Insights From The Note Business with Scott Carson

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Chronicles where law meets life. Prepare to embark on a journey with our top notch guests as they examine law, life and the pursuit of happiness in America. Now here's your host, Jason Byrd.

And we're live.

Scott, what is going on, man? I'm honored to be here, buddy.

Well, I appreciate you being here for everybody. Let me give a little background before you introduce yourself. You're here on the Bird Chronicles again and thanks for listening, all two of you. I've got a special friend here today that you know. You get two treats. Number one, you get my boy, Scott Carson. And number two, if you want to watch on YouTube, you can get a little video. We usually do it by audio, but we do it by video. But by way of introduction, I wanted Scott to come on for two reasons. Number one primarily is he's a very successful professional in his industry. He's all over the Internet. I mean, if you're looking at anything about the note business and don't find Scott Carson, then you're blind. And it's because he's truly an expert and he's good at it. Number two, Scott's probably the oldest friend I have. We met when we were nine years old and have been friends ever since. I love him like a brother. I don't get to see him very often, don't talk to him like I should, but I still love him and he's a fun, interesting guy. So I hope you enjoy me and Scott here today. So welcome, Scott.

Hey, man, same here. Honored to be here. Yeah, man, we got. It's hard to believe that you think back 32 years ago to those two ingle dinks from Ingleside. You walk into my dad's hardware store and then us playing around and getting in trouble and high school and friends. Yeah. Oldest friend in my Rolodex. Yes. We sure as hell don't talk to us off as we should. But when we do, it's always a good time and we have a tendency to crack up. So I'm sure we'll have some talking today.

Well, and I'll start it off because I'm always going to have to correct you whether I'm right or wrong, because you know how that goes. But I think it would make it 33 years.

33, you're correct. Yes, you're right because. Yes, I turned 42 here and in two months. So, yeah, you're right about that. Exactly. You don't have to get good at math in the note business.

So Scott is the host of the no Closers podcast He's the owner of We Close Notes and We Close Notes dot com. And it's been pretty fun to watch from afar. I'll say Scott, but Scott's one of the big reasons I started this podcast. And it's because it looks like you have fun when you do yours. Do you? Or is that all an act?

It is great. When you called me up and were asking about it and you said you were doing it, I was like, oh my gosh, yes. Awesome. I enjoy this. I've always been. Had a bit of personality. I went to school originally for radio tv. That changed the journalism. I thought it was gonna be the next dan Patrick on SportsCenter is what I wanted to be originally.

I remember that.

And then I remember one of the first things that we did was that TV show our senior year that you were the host of.

Right.

Back in the day.

Some cable access.

Some cable access show. Exactly. For high school football. But it was, you know, it was really good.

I think it was supposed to be for just high school related interests. Would get my football buddies to come on and talk about football.

Exactly, exactly. And so yeah, the podcast, I mean, I've been doing a podcast for 19 months now, so not long. But I have been doing a lot of video, online webinars. Yeah. All over YouTube, Facebook, with our company. Because it was a way for us to really reach out and communicate with our network. You know, I'm in a very, very niche aspect of real estate investing in the note space, specifically non performing notes. There's maybe 15, 20,000 people across the country that are investing it and there's even fewer of those. There's like four or five of us that actually teach it. But yeah, I was doing webinars and I started this podcast 19 months ago and it's been crazy to see it blow up like this. We just went over 270,000 downloads a few minutes ago. Sponsors. I've been asked to speak at a conferences because we do a really good job of marketing it and using our audio or the video because we do live streaming like we're doing for this one across the board. And I'm Getting People from 80 countries are listening into our podcast and 40 states and we've had investors reach out to us to invest with us and people to sign up for our workshops and things like that. So it's actually really kind of crazy. Beginning of the year, we completely revamped what we kind of do and how we structure it because to be more focused on the podcast because it's just Been amazing to see people reaching out. I think people really like it because if they listen on a regular basis, they get a chance to kind of get to know you. Right. And you're big in relationships too. And that's the beauty. What you see is what you get. You either like it or you don't. And if you don't, hey, no skin off. You know, your knuckles keep going on your way, but if you like it, hey, great. It's a great way to build relationships with people, whether it's here in your backyard or halfway across the world too.

Well, I've gotten to the point in life, if you don't like me, that's fine, I'll just move on. I'm just going to keep doing what I do and try and treat people right and I'll just move on from that. Now, 20 years ago I'd have fought you.

20 years ago we had a little bit more piss and vinegar in our veins.

Well, I wanted to ask you because my audience may be a little different. You mentioned that you have about 15,000 people in your industry if you could dumb it down for a lawyer like me. Because you know, in my law practice I don't deal with non performing notes. I understand the terminology, but what you actually do, how would you explain it to a guy on the street?

Yeah, so everybody's in the note game. If you've got a mortgage payment, a car payment, credit card, student loan, you know, whatever. Yeah, exactly. If you're making a payment out to somebody, you're in the note game, you're just on the wrong side of the payment stream. I become the bank, basically. So what I focus on is I buy non performing notes or mortgages from banks and hedge funds from anywhere like Wells Fargo to like the small little real estate investment trust that financed a property for somebody. So we buy the mortgages where people aren't paying. The fact that they're not paying allows for us to buy that debt at a big discount. You know, it's a receivable. So, so the bank sells that debt to us at a discount, 30, 40 cents on the dollar, what's owed. I then become the bank and then I make my money by rehabbing the borrower for the most part. People watch hgtv, flip this house or they've been a landlord, they understand the rental side. I'm not that, I'm the bank. And my big goal is then we'll reach out to the homeowner, the borrower, and try to work out a win win scenario. Whether it's a loan modification with them or just trying to get them back on time again. Hey, you've been out of work for two years. We'll just take this two years of payments and put it on the face amount of the loan. Or you owe 150 and your house is only worth 75. Now let's get you on time for six or 12 months and then we'll forgive you a big chunk of that debt because it's not really worth that. And reduce your down to 75 grand and make it a win win across the board. Because If I paid 20 grand for that note and your mortgage payment is say $800 a month, I'm doing pretty good. If you pay on time for 12 months and then I can do a permanent modification and then, you know, if you pay on time for six to 12 months, it's now it's not a non performing note. Now it's not considered reperforming. I can sell that loan back to Wall Street.

That was my next question.

Yep.

So in some ways you're maybe playing the spread. So you buy. I'm using these examples, so bear with me. Let's say you buy 100 of these at 30 cents on the dollar and you get 70 of them performing at at a level at which, you know, traditional underwriters would buy the paper. And then you sell it at 70 or 80 cents on the dollar. Well, they're happy because they've got a performing note that they bought at a discount. And you made the spread between the 30 and the 80 cents.

Exactly. Plus the cash.

Right. Is that oversimplifying it?

No, that's exactly what we do. That's a note business in a small five minutes aspect of things. Unfortunately, a lot of people overcomplicate it and try to use your bigger terms, but that's really what it comes down to. We buy the debt at a discount. We want to keep the borrowers in the property. If I have to take the property back, then I'm dealing, paying attorneys. I'm having to go through the foreclosure timeframes, which can be six months to two years. And then I've got to then fix the property up to sell it. I don't want to do that. I want to buy a note, incentivize the borrower in some sort of fashion to start paying on time. Now I got cash flow coming in in 90 days versus waiting nine months. And you know, in a year. Now it's re performing. I sell it 80, 85. I made a Nice chunk of change along the way. And at the end, and then I'm taking that money now, instead of buying one asset, I'm doubling down, buying two or then buying four and going that.

Way and able to exponentially grow it.

That's correct.

Well, you said paying attorneys like it was a bad thing.

No, no, no, it is not.

It's not a bad thing.

I love my attorneys. Don't get me wrong, we love it. You know, it's nothing wrong with that. I love attorneys. They do a great job for us. We're not the ones doing the foreclosure. We're not the ones making the call outs. I just like the velocity of capital. I like my money increasing. So if I know I've got a paying attorney, I know it's probably going to go the foreclosure route. That is a pain point for me for the most part. But no, I love our professionals. I mean, we've got attorneys in a bunch of different.

And I get that. I say that mostly in jest.

Sure.

Because I like to tell people, if you call me or you're in my office today, it's probably not your best day.

Right.

I mean, you have a problem. And in my practice in particular, although it's fairly diverse, it's all litigation based. So. Different than what your lawyers do for you. I mean, there may be technically some litigation, but nothing like what I do.

No, exactly.

And if I'm doing that, then you probably should have called me a couple months before you did show up. And it's, you know, it's a lot of stress for people. So I get it. You don't want to be in my office. And so I use it. I said that. But I try to say, okay, well, what's your problem? And let's help fix it. And that's what you do with your borrowers.

Yeah, they've had, you know, you have borrowers that have been in the house for years when they've maybe their mortgage has been sold three or four times. A lot of them don't know who to mail a payment into.

Right.

Or they've made some payments and then their loan got sold and they don't know who to send it to. And we've even had some deals where we bought the assets in the borrower, like, thank God I've got a year of payments saved to pay you. It's just that the new person that bought my loan never reached out to me, never sent me a letter. I mean, we see some weird situations out there, but.

Well, in not all mortgage service companies or mortgage companies are built equal. Some they're really good and responsive when they're producing the loan. But on the service side, it's always not good. And frankly, I've experienced that recently. And I have an indemnity payment I received from insurance and I just went ahead and did all the work out of my pocket and I can't get them to send me my money. And it's been months. I've sent them four letters from the law office saying, please just release it. Here's the info, here's all the stuff, and nothing. So I just.

You need to let me know who that company is. I might have an internal phone number or internal email for you to reach out to.

Well, it's already fine now. I mean, well, it's not, but I mean, I filed suit and my most recent statement shows they're not holding the money anymore. So I assume that means they've issued a check, but I've yet to see the check. But I just went ahead and filed suit and now they're going to pay me for all the time I had to deal with it.

There you go.

Yes, it's going to cost them an extra ten grand just for someone not picking up the phone.

Well, you said something very, very important there. On the origination side, they're all about service.

They're all about sunshine and lollipops.

Exactly. Once they get you paying, okay, we'll take our time. We're not really worried about. But the servicing side, I mean, they're hiring people that are making, in some cases would make more flipping burgers at McDonald's to handle the workouts or handle the phone calls. I mean, that's what we ran into. I actually hired away my asset manager at my servicer away from the company and to work for me full time because she wasn't making much money there and she was going to leave, it's like, no, no, no, you do a great job. I want to hire you. Let me bring you a board. You can work remotely in New Jersey from home. I'll send you a computer, everything like that. And she was like, awesome. She does an amazing job. I mean, she's on the phone communicating with our borrowers and then talking with our attorneys and then communicating back with the servicing company, making sure things sent out in a timely fashion. That's the biggest frustration we hear is when they're talking to mortgage companies or the servicing company, they just don't give a rat', especially if you're behind and Trying to negotiate a mod or a short sale. There's nothing short timeframe about a short sale still. It may be faster than it used to be, but it's just that these people have these stacks of files. They're not paid to really care, and they just go off the top one. If everything's there, great. If it's not there, it gets put to the bottom and they just go on the next one.

Oh, I get it. You know, years ago, this has been over 10 years ago, but I actually sued Countrywide when they were still around. There were three statewide class actions in three different states going against them. And I basically decided, you know, looking at all of it, that people were all similarly affected, but it couldn't meet these technical legal requirements for class. So I ended up representing about450,500 individual people and filed them as individual lawsuit cases.

Wow.

And ultimately, basically, we were playing the class against them and playing them against the class, and ultimately it all got resolved. Our group of people got, at a minimum, three times what the class relief was and some 10 to 20 times.

Wow.

And we got paid more than the class lawyers, too.

Well, that's why it's important. And I tell if people are listening out there, that's why it's important to communicate. I mean, our best buck is when I've never found bad money when I paid either my attorneys or my asset protection people. My accountant and my attorneys have always been good money. Sometimes I didn't like to write that check, but it usually came back exponentially of what I was paying to either represent me or handle the foreclosure or to make sure our stuff was protected.

Well, you know, in my podcast, I call it the Bird Chronicles, where law meets life. So we got to talk a little bit about law stuff.

Sure.

Don't feel like you're tied to it because really well. And part of me doing this, Scott, was through your encouragement, but was really something to keep me engaged. And I don't know if you see this in your business, but part of my biggest impediment to success in my business continued over time is me. And it's mainly out of boredom. I can get bored with it really easy. And, you know, it's not good work. And not that I don't like it, it's just, you know, it gets old like you see on tv, man.

Yeah, I totally agree to that, man. My note business is great. I enjoyed the teaching, but when you're doing the same thing over and over and over again, especially when you're Extrovert personalities like you or me. You want to be doing something different instead of regurgitating. You don't want to be the smartest person in the room. You want to find ways.

I'm used to it.

Huh?

I said I'm used to it. Yeah, well, I was just mentally.

It's funny you say that, though, because I have used the pod. The podcast has allowed me to, really. And I still travel a ton for things, but I've actually turned down speaking engagements at different note conferences because I'm like, I don't want to be the smartest person in the room. You know, I appreciate that. But you can get everything you need from a webinar or my website. I know everybody there. I don't need to go. I'd rather just stay at home in my flip flops and shorts and do a podcast episode or do a webinar from there and use the 21st century technology to share that information. And I can do without jumping on a plane and staying in a hotel room and eat my own food, sleep my own bed at night.

Well, it's a very good point. I try not to travel as much as I used to as well. You know, you really got the train rolling, so to speak. I mean, that's obvious. You know what you're doing, you're good at it. But it probably hadn't always been that way. I would think, just by you explaining your business, that the first impediment is just access. How the hell do you find out who to talk to and where to find the note information that's not proprietary for me? And then, number two, the capital to close the deal when it's a good deal. How did you get started?

So, funny thing is, I was actually a deadbeat bar for a while. I graduated college from Texas State University. Go Bobcats. Thought I'd be a real estate entrepreneur because I knew how to fix everything in a house because I grew up in my dad's hardware store. And then so I started. We bought a couple investment properties. Married, college sweetheart, bought a couple investment properties. And then I got laid off for my job. And we were making basically six mortgage payments on a private school teacher salary. Three first three seconds, because at that time it wasn't. And then Dell in Round Rock, where we live in, where our investment properties were, they laid off a lot of people. So our rent rates went below what we were paying in monthly mortgages to them. And I didn't have any income. Because when you were straight out of college, what do you do when you're making good money, you spend it on toys, you're spending it on the big screen tv. I mean, I was making good money as a financial advisor basically then, but it didn't last long. And so.

Been in an old hookage and blow, weren't you?

Oh, yeah, no, no, I'm good on that those days.

Just joking, man.

That was later on. But no, you know, fortunately I had a buddy that I'd known and I got into banking. I started working for JPMorgan Chase for a couple years, was top banker in Texas. And my buddy that I worked with, a financial advisor started a mortgage company. And I was like, that's really where I wanted to go when I talked about what they were doing. And four years I got to travel the country at all these different real estate seminars and expos Offering mortgages to investors. But I also sat in the back of the classrooms and took all this free education in that I had access to, which is nice. And when everything hit The Fan In 2008, I left the mortgage business and just started dialing for dollars and calling banks and asset managers. That's really what really separated myself is I would make 50 to 100 phone calls to banks and get transferred. I can't tell you how many times to the right department, it's the secondary marketing or the special assets department is the name that these institutions, it's people in these job classes that they handle the distressed asset sales, the distressed mortgage sales. So I'd call, make 50 phone calls, get four or five people on that, send me a list, and then I would dive into that list. One of the big turning points is when Wells Fargo Financial was around, was one of the first tapes I got from them. Back in the day, they sent me 72 properties or 72 notes that I could buy like anywhere from a grand to five grand. You know, it was ridiculous. I bought a three bedroom, two bath house, bought the mortgage on this house in Jacksonville, Florida for six grand. I flipped it for 20 grand. A month later, Capital One sent me a big list of stuff that I got from making sending phone calls over three weeks and getting transferred. But when I got their list, it was a 33 page PDF with all their assets in the country that were below a million dollars in a commercial side and all it was in six point font. I almost needed a magnifying glass to read it, you know, but it was crazy. I was like, I can't buy all this stuff. Like don't just buy something. So I would find an asset.

I didn't even know what they had of it on that list.

Yeah, exactly. But I found the six unit apartment, eight unit apartment complex in San Diego. It was worth 700. They wanted 375 for it for the note. I found somebody would pay me 425 for the note and they could take it. And I made 50 grand that way. And I just started rinsing, repeating and doing that for a couple years, scratching out. I had a business partner at the time and 2000. Like, you know, about this time in 2010, we stopped working together and I said, you know what, I'm gonna get out of Austin for a little while. And so I planned this massive 30 week tour across the country to go all the ballparks and then remember that on Facebook. Yep. That 30 week trip turned it into three and a half years of travel of me speaking or going and meeting with banks. I spent a lot of time in Florida. As I like to joke, it's God's waiting room. And I would just literally I would go like door to door like banks. I'm not Mormon, but I felt like it, a lot of it. They tell you about how I can save your distressed debt. You know what I mean? I got short hair, I look a little younger than I am. But I'd walk in, these guys, these asset managers or bankers are 60, 70 years old. They're running these two or three community banks. Like, what do you know? And I'm like, well, I know you've got 70 million in bad debts. That's over 180 days late. That's killing your books. Why don't you let me take a look at it and see if I can't help you out with some of it. And they would just like look at me and be scared. Okay. I'd walk into their conference room and it would just be stacked to the ceiling with loan files. I mean from the floor to the ceiling, hundreds and hundreds and hundreds of loans. And they're like, here's my assistant, please help us. And I just started flipping through a file and it's not quite as glamorous as like the big short. Made it look like the movie, but it was a lot like that. Flipping through lists and spreadsheets and looking at credit scores and payment streams and value of the property and where I thought that property was going and go from there. So I started off just really living on crumbs and buying crumbs and moving them. I didn't have a lot of the capital then because I had some investment Property here that I bought to fix and flip, and the market crashed. So I wrote some big checks to my investors. I'd gotten divorced at the time, too. So as I joke, I lost 135 pounds overnight by getting divorced. But just started.

I just got it. Sorry. It's all right.

It's a joke grenade. But then I just started. Okay. I really streamlined down to basically bare minimums. And, you know, I'd go from like a hotel or I have a buddy in Florida that knew I was coming to town and let me crash on his couch for a week or two. And during the day, I would just dial for dollar and would get a lot of banks buy something and flip it. Thank you. And that's it. We just kind of carved it out. And in 2010-2014, I was doing. And the industry awarded me the educator of the year award in 2014. I was pretty honored for that.

And really, I didn't know that.

Yeah, I actually. I think I got. Actually, I have the award back here. John Richards note. Educator of the year award, you know, in my industry. So that and $4 a buy. Might buy a cup of coffee at.

Starbucks, you know, but a small black one.

Yeah, exactly. They're Pike's Place. They're drip. But I helped a lot of people. That's one of the big things. I know you've got a big heart when you like helping people out and helping them overcome things. It's just how you're raised. And same thing here. We get students that take my classes and they start doing this on the side gig, you know, at nights and on the weekends, and they leave their job, but they dislike doing it because they bought a few assets that are now paying. That replaces their income. And they can do what they want to do. And that's always exciting. But the biggest excitement is when I get a borrower that we're really doing something cool with. We keep them in their house and they were facing foreclosure, and we came in, bought the note up and let them stay in there, but created a payment plan or something like that. When I get letters or I get mailing Christmas cards from our borrowers that send us stuff that, hey, thank you for allowing us to stay here. And that's the funny. Yeah, we make money. What we do. We have peaks and valleys like anybody else does with things that we're buying. And I wish to say it was always smooth sailing. I mean, I've bought some deals that have just eaten my lunch too. You know, I'll never Buy in Chicago again. It is totally Crook county, you know, it is totally crook county in Chirac, you know, lost over a quarter million dollars in a couple deals up there, you know, paid my investors back and took a big juicy bite on my butt. But our biggest goal is, like I said, if we can rehab the borrower and you can get that done 50% of the time with what we buying, we're usually sitting in a pretty good spot.

Well, it sounds like you've come a long way, baby.

Yeah, I'm no longer an ingle dink from Ingleside, but yeah, yeah, you still.

Got a little bit of that.

You can't get out of that. Exactly.

Well, what do you think? If you could put your finger on it and you may not be able to, but the one most significant factor or thing or break or anything has been in getting you on this long journey.

Wow. I've had really good mentors. I think that's a big thing that's helped me out more than anything else is having good mentors that have given me great counsel. Everybody looks for advice out there. Well, if we're going to do something new or going through something, we'll ask anybody, oh, what do you think about this? And they'll give us their opinion. And really is all it is because they can't really give advice because they've never walked in their shoes. So I've been very blessed and some really great mentors along the way that have helped me in this industry. The likes of, like Greg Reed, who's the author of Think and Grow Rich, Three Feet From Gold, Sharon Lecter, who's a friend of mine who wrote a co. Wrote Rich Dad, Poor dad with.

Robert Kiyosaki, Hannibal's sister.

Something like that. Yeah, exactly. That would be the biggest things. I think I've been coachable. Like I said, I don't like being the smartest person in the room if that is. It's not a very smart room. It's just coachable. I think the biggest things too is I'm not willing, especially my staff. I'm always telling my staff, I'm not going to ask you to do something that I'm not wouldn't do myself and some people I'm willing to do a little bit more than most people were able to. I'm always trying to stay productive. I think it's the biggest thing too. I think it just comes from my dad's work ethic and teaching him. They're always just a keep going at it, keep going at it. Keeping going at it.

And. Well, it's interesting you mentioned that last, because I kind of set you up with that question. And this is only because I know you. I suspected you would say something about a mixture of upbringing and people doing good things for you. And you did. Mentoring. But from knowing you since we were nine years old, I guarantee the biggest factor is your work ethic. You've always been willing to work, even when things were tough and I may be kicking your ass at football practice. You were willing to work.

That's right.

And that's pretty good how I slipped that in on you.

You are. Must be. Are you high?

I got my little smoker here.

The funny thing is, those that don't know is our coach had a nickname for us, Chili Pinkarni. You know, growing up, Coach John Robletto, Jason was the chili because he's always the spice, and I was just the freaking meat, the carny garni.

It's funny is the Scott and I, we got. And by the time we got in high school, we played on the football team and we were both. We were the two linebackers on the team. And you can't tell. I mean, of course, I've always been better looking, but he's just a bigger man than me, you know? And even at 17, I was a five foot eight at best. About five eight and eating everything I saw to get to 170 pounds, and he was at easy six foot, maybe six one. 210.

Yeah.

It was just. What? Right. And we'd have to go head to head every single day. But I'll tell you this. And he might get over on me a few times, but I never would let him know it. And if he was ever caught in slack, I'd use that chance to bust.

His chop a couple times. Goofing off or something like that. Yeah, bust the chops is definitely the right. It's a good thing. I get up and starting and chuckle like, who the hell is that? Oh, that was you. All right, let's get back in the huddle. Let's go have some more fun.

Well, you know, it's indicative, I think some of those lessons and the work ethic have lasted for me and me. And I know that's what's driven you and really helped you out tremendously.

Yeah. And I think the biggest thing, too, is I don't mind being the underdog. I like when somebody tells me I can't get something done. I get my dad's words in my ears all the time on different things. And you grew up in a small town. Everybody knows everybody for the most part. You know, you're in trouble. You're not in trouble. I like that aspect. I think a lot of that stuff is gone in today's society, things like that. But you're not afraid. You and I were never afraid to call each other on our crap. That was the biggest thing. If we did something stupid, we just fessed up to it, and, you know, it was better to get it over with and move on or go on from there. So I think that's a little that way.

And we're still that way in a large degree. You know, I'm pretty frank with folks. I'll tell you what you may not want to hear.

Yeah.

But I'll tell myself what I don't like, too. I make mistakes. It's about getting past those and learning from them. And I've made plenty of them in my practice, in my family life and everything.

That's the thing, I think you just have to. And sometimes, hey, the buck stops with me. I screwed up. Here's the solution. I don't have an answer today, but I'll have an answer for you tomorrow, you know, or, hey, this didn't go the way we thought it was gonna be. And that's the thing. I always. In real estate, not every deal's been a home run. I've lost money in some deals. I got some great deals and some deals that have gone south. It's just on the deals that go south that you know what you're gonna do in case it happens and making sure to take care of people and have a solution. Cause that's the worst thing in anything. Somebody asks you a question, you don't have a solution. It's okay to say, I don't know. It's better than telling a lie. But say, hey, I don't know, isn't it?

It's hard sometimes, though.

Oh, it totally is. It totally is. Because you've got. Well, it could go this route, but a lot of times you got to realize, hey, you know, realize where that person is coming from. They may not have the experience you have. So you've got to. I'm not going to say dumb it down, but put it in words that they'll understand or complications. And sometimes people, they don't want to hear the bad. We all know that most people want to hear just the good. They don't read contracts. They don't see the things in the contracts that, this could go this way. This is an investment. You Know, past experience is not an indicator of future performance. You know, that kind of thing. But that's the thing, is you just share with people and be honest. And there's enough smoke blowers in the world these days that just make everything sound good. And you and I both are not that way. I get that quite a bit from people who listen to the podcast, like, oh, you're pretty straight on. Or somebody asks you a stupid question, like, well, you've asked me that question three times now. It's not going to change anyway. Here's what it is. Why are you asking me the question? You're not going to do something anyway. You just got to be honest with people. And I think honesty and being direct is a lost art, and I think we need it more across society instead of the political correctness crap that we have of everything. Everybody afraid to step on anybody's toes. Just tell it like it is and let's move on.

You know, I'm glad you say that as well, because you do a really good job. Just. I call it Internet marketing. But you're. You've always had videos going, and. And it's just things commemorating your hustle and. And I see guys like that in every industry you can go find. And a lot of times I just dismiss them. Now, I know that not to be the case just because I've known you my whole life and I don't think you've changed, but it's good to hear, you know, you talk like that, because I bet once folks get to hear. And that's probably why your podcast is doing so well, is once they get to know you a little bit, they realize, man, Scott's the real deal. Holyfield. Real deal Holyfield, but with both ears.

Yeah. I met Evander Holifield one time at an event in San Diego. Huge, man. Three quarters of an ear. Still funny to this day.

He seems pretty cool, though. Total cool guy.

He's a huge. His son's playing football at University of Georgia right now.

Okay.

And he's a freshman running back, but he looked like he was, like, 25 years old. But, you know, I get Evander on the sidelines or the playoff. But anyway, I mean, that's the thing. I think people out there want truth. They want somebody to tell. And that's the thing. I've always. It's my dad and me. I can hear it right now. Just tell them what it is. It may not be pretty sometimes, and it may not feel the greatest, but if you wanted me to sit here and, baby, to death, you'd go somewhere else. I don't want to waste your time, and I sure as hell don't want to waste my time, so. And when you talk about Internet marketing, the biggest thing I've always thought when I was sharing videos and things like that, I wanted to prove to people that if this idiot could do it.

Anybody else could do it.

And that was been the big stuff be times, okay, what can we do to get the word out what we're doing, but to share it with more people so that they can see that it's not nearly as difficult as they think in their head?

Well, not everybody can do it because not everybody's going to work as hard as you will. It's just not going to happen.

That's true.

And thank God for them. And that's what I say. In the past, I've filed thousands, literally thousands of cases against insurance companies. And I say, well, you know, a lot of times if I'm following the suit, they're probably not in a good place because I've gone over it pretty strong and trying to, for lack of a better term, cheat someone, and that's a bad thing. But then thank God for them or I'd be sitting around with nothing to do half the time at least, you know, so. Right. Thank God that people aren't willing to work as hard because. And I've heard someone say it is. We may not all start in the same place, but once the race starts, you know, it's every man for himself and we'll see what happens.

And I think you and I got a lot of that growing up, because I remember weekends you're at the car lot working. Yeah, you know, mom and dad there. They're not there. And you're still at the car lot working. You know, same way here. I'd be working at the hardware store out mowing lawns or digging ditches or siphoning ostrich crap at an ostrich farm in South Texas. And a lot of our friends, God bless them, weren't doing that. They were off going to the beach or off having fun and stuff like that or honking at us.

I'd see them drive by and they'd honk at us. And we're out there working like indentured servants. And, you know, here they're going to the beach and I'm like, you know, to hell with them.

Sweating our ass off in South Texas heat. And that led. I think that led though, to us. Hey, we're not afraid of. To roll up our sleeves and get dirty. We're not afraid to do the thing that is that extra thing to get things done, because that's what happened. But, you know, I look back at a lot of people and love all the people went to high school with it. We went very small school. We had, like, 65 people in our graduating class.

It was more than that.

It was maybe a little bit more, but it wasn't much.

Around 80, you look at the things.

That you and I have accomplished. Being our own boss, calling our own shots, stuff like that. We're not reporting to somebody. And there's nothing wrong with people like and love what they do. That's great. More power to them. But I know a lot of people that we went to high school with before, during, or after who just do not like their life. And I think it's come from. They want something to be handed to them. They just didn't have that work ethic that was instilled into us from our parents.

Yeah, no, I hear you. I tell my kid I've got three kids, and I say, man, y' all are soft. They don't even realize how soft they are. See, you're the kind of kids I used to beat up. So I know you work all the time, Scott, and, you know, and you've got all this going on, but you've got to do something to keep yourself sane. And what else do you like to do?

So I still a big avid sports fan. So Steph, my significant other, not married, as I like to joke. We're not married. We're happy. Don't have any kids.

I've been married 20 years this year.

Congratulations. Jennifer should get a gold star for sure.

I think I'm gonna get her a plaque.

There you go. Mother of the double decade. That's good. But, you know, we like to take vacation. We usually do one big vacation a year, maybe two. We love to go to a lot of sporting events, baseball, basketball. We go to a lot of concerts. We do stuff a lot locally here. Austin, Texas, is home. So there's always some fun stuff going on here, like we're going to the ballet Friday night or go to the comedy clubs. I just like to kind of get out and relax and unwind. We go to a lot of movies, so it's a great way for me to turn my brain off and kind of relax for an hour or two. But, you know, travel. I think we've been to 22, 23 of the 30 Major League Baseball parks, you know, been to close to that many countries over the last couple years of traveling via cruises and other things. So that's the biggest thing. Enjoying new experiences is one of the biggest things that I think is a great way because if you do the same thing over and over again, you can get really numb and agitated. And I'm the big point. Okay, let's turn it off or turn our phones off, or let's just go somewhere and escape for a little while to have some fun and make a memory or two. And then. All right, recharge your batteries and come back and get back to the salt lines.

Now I know you don't have any children, but not that I know of. Whatever, tough guy. But she doesn't either though. Correct.

Now we've just. She's got. We've been together going on six years. Five. Six years now. She's got the four legged furry gun.

So, yeah, it's just what I hear you talk about travel is with my three or four, the oldest is 15, almost 16. And then the boys are 13 and 11 and we go places. But you know, they've always been young enough. We have to take them and you know, you take three kids somewhere, it's not fun. That's not my idea of fun. But sometimes I got to just suck it up and do it, you know.

Well, and that's the thing. Kids are great, kids are awesome and everybody's got their. And what's beautiful is they all have their different personalities, you know, and you know, we've got a lot of good friends that have kids and we've taken vacations with people with kids and stuff like that and helped out and stuff like that. I don't mind babysitting, but as long as I can give the kid back and walk away, I'm happier. Steph worked at Disney growing up, went through the college program at Disneyland in Florida there. So she's a big Disney fan. I am not a fan of the ankle biting rat land that I like to call it. You know, I'll take a Disney cruise.

We choose not to participate in Disney World.

Yeah, that's smart. Although a Disney cruise is worth every penny you pay for it though, so. But they've still got some other things about just the parks. Like they got the Alani Resort in Hawaii, which is a lot of fun. The Disney cruise lines we've taken at a variety of different times. I think this will be our fifth or sixth one here in a few months. Enjoy that stuff. Great. That's awesome. But I think the biggest thing too is that we try to make time. I mean, I was married beforehand for seven years. Stephanie was married before for about seven years. She's been divorced for five, I've been divorced for 10 now. I think the biggest thing that we have found, and I know this, is you do this with Jennifer a lot. You try to make time for each other. You got to have that date night or that other things to come back to. We're blessed that she works with me.

So that would not be a blessing here. And I love my wife, but I would kill each other.

Yeah, you know what? Yeah, other people, I would kill each other. But we have our different strengths. That's the beauty. She used to work in the office here, and I'm a loud person. She doesn't. So she works from home, which is still only less than five minutes away. But our students know us, our coaching mastermind. People know her and she does a great job working with those people and is really an amazing ambassador for that aspect of things. And she's got such a big heart for people. And I mean, I have a big heart for people too. But we come up with something and she goes and puts it together. I could not do what I do, could not have grown my business like I have in the last five years without her. It's just been nice then. The important thing is, even though we do work together, we got to learn to turn it off because we would talk about work all the time. And so it's great having the pets and we have a lot of friends across the country that are pretty cool, that we enjoy hanging out with and we travel and we find ourselves talking about work a lot. But then it's also, okay, let's turn it off. And we have a lot of the same interests. And I think one of the things I have found, it's not about finding somebody that loves the same things that you do. It's finding somebody who hates the same things that you hate. Love to hate. Then it's like, oh, that's perfect.

Well, I'll tell you what, next time I'm in Austin, I'll come by and spend a little time with y' all and get you all drunk and remind her that there's still a 16 year old boy inside your head.

There always is. She knows that.

You know, we were talking and I focused earlier, at least our discussion did, about your business. On your actual note, business, you know, how you started what you do, but that's only a part of your business now. There's a number, a myriad of different things that you're doing what? All I know you're still handling your notes and you're, you know, you're buying paper and rehabbing the notes and selling them or holding them or whatever you're doing with. But that's just a segment. I know you talked about webinars and classes and I know you're talking all the time at places. What all you got going on.

So, yeah, I've been teaching. One of the best ways we found to raise capital, especially for this niche of real estate investing that people don't always understand, we start teaching about it. So I started teaching classes in 2010 and doing webinars on a regular basis in 2011. Look back at my account and I've had that account since April of 2011. So I figured I've done somewhere around 600,000 webinars. Somewhere around there, if you think about it, to investors. That's a lot of talking. Yeah, it's a lot of educating. And that's the thing. We have our education platform that helps pay for our bills and some of the things. But you know, we do webinars, we do online conventions. I speak at different conventions across the country as well too. We've got a really pretty cool mastermind of our students that come together and they'll come and spend some time with us here in Austin and we'll do some coaching with them one on one, kind of helping them ramp their business up. So it's all note focused. I'm in my one lane of notes. But yeah, we have the real estate stuff on the notes side at generating income. Then we have the education side of what we do in the podcast, which is it feeds kind of both of those things for the most part.

How do you monetize the teaching part of it? Is there like a paid membership or there are these Tony Robbins type seminars where rah, rah, buy notes, kick ass.

I'm not to blow smoke up. You know, we have fun. I'm my goofy self on these webinars. But we'll teach. I've got an online home study course that we created 40 hours of training videos that we sell for 1000 bucks that gets them a ticket to our online workshop that's live for three days. We'll sell that for 600 bucks. And then we have our mastermind and coaching side of things that we'll do where they come in and spend time. And that's 15,000 to come in and spend time with us. I have a big believer. Everybody's a buyer, a seller, or a funding source. And we raise a lot of capital from our education side. People like, I don't want to do the work. I don't have the time, but I'd rather write you a check and let you run with it.

Okay. You know, that develops investors as well.

It does. And it gives them, you know, especially if somebody's coming in, wants to invest with me, and they've never done anything in notes. The first thing I do is I can send them a link to a workshop. I'm like, hey, go watch these replays so that you understand what's going on. You know, honestly, I don't mind giving updates once a month, but if this one is calling me every week for an update, that's not the right type of investor for me. I don't have the time for that. I want somebody who's a little bit more sophisticated, who's maybe done some real estate investing. They understand a little bit of that stuff. It takes time, and we're glad to educate them along the way. What's funny is we've turned some more deadbeat borrowers into students and investors and Mastermind members as well, which is kind of fun. Some people we bought the note from, we're able to let them walk from a house. A guy in Orlando, a guy named Robbie woods, actually bought a house with one of his best friends in college. And of course, the market tanked. I ended up buying his note, reaching out to him, let him sign the property over to us. Six months after we let him walk from 140 grand. And Daddy called me up, hey, I've been researching you, and I see your videos on YouTube. I'd like to learn more about what you're doing. I'm like, that's great. Sure. Flying up to San Francisco, I'll let you come to a class for free. And he came to a class and brought his dad. And they're like, we want to do this. So then they signed up for coaching with us. And six months later, he bought that house back from me for double what I paid. And he's a good friend now. He's bought over a million dollars. And he actually started a podcast a couple years ago in the notes space. Kind of let that go. But it's kind of funny to think that this came from a small little two bedroom, two bath in Orlando. 2825 Hunt Club Lane, I think. And we were able to do some good stuff for the guy. He's gone out and changed a lot of lives as well with what he's doing and the deals. That he's doing and the people that he was educating and things like that. And it's just. It's a small world. It gets smaller every day. You never know who you're going to talk to and who's going to turn into what for you.

That's awesome. And, you know, it's those stories that make it worth doing. I'm going to guess you like the education side the most, don't you?

I enjoy the education side. I've been doing it for a while and it's fun, it pays a chunk of our bills and stuff like that. The podcasting side has really gotten my niche, though. I like to be able to communicate and seeing now that we've been doing it for over a year, seeing where people are coming from and people are coming into both the education and the investing side, I like giving people. I was very fortunate to have some mentors that gave me a lot of great education early on. And I made a vow in one of my Tough Times in 0809 that if I got to where I wanted to be, I'd help give back and help other people get there. So I like the education. We are. We've tweaked some things up here in the last couple months because when you do the same thing over and over again, it gets a little boring. So we're tweaking out some new things. It's fun little thing you have to be wary of. This is just not in the notes space. This is in all real estate. When the market is at a peak, you start seeing a lot of people coming into the industry who haven't had experience, but they want to be educators now. Oh, I've done two or three deals. I'm now an expert. That's not the case. We see that in real estate. Real estate's all you got all these fix and flippers and shows. But when the market turns out, they're going to get wiped out. You're going to have, if you're going to talk to somebody or get educated for somebody, talk with somebody who's been through at least one or two upturns or downturns, one bear market and one bull market at least. So, you know, if everything's on the way up, anybody can make money. But that's not always the case. You got to have somebody who's got experience in a down market or if the market changes and know what to do. And I'm laughing. What I see, we're licking our chops, expecting to see a downturn in the next 12 months from a lot of things. So we're kind of pulling back some of the educational stuff to prepare for that downturn whenever it hits.

Well, I was in. He beat me to it. I was thinking the last big downturn, you were kind of starting out in a lot of ways and just hustling and things. Ten years later, you're at a much different place. And I was thinking you're probably would benefit at least the note side of your business, your direct business. You'd probably benefit at this point from a big downturn. Yeah, I say that. I mean, it would provide opportunities in greater mass and you could be more discerning and really cherry pick deals you really thought you could do well on.

That's the thing. I look back 10 years ago and the biggest regret I have is I didn't buy more than you know. And we've had. You look at a calendar of ups and down markets. We're due for a market correction. You look at what's going on in the credit card space, the car space, the student loan space, medical bills, all that stuff, that higher than normal default rates. So it's just in turn for the housing market to take it. I mean, still In America today, 1 out of every 10Americans is at least one month behind already. 10% of the United States is a month behind.

And half of them are working paycheck to paycheck.

That's correct. You know, you look at what happened with all the government employees. They were all safe. I got a secure government job.

Boom.

You're not working for 60 days. Oh, my God. Now you're in default. You know, that's the thing to keep in mind. So we'll see a downturn when that happens. Yes. We'll have more inventory that we can cherry pick from. We can buy cheaper than we are right now. We're still seeing a lot of great deals. But yeah, when a downturn happens, you'll see a lot happen, a lot changes. You'll see a lot of mortgage brokers get out of the business. You'll see a lot of realtors get out of the business. I laughed in the last downturn, right before 2008 happened. Austin, Texas had about 11,000 realtors. In 2010, that number was down to 4,000. Okay, we're back up like 12,000 realtors in Austin. I'm like, oh, it's time for a shakeout. Because two thirds of them are going to leave because they won't know what to do. Every industry that booms, you have a lot of People that come into it and then when it busts, you have the people that have known how to market, know how to make money versus just rising on the up price to make money. So, you know, good or bad economies, we buy debt no matter what. When there is a downturn, we buy a whole lot more and a lot cheaper. But it also leads to like, okay, people are scared to invest that. What should they do? Well, that's why we like buying the debt, because we're getting cheaper and faster and more from a lot of the other people out there trying to shake a tree to have something fall on.

Right on. Well, you've been doing this about 10 years, right? Where do you see it in 10 years from now? Or can you even really think that far out? I know it's hard for me to.

Do, so I'll tell you where I see myself in 10 years and then we'll go from there. Because one of the biggest things I've had this dream and image, I enjoy the tropics, I enjoy being around the water, is I see myself not living in the United States in 10 years. Living somewhere warm all the time. Whether it's in Central America and Costa Rica or somewhere in the Caribbean or.

You're gonna buy a fucking island, aren't you?

You're gonna buy. But will I still be teaching? Yeah, I still see myself doing a podcast or something else. Who knows what's gonna happen in 10 years, but I see this taking place in the next five years or less. Moving out of the United States, moving somewhere, maybe Puerto Rico. Well, the tax advantages are down there.

But the local taxes are so high.

Yeah, everything's like 80%.

I mean, it's crazy.

I've been there one way or another. Exactly. Whether it's an increase for cost of goods and pay 10 bucks for a gallon of milk or whatever. But somewhere, our biggest goal, my biggest goal, is to end up with 400 to 500 notes that are paying 250amonth to me. And that'll generate $1.2 million a year in cash flow. I'll live off a fraction of that and just own those assets. And if they sell off, they sell off stuff like that. But that's the biggest goal. We're on our way there, trying to add 20 to 50. That long term goal, it's going to be long term payoffs every quarter to six months. We can, but that's the goal. You do that, have a sunburn, walk around a cap and khaki shorts and a dirty T shirt and who Cares. As John Goodman said in the Gambler, you want to end up with FU money, right? You got 2 million in the bank and you own your house, you've got FU money, you ain't got to do what. You only do what you want. You gotta do what anybody else wants.

Yeah, I just think that money doesn't go as far as it used to. 2 million ain't fu money, at least from my perspective. And I say that is because a lot of that's probably because of the way I think about my business. I do 90% of my work's on a contingency fee. I don't carry huge lines of credit cards. So it's usually my money that I've basically made after paying taxes and reinvesting in cases. And so even a small office like me, it's nothing to have a million dollars on the street just in any given time. And that's in addition to having to fund new stuff and operate. Yeah, the operating capital necessary. And so, man, you can suck up $2 million real quick. @ least in my industry you can.

No, that's very truthful here too. You can do that as well. Point where we are, I mean, we just try to streamline. Every six months we come back and remove stuff. And one of the biggest things I learned from in the mortgage business is not to have a big overhead if you can. You know, if I'm working, and that's the one thing I love about doing what I do. I can do what I do from anywhere in the world. I mean, I have an office, but if I didn't want the office, I've closed deals in Spain, I closed deals in the middle of the Pacific. If I got a laptop and a cell phone, I can do my business for the most part because we rely on a lot on vendors and other people to get the stuff done. I don't have to have a huge staff.

How much staff do you have?

I got less than 10 people.

Okay.

So myself, Stephen, long term. We've got Shannon, our full time marketing girl in the office. Does a great job. We've got Hazel, who works in New Jersey servicing the assets. I've got another intern that works in South Florida as well, time to time. And then I have different virtual assistants that will jump in and do stuff for me. Then we have our vendors, our attorneys, our servicing company, and then other people that jump in. So, yeah, we're pretty small. We'll bring in people periodically as we're closing them on larger portfolios that will work 10, 20 hours a week for us to review files or other things. But we try to keep it streamlined.

I've done the same thing. My quality of life has improved by doing so. There's a time in which we had nine lawyers and 20 staff and NS, multinational law firms and things like that go. That's very small.

Right.

But as far as a local. I'm funding the whole deal kind of operation.

That's a lot. Yep, that is.

And in my industry, everything, even assistants and paralegals are fairly well paid professionals. And so that's just salaries for lawyers and paralegals, 30 of them. That's a lot. Mm. And people gotta get paid.

Yep.

So I've got it to. You know, it's me and one other lawyer, and frankly, she works part time now. She's got a whole lot of personal, not bad things, but just life. You know, three kids, husband helps him with his business and things like that. So she works on special projects and a couple staff in the office, and that's it. And it also has allowed me to do something. I've gotten way more selective. I typically don't take on your matter unless one of a couple factors exist. Number one, I just feel sorry for you. I'm always still a sucker for that. If I feel sorry for you and I think I can help, well, then I'll probably do it regardless of size. Number two, you know, it's pretty good. I think I can really help. And, you know, I think I can financially. Ultimately, that's all I can do, is deliver dollars, financially help a situation and make it worth my time doing or. Number three, we have a relationship. We have a existing relationship, which if you called me up and said, hey, send some shitty letter to somebody, that's normally not what I do is just randomly send out letters. But of course, you know, send anything for Scott, you know, even if he's wrong, and then try and counsel you to say, hey, man, what are you doing over here? Yeah. But it makes my life a whole lot more pleasant. You know, I think it's. I make the same money too.

Yeah. That's the thing. Yeah. Well, the older I get, the realize the days of thinking I was gonna have a huge firm and all these huge offices is not what it's got out to be. Because the bigger you get, the more. Especially the more personalities you add to your office, you end up becoming a lot of times an adult babysitter. So the more that we've narrowed down and focused over the last few years. Yeah. The happier that we have gotten because we're not chasing so many squirrels. We're able to stay in our lane. You may not be making as much in revenue, but you take home a lot more because you got a lot less that overhead and expenses along the way.

Absolutely. Well, you know, I know some of our listeners are going to want to know more about the no business and really if they listen to the beginning of the podcast, kind of might be intrigued on what you do. If someone wants to hear your podcast and find you, where's the easiest way to find you?

The easiest way is just to go to our website, weclosednotes.com it's a website. There you'll find our training, you'll find links to our podcasts, links to our videos, YouTube account. You learn how to contact me there. But that's the easiest way. Just go onto the website weclosenotes.com you should always shoot me an email@scottclosenotes.com and I was glad to spend some time on the phone, talk with you, you know, give you 30, 45 minutes of education and go from there.

Awesome. I assume we can find you on itunes or Google Play and all that.

Oh, yeah. Our podcast is across all the other different channels. I think you're using potted ties as well.

Shout out to Tom and the guys.

Alexandra and Tracy do a great job over there. But yeah, iTunes, Stitcher, iHeartRadio. We're also our podcast. We just launched this month. We're on 16 different AM FM radio stations across the country as well. Every Tuesday, Wednesday, Thursday at 9am from Tampa to Long beach as well. So pretty stoked about that as well.

Awesome. Well, if I listen to the radio, I would check it out.

Yeah, I know, right? If you're listening to radio. I don't listen to radio anymore.

There's probably some older folks who are checking it out.

Yeah, exactly. We're getting some hits off, but it's just that didn't cost me much to do, so I was pretty excited to do it.

Well, I know you're a busy guy. I don't want to take all your time, but I want to thank you, tell you I loved you.

Same here, brother.

And thank you for being here. Certain folks who listen to your podcast may actually enjoy listening to this. Just to get to know a little, you know, a different respect about you. And the last thing before we close it out, I'll, I'll tell your listeners about that are listening is he's got a big lovable guy and all this. But one time when he was about 10 years old. He got beat up in front of the police station by yours truly.

Picked your bicycle up and threw it on top of me. That's correct. I remember that.

And then says a random cop came out.

What are y' all kids doing?

And check this out, guys. So we were still naive. And the cops came out and they. He opened up his pad and he said, well, tell me your name and your phone number, and I'm calling your mom. At which point we might have both peed down our leg, you know, called my mama. She's gonna whip me and send us on his way. And, you know, thanks God for his discretion because they didn't call our moms. But we kept comparing notes for about a week. Hey, the cops called your mom yet?

The police department is literally across the street. Really? From my dad's hardware store and literally just a block down from Bird Auto Sales, too. So go figure.

Go figure. Anyhow, Well, I love you, buddy. Let's do it again. And I know you've got a lot higher flyers than me as far as the podcast.

Love to have you on. I'm gonna have me on.

Let me know.

I will do. I'll shoot you a link over here in a couple minutes, actually.

Okay, bro, talk to you later.

Thanks, bud.

Bye.

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