How To Get Started As A New Note Investor In 2022: #NoteInvesting

Foreign.

This is the no Closer show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of.

Dollars worth of property.

For panties 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 nodes, Scott Carson.

Good morning, good afternoon, good evening, everybody. Welcome to this episode of the no Closer Show. As always, Scott Clarkson. Excited to be here with you today. And today's topic, I wanted to talk about starting over, starting over again. You know, I mean, I've gotten a lot of phone calls, emails, messages from folks who are scared about everything that's going on in the industry. You know, increased interest rates, inflation at all time highs, cost of goods sold, gas is through the roof, people getting laid off from the mortgage industry left and right. Realtors are scared. You know, there's five realtors for every one listing a lot of cases out there. People are really kind of figuring out, hey, what do I need to do? You know, the fix and flip side, I'm not seeing reos, what do I need to do to get into the note industry? And that's the beautiful thing because we do see deals 6 to 12 months ahead of most folks, especially your fix and flippers, your landlords, your REO investors. We're seeing a bigger discounts than most people are saying. But here's what I do. Now that we're in the second half of 2022 and all the Pied Pipers finally getting paid is coming to call to get paid from COVID and them kicking the can down the road, the mortgage forbearance agreements is just kind of stopping things. Well, foreclosures are not going to happen all at once. We're not going to see this wave of foreclosures happening all at once. You will see, as I like to say, kind of a domino effect across the country. What I mean by that? Well, every state has a different foreclosure time frame. Your judicial states like Texas, Georgia, North Carolina, Missouri, you're going to see things happen faster there because you can foreclose faster. When you compare it to judicial states like South Carolina, which is a year, Illinois, which is about a year, Florida is about a year, 13 months. That'll be the second wave is your faster judicial foreclosures, then the final wave will come like New York, New Jersey. Ever get around to that? In 24 to 36 months or later you could throw in Puerto Rico if you're looking at stuff in Puerto Rico there too, because it's about 27 to 30 months to foreclose there. But if I was starting over brand new, okay, these are the things that I would focus on. First and foremost, you got to get educated. Because if you're just coming out of the fix and flip mindset or landlord mindset, you are dangerous. You think you know everything there is to know about real estate, but that is not the case. No, investing is a whole different concept, different evaluations, different strategies, different really end game in mind. For the most part, it's not to take real estate back. It's primarily probably to get it re performing and either A turn them into cash flow with performing notes or B you do take the real estate back and either A sell it off as REO's or if you want to keep it to your portfolio, you can. Whatever you do after the foreclosure is up to you. Okay? But I will tell you this. The first thing I would do besides getting educated is to look at markets. By markets, I'm not talking about individual like cities like Austin, Texas. I would be looking at states, when I mean markets. Look at the states that have inventory, that have had a lot of distressed debt. Now if you're in California, I'm sorry, you're just not going to see a lot of that makes sense out in the West Coast. Arizona, Nevada, Washington state, Oregon. Just don't see a lot of stuff there. So if you're listening from there, hey, I love you guys in the west coast, but you probably need to move your investment focus. Missouri, somewhere middle of the country for the most part. Maybe the Big Ten Southeast Conference, part of the United States, the Rust Belt. We've had states like Alabama, Mississippi, Louisiana that have been leading the foreclosure numbers since COVID really started two and a half years ago. So look at states that have stuff like you will always see distressed stuff in Ohio, you always see distressed stuff in Michigan, Indiana, Illinois, those are great areas. Missouri, Kansas, the Carolinas, Florida. Starting to see uptick and stuff things there too. Maryland, some of Virginia, Georgia and Texas. You'll see some stuff move so quickly in Georgia and Austin. Unless you've got an inside track, you're probably not going to see a lot of stuff in the state. So here's the thing. Identify three to five states what I always tell people and then learn what you need to learn about the states. And what do you need to learn besides educating about the note business? What are the foreclosure timeframes in the State, what are the foreclosure processes? What are the biggest cities? And I would start with cities that are 100 grand or greater. Worst case, drop it down to 50,000 or greater. I mean, I'm buying a note right now In a city, 25,000, it's in Indiana, but I know that area. It's near some other bigger cities and I'm completely confident with that. Okay, so understand that. Yes, you will see lists in from all across the country. There are some states that you want to avoid for the most part, unless you live in there and you have some carnal knowledge. One of those areas, one of those markets is Illinois in specifically Chicago, Cook County, I like to call it county or Chirac. But Illinois is not a bad state. It's just that the Cook county is really difficult to foreclose. And if you don't live there, you live there. Hey, by all means, guess what, you've got a lot of distress deals there locally to deal with. It's still going to be about a year to foreclose. If you're an out of state investor, the judges, the courts always seem to side with the local folks that live there. So unless you're a local investor, I would just make Chicago. Whenever you see something in Chicago, Cook county, just eliminate it. Same thing goes for like New York, New Jersey. I just eliminate those things. Maybe get rid of Kentucky because they want to create a large bond, a $500,000 bond for an individual million dollar bond. If you're a business area, you don't need that in other states. Do you need to get licensed? You need to get a licensed servicer first and foremost. And then some states do require to have a bit more of a debt collector's license. Illinois is one of the states that once you have a debt collector's license, you're going to pay your pound of flesh of 750 bucks to the state and be good for two years. It's not going to stop you from, it won't stop you from foreclosing, but it's good to have. There's Georgia. The attorney general wants you to be a mortgage broker there. Doesn't mean you have to have one to buy. Doesn't mean you can't get through a foreclosure without having verified. But you just don't want to have that big brother potentially slapping you on the wrist. You know, look at some other things. Maryland's got a debt collector's license license. They want their kind of life as well, like they have always wanted going back to when the short sale last recession, they started making up names to collect fees. But what I'm trying to get at here, ladies and gentlemen, is you're going to start seamless. And one of the biggest things that we have seen over the years still to this day was when a big list comes in, people that don't have their markets focus, they look at everything being an opportunity and at the right price, everything can be. You have to look at what you want for your portfolio. What states do you want to invest in? What states do you want to own real estate in? What states do you want to own? Noted. Now I wouldn't be one of these individuals. So I just want non judicial stakes, fast foreclosure stakes, okay? You're going to pay a premium for the faster foreclosure states. I just want my backyard. Well, you live in a city like Austin, Texas, you're not going to find a lot of stuff in your backyard. You've got to spread your interest out and take what the markets are giving you. Take the opportunities they're giving to you and focus on this. Now here's the thing too. If you're using your own money, you can be as picky as you want to be. If you're going to use other people's money, you need to see deals that are going to be paying at least a 12% return to you. If it's a performing or a non performing that was once is now performing like a reperforming a non performing note that you're going to end up foreclosing, you probably need to see somewhere around a 20, 25% yield on that just so that you can pay your money part. So the biggest mind block that we see from folks that get into the note space that they can't go get a hard money loan for a note, they can't go and get a mortgage because they're used to doing that traditionally is the fact that you have to start raising private capital. Here's the thing ladies and gentlemen, we say this time and time again we see this, the media is doing all the marketing, all the fear scarcity rules that they're sharing out there. Oh, inflation and rates up and yada yada yada, it's more expensive. Everything, yes, everything is more expensive. But the things that are not returning a lot is the capital. People that have money sitting in banks, savings, checking accounts, they're making less than 1 and they're all fearful because their 401k is now a 101k, their CD is a certificate of disappointment. They're looking for opportunities. And all that you have to do is start sharing the opportunities you're coming across. You got to share where you cannot be a secret agent. You can't be James Bond and expect to succeed. If you don't want to share what you're doing, you got to tell folks what you do. You got to get the word out. That's more important than anything else. We see that as being the biggest contributing factor to success or failure is an individual's willing or lack of willing to market. You got to get the word out what you're doing. You're going to share what you're doing, share what you're looking for, sharing the deals you're working on. You're going to raise more capital, find more gifts. If you're not going to share, you're not going to have deals come across. You're going to be reliant on just a few websites that I get picked over and you're going to be reliant on what's just in your bank account. And that's not a good way to be. You are not limited by what you're banking to buy notes if it's a good deal. But you've got to be able to share it. So you've got to embrace the 21st century fact that you got to market Now. I wouldn't be marketing everywhere. I'd be marketing on LinkedIn, growing your database and marketing. I'd be marketing with short deal videos, case studies deal that you're working on day in the life of a Note investor on YouTube videos, whatever, LinkedIn, Twitter. If you're going to do on Facebook, do it in your group to your audience. You're going to see a smaller stuff. I would not be sharing to other groups. There's a lot of real estate trolls out there that keyboard warriors that want to bash you when you post something. You're looking for something. So I would just Facebook we all know is a burning dumpster. Okay, Dumpster fire. So just focus on LinkedIn. You got to spend time on there. It's pretty easy to connect with other note investors, real estate investors on LinkedIn. And then I would double down on one other asset class. Now asset, I don't mean by notes, I mean asset mean investors is jumping on the county records and start pulling IRA. Investors who have bought a property let money out of their ira. Pretty easy to search for those individuals by their self directed IRA custodians. West Equity Trust, Pensco. Like today I pulled 200 names just in one county with those three names. Over 200 contacts that we are going to market to for raising capital. Use their money to buy your deals. Because everybody's looking for deals. Every IRA investor is a investor looking for deals. They pull the trigger. They're pretty knowledgeable, more than you're just average Joe on the street. And guess what? They're looking for a decent return. Doesn't need to be 10, doesn't even be 12, 6 to 8%. They've got money sitting on the sidelines for longer than 12 months. It's a pretty easy sell into a deal. That's the short term of 12 to 36 months. So that's if I were starting over brand new. That's it. No list. I would jump on LinkedIn, start looking for special asset managers. I would start searching out the servicing conventions. Okay, not like industry conventions. Now what do I mean by that? Well, every year there's always a West coast servicing and east coast servicing conference that takes place. IMN.org or IMN Information Management Network has a lot of pretty great events you can go to. But what they do is they share not the names of the people showing like Scott Carson, but they would share titles and company names you leveraged. Pull that information and jump on LinkedIn with a VA or yourself. Your virtual assistant can help you find pretty much most of those contacts without you having to jump on a plane and paying a ticket to attend. So that's what we do. I would jump on LinkedIn, I would go to these networking, not networking conferences, but conferences and start pulling names and people off of that. I wouldn't waste your time going to some of the smaller conferences. Know where the investment summit been around for? Well to the second rendition was around 30 years and dropped off for a year or two and sent back. Not a lot of people there. You're not gonna see a lot of distressed mortgage expo, you're gonna see a lot of note expo. Besides the same people and you as an investor, you as a note investor don't need to be talking to the same people over and over again. You gotta get the word out. Either find deals or find funding. And the finding deal side is. That's your reaching out to ask management banks. That's your post on LinkedIn. Going to maybe some of the groups on LinkedIn that are distressed asset sales or secondary marketing professionals or special asset manager groups. That's your key. That's your number one key. Okay, now the capital raise, like I said, besides reaching out to IRA investors with a letter or postcard or connecting with trying to find them on LinkedIn is networking and not so much going to your local real estate investment club because that's great and everybody should be a part of the local real estate investment club. Especially if you're buying in a market. One of the things we always say, hey, go find the local REI clubs or meetup groups that are in those markets for you. So you do have potential buyers of assets you pick back or potential funders. But you're going to probably have better luck by connecting with professionals who are really understanding the value of network. And what I mean by that, that means really your entrepreneurial networking groups and your like your BNI networking groups, the ones that referrals because those are really great at educating and looking for referrals. So going and attending that maybe joining one. The beautiful thing about being a note investor, that's a very unique niche. It's not just a. You're not a financial advisor, you're not a fix and flipper. Your investor focused on one aspect. If it's in a city that has a lot of stuff, great. If it doesn't, hey, you have opportunities to put people's hard earned money to work. Not like a financial advisor, act like that. But you're an investor and looking for deals. So that's an opportunity for you. Because there's a lot of professionals out there that have money but they don't have the time to do it themselves. So they'd rather write you a check, get to know you investment. That's a bit longer of an investment versus just showing up for lunch or breakfast one day you got to attend. One of the things I did a few years ago is I went and attended most of the BNI networking groups and B and I stands for Business Networkers International and got to know a lot of those professionals who are paying to be a part of network. There's some other networking groups you can go to. If there's an apartment networking group that might be one to go to. Because people are looking for deals and there's usually a lot of capital are sitting on the sidelines, they can't get into a deal themselves. So might be a good spot for you to get to. But you know, start networking, start going out to the things, maybe attending a chamber event. There's a lot of entrepreneurs out there that are looking for help because they've got money and they need somebody help them with that. If you know what the hell you're doing, you know, if you're brand new, it's okay, you may not have a big track record, but your vendors do got a team already behind you. The minute you decide that you're going to be a note investor, that's something unique that most folks can't brag on. When you're a note investor, you've got a servicing company, you've got real estate attorneys that are going to do the most they have you lifting for you got a coach. Hopefully you're listening to me here. You're listening to this today. You ever watch this part? And somebody who can you can reach out to when you have a question. If you ever need to schedule a call, you can go talkwithscottcarson.com to schedule a phone call. It's talkwithscottcarson.Com but here's one of the most important things. Don't be scared. I know that's easier said than done, but I would embrace this time, this new time in your life as you dive into as a great learning and opportunity. I don't know if you the world, the country is going through a bit of a reset and there's more money, more millionaires made in a time of turmoil than there is in a time of, of growth. All right, there's a lot going to be a lot of distressed debt and be a lot of mortgages hitting the market. If you know how to market and you can get further up that chain to closer to the bank instead of waiting for a list to come, cycle down through a website or onesie Tuesday, you're going to be a much better off basis. Now I would be going to the county records as well, county clerks and doing searching for assignment transfers from two years ago, not the last six months. But look for an assignment of mortgage. That's what's filed to the county to transfer ownership and look to see who sold mortgage and who bought it. That's the beautiful thing about an assignment. You're going to have two parties first and the company that sold it and the company that bought it. And if you can pull company names llc, names of those that are around in the industry, stuff like that, you can often find who they bought from and find some amazing deals and direct sources. Scott, I don't have a million dollars. That's great. You don't need a million dollars. You need some money for email marketing, send email blast out and a little bit of some other tools like I would highly recommend get LinkedIn and you can get the upgraded version, you can do the free version. But the point I'm making is invest a Little bit of money in tools that you're going to use in a rate. What I mean by that, A logo. You need to have a website and don't try to do it all yourself. I get it. If you're strapped financially, you've been one of those that have faced the cutting acts of being laid off or fired. I get it. But you got to start looking professional. You got to start asking yourself, am I looking professional or do I look like I'm just thrown, throwing it all together. In today's world, you got to have a website. Today's world, you got to have a logo. Yeah, you need to create some business cards. You still going to need that when you're out networking with folks. Everybody. Business cards are not dead. Raising capital. You may have to spend a little bit of money on some postcards or letters to send out to 100, 200 people. But that's really all that you need is developing 100 to 200 IRA leads and start marketing to them on a regular basis. Get canva, get key. YouTube is free, gets you a good webcam. Start listening to podcasts, start connecting with people and going out. And don't eat alone. If you need to go out to lunch, go to lunch and meet some folks, go to breakfast and eat some stuff. You never know. These days, ladies and gentlemen, entrepreneurs are looking for opportunities. And you might want to be that opportunity for them. Not you don't. Somebody else will appear. And that's the thing, like I said back very beginning this episode, the thing that holds a lot of people back is them stepping out and being John Doe, John Smith, Jane Smith, note investor. Right. Oh, I've been this. I'm scared. I'm an introvert, I get it. But if you're not happy with where you're at, you're uncomfortable, you're tired of being tired about your situation. You can either do something different and start planting seeds to yield, or you can just keep doing the same old, same old. And your situation is not going to get any better. It's going to get worse. You just sit there, it's going to get worse and worse and worse. And at some point, somebody's going to make a decision for you. Might end up being that distressed bar. Don't want that. And when you look at the amount of mortgage companies laying off realtors out there that don't have listings, you look at a lot of the service industry with people getting, having to tighten their belts up again, not because of COVID but because of inflation. That's where you See that first time homebuyer that you know at $250,000 and below home, that's what starts really hitting the markets. That's what starts getting distressed. Those first time home buyers, service industry people that aren't making a lot of money making 20 bucks an hour or less in a lot of cases across the country. That's where you're going to see a lot of the opportunity pop up for us as note investors buying that debt and then working to modify it, get them back on track. But you have to realize if you aren't a note investor, you're brand new to it. You gotta buckle down on the education side, learning as much as you can. We have our workshops, we've got our classes, we are coaching. It's not an ad for that, just important if you're going to dive in. If I was going to be an apartment investor, I would go spend a lot of time learning about apartment. If I wanted to be a self storage investor, I would learn as much as I could about self storage. If I was going to be dealing with subject to which you're going to see a lot of subject to deals opportunities we know how to market for those. I go learn as much as I can about subject to deal. Same thing. I learn as much as you can about note investing. And beautiful thing is we've got plenty of podcast episodes, plenty of YouTube videos, classes for you to learn from. But the most important thing you can do is start to apply what you learn, jump on LinkedIn, update your profile, start contacting asset managers, start contacting note investors, start looking at tapes, looking at deals, starting to break down the due diligence. You can use some of the websites that are out there to look at deals and do due diligence, but they're not going to be the best places to pick from. I saw, I want to say competitor because he's not really. He had to go back and get a job, but he sent out a news article or a white page on the six places to buy notes. Well, three out of the six are no longer in business. And I'm like, well that tells me you haven't bought a note from them. You have been buying notes for at least six months, if not a year. This one of these have not had anything for over a year. So careful on who you're learning from. One of the things you want to deal with. I will tell you this right now, ladies and gentlemen, is don't be afraid to make mistakes. You're afraid to make mistakes. Be hard to you're going to make mistakes. But the real thing about the note business, most of the time, as long as you're coachable, as long as you ask for counsel, not advice, most of the professional investors out there will help guide you along the way and help you achieve a step on that path to your financial independence or whatever you're long. All right, so it's all about finding and funding. That's the two biggest things. And those two finding and funding are united in the middle by marketing. So embrace the marketing. If you're new to marketing, you got to start investing in yourself because that marketing skills, marketing tools are going to help you a long, long, long time. And as I know most investors, most note investors, most real estate investors never retire. We just get smarter and more focused. Usually most real estate investors end up evolving into the note space to be the thing. So I encourage you, take action. Don't be afraid to pick up the phone, ask questions, get educated. We've always got our note weekend class, which is our one day Saturday class. We have our quarterly class or not Buying for Dummies that we host. You don't have to attend it live. You don't have the replays. Check that out@weclose notes.com and ladies and gentlemen, there's a lot of opportunity. I'm excited for the second half of 2022 and into 2023. If you're waiting around, do not wait around. Your boat will leave you. That horn is honking. That boat's getting ready to leave port. You just got to jump on it and ride that way and focus on getting your first deal closed. Focus on getting your first private investor. Once you've done that, it's a rinse and repeat. It's a rinse and repeat model for the most part. So go out, take some action, everybody, and we look forward to seeing you at the top. Thank you for listening. Thank you for helping to make the no Close show the number one note investing podcast out there. Thank you for helping make our YouTube channel the number one YouTube channel for note investors out there. And I encourage you all, take action, kick ass and we'll see at the top.