Knowing Your Buy Box & Due Diligence Basics - 4 Week Coaching Part 3

Foreign this is the no Closer show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property for panties on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now here's your host CEO of We Close Nodes, Scott Carson. Hey everybody, Scott Carson here. Just want to say thank you again for listening to the podcast. If you've been listening for a while, you're subscribed to the podcast. First of all, thank you. Second of all, hey, you know if you're you're not one of our coaching students or you haven't signed up for one of our three day workshops, here's an opportunity for you. You want to check out our WCN membership. This is the biggest bang for the buck of the notice street. Besides our one on one coaching, this is our monthly membership for 97amonth that gives you access to all of our online training, our virtual workshops, our note weekends, our special one day master classes that we've taught in the past, anything that we have going in the future, as long as you're a live member, if I can't make you or save you $97 a month, I'm doing something wrong. But save you paying 997 or 99 bucks or 399 here or anything like that. We make it affordable at $97 a month and like I said, it gives you access to all of our past replays, our upcoming classes, our access to our special classes. We also do weekly coaching calls with our WC members and also our WC members also get first crack at tapes and lists of notes that we get in after our one on one coach to take a look at them. But it's a great way for you to go. You can also schedule call with me anytime to go through deals that you're working on marketing things, questions you got going on about a deal. We're here to help you. So how do you get signed up for that? Really easy. Just go to noteumbrella.com that's noteumbrella.com get signed up there for you 97amonth guys. Like I said, biggest bang for the buck of the nursery and we want seeds of the family. So let's get you signed up today. That's known umbrella.com welcome to the no family buddy and thank you for always for listening. All right everybody. Hey happy day. Hope you are having a great week so far. We are honored to have you guys join us here on this episode. This is week three of the implementation coaching. For those of you guys that have gone through our Note Buying for Dummies workshop, we did held our last workshop in December. Some of you guys attended that. Some of you guys have attended the past. Our next live workshop is going to be March 1st, 2nd and 3rd here in Austin, Texas. So mark your calendars for that. Like I said, March 1st, 2nd and third and you register for going to note buying for dummies.com if you're a WCN crew member or a previous coach, just let me know as we you've got a special thing during coaching past coaching student, you come for free. If you're a WCN crew member, there is a reduced cost for you as well for you or be glad to have you guys. It's a Friday, Saturday, Sunday here in Austin, Texas and I'd love for you to join us there. But if you are are looking to get rock and roll, let's discuss a little bit of what we cover the past week before we dive into today's information for you. All right, week one, we talked about the ways to find deals. We broke down some of the different ways that we're finding deals that nobody else is finding, how to get these deals sent to you and how to leverage LinkedIn and other lists to find deals. Last week, week two, we discussed about raising capital. Some of the different ways that we raise capital, the things you need to have in place like your pitch deck, your executive summary and the marketing facet behind that. And I gotta give a shout out to a couple students this past week have raised a couple hundred grand. You know, John Gore's raised about 200 grand. He's pretty excited about that. And I think Cal's raised about another 200 to 250 as well. So kudos to you two guys for doing a great job following through along with the implementation and big shout out to Antron and Fulton also who are doing some great job in getting their stuff up, rocking and rolling. So you probably hopefully hear from those guys and gals all before the next couple of weeks are up. Might have one of them join us on here tonight. But anyway, today I want to dive in what you should be looking to buy. And while there's a lot of product out there, different facets of what you can buy. I want to go through what you really want to spend your time on and what you don't want to waste your time with. Okay. And then we'll dive into the due diligence and how to slice and Dice a tape. When you get a tape in from an asset manager, what do you look at? What do you spend your time on? What do you not waste your time on? Okay. And I am honoring the chat role. So if you're up, I guess it does help if I actually enable it so you guys can actually chat with me so that you are able to ask questions there. And I am monitoring on YouTube live stream as well. So feel free to give me a thumbs up or a hello on YouTube as well. So we know that you're live on there. Like I said, ask your questions or no dump questions. I will ask you to keep your questions to relevant information. You can always go back to our YouTube channel at WeCloseNotes TV. If you're watching that, make sure you subscribe to that and watch the last two episodes, week one, week two. We also live streamed week one, week two back to back this past Sunday. So you can watch the roughly three, two and a half hours of that training back to back on our YouTube channel as well. But anyway, and then of course we turn these into a podcast episode as well. So if you're listening to this podcast episode, you can click on the link in the description to actually go back and actually watch the live video. All right, so let's talk about what's coming out and what you're seeing. First and foremost, there's things that are coming out that you can take a look at it. I mean the more tapes, the more list you get, the more familiar you're going to build and the more educated you're going to get in understanding what you're looking at. All right, so every tape does have value. Okay. But the tapes that you're not going to bid on, you're just going to kind of say I'm not interested are basically they're either going to be a pure performing tapes where they've never defaulted. The banks want to sell those at par. There's no room to make money if they're selling at par. Okay. And that's very common. A portfolio of performing notes. You've got to have cheap, cheap money to buy that stuff at like at a 1% money cost. And if you're making 2, 3, 4, 5, that's how you make your money is the difference between the spread. Well, most of you guys aren't going to have a couple million bucks to handle it and that's okay. You can strive to get that later on. So tapes are performing. That's you're not going to buy the second tape that you're not going to waste your time is what's called scratch and debt loans. And these are loans that a bank or lender has originated and there is something wrong, not anything huge, but something wrong with the collateral and by the collateral mean the loan documents. Maybe there's missing documentation, maybe there's missing signatures and a notary stamp when the loans originated. Maybe the borrower was not Dodd Frank compliant or the loans that makes the loan not Dodd Frank because the bar didn't go through a registered mortgage loan originator to make sure that they were, you know, able to afford. Could also be that the when the loan was originated it was going to be sold to like a Wells Fargo or Bank of America. But the borrowers credit may have changed at closing, they may have high dti. The appraisal came back. There's a whole lot of things that can affect the scratching debt doesn't mean it's a bad loan, it just means that you're probably not going to buy it because scratching debt loans are still selling in the mid-90s, 90s of the unpaid balance. And once again once you get really, really cheap money, it doesn't make any sense to buy that stuff. So it's great to look at this stuff. Unless they're going willing to take a big discount, you're really not going to buy either those two things. So that's the first thing you don't want to waste your time with. Okay, third tape, Third type of stuff that you're going to get in is going to be a mixture probably of reperforming loans, stuff that was once non performing. Whether it's Non performing at 12 months and the borrower started back on track in the last 12 months of some sort of pain, they behave 3 months, 6 months, 12 months, whatever or stuff that's non performing or stuff that is the bar is 60, 90 days late. Now on a non performing note, I don't look at anything that's really less than six months in default. Okay. The reason for that is the seller is not going to take as big a discount. I mean if the bar is only 30 days late, they're probably not going to take that big a discount if it's been, you know, performing the entire time and just started to be late. Okay. If it gets beyond six months they're going to start taking a bit of a discount to get it moved off their books. Now that's the first thing you look at. Look at your last paid date and look at the payment history. Couple of things on the spreadsheet you're going to see is the most recent payment and last pay date or next. Next, I'm sorry, let me rephrase that. Last pay date and next due. So if a borrower has been like six behind but they made a payment in January, but next due shows July, that tells you they're still six months behind. Okay, so those are stuff that you would buy, stuff that's six months late, stuff that's greater than 90 days late, that would definitely be stuff that you'll buy that's truly non performing stuff. Now when it comes to the non performing or stuff that's re performing bars back on track, sellers are selling it at 70, 80 cents a dollar. That's a price that kind of makes sense for the performance stuff. All right. Other stuff you'll see, you'll see like contract for deeds. I treat contract for deeds like a first lien. They're usually lower, lower balance loans on lower balance properties. And I'll talk about the balance and values of properties in a minute as we go through things. Okay, but when you're getting in tapes, yeah, I will look at reperforming, I'll look at non performing and then you know, those are the two biggest. I look at contract for deep tapes all day long. Now somebody asked me the other day, well, I look at a foreclosure list or an REO list, real estate owned list, and I'll glance at it briefly if the lender has a list of REOs or investors taking some property back and they haven't sold it yet. Yeah, I'll take a look at it. But you got to be very careful. Here's the thing about REOs. Most of the time, if I'm an investor, like I'll give you, this is a great example. Jessica is watching here. Now, Jessica was looking at a tape from a company out in Arizona. It had a property in it, not performing note in Spring, Texas. Now Spring Texas, hey, that's just north, down the north side of Houston. Not a bad thing. The online Valley showed one thing. The, you know, the photos you could see from Zillow looked like it was okay. And I was like, why are they selling this note so cheap in a lot of cases. So I drove out. I was on my way to go look at another property and he says, well, I'll drive by this one for you. So I drive by that asset and from the front it looks like it's occupied. Well, I walk around the side of the house, I can see that Jumanji's in The back yard, back door is wide open and what do I find inside? Ass. Just straight up nastiness. Okay. And it was being sold. Rats. Exactly. Worst rat infestation. We'd seen rat crap everywhere. It was a shitty house, pardon my French, but it was just, it was crap. Roaches, trash everywhere. It was demolished, basically. Well, I told the seller that I actually did a walkthrough video. You can actually go to my YouTube channel and watch the walkthrough video of that property. And I sent it over to the seller and they're like, oh, thank you very much. Yeah, the bid that we offered, we're not, we're some. We're withdrawing the bid. Your bid shouldn't be 200, maybe 50k for what the value would be after clean out in a lot of cases. Well, the seller is still trying to sell it. He's trying to sell it as an aria, hoping that somebody doesn't pay attention to him. Like, you can't do that. You got to realize you get to list. The sooner you come to the understanding that you have to disclose this stuff, it just makes it. Now here's the thing. I know the seller. I know the seller very personally. And when I see an REO on his list, it tells me, A, it needs a lot of work, B, it's not a deal in a lot of cases because any of us, if, like I'm going to foreclose. Jessica, Catherine, Larry, anybody, if we're going to take an asset back and foreclose on it, and if it's in decent condition, decent meaning paint, carpet, a little clean out, stuff like that, we're going to proceed with it. We're not going to list it for sale because that's, that's extra equity or value now that we can take back now, right? That's now profit to us. Now if it's in a rough area, needs a rough. A lot of work. Rough. Yeah. Then we'll sell it for somebody, let somebody else locally take care of it. So that's why I don't really focus on a lot of REOs. I look at stuff in Texas, I look at stuff in Florida for the most part. But most of the time I don't want to get into the property management aspect of doing that. Does that make sense, everybody? Hopefully you understand it. You want to keep it simple. Okay. You don't be doing rehabs all across the country. I got a rehab right now that I'm working through that's dragging on and dragging out the winners here. It's dragging on even longer. Okay. But it is what it is. We're working through it. We're still going to make money on it. Still going to be a good day. It just takes a little bit longer for that aspect of things. And I'm in the note business, not in the real estate business. Okay. So those are some things you want to keep in mind and really underlying more. So there's. There's really one law that comes down to bidding on notes. We're really bidding on real estate as a whole, as itself. Now, somebody would say, well, is that location, location, location? Well, that could be, yes. Everything has good location. You know, every city has good parts. Every city has bad parts. You know, a few cities I won't buy in Chicago, just as a rough area to foreclose. Chirac, Crook County, I don't like that area. I don't buy in New York, New Jersey, Tom. I don't buy in the west coast states, you know, Washington state, Oregon or California just because it's kind of crazy there. It's not friendly. I don't buy in New York or New Jersey because the long foreclosure time frame. I don't buy in Louisville because of the. The bond they want you to have on there. But most of the rest of the states are a. Okay, all right. If you hire a local servicing company, Servicing that's licensed in that state. And if you need to foreclose, you've got an attorney's license in the state. Ask those folks, what's it going to take to foreclose? What's the cost, what's the time frame? And go from there. Okay, but the underlying number one rule isn't location, location, location. The number one online underlying rule when it comes to any type of real estate investing, and primarily in notes, is never buy something you don't want to end up owning. Never buy something you don't want to end up taking back. All right? And I'm serious. Never buy a note on a property you don't want to end up taking back. So it might be the greatest deal deal. I'd be getting the best return on this property. But if it's in the middle of a crack alley or it's the smallest property on the block, like it's 800 square foot house, or it might be out in the edge of town with nobody else around, that may be Dexter the serial killer living in it. Okay, it's not a deal. Okay? You got to run the deals. I'll give you another example here. I won't say client. There was another investor that reached out to me. He's like, hey, I'm getting ready to buy this note in lagrange, Texas. Now you guys know where lagrange, Texas is? It's east of Austin by an hour. ZZ Top made it famous a few years back, obviously in their song. And lagrange is not a bad little city. It's great. It's your typical kind of mid sized small Texas town. I mean, Texas is a. Oh, it's exciting. You can foreclose in a year. I mean less than a year, really. Like 30 days, right. And I had this guy come to me, he's like, hey, Scott, I'm really excited about this note deal. And I'm like, oh, that's awesome. Tell me about it. He goes, well, it's in lagrange, Texas. I'm like, okay. I go, give me, tell me the numbers on it. He goes, well, it's worth about 90k. I'm gonna pick it up for around 30k. I'm like, okay, that's not so bad. You're buying it for 33 cents on the dollar. Is it occupied? Needs work? It needs, it needs some work. I said, well, how much does it need? Well, it needs about 30, 35k and work. I'm like, okay, all right. And I said, okay, that's okay. It's still not too bad. You're buying it for 30. It needs at least 30k in repairs because it needs outdating paint, carpet, some other stuff. It's worth 90. So you're sitting at 60. Basically 67 cents on the dollar. Right? 60 divided by 90. That's where we got that. So you buy it 67 cents down the dollar. Okay, great. I mean they owed a little bit more than the 90. So it wasn't, it was underwater a little bit. So he's basically truly buying like 60 cents of owed. And it was like 67 cents of value. I'm like, okay, what are your. Who's going to finance? He goes, well, I got a hard money lender who's going to finance me at 12%. I'm like, okay, that's kind of. You're kind of getting skinnier now. I go, what are the days on market? And he's like, what do you mean? I'm like, well, what is the days on market? Have you talked to a realtor to get your comps? He was like, yeah, I. Real estate is worth about 90, maybe 90 or 100. Okay, but what are the days on market? It's one of the things that always. He's like, I don't know. I have to check when he came back. Oh, it's a year. I'm like, then it's not a deal. Because what do you mean? I'm getting at 66 cents on the dollar. I'm like, I don't remember what his name was. I didn't say his name was Gene, but it wasn't. But anyway, we'll just call his name Gene. Gene. If that property is going to take you. Let's just. Let's go through the time frame here. You're buying it at 30. You got to put 60 into it. There's probably another grander a grand in foreclosure cost and servicing. All right, now you're at 61. All right? And it's hopefully at 90k. Your hope. It's gonna stay at 90k, but takes a year to sell. Now, if you listed at 90 and it takes a year to sell, what are you gonna do to move it faster? Because you're gonna. If you have hard money loan on this stuff, that's at 12% plus 2 points. So 12% on his $60,000 investment, 7200 bucks plus 2 points. That's another 1200 bucks. So that's. We'll just say 8500, right? So now if everything goes right and it sells in a year, you're sitting at $70,000 in cost on potentially a $90,000 sales price. He's like, yeah, that's still good. 20 grand. Like, no, it's not. Because if you take realtor commissions out and closing cost, that's 10% of your 90. Now you're 81. Now you're making less than 10. Really rough about 10 grand. He's like, oh, I didn't run the numbers through for that. I was like, do you know any back. Oh, yeah, there's a couple of years in back taxes. He's like, I think five grand. Well, now you're at six grand. Now you're in a skinny deal. So some of the things I want you to take away from that, ladies and gentlemen, never buy something you don't want in. Only make sure you know your numbers okay and know the days on market. In today's world, we can all agree what? Well, days on market have increased, right? It used to be anything was that didn't sell in two weeks on. The MLS was basically junk, right? Even junk was selling faster than 30 days. Okay. If you're seeing in market where it's taking a year to sell something, you got to understand you got to price that puppy to move. You're not going to get full value. You've got to do a 30, 60, 90 day quick sale price, which is mean you're going to be dropping the sales price 10, 20, 30% in some cases. You got to make sure it's an ideal asset. You've got to rehab the property up to be the best looking one on the mls. And you've also got to make sure it's a, a cookie cutter house or cookie cutter property that people are looking to buy. 323122. You know that kind of stuff. You get to where it's a smaller house or it's got a funky set up to it, that's not going to work well in your favor when most comps are being pulled just off the square footage. You know what I mean, ladies and gentlemen? So that's the thing is never buy something you don't want to end up owning is one of the most underlying deals I can tell you when it comes to now I've bought lower valued assets. I bought stuff cheap that I didn't mind owning because it was decent looking assets. I knew I could hold onto it for a while and if I worst case I had to rent it out, it would do good. But I've stayed to that at least three one or two twos. I don't usually do like a A2 one unless it's in a highly densely populated area where I know I can move those pretty fast or more. So two ones are decent little rental properties. I'll look at condos, condos all day long in Florida definitely where there's safe harbor rules and stuff like that. I'll look occasionally here in Texas, stuff like that too. But that's the biggest thing. Don't buy something that you don't want to end up on it just because the numbers on your spreadsheet are looking good based on the calculation of your yields and running your numbers. And we'll get to more of that later on. That's the thing to look at now as we dive into your spreadsheet. There's things that you want to start slicing and dicing and by slicing and dicing being a note samurai, I mean by stuff that you just want to remove, get off your list, literally take off, delete, get rid of them. It's just not worth it. Okay, now first and foremost, we already mentioned some of the states, New York, New Jersey, I get rid of them most of the time. Washington state, Oregon, California. I'll pretty Much get rid of them anyway. I may send them out to a few investors that live in those neck of the woods that are, I know are buying. It all depends on what the price point is. And that takes us to the number two question. You've got to ask for due diligence before you even dive into it. What the hell do you want for this? What price point? What's the sales price? Give me some sort of color or breakdown on what type of discount or price point you're looking for. If you want $0.90 or $0.95 on the dollar for non performing, never mind, it's not worth waiting. If you want par, it's not worth wasting my time. I'll move on if you give me some sort of discount. If it's not performing, I make a discount offer to it. Great. But I don't want to waste my time and waste your time. So it's important, what's the price point? Because I'm going to ask you that. I get people all the time. I got a deal. What makes it a deal? Is it a dud or deal? I don't know. What's the price point? Well, they didn't tell me. Well, you got to ask, you got to get some sort of pricing specification so you know how to run your numbers, how to figure yield, how to figure your rate of return. Those kind of things are very, very important. Okay, okay. So while we talk about, you know, everybody, then you want to end up on, you also got to know the bid price, roughly where they want you to. If they come and say highest and best, okay, that's fine, you know, as long as it's not par. I had some bank tell me the other day, oh, it's, it's non performing. We're selling everything, all our non performing at par. I'm like, well that's good. Doesn't mean I'm going to bid on it. It's just I've got money cost and I can't make any money that way. So you're going to end up owning that for a while. Okay, so we start getting rid of assets based on the spreadsheets. Now the first thing, the easiest thing to do is go to your states out, you know, filter them, alphabetize the states and start getting the states that you don't want to invest in. Now I always tell investors start with three to five states. Okay? Now like I'm gonna give Darlene and Lisa an example here. Darlene and Lisa are from Michigan. Actually. Darlene lives down now in Florida. Well, guess what then? The first two states you should be looking at stuff is what Michigan and Florida. The next state I was looking at would be Ohio. Okay. Because if you're going to do a non judicial state like Michigan, that's great. Everybody loves non judicial states. I wouldn't just be buying in non judicial states. I would look at also judicial states. Well, Florida is a judicial state. It's got a little longer foreclosure time frame, but the values are obviously higher than Florida and values are still maintaining in Florida and there's still people moving to Florida even with the insurance costs. If you can find insurance, great. You can't, you might want to avoid it. But Michigan is going to have plenty of assets to take a look at. And that's what I want you to think about. What are the states that I can look at that I'm seeing inventory in? New York, New Jersey, excluded. Unless you live there and you got your own attorneys in New York and New Jersey, like I've got a few students, you probably don't want to waste your time there. Okay. But Ohio, Michigan, great station seat. Play inventory. Missouri, where Jessica lives, you're gonna see some stuff there next door in Kansas. You're gonna see some stuff there in Kansas. Kansas is a 12 month judicial foreclosure process. Missouri is what, 90 days, something like that. I would look at Indiana. Indiana is kind of like about, in the middle, about a nine month process to foreclose. Illinois. People always ask me about the, the Illinois and I'm not a fan of Illinois. Especially in Cook county around the Chicago area. It can take you a while to foreclose in Illinois, but when you ask, when you get all the, the red tape and the dragging out, I'll look at other counties besides Cook, but if it's in Cook County, I'm going to kill it off. Okay. Like I said before, I won't look at anything in Kentucky, Louisiana. I'll look at if it's like New Orleans or Baton Rouge or Lake Charles or where they're major areas and that's the next thing you want to look at. Okay. You're going to get these states and stuff like that. If you recognize the city, guess what? Yay. If you don't know where the hell that city is, take a look at it. And then it's out in the middle of nowhere, out in the sticks. Okay. You don't want to be buying stuff that's rural for the most part. Unless you're looking for like landing and go hunting on or something like that. Or you're fine. Like I go, it goes back to that first rule, never buy something you don't want to end up on it. I was looking at a portfolio stuff a few, a year ago, there was a property in Michigan, south of Jackson, Michigan, out in, out in the woods. But it was like 120 acres with a three bedroom, two bath house on it with a 10 acre pond. I was like, that might not be too bad. If it wasn't so freaking cold out there, I would look at that, right? So that's the thing. If it's rural and out in the outside of town where it says Rural Route 1 or something like that, or Farm to Market Road, you probably don't want to end it. Now, don't be wrong. There's a lot of farms throughout Kansas and Missouri and Minnesota, a lot of cornfields in Iowa. You know, you're going to see that that's okay. If you're fine, that's, that's fine. You can, you know that if that's in your buy box, that's okay. But you got to know your, your buy box is. I'm glad I brought that up because you're going to have asset managers ask you what are you looking to buy now, what's my buy box? My buy box is I buy basically assets anywhere from 50,000 to up to a million single. These are single family homes. I look at, I don't, I prefer $500,000 and less in most cases. But I'll look at stuff in most of the major markets that's at least six months or longer in distress. I'll look at reperforming stuff. But I gotta have at least a year of reperforming for buying. I don't really like low balance stuff. Anything that's got low balance, and this is where you go back to your spreadsheet and as they start, people start asking you or as you're getting these spreadsheets in where you start eliminating things. Okay, now I say this with a grain of salt. Now. If you're using your own funds, your own money, your own IRA accounts and you find something, you're happy with it, you're happy with return, and it's going to return to you with your own funds, by all means, then buy it. Totally fine to buy. Whether it's a big balance or it's a small balance, if you're happy buying that asset and it's going to make you whatever your return is happy with, 6, 8, 10, 12, whatever, beyond whatever it might be, that's totally fine if you're happy. That asset and where it's located. Like I live down and I grew up in south Texas, down by Corpus Christi in a small town that originally had like 4,000 people. That's really too small for most people. But since I grew up there, I have friends there. I know that area there. My mom still lives down there. I would do that. Okay? I would buy. I'm comfortable with that. Not everybody else is. You get what I'm saying? So that's the thing. Try to stick to your major markets. I prefer cities that have at least 50, 000 people or greater. So that would be one of the things that you might do. If you're comfortable buying in Michigan, Ohio, then what you could do is go to Google and say hey, what are cities? Or go to chat GPT. What are cities in Michigan or Ohio that have a population of 50,000 people or more? And it'll spit out a list. Well, there's your list. There's the cities that you'll buy in. Okay. For the most part, you know what I'm saying? You start getting smaller than that. The reason we avoid smaller cities for the most part because it's less people there to buy, less realtors, less rehabbers. It just becomes more expensive for you to buy some rural. A few years ago a couple students of mine thought they were going to be smart and buy a bunch of these low balance properties that were these like vacant reos. They were gonna go rehab them. They're gonna offer them on terms and on our financing. I was like. I said I love the idea. I hate, I hate the actual ass. And they're like what do you mean? I said listen, there's a reason these assets have. They have issues. There's nobody out there to go. Nobody wants to drive an hour out of town to go knock on a door. Nobody wants to rehab that property. I mean even you have that around bigger cities like this happened in Flint a few years ago. People didn't want to rehab properties in Flint. They want to go to Detroit to rehab. So it was. It cost you twice as much to get somebody to come out to rehab your property in Flint. Now I bought in Flint. I own stuff in Flint. It's not a bad city. Forget the water. Just don't drink the water. Okay, but I'm not drinking the water there. Other people are. You get what I'm saying? So that goes back to the thing. Start, get ready. If like I said, it's make it easy, you. If you start cutting your List down and there's nothing left on that list because the population is too low. Guess what? There will be more that come along. All right? Don't feel like this one list or this list you're looking at is the only. I gotta make an offer. I gotta make a deal happen. You start thinking that way, you're gonna get in trouble. Can I, can we agree to that? Can I get an amen from anybody that's watching on this? They understand that. Yes. Thumbs up? Yes. Good. All right, so you eliminate small cities, you eliminate rural cities. Then you're going to be looking at other things on the spreadsheet that help you identify the opportunities. Now one of my favorite things to eliminate is I look at the monthly P and I payment. All right? Now remember, if you're using your own funds and you're happy with $100 a month payment coming in off of a small balance note and you're buying it cheap enough, you're getting a good yield. Kudos. Good for you. That's fine. You can buy. But what you have to realize is that there are servicing costs. There's going to be monthly servicing costs that are going to be taken out of that monthly payment. Okay? So it's a performing note. You may only see a 15 to $30, you know, charge each month. And that's fine. Okay, if you're fine with that, you're making 70 bucks now. Great. 7 times 12 is 840. Hopefully you're buying that cheap. Okay. To get that. But that's just to you now. If you've got an investor, you now have to pay on top of that. Then you're not doing very well. Then you're not making money at all. You're you potentially losing money on that. So I look at anything that's below 250amonth, I just go and get rid of it, whether it's performing or non performing because we're going to be using other people's money most of the time. Now I will like, I'll make the exception every once in a while for something we're buying with our own IRA money and stuff like that. Different story. But if I'm using OPM or I got an investor who's going to fund the deal, I'm not going to put them into something like that because it's hard to make money when you're base. When you're barely making 200amonth on a deal, it just becomes more of a pain in the ass to take that deal down. Now there's Going to be times that you're going to, if you're buying in bulk or you're buying a portfolio, you got to take it all, okay? All those low balance stuff like that, you basically reduce your bid so much that it can make money for you. But most of the time if you can just cherry pick or you get low level pricing, just avoid those. I had a couple of deals down in the valley. They were low balance assets on assets that were worth about 100 each. And I, when I got in the the BPO, the exterior drive bys that my realtor did and showed me the comps, I was happy with the comps but the actual photos of the properties were in worse condition than the actual property was online. When I looked at it originally like the grass was tall, the paint was peeling, it looked like a lot rougher house. And I started doing a little deeper dive. It was a couple elderly folks that lived in this property. I'm like, I don't want to foreclose. I really can't imagine anything I have to rehab this property is probably not going to make sense and I don't want to get in that rehab in these, these rougher areas. So I said no to those. Okay? And that's the thing. Your due diligence is going to help protect you. The money you pay for an exterior BPO and then ordering a title report or an O and E report. The person that we love working with is Dicky baldwin@baldwin advisorygroup.com. they're a great company. Very quick turnaround time most of the times. And that's another thing. If you have a rural asset, it may take a longer time to get due diligence back because some of these small counties just don't have the staff to pull stuff. Okay? So once again get rid of rural properties. Get rid of low P and I monthly P and I pay it's really below 250amonth or less. It just doesn't make any sense. And I honestly the more you get into this, the more that number is going to go up some. You may go to 300. You may go, I got to see $400 a month. Just depends on where you're looking to buy. Obviously. Okay, if you saw a $400 a month payment in Florida or like down in Miami, it's going to be like a rat hole, you know what I mean? Not going to be a nice, nice property for the most part. So low, low monthly payment and then you're going to look at your, your balances. You have the unpaid principal balance and if they have it, the legal payoff amount, estimated legal payoff, I get rid of low, low numbers on that. Really anything below 25,000 and those I'm going to get rid of. Like I said, that's my decision. I'm also going to look at the terms of the mortgage. Anything below really 10 months of payments. If they have less than 10 months of payments, really less than 12 is probably a better thing because most of the stuff you're looking at 30 year mortgages, okay. If they've got really less than 15 years, I just, it doesn't make a lot of sense because they're paying down too much principal. The interest is to be a harder time paying holding onto that note for three years if you're taking care of your investor. Okay, so low terms left, I'll get rid of that. Now the exception of that, and I meant to bring this up there, you may see hard money loans that are only like a 12 month period. As long as you're buying those hard money loans at a price and you're happy making that return for six or 12 months, they get paid back. That's a different story. Your 30 year mortgages, I want to see at least 15 years of payments left. I prefer the mid 20s actually, more so than anything else. Okay, what I don't like buying now too and this is affects the P and I payment as I don't want to buy 4050 year mortgages. All right. I don't want to buy that because the payment becomes so small in a lot of cases and drag it all out. It just doesn't mean I like 30 year mortgages. Preferably I'll look at a 15, but the 15 needs to have at least probably 12 years of interest payments still left available to it. Okay, so get rid of low, low upb, low terms or low months left I guess you could say is a more accurate thing. Then look at your values now. How are you going to pull values on the front end without ordering BPOs? You're just going to run with Zillow. They're most of these sellers are going to put a valuation on it and honestly 90% of time they're just going to do a Zillow estimate, a Zestimate. Now they may have pulled a bpo. They may have paid for some realtors to pull comps. I'll throw that in there, that's fine. But that number we know can be varied a little bit. We know that like if we go back to that spring property, hey, online Zillow. So this Property is worth 250. Well, and realistically it's worth 50 because of the condition of the report. You got to realize Zillow values, truly values, that's like an AVM model, automated valuation model. They're going to be taking off what's sold. And most of the stuff that's sold is, you look at it is probably going to be pretty decent properties for you. Okay, so now they get your spreadsheet. You've eliminated a lot of stuff already. You got rid of stuff that's in New York, New Jersey. You've got rid of stuff that low mortgage payments below 250. You got rid of anything really below a UPB unpaid balance of 25,000. When you look at your values, really anything below, I say get rid of below anything 25. When you're starting off, you're probably going to bump that up to 50,000. The more experience you get. I want to see some assets with some values, especially these days. The values will come back. Great. All right, now, not every city is seeing appreciation growth, but some is staying pretty flat for the most part. Okay, now then, what do you want to look at? Well then look at two go. We talked about, you only want to own something, buy something you want to end up owning. Than looking at the type of the property type. Okay, I like single family homes, I like condos. I don't care if it's a pud, you know that or it's a townhome. Those things don't bother me. What I don't want to own really is vacant land right now. Now I'll look at vacant land differently for my own investment, not for a note investment aspect of stuff. Okay, but you can buy land notes. You can buy land notes all day long. There's people that sell land notes all day long. Just be careful the values and make sure that the terms and everything look good for you. Okay? But I don't want stuff that's basically, you know, I don't really want a mobile home on a lot. Okay, I will look at that stuff. I have bought some of the stuff, depending on where it's at. But you got to be very particular about where you're buying mobile homes. Now, there's some great folks that love mobile home notes, like Maurice Walters, one of our students and a bunch of other folks that like that. That's totally fine. That's not my cup of tea. I don't want to take that stuff back to rent it. It's also got to be attached if I'm gonna buy something like that. I gotta give my buddy Cal a big shot. He's got three that have been originated a couple years ago. They're on time. He's buying it like 70, somewhere between 70, 80 cents of the dollar. They're gonna be great little investments for him. Well, when I throw it, When I say mobile homes, I. I mean manufactured homes as well. Lorelei, for the most part now, I'm not talking like stuff that's in the middle of a neighborhood, okay? If it's like in a RV park, I'll take a look at that. If I'm talking stuff that's way out in the boonies, you know, it's outside of town, It's a, it's a, you know, it's in a. It's in a ratty ass mobile home park that looks ratty ass, okay? You get what I'm saying? I don't want that. I want something that looks nice, that I can move, that I would be proud to own. All right? That's. That's a big thing on that. And I'll look at it. And a lot of times when you eliminate the small cities and start eliminating small cities, a lot of stuff goes away, okay? Because there's usually zoning, mostly cities that won't allow for mobile homes to be downtown in the middle of, you know, a development. You know what I'm saying? Right? Those, those are things I'm getting rid of. I'm literally just like slicing and dicing, deleting off, deleting off, deleting off. Another thing that you can run due diligence for is check your rent rates, okay? And every city has a little bit of different rent rate from the cream of the crop down to the crap, okay? You might be able to rent a property, but if you've got to go in with two guns blazing to get collect your rent, it's probably not a deal, right? And so know what? Your cities, and that's part of the thing that you want to look at when you start looking at the cities is, okay, what's the median rent rate? What's the average rent rate of those cities? And that'll tell you, okay, am I on the upper side or the lower side of the rent? If median rent rates 1500 and this one says it rents for 1000, that's below. The meaning is this. In a rougher area, what's the crime look like? That kind of stuff, okay, Like, I'll give you an example. Like Michigan, specifically around Detroit, Wayne county, few years back. I would look at stuff that be $500 and above. Okay, same thing. Columbus, Ohio, I got a couple of buddies there, they were like, oh, anything we can rent for $500. If it's below $500, it's a rough, rough neighborhood. Okay. Of course that number's gone up now. Columbus got better. It's gone up in Detroit, it's gone up everywhere. So you know what your median rent rates are. So that's the thing to get rid of stuff, you know, get rid of it. If it's low, low value rent, it just doesn't make any sense. And you really don't want to be in class D as a note investor. That's not saying you're going to rent it. I'm not saying. But if you do have to take it back, it means it's probably in a rough spot. That's part of due diligence. Okay, so let's, let's kind of talk about this as I keep kind of going back in there. So looking at the state you don't want in the rural cities, the low P and I payments, the low upb, low values, those are all things you're getting rid of. And then looking at like a rent rates and getting rid of those that are low rent and also property types, keep your single families. Now the next question that people often ask me, well, what about vacant versus occupied or unknown? You'll see that on a lot of spreadsheets where it says occupied owner, occupied or occupied, Unknown means there may be a tenant in place there. Or if it just says unknown, they don't know if it's occupied or vacant. Okay, so here's the thing. In Texas and Florida, this is my buying stuff, I will look at vacant assets in those two states. Okay. I'll look at a little bit if I have, if I see other cities that I own stuff in currently. Right. But for the most part, a vacant asset isn't going to be something that you're going to get back on track. That strategy for a vacant asset, 9 and a half times out of 10 is be when you foreclose, if you can foreclose, great. Or if you get a deed, Lou, that's great. But you're probably going to have to foreclose most of the time. Then guess what? You have an reo, you're basically buying that note to foreclose, fix it up and sell it. So only do buy vacant assets in areas that you're familiar with or you've got friends or you already have stuff in. Okay? Because when you buy a note, you don't have to wait to foreclose to go in and weatherize it. You can go over the minute you close on that note. If it's not, if the locks aren't changed, as long as it's vacant, you can go over, change the locks, take a realtor over, take pictures. As long as it's vacant. Don't be like a couple guys a few years back, they bought a note, they searched online, they said it was vacant. They called the city, but they called on the wrong address. It was like 696 Davis Drive. Well, they called on 696 and it was Davis Circle. So they showed up to the wrong house, change the locks. There's. There's this house full of stuff. They pulled up a moving truck. We're hauling stuff out. And guess what happened? The cops showed up and the homeowner showed up as they're moving stuff out. Oh, somebody's going to jail. Well, it was a mistake. It was a nice mistake. They end up paying that homeowner quite a bit of money to avoid that, to apologize. But you got to make sure you're looking at the right asset. Okay. That takes us to kind of online values or online viewership, and that you look at this stuff too. I mean, the reason we didn't start off by looking at the condition of the online photos first is you can often get rid of a lot of the junk by just looking at the spreadsheet. Look at what it says, okay? Look at that stuff. It's going to save you a lot of time. And that way, then after you kind of cut down your list to where you're. Okay, I'm comfortable with the payments cover with the cond, where they're located, the asset type, the UPB is the values. Then we look at what the online condition report looks like. And that's jumping on Zillow, doing some Google Map views. There are things that you look for in Google Maps. Okay. They want to take this down a little bit. Obviously you're looking over aerials. What does it look like? Does it have a roof? Does it have a blue tarp on the top? That does. There's never a good sign when there's a blue tarp on the roof. Okay. Means you need to replace the roof. Okay. Water damage, that kind of stuff. But look at the date of when that photo was taken, when that drive by was taking. If it's this year, like, well, it's 2024 now, as we do this, right? So if it's something from the later part of 2023. You know, it's less than six months old and the house looks good and there's a car in the driveway. The yards mode. There's some pride of ownership with landscaping or plants or wind chimes or whirly gigs or kids toys out in the front yard. I'm cool with that. Especially if I'm buying that note. If the value is at 200 and I'm buying it noted 100, I'm not going to spend a lot of time like okay, I'm pretty comfortable with that valuation. Right. Okay. But if it's, you know, if it's, you know, if it I have an older photo and maybe it's two year old photo. I'm going to make sure and still pay for a bpo. Somebody drive by, make sure pull current comps, current numbers on it. But if it's, it's current photos like in the, like I said last 90 days and looks good in pristine condition. I'm pretty especially it's occupied. I'm okay with that. I don't really worry get so bugged down on the valuation of that stuff. Okay. But if it's vacant and it doesn't look good from a year or two ago, it's probably not going to look any better. It's probably look worse. Okay. The one exception of this would be like contract for deeds. Contract for deeds may have been an ugly property where somebody went in, rehabbed the property, offered boner financing for a period of time to folks and yet people come in fix the property up. So when you're looking at a contract for deed tape, what's great about it is if you're doing the Zillow search, if it was a contract for deed, the deed transferred hands from either the bank or the land institution to the investor. Now who own or finance the property to an end buyer. Right. But the deed doesn't change names yet. Still may be ABC Investments, but John Smith live in it who took a contract for deed out from ABC Investments. So you can see when it's sold. And we know a lot of times Zillow will show a sold price affects your value. So look at when the date that was sold. Okay. If the date was sold and then you look at your spreadsheet and the origination date is after the date on the photo. Okay. It tells a story. Somebody bought this house, they went in and fixed it up. An owner financed it or they decided to finance somebody else because the old photo is before this note was Originated. Okay, we need to, we need to send somebody out, take a look at it. Okay, but if the photo is, say, is 2022 and the loan was originated in 2020 and you got boarded up windows and cracked glass and ugliness, it ain't getting any better. Okay. One of the, one of the jokes that we used to run in our mastermind groups is if it had a big overgrown tree where you couldn't see the house or overturn weeds, it, you might as well just killed it. And that was a pretty honest case. Okay, so that's the thing. Look at the properties. Don't fall in love with it. Don't run into the. We always call it the OTSC syndrome. Oh, that's so cute. Because you don't own the asset now. You don't buy anything you want to end up owning, but you don't really own the asset. You're the bank now. You're excited, hey, I'll buy that note. Because that borrower's got a lot of emotional equity. They got a flag out in their front porch. Great stuff. We'll definitely work to keep that and keep that bar in place. Now that's how you kind of go through that stuff. Now I like to use batchgeo.com to map a lot of these at once and I can go through them individually and take a look. You know, you could hire a VA to do the things we just talked about and have them knock this all out in, in roughly just a few minutes and then go and pull values of the assets and also pull street views images and save it on a spreadsheet or save it in a Dropbox folder so you can take a look at that and see what the condition report is and tell them, hey, if it looks trashed out now, don't be wrong. A trashed out property here might, might look like a kingdom, a castle somewhere else in the world. You get what I'm saying? So I select to look at the assets, but I'm not going to sit here and spend a lot of time looking at because it's initial due diligence. This is not. Spend a lot of time and a lot of money because you don't know if your bid's going to be accepted. And that takes us back. Once you narrow down the list, you're going to run some numbers on your spreadsheet, insert some columns or run some formulas. And the basic things that I do, I'm not going to get into formula creation. If you've been through the workshop, we give you Some formula slides, we go through that stuff but you gotta look at. And this is why I go back to what is the bid? What type of bid are they looking for? Okay, well they give you a bid like I want 30 cents on the dollar of UPB. Guess what? One of the first things I do is insert a column in my spreadsheet and say okay, what's 70 cents on the dollar of UPB? If it's non performing, I then add a column and say okay, I'll take 12 months times the PNI payment, the principal and interest payment. And what is that number? Well, what can I get if the borrower just starts to reinstate the loan? The first 12 months, I'll put that in a column. I'll then also insert a column next to it and say 16 months P9 because I'm going to ask that borrower to bring some skin to give me at least four months of payments, especially if they're over a year behind to the table. And so that's 16 months. So now I got two basic columns. I got, okay, what am I, what's my bid Now I can take my 12 months P and I payment, whatever that number is now at a fourth count on and I label it 12 month mod. So it's simple. Okay, 12 month P and I divided by what your bid to see what kind of yield it is. I'll do that all the way down and I'll do the same thing for 16 month mod and then run that all the way down there. Now Lorelei asked me the question, how do you price bankruptcy assets now? Are there in current bankruptcy right now? That's the question. It's an old bankruptcy filing from a couple of years ago and a discharge. It's not, you don't worry about this. It prices a non performing notes, non performing note. It's a current bankruptcy loan. Most of those loans they want to sell them. If it's currently a BK chapter 13 in payments, they're probably going to want 80 cents of the dollar for that. They will treat it as a performing note because they've got a court order. I don't do that. I, that's great. And if that number makes sense to you based on what the payment is and what the was owed, okay, that if that yield is good, great. But oftentimes if they want 80, 90 cents of the unpaid, it just doesn't make any sense to buy that stuff. Okay, so you have to look at the asset individually. When was the bankruptcy, is it still in effect? And then that's an extra layer of due diligence that you need to do. Lorelei. And looking@the pacer.gov loans. Okay, but by the way, did you ever get a response back from the seller on that tape that you had, and if they had their final price? Because I know he pulled that tape. The seller pulled that tape. Have you followed up with them more than once? Okay, so that's what I get at. Here's. Here's one of the best things you can learn. Do not. Don't follow up with somebody only once. You got to follow up 80. You realize, ladies and gentlemen, 80% of sales are made after the fifth contact, okay? If you've only followed up with once, you're basically. You still got four more times to go. All right? And here's the thing that I'm a big believer in. I'm not bothering somebody. They want to sell those lists off. Maybe they've been busy, maybe had something come up. Maybe they missed your email. Okay, so follow up with an email, Follow up with a phone call. Follow up with a text message. I mean, I'm literally stalking these people until they say, me, tell me. No F off. Scott Carson, we don't want to talk to you anymore. Okay? Just put it. Here's yes and, Lorelei, thank you for saying it. And here's the number one thing. I get that from people. Oh, thanks. I thought I was bothering them. You're not bothering them. People are busy. You are not their only thing they think about, okay? Now, if you called them, like, every hour on the hour, text them on the hour where you were like a psycho girlfriend, psycho boyfriend, you wouldn't be bothering them, okay? If you call them, like, once every two days, hey, just follow him back up, Fall back up. I'll give you a great example. Like Larry Hoffman, one of his funds that sends himself all the time. Now, it took him, like, eight weeks of calls. It took him six weeks to get the right department. It took, like, another eight weeks to follow up with it before she finally. The estimator finally seemed. A tape. Now, he gets a tape all the time, so don't ever apologize. They got notes to sell. They're trying to sell them. Follow up, follow up, follow up. Okay, I can't. I talked about that on the first week. Just follow up. Continuously follow up. Once a month, at least once every week. If they got something you got, you know, there's a nibble on there. They got a list. Follow up with them weekly, once or twice a week. Just follow up, follow up. Seriously, until they tell you don't call them anymore. You're not bothering them. Okay? Don't take no for an answer. That's part of the. How you get ahead in this industry is not taking on making multiple offers, okay? Because you got some options. I'm not, I'm not just. I'm not picking on you. It's just, it's one thing. I'm glad you brought it because everybody needs to hear that. If you. The minute you start thinking why I'm sure I'm bothering them, that's where you've got to pull out the gun and shoot that thought, okay? No, I'm not bothering them. They got stuff to sell. I'm a buyer. Or I've got buyers that I can wholesale these to. Let me get, let me reach out to them, okay? So anyway, going back to your spreadsheet, you've entered a column in for 12 months payments. 16 months payment. If you run your calculation of what it would. What kind of reinstatement modification you get. If the bar start making 12 months by taking 12 months P and I divide that by what the, the bid price is what they're looking for. That will give you a yield, an interest rate. That's your yield. Roughly same thing for 16 months. Divide that by what your bid is. What's that number look like? Those are rough numbers. I'm not going to sit here and run everything through an ROI calculator figuring every expense in the book right off the bat. I'm just figuring the high end because on those two calculations, especially 16 months, I'm going to want that yield to probably be. And we're talking non performing. This is strictly non performing right now. Because if it's performing, you're not going to get 16 months. You're going to use 12 months, the non performing side. I'm probably gonna. I will not probably. I want to see roughly about a 20 yield. Okay? We're 16 months of payments divided by what my bid price is. I need it to be roughly a, you know, 20% yield. Now here's the thing. We've had historically low interest rates the last couple years, right? Not the last 12 months, but before that we had two, three years are really low. You're not going to buy a lot of stuff at a 2%, 3% interest rate. And those numbers make sense, okay? They're just too low an interest rate and you're gonna have to get a bigger discount, let's say $0.70 on the dollar, okay? So don't be surprised if you're Looking at, and you run those numbers and the interest rate comes out like a single digit number. Like what's it, well, that's where you go. Look at the interest rate. If the interest rate's at 4%, well if you're buying at 70, you're only getting a, technically a 30 bump. So you're basically seeing about a 4.23 yield. That's not, that doesn't make a lot of sense. You get what I'm saying, ladies and gentlemen? So anyway, run your formulas on that. And then what I also like to do is I'll then, okay, let me see, what's the value? Put my value in there. What's 90 of my value? Because figured if I had to sell it fast or pay closing cost of commissions, let me take 90 of the value minus my purchase price and then I usually add a flat 5,000 on top of the purchase price. So if I'm buying it 70, I'm basically 90 cents of value minus my $75,000 bid. Okay, now here's the big thing. That's if there's underwater assets, the value is 90 and they owe 120 and you're buying at 70% of value. Okay, great, but there's equity. Let's flip this number around. They probably are going to want like 80 cents of the dollar if there's equity. So run the same formulas at 80% and that should tell you roughly what it is. If you're using your own money and you're happy making the yield on that bid away, if you're using other people's money, you have to think about what you're going to pay your investors. Okay, if your investors are going to be at a 6, 7, 8, 10% interest to them because that's what you're working on to, then you're going to need to see if you want to make, if you're paying somebody 10%, then you want to get 10% yourself, you're going to see a 20% return. If you're paying somebody an 8%, you want to get at least 8%, then you see a 16% return. Okay, well that's still a great day. And that's just off the payments. Now if you foreclose, then you, you figure out what's your yield on that, on the foreclosure. This is why we like to buy pretty assets. If we, you know, we know we're gonna have to do a little paint carpet, that's not too difficult at all. Okay, appliances. But you gotta, that's the big Thing about that's why you buy pretty assets. So it doesn't need a lot of work on the inside. If you're buying a vacant assets gonna need a lot of work and you're often gonna have to replace the electrical, the plumbing, the roof, the foundation, something in that house, if not multiple things to make it work for you. And it just doesn't make sense. In a lot of cases, especially something like that, you're gonna be paying a whole lot less. Okay. So don't be surprised if you run your numbers. There's only a few on there that make sense for you. That's kind of normal. That's normal. Make some offers, don't, I mean just, you're just pulling online values. I would always call and check taxes though. This is one of the most important things you need to get on Netra online public records, call the taxing authority, see what's owed in back taxes and then figure out what back taxes are into your bid. If there's $70,000 is what your bid would normally be, but you find out that's five grand in back taxes owed, then deduct that from your bid, say okay, 65. This includes that there's five grand in back taxes owed that need to be paid because otherwise the seller is going to be nitpicky about it and say, well, you could have checked the taxes beforehand and that would have been something on your bid in the front end. I, there's people that do that all the time and I just want to, I'm just like, I just want to slap them because like not everybody's going to look at taxes off the bat. You should. And it's one thing we do. But what I'm trying to get at, ladies and gentlemen, is check it. It's worth doing if it, if you can't find a number of pick up and call the county before you submit your bid. Now if you're getting last minute, you may want to submit your bid with some stars, you know, you know, and we're not saying what do you call that when you spend an offer in a property and you've got, was it conditions, stipulations or whatever, like your bid, you know, like I have somebody wants me, sends me a tape and I gotta get a bid in by tomorrow and it's like 100 assets. I'll run my number, say, listen, I don't have time to check the taxes. Here's my bid minus taxes owed, or here's my bid and I'm going to say I haven't checked taxes. So I'm going to fade my bid by any amount of taxes or owed because I don't know, I mean I'm not going to sit here and look, waste my time looking 100 assets if I'm, I can't, you know, doesn't make any sense. Why waste, you know, all that time? Are you going to hire somebody to do that? But still paying me to do that, it's still easier for you to do that. So this is why we wait for the taxes till you've narrowed down the list to really your, your final 10% of the take. Go from there. Okay. Contingency. Thank you. Lisa. Hey, hey, how's it going today, Lisa? Your contingencies on the contract. But here's the thing. When you send in a spreadsheet and how do you make your bids? Attach the spreadsheet. If you're submitting on one bid, one asset then you know, you could copy paste what the loan number is and the address and the number. Don't copy the whole thing like 40 cell wide and insert that into the email because it's going to shrink it down so low the asset manager is going to get out magnifying glass or the Hubble telescope to try to read it. Just send the spreadsheet along, eliminate everything else off the spreadsheet but the two, three or four assets that you're bidding on. And insert a column on the very far left side, highlight it and label it my bids or Lisa's bids or Jessica's bids or WCN bids. When we put that number on there and that's how we send it in. Attached, not inserted. Okay, Right. If it's an individual assets one tape, you could always respond back with an email and say hey, I'll offer you a 55000 for this one with loan number. It's simple like that. But if you're looking at a bigger tape, getting a habit of attaching a tape back to it, not inserting it. But only if you're, you know, there's 200 assets that's an only bidding on three or four, then just send them back because the reason it's most important attach a spreadsheet. You want to make it simple for the, the broker or the seller to be able to copy paste over your bids and put them into his master spreadsheet or his or her master spreadsheet. Because they're going to get bids from 5, 10, 20 people and you wanted to make it as easy as possible for them to take your bid and put it in their spreadsheet as either the highest or the second offer. Okay. And that's the thing, you know, looking at that stuff going through that stuff, we've got a, a longer due diligence that if you attended our workshop, you got a copy of it. I'm not going to go through tonight because if you guys attended the workshop, you've gotten that or you've gotten it from me, from being in the WCN crew or stuff like that. Let me just share a little bit so you can kind of see what's all involved with it. This is actually kind of start from top, start to finish the evaluation tapes filter going through that from values. Get rid of equity deals. Look at your last payments. Kind of the simple stair step method. If there's negative equity kind of bid off of price it and gets in your due diligence aspect of when you order a BPO and only never order anything you're going to pay for in due diligence, never order it until you've got an accepted offer back and I prefer to have it under contract and then send a contract out to you. Okay. Look at your insurance, look at your collateral files. We're not going to get into that tonight. There's other things you can do for that. Your servicing company and legal stuff to look at. Check the notes, look at the last dates that the bars reached out to the homeowner or the bank. I mean there's a lot more stuff to go in what to look for the collateral files and then also obviously the property stuff like that. But there's more stuff to look at versus just pulling the property value and look at that stuff. You've got to run those numbers. But it's the first part of it is the due diligence and like I said, you got to know what you're buying if you're going to tape in. It's a stuff that just doesn't make any sense. You're not buying this stuff and it's okay to go back to seller say hey, I appreciate you sending this, but this is just not what I'm buying. It's not in my buy box. Okay? I'm not buying anything in New York or New Jersey. So I appreciate you sending it over to me and going from there. Now somebody asked me what about reverse mortgages? Okay? Now reverse mortgages, if you know what they are, they're basically the borrowers in most reverse mortgages have been deceased. Once we get them on the note side, the borrower's passed away okay. And it's the heirs that have the opportunity to either pay off the mortgage or, or the bank forecloses. Now we're buying those. Oftentimes there may be equity and sometimes they want 90 cents of the dollar because there's all this equity. Well, I'm not going to pay for that. Right. So reverse mortgages are strictly a buy. That note foreclose, rehab, turn into rental or rehab and sell and make sure you get to the right price. Now I've looked at reverse mortgages. If it's in here in Texas, you know, within a two hour base, I'll literally get in my truck and go out and drive by them and take a look at because oftentimes you can get interior access and it's. That's a great thing to look at a vacant asset and see if it makes sense. Some of it made sense, others haven't made sense. So. But that's what I want to go through know your buy box and know how to really cut down that list to take a look at things. All right. And looking to one thing I forgot to mention, I was talking with a student about this earlier. He's looking at an asset in Maine. Besides it being freaking cold like the frozen tundra of the United States, but Maine, okay. Freaking Stephen King countries. We like to say look at the last payment date because what's going to happen to is a lot of lenders are putting like estimated estimated legal balance. Well, the estimated legal balance or payoff balance is going to be the unpaid balance plus how many payments haven't been made been added to that amount plus late fees. Okay. But every state has a statute of limitations when it comes to mortgage debt. So when we looked at this asset that Cal was looking at earlier tonight, Cal's one night coaching students, he was getting a pretty decent price. The value was there. Okay. The legal balance was at like 220. The house is supposedly worth based online was at 275. And they wanted. What do they want? He made his offer at. I'm trying to remember, can't remember exactly what it was, but it was at 70 cents on the dollar of payoff balance. Okay. The thing that popped up is that the UPB was only 90. The legal balance was like 220,000. So there's $130,000 in back payments and late fees. I'm like when was the last payment made? And he looked over 2014, literally like January 2014. So it was 10 years of back payments on there, added on there. I said, well wait a Second, most states have a statute of limitations that limits the amount that the lender can go in collecting in late piece. And so with Maine, the statute of limitations is only six years, not 10 years. So that would be, that would be my get out of jail card. I'd say, well, he bid on it, they've accepted his bid. I'm like, well, I would go back and say, I'm not going to close on this one because the payoff balance that is enforceable is not $220,000. You've got to take four years of payments off the four, plus late fees. So it's only in the last six years. So your legal balance that is enforceable. I don't know what it was, but it's significantly less than a $220,000, which means Cal's bid needs to come down significantly as well. Okay, so look at that. Now, some states, if a borrower's made one payment of a dollar, it restarts the statute of limitations. But if, if they had done that, it would show the last payment made would have been sometime a whole lot sooner than 10 years ago. So look at the statute of limitations. Each state's different. You have to Google that. You can usually find that stuff pretty easy by just what's the statute of limitation for Arizona? What's the statute of limitations for Michigan for mortgage debt? And it tells you just realize anything beyond that period, you're basically going to say, see you later, that you're not gonna be able to collect on that most of the time. And something like this would be more of a foreclosure anyway. But it's important because you can only foreclose on the enforceable amount that you're due. Now if the borrower, the property's vacant, the borrower's moved on. Yeah, could you go ahead and foreclose on the full amount if you want to take the property back? Because nobody's going to contest it. Yeah, you could do that. You could totally do that. But if it gets contested, it could be thrown out or you're going to have to go back to square one. And in Maine, it's a two year foreclosure process. So I was like, you know, have they started the foreclosure process on this one? He's like, yeah, they're like a year into it. I'm like, well, okay, is it occupied or vacant? He goes, I don't know. I said, well, it's vacant. How long has it been vacant for? How much in taxes are? Because I don't Know the tax. I said, well, you better call and find out how long it's been vacant for because we've had some extreme winters and Maine is damn cold up there and you don't want some of the ghost of some bar from bond to show up on it. Okay? So that's one thing to look at, to watch out for. We go on and on into the due diligence aspect of it. But these are the things I get the most amount of questions about when I get a tape and what am I looking, Is it a tape or dud? These are the things to look for. I do encourage if you're watching this, catching the replay on this, listening to this. We do have our one day note class, note weekend. We host that the third Saturday of the month as we're recording this. We'll be having the note weekend this coming Saturday from 10:00am to probably around 2:00'. Clock. About a four to five hour class of me going through the basics of note investing, how to find, fund and flip. And then of course we have our next three day class live actually here in Austin, Texas, March 1st, 2nd and 3rd. Cost for that is 997. That's good for you plus a spouse. If you're a coaching student, you can come for free. If you're a WCN crew student, you can come. It's a reduced price. Just reach out to me and I'll give you a specific link for that. But it's significantly less than the 997, I'll tell you that. Okay, but anyway, guys, are there any questions, any concerns if we want to ask something before we let you wrap up for the night? I just wanted to go through that tonight to help you. That really, that first part is what really scares a lot of people. It's like they get a tape in, they get a spreadsheet in. What am I looking at? You get overwhelmed. I've seen realtors literally have like almost nervous breakdowns because they're like everything's deal. Not everything's a deal. Yes, there's a buyer for everything, but you're not a buyer for everything. Know what you want. Know the values that you're looking for. Know the areas, the states, the bigger cities. Those are going to make your life a whole lot easier. All right, Cookie cutter. When you can have it, you're, you know, you're buying, you know your buy box. It makes things a whole lot easier for you. If it doesn't fit into it, you kill it. Okay. And same thing, like I'm not Gonna a million dollar note in Miami, it's kind of an average asset. Right. We're not, we're talking Miami Florida, not Miami Ohio. Right. But a million dollar asset in Akron might be LeBron James House or something like that. That's going to stick out a little bit more. So know what's the values the median values of your properties are area the cities and states, stuff like that. Cities specifically don't source states because it can be all across the board. But important to know that. Know your foreclosure time frames. One of the best things that you can do when you're starting off is pick your three to five states that you're looking to buy in and reach out to foreclosure attorneys. You can go to D legaleague100.com is a great website to find them. You can reach out to servicing companies that are servicing there and ask them who they're using. Ask other note investors who they're using as a servicer. Those are some things to do and talk to that attorney. What's it take? What's the average foreclosure time frame? What's it going to cost me to foreclose on a note on a contract for deed and go from there. But keep it simple. Narrow down. You're not buying everything. If you're buying everything. You're the way I hear that and what other banks ask me if you say you're buying everything, you're a buyer of nothing, your broker. We don't want that. So don't be afraid to reach out to me. You always schedule a call with me. Go by going to talkwithscottcarson.com and then I also encourage you guys check out our monthly membership by going to noteumbrella.com it's $97 a month get you access to our training class and stuff like that at a far significant cheaper price for you and along along with some weekly coaching calls and access to us. So any other questions, comments, concerns? Yes, you need a, you're going to need a bankruptcy attorney in that state separately from the foreclosure attorney to foreclose. So yes, now most of the time you're going to have the servicing company that's already is handling that. It already has an attorney lined up. So you just basically retain counsel and take on that attorney to help you out. Okay, good question. Lorelei. All right, all right everybody. Well hey, go make some offers, make some phone calls. You don't need to know A to Z to get rock and rolling. This is part of why we're doing this, finding deals, start to raising capital, marketing, and start diving into the tapes to look what you're doing. Next week, we'll go into some of the strategies, the exits that and how to figure some of the case studies and how to make things happen. How to make some money in the note business will be our fourth week and final week in the implementation coaching for you. So if there's no questions or comments, we'll let you get back to your day or your evening or your afternoon. Go out, make some offers, buddy, and we'll see you at the top. Thanks for joining us. Bye. Sam sat.