB Builders and they build like a big square house. I mean it's literally like four square walls, but it's a pretty good size. Like okay, great roof, looks okay. Neighborhood looks pretty good. There's an older car in the driveway. I mean, older car, it's late model. So anyway, sure enough ring a doorbell and it's been icy that weekend, so there's ice on the ground, it's been raining. And suddenly I hear rah, rah, rah rah, dogs barking. Okay? And so I decided like, okay, dog's barking, that's okay. Let me go by and knock on the door like she said. Or after I knock on the door, I'll go stand by the garage. So I sure enough go do that. I'm standing there and suddenly I hear the see the garage door opening up. It's like something out of like a movie. Just cold outside. And inside as it's going up, I see that there's the Walls of the garage, there's these bookshelves and all these, like, love stories paperbacks. And there's blocks, black hefty cinch sacks everywhere in the garage. And there's this car in here, you know, and then there's a lot of, like, dog shit. I can see as it's moving up. And sure enough, as it gets all the way top, it's dark out steps this lady who's maybe. Maybe five foot tall, and she's about as wide as she was tall. Sure you, Scott? I'm like, yes, I am. So, all right. We talked for a few minutes. I said, well, I need to go in, and before I can help you, I need to go and see what kind of dish the house is. She really hasn't. She really is hesitant to let me in. Finally she says, okay, well, she turns around and walks in, and her pants were split smack down, down in the middle. Okay, so they're blowing. Luckily she was wearing underwear. But as we're walking, this wave hits me of just trash and just nastiness. I'm like, oh, this is kind of stinks. Well, we open up the door in the garage to go into the house, and it's an even. I can literally still smell it. It's funny how memory is such a strong reminder and now your senses kick in. So there's a bathroom, a half bath right off the kitchen. She goes, this is the half bath. Very resident. I opened the door, and it's just nasty. I mean, she told me outside that she had not had the water on in four months in the house. And she was driving without a license. She had a couple warrants out because she'd been arrested without license. It was just a big south story. Oh, I used to have four houses, and I had all this inheritance, and then my roommate stole money from me. And then I was doing drugs and got arrested and lost a lot of it. And some other things that. So what was sad is this was this horrible stink. So they go beyond the first and half bath, like I said, the toilet. She hadn't been no water in four months, but it was full of just shit. She'd been wiping her butt and putting the dirty toilet paper in a homer bucket and Home Depot homer bucket in there. And when you went. But we went by all three bathrooms that was all the same. Homer buckets full of just dirty toilet paper stuff everywhere. We get downstairs, there's these clothes that are on the. The couch. She did have four big dogs. And I'm not talking like small dogs. Big Dogs, okay. And she had a big backyard, too. And I'm like, okay. The carpet downstairs carpet was just kind of spongy in places, squishy. And the lower 2ft of the sheetrock was yellow. And I was watching the dogs basically go lift their legs and piss. And that's what it was. It was spongy from the dog piss in the carpet. She didn't cleaned it, and they were defecating. There was dog turds everywhere. These dogs were rolling around. It was just nastiness, dog hair everywhere. The kitchen had dirty plates. There was flies. And although you could see the nice cabinets and the nice granite countertops, it could have been a very nice house. It was just nasty. There's flies there. When she sits down, the dogs don't want to lick me. And I don't want even touch the dogs because you see what they're rolling in and playing with. But there's a stack, literally two stacks of postcards and letters on her coffee table. So we're talking a little bit, and I'm trying to just avoid the dogs coming up to me. And she said, the reason I called you is I got two letters from you. I got one for the mortgage, and then I got one for helping me on this. What can you do? And I said, well, we could try to work out a loan mod. She's like, I already tried that. I just want to get out of the house. I'm like, okay, well, we could always see if we can get a short sale approved because you owe more on the house than what it's worth this time. She goes, that sounds good. So had her sign off and authorization release information, Took a copy, made a copy, took a photo of her driver's license, because I could send that in on the authorization release form. Got some other information. She found a mortgage statement, gave it to me. So I had the loan numbers, and I left, and I almost vomited when I got out of the house. I had to hold it in just now. And it's still nastiness. It gets to something later on. I get home, I call. I was married to him, and I called my wife and said, listen, put some clean clothes in there and some soap in the garage, and can you bring the garden hose inside? So sure enough, I get in, I get out of my truck, I go in there, close the garage, I strip down, scrub down, and I basically took those clothes and threw them away because they were just throwing them immediately into the wash because it was just nasty. She's like, you smell funky. I was like it's because it's got in my clothes to smell piss and shit. Well, I reached out to World Savings and for six months I was negotiating back and forth, back and forth. We took plenty of pictures, sent them in. Wish they were scratch and smell pictures because that would have helped but they would not budge from their numbers. So eventually I said there's nothing I can do in six months they're not budging of me calling them once a week and sending everything in and short sales and all notification that they finally did it. Well, fast forward another six months. I get a phone call from World Savings, ask me if I'm Oscar the buyer. I'm like, I'm sorry, what are you doing? Well, we finally foreclosed on the property, but unfortunately we found the borrower inside deceased. I guess she had died in the house and the dogs had gotten hungry a little bit and nibbled on her. Yeah, feel very sorry for her. But anyway, turns out they again, the buyer on it had to strip that house down after they moved everything down to the actual studs and the concrete and reseal it because of everything and just messiness. So that's a deal that I didn't close on, but that's the first deal that I got inundated in with going to that. And the true smell of shit and piss is not always a smell of money, as Ronald Grant says. But that saying that he likes to say, if you don't know who Ronald Grant is, he's one of the foremost real estate educators in the country, been doing it for 40 years. And he likes to say that home smell shouldn't piss. The smell of money in real estate. And it can be, but that one deal, it was not. Okay, it definitely was not, but it was definitely one like, hey, real estate is not always just picking out paint colors and carpet and pretty rehabs, you know, I've been my fair share of ugly houses as I've just shared on the last couple examples with the one in Salt Lake City with the worst cockroach population. This one was in Cedar Park, Texas. Literally probably less than a 15 minute drive from where I'm at right now. Yeah, definitely. Sometimes I've driven by it as well, but 207 Silk Cove, I'll always remember. And the reason, you know, you make think of a big backyard. And I asked the lady, I was like, why don't you take the dogs out in the backyard? And she's like, because there's a portion of the fence that's fallen down and I'm not going to fix it. And the neighbors don't like me so they always throw trash. So I keep the dogs inside because it's just too cold. Like they got a frickin fur coat. It's not that cold. But anyway it is what it is, so be careful. If somebody's got big dogs, they tell you to knock on their door then go stand by the garage. They're not going to kill you, but you may want to. You might feel like you're lost a life or two in there anyway. So those three stories right now are probably the three that stand out the most to me. The people you know, first one found a cease. That's obviously a few years in my real estate career. The one with the roaches was about three years into my real estate career. And then of course Silk Cove is the first one here, back over 14 years ago. Now there's been other, other deals that we've had that have been ugly in Pittsburgh. One time I was up in Pittsburgh coaching a student. One of the great ways, and you may want to use this in your marketing or as a way to find deals for you is the fact that oftentimes churches are given property. People pass away members of the church, you'll donate money, donate property, donate real estate to the churches. And the client I was working with, he had reached out to his local church and sure enough they had been left this three story kind of brownstone back in, you know, three story house, townhome, you know, it was a triplex basically that they'd been left and need some work had been locked up. According to the priest who was this big Joe Green looking guy, I mean absolutely big. When he shook my hand, when I met him, his, I felt like his hand wrapped around my hand. I mean just this mammoth like almost 7 foot tall guy you wouldn't want to mess with. Okay, my investor and I go and meet the priest and unlocks the door and it's boarded up. Come in, you can see it looks like there's been, you know, one of the windows broken and stuff like that. And you see looks like somebody's been living in there a little bit or a bomb. And you can hear a little bit of noise upstairs. Like it sounds like squirrels or something like that. Of course the minister goes, you know, the priest goes, hi, this is real estate. Anybody here? Anybody here? And it had a setup where you'd walk into the front door and there was basically like four or five rooms that kind of branch off the main kind of entranceway there. So you Had a couple bedrooms and the kitchen and the main living doors in the center there. So we do that and there's nothing there, but there's a stairwell to go up the second floor, the second unit. So we go open up the second unit and walk in, you hear more commotion upstairs. Gets a little louder and same thing, the ministry goes real estate here, agent. Hey, anybody here? Don't shoot us. You know, just the noise of stairs, nothing there. So we go up to the third floor and same thing, we walk in and the rooms, I want to paint the picture. You got like two rooms here, two rooms to the right, to the left, and one facing you forward. Well, they come in the front door on the third floor and the two rooms to the right are locked and the two rooms to the left are basically open. And then the one room that faces the hey was locked, but that's where we heard noise coming from. Like, okay, this would be interesting. My investor's a little nervous. He's like, I don't know, should we leave? Should we call the cops? And the priest looks at him, hell no. So he walks over the door, knocks on the door, and you hear him just commotion inside, you know, all this stuff going on. And he just literally kicks the door. And he picks up and uses his size, like huge foot, probably a size 15 shoe if I remember correctly, and kicks the door in, opens the door up off the lock. And what we see, we see two bums, two homeless people, one guy, one girl, just butt ass naked, just going at it. Just absolutely, just having sex right there. And they are drug. I mean it smelled of nastiness, piss in the corner, stuff like that. But painting a picture, these two people were just so high as a freaking kite. But they were going at. And they were not attractive, let's just put it that way. Not sexy at all. I think she was missing most of her teeth. He was missing his teeth and just smelled just nastiness. But you know, we kicked the door open, it swings open, we see them go on had it. They finally realize it and they're like trying to get uncovered and get. Try to go out the back window at the same time. And my investor's like, oh my gosh, oh my gosh. And so they grab their clothes, they run out the back window and the mistress goes, turns to us and goes, so you want it or what? And I can remember I just started laughing my ass off there. And my investor, my coach sister, was like, I don't know yet. I don't know if I could do that and he just starts in. The minister just starts laughing. Pre starts laughing. And that was the most memorable time. So it was kind of interesting deal. You get memories. And that's where I got the idea. Hey, if you ever need to get into a house, just use a size 14 boot hammer was from this thing. But that's, you know, you never know what you're gonna run into sometimes. I mean, our buddy Wayne Snell, famously, a couple years ago, took a video of him going into a house and then vomiting up on the live video. You know, we've had that happen. Other people have gone and seen houses, and there's been dogs or animals in there before. I've been to places I've been shot at before, you know, twice, I guess you could say both times were. Actually. Both were in Gary, Indiana. And one was. I'm just driving through, looking at stop. I get out, look at a house, knock on the door, and there's. Gunshot goes off. It whistles past me. I'm like, whoa, close enough to know to get the hell out of here. My skin's a little too light, so get out of that one. Second time was on actually on a shadow inventory roadshow with our buddy Mark Gold. And there was this house at the corner. I've been baking for a couple of years. We're all peeking around, and I can hear a lawnmower just on the other side of the street. And this is a residential neighborhood, you know, where you have the street and blocks. So I pick around. I see this guy mowing his yard two streets or just two houses down on the backside of this house. So I walk down there, and it's a beautiful sunny day. We were driving around in this, you know, Mercedes Sprintster that Mark and I would rotate on. We had 15 people us. And Stephanie was with us also with a film guy that was working for us and two students in the blue Suburban. But they're at the house. And as I'm walking down to see the guy who's mowing the lawn, there's no way you can see the vehicles. So I come up to him, he stops mowing his lawn, looks at me all funky, and I say, hey, man, I just want to ask you about this house down here in the corner. You know, how long has it been vacant? Do you know anything about the person lived there before? This was part of a list of properties that we gotten from a hedge fund to take a look at while we were driving around Chicago and Indiana. The guy's like, oh, it's been making for like three years. What do you care? I'm like, well, I'm sorry. I'm an investor, and I got some other friends down there. We're looking at deals in the area here, and just wanted to get an idea this was on our list. So the guy goes in this tirade, gets upset about the fact, oh, you California investors need to go back. You need to get the hell out of here, actually, I'm gonna shoot you. And I'm laughing like, whatever, because his wife was walking out. The wife's walking out. Do you have a beer? And she's like, oh, hey, how's it going? And she was just cordial. The guy goes in his garage and comes out with a.44 Magnum, okay. And he starts yelling at me, get the hell out of here. He's like, whoa, calm down, man. I just asked information, not stealing anything. Okay, I'll leave you be. And so I take off. The guy fires over my head, hear it whistling past me, and I kind of go jogging back a little bit. I will tell you this. I did not run, and no, I did not crap my pants, okay? I was a little nervous there, okay? But I was interested. Like, man, I got back there, and everybody's like, we heard a gunshot. Are you okay? I was like, yeah. Don't go down the street asking neighbors here about advice. They don't like you. And so got back in the Sprinter, and we did a Huey and got the heck out of that part of Gary again. There's some great parts of Gary, Indiana, that was obviously about six years ago, if I remember correctly, when we did that four years ago with Mark. But it made for a memorable story of doing it, of going out and talking to people. Most of the time, your borrowers or your neighbors of the house that you're at will give you plenty of information, more information you'll get for most people about the asset and what's going on with the deal and go from there. So that was kind of an interesting story there, where somebody did not want to be forthgiving of information in the property neighborhood. Most people don't realize that if an investor comes in the area and they keep a property from going to foreclosure, and they build it up, they actually had value. They don't take value away. But not everybody understands that. So I would say that there's been a nightmare of a city to invest in. It would be Chicago for me. I hate Chicago, specifically, Cook county lost a lot of money in that market. Over a quarter million of my own money. We Bought some assets there and it just was a pain in the ass to foreclose tenants stealing crap. I've had properties where the homes were broken into and vandalized three times after we've repaired it and put the copper in. We've had the city give us zoning violations because they said the doors were wide open and then we should provide proof the doors aren't open. So somebody out there just trying to fine us for things that we're not seeing, but we got to pay our attorney to go to the court to get them disapproved. High taxes. I just absolutely hate Chicago now. I'm a big fan of their sports teams. I love visiting the city, but it is not a great city to invest in unless you're there locally now. There are great areas there. Don't get me wrong. These 10 assets were on the south side predominantly. But we all visit me when I say all. Taught a class in Chicago one time and I sent J. Tenenbaum was at the class with me along with Robbie Woods. Robbie woods, the host, ex hoster, still great investor. Both guys are great friends. Talked to both of them this week and I can remember us going and driving around. Originally, Jay had a property note that he bought in Chicago. We wanted to go do a door knocking. So the three of us on a Monday after my workshop, we went off and looked at these assets and knocked on the door. And Jay was able to negotiate a loan mod with a tenant or actually the tenant in place who was the sister of the guy that owned the note or the mortgage holder. So he was able to negotiate. And we had these 10 assets that we went and drove around, looked at. All three of us, inspected these assets. We all were excited about these assets and things like that. And there's even a 10 plex that Robbie still owns to this day that he bought off of me as part of a portfolio. But it's been an absolute nightmare for him in that neck of the woods where people just do some stupid stuff where they let the water running in or they take off spigots and it just runs and let run continuously. It's just been a rough area. I would not recommend people choose Chicago to invest in unless it's in a good area and they're able to be around that asset on a regular basis. So that's the things that I would tell you about Chicago or Chirac, as I like to say, or county. That neck of the woods. It's just a bad, rough area to invest in. So I do not recommend it unless you do have a gun going there because people will do weird things. We had people that were cutting out walls and walking back and forth through units, you know, just kind of stupid with stuff that you would never believe. But anyway, we were glad to get the hell out of there as fast as possible. So anyway, Chicago, not a big fan of that area. You know, I think about some of the other areas. I mean we've had rentals that were good here in town. We've had subject twos have been really good. Smaller finance stuff. A big lesson for me early on in my investing career came from a property that we picked up here. And this is a thing about partnering with people. Here's a big thing. I talked about Silk Cove as the first really kind of asset that I had to walk off of postcards. Now in that same batch, I got another asset in Round Rock that came to me. Homeowners reached out the week of the foreclosure auction. We were able to go over and talk with them. We I should say I went over that and was able to talk with the borrower. Gorgeous looking red brick home in Round Rock. Two story house, nice big yard, big backyard in a beautiful neighborhood. And these people, just be honest, they'd overextended themselves. He'd been out, left off of work. She was trying to do whatever she could. They had a couple kids, three girls, remember correctly. And they really just wanted to walk away from the house. And there was some equity there initially what we thought. So as I'm doing my due diligence, calling around checking taxes, all that stuff. I'm like, okay, it looks like we're good to go here. And we took over subject to got this foreclosure auction stopped and went and brought on a business. A friend of mine who brought me in to the kind of the real estate size. It made me an introduction. I said hey. I felt hey. I wanted to bring him on, so I brought him on and we basically took the deal over and started getting a rehab of it. Now it's right at the time, so clean out rehab took us roughly about 90 days. Cause we're doing a lot of it ourselves, a lot of the paint ourselves. I did have to fire one painter along the way. Did all the landscaping myself, placed some locks and just drag out longer. But then what happened is between I did not check successfully check the taxes on it. Well I did call them the taxes and it said the taxes were paid up to date. When I called the bank get the balance on the mortgage, it gave me one mortgage. Well, 90 days later, the balance on the mortgage was a lot higher than what it was. And what had happened? We had taken the property over just as the bank had paid the taxes, tax, foreclosure. But it was not reflected on the most recent mortgage statement that we've gotten. So while we thought we were going to make at least 20 grand in profit, we came and realized we were going to be making like five grand in profit after 90 days. And when I figured out how much time I put in the house I was working for less than what most people make flipping burgers. Okay, great learning experience. Very big learning experience. It was better to come out on top of it versus or losing. Not losing anything, but better than owing money. But the biggest lesson I got from this deal was like, don't bring on partners that don't have the same motivation as you. Like I said, me and my time, my spouse at the time, we're doing a lot of the work ourselves, spend every weekend there. There's one time I get on the phone to the guy, like, listen, I need you to come here and help me out with it. So he shows up and just dress clothes just to check it out. And he's like, well, I can't. I can't stay and help out because so and so my wife's going to a concert, so I have to go home and babysit. And I just ripped him a new one. And the guy's older than me. We're still friends this day, which is a great thing. I said, man, dude, we are here every freaking weekend, working, making this happen. Look, hire a damn babysitter. I need you here to help because it takes me twice as long to get stuff done if you're not here to help. We're doing the best we can. And he was like, you know what? You're right. So he called, got a babysitter. He came back, spent like four hours there. And it was about all the work we got from him. But fortunately, we got the stuff done, got the house sold, and moved on. And, you know, sometimes you learn more about yourself. And this is the big thing I learned that I didn't want to do all the work myself or ourselves. I didn't have the time. This is why you need to be very careful on your numbers when you're looking at stuff, especially if you're a new investor. Don't try to do it all yourself. I have so many note investors that they want to do the workouts or the talks themselves. It is not worth it. You don't want to do that, Trust me. You want to hire professionals to get it done. Because with Vita hire professionals, we could have this deal done in 30 days versus 90 days. And it took another 60 days to sell the house and get financing to go through. But. So it was a beautiful house. We did some cool features to it that made sense. But it was a nightmare when it came to final when you're calling to get the payoffs and stuff like that. And I can remember this, the blood draining from my head as I'm talking to the asset or the banker and I'm getting the numbers. I'm like, what? No way. Not good at all. Not good at all. But gorgeous house in Round Rock, Texas here. So that was an interesting deal. I'll leave you with one final one. This is kind of the one that why you always probably. You probably don't want to let your borrowers stay in the house once you take the asset over. Sending out letters, postcards, we get a response from a local guy here in Austin, Texas. And I remember the address. 1500 Bluebonnet Drive. Now this is down in Zilker park and down at a great area of Austin, Texas. This is right by where south by southwest goes. I mean down near the Austin city limits pavilions and where all the live music is. This is a really popular area to live in. So we're pretty excited about this house. Now we figured out after repair value was gonna be somewhere around 550. At the time I think the house was worth 780. As you saw that it sold for the borrowed 298,000. It was a select portfolio service. And the guy that was living in it is a local drummer here in Austin. And he had these long dreads. Remember his name was Sash. It goes by these long dreads that went down basically to his knees to be a local drummer. And it was a good looking house, needs some work, obviously a little outdated and he wanted to be gone. He said, hey man, I know there's value here. If I can get ten grand, I'll be gone and sign it all over. And I remember I came across this deal originally. Cause I was talking with a couple local realtors here in the area and the guy made a list of 10 houses he thought would be really good investments for somebody to come and fix and flip. What's funny is this is the postcards that we sent out, the letters we sent out to the bars. This ended up going was one of those ten too. So Realtor had all these numbers, Rehabs Like I don't wanna do heavy rehab. We were able to take it over something too. We were able to pay 15 grand to the bank, select Portfolio Services for six months of payments to substitute. The borrower actually signed the property over to his dean, Lou. But he wanted to remain in the house for 30 days. Now that was the kicker. In 30 days, this guy sold just about everything he could out of the house. Appliances, cabinets, granite countertops, fixtures. He was selling it all for a profit. And it was okay. Cause we ended up wholesaling, making a quick $75,000 on a wholesale deal above and beyond what we paid to take it over. And the guy that bought it didn't care. He was gonna strip it down anyway. Well, the nightmare for him, unfortunately is it had basically a brand new roof on it. It had these really beautiful wooden floors, old wooden floors in the house that were really good. Well, he. When Sash moved out, we had Sash, you can't be doing this. You can't be selling this stuff as part of the house. You're gonna have to be out in a week now. So Sash moved on. Well, unfortunately, Nick, the guy that bought the house from us, when he sent his crews out to fix it, they ripped the new roof off, they ripped the old floors out. They literally demolished the house almost until there was just wall standing. And that house sat like that for over a year because Nick did not expect that much in rehab. And sure enough, they went way above and beyond. He didn't have it invested into it. And even though the numbers would have made sense, he didn't borrow enough money from his investors and they wouldn't give them any more money because they the trash out and the extreme rehab stuff. So that's a nightmare of a deal there for him. Now fortunately, Nick recovered. He's made some money. He's doing some great stuff here in Austin with some commercial developments and some things like that, but he was not prepared for that. So this is why sometimes it makes more sense to make a quick buck and make some money and move on to another deal versus trying to do all the heavy lifting yourself. And you don't want to get into it because what's going to happen if you're not there, especially when demo day, you're going to be wishing that, you know, somebody drops a hammer on your head and you're not hearing song going along or anything like that. So as I said, sometimes deals can turn into bombs that blow up in your face. So that's a deal that we were glad made some money and moved on our merry way. And that's why I don't like heavy rehabs. I like rehabs, light rehabs, paint carpet for the most part and move it on there. And that's why I got in the note business from the get go because I want cash flow, not big rehab costs. So guys, you will guys and gals, listen out there. I would love to hear about your deals. I would love to have you share your stories. So if you're listening to this episode, you've got a story that you'd like to share. A disaster story. Love to hear a bad story and a good story. If you've got one of each especially I'd love to hear about it. I'd love for you to drop me an email, tell me about it and maybe we'll do a whole episode on just your nightmare stories in November. Nightmare November. Ooh, I like that. Or things that we're thankful for the deals that we got out of. Well, we could talk about that but do a whole series on some guests there. So if you're listening to this or watching, please drop me an email or leave a message. If you're watching this on YouTube. Great, write a message. But I would prefer you to drop me an email@scottweekclothesnotes.com Tell me about your story. If you can film a short little video of it, will you tell me about the story, Send it over to me and we'll see by having you on a future episode talking about bad beats, basically, I guess you could say. But anyway, if you're listening to this, watch this. If you had. If you watch this beforehand or on Halloween, have a very safe and fun Halloween. This is after it. Hey, I hope you had a great time and we look forward to seeing you all the top everybody go out, make something happen and we'll see all later everybody. Bye Sam.