From Distressed Landlord to Crushing it in Notes with Scott Carson: How Real Estate Works Podcast

You're listening to How Real Estate Works, your one stop shop for all things real estate. Whether you're looking to learn about real estate investing, buying your first house, growing as a real estate agent, and all things financial freedom related, we got you covered with co host Jesse Johnson and Matt Talent.

All right, welcome to the How Real Estate Works podcast, episode five. I'm your host, Matt Tallent, and my co host is Jesse Johnson. I'm excited today because we have our first note investor on the show, Scott Carson. Scott is a nationally syndicated radio and podcast host of the popular Note Closers show with millions of listeners each month. He's been an active real estate investor and entrepreneur since 2002, focused on distressed mortgage investing. For the past 10 years, he's been helping real estate investors and entrepreneurs create wealth through his teachings and strategies. He's also been featured in media outlets such as Investors Business Daily, the Wall street journal and inc.com. he's also a Dallas Cowboys fan, but we let him on the show anyway. Welcome to the show, Scott.

What is going on, fellas? You guys doing all right today?

Yeah, It's Friday.

It's 100 degrees out Friday before the 4th. So I'm thinking lands there in Philly, huh?

Yes. I mean, this was, you know, kind of where this all began. So just saying, it's better than Dallas.

You know what?

I will give you that. I will give you. There's probably not more of a patriotic city in the country besides Philadelphia, but I would tell you Texas is probably a prouder when it comes to state.

Pride than Pennsylvania is a little bit there. So.

Wow.

Wow.

Fighting words right out of the gate.

Let's bring it on.

Yeah, everyone's gonna want to listen to this show because it's about real. So, Scott, Matt said a lot of really nice things about you there, and now I'm going to validate them. So tell me about your real estate background. How did you get started?

Yeah, no problem. I got started like a lot of people did. I graduated College back in 2001, and about a year after I graduated college, I was making good money as a financial advisor. And this was my stuff, making six figures straight out of college for the most part. And so I bought. We bought our first home, our primary house. Loved it, enjoyed that. And then I grew up in a small town and my dad owned a local hardware store so I could basically fix anything in a house. And at that time back in 2002, the market was roaring. It was doing well, especially here in Central Texas. And our realtor's like hey, well you know, you've got great credit, both of you as married at the time. And why don't you thought about being an investor? Like oh yeah, yeah, I thought about that. You only watched that fictional tv Flip this house, you know what I mean? Hgtv, all that good stuff. Yeah, right. Like that's the truth. But so we did, we went and bought two more investment properties and then unfortunately about two months ago, our second one, I got laid off. And the company was employing our tenants because we were buying here in the North Austin area, very close to where Dell Computers is a little small company. They laid off a lot of their staff as much. So our, you know, not only was I out of work, but our tenants.

Were out of work.

And so we went from being a wanting to be a landlord and landlord riches. We ended up becoming a distressed borrower real fast because we were trying to make six mortgage payments on a private school teacher salary.

So.

So through the grace of God I busted my ass, did whatever I could do, got rid of the two investment properties, were able to get a forbearance agreement on our primary residence and keep that and lick my wounds for a couple years. Got back into finance and banking and a buddy of mine that I worked with previously, he was starting a mortgage company with another real estate investor who was traveling the country teaching about creative financing, wraparound mortgages and all that good stuff. And I joined their team, was doing mortgages and basically for four years I kind of had an apprenticeship on the mortgage and notes side of the game. Not only on the origination side, but also owner financing, but then also going to all these conferences, sitting in the back of the room and walked out with a wealth of knowledge on how on creative financing and so doing that, doing well. Mortgage business was booming. And then 2008, we know what happened, the music stopped. So I sold my half of the mortgage company for just a few bucks. Cause that's about all it was worth. A latte from Starbucks. And started jumping on the other side of things. I mean I already started do some real estate, investing in wholesaling and subject to deals and some other things. But when the market really took a dump, I jumped on mortgage side and started buying distressed debt, start calling, dialing for dollars, calling 50, 100 banks in.

A day to see what they had in their books as far as distressed debt that I could buy.

And that's basically what I've done for the last 12 years, is basically just focus. Buying non performing commercial and residential mortgages and Then with the whole goal of.

Trying to buy it and keep people.

In their home if we can, through a variety of different strategies. And if they won't work with us, then we have to go the legal route, like any bank would, to recover our investment and then either sell it as an REO or keep it as a rental or owner finance or do.

That stuff as well, too.

So that's kind of, kind of been my journey. And 2010, I was, you know, I'd been divorced, had a business partnership that went a different separate way, and I was like, well, I want to do something fun. So I'm a big baseball fan, a huge baseball fan, all baseball fan. So I planned this 30 week kind of trip across the country to go and visit all the ballparks, just in theory, just really like right down one night. And it was kind of funny over about five weeks, six weeks, I had a bunch of investment clubs that were starting to pay attention to some of the marketing that I was doing as far as blogs and videos and me sharing some of the deals I was buying. And they all reached out and said, hey, would you like to come speak at our club? And I'm like, yeah, when? And the dates they gave me lined up perfectly with this fictional baseball, you know, and so I was like, okay, that's divine intervention. Somebody there? So I said, okay, let's do this. Yeah, everything I had got rid of them, get rid of my last two flips that I wrote a check at closing because they were underwater because the market tanking. And I thought I would spend 30 weeks in the road, turn to three and a half years of traveling nonstop and speaking about notes, working with banks and asset managers across the country. Saw a lot of good baseball, saw.

Some bad baseball, but saw a lot of great baseball.

And that's, you know, amazing trip. And, you know, I got to see a lot of the country. I am spoken in Philadelphia a couple times and nice time at the Phillies, you know, Citizens bank ballpark. And, you know, that's kind of my story about real estate for the most part, how where I got to where I'm at today.

It's interesting. It's. It's amazing how the magic is actually real, you know, like, you put yourself in the right place, you make the right plan, and like, it's, to use a baseball term, if you build it, they will come. Have I used that twice on the show already, Matt?

No, I think that's the first one.

Okay, cool.

You kind of did it, Scott. You built it and you had this plan, you just didn't know why you were going and the magic is real. So I mean, it seems obvious that you had a massive background in mortgages finance. So it does kind of make sense why you chose notes. But I'm going to ask this question a slightly different way, like how are you using notes to build wealth?

That's a really good question. I'm glad you asked that, Jesse. One thing you realize is the most wealthiest companies out there are in the note game in some sort of fashion. The banks, for the most part, they're taking money and leveraging by either a paying you a half a point on your savings account and then leveraging out 10 to 15 times on credit cards, stuff like that. How we build wealth has been kind of two ways. One is when we're buying notes, we're usually buying occupied assets that we can get reperforming at a substantial return on investment to it to us. So you know, that's the whole point is to build cash flow. Not only are we getting equity and buying the debt at a big discount, but let me give you some numbers as an idea. So say we're buying. We get a mortgage sent to us. Borrower owes 110, 120 because they've been behind a few months, their house is worth 100. If they haven't paid in six months or greater, we can usually pick up that mortgage somewhere around 50, 60 cents of as is value. So let's say we bought it at 50 cents on the dollar of as is value. So we paid 50 grand for the note, which is below 50% of the what's owed normal. We'll just say 6% interest rate on that mortgage. If we get them to start paying on time by say, listen, hey Mr. Mr. Barr, don't know what happened. You get laid off, get sick, you know, can you start making their existing payments again? I know you don't have six months or eight months like most of the.

Banks want you to bring the full amount due.

Can you just start paying a little bit? You know, most borrowers have gone through a hiccup.

They can pay the existing payments.

It's that extra that they have a difficult time with. So if we can get them start paying extra right now at 6%. If I bought it at 50 cents, that's a 12% cash and cash return immediately to me on that. Now if I hold on to it for 12 months and now I can sell that note as a re performing back to the secondary market at 80, 85 cents on the dollar, that's 30 to 35 cents in profit on top of the 12 months of cash flow. And then if I can even get the borrower to pay a little bit extra each month to get caught up on those rearranges, that's a huge windfall of return on investment to me in 12 or 24. And so that's kind of the thing we do is try to get reperforming for payments. And then if they won't work with us, about 50% of borrowers out there just don't want to work. They hide their head, they tell us to go pound sound or stuff like that. Then we go the legal route, start the forego closure process and we can sell that property at the foreclosure auction or take it back and hire quality agents like you guys to sell it as an REO on the open market for us.

Only the best.

Only the best.

Oh, yeah, the best.

Oh, we're singing today. We're singing today.

Wow.

This show is going down in the history books.

Oh, yeah. So, Scott, so it sounds like note investing is basically just buying distressed mortgages and handing them off to a servicer. How involved are your investors and dealing with the notes and the borrowers and everything?

That's a good question, Matt. So it varies. I mean there's, it's not just. I mean, we buy performing notes as well too. You can buy a lot of performing debt at 8 to 15% return on investment. Relatively easy out there as well too.

So.

But there's a lot of due diligence that goes on the front end. I mean, when we're looking at a portfolio from a bank, we're often able to cherry pick or carve out our own tranche or a chunk of. You know, if somebody bank sends me a hundred, I'm not gonna buy all 100. I might buy my make bids on 50 and then up with 10 or 20 because we have to do. You know, there's a lot like you guys would do. Like on a traditional piece of real estate, you're doing an inspection period. You're gonna check contingencies, zoning, stuff like that. We are more interested, yes, we do check on the borrower, I mean check on the property. But we can't get internal inspections on an occupied asset. So we're not only looking at the value in the neighborhoods, but also looking at the borrower. And so we're evaluating that paperwork to make sure everything was and we're able to foreclose. We're also going to review what the payment stream History has been what's the.

Borrower look like before when they were.

Getting financed, where do they at? Kind of now tentatively, from what we can tell going from there. In the debt game, you have to realize you're not really going to, you may not end up with a property. So you've got to evaluate the asset for, okay, what if the borrower starts paying on time again? What they miraculously, you know, find the money and start paying on time. So a lot of traditional investors will come into it and start overpaying for assets because they evaluate it like it's.

A fix and flip deal or that they're gonna take the property back.

We don't look at that way. If we get the property back, okay, we're not really happy with that, we'll deal with it. But our biggest bang for a buck.

Is getting re performing.

So in the debt game you have this consumer finance protection bureau. And so investors can't just reach out to borrowers and start calling them up.

At any time of the night, hey, pay me now.

You know, pay me or get out. That's big violation. So there are vendors out there servicing companies that they handle most of the heavy lifting after the purchase on the note. They're the ones reaching out to the borrowers. Four to eight times a month they're sending out door knockers, sending out statements. If the borrowers won't respond, then we'll move it to a legal side and hire a real estate attorney to start the foreclosure process. But for the most part, most investors don't need to be calling the borrowers because they just screw something up and violate something. Now that doesn't mean that they can't kind of dictate terms through the servicer on here are the options that we'd like to offer the borrower up to go from there. So, you know, you never know when you're getting a borrower on the phone or where they're going to call in to the servicing company. Occasionally we'll have a borrower reach, track us down and call me directly and then I'll say, okay, what's the situation? Let's get the servicer on the phone and then put a plan in place to kind of help them out. You know, if a borrower calls us and they're willing to reinstate or try to do a loan mod, I'm not gonna sit there and delay it. That's a, that's a valuable asset to.

Have a bar who was reaching up.

Say, hey, I'd like some Help. I really want to stay. Can we play ball? And I'm like, yeah, what can you afford? You know, what happened? What's the country western song? You know, you know, did the Eagles blow a big lead and you blew your rent, your mortgage payment on.

Yep.

On the gamble.

Yeah, it happens. Same thing with the Cowboys. Cowboys, what, eight and eight again for this year?

Who knows? But anyway.

The Redskins are changing their name, though, so that's. The Redskins are going to change their name, so there's that.

Well, they need to.

They need to. FedEx just needs to cope up a couple million dollars to Snyder and he'll change it. For the most part, we're talking.

That's a JV team.

You mean we got the Eagles and the Cowboys.

Yeah, right.

JV teams, right. Wow. Wow. Yeah.

I mean, if you do bet on a game and you win that bet, you're doubling your money. So it's 100% return on investment. So not a bad gig. But Kanye. To elaborate on something you were saying, I think note investors a lot of times kind of get posed in like a negative light that they just want to buy these notes and foreclose on the home and take the home back. But a lot of the investors I know who invest in notes, they don't want the home back, they want the note to perform and are more willing to work with borrowers than traditional banks are. So can you kind of shed some light on that, on how you guys, like, put plans in place to work with these borrowers?

Yeah, I'm glad you bring that up because, yeah, when borrowers are in trouble, the bank always comes across as being the big bad bank foreclosing. And most of the time that's not the case. Most of the time, the bank. And in this case, when we buy the debt, we become the bank. So. And we're sending letters out, we're trying to give opportunities to borrowers to stay in their house, trying to modify their.

Payments or offer forbearance agreements up.

I mean, yeah, immediately. When everything happened with Corona, I didn't start the foreclosure process. I'm like, no staff. I was like instantly 60 to 90 day forbearances. And we'll evaluate the market and things after that. It's just what we have to do. Because if I'm going to foreclose now, I've got to lay out attorney fees, then I've got to lay out repair costs. If I got to take the property back and sell it, I don't want to do that. And it drag out 6 to 12 months. I'd prefer to offer up the borrower just cash for keys for them to move on if they can't afford it or to list the property and sell it as a short sale. If so, we want to keep them in that property. For the most part. That's what we're in as note investors.

We're in the note game, not in the property game.

Although we do end up taking property.

Back a big chunk of the time.

It's never from the lack of us.

Trying to keep them in the property.

Most of the time. That's the first aspect of investing is to try to work out the mod. Now one of the first, one of the bigger mistakes I made early in my note investing career is coming in.

From the fix and flip side.

So I was trying to foreclose on anything when I could have modified a lot more.

Sure.

And I've learned that, that it's actually a bigger bang for a buck more profitable for us to keep in the property. Banks don't like owning real estate. They don't like owning reos. It's a non performing asset and they would rather have that cash flow and they can leverage that money with a velocity of capital coming in and going.

Out on a regular basis.

Same thing for note investors.

You don't, you get in the note.

Business because you don't want to deal with toilets, tenants and trash out with contractors. You want cash flow. And that's the beauty of the note business is really not mailbox money, it's digital money.

The first or the fifth you're getting.

Paid on mortgages, coming in electronically.

It's the dream.

You hope. So you buy a portfolio and that's what I always tell people as note investors. Look, it's not a get rich quick. It's going to build wealth, but it's.

Going to take time.

So if you're wanting to say you needed ten grand a month in cash flow, well that could be 20 deals.

You know, that could take 12 to.

24 months to get to. But still a good strategic plan because there's really big, three big things that I love about note investing I think trumps a lot of things. One, we get a lot more deals because a bank will send us stuff on a quarterly or biannually or monthly basis without us having to send out a lot of yellow letters or door knocking or bandit signs or that stuff. Secondly, the pricing point is often a lot better where you're not paying above 60% of as is value or less or paying a Lot less a lot of times. And thirdly, the exit strategies. We've got a variety of different exit strategies whether it's occupied or vacant to.

Really make it win.

So those are great things but it is a different animal than just going.

Out and looking at a property and pulling rates and comps.

You really got to know a lot.

Of other stuff because there's a lot of moving parts.

So what was that thing you said about not having to deal with tenants and toilets? Can you say that again?

Yes, I said we're not the best deal with toilets, tenants and trash outs.

Reverb.

Not ask them. Don't ask what you could do for your country or what your country can do for you. Ask not what you can do for your country.

That was the reverb of the day.

We don't deal with toilets.

I deal with toilets. Point made.

Point made. So no I like so I'm sitting here sold on. I should be doing this right now. How do I get started? So I'm going to ask you a couple of how do I get started questions like I want to find a note so I got X amount of dollars. I want a note, I want it now, I want it to perform, I want all the magic. I don't want to fix a toilet so how do I do that? How do I find a note?

So if you're looking for performing notes that are going to perform right now, one of the best things you could do is start reaching out to other note investors. There's different Facebook groups, there are some meetup groups in different parts of the country. I mean I get non performing, we get them converted to performing and then we're looking to sell them off after.

Six to 12 months.

So it's a small niche community still about. There's a lot of banks that will sell scratching dent loans they call them where they originate them and they have some issues with but I think you're better off dealing with other note investors that have bought some stuff that they're looking to recapture their capital that they put into a non performing bought it at say 30 cents on the dollar and they'll sell it at 70 cents on the dollar where it's a good double digit return to you Jesse and it's a good win win for them too. So just networking, talking with people, you can jump online. There are some note platforms out there that will sell non performing performing notes. There's not a true like MLS but there are some different websites like Paper Stack or Exchange loans is a newer one Watermark exchange Out of New York.

Is another one that has some stuff.

So just varies on how much you're looking and where you're looking to buy.

For the most part.

Excellent. Let's say in my real estate investing world, I love the syndication. Again, I don't want to have my hands in it. And I, and I like the, if I'm getting the return on investment that I want, I'm good. Is there, is there a true syndication world where, you know, could, could I give you my money and you can give me a, you know, dependable return on investment?

Yeah, I mean we've got a fund that we're working through to get finalized, pushed through for, for that. There are a few different funds out there. They're investing in some different asset classes. So I would just say, yeah, let's jump on a phone call, talk about your wants and needs, what you're looking for. I mean, if you're looking for a double digit return in a syndication, you're probably gonna see like 8%, maybe 10%.

In some funds, which is not bad.

If you're not having do any of the work. But if you're wanting a higher return on investment, then you might have to get your hands dirty a little bit.

By doing some of the workouts yourself.

And that's what's a lot of people, especially as you get older, people like to performing outside because it's kind of on automatic for the most part. But everybody in this world who's a note investor, it needs to understand the distressed side because we're in a land of distressed assets right now and we're going to see a whole lot more non performing notes over the next six.

To 12 months than performing, I think.

I agree. I think there are people who overleveraged in the investment side, not necessarily on the primary side. And I think we're going to see a little bit deleveraging happening there and I'm excited for that.

Yeah, it's like history repeating itself. When I got started doing this stuff in 2008, 9 and 10, we saw a lot, especially commercial loan. I think commercial paper, it's gonna hit the market first because that's taken such a bigger hit, they're not gonna have as much of the bailouts. And you look back 12 years ago, that's the stuff that I was first buying with some smaller commercial paper. Especially the million or less balance on the bank's balance sheets because they want to get that stuff off the 1 to 5 or the 5 million greater. There's plenty of people that Will handle that. But the sub 1 million value, sub 1 million loan amounts, those are gonna take the biggest hits. I bought a lot of apartment loan paper back then 20, 30, 50 units where the owner of the property, bought the property, thought they would get it leveraged, get it re gentrified, increase the rent, increase the cap rates, increase the values.

They didn't count on the market tanking.

Their whole goal was to get it, recapitalize it and then get it refinanced out in three years and pay themselves.

And their investors back.

Well, when you have a market drop, the banks can call and say hey, we need you to recapitalize, bring 20.

25% cash to the table.

When they don't have that becomes a non performing note. And then the banks turn to people like me to come and step in and buy it. And then I have the options to either A work with the borrower if they're doing a decent job or B said no, this isn't working, take it over receivership and start collecting the owner, it's myself, and then sell the assets. So it's, if you know what you're doing, you can pick, you stand to gain a lot of wealth being transferred.

Here in the next 12 to 24 months. All right, cool. Then before we hang out, I need a, I'm looking for a referral from you guys too, if you've got one too.

So.

Yes.

Okay.

All right, Matthew, you're up.

Okay. So Scott, like if a normal person starting out wanted to get started in node investing, what's like the barrier to entry? Could anyone with $5,000 get into this? Or is this something a more seasoned investor with like $50,000 can do though?

We get, we have investors that get in the space with $0 and then we've got people that get into it with a half million dollars. Those that have, don't have any funds. You know you're going to have to market for raising private capital. You know, you're going to have to go to your local real estate club. You have to reach out to your warm market. The beautiful thing is, you know the deals make, if you find a deal, there's money out there. I mean there's seven or nine trillion dollars sitting in retirement accounts not making or earning anything and a lot of money sitting in self directed accounts literally making zero. So if you find a deal and understand it and break it down and know how to market properly, you never want to say the word guaranteed rate or risk free or stuff like that. That's not what you want to do, it's real estate there. Otherwise there's a risk associated with it. So something with 0%, you're just or no money. You're going to want to get started by going and finding deals. Maybe start wholesaling notes like you can wholesale a piece of property, find it, get in their contracts and sell it to an investor like me or somebody else and start building money that way. Start networking and finding investors out there. I mean, look at this. Here's one thing I'll tell you. If, if Warren Buffett is raising capital to do deals and not using his own funds, you can go out and raise capital, do your own deals. For those that have money sitting on the sidelines and using their money to start off with, there's nothing wrong with that. I just see those investors struggle long term because they don't put those marketing tools in place. They're not building, creating a list.

They're not.

Building their presence online so that when they do run out of their own funds and they got a great deal, most of them will just sit there, well, I don't have any money. I can't do this deal. Well, if they would have been marketing all along, they could have done bigger and better things. So we've got students that started out with nothing that have now closed on 120, 130, 250 assets by using other people's money to take, take it down. So you just like anything else, you got to get trained, you've got to learn what to do. There's a lot of videos on YouTube, a lot of blogs out there, several podcasts, including mine, the Note Closer show that teaches a lot of this stuff. So that's the biggest thing. You got to be a student of your business, anything like anything else. Start off by learning the basics and then grow as you learn.

So here's the chicken or the egg question. What's better? Should I, if I want to get started, I'm a newbie investor, should I go out and find a deal and then raise money, or should I raise money and then go find a deal?

You're never going to find somebody.

An investor doesn't take you seriously unless you've got a deal. So here's the thing. Go find your deal. The beautiful thing is that there's, you know, there's plenty of real estate investment clubs, meet up groups all across the country, whether it's locally or somewhere there that you can market to. So the biggest thing I could tell you is, listen, just go find a deal, make sure. Talk with somebody who's a note investor and identity, make sure it's a good deal and then market it. You know, hey, here's the reason this deal is great. Here's the reason this deal is awesome, you know, and I'm not brand new and everybody's got start somewhere but then rely on your team. Hey, I've got a servicing company, I've got a mentor, I've got a team of realtors in that city. I've got real estate attorneys, I've got servicing companies, I've got people that will help me handle all of these things so that I'm not the.

You don't think that I'm the guy.

Going out trying to do it all.

Sure. And it sounds like you're not like you're not sending out mailers anymore. You're not making one to one calls for these deals. So it sounds like a lot of banks are coming to you now and saying, hey, we have these notes, how do you build that pipeline?

So that's one of the things that we teach is show people how to find. There's literally some pretty free resources for you to be able to pull list of asset managers. I mean you could go on LinkedIn right now and type in special asset manager or secondary marketing manager or whole loan trader and find thousands and thousands of these professionals out there that handle this for the banks. So what we, what I started doing, I was, I would dial for dollars. I'd pull a list of 50 and crank out 50 to 100 phone calls in a day. Most people aren't going to do that, but that's okay. You can jump on LinkedIn. You can use a service like Bauer Financial and buy a list of banks. And Bauer Financial is a ranking system, ranks banks and you can see who's gone up or gone down. You can jump on lane guide for 160 bucks a year and it'll give you internal numbers to call these departments. So it's not that difficult. Most of what we do is we send an email out. After we build a list of asset managers, we'll send out a list, just an email to them once a month. Hey, what do you have in your books this court? What do you have in your books this month? And just do that on a regular basis for those that open. Then we'll follow up with a phone call to those that open up or go on to LinkedIn and track them down that way too.

Okay.

So it's interesting, you know, now it seemed to me like the market has Been pretty good and there's not been as much distressed debt. Where do you see the market in the near future in the long term, you know, in the next year to three years?

That's a really good question, Jesse. I would see we were, in 2010, we had 15 million homeowners underwater. So when everything happened in 2008, it took a while for everything to kind of filter out. With states delaying foreclosures, Attorney General's just stopping foreclosure proceedings, governors putting a moratorium on the foreclosure and eviction process. So here's where I see the market being. I don't think we're going to see, I mean we still see distressed debts. I still see non performing assets. I mean the national default foreclosure rates around 2 to 3%. I think it was up to 4.4% at the first quarter because of some things. So we'll, we'll see it start to trickle back up. What's going to happen is, as I think I mentioned beforehand, we're going to see more non performing commercial debt hitting the market first. With Fannie, Freddie and others kind of kicking the can down the road and doing six month forbearance agreements and then with the idea already in place to do a secondary forbearance agreement. Especially if we see the numbers continue to spike and we end up having more stay home orders, the banks are just going to delay things, especially the government backed banks. Now the biggest impact we're going to see is when the states do open up or the counties do open up and start allowing foreclosures, evictions. I don't think it's going to be your federal bank stuff. It's going to be your smaller investor, your owner financed bank, owner of the property, owner financed property who can't afford for the property not to be generating income, rents or some sort like that. So next six to 12 months we'll see it start to trickle in. But after the beginning of the year, after the election, I think we're gonna start seeing several waves of foreclosures hitting the market depending on the state that it's in. Some of the states that have faster foreclosures will be faster start debt. States that have longer foreclosure precedents, it'll drag out as they try to figure things out. So it's, I don't know if it'll be as bad as 2008, 9 and 10 were, but I think it's good. We're gonna see some blood in the water. For sure. So the best thing I'm telling people right now is like between now and the end of the year, start learning, start putting your systems in place, put your vendors in place, start that marketing aspect. So when things do hit the fan like we know they are going to, you'd have to be blind not to see that you've got these things, you've got your systems, you got your things in place. That way you're ready to rock and roll and really capitalize on the downturn by and being able to help, as I say, make America great again. One defaulted mortgage borrower at a time.

Yeah, go ahead.

I think it's important to note too about forbearance that these banks aren't just doing you a favor and saying, hey, we'll just pick up your mortgage where we left off in six months. They're going to want that money back at the end of that six months. Is that right?

It's going to depend, it's going to be on a lender by lender basis. I've seen and talked to some banks that they're just going to put that in the face of the loan and extend that person's loan by six months. Others may want the full six months of payment. So I don't, it's going to vary by state by state and lender by lender on that aspect of things. So what I, what I worked on our portfolio, we're just saying, listen, we'll just extend the term or for every $100 you pay extra to get caught back up, we'll forgive $100. So it's, it's, it's hard to say. You really need to. If you're listening to this and you're going to go into fairbearance agreement, you really need to reach out to the bank and ask out, hey, am I going to be due full six months in six months or is it just going to, are you going to extend my premium? If you have a government backed loan, it's probably just going to go on the face amount of loan, your term be extended six months. If you don't have a government backed loan, you may have to write a big check in six months or figure something else out.

That's fantastic.

Matt. I think we should go, I think we should go with the question for us. I think that's probably appropriate right now since we've asked him a ton of questions.

Yeah, no, I agree.

So the question I have for you guys is where, what are your goals for five years from now? Now God knows, back in 2015, when people ask that question, we didn't expect. Stuck at home for 90 days, veggie out and chips and cheesecake.

Yeah, no, don't see that coming at all.

But you guys, but knowing you guys, you both have some plans in place. So I'll start first with Matt. Matt, kind of what's your five year game plan? What you're going is it. And we all know there's gonna be ups and downs, but what is something that you set for yourself in the next at least 36 to 60 months?

Yeah. So I really like the rental property investing and I like living in them and fixing them up. Cause it's just easier to tackle it that way. You get lower down payments and everything like that. So I could see myself moving one or two more times and then getting into the bar investment game because I like the touchy feely part of real estate and doing like not. I'll probably move away from doing the work myself and hiring it out more as my time dwindles down. But yeah, I really like the fixing up of properties and everything. So I see myself in five years, hopefully growing a portfolio of rental properties.

Wait a second, didn't you just get engaged?

I did, yeah.

Is your fiance on board with living in a rehab and then flipping and flicks and moving on? Because that's the big question. If mama ain't happy, ain't nobody happy. So is she aware of this?

I think so.

That doesn't sound very confident.

That's where the burn busting comes in. Can't move forever.

That's like thinking. I think Carson Wentz is going to play all 16 games. Yeah.

Oh, exactly.

Yeah.

I think after we stop the recording here, we need to have a conversation with Matt Scott. Like we just need to.

We gotta come to Jesus meeting. Yeah.

So sorry. Let me tell you how this doesn't work.

Anyway, so Jesse, what about yourself? Where do you see yourself in 36 to 60 months?

So I'm actually writing, currently writing my 2023 vision. Just finished the like we were kind of in the middle of the 2020 vision. And I'm one of these people that believes in like you write that shit down. Like that's like anyone that I teach, Matt has heard me say this. You write it down. Whatever you want, you write it down. And that is almost good enough, believe it or not, because most people won't write it down. So I'm writing down what my goals are and specifically in the next three years, I want to buy two, three to Four unit buildings. As each one, you know, potentially one is a primary residence for a short period of time and then another one. And specifically that is like, they're each one for each of my daughters that. That's gonna pay for college if they don't get scholarships. Cause I am prepaying for college right now or. And weddings. And, you know, when they're done using it, you know, they can take the equity out of it for whatever. But I see that as a.

That's.

That's the most important thing then secondly is creating. I came up with like three Cs for myself, and I'm trying to remember them, but, like, it had to do with creativity and. Oh, cash flow and the third C. So there was three Cs. Matt knows I like things in threes, but the creativity and it was the idea of basically creating a lifestyle where I have options, I have enough cash flow where I can. Where I have the. I have the ability to think creatively and do what I feel I want to do. And so that's, in a way, it's very, like, big picture still, because I haven't gotten it down to the nitty gritty. But I believe 100% of that has to do with. I do not fix toilets. I do not fix toilets. I do not fix toilets. So it will be finding creative, passive investing that allows me to use my brain to create opportunities to. For myself and others to create cash flow. So that's where I see myself.

Nice. I love it. I love.

Yeah, you've got a. I think Harvard proved it.

If you write your goals down, you're 50% more likely to have them happen.

Yeah.

And you'll write them down and then post them. Sharing them. That's one of the biggest things, sharing with your friends, families, and so they can hold you accountable. That's beautiful. I love that.

I'm working on, like, a whole thing where you write that shit, you share that shit, and you let somebody hold you accountable to your shit. So, like three S's. Three S's.

Beautiful.

And then there's the. There's the. Then there's the repeat where you go back and you're like, do you still want that shit? Like, you know, so. But yeah, so that's. I'm excited about that because I'm in the midst of it. Like, I'm feeling it right now. So I'm so glad you asked that question.

Good stuff. I love it, man. Yeah, we're constantly. I think a lot of people have taken their 2020 goals and throwing them out and I'm like, just gotta adjust them a little bit. You know, the thing I look at too, this might be God's way of saying, hey, we all need to develop a little bit of a side hustle or focus on our marketing and trends. If you're not in a spot where you can do things online, you've got, you've had a 90 day window to get prepared for new reality. And I think that's a big thing for everybody is looking at your numbers and figuring, okay, do these goals really fall in line with where we're at right now? What do I need to adjust to hit them?

Exactly. So I said to you earlier that the magic is real. And I'll tell you this, I so believe in this. And I'm so off on a tangent, but I wrote down 20, 20 goals that I would be able to compete in a triathlon, which I came into 2020, probably 30 pounds heavier without, like looking at my goals. And like, I probably could suffer through a short triathlon right now. Like, I could definitely, like, I would get kicked in the face a few times on the swim and still push through. So I definitely, like, I feel good about that. I said I would be 100% consumer debt free, meaning I'd have no other. No. And I was like, there's no way that's going to happen now. And literally, like, I just paid 50% of my consumer debt off in the last week. So. So, like, when you write stuff down, it definitely, it definitely works. And, and what's amazing about it is if you asked me in January if any of it was going to happen, I would have said it seems unlikely. It just, I just would have said it seems unlike. I would have definitely not said no because I don't, I don't do definitives like that. But it felt unlikely. So I think again, like, you know, the magic is real and it happens when you are willing to be vulnerable with yourself and put it out there and you know, so I'm so glad that you asked that question.

Like, you totally hit the right, hit.

The right button today.

Ding, ding, baby, that ring, that victory bell. There we go.

Yeah. Or the, or the Liberty Bell because Philadelphia is better than all of Texas.

Just saying had to go there.

Careful, careful.

A lot of love here.

Exactly. Exactly.

Scott, thanks for coming on. We learned a ton today. I definitely learned a lot more about node investing, so I'm really excited to learn more and keep growing.

Yeah, no problem, guys.

Honored to be here.

If your listeners would like to. I'd Be glad they can download my book on kind of how to get started in note investing by going to noteblueprint.com freebook. It's a free download 73 page book that they can kind of dive into and kind of get their feet wet. Learn a little bit about it. And we've got thousands of videos on weclosenotes TV which are YouTube channel for them to go and watch and learn and go from there. So but honored to be here guys. And for you guys that are listening to this, do Matt and Jesse a big favor. They need all the help they can get but they're doing amazing stuff here. Go out to itunes, hit that subscribe button and leave them a five star review. They love it and it's one of the things that's podcasters that we love to see, so. And also you may want to check out their episode on my podcast that should be airing here in the next week or two on the Philadelphia real estate market.

Yeah, go check out the no Closer show.

A lot of love.

A lot of love, guys. That's right. Same here, guys.

By the way, that's the other lol. Lots of love, Justin.

Exactly. There we go.

Can start making bed Beth and beyond signs now, Jesse.

That's right. Well it's gotta be something because BB and B is gone. So maybe it's, it's, maybe it's the LOL store. Lots of love.

Lots of love. LOL. I'm trademarking that in about 30 seconds just so you know, because Scott, you're pretty smart and I see you're like, alright, I can, I can, I can sell really sweet smelling hand sanitizer. All right, we're ruining the show right now.

Yeah, exactly.

Bed Bath beyond stock in their inventory and then just relabel it.

Lol.

Buying debt, baby.

All right everyone, thanks for listening. You can join us weekly on Spotify, Apple Podcasts and YouTube. Please subscribe and leave a rating or review. It really helps us out. You can find out more about me at callphillyhome.com call phillyhome at Instagram or email me at matt.talentompass.com and you can find out more about my co host Jesse johnson@how realestate.com Jesse Johnson on Instagram and email him at jesse.johnsonompass.com.