How To Invest In Notes And Free Note Course Giveaway With Scott Carson From The Invest Nest Real Estate Investing Show With Travis Murphy

Some of the mistakes that you'll see, the pitfalls is people not actually putting eyes on an asset. They just rely on Zillow for values or the picture of the property. No, no, no, no. There've been times where like, ooh, the Zillow property looks good, but it's actually the house or the empty lot next door to it that you're buying the note on. You got to be careful about that, okay? Welcome to the InvestNest Real Estate Investing.

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Hello nesters, and welcome to the Invest Nest Real Estate Investing Show. As always, I'm your host, Travis Murphy, and we've got another great invest guest joining us this week. Scott Carson with weclosenotes.com is going to talk to us about his real estate investing journey and business, which is somewhat unique to what we typically have on the show. Scott does note investing and it's. It may be in a different way than you're thinking, so be sure to stay tuned. A lot of great stuff come out of this interview. Scott is an awesome guy. He's high energy, very enthusiastic. There's a lot of good takeaways from this podcast. More than just the specifics of what he's doing with investing, but just how he got to where he is is taking action and making things happen for yourself. So stay tuned to an awesome interview coming up in just a minute. But before we start, I want to first wish everybody a happy Wednesday and I hope everybody's having a great week so far. I want to thank you all, as always for tuning in this week. I can't express how appreciative I am for all the support. I see our numbers climbing every week. So thank you so much for tuning in. Please go leave us a review and rating if you're enjoying the show so far, wherever you listen, preferably Apple podcasts, you go leave us a review and rating. It really helps us out to any of our new listeners. Be sure to hit the subscribe button. We release our podcast every Wednesday and we have a guest join us talking about their real estate investing journey.

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So be sure to hit the subscribe button. You can also check us out on Instagram, Facebook and Twitter. He InvestNest. We've got a lot of good content that we put out there, so be sure to hit the follow button. We have a Facebook group page at the investnest as well, so feel free to go out and join that, of course. Check out theinvestnest.com It's a free online community for real estate investors to network as you create a free profile. We've got a ton of great resources and, and we have also a lot of new features coming to the website very soon. And I'm super excited to make announcements about that in the coming weeks. So before we get started, I also want to hear from you guys. So all of our listeners out there, all of our nesters, reach out to me, send me an email. You can email me@infoinvestnest.com you can DM me on Instagram, Facebook or Twitter, but give me some feedback. You know, give us a review of how we're doing, things that you like, things you maybe don't like. If you have any questions about real estate or, or real estate investing, feel free to shoot them my way. I'm going to start reading, if I've got any good comments or any good feedback or any questions, I'm going to start reading them on the podcast. So if you shoot me a question or a comment, there's a chance you might have your question answered on the podcast. So just wanted to throw that out there. And lastly, just mention real quick, we're also on YouTube so if you prefer to watch as opposed to just listen, check us out on YouTube. Hit the subscribe button notification bell there as well. All right, and now it's time to get started. All right, and now let's welcome our invest guest, Scott Carson with weclosenotes.com Scott is a note investor and he shares his knowledge of investing in notes on his website and on his Instagram page. Oat closers, Scott, welcome to the invest desk.

Hey Travis, honored to be here today. It is a gorgeous day, hopefully virtually here in Austin, Texas, my background, but it's a nice day outside. Hopefully it's nice wherever you are and wherever your audience is, no matter when they're listening to this. So honored to be here. MAN ON investnest.

Absolutely. Thanks for coming on. And yeah, finally weather's breaking here. I'm outside of D.C. so we're starting to get some sunshine and everybody's getting in a better mood and out and about. So things are good? Things are good so far in 2021. How about you? How's everything going in the new investing world in 2021 so far?

Well, I would tell you we all can agree it's an interesting market and with what we do in buying non performing notes where the borrowers haven't paid in a period of time. We have our fair share of borrowers across the country and investors are struggling. And we've been dealing with a lot of phone calls with banks, lending institutions, hedge funds, seeing what we're buying, both residential and commercial stuff. So it's heating up. It won't be as bad as it was back in 2008-2010, but we're expecting this to be a bumper year. We're looking at a lot of portfolios, more than we've really done the last two years, both on the residential and the small balance commercial side. So I expect to be extremely busy. Like, I just got a listing of 69 notes this morning from a fund that we can pick up somewhere around 50 cents of what's owed, which equates to somewhere between 30 and 70% of value. We're seeing deals and being in the bank space, the buying the debt space, we're often seeing stuff at a big discount compared to what retail buyers are paying or most investors are buying out there right now.

Very cool. So, yeah. So, Scott, I'm super excited to have you on today. Earlier on, I thought note investing meant private notes for us real estate investors to utilize as an alternative to hard money or regular mortgage in order to buy investment properties. But you do something totally different. You're an actual note investor. Before we get too down into the nitty gritty details, can you give us an overview of what it is that you do?

Yeah, I'm glad you asked that because a lot of people when they think of a note, they do think, oh, he's on our finance notes or something like that, or providing financing. And that's not what I do. I mean, I am a previous mortgage banker and broker and originated plenty of owner finance notes over the years. But what we do is we actually buy the dirty, the naughty notes, as I like to say, where we're not dealing with homeowners, we're not doing any direct mail campaigns or stuff like that. We are literally dealing with bank special asset managers and whole loan traders on Wall street who have these portfolios of residential loans, most of the time commercial, some of the time where the borrower has not paid and usually six months or greater or longer. Like right now, we know there's a lot of people haven't paid in over a year. And we buy that debt direct from the banks at a big discount. We then become the bank, become the lender. And then we try, we make our money by trying to work it out with a homeowner to keep them in the house if they can, by either getting started, back again, paying their mortgage, or if they won't go through one of our strategies to keep them in the house, then we'll go the legal route and you know, either offer them cash for keys to walk away or we'll go the foreclosure route and foreclose, then take the property back, either sell it at the auction, take it back, fix it up, sell it on the MLS as an REO at that point, or sell it to another investor. But I'm dealing with Wall Street, I'm dealing with the guys and gals inside the banks that are making decisions on hey, they've got a portfolio and for every loan that a bank has that's not paying, it's costing roughly 10 times that in fees. So people often ask me, well why would a bank want to sell a non performing note and why would you want to invest in it is because it's still backed by real estate. And the fact that we buy that debt at a big discount, usually below 60% of fair market value of the property, that gives us a lot of flexibility, a lot of opportunity to A, work with the investor and if they won't work B, we go the legal route and then we take the property back. But actually our biggest bang for our buck Travis is actually keeping people in their houses. So when we buy loans, we are trying to work it out with a homeowner. The fact that, that we bought the debt at a discount. I'll give you some numbers, like let's just say looking at a deal today, guy owes over 150 grand on a house that's worth like 125 upside down. Why would the bank sell it to us at discount? Because they would rather get 60 grand now and go out and rinse and Repeat. Lending that 60 grand out 10 times and then you're gonna make up for what they lost. The borrower still owes 125 to us or 150, whatever. And we make our money in that negotiations with them. If we get them back on track, it's almost like a double digit return. If they start paying on time to us again, if they don't can't afford the existing payment, we'll work some sort of trial payment plan, keep them on path. But our goal is to get them paying again for 12 months straight. That if we can get them paying again, then it's a reperforming note. Now I can sell that note back to Wall street or back to other investors at 8590 cents of the dollar when I bought it at 50. So that's a little bit about what we're doing. We'll buy one single notes from banks or institutions, but we were often buying in bulk, 10, 20, 60, 175 assets at a time.

That's awesome. Very interesting. And for our audience, which are mostly real estate investors, I don't know, some of you guys may have gotten a little bit lost by what Scott had just said, but we're going to dive into it. But before you maybe tune it out or think this isn't really for you, I think we're going to find out as this interview goes on how real estate investors could capitalize on this and maybe take advantage of it. But I got to ask you first, are you basically like a professional loan shark? It sounds like, I don't know if you ever saw the movie Rounders, but the guy goes around and buys up all the poker players bad debt and then they owe him for a premium. But I know you do it a little bit differently, but it sounds.

I'm not kgb. I'm not KGB twisting my Oreos. No, we're not a loan shark. Actually, when we buy the debt, it's usually because the bank can't get a hold of the borrowers or they're not communicating or the bank is really stressed and they need to try to get some cash in to offset this bad debt. So we do buy debt all the time. But I'm not dealing on individuals. Like I'll give you an example, I have borrowers that reach out to me like, hey, can you buy my loan? And I'm like, no. Why? Because you're not going to pay. I know that you're not going to pay because if you're trying to get a friend to fund the note, you want more term and I get it, try to help you, but it doesn't work that way. Not every bank will sell every note. I'm not buying from bank of America, Chase, Wells Fargo. But I'll give you a great example. We're working on a deal right now just funded on this on Friday. It's a condo in Miami Beach, 20th floor overlooking Biscayne Bay. BPO came in at 215, 220. It's a one one, about a thousand square foot clean borrower owed roughly about 168 on that. Plus you look back HOA fees and the back payments, they owe more than what the property is worth. So we bought the note from the bank for 100 grand, even $250,000 in equity. Now, our goal, borrowers already moved out of the property, moved on. So our goal is to finish the foreclosure. And yes, there are states that are foreclosing. They're just not evicting. In some cases. This is not an owner occupant. So we could finish the eviction because it's not a homeowner. But the house is worth 215. We're into it for 100. There'll be some foreclosing costs five, maybe ten grand. We'll have to pay the HOA sum. So maybe be into it for 110, 115, but we'll sell that close to 200. 215 if it takes us six months to foreclose, maybe worth 220, 230, the way the real estate's going up there. So we're into it for 110, 120. We'll sell it for at least 200. That's $80,000 profit on $120,000 investment in six months. Really? That's actually about 137% ROI to us because it works out that well. Now, if we can get the HOA to deed and Lou or work with us for five grand, we may end up with a property in a couple of weeks. Like I said, I always try to keep people in their properties. We can. This borrower on the Mima, 100 left. So we got another one borrower owes $160 on a house that's worth 100. We're buying the debt at 50 grand. And I already know that the borrower wants to stay in their house because they've tried to make payments over the last 18 months, make a payment, miss a payment, miss to make a double payment. But they're still technically behind by a year. I know if I, based on the due diligence on this asset of looking at the servicing, the collateral files, I know the value of the property, the pride of ownership. They got some small kids, based on the photos, we can tell, and they got some emotional equity, obviously with the kids and taking care of the property, that I'll be able to get that borrower back on track by just adjusting a couple of things. Maybe it's the payment amount, maybe it's give them a little bit of a break for a month to get caught back up on some things. But the return on that immediately when they start paying on time will be over 15% ROI while the payment streams go on. And then in a year when we sell that, there'll be another 35, 40% profit on the back end side when we sell it as a note or if the borrower does not follow through, they fail to work with us, then we can foreclose and still make 30, 40% pretty quickly by foreclose and taking the asset back if we need to. So the three biggest things that real estate investors come into the note space is for these big things. One, we see deals that nobody else does. Most investors are waiting for things to hit the MLS or become a foreclosure. We see stuff six to 12 months ahead of that. Most of stuff hard never hits the mls, never hits the foreclosure auction. Okay. Second big thing we get is we're getting steeper discounts because the fact is that we're taking over the bank's problem, children's. We're basically being incentivized to take on this debt. Work with a borrower and it may be three months, six months, a year before we actually, if we have to foreclose to take it back that way. And third thing is pricing. We all are looking for deals. You and I were talking how crazy some of the markets are out there. I don't pay above 65% of as is value for a note. If it's above that, then I move on to something else. So access to bigger, deeper deals, better pricing, and I like to say higher returns. A lot of investors are doing deals these days that are pretty skinny. I don't want to do skinny deals. I want to stick to my profit margin of at least 20, 25, 30% on a minimum threshold for us, whether we get it re performing or we have to take the property back as a foreclosure.

Yeah. I mean, in the current market right now, margins are squeezed. So everybody's looking for roi. And it's been, it can be difficult to find right now because there's such a demand in the marketplace for not just housing or not just investors, but housing in general. And I joked earlier about a loan shark, but really the reality is, is that you've learned and figured out these channels and these processes in order to deal directly with the lenders, which opens doors to opportunities that other people probably don't have access to because they don't have the knowledge or the ability. And one of the things I like about all this is that you have now that you found that door and opened it and been able to walk through it, once you're in there, you've got different options. Not aside from just pure investment. It sounds like the Returns are very high compared to what a lot of us are investors are facing in the current market. But you have the ability to pick up instant equity and then depending on what's happening with the individual, either need to foreclose on them or potentially it's already vacant. So now you've got a great value on this property that you can do whatever you want with at that point. If you're a house flipper or you can sell it to a house flipper, or if it doesn't need much work, you can just fix it up or if you want to keep it as a buy and hold, you've got all these options. The other thing that I like is that the second part of what you said is getting the tenant back on track or getting the homeowner back on track, you're able to just reap a long term reward on the investment because they're just paying the loan and you're getting the returns that you were after. But then the third thing about that I think I like the most is then you go resell it back to the banks once it's performing and I guess meets their criteria. So more or less you're pushing paper from the bank to you cleaning it up. You're doing all the dirty work that the bank doesn't want to deal with and then you're getting it ready for them and then you're selling it back to them for a return. If anything goes differently, in between, there you go. You can go down a different path if you'd like to. That's a really interesting stuff. I mean if I missed anything, correct me, but that sounds pretty awesome.

It is. I mean you do, it's. You always have to do research, due diligence like anything else. I always wish every deal went great. Some deals you have borrowers that will drag stuff out. Long foreclosure. Like we'll avoid New York and New Jersey because it's a long, long foreclosure process there. Always need to put eyes on the property. I'm buying in about 30 different states as well too. So you always have to have people go out look at. It's a very heavily vendor driven business. In the notes space we have servicing companies that are handling the call outs to the borrowers, negotiate with attorneys. Basically I work like a general manager of a franchise or the owner. Like I'm in Texas. I'm a big Cowboys fan. So we'll say Jerry Jones of the Dallas Cowboys, right? He's not out slinging hot dogs and selling beer. He's sitting up in this suite drinking Miller Light, telling people, okay, go do this, go do this, go do this. And we'll reap the rewards from that. Now you'll have sometimes borrowers that will do stupid shit like they'll try to burn their head when they tried to burn their house down because they were mad off because we tried negotiating when trying to get them back on track, they didn't want to do it. So they, aha, screw you. And I was like, no, ha, ha, screw you. Now you're going to jail for arson. And we have insurance on that note. So now you're going to actually help us make more money by filing an insurance claim on that. And you always got to know, I mean, I would say if you're buying 10 notes, you're probably going to get three to four that borrowers will modify. They want to stay in their house. They want that dream of homeownership. And I'm glad to work with people. You'll have three to four people that just aren't in a good situation. They just are divorced or lost their jobs. They just physically can't stay in the house anymore. And we'll work with them on that by doing a deed loom, or we'll give them cash to walk as well. And the remaining four to five, they're just not going to answer their mail. They're not going to respond to phone calls. And you've got to go the legal route to foreclose. And that's actually our least favorite angled. One big mistake I made early on in my note business back in 2008, 9, 10, is I came from the fix and flip business. I mean, I was a mortgage broker doing rentals and fix and flip traditional real estate investing here in Austin. And when I would buy a note, I was like, oh, no, no. They've had their opportunity. I'm going to foreclose on everything. And I lost a lot of money. I left a lot of money on the table because I had deals I was foreclosing on. When I have to foreclose now, I got to fork out attorney fees and servicing costs, then repair costs before I see a profit in six to 12 months. If I would have modified those loans or kept the borrowers in them, I would have had cash flow coming in and sometimes 30 to 60 days and then a big paycheck on the back end. If you're in the note space, it should always. Your number one strategy should always be to keep people in their houses. Because when you start looking the Numbers don't lie. What the ROI tells you, the numbers don't lie. That's one big thing that we see people screwing up on is they come in the note space, they try to evaluate property. Oh, I'm going to take that property back and fix it up and I'm going to have arv. I'm going to have an after repair value. Well, we don't see that in the note space. It's as is value. I never buy a note on something that I don't want to end up taking back. I really don't like vacant properties because if a property has been vacant, we all know that the copper goblins usually will show up or the air conditioner will go for vacation and take off, or if it's cold in Chicago or someplace like that, you'll end up with an indoor ice or water feature. So there are some challenges along that way. But it's always an interesting day. You never know what's going to happen. We've got some borrowers that have been paying for eight years, nine years that are just grateful. They pay like clockwork. And then you got other people that you think are going to work out well that are just try to, you give them an inch and they try to take a Moloch and anything else. So it's never a dull day in the note business, I'll tell you that.

Yeah, I mean, I didn't mean to make it sound easy. I'm sure it's very complex. And us real estate investors, we face our own challenges. There's always somebody that's not paying or a difficult foreclosure or eviction. There's eviction processes that vary from state to state. There's maintenance issues. We can relate to that. I think as far as not everything always going perfectly smooth. But the part that jumps out to me is that that's started off by saying, why would a bank sell you this debt, this bad debt at pennies on the dollar? Well, it's because they don't want to deal with that. It costs them money to deal with it. They're in the business of lending money and making money, right, Making loans. They're not in the business of working with people and helping them, but that's where the opportunity is. You're able to do that, work with the person and get them back on track and get things sorted out. And there's value there that you're able to take advantage of while the bank is not in a position to be able to do efficiently, cost effectively. And they end up losing money. And I refer to it as like friction. It's just like anything in any business transaction or any business in general, the bank hits a wall of friction and friction costs money. Right. So they are willing to unload it to you and you dive. That's where you come in and are able to take advantage of it. You pointed out back in 0, 8, 9 and 10, you started that eviction process immediately. Well, I think what you probably realize or learned is that you were introducing friction sometimes where it's not necessarily needed. So in other words, as opposed to having all these obstacles that you have to or challenges and these processes you have to go through in order to get through the eviction process, there's less friction if you're able to just get that person paying their mortgage again and you're able to collect money again. So a lot of good stuff that just came out of that. I got to ask you, Scott, how did you get into first of all real estate investing and then at what point and why did it turn into note investing?

So I grew up in a small town down South Texas where my dad owned the local hardware store. So I grew up doing stuff, housing and roofing, electrical, digging ditches, whatever you do. Blaine Foundation. So I was a lot of times I say that the slave labor on the weekends, getting paid a few bucks an hour to help out. So I learned about doing stuff. And so like many people always interested in real estate investing those fictional TV shows on tv, my ex wife at the time loved watching those. And so we bought our first house in 2001 and we bought two investment properties back then too because we had great credit. And so we got basically three houses with nothing down. Three first three seconds. And we're going to be landlords. I can fix anything. I thought, well then the employer for our two rental properties, the tenants in Dell Computers there laid off a ton of people. So. And then I got laid off because I was a financial advisor at the time. And so we were trying to make six mortgage payments on a private school teacher salary. It is not a good place to be in. Luckily for us, we got our assets out of a sling, got rid of the two investment properties, did a modification and kept our our primary. But I learned I became a deadbeat bar, I guess you could say because we just didn't have the funds to do that. So I've always been empathetic towards that. Fast forward a couple years later, 2004, banking for JPMorgan Chase mortgage banker and a buddy of mine approached me who was starting a mortgage company with a couple real estate investors who taught creative financing, they taught owner financing, wraparound mortgages and then business. I said okay, that's what I want to do. So from 2004 to 2008 I co ran a mortgage company. We were doing loans in over 30 states. I was on a plane pretty much every, at least once or twice a month going and speaking in front of a big expo like the Ron Legrands out there in the world. The big educators of these big expos back in the day doing mortgages, but also learning creative investing and real estate investing the right way was doing options and some subtos and small flips and some rental property. And then when everything hit the fan in 2008, I sold my half of the mortgage company for a buck because that's about all it was worth at that point when everything hit the fan and just started dialing for dollars. Because I had basically this four year apprenticeship on the note business. And so I just started dialing for dollars, calling banks, calling lending institutions to track down their debt that they had originated a lot of subprime stuff that we could pick up. And so I started doing that, started flipping paper, wholesaling notes to other investors, started building some cash reserves and then started taking down some bigger projects. Like one of the biggest accomplishments I think of back in that day is over a three week period I was calling Capital One to get into their trading department because I missed out on a traditional deal here because they sold the note. So I know they're selling the note. So three weeks, 70 phone calls later, I finally get into the right person and I can't tell how many times I got transferred to Pakistan or India or disconnected along the way. Finally get the right person. She sends me over a PDF of all their small balance commercial stuff. It was 34 pages long with everything in like 6 point font because I just had so much. And she's like look, I'm like I can't buy this also I go buy something. And so I flipped. I saw San Diego apartment complex on there in eight units. I got it under contract for 375. I wholesaled that note for 415, made 35 grand, flipped another one for 50 grand, flipped a third one for 75 grand, made 10 grand on a beer barn that I bought the note on and I sold it back to the actual distributor in it. So it just got creative with that. And now fast forward. It's hard to believe 11 years later. Basically it's all I've Done. We've bought over a billion dollars in distressed debt. We've got a different type of portfolio. We've always got stuff performing, we got stuff non performing. We're looking at some hotels right now. And that's how I got into it. I guess you could say the biggest thing I did in 2010, I'd just gone through divorce and stopped working with another partner. And I literally said I wanted to get out of town. So I'm a big baseball fan. I don't know about you, but huge baseball fan. It was about the start of the season and so I planned this trip around the country to go see all 30 Major League Baseball parks. I guess you could say divine intervention. Because I was starting to share my marketing and share some of my case studies and videos of what I was doing. I started having real estate investment clubs call me up, say, hey, can we use your blog and our article and would you like to come speak to our group on this note investing? I'm like, yeah, sure, when do you want me out? And the dates that they had available lined up specifically exactly when I would be in that town to watch a major league baseball game. So total divine intervention, the way I look at it. And so that's what I did. I sold everything I owned except my truck and my dog and jumped in truck. We drove around what we thought would be 30 weeks, turned it in three and a half years of non stop travel teaching speaking. I walked into a lot of banks, evaluate a lot of debt and became the note guy on a grassroots effort like that. And like I said, it's been an amazing ride. Yet still talk to some of those people that we bought notes from back then as they've been calling me now versus me calling them, like, hey, what are you buying these days? Because we've got a lot of stuff on our books that we're going to be moving here in the next quarter or so. So that's a my background I got to where I'm at today.

That's a great story. I mean it sounds like obviously, I mean you have and you've turned it into and built a successful business doing it. It seems a couple things I would like to take away from what you just said is you took the challenges the early 2000s and the things that you learned, but you didn't let that stop you. You learned from it, you acknowledge it, you learn from it and then you pivot and you keep pushing forward. You hustle. After 2000, I guess it was 8, 9 and then 10, you, you're just on the phone, right? You're making calls, trying to make stuff happen. So to our listeners out there, to all of our nesters out there, we talk about getting started in real estate and what it takes. And it's not all just easy and perfect, right? There's going to be challenges, there's going to be some failures, but the key is trying to learn from them and learn what went wrong so that you don't make the mistake again. And you can take that lesson forward with you in your investing career and in life in general. The other thing is that you took all those lessons that you learned and all this knowledge that you have built up and gained, but you took action on it. You're not just sitting there waiting for something to happen. You have to take what you know and put it to work. So that's the biggest takeaway for the people who are maybe listening, who have not started investing yet, and they're learning and they're listening to podcasts and they're reading books and they're gaining all this knowledge and all this information. But if you're not acting on it, there's not really much of a point. So we always need to try to remember, take what we're learning and put it into action in addition to just taking action in general. So a lot of great stuff there. Back to just real quickly, on the note investing specifically, you've talked about a lot of the benefits. What are a few, if any, of the pitfalls, and maybe some things to look out for if some of our listeners are going to try to go out and start doing this.

Yeah, I'm glad you brought that up, Travis. You always learn more by your mistakes than you do by your successes along the way. So those of you out there that have been bit by the mistake bug or stubbed your toe, you're going to do more by learning and take what you learn from that. But some of the mistakes that you'll see the pitfalls is people not actually putting eyes on an asset. They just rely on Zillow for values or the picture of the property. No, no, no, no. Now, while I don't jump on a flight to go look at every property, there are vendors that we use or people go out to take photos of the properties, make sure it's there. Well, there have been times where like, ooh, the Zillow property looks good, but it's actually the house or the empty lot next door to it that you're buying the note on. You got to be careful about that. Okay? Second pitfall is people not checking taxes, like, oh, I'm gonna buy that note. And they don't check the taxes owed or make sure that the property hadn't been foreclosed out by a tax sale and wiped out. That way that can happen. You gotta always check your taxes, make sure that the name matches up with the note. Because the name doesn't match up, is either went to tax sale or something else has happened that you don't wanna buy a note that you end up. Another third thing is checking the collateral. You got to make sure that the loan docs are all there that you're buying. Because you're technically buying the docs, you're not buying the property. Property is a collateral for the loan docs. So you always got to make sure that the correct documents are there. Make sure if the note's been sold three or four times, you've got an assignment and a line to go along with that. So those things are important. There's different moving parts. It's a whole different mindset than like the HG flip this house thing or buying a foreclosure. It's a whole, you have to approach it from bankers mindset. And some people struggle with that. Evaluate it like it's a property. Like I had a guy working for me for a little while and he made these bids on these, all these Georgia prop notes. And I'm like, I'm looking at the bids before he sends them in. I was like, why'd you bid this? Oh, because it's worth 100 and I'm getting offer at 60. I said, yeah, but the guy only owes 50. Why are you going to pay more than what the guy owes to the bank? That doesn't make any sense. You have to take it from a note mindset versus a real estate mindset. So those are the things that we see a lot of people like, I'm going to buy this because there's all this equity. I'm going to take the equity back in the note space. That equity doesn't belong to us. The equity belongs to the borrower a lot of times. So while most investors would target assets with a ton of equity, we actually avoid them because they're not that big a discount. And if you have a lot of equity, the borrower is going to fight you a lot of times to avoid the foreclosure. So it's having to almost like retrain somebody's mind to understand the bank side versus the fix and flipper or the note side. You can't Go get a loan from a bank or a hard money lender. Most of the time to buy a note. You got to raise capital, private capital to do this. So you've got to be good at talking with other investors. We use a lot of self directed IRA funds or private funds are doing that. A lot of people start funds, get PPMs and five or six season Ds or reg A's, raise a lot of capital because when you buy in bulk, you get bigger discounts from banks. I mean that doesn't mean you have to have 5 million or even a million bucks to get started. There's a lot of people that get started like 25, 50 grand buying 1 or 2 Z and they figured it out and then they go from there. I guess you could say that's some of the different pitfalls. People that have money is a good thing, but they're all often handicapped to their own investing strategy because they won't go market for money. So they only will look at what they have in their account. That's all that they'll bid on me, I'll make a million dollars offer and have 50 grand the account. And my staff was like, you don't have that in the trading accounts. Like I don't care. It's going to take a month for them to come back. We get back in, final number. If I'm bid down 60, I'll probably end up with 30. It gives me a month and a half to raise capital. I'm totally fine with that. We'll do it. So some people have that type of mentality, oh my God, I can't do that. Maybe I'm a little bit more of a riverboat gambler, but I know what I'm capable of and I know that there's money sitting out there. I mean there's so much private money. You just got to get in front of people and tell the story of the deal and show them that hey, we're buying this cheap so you're secured. Because we're not going to be over 60 cents on the dollar with all in. I'm only buying first liens, I'm not buying second liens or junior liens. We have professional team of attorneys and servicers that are doing all the heavy lifting. I'm not the guy calling the borrower knocking on the doors in case of an act of God. We've got insurance that covers us. And you're not wiring the money to me, you're wiring it to the bank or to our attorney to handle that. And going from there. So that's a different mindset than a lot of people have. So it's just like I said, you tweak it and understand it and then once you get it you're like, oh my gosh, it's like a whole new world when you understand the note business.

Yeah, I mean I imagine the learning curve is somewhat steep. And in just a minute I'm going to ask you how people can reach out and connect with you and find out more about this. But you mentioned it earlier referencing Jerry Jones. You're like the puppet master pulling the strings. There's a lot, like you said, a lot of moving parts. There's a lot to know about this type of transaction in this business. Not just the options you have, but actually how the process is and how to make it actually happen. But that's why you do what you do, because you have that know how you've put all these pieces together. And I also like what you said about putting the bids out and then figuring out the money later. It's not like typical real estate measurement. We might have to attach a proof of funds letter or copy of a bank statement. I mean this is like you said, thinking less like an investor and more. But the business mindset, it's basically eliminating all the emotion, emotional factors out of it. It's just numbers. You're deal with bankers and lawyers and it's more or less. If it works, it checks the boxes, it works. If it doesn't check the boxes, it doesn't. You got your criteria and then you just make it happen. You move the pieces around and you make it happen. So there's a lot of good stuff there. Before I talk to you about how people can get in touch, it's time for segment advice from our invest guest. So it's three questions we ask each guest every week. Question number one, what is one thing that you can recommend to people who have not got started in investing in either real estate or notes or anything yet that they can go out and do right now to help get them on their way?

Great question and I think everybody needs to join your local real estate investment association. You need to surround yourself with like minded people. We all have friends, family, colleagues, but they're not always the most supportive. They want to protect you and sometimes they get downright jealous if you're going to try to better yourself. So go join your local real estate investment club. You go to reiclub.com can find a list there. You can go to meetup groups and type in real Estate in your city and a bunch of pop up. Most of them are virtual. Some of them are starting to come back and be in person. I think that is the number one key to educate yourself, get out there, get started, start following people, connecting with people. Doesn't matter if it's notes or flips or whatever. Join your local or virtual meetup groups. That's the number one thing. And usually if you're joining a local one there may be an annual fee or some sort. There's a lot of free ones but usually the ones that have an annual membership are a lot better because they bring in quality content and they've got features that'll help you Versus free is not always good. But go join your local rea clubs and go from there. That'd be the number first one thing they could do today if they haven't done that already.

Great answer. I talk about it all the time. Reach out, find your local real estate meetup group, get online, start networking, join the invest nest. It's all about getting out there, meeting people and like you said, like minded people thinking together. Rising Tide raises all ships so you run with the right circles and people that want to do the same things and accomplish the same goals you have, it's only going to help you as opposed to hurting you. It's a great answer. Okay, number two, you had already answered this earlier on, but one thing looking back that you would do differently if you were to start back over again.

Man, one thing I would do differently would start back over again. It would be more to buy notes just to go ahead. One thing, make more offers. Because I was like many people, I looked at what was in my account and was only comfortable with that and making offers when I should have just made a whole lot more offers and market a little bit more. That would be the first thing. Secondly, approaching it from a lending point prospect, I mean and a modification process versus a property prospect, that would be probably the biggest thing that I would do differently because I went back and looked at those deals and the amount of money I left on the table, it hurts. Looking back, hindsight's always 20 20, but that's what's so great about what's going on right now. I can learn and apply what I've learned and made mistakes on the last couple years and applying that to make my business better. And that's. I think we as real estate investors are always doing that. I mean things change at times you're going to have deals, you get caught up and stuff. I had a couple foreclosures early on in my career where the market went south on them and I ended up writing some big checks at the closing tables as I was moving in the note space. So you learn from your mistakes. I'll tell you this right now. You show me an investor that's never made a mistake or never been sued on a deal, I'll show you one that's never done any deals, ladies and gentlemen. That's what it comes down to. And I think you'd agree with that. Travis, you're smiling. They're smirking. Pretty good, huh?

I mean, that's just all I'm gonna say is that's good advice right there. That's good advice. Yeah. I mean, all of that doing more of what you did earlier, everybody kind of has reservations of why they can't do certain things or do as much of them. But hindsight, like you said, It's 2020. Looking back, it's more of an abundance mindset. Go for it. Make it happen. So good answer. Okay, number three, I don't know if you have a book recommendation, but anything maybe that our listeners, if they're interested in the note space, if you have a recommendation on a book, read for them.

Yeah. Well, I'll tell you this. First thing you should do is hit that subscribe button and leave Travis a five star review. If you're listening to an itunes, that's the first, first thing you should do. He's got great stuff. We as podcasters love hearing from our listeners, so leave a five star review. It makes us feel good. Sometimes we feel like we're talking into an empty box sometimes. So do that first. But books, there's always great books. I'll recommend two. One for mindset and really being focused. I would go and get Outwitting the Devil by Napoleon Hill. He wrote this book back in 1938. It was never published till a few years ago. Any rich dad, poor dad fans out there will know who the name Sharon Lecter is. Sharon was actually given the manuscript by the Napoleon Hill foundation and so she released it, leaving pretty much the exact wording in place with her just adding a few paragraphs here and there per chapter and what she thought for how she taught Napoleon Hill to approach the subject today. And the book is based on Napoleon having a conversation with the devil and asking the devil what makes the devil successful. And in the book, he talks about the fact that he gets people to drift. Those people that are the most successful, those that have the most amount of success in life, are those that are focused and avoid distractions. And Devil likes to throw distractions in our way. TV news, social media, God, we all know what's going on these days with distractions that cause us to drift. So if you can avoid drifting and be more focused, you'll find success in whatever you're doing. And so that's one book that I've probably given away. I'm not joking. A couple hundred copies over the last 10 years. You're looking for a book on note investing? I got a book, how to Buy real estate at 40% off and how to Break in the World of note Investing. I don't know if it'll show up here. If you email me at scott@weclosenotes.com, i'll send you a free copy of it. 73 page book, very easy to kind of read. Kind of a good start for you guys out there.

Awesome. Great recommendations. And that first book that you mentioned, that sounds like it's got a lot of good advice in it, not just for real estate investing, note investing, but just life in general. So great stuff, great answers. Okay, Scott, this has been a lot of fun, but before we wrap up any of our listeners out there, how can people get in touch with you? Where can they find you? If they want to learn more about this and how to do it, is there a way that they can connect with you and learn from you? Do you have anything that you could help our audience out with?

We just, we just have just a few resources. I've got about 660 podcast episodes on the Note Closure show podcast. You can check that out about a thousand plus videos on my YouTube channel at WeCloseNotes TV. You can go to my website, WeCloseNotes.com, check it out. I'd like to do something special for the envestnest audience. Every third Saturday of the month we teach a one day class called Note Weekend. Basically it's a one day dip your toe in the water, the Cliff Notes investing or Cliff Notes side of note investing where we'll spend a full day just helping you understand the find the fun. The flip side of note investing, it's usually 49 bucks. But I'm going to comp anybody from the envestnets community into it for free. So if you go to noteweekend.com and sign up there, if you use a special code nest, it'll copy in for free.

Awesome. That's great. I appreciate that. I know our audience will too. And I'll make sure I put all of Those links and information down in the show notes below, not just to the free course that you're offering, but also to your websites and all your social media. So any of our listeners out there that want to connect with Scott, learn more about him and maybe take him up on his offer for his free course, be sure to check out the show notes below and get in touch with Scott. Scott, this has been a lot of fun. This is a unique topic, I think, from our typical guests that we have on. So I appreciate the time and having you come on with us and tell us about your story and what it is that you do. I think this market's been challenging. It can be challenging for a lot of investors and everybody's looking for creative ways and different ways of doing things and trying to find opportunity and value and return. And I think just having you on is a great example of when you do get creative and you do maybe look at things a little bit differently and force the issue and keep going after it, that it can have a huge payoff. So thanks a ton for coming on and sharing your story with us. It's been a lot of fun and.

Honored to be here, Travis, and love what you're doing. Keep up the great work and everybody out there, listen, hit that subscribe button now. Do it. You cannot go wrong with the stuff that Travis is putting out there, so do it. Kudos to you. Keep up the great work, brother.

Likewise. Thanks, guy. It's been a pleasure, man. Best of luck to you in 2021 and beyond. And I also want to thank all of our investors for joining us again this week. Thanks for tuning in. I hope you guys enjoyed that interview as much as I did. A lot of great stuff. Scott is doing some very interesting things and you know, it really is. This market can be challenging right now, so getting creative and doing things differently. Although Scott's been doing it for a long time, it may be new to some of us, but, you know, exploring different avenues and exploring different options may present opportunities to us. So I hope you guys got a lot out of that. Be sure to check out Scott again. I have all of his links down below. Go take advantage of his free giveaway. The course that he's offering, the link down there and the promo code will be in the show notes, so definitely go check that out. I want to thank you guys all again for tuning in this week. Every Wednesday we release our podcast. Hit the subscribe button if this is your first time listening and if you're a longtime supporter, go leave us a review and rating. It really does help us out. Again, we're on Instagram, Facebook and Twitter and@theInvestnest. And go create your free profile@theInvestnest.com today. All right, everyone, thanks again for tuning in. As always, I'm your host, Travis Murphy. And we'll see you next week on the Envestnest Real Estate Investing Show.

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