Is Real Estate Investing Right For You? From the Enlightenment of Change Podcast Feat. Connie Whitman

Welcome to Enlightenment of Change with Connie Whitman of Whitman and Associates. Here's Connie.

I am Connie Whitman, your host and you're listening to Enlightenment ofChange on webtalkradio.net thanks so much for joining us this week. So my motivational quote is by Andrew Carnegie and he says 90% of all millionaires became so through owning real estate. Who knows someone who is doing some form of real estate investing, flipping houses, anything like that? I bet you all do. So and of course it's thanks to hgtv. There are shows like Flip or Flop, Property Brothers and my all time favorite Fixer Upper with of course Chip and Joanna Gaines. Do you have Shiplap in your house? Okay, so this is just a really hot topic and I think we're in a hot market. So during the next half hour, my guest and I are going to discuss how he makes money in real estate, specifically through distressed mortgages and notes. And I know some of you are saying, what does that mean? Stay tuned as we dig in and discuss how you may be the next real estate investor and how to make money. So my guest is known as this is very cool, the Note Guy and has been an active real estate investor since 2002. He is solely focused on distressed mortgages and the note industry since 2008 where he buys and sells non performing mortgages directly from banks and hedge funds on properties all across the country. Now my Guest is the CEO of WeClosenotes.com it's an Austin, Texas based real estate firm. Now he's purchased over a half a billion dollars in distressed debt for his own portfolio and purchases assets in over 30 states across the US which is kind of co. He also helps thousands of other real estate investors make money along the way. Now he's a highly sought after speaker on distressed debt marketing and raising private capital and he has also been featured in Investors Business Daily, the Wall street journal and inc.com and he hosts a popular podcast called the Note Closers show which is kind of cool. So please help me welcome Scott Carson, AKA the Note Guy to the show. So Scott, thanks for being on.

Hey, I am so honored to be on the show. Just absolutely love your stuff. Everybody better go out and subscribe and leave 5 star reviews for she's rocking it out here. Absolutely love your show.

Thank you Scott. I appreciate that. So now this is just a really big topic. I don't care who you talk to. I went to a doctor last year, you know, for a checkup and he and I were chatting and he and his son were Flipping houses. I'm like, you're a doctor, why are you flipping houses? It's a great means of investing beyond the typical, you know, the sec, the, the stock market. Right, so what? First, let's start, I think, because people in my intro are probably saying, what the heck is a note? And all of this. So what is note investing and how do you think it relates to the listeners, everybody listening today?

That's a, that's a really good question. And I think it's always the best place to start with. So everybody out there is in the note game, whether they believe it or not. If you've got a mortgage, a car payment, student loans, credit card debt, and iou, you're the note game. You're just on the wrong side of the payment stream. Okay? You're paying out. So a note, basically what we buy is, it's a mortgage. It's a mortgage on either a residential or commercial property, primarily a first lien position that we're buying. And so we buy this debt from banks and hedge funds and we're buying it on non performing mortgages. And the next question is, well, why would I want to invest in a non performing mortgage? Or somebody's not paying on time. And the reality of that is that banks and hedge funds have hundreds if not thousands of these notes where people aren't paying their mortgage on time. And we can often buy that debt at substantial discount, well below what the borrower owes, becoming the bank and then being able to turn around and reach out to the homeowners and negotiate. It's like, I'll give you an example, like if you're gonna buy at Sam's, you can buy in bulk pretty relatively cheap versus, you know, a huge box of toilet paper versus like four rolls from your local Walmart.

Right?

It's kind of like that. We go and buy a portfolio of notes at a big discount. They're not paying. We can then turn around and reach out to the homeowners, say, listen, I know you went through some sort of country western song, whether you're, you know, you got laid off, you got sick, your grandma got run over by a reindeer, whatever it might be, let's work something out. And the fact that we bought it at a discount, I mean, they still owe the full amount, but it gives us the flexibility to really create a win win situation not only for us, but also for the borrowers. And so we like to say, instead of going out and fixing flipping homes or rehabbing homes, we like to rehab the borrower and try to Keep them in the house. We can.

So Scott, how does that work? So I'm defaulting on my mortgage. What. Whatever that means. Right. Like you said. And you reach out to me and say, hey, listen, I bought your note. Now you, let's say I owe 300,000 on that note. You bought it for 200,000.

It could, it could be just depends on the value of the property. So let's use some similar numbers. Let's say your house, you, you owe 300. Maybe your house is only worth 250 because the market dropped or you've been out of work for a while, so you've got a year of payments behind you. You know, we usually buy around $0.50 of as is value or less if we can. So let's say in this situation, we bought the Note at say 125,000. And I mean, you still owe 300. But the fact that we bought it at a discount gives us a lot of flexibility. Hey, Connie, I know the bank. Let's say it's bank of America or whatever and say, hey, you haven't paid in two years. I know the bank wants you to come to the table with a full two years of payments, which most people don't have. They can't afford that. So we'll say, listen, can you start paying your existing payment on time? Yes. Okay, great. Can you bring a little bit of skin in the game to the table? Can you make up, can you bring four months or like five grand to the table over the next six to 12 months? And most people can in some sort of fashion say, okay, great, let's get you started. Because you think about this. If your interest rate is at 6% and used, we bought that note for 50 cents of value and you start paying on time. That's almost a, it's actually over a 12% cash and cash return to us, Right?

Sure.

And then our biggest goal is get you paying on time for 12 months. We now got 12 months of cash flow coming and you've now are a re performing note. You've come through a dark time and been able to get back on your feet. And 12 months is a good payment history at that point. We can now take that mortgage and either sell it back to Wall street or sell it to another investor for a nice increase in the price. So if we bought it at 50 cents of value, we may be able to turn around and sell that note at 80 to 85 cents of value or more to, to another hedge fund. So we made 12 months of payments. We got a Little bit of skin on the front end to keep you in the property. We now, we bought it at 50, we saw it at 85. But oftentimes we'll modify the loan so as the borrower, we'll drop what you owe. If you say owed 50 grand more than what the property's worth, we'll readjust your value or what you owe and forgive you 30, 40 grand on the payment because it's something we're not going to be able to collect on anyway because your house may never get back to that point again. Does that make sense, Connie? A little bit.

It does. And so bank of America is now out of the picture. You are in fact the bank.

Exactly. Now, I shouldn't have said bank of America, but we're not going to go out and buy one note from bank of America, Chase or Citibank. So I know your listeners. That's the big thing. I called me the other day, hey, I, my, my mortgage is Wells Fargo. I'm like, that's great. I can't, I can't help you because unless I can write a $50 million check, they're not going to deal with me. So we deal with a lot of regional banks and we've bought commercial debt from some of the bigger banks, but it's mostly regional banks stuff that are in some different states, I mean, Capital One, we bought a lot of commercial debt over the years from them and some others. But that's kind of what we do is we try to, if we can work with a homeowner, if they'll work with us, and we, you know, that happens about 50, 60% of the time we're able to keep in the house. But other times borrowers will just foreclose and go that route.

So they will go through the foreclosure and hightail it out of there. And then you just, do you go in then in rehab or you just still you're not into that, you just take that note and resell.

Depends on the situation. Sometimes we'll take it back and fix it up and sell it out. I don't do a lot of heavy rehabs. My, my best time in use is not getting bogged down in a, you know, 30, 60 day rehabs like Chip and Joanna Gaines, our neighbors to the north of Mako. Yeah, you know, we do, we put a little paint and carpet cleaning off. We can, a lot of times we try to sell it, sell the, the property literally at the foreclosure auction. So we can walk away from it.

Yeah. And then you're done. That's right. How the heck did you get started? I mean everybody does the, you know, oh, I'm going to flip the house. How did you get started in this component?

So it's, it's a funny thing that you mentioned HGTV. So I graduated from college in 2001, college sweetheart. We bought our first property in, you know, primary residence back in 2000 and 2002. It was all excited, the market was great there. Basically put nothing down, first and second mortgage. And my realtor's like, hey, you should be a real estate investor. And we'd watch HGTV and the now ex wife at the time, like, oh yeah, I could pick up paint colors and carpet and do all this designing. And my dad owned the local hardware store growing up. So I can fix just about anything. I built houses from the ground up. I was like, oh yeah, I'll be the landlord, sure, I can fix this stuff. Boy, was I wrong. The market turned south. Here we have a major employer that rhymes with hell, Adele, who laid off a lot of people and changed some stuff where our property. We bought two more investment properties to be landlords and they were vacants. And then I got laid off for my job in 2004 making good money. And so we went from hey, making six plus figures a year to trying to pay three mortgages. There's actually three first and three seconds on a private school teacher salary. So I became a deadbeat borrower, a non performing borrower, was able to get rid of the two investment properties, keep our primary by doing a loan mod and really was licking my wounds. Got back into the finance industry and a buddy of mine approached me about two years later that I was friends with and said, hey, let's, I'm starting a mortgage company. Let's do this, let's get in and have some success. I was like, okay, great. So 2004 I joined the mortgage company and I was very fortunate enough that one of the guys, the principals in the company, was a very creative real estate investor. Traveling the country, speaking at these large seminars, he taught creative financing, like owner financing, wraparound mortgages, all sorts of crisis for basically like four years as I was traveling the country to these big expos and offering mortgages in the back room. I got basically a really nice apprenticeship of being able to learn from so many different investors and Bob the main investor that I basically learned the business. And then when everything hit the fan in 2008 with the mortgage market, I just left my mortgage company, my buddy, and started Buying paper and started dialing for dollars, calling on these banks and hedge funds. And over the last 11 plus years, we've made a ton of relationships, you know, thousands of banks that will send us stuff, sometimes throughout there, sometimes quarterly, sometimes monthly, sometimes just once a year. But the biggest thing that happened was you talk about Andrew Carnegie and I think about Napoleon Hill, how Carnegie brought in Napoleon Hill and gave him an opportunity to go around and meet with all these experts about master mining. I was sitting in Austin in end of March, watching tv, and I'm a big baseball fan. And one of those commercials came on like, oh, hot dog, $5 cold beer $8 visiting every baseball park in America, priceless with your son. I don't know if you remember that.

Yes, yes.

So I was like, that would be really cool. How would I do it? And so I've always been a proponent of if you wanted to do something, write it down, you know, share your goals. So that's what I did. I wrote down. I even went on to ESPN.com and figured out the baseball schedules and said, okay, if I started in Dallas on April 1st for home, you know, the home opener for the Rangers and where I went, how long would it take me to hit? That's like, it was like 30 weeks. And I had already, you know, I'd been doing the note business for a couple years, two years, and I was, you know, sharing blogs and articles and case studies, and I suddenly, I believe in divine intervention. Suddenly, like a week after I wrote that down, my phone and email started blowing up with real estate investment clubs reaching out to me and said, hey, Scott, would you come to our meeting at some point? Would you speak? Would you, would you allow us to use your blogs or your articles? I was like, yeah, when do you want me come speak? And I swear to God, and my hair, always, it's standing up right now. It's so goofy. The dates they wanted me to be in their cities, whether it was Houston, Dallas, New Jersey, Chicago, were all right around the same dates that I put down on this baseball schedule. That's crazy craziness. And I was like, okay, that's divine intervention. Somebody's speaking to me and that I need to do something. So I got very drastic. I was now divorced for about two years now, just me and my dog. And so I sold everything in my house. I got rid of my last investment properties here in Austin because the market was taking a big hit here with it being 2010 and values dropping. So I got rid of those two investment properties, sold my Primary and me and the dog jumped in my Ford F150 pickup. And we started off across the country, what we thought would take 30 weeks. We spent over three and a half years traveling non stop speaking. You know. You know, I've hosted some, I mean the big keynote, some big events. I spoke at the National Association Realtors conference, spoke at these large note conventions. I spoke with about 50 different individual banks where they actually called me in to come into their bank to help them with their portfolio. A lot of it was in God's waiting room, Florida. But that's kind of how I became the note guy. Just traveling. And people would come up to me and see the videos that I was doing and say, hey, aren't you the note guy? I saw you dial for dollars for like three hours and you got hung up like 12 times. Yeah, because it's, it's, it's not the, this is not the easiest thing and it's not the most tangible thing in buying a note. I mean, you know, it does control. We do look at the real estate, but it's a whole different mindset. Instead of picking up paint, carpets, I actually want the people to stay in the house. My biggest bang for the buck is when we do rehab the property, keep them in for cash flow and then sell the note off or either let them refinance out later on. That's the biggest bang for the buck.

You just said you go in rehab. I didn't mean to interrupt you. So you, when you buy that note, if they say, yeah, yeah, we want to work with you, we want to stay here. You'll go in and put the money into the house?

No, we rehab the borrower.

So we had the, my, my misunderstanding.

That's okay. I mean I, I'm actually putting a roof on a property right now in Flint with a borrower. So we're. Sometimes it makes sense for us to come in and fix it up and keep the property. But that's kind of a rare situation. For the most part. We're not buying ugly assets because we do a lot of due diligence. We like it when they're owner occupied. We'd like to try to buy something where the borrower has made some sort of payments in the last 12 to 24 months. And the beautiful thing is that when we're buying these notes, we get the whole collateral file and the loan documents so we can see the situation if they've tried to do a loan modification or they tried to do a short sale or if they just told the bank to f off. We know what kind of route we're going to go down if we've got a, either got a chance to try to keep them in or we've got to get our attorneys involved to start the foreclosure process.

Did you have a big bulk of money when you started this?

No, I started this. I mean I bought a little bit here. I bought some smaller assets and just flipped them really fast. Like I get them under contract and flip it to another investor in Jacksonville or Las Vegas or I found an apartment deal in San Diego from Capital One. It was such a screaming deal that I was able to flip the contract for 50 grand in 24 hours. So I didn't have a lot of money because I had lost some money in some fix and flips at the time. You know, I, I talked about getting rid of my last couple properties. I had to write big checks at the closing table so I didn't have much. So I just started marketing and sharing the deals that I was doing and really, you know, email here, Facebook posting here what we were focused on. And I really was just myself on my videos talking about the deals that we were working on. And you know, luckily people started following and then people started reaching out and said, hey, I want to do that. Or they'd hear me speak at an event, come to me, hey, do you have a class? Yeah, sure, I got a class and teach them how to do that. And they're like, oh, this seems like too much work, I'm lazy. Can I just write you a check and you invest it for me or use my money to buy a deal partner? I'm like, yeah, let's do that. So that's kind of what we have done for the most part to just partner with other people. You know, they're self directed IRAs or cash accounts, stuff like that, to go in and find a good deal and then we do all the heavy lifting and pay them a nice return on the back end.

So you really, are you a numbers person? Like is that your degree is in finance where you just see numbers? You can look and drill in and see the numbers.

Well, I've always been really good at with numbers. I have a business management marketing degree, you know, from Southwest Texas State University, which is south of Austin, Texas now. Texas State University used to be a big school. Part of the reason I went there is because they had a business school. But the girls outnumber the guys 3 to 1 on campus. I was pretty excited about that.

Typical reason to go to college right to pick a college. That's awesome.

Beautiful Texas. We got a river running through the campus. It was just, it was. I had a really good as a bartender through Cali, so I had a really great time going to school. But I've always liked numbers. I like finance and I, I think I have a bit of empathy towards our borrowers, maybe a little bit more than mo most because I was in their shoes back in 2002. And so that's an important thing is I always like to give somebody a handout if I can. I had such a great fortunate thing along the way to have four years in apprenticeship and then to have somebody step in and kind of guide me in the way of where I, where I've gone the last few years. And so it's. I like to try to help any way that I can. So we've got so many videos on, I'm about a thousand plus videos for people to watch and learn and we do have classes and that's great thing. But my biggest thing, I love seeing that light go off in people's eyes when they close their first deal. They're. They're working at a job they dislike and they want to do something different for their family and put themselves back on pace. Retirement or just to have fun. That's the biggest joy. I mean I close deals all the time, but I get the biggest joy in seeing people who don't have the business degree, they don't have the finance degree, who come in, they buy a deal and you don't have to have a lot of money. I mean there's a lot of money people out there but. And we bought a lot of assets that are, you know, fifty, sixty thousand dollar values that are in Ohio or Michigan or Indiana that are great places. Now in California that might be the 50 grand, might be the door on the garage, you know, but in other areas it's a, It's a beautiful three bedroom, two bath, you know, 1200 square foot house that somebody's lived in for five or ten years. They've taken a lot of pride in ownership, you know, and so that we love putting those people back on the right path to success.

Success, you know, it does feel good to help people. And you're right, you know, you had this divine intervention. It was such a, that was such a great story. So you know, you've been so blessed along the way for whatever reason. Right. And I believe we create our own luck. So I think you created your own luck along the way as well. But you saw the opportunities And I think you're a nice guy. So I'm sure also people think he's a nice guy. You know, he's. He's willing to get in there and dig in and are willing to help because you're appreciative. You're not. You're not arrogant, you're not. Not a jerk. So, you know, I think we reap what we sow as well. But it's nice that you feel that gratitude and then in turn, you know, are trying to keep people in their homes and trying to make them home whole after hitting hard times. And let's face it, Scott, we've all hit hard times at one point or another. No one has escaped it. No one has lived a perfect, charmed life. So it's just nice that you're able to give back. So how are you? You know, you talk about also changing communities. How have you done that? Like, do you go in and do one particular community?

No. What happens, most people don't realize this, that if you have a foreclosure happen on your block where it actually goes back to the auction, it depreciates the whole value of the community of the block, like 10 to 20 grand or more. And then if you have a vacant house there, what happens oftentimes is vacant for a while. Vandalism. You know, neighborhood kids get into it busted up, you have bombs sometimes, or homeless will break in and steal things that vandalize, as we like to say. The copper goblins will show up, you know, and nobody wants to live in a neighborhood where there's the ghost house across the street or it's just trashed out. So that's one of the biggest things is we go in and we see these deals 6 to 12 months before they ever hit the MLS, before realtors ever see them. So we're, you know, we're able to go in ahead of time, really kind of find this stuff there and avoid those kind of zombie houses ever developing. Another thing you look at is when you are dealing with financial struggles as a borrower, you're stressed out. It's, you know, it's one of the biggest rifts that happen in couples divorce. I mean, we've had, you know, we've dealt with so many borrowers, single moms, single parents, the elderly, that, you know, maybe they're in a product that they didn't understand. I mean, I, as an ex mortgage broker, I have a tendency to believe that everybody that signs on a piece of paper, you should know what you're signing on. You have to take some accountability. But there's a lot of places that have values have dropped. That was out of. No, you know, the borrower had no control over that. I mean, if you think, you think about it, in 2010, we had 15 million homeowners underwater across the country. Huge amount of defaulted borrowers. We had the subprime mortgages. You know what those have, those have come back. They're now, they got really original. Now they're called non prime mortgages. And there are companies doing 100% financing to people with very low credit scores in all 50 states to this day, they're all back. So we're gonna have a repeat of what happened. Maybe not as extreme, but we still have roughly 3 to 4 million homeowners underwater. There's over a million people that owe twice the amount on their house. And what it's actually worth, 1 in 10 homeowners right now. As of today, 2019, 1 out of 10 homeowners is at least 30 days behind their mortgage as it sits right now.

Oh, that's terrible.

It is. So the thing is that we love to do is, like I say, try to come in, buy what we can in an area that makes sense and try to reach out as fast as possible. You know, what can we do? Let's, you know, let's create a win win scenario. Last thing I want to do is evict somebody or foreclose and throw them on the ground. So we often go in and offer, you know, hey, you can't make a payment. We can't come to one of our tenant arrangements. Well, then let me give you some cash to walk. Let's have you sign over the property and walk away. And then if we come in and keep the property clean, that keeps the values high, maybe increases a little bit. You know, people aren't dealing with damaged homes or ugly homes out there. So that's one of the things that we do and helping, you know, borrowers and sometimes people just need a hand up, you know, that's all they need.

When you do that and you buy them out, right. Obviously lower them for them, what you purchase the note for, do you then just turn around and sell that note for what you're holding? So you make the profit because it's still, you know, you're still, you're making money, but somebody is still getting a deal because you're, it's undervalued for what it is at the marketplace. And at least people are walking away with some cash in their pocket to either go and rent or buy another home, whatever it might be.

Yeah, it's mostly, mostly rental stuff that it's hard to, you know, hard to get a mortgage if you've got a mortgage later too on your history the last 24 months. But you know, we've done things where we paid people's deposits at their apartments or at least gave them something to walk because it makes sense for us financially too. Instead of having to drag out nine months before close and say like Illinois or Ohio, I'd rather give that five grand to the bar and let them walk. And now they've got this, you know, one hundred fifty thousand dollar mortgage on a house that's not worth a hundred off their back. You know, they've moved on and then go out and try to do, you know, find, you know, if hire, if they hire a credit repair company, they can, you know, get those lates removed and then they can, you know, kind of explore the pride of home ownership again or the dream of home ownership and going from there. So I'll give you one story. It's kind of fun thing. Sure, we've got time. We got a list sent to us. We're booking, buying this portfolio. There's a borrower in South Beloit, Illinois, and not the biggest house. Family owed 65 grand. The house was maybe worth 35. It was kind of rural. They'd lived in the property for 18 years, raised their kids. The husband had gotten sick and had a heart attack. So he was out of work. Their value had gone up. So what do they do? They took out a, you know, they refinanced, pull some equity out. And then of course the market dropped. And so we're looking at this and I get the, I can see the notes in the file that the homeowner had been trying her name. Sheila had been trying to do a loan MoD for four years and her loan had been sold four times. Nobody reached out to her. And so I said, well, okay, this, this looks appealing. So we bought the note and all honesty, we paid 12 grand for the mortgage. House was worth 35, she owed 60, 65. Okay, so we see the loan mod. I call her up and she's, I said, well, hey, I'm just calling to let you know that your mortgage been sold. You get some letters. I'm now the owner of your mortgage. And you could hear this despair on the other side. She's like, oh man. Because you've been trying to modify the loan for four years. And I, and literally the file was like a foot deep of her sending in documents. And there's, that's not a fun thing. And I said, okay, let me ask you some questions. Can you start making your 400amonth payment right now, each month? And she's like, yes. I said, okay, can you bring like five grand to the table? You know, she's like, well, I don't have five grand right now, so. Well, can you bring 2500 and then another 2500 or 200 extra a month for, you know, 12 months? She's like, I can do that, definitely. I said, okay, great, you'll bring that five grand to the table and start paying your payments on time. This is what I'm going to do for you, Sheila. I'm going to drop your interest rate from the 8 and a half percent to zero so that every penny you pay goes towards principal and interest. So instead of taking another 30 years to pay off this mortgage, you'll have it paid off in six and a half years. Yeah, and then, you know, like I said, I mean, you know, you pay on time, we'll drop the balance of the 60 down to roughly the value of your property in 12 months. Whether it's 30 or 35 or 40 will forgive you some principal. There's. And she's like, no way. I'm like, I'm serious here. I, I can, you can go talk to my attorney who's not too far from you. Sure enough, she went in, her husband went with them, and I was told that they cried at the closing table. They couldn't believe it. So that's a, that was, I mean, we were making money. I mean, we got five grand on a twelve thousand dollar investment. We were getting six hundred a month. I mean, I was gonna have my investment paid back in the first 12 months. So anything over that was gravy for me. Well, it's kind of another little tangent story. About six months goes by and I get a letter in the mail. And she and her husband had three daughters and their eldest daughter was pregnant at the time we did this. Well, she had a baby, a boy. So they named it Carson after me because we helped him out. So I don't have any kids of my own, but we've got some kids that are named after me out there, some borrowers. So that's kind of a. I always think of that story as just, it's a heartwarming thing when we can really help. And that's, you know, that's really changing not only one generation, but a second generation.

And here's the thing, you made money it making money is not a bad thing, right? So you made, you made a really nice money off of that deal. They got to stay in their house and they paid it off within the six years. So they owned it free and clear.

After that, they are with it. She is within her last 12 or 24 months of paying it off right now.

Done. So instead of looking at being upside down, 30 year mortgage, what are we going to do? They didn't. I give her credit. See, again, you create your own luck. I give her credit for not just saying, you know what? F all of you, I'm out of here. Here, walking away. Now what? Now you have an empty property. She tried to work with the bank because she there people, you know, people hit hard times doesn't mean that they're, they're dirt bags. They, everybody hits hard times. So you were, you were a godsend and I love that they named the kid after you. That's very cute.

That's so cute.

That's awesome. What? So okay, for the listeners, great story. Here's a way for people to make some money, right. And help along the way. I don't know about you, but that feels so good to be able to make a living and help and serve, right? Serve others. What are some change tips or tips that you share with the audience listening and the folks listening on your podcast?

So the nice thing that we share is we share with people how to raise capital. That's one of the biggest things that people need to do this is to raise capital. There are $7 trillion in retirement funds sitting out there making nothing, you know, making very little. And so that's a great thing to look at. Hey, look, there's plenty of investors in your market, other markets out there. If you just know what you're doing and talk about the types of deals that you're doing, it often becomes really easy to raise capital. A lot of our students are like, that's their biggest intimidating factor when they get started. And they realize it's a lot easier than they expect, but because they're networking and doing things. But another thing is that I'm not the guy that's making the phone calls to the banks or to the borrowers. There are vendors out there that can help you do that. You actually, most of the time people have too big a heart and shouldn't be calling because they'll let the borrower kind of drag out and you know, take an inch and they'll take, you know, give them an inch, it'll take a mile.

Absolutely.

So you've got to be very strict. You know, we're very, very strict. Say, hey, we need you to do this. We're glad to help you, but you've got to do A, B and C before we'll do, you know, D. So a lot of times it's best for people to have their servicing companies, which are people, they have, you know, clients, stuff like that. They're calling for, you know, borrowers all across the country all throughout the week to kind of really make sure. Then they've got, you know, they got to read, you know, there's fair debt collection practices laws you got to stick by. That's why service is really good. And then of course, you know, we have attorneys in every state that handle the paperwork. And if we do have to foreclose, they handle the process. So this is a. A business that you can do from anywhere for the most part. I mean, I, I rarely buy anything in Austin, Texas, whereas where home is because it's overpriced and it's. We don't see that much in default because it's a, you know, skyrocketing city as far as value. So I'm buying across the country. I've bought notes when I've been on cruise ships over in Europe. This a few actually about a month ago, traveling abroad, we closed on a couple transactions and we're able to negotiate some loan modifications and keep some borrowers in their houses while I was on a cruise ship in the middle of Spain or in the ocean. So there's. If you've got 10 to 15, 10 to 20 hours, you know, you're looking to do something on the sign. This is something that you can do. It's not a get rich quick scheme by any means. It's a get wealthy thing. But you've got to put the work in.

Sure.

And honestly, I love this industry because there's not as much competition. Yes. Hgtv, Flip or flop. Flip. This house has really brought a lot of investors out, but they're overpaying for assets for the most part because they don't have the education, they don't know what to do. And then the last thing you want to do is over buy and over rehab a property to something that you can't sell and lose money on. That leaves a bad taste in everybody's mouth.

Yeah. And it's. And the other thing with the flipping is you have to hold the property and pay the taxes and you have to have electric and all those things. So you need quite a bit of money up Front to pay all of those things. And then if you're lucky with weather, etc. That you could get it done in three months or whatever that is. Otherwise, if it drags on and the market does shift, you could be left holding, you know, rotten eggs, so to speak. Right.

Yeah. It also comes down to your financing money costs. If you're not using their own money. There are hard money lenders that will lend on real estate.

Sure.

That are going to be charging anyone 10 to 12%, which is not bad if you're in a deal for less than a year. But you get beyond a year, that eats up a big chunk of your profit. So you got to be careful that way.

Absolutely.

That's why.

So do you work with people that they have the assets and they come to you and they say, hey, listen, I have $200,000 in an IRA. What. What do we do? Do you guide them, work with them, use their money? What? You know?

Yeah, we do a couple things. If they want to do this themselves. We've got classes that we teach. You know, we have a thing called the Note Buying blueprint, which is about as close to an A to Z, step by step kind of training program for people. It's not one of these training programs. Oh, yes, sign up for 99 and we're going to charge you 25 grand for. It's not like that.

Okay.

So if people go through that, we have a lot of students have a lot of success going through that because we give a lot of nuggets, we give a lot, we share. The vendors tell you who to do, what to say, what not to say, who to call. They want to take a little bit more advance. They can come into Austin and spend a couple of days with me and I'll coach them one on one and then, you know, obviously continue to coach them along the way. But some people like that, like, yeah, I'm just too busy, you know, I'd rather, you know, get, get a decent return on my ira. You know, let's talk.

So it's interesting. This is very personal. It's. It's kind of funny because my husband started getting into the flipping of the real estate, which never happened. But we do have rental properties in my ira. I do a self directed ira, so it's awesome. We're getting a great return on that. We have the property people taking care of it. We live in New Jersey. I have one in Cleveland, Ohio, and one in Buffalo, New York. Again, they're not like New Jersey real estate. Forget it. You can't touch it. So these are very inexpensive, but they're giving me a nice return. And he is actually losing his job, company got bought out, blah, blah, blah. So he's like, khan will get, you know, this extra money from my 401k and I'll be able to do a self directed IRA. So I think that he needs to talk to you because I think that, I think this is an easier way than buying property, flipping, etc. Etc. And I like the idea though, of also for us having the real estate with the income coming in. Right now it's going into my ira, which is awesome because we just keep buying properties with that income. But when I retire, we could keep those incomes coming in. I don't even have to change, touch my assets. So that, yeah, that's kind of our game plan. But now it's so funny, right? Not opportunity knocks. He's losing his job. When he came home and told me, everybody's like, oh my God, are you freaking out? I'm like, no, this is a great opportunity. Are you kidding? He's brilliant. You know, he, it's not. He didn't lose his job because he didn't do a good job. Right. The industry is what it is. And I think this might be the ticket, Scott, for him to figure out what he wants to do. He's got a package, so I'm telling you, we're fine.

That's awesome.

Yeah, it's, it's opportunity knocking. So I'm gonna have him call you.

You know what? I'm, you know what? I'm glad. Let me know. I'll be glad to throw you guys into my online training for free at no additional, at no cost for you. So you're a love. Because it's just, you know, there's, you know, one of the things we do is if somebody's, you know, I don't know if you've got any past or present military first responders on there. We like to compliment those guys and gals into our workshops too, because they've given so much.

Absolutely.

Time. So first responders, nurses, police, firemen, emt, and then anybody that's a pastor, present military, we compliment as a way to give back, to help people out too.

I love meeting people like you. I'm sorry I'm past the age of bearing children, but if I was, I would name one after you, Scott. That ship has sailed, my friend.

All right. That's all right. You mentioned the markets there. Ohio is one of my favorite markets to buy in because is there's so much inventory. I'm not now Cleveland. You had to be a little careful, Cleveland, buying notes or taking rough properties back in Cleveland because the city requires you to put up a big bond there for it. But if you've already bought a turnkey rental, you're above that, you're golden. Okay. Buffalo, New York is one of the longest foreclosure states in the country, so we have a tendency to avoid that. But I have bought in Buffalo, Rochester, because the cost of property up there is so cheap. And when you compare it to the rent factors and the rent that's coming in, it's a, you know, if you're buying a rental, it's a great thing there.

Yeah. So, yeah, I love it. I love it, I love it. We could talk all day. We're out of time. So if you, if this, I hope guys looking for a little bit extra income. You're transitioning jobs, you know, like my husband's going to be in the, in the coming months. This might be just what the doctor ordered. So again, opportunity knocks. Are you listening? Please go to Scott's website. It's we close notes. If you have questions specifically for Scott, go to scottclosenotes.com and Scott, you have a free book that you said.

Yeah, I do. It's I have a free book. They go to noteblueprint.com freebook. They'll get a copy of my how to buy real estate at 40% how to break into the secret world of note Investing. It's usually 19.99 on Amazon, but they can get it for free or they can email me@scottclothesnotes.com we'll send over an e book version of that.

That's awesome. Thank you so much. I love, I love giving free things away. And again, this is the next step. If somebody is intrigued by this, read the book. See if it's something that makes sense to you. Because if it doesn't make sense, then, you know, maybe it's not the right thing for you. So thank you so much for the information, for the free gift and just for your time. Scott, you really are a delight to talk with as well. You have a nice personality, which makes the show fun for the listeners, you know.

Well, we try to. There's nothing we worse than hearing somebody drawn on like Charlie Brown's teach. Exactly.

Exactly.

The biggest thing I can leave somebody with is, hey, just be yourself. God knows we have enough fakers out there. But there's only one of you. So be yourself and you'll be a lot happier when you can, you can be yourself in your own skin, right?

That is so true. So true. Thank you again, guys. If my partner and I are still offering that free communication style assessment@wisdom decoded.com right on that landing page. Fill it out, get the report, learn about how you're communicating. You learn about your strengths and your challenges. I don't know about you, but if I understand my challenges, at least I know how to attack that and work on that and become better. So Again, it's wisdom decoded.com free communication style assessment. Scott, it has been a true honor and pleasure to interview you. I can't remember the last time I had such so many laughs with someone. And you really are just a, a delight to deal with. So thank you again and thank you for giving so much vital information to my listeners. I do appreciate that.

Well, thank you for having me.

It's been an honor, a real pleasure. I hope you guys will join me weekly as we question, build and discover together that this whole thing about change that we talk about week to week, it's easier than you think. And I hope my guests, like Scott, help you uncover maybe the next change that's going to impact your life. You've been listening to Enlightenment of Change with me, your host, Connie Whitman on webtalkradio.net I thank you all. I thank my guests. I hope I wish you all a wonderful, inspired week and check out Scott's stuff. It might be your next adventure. Thanks, everybody.

You've been listening to Enlightenment of Change with Connie Whitman of Whitman and Associates. To learn more about Connie, Visit her website, whitmanassoc.com thank you for tuning in. We're glad you were here.