How to Get On the Right Side of Note Investing w/Scott Carson in The Kevin & Fred Show with Kevin Kauffman

Welcome to the Kevin and Fred Show. I am your host, Kevin Kaufman, and along with my business partner and co founder, Fred Weaver, we bring to you our podcast, the Kevin and Fred show, where once a week we bring to you a expert interview. Every single Monday, we interview one of the brightest and best in the world, usually in the real estate space, sometimes in technology, sometimes in entrepreneurship, sometimes just in forward thinking. The things that are going to help us learn to move forward are the things that we're interested in bringing to you on this podcast. So we don't keep it limited to just real estate agents and I think you'll find that really valuable if you've been listening or if you're a new listener. All in the same. We also bring you once a week something we call Industry Headlines, which is a look at what is going on in the real estate world. What's happening in the mortgage space, what's happening in the technology space. Bring that to you in a short form, 10, 15 minute podcast at the most once a week on Wednesdays. We're also a proud member of the Industry Syndicate family of real estate and mortgage Podcast. Check out that app in the App Store. Again, that's Industry Syndicate. And if you would please do us a favor, please, please, please leave us a review, download, subscribe, share an episode with a friend. We would love it. There is no better way to say thank you, except for maybe a real estate referral because we are, after all, real estate agents and we love real estate referrals. We're based in the Phoenix area and would love to hear from you. Thank you for tuning in to the Kevin and Fred Show. Hey, it's Kevin and Fred. Do you have a referral for us here in Phoenix? There are 30,000 agents here that you can send them to. Why us? Well, for one thing, we'll keep you updated and you'll never have to track down your commission.

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Hey guys. Welcome back to another edition of the Kevin and Fred Show. Today I am joined by note buying expert Scott Carson. Scott and I met in a unique way. Well, unique for me. And at least we're having guests on this podcast. We connected over LinkedIn and after seeing Scott's background in history, I knew I had to get him on the show. Scott is the founder and CEO of a company called We Close Notes. We Close Notes is based in Austin, Texas and they, they specialize in buying defaulted notes. So they go out and they find non performing notes on residential and commercial properties and they purchase those notes for their own portfolio and then service them and in some cases flip them, some cases work out new arrangements, all sorts of different exit strategies, which we talked about quite a bit here. He's also got his own podcast called the Note Closure show, which has millions of listeners across the world. Scott is also an investor, entrepreneur, marketer, and featured speaker. He's a cool guy. He brings a lot of energy. I think you're going to dig this.

I know.

I definitely enjoy this conversation. So without further ado, I bring to you, Mr. Scott Carson.

All right, guys, we're back with another episode of the Kevin and Fred show, expert interviews. And today I'm joined by Scott Carson of the Note Closer Show. And Scott, first of all, I just want to, like start off with talking about how you and I met. We actually met on LinkedIn. Right? You reached out. I saw that you, you run a company where not only do you buy mortgage notes, but you are helping others to buy mortgage notes and kind of learn that game. And that just jumped off the page at me. So I'm excited about this conversation, man.

Well, I am honored to be on here and to serve your audience today. And you know, yeah, LinkedIn is a very powerful tool out there for those out there. We use it a lot for in our business. Not only help me get booked on more podcasts, but also add people to our podcast and connecting the podcast family. So welcome to. We're podcasting brothers now. Whether you believe it or not, there for you. And, you know, that's the big thing. We use it a lot to book with banks and asset managers that I'll get into in a little bit here to really drive our prospecting for real estate deals versus a traditional type of, you know, yellow letters, door campaigns, you know, bandit sign stuff. We do it all very evergreen these days.

Awesome, man. Well, I'm excited to dive into some of that stuff. But before we do, like, give us the, give us the pitch. Like, who, who is Scott, man? How, like, who are you? And you know, where'd you grow up and kind of get into the business and let's take it from there.

So Scott Carson enjoys Crown Royal and Sprite and limes, a good Cuban cigar on a Saturday night. Now, Sol, I like my chicken fried now. Previous mortgage banker, financial advisors. When I graduated from college with a business degree and kind of got into the banking side. And a buddy of mine started a mortgage company back in 2004. So I started working with him and for four years was kind of unique as I had kind of a, I'd say a paid apprenticeship, an internship. I was doing mortgages. We were doing, you know, Investor loans in 30 states in the heyday of mortgages, 2004 up to 2008. But I was very fortunate that the sponsoring broker for a mortgage company was traveling the country teaching creative financing, owner financing, wraparound mortgages subject to financing, and then also distressed notes and, you know, buying notes and paper from banks. And so for four years I really got a chance to learn that side of the real estate business on the investing side where I was doing traditional mortgages and stuff like that. And then of course, the music stopped in 2003, 2008 with everything. And I sold my half of the mortgage company for a dollar. Probably got overpaid for it with the market.

I was going to say, you probably got like, you got top of the market value.

I got top of the market value, yeah, for my share, whatever. But then I just started, I jumped ship and I started doing, start dialing for dollars, you know, started making phone calls to the banks and asset managers that we had originated from and as creating loans for going out and starting to reach out to them to see what they had in their books. That was ugly. You know, I had some hair on it that their problem mortgage borrowers that they want to get rid of and just started getting lists sent to me, started cherry picking those deals by buying the debt at a big discount back then pennies on the dollar and then becoming the bank and then, and trying to work out some sort of agreement with the borrowers to either keep them in their house. Okay, so you want to stay, you gotta pay. Let's figure something out. Makes sense. Yeah, I know you owe 150 grand and your house is worth 70. Let's, let's create something that makes sense here because I bought it at like five, you know, five, ten grand. And then, you know, I was getting these lists all across the country, could do it all. So I said, okay, let me start teaching people how to do this because there's enough to go around. And I get so convinced myself that, hey, I really need to get out on the road. So I sold everything I owned here in Austin, Texas and I thought I'd jump on the road and drive around for 30 weeks to enjoy the baseball season and hit all the major league baseball parks. And that 30 week trip turned into over three and a half years of nonstop travel of speaking at real estate investment clubs all over the United States, speaking internationally on cruises and then also buying a ton of debt. And I look back now and it's been a crazy 10 plus year ride. And we bought over a half a billion dollars, thousands and thousands of properties and notes that we bought and became a bank on. But one thing I'm most proud of is the fact that I've helped a lot of other investors out there get their toe in the water, learn that it's not as complicated as you would think it would, a lot of people make it to be and learn how to be a debt investor.

So let's do this, let's slow down for a second, let's go with the basics. So like on your website I believe it says something like we buy and sell non performing notes from banks and hedge funds. Let's start with that. What's a non performing note?

Well there's a lot of non performing notes right now in the industry out there.

Precisely, yeah there are.

So I'm buying mortgages on residential and commercial property. So I buy the debt, I'm only buying senior liens first liens. And a non performing note really is a mortgage where somebody is at least 90 days late or more on their mortgage. They haven't made a mortgage payment, they're not in a forbearance agreement, they just haven't paid. They're sticking their head in the sand. They're not talking to the banks, they're just trying to avoid the mailman and the, the 1, 800 numbers coming in on caller ID from the bankers. So I buy that debt at a discount because the bank is like okay, we for a bank to do what they need to do. The banks don't want to own real estate whether you believe it or not. They just want, they want the mortgage, they want the payment stream so they can leverage it. For them to take a property back as an REO is a big failure for them for the most part.

Totally agree.

Okay, so I built my career on.

That premises by the way.

Yeah, same here man.

Yeah, all I did was short sales when I first got in the business. So I built my career with that solid belief that the bank did not want to own real estate no matter what any other real estate agent or any bank employee ever told me. And you're preaching to the choir there.

It'S totally the truth. While I was doing, started off doing this, we're doing short sales in 30 states, you know for investors and trying to buy the debt and then sandwiching by buying the mortgage at a big discount, approving the short sale and then coming out even sweeter in the back end to a regular buyer. So we buy the debt discount and we make the most of money, most amount of money though, by keeping borrowers in their houses actually.

Yeah.

So if they're, you know, 12 months behind, haven't paid, but maybe they're back to work, they just can't come to that full year of back, you know, back payments. I think we're going to see that in six months or 12 months when these forbearance agreements change people. Yeah, great, I want to stay, but now I can't. I don't have savings. You know, before this all happened, looking back six months ago, I was, you know, one in 10Americans was already a month behind to their mortgage payments. And so we're gonna, it may not be as bad as 12 years ago, but we're gonna see a lot of stuff. But anyway, we buy the debt at a discount. The fact that we buy like $0.50 on the dollar, $0.70 of the dollar or less, gives us a lot of flexibility to work with the homeowners by trying to create a loan modification, a trial payment plan. If they won't work with us, then we have to go the legal route and foreclose. But you know, I just approved a short sale about 30 days ago on a property that we bought the note on a while back. The borrower had a buyer that wanted to fund it, needs some work. So we were able to negotiate down and make a win win across the board for everybody. And that's what I do, is I try to keep people in their houses by buying the debt. And as I make the joke, make America great again. One defaulted borrower at a time.

Solid. I love that. Okay, so I've got a question. I'm just gonna, I'm gonna scratch the itch here. Help me understand, help the listener understand. Why would a bank want to say, sell you their non performing mortgage note for whatever. I don't care what the cost is. You know, whether it's $0.50 on the dollar or $0.10 on the dollar versus, say take it back as an reo or even short sell it. Right. What is that? Is there a certain thought process or type of mortgage like what's, how does that work?

So let's get something clear. We're not, I'm not going to buy a mortgage from bank of America, Chase, Citi, Wells Fargo, they're just way Too big. I mean, even though I know the right parts of the right person at Citibank and I've talked to a couple of them, they're not going to sell a one off mortgage. It's not in their value to sell it because that's all mortgage backed securities, stuff like that. But there's a lot of regional banks, a lot of smaller banks creating stuff like that that'll debt. And a bank would rather sell you a Note off at $0.50 on the dollar to an investor like me because they recap 50%, they'll write that other 50% off and they can go out. And by the way that they, the velocity of capital, making loans and leveraging funds, they can make that 50% back roughly in 12 or 24 months versus taking it and then having to pay usually two to three times to foreclose what it would cost you or me. And then of course they got to repair the property. That's going to cost a buttload of money for them, which they don't want. They want the cash flow. So if a property sitting on the market for 612 months, it's 100 grand, 150 grand of their money that they could have probably flipped 10 times in the mortgage markets.

Yeah, correct. So correct me if I'm, if I'm wrong here too because that, you know, I'm gonna for a second pretend like I know what I'm talking about even though I don't. So I mean that's like that I was almost at hashtag fractional banking, right? It's like more valuable for them to take the, call it the 50 cents on the dollar, relent that out, take the write off for the other 50%. Because it's not like they only can lend out $1. It's like when they get a dollar back, what is it they can lend out? Was it 10 or whatever the number is.

So here's a scary number. Back in 2010, the banks were leveraged 15 to 1. So for every dollar they come in, it was at 50. It was lent out 15 times. What do you think the number is now? Take a wild guess.

I literally, my stomach literally just dropped at 15 to 1. I'm guessing based on that, based on look on your face, 20 to 1.

Try 52 to 1.

So for every bank, so for every dollar I have say in my savings account, if you will, they can lend out 52. That's what they have lent out.

They've got the ill ability to lend it out, leverage it roughly in the 50s when you look at everything and how they've all got it set up, that's why banking is always the biggest companies for the most part.

Yep.

That's why you learn the leverage aspect of things. And if you, they're lending you 50 cent, they lending you half a percentage point on your savings account. Okay, half a percent. But they go out and they're making, they lend it at a car note at say 6%. Let's just say their mortgage at 6%. That's not five and a half times. Okay. Or that's not five and a half percent interest difference. That's 550% difference.

Yep.

That's why banks and it's good to be the bank. And what's unfortunate, Kevin, everybody that's listening to this, everybody's listening to this podcast episode or watching this video or listen, whatever, everybody's in the note game already. If you've got a mortgage, a car payment, student loans, credit cards, medical, you're in the note game. You're just on the wrong side of the payment stream. All right. My goal is to get more people on the right side of the payment stream receiving versus the giving. All right.

Yeah. So how does, so okay, gosh. So give me some more info on that. Like, so how do people get more into, or I should say they're already in. We're all already in. How do we get back? How do we get to the right side of that game?

So that's, that's a really good question. And if we can take it a couple ways, if we go the traditional just regular mom pot, there's a lot of great things out there in buying. You can buy performing loans, loans that have been performing where people haven't lost, you know, lost their jobs or their owner financed a property and they've been paying on time. You know, that could make you an 8 to 12, 8 to 15% return on investment for you. If you're wanting to be a little bit more aggressive, non performing where you're doing the workouts, but then you've got to add in the legal side of things. I mean you're gonna buy stuff a whole lot cheaper. The underlying property still has the value. They may be way upside down their mortgage, but property, they just got to work with the homeowners. And that's going to vary on your time frame and costs on a state by state basis. So you're in Arizona. Arizona's got a pretty relatively faster foreclosure market. Not quite as fast as we here in Texas. Yeehaw. 21 days to foreclose here. But you sure you don't want to buy debt in New Jersey which take you two years to foreclose?

Yeah. Or California.

Well now California has been a little bit of a mixed bag the last couple years was, I think it was three years ago they changed the homestead laws. So if it's a homestead, it is a judicial foreclosure. You gotta go about 12 months to foreclose. But non owner occupied investment property, it's a non judicial foreclosure. So it's relatively quickly. So it's got its pros and cons in Cal. I mean look, California is a land of fruit nuts and with all the droughts, the fruits all dried up, just a bunch of nuts there. Okay. And then you know where they're moving? They're moving to your state and moving to my state and buying stuff three times cheaper than it is in California and putting that 3, that 200 extra percent in the bank.

Yeah, there's you know, it's something to go, to go backwards for a second too. You said, you said something about you know, kind of buying performing versus non performing maybe think of, there's a hedge fund manager, I guess I've got his memo, one of his memos right here by the name of Howard Marks who runs a company called Oak Tree Capital. And early in his career he like, he really took off buying high yield bonds or junk bonds. Right. And he talked about how like he actually talked about like the way he made so much money was the fact that he was, he was, yeah, he was taking a little extra risk but his payoff was infinitely higher than something like you will, that seems safer or you know, looks safer anyways.

Well, I don't like to use safe. That's a four letter word. Yeah. So it's risk. The thing is when you buy a non performing there are more moving parts. You've got to try to get the borrower back on track. And that's our biggest thing is trying to keep the borrower back on track. So when we buy a non performing note, we do a very extensive reach out, you know, phone calls, letters, door knockers, trying to see what the heck is going on with a borrower that takes vendors to do that once you've got the skills. And most real estate investors, they come from oh flip this house or Flip or Flop or whatever it might be. Those fictional TV shows that we all know aren't A and E, which you know are not accurate. That's their kind of experience where they go on to local real estate clubs, and they're starting to dabble in. That's great. Note investing is a whole different ballgame. You know, I've seen people get hurt because they approached it from a fix. And flip side, you've got to think of it as a marketing side. So, like, one of the biggest things I see a lot of people screwing up with it come over is they'll look at a list we get from banks. Like, we'll get a list and call it a tape with a spreadsheet that may have 10 to 1,000 mortgages on it that we can cherry pick from. All right. That's one big advantage I love about notes, is that we're often getting a lot more deals closer to the resources at a lot cheaper prices. So they'll look at it. Most investors, when they see a property that's got a lot of equity, they get excited, oh, that's got a ton of equity. I owe the bankless with us. That's a big no no for us, because if we were to buy that note, most of the banks, when there's a bunch of equity, they'll sell that note close to payoff. They won't give you a big discount saying, oh, you'll get paid back. So let's use some numbers. $150,000 valued house guy only owes 100. The bank would probably want us to buy that, like, at 90 cents on the dollar, which is not a good deal because when I have my cost in there to foreclose, my maximum bid at the auction could be my payoff amount might be 100. Okay. Which that's not really exciting to make a few percentage points. If it sells for, like, say, 140, the auction and my payoff is 110. Well, that extra 30, 40 grand doesn't come to me. That goes to the borrower. So a lot of people make those types of mistakes, not know what they have. You always have to approach it from a banker's mindset. It's a different mentality. I don't get excited about paint and carpet. I look at dollars. I look at, you know, spreadsheet and formulas and stuff like that to figure out. I mean, obviously, value is important. Condition of property is important. I mean, that's a big thing, too, is that we are not gonna get interior views of properties. There's somebody living in it most of the time. So we have to make our bids based on the idea. Okay, what's the exterior look like? What can we learn from evaluating the loan file by looking at the servicing notes that the borrower had with the previous bank, any notices, any other documentation from when the borrower took out that loan and determine, okay, you know, we know we're gonna have to put paint and carpet in almost every house. We take back a little bit of cleanup, you know, and it's a rule of numbers. And we know that out of say, 20 notes we buy, we may only have to do some heavy rehab on two to three, if you really know what you're looking at. And I actually, you're going to make more money and have it easier actually buying occupied assets versus vacant assets. Vacant properties. We all know what happens with vacant properties. You know, the air conditioning goes on vacation. The copper goblins showed up. If it's in like a northern part of the country, your basement becomes an indoor ice skating rink, you know, or water feature, you know, so it's, it's a different mindset. You got to really know your due diligence and you got to kind of, you got to learn the business. Like short sales, that doesn't come easy. You got to learn the ropes. You know, it takes a little while to do it like anything else.

So, yeah, let me ask you, like you mentioned, like, you know, most people, they, when they think of like real estate investing, most people go to flip. You know, that's the first thing in their mind, maybe wholesale or flip or, you know, and my, my hunch is probably the third thing they go to is rentals right now, right now, excluding the kind of the COVID 19. Just for, for, for context, we're recording this at the end of May 2020, so in case you're listening to this in the future, we are still not quite out of the COVID 19 situation, so. But this would have been relevant three months ago, maybe Airbnb, right? From like a short term rental type of viewpoint or mindset. Why? I don't want to say why one over the other, but why, like why would somebody choose to go down the road of investing in notes versus, say, flipping property or even buying something for rental, whether short term or long term?

That's a great question. I'm so glad you asked that. So here's the thing. In the notes space, nobody calls the bank when little Timmy flushes the birdie down the toilet. Okay? I'm not having to deal with toilets, tenants and trash outs for the most part, so I don't want to get those phone calls. It's up to the borrower to make up the property, to keep the assets up, you know, to make sure everything's repaired, stuff like that. So we get paid. The bank always gets paid. That's the beautiful thing. And so the fact is, a lot of people don't want or get tired of doing that over a period of time. They get tired of sending in people. Yeah, they may have teams that do that, but they get tired of going in, having to make up that property, clean it out, and put new paint, carpet down. Me as the bank, and we don't have that many switchovers. As we get to foreclose, we sell the asset off. The only thing I want to really retain, for the most part, is performing notes. People that we've gotten back on track because the return can be through the roof. Here's another thing, pricing points. We talked about this. Why do people get in? Because a, we're not having to search, and we all know it's kind of tight. It has been tight out there for people to find a deal that makes sense, right?

Yep.

I'm not paying above 65 cents as is value. I'm usually paying way below that for the most part. If you're dealing with distressed borrowers by sending like, postcards or yell letters or door knocking, most of the people you're talking to have one property. Okay, me, when I talk to a bank, they have thousands of assets that usually I may get 10, may get 50, I may get 100, may get 1000 every quarter from one source that I can share a pick from. Now, another thing that notes gets beat on is most people that are looking very locally, like, I'm in Austin, Texas. I haven't bought anything in Austin, Texas in 10 years, but I have bought in Ohio, Michigan, bought a lot in Florida, other parts of the country where the deals made sense. So if you don't like investing outside of your zip code, then note investing would not be for you because it's more of a national mindset. I mean, you get bigger deals and there are vendors that help you out with it so you don't have to jump on a plane or go look at the property yourself. There are vendors that will do that for you. So notes can be a very systemized approach to doing things. Once you get up and rock and roll and you've got your kind of your bread and butter going, that's what a lot of people get into. We get a lot of landlords that come over here, they're tired of the property management headaches, so they would rather just convert their rentals to cash and then buy performing notes that are bringing in them you know, 10 to 15% return or they'll buy non performing and specific asset classes. They can get to re performing to see a 20, 20% or more ROI.

So okay, I get that mindset. What do you say to the person says yeah but I get a, I get a tax break right. Or there's, there's tax credits or tax benefits if you will to owning rental properties. Is there. How do you, how do you I guess account.

That's great. There's nothing wrong with at all. We do end up taking some property back. So if you like rentals, great. This can be a great source for you to find rental property in different parts of the country to get that. But here's the thing. We write off debt every year. You know, if we paid 75 grand for a mortgage and the borrower we foreclosed that they took off, we 1099 them for what they didn't pay for the difference. We 1099 people for lost rent all the time people lost payments, you know, or did they make a payment and then we had to foreclose on a victim or kick them out and different things. We can tend them in write off as well too. So it all depends on your asset really what you're looking at. You want to. I'm not an account or attorney. Just stated a Holiday Inn Express like six months ago. So always talk with. For some people they just want the passivity. Other people, eh, they don't, you know, they don't want the headache and they have the right, you know we have a lot of people too. As they grow their portfolios there's different things you can do with trusts and deferred sales trusts and things like that. They convert stuff with that, with the write offs and things like that too that they can be using to in buying notes too.

Awesome. Does this work for all sorts of real estate? I mean is this just single family homes or can this be bigger properties? Like could it be mobile homes? Could it be manufactured homes? I guess might be the proper word. Like here you go.

I have bought a note on just about every asset class out there from the little single wide all the way up to a 100 unit hotel, you know, 500 unit apartment complex, 34 story high rise. You know, we have seen it, bought it, sold it. I mean I bought a debt, I bought a note on the truck and repoed the truck and drove it for three years too a while back direct from a credit union here too. So you know that's the thing, paper is around, you can buy Debt on just about anything if you want, as long as there's a mortgage on it. You know, once it's a foreclosure, there's no mortgage. So you're not gonna buy the note anymore. But yeah, I'll tell you a funny story. I bought a mobile home. I know it's a mobile home park in Las Vegas that when I sent the due diligence guy out there, he's like, well it should be a commercial asset. I'm like, is it a park? He goes, no, a lady of the night is running it. So it's cash flowing on an hourly basis. I start laughing at that. Yeah, we bought a 70 unit apartment complex in Miami Beach a while back, 10 years ago from Oceans Bank. And you know, we bought it for a nickel basically and it was worth about two nickels because of all the crap into it. But once we cleaned it out and we found it, a developer came in and bought it from us at 20 cents of the dollar. And it was, there was never, there wasn't even a single 10. It was completely vacant. So you know, you have to realize Everybody, people, it's May 2020, we're going to see an increase in distress debt. We're already seeing that. We talked about that earlier. There's so many forbearance agreements. You know, we expect 20% of the population be on unemployment for an extended period of time. You know, small businesses are going to fail. Commercial is what's taking the blood. The most recent bloodbath. I mean you look at retail, you look at all these commercial mortgage backed securities that the market lost $50 billion in March on, I mean it went to zero basically. Yeah, a lot of commercial spots coming up and a lot of commercial papers available. You'll probably be able to pick up at nickel 10 cents a dollar. Just gotta be able to do something with it here before too long. So a lot of people make really good money on the notespace by picking up commercial assets that are vacant and then rebranding them, recreating them, turn them something else. I think you'll see a lot of these big box stores get turned into stuff storage facilities because people will need a place to put their crap that they bought from Amazon and can't return or what they got there. The Corona crazies that they spot something from Amazon every day because that's how they itch their itch while staying at home in the pandemic. But that or you'll see a lot of these bigger office departments that get bought up and then get recast as executive offices or virtual office space for the most part, you know. You know, there's a lot of interesting people people are taking. I got a buddy who's buying up old buildings that used to be old, you know, smart Walmarts buying the debt on those and then turning those into storage facilities for your big semi. I can't think of this, the larger storage containers and using those in rural locations or people that buy an old. Pick up the debt in old hospitals and turn them into assisted living facilities in your smaller towns by buying the debt. So yeah, there's a lot of things I know. Everybody asked me if they can buy notes in apartments and yes you can. I think apartments have been the most overpriced assets over the last like three to five years. But a lot of people overpaid for assets, especially apartments, let's say in the last 12 to 24 months. With the idea that they'll be able to get refinanced out in 24 to 36 months. We know that's not going to happen.

We now know that that is not going to work out the way they had hoped it would.

So when their mortgage comes due in three years and they have to have a capital call bringing another 20, 25% cash, it's gonna be exactly like what happened when I first started out buying nuts. I was buying mostly apartment loans at you know, 30, 40, 50 cents on the dollar from some big names. I'm not gonna drop any names in the industry out there, but you would recognize them. I dropped them and it's just they sold them, we bought the debt, we got them to sign the property over to us, we re gentrified the asset, leased up and resold it all off or in commercial debt. The beautiful thing is that you have the right to start collecting rents versus a single family home. So when we bought commercial loans where there was tenants in place, we took over receivership of the asset, managed it, got the cash flow while we took it to the foreclosure auction and then sold to the foreclosure auction and made a pretty penny.

That's awesome.

Long answer to a short question. Sorry.

No, I love it. That's great. So I mean, let me ask you this. As we're starting to wind down, what I'm hearing, or at least what I think I'm learning from you, is that you know the person who goes out and does like say wholesaling or flipping or even long term rentals, that's just, it's maybe it's A different mindset, right. Like you are, you're not necessarily looking at the asset like, like the building itself, but almost like as the spreadsheet itself. Right. The numbers, if you will, that make it make sense or make it not make sense. How do you, like, what are a couple traits, if you will, that you've seen over the years that show up as, you know, good or positive traits in terms of being this type of investor who might want to pursue going and buying notes.

So it's probably you should talk about the type that don't do well.

Okay, yeah, let's do that.

Okay. So There are like 10 different exit strategies. When we buy now, we can get it either re performing or modified or deed in lieu cash payoff, short sale, wholesale resale, foreclosure, let somebody take it over. Subject to, you know, there's 10 different strategies. Engineers have a really hard time calculating 10x strategies on a spreadsheet. Don't get me wrong, some have tried it, but you have to be a doctorate in Excel to figure that out. So a lot of times, no offense, engineers will overthink things because they don't have that one course of action where they have everything documented. We all know there's different expenses with that stuff. So while we do have some engineers, a lot of them, like, I can figure this out, it's too confusing, you know, so who is short sale people usually like this because they understand getting something shorted. You know, Short sale is just a loan qualification. Qualification package. Okay.

It's exactly what I called it.

Yep. Done so many of them. So it's similar. Title people do really good because you're checking to see what's in title. You know, we still have to, you know, pull values landlords do. Okay. You just have to try to remove the emotional aspect of that. Same thing with fixing the flippers. You have to remove that OTSC syndrome, as I say, the. Oh, that's so cute by looking at the picture of the property. Okay. So people that understand mindset, they understand cash flow, mortgage brokers guys, you know, finance guys do really well because it's a numbers driven industry. And then, you know, the more you delegate off, the more you make in this business more than anything else. And so if you're trying to do it all yourself, you know, there's plenty of investors out there that are, let me take me rephrase it. All investors are egomaniacs. Okay? We all are. Okay, I say that here as a card carrying member, but what it is is that you have to learn to Let stuff go. You have to delegate stuff out to vendors and team and experts. You try to do it all yourself, like fixing and flipping a property. You're gonna end up hitting a bandwidth and not be able to really manage more than like 20 individual notes. That's the number 20 to 30 for those that are really seasoned because there are moving parts with, okay, making sure that there is the taxes are being paid, making sure that they still have insurance on the property, making sure that payments came through this month, you know, so you want to have a good bookkeeper, good accountant with that. They usually do pretty good. We get some accountants that dabble in this stuff, but for the most part, you know, if you love numbers, this is kind of the niche for you, for the most part. And you don't like the, the working. You know, I hate rehabbing property. Doesn't mean I didn't do a bunch of it here in Austin years ago. But my best way of making money is being on the phone and dropping an email blast out to 5,000 asset managers to get a list sent to me that I can cherry pick. I can make 50 offers knowing that probably half of them are going to get accepted or countered. But I'll control those 25 that come back and accept and then I can have 30 to 60 to 90 days to raise capital, take down those 30 assets.

So very cool. All right. That man, that was, that was a lot to take in in a short period of time, Scott, where if somebody who's listening to this, because you know what, I want some more information on this, I want to learn more about this or even just connect with you. Where, where can people do that best.

At really easy we go to weclose notes.com that's my main website. We close notes.com you can find out our podcast that we have, our free informational webinars that we do every Monday night for the most part. And then of course the, the Note Closer show podcast is the. We just celebrate our 600th episode last week actually.

Whoa.

Thanks man. And we crank out a lot of content there, bring out a lot of guest vendors and experts and in the note field, in the real estate field and then also entrepreneurial field kind of because it all. We're all business owners, we've all got same issues, you know, so we like to bring in a lot of, a lot of guests. But I also teach a lot of there on specific niches and things that happen in the note industry.

Very cool. I love that. Alright, so note Closure show podcast and then one More time. What's the URL for your main website?

We close notes calm.

We close notes.com. awesome. Well, Scott, I appreciate it. Before we wrap up any final like parting words or something we should have talked about. I should have asked you about.

Well, I should say that Kevin should have asked all of you if you like what he's doing and like this episode of go on over. Make sure you hit the subscribe and leave a five star review for Kevin. We as podcasters, that's our rubbing our head like the Good boy. Good boy. Good girl. You did a good job. I'm gonna leave your review, so please do that for Kevin. He didn't bribe me. He will later though. But no, here's the thing. Not invest everybody. Great way. It's been around from the beginning. Just learn. It's like anything else. It just takes a little different type of education. Spend time on there. It's not as difficult as you would think it would be. If you love the movie the Big Short Tube, Too big to fail, you will love note investing and I'll leave it at that.

That's awesome. All right, guys, well, thanks a lot for being here and spending the time with us, Scott and listeners. We'll talk to you again next week. Have a good one.

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