Mortgage Note Buying With Scott Carson From DealQuest Podcast With Corey Kupfer

Do you want your business to grow faster? Are you open to new and out of the box ways to drive revenues and increase value? How do you imagine the most successful entrepreneurs and business leaders double, triple or expand their businesses tenfold or more? The answer is deals. This is a weekly podcast featuring conversations with business owners, executives and leaders as we reveal behind the scenes details that give you, our listeners, the confidence to pursue your own deal driven growth. On the show we discuss a huge variety of deals, everything from large, complex mergers and acquisitions, smaller deals that you can do even without significant capital. My name is Corey Cutfer and I've been supporting deal driven Growth for businesses for 35 years. As a successful entrepreneur, professional negotiator and attorney, my goal is to help you strategize, plan for, find and complete deals that will help your company grow faster. Welcome to the DealQuest podcast. Let's get started. Scott Carson is a highly sought after guest and host of the popular podcast the Note Closes Show. He's an active entrepreneur and an expert in real estate investing, raising capital and marketing. He speaks regularly at different events and industry conventions focused on real estate marketing and podcasting. He also helps thousands of investors and entrepreneurs each year create wealth through his debt buying classes, podcasts and coaching. A regular podcast guest, he has recently been named number four entrepreneur to follow in 2022 by U.S. news and by U.S. news Reporter magazine. An avid sports fan, well, you and I have that in common. He spends his free time traveling, gardening and making memories. He calls Austin, Texas his home. And I am excited to have Scott Carson on the Deal Quest podcast.

I am honored to be here today, Corey. Just glad to give to your audience. Let's have some fun. Let's make some podcasts and memories today.

Absolutely, absolutely. So. So listen, I'm gonna, we're gonna talk about a type of deal that we haven't talked about yet on this podcast specifically. I mean, you know, Scott's got background in all kinds of real estate investing and other stuff, whatever, but his main focus on is on is on buying notes. And that's something we really haven't covered. So I'm really looking forward to doing that. But before we get there, I'm gonna take you back, Scott, to when you were a little kid growing up, maybe 8, 10, 12 years old. What did you want to be? Because my guess is somebody who buys up mortgage notes was not it at that time. But you tell me maybe I'm wrong.

Well, so I grew at in a small town in South Texas called Ingleside, about 3,000 people, it's famous for its mustang grapes. And the founder of the wishbone offense actually developed with the wishbone offense there.

Okay.

Coach Emery Riddell before he went on to Texas and make. And the wishbone offense got famous at University of Texas with Darryl K. Royal. But growing up then, my dad was my hero. So I thought I'd be working in a hardware store because my parents opened the local hardware store for a year. So I was kind of like that kid that did everything on the weekends, you know, around making extra money where it was mowing lawns or putting stuff together, working with electrician or digging ditches. I, you know, loved working there. As a big baseball fan, Nolan Ryan, you know, was my hero. You know, if you get a chance to watch the new documentary on Netflix on, on Nolan, do it. But, you know, I thought if I be sports, you know, sports star of some sort, baseball or football, it'd be great, but it's not. I thought I'd fall back and be the next Dan Patrick on Sportster. You know what I mean?

There we go.

Funny. You know, I went to college in Mass to be in journalism and Mass Con and stuff like that and switched about halfway through in the business. And I kind of chuckled that. Being a podcaster, I often feel like I'm a bit. I'm scratching my proverbial sports center itch by being a guest and then also hosting a regular show as well, too. So that's kind of what I thought. When I be, When I go, there.

You go, There you go. You know, it's funny. Listen, I grew up as a Met fan and I'll show my age because I remember when Nolan Ryan was. And at that time, of course, he, he, he could, you know, he still was smoking the ball, but he, but he didn't have the control that he got later in his career. And, you know, it was always, it was an adventure as to when, you know, like, batters were like, all right, is he going to strike me out or is he going to, like, hit me in the head? Not intentionally either. Just, you know, because he was wild. And of course, as is typical of my wonderful Mets, they usually trade the people who turn out to be great and then trade for the people who are then past their prime. So, you know, the Mets are famous for that. So this was a early example of them giving away a guy who obviously came in, became one of the greats. So I was. Liked him back in the day. Any case, one more question. Looking back, what was your first deal of any type? It could be something small. When you were a kid or early in your career, anything that comes to mind that was a deal.

Well, the entre side of me, when you worked in a small town, your dad owns a hardware store. You have always people that come in looking to get stuff done. You know, like I said before, whether it's they need help in rehabbing a property or laying foundation or reefing. My first deal I've got that really helped me build. My blood was I'd started doing work at the time I was in the fourth grade. Not only running the register and being able to run a Harvard store, but I was actually out going doing a lot of stuff where all my friends were out, you know, going to the beach or getting in trouble. I was working on the weekends. And as that grew from the fourth fifth grade on, it moved into junior high and high school. They, my friends started coming to me and asking me hey I need to make some money for Christmas or spring break, you know, stuff like that. So I started implementing that. So that's really kind of my blood is putting my friends to work, working for me at a young age and make sure making extra money and getting more, more stuff done. But I guess that would be the first thing, you know, I enjoyed that. You know, my mom and dad taught me work ethic in a lot of cases out there. And I think when you, when you mentioned that that's the first thing that popped in my mind. Weird. I was just talking with a friend the other day about he still to this day remembers me make putting to work pulling this like yard of sunflower were like 6 to 8ft tall and there was like ostriches running around wild like sitting on the drawers and people was getting run over three or four times by these big ostriches that were like just crazy.

I said but you made some money.

He goes yeah, I made some money. I made some money.

I have the same thing. I, I, I have friends of mine who remind me when I was a 15 year old business owner deliver. But for me of course I grew up in, in, in Brooklyn which is very different and but so what I had them doing was delivering flyers door to do like supermarket circulars, things like that. Because I work for somebody doing that. And then I got my own accounts and I hired my friends. So yeah, that entrepreneurial bug and the early idea of the fact that you don't have to only sell your own time, you can sell other people's labor.

I mean well you think about that's how you know that's how you get ahead. It's not just doing yourself, it's leveraging other people's time, whether it's employees or virtual assistants or anything, anything else out there. I mean, that's the wealth of America. All the wealthiest of done it by leveraging other people's time and helping that out.

Yeah, and expertise and all that. All right, so let's jump to it now. So now you have this focus on buying notes. You train people on how to do it as well. You've been doing it for a long time. Let's jump in, let's talk about that. But you know, so what is that business model? And then I want to backtrack and talk how you got there. Because I don't think people, you know, most people I know who do anything related to this have come through the real estate end, the more traditional real estate end. Right, but just, but just explain the business of buying notes.

Yeah, so we buy when there's all sorts of debt out there. If you owe money on credit card, student loan, your mortgage, your car, your credit cards, you're in the note business. You're just on the wrong side of the payment stream. Paying in. Right, versus getting paid out. And what we do is we focus on buying mortgage debt, residential first liens and commercial first lien debt. So we, we get these lists in front of different banks and hedge funds, primarily non performing notes where somebody hasn't paid on their mortgage in you know, usually nine, 90 days or actually like six years in a lot of cases. You'll see that. So the bank has this debt or these funds have this debt that they're not collecting on, or they're, you know, kind of hit and miss. And they'll sell that debt to us at a fraction, 50 cents on the dollar. We'll just use it as a round number. And so we buy that debt at 50 cents on the dollar doesn't mean the borrows any less. They still owe the same amount. But we make our money by then reaching out to the borrowers or the property owners, say, hey, what's going on? You know, what's your country western song? What happened, Covid? You know, do you have a death in the family? Divorced, you get sick, laid off, white, you know, don't care. What was the reason that you can't pay, but can you start paying now? Give you a leg up or we help you out of the hole? Do we need to modify that mortgage? Do we need to modify the terms? Do you know what's going to make this a win? Win situation. And that's what we do, Corey, is we really try to keep people in their houses. We can by modifying the loan or just try and say, okay, you, you haven't been able to pay for two years because of COVID Could you start paying out? Great, well, let's move this two years, the back amount of loan. We'll just extend your loan and make it a win win, you know. And so that's what we do is we buy this debt at a discount. Our goal, number one goal is to get it re performing, get the borrower back on track, making payments. If they make payments for a period of time of at least 12 months or longer, it's now considered a reperforming note. Instead of me, when I bought it at 50 cents on a dollar, I can now either A hold that for great cash flow or B, I could turn around and sell it back to the market at 70, 80, 90 cents on the dollar. And you know, we make cash flow. We usually got some money on the front end from the borrower and then we got a nice back end payment. Olive sense. If we bought it at 50, we sold it at 85, we made a nice jump there.

Nice.

That works. About 50, 60% of the time you get the borrower back on track. The other 40% of the time, either the borrower is signing the property over to us because they've already left, they don't want to deal with it, you know, do a friendly foreclosure or they won't deal with us at all. They won't return phone calls, they won't comment, or they'll just tell us to go pound sand, you know, give us, tell us they're number one in a bird, you know what I mean? And we'll foreclose and go the legal route to take the property back that way. And then when we own the, when we hold the property back, then we can do what we want to it, rehab it, sell it, flip it to other investors. Most of the time we even sell at the auction. And I was talking to you beforehand, I actually got a deal right now we're working on in Houston that we're finished up the rehab on that we got it, you know, 47% of value. Because we bought the debt at such a big discount, it's taken us back to about five months to go fish the re. Fish the foreclosure and finish the rehab and get it done the market.

So, so let me ask a question which I happen to know the answer to, but I want to make sure the audience understands it. Which is why is it that the banks are going to sell you the notes? Right. Because they're taking a big haircut. Right. In theory they can do all of the things you just talked about. Right. And so why is it that a bank will, as opposed to foreclosing, foreclosing or trying to get it re performing or you know, whatever, whatever it is, why do they do a deal with you?

That's a really great question. That's the number one question we get. Why would a bank sell us a note versus don't do it themselves. And it's all about leverage and it's all about velocity capital. You know, every state has a different foreclosure timeframe. Like in Texas, it's the fastest in the country and we got fast highways, fast foreclosures and fast executions. Here, you know where you're at, I mean, or where you're not where you're at now, but where you're from. New York, New Jersey, if that neck of the woods, New York is a three year foreclosure timeframe, two years. California is like over a year now. Two to foreclose about 18 months of a similar. So the bank would rather a take their losses, sell us that debt at a discount and they can take that 50 cents on the dollar and go back out and re lend it out 10, 12, 13, 14 times and leverage their money in multitude of ways. Banks don't want to be in the property business, they want to be in that mortgage business and the leverage account. You also got to realize most of these banks have been borrowing money at less, you know, 1% or less a lot of times. So if they're making a loan at 4, 5, 6%, they're not making a 4% difference. They're making a 400 or 500% return of their money. So that gives them the flexibility to take a haircut, take a bit of a loss, especially the big. Now, I'm not buying from bank of America, Chase, City of Wells Fargo. Those guys all want you to write like a $50 million check, right? We, we buy from a lot of, you know, regional banks, smaller institutions, hedge funds, REITs. Like I just, I made an offer in just a few minutes ago on from one fund, they had five notes for sale. I made an offer on three with my bids ranging from like eight grand to 80 grand, you know what I mean? So it just varies, you know, what's, what kind of condition the property's in, what state it's in, how long in the, in the foreclosure for assets that the bank has already started or if they haven't started it, you know, what kind of estimated repairs we might need if it's vacant. I also have to kind of evaluate what's the likelihood of the borrower to come to the table and reperform and start modifying the loans. Right. There's a, you know, we're evaluating different things. You're not going to walk in your local bank and say, hey, I want to buy notes. Because I heard on the Deal Quest podcast this guy Scott Carson talking about it. We're dealing with like internal departments at the banks. I mean, I used to be a banker for jp, JP Morgan Chase. I didn't even know about this.

Right, right, right, exactly.

So but I kind of compare it to me being the, if you've ever watched the movie the Big Short, I'm like Christian Bale's character in there reviewing tapes, reviewing spreadsheets, drumming out to Metallica my headset, wearing shorts and a T shirt most days.

I love it, I love it. And you know, listen, I think, I think more and more people understand the fundamentals on the way this works mainly in large part because they watched various shows and figured out what happened in the recession in the 2008, 2009. But it was interesting. I remember when I was a young attorney, I didn't even realize. And listen, there was a time when banks made a loan, they held the loan, they kept it in portfolio and then they get paid back and they relent. And that time is long gone for most loans. Various times by the way, not just mortgages. Right. With car loans, all kinds of stuff, credit. Right. And, and it's been forever. And, and I worked in my early days as an attorney, I worked on the early mortgage backed securities deals and we did like a half a billion dollar shelf registration for the Dime Savings bank. It's no longer around. And we securitized those loans back then and then they became, by the time, you know, everything went to crap in 2008. You know, it was so funny because I remember we had, we had 280 page pooling services agreements with like 60 pages of defined terms back then and that and that, and that was nothing compared to the, what ended up happening by the time the later deals came on the on the way they securitized these loans and strip them off. But the important part for this conversation, because the whole securitization is a separate conversation, is that, you know, banks generally are selling off these loans. The bigger banks and big portfolios like you said, for 50 million. And it's why as a, as a borrower you get these notices often, you know that oh, you have a new service area. And by the way, servicer is also separate than the, than the owner a lot of times. But sometimes when the ownership changes, the service changes because they use different services. But the point is this is happening behind the scenes all the time where this debt is being moved around and sold, you know, whether it's performing or non performing in terms initially securitized, you know, or later. So you're, you're taking advantage of that market. And listen, I love the business model where the preference. Right. Is that you're trying to get these loans pre performing and keeping people in their homes. Right. Obviously if that's not the case, you got to do what you got to do. So you said, I think you said what about 50, 60% of the time you're able to do that?

Yeah, if we're buying owner occupied assets about 60% of the time, we'll be able to get the borrower back on track of some sort of payment arrangement for the most part. Sometimes it's as high as 75. It just 60 is what we look at is our average. We can do better than that. We're doing really, really well. During COVID it was a little tough because the government, you know, two years there where a lot of people didn't make payments. We were lucky we still had about 80% of our portfolio. They, they were still making payments on time through the entire, during the entire pandemic and stuff like that. But yeah, it's about 60% of the time we can get them back on track.

And I don't know about in Texas, but in, in various places there were foreclosure moratoriums. Right. And things like that and eviction moratoriums. So. Yeah, but listen, the thing about it is that you've got, because you're buying the way you're buying. I'm not, listen, every, every business is challenging. I'm not saying it's easy but, but you have, you have room, there's right to, you know, to, to redo the loan with the borrower to, to hey, say how can you, can you pick it up for now? You don't need to, you don't need to get that back, you know, arrears that the bank was dealing with to be able to have the, have the, have the loan work for you, right?

No, exactly right. A lot of times we're buying debt where they Owe more than the property's worth, they're over encumbered, they owe 250,000. With 200 I'm not worried about that extra 50k, I'm more worried about that 200. And that's how we bid when we come to it, you know, we're not bidding on 250. We're bid on the value of the house to be a 200. So we'll bid at 100, 120,000. And if we do get them back on track and they, they pay on time for a while, we might recover that extra 50k there above if they pay for another 5 or 7 years.

Right.

It's great, you know, or they, you know, we let appreciating take place. Well right now what's happened to country? We have depreciation, we have a price correction taking place. So the fact that we buy at such a bigger discount, I won't say recession, preach our business, but we're not sweating price drops like a lot of investors are who bought property in the last 12 or 24 months and they're like, oh my God, my property value is going down or my debt service coverage ratio is below one and a quarter. Because if things are happening, so it gives us, we're really kind of excited about what's going on the market. We don't want anything bad to happen, but we see a lot of opportunity. I mean, I'm not going to tell you here, I'm buying, I'm going to buy in $1 billion at a time. I've bought over $1 billion of debt my time, but we've really carved out a great piece. There's a great chunk of lenders out there. I mean you're not going to really buy a one off note from a Bank of America, but there's still about 5,000 other lending institutions out there, banks, hedge funds, stuff like that, that will let you cherry pick their portfolio or they'll send you what we call a tape, a spreadsheet, Excel spreadsheet that may have a hundred assets on it that will make offers on 40 and get approved for 20 and buy. Going through due diligence, stuff like that, we may end up with five to 10 and that's a good day for us.

Love it, love it, love it. All right, so let's talk about how you got here because I'm sure, although we haven't talked about this specifically, I'm sure you didn't just wake up one day and start buying this.

No, it's, it's it is an interesting story. So back in 2000, 2002, I was working for Chase bank as a banker, VP at branch location here in Austin, Texas, just being a regular banker. And I previously worked for a financial services company, Smith Barney. You know, you've probably heard of them. Back in the day they had an office here in Austin and a buddy that I worked with there who started a mortgage company with a couple of these, I guess you say gurus or real estate educators who are traveling the country teaching seminars alongside some other other folks and they're teaching creative financing while I'm sitting there and Chase, Chase enjoying my job as a banker, number one banker in Texas, my buddy Boyd turning, he said, man, I'm starting this mortgage company with these. These two folks were slammed. I really need some help and I trust you. And I was like, well, okay, let me, let me talk with him. I went to lunch with him, came back, talked to the spouse, I said, yeah, this is something I want to do. Because I dabbled being a real estate investor a few years ago and fell flat in my face.

Okay, okay, all right.

So I was like, I was a little nervous trying to be the next landlord out there. But anyway, when I remember July 4th, 2004 was my last day basically working at Chase. And the next week I was in California at the LAX Marriott and was talking about mortgages. And we were doing mortgages in about 30 states and traveling the country. And from 2004 to 2008 I basically had a four year apprenticeship.

Corey.

While I was doing origination, my buddy Boyd, on the upper side of the office was a guy, Bob Leonetti, and a lady, Jamie Kale. They taught creative financing, they taught the note business how to create terms, owner financing, stuff like that. They'd also been a mortgage bank, so they'd sold paper during the 80s, during the RTC days.

Sure.

So they had had a portfolio that went south that you know, with the values dropping. So I learned the theories of buying paper. And then when everything started to hit The Fan in 2007, 2008, not only did were they like, Scott, you gotta jump on this. This is something that doesn't come around very often. I also had a couple other investors that had funded some deals of mine and some rehabs and stuff like that, that they were like, oh my God, if you're in the note business now, it's a great time cause everything's on sale. So when everything hit the fan in 2008, I sold my half of the mortgage company for a buck. But it was worth it at the time then.

Yep.

And then I just started calling the same banks that I'd been originating the loans for. Started dialing for dollars, fifty to a hundred phone calls a day and started getting in these portfolios or tapes of assets. One from Wells Fargo Financial that was like 185 subprime loans that I paid for the first one for 500 bucks and then flipped it for scrap metal for 1500 the next day because it was in Detroit. I bought a note on a mobile home in Las Vegas. It turned out to be a cash flowing brothel asset basically. Ladies, yo. I bought a dollar for dollars for about three weeks to get into and I found the special asset manager. Capital One Bank. Yep. And they sent me this huge list 33 page PDF of all their small balance commercial stuff. And there's so much of it was in six point fonts. I had to actually have a magnifying glass to see everything. And on it was a, an eight unit apartment complex in San Diego. It was worth like 7:50. They were owed like 650 unit. I bought it for 375 the debt and flipped it for $35,000 profit in 30 days to another investor that took took Ren with the deal. So I was, I was flipping paper at first but then I started buying stuff from my own portfolio and now we, we fast. You know, I bought anywhere from a single note for seven bucks that I flipped for five grand all the way up to 335 notes at one time. And, and we worked on those portfolios but that's. We're constantly buying notes. You know, we've got a pretty decent portfolio. I don't do it all myself. There's. We have like you mentioned servicing company. We've got several servicing companies that work for us that manage my portfolio along with attorneys in every state. And then I also have a couple of folks that work with me remotely that are dealing with most of the borrowers with a borrower outreach or contacting the counties to make sure taxes are paid and stuff like that for you. So basically I go find the deals, I talk to investors and raise capital and then I put it in my team that handles the borrower outreach, the work ethic which I of course direct and say hey, with these assets let's go this route. These assets, let's go, you know, A, B or C and let's go from there.

Yeah. So it's interesting because I mean one of the things I talk about in this podcast generally is that there's always no matter what kind of industry or company you are or whatever, there's always a deal you can do. And also, no matter what the economy is, there's always a deal you can do, right? And in fact, in challenging economies and otherwise challenging economies, there are certain businesses that do really, really well. And, and, and, and it's funny because, you know, it's. So I. I've got a buddy, in fact, I interviewed him on the podcast a couple of times. Damon Gersh is totally. This is an analogy, totally different industry. He's in the disaster recovery industry, right? So he makes. He makes money when there are floods and fires and 9, 11, and whatever. So it's a weird business because, like, for him to do really, really well, bad stuff has to happen. But yet he provides an amazing, phenomenal service because he helps rehab, clean out, whatever, do all this stuff, right? So to some extent, this business or other, any business where there's an advantage of things, you know, are challenged or distressed is somewhat similar. So I guess my question for you is. So you started doing this back. You came into this time during the Great Recession, right? The financial crisis, where a lot of. There was a lot of inventory, right, unfortunately, because people ran into a lot of trouble, which is a good thing from a business point of view. Although, obviously you gotta buy, right? And the market's not as strong to, you know, maybe people are less able to have those notes become performing, right. Or. And then values down. If you have to flip and sell it, then you. Then we went through this boom period, right, for 10, 12, 12 years, whatever it was. And then we went through Covid, which is this really weird, interesting dip thing. So I'd love to talk about the business evolution and how things have flowed through that entire journey. You know, I think it'll be very interesting for us to hear.

Yeah. So the first thing I guess we talk about is pricing. When we were buying stuff back in 2007, 2008, I wouldn't pay above 40 cents on the dollar and the value of the property at that point, right? Because I was like, oh, I'm not paying more than 40 cents. And that's got to include back tax because there was so much. There was. I mean, if you look at Florida, Florida was basically 30% vacant in a lot of cases. 70 cents of every dollar in Florida was international money that was pulling out of God's waiting room is what we like to call the Sunshine State, right. So that was. I mean, I was getting lists in and new and I was. I didn't know what I was looking at half the time I was like, I just had so much stuff coming in at night. Got lucky that I had some mentors that were holding my hands or I could always pick up the phone and call and kind of go from there. And I just said, let's just make it happen. And I think that the biggest thing that helped me more than anything was I kind of embraced marketing and doing videos. Like if I was working on a deal I would, I would film a short little video with like my, my Dell flick camera. You know, remember these things here, I still got it here and I would share it on YouTube. There's like video old videos of me walking around an apartment complex here and I'm sweating my ass off in 100 degree. He been talking about the property and that would help me raise capital for help I find a buyer for that kind of deal. So we saw a lot of inventory. I mean I'm talking thousands and thousands and thousands. And those that, that are in this kind of niche of an industry. We always thought that this market maybe last three years. Oh like it'll be done by 2011. Well that came in like 12, 13, 14, 15. And here's the thing is that there's always distress out there.

Yep.

Even in the best market we were, I mean you look at pre Covid, we were at about a 3, 2.5% default rate and all the mortgage that still equates to several million homes, several million borrowers who can't make their mortgage on time. And so as we track the staff like when I was first buying, so that buying like 75% of the time was commercial assets, you know, small balance, apartment complexes, industrial, mixed use staff with a little bit of residential. As the banks were figuring out what the heck to do with the residential staff, like Lehman Brothers going bankrupt. So their portfolio was on hold for about five years before they released it in 2009 and 2010 where we could bid on it.

Yep.

And that evolved. Then it became more 50, 50 and then it's more 75 residential, 25% commercial. And right now it's, it's, it's about, it's, it's 60, 40, 60% residential, 40% commercial.

Okay.

Small balance stuff is what we see on a lot of things. But pricing obviously has gotten a little bit more expensive as values have gone up. Sure, that's okay. We've had to evolve. I think that the biggest thing I would say for my own business model has changed the first two years. I wouldn't modify anything. I was like, oh, no, you're a deadbeat bar. I'm going to foreclose on you.

Right.

And that was a mistake that I made.

Right, right.

Because I could have modified a lot of those homes and make cash flow immediately without having to pay attorney fees and rehab costs, you know, and drag stuff out. And so it took me two years. You know, I'm not the brightest guy. It takes a few knocks on my head. Let's do that. Playing college football, maybe I got a few cells loose, but I learned. I was like, wait a second, it does make more sense for us. And that's one of the big things that I, when I'm dealing with other investors out there that come from the property side or they like watch them flip his house or, you know, flip or flop or like, look, you don't really own the property yet. I know you're excited about this property. You fall in love with a white picket fence. You don't own it yet. You got to do the legal action. The borrower still owes it until you go through a legal process or they sign over to you. So that's always a big thing when talking to people. Hey, the property looks cute. It's amazing. But let's look at the numbers. You really gotta stick to your numbers. And you know, you've talked about here, any type of deal, you've gotta take the emotion out of it. It's gotta make sense numerically, numbers wise. You know, it's black or white, there's no gray. Is it gonna make money or is it not gonna make money? Well, I think does not work in our business. You know, we got to look at where the asset is and what's going on in that market. And that's what kind of makes it a little bit challenging sometimes for folks. They want, you know, they want to just buy in like their backyard. Well, if I was just buying in Austin, Texas, I'd have gone bankrupt a long time ago. Because everything in Texas is a lot more expensive. Because like you said, we got the fastest foreclosure in Austin's highest markets in the country the last few years. So this is why we leverage a lot of, you know, a small tool called Google, you know, realtors and team teammates outside of my home area, so I don't have to go look at a property drive by. We leverage to make things happen. And that's, that's one thing evolved. I went from basically just buying in one or two areas. Now it's 30 states roughly. In most of the major markets. I'll look at some smaller markets if I have stuff there. But that's the thing is my market isn't just the one zip code of the city I am, which most people are limited to. Mine's basically 30 states. So if I see something I can act on it and within, within a couple hours have a valuation or somebody putting eyes on the asset and then I'm, I could be making an aggressive offer to the hedge fund or the bank and you know, they have a bid within 48 hours which helps them make a decision, say yes or no or, or maybe and go from there.

That's great. That's great. Let's take a break from the show for a minute so I can invite you to a new way to determine your deal readiness. I created a fast and easy assessment that will determine exactly how deal ready you are. Once you complete the assessment, I use your responses to identify the obstacles that are holding you back from being a deal driven growth genius. It's as easy as heading to coreycupfer.com assessment that's coreycupfer.com assessment and filling out a few multiple choice questions. I'll be checking in after the episode to see what your results are. Now back to the show. So now you also have some courses, right, where you train other people on how to do this. Well, first of all, what had you decided to do that? You know, I always, you know, I've asked this question, you know, because I just have fun with it because listen, I've, I trained people in negotiating and I negotiate for a living. Right. So I do the same thing and I know other people who do it. And you sort of like, you know, one way I could phrase it is why did you decide to create competitors for yourself?

Great question. I'm very glad that you asked that because I believe the opposite. I don't believe in competition. I believe that there's enough deal flow to go around if I'm not good enough to make my own relationships. I mean, like I said before, there's 5,000 plus lending institutions out there that all of them have bad paper at some point.

Yep.

And not. And 95% of people that go through a class or training of some sort, they never implement anything anyway.

That's true.

The reason I started teaching, I was literally speaking in an event in Orlando. It was a big short sales sum and they asked me to come speak there from seeing my blogs and articles and deals I post. Hey, can you come talk about the note business? Like yeah. So I get up there in front of about 1500 real estate entrepreneurs in Orlando I'm speaking about. I get off stage and I get bombarded with people, they're like, we want to learn this. How do you teach this? Oh, do you have a class? Oh, yeah, I got a class.

Right.

Pulling out my hands. Yeah. How much? 250 bucks for three days in Austin. Oh, thanks. Can you send me a key? Give me your card, you know what I mean, that concept. So I taught a class. But do we make some money off the classes? Yeah, of course. But our number one thing is we make our money off of real estate. Yeah, we make our money off of deals. That's the big we close next. We don't talk notes. Okay. And that's, I think it's one of the biggest things when you're looking at taking training for somebody is talk to the trainer, text the person that's teaching, and are they active in the market in today's conditions? Not something from two years ago or five years ago. There's a lot of those folks out there that haven't close down a deal in five years.

That's right.

And we even have in the notes page, I see, I get people calling me up or thanks, somebody said this. Well, that was right five years ago, but we haven't had those types of deals for that. So I started teaching as a way not only to, yeah, I made some money, but it also helped educate people on my deals. So. So they were more comfortable in buying stuff. Maybe they didn't buy a, you know, 20 notes like I do at time, but maybe they'd buy one. So I could sell them a note and make a little money. But I could also get a bigger bulk discount because I could, you know, buy 10 and said sell 10 to 10 of my students at the same time, they're getting a great deal because it's like a Sam's versus Walmart thing. I'm getting a better deal. My bids have more value to the asset, to the banks because I'm submitting offers on 20, 30 versus bigger. Exactly. And now this also gives me eyes and help me build a network across the country. So if I got a deal and new, you know, Albuquerque, I can call Gene out in Albuquerque. Hey, Gene, I got this deal in your backyard. Would you could take a look at it, Let me know if you're interested. Great. We can work out a deal where we could partner on the deal together. Or if you're not, you should let me know and I'll make sure and let the hedge fund know what kind of crappy condition is because we can add value to that relationship too. And so that was the whole thing. So now I. That's helped me.

You know.

One thing that also helped too, Corey, was back in 2010, I basically sold everything my own except my truck and my dog. And I drove around the country for what I thought would be 30 weeks turned into three and a half years of looking at deals and with bankers and stuff like that, that helped a little bit too. But you know, I got classes. It's the biggest bang through the bucket industry where, you know, I'm a big believer that if you give people the tools to succeed, you don't blow snook up their ass. You're not upsell, upsell, upsell that kind of crap or pitching them to death.

I'm.

I hate that. I like to give people the tools to go out and achieve things. And we're very blessed. We got a very high success rate with our students because we don't. Oh, hey, well, you know what, you can sign up for this, but it's going to be $25 million more for everything.

Love it, love it.

We got some one on one. Good. Here's the thing. I poured myself and my students. I'm really proud today. I got a student today who closed on his first deal. He, he found seven mobile home notes. He flipped them to another guy, made a quick seven grand. He's, he's delighted it's changed. In two weeks he made more than he's made in two months.

Right, right.

You know what I mean? And then I got another guy, Cincinnati. Cincinnati. Leary, who's makes six figures, enjoyed his job, but he's getting tired of that rat race. Well, the last year he's, he's made over six figures and is loving life and stuff like that and looking to leave his job and just do it full time. But everybody's got a different notes are not for everybody. I'm gonna be the first one to tell you there. It's not a get rich quick thing. If you're looking for get rich quick, go play the powerball. You know what I mean?

Right?

1.9 billion. You'll end up with 925 million. That's a good day.

That's a good day. But your odds.

But it takes work like anything else.

You know, I love the way you open that question and I purposely, you know, phrased it that way about creating competitors, you know, because I have fun with it. But basically you answered from the same place that I come from. And my listeners know this. My viewers Know this, that, you know, I'm a, I come from an abundance mentality. Right. You know, there's more than enough for everyone, right. I don't shows up in, in whatever. I'm, I'm happy to, I'm happy to train, train people in, in negotiating. I've got, I remember once I said I've been a member of entrepreneurs organization for a long, long time and he has a great organization. It's a peer to peer learning organization. And you don't solicit. There's no solicitation. Yeah. You end up doing business with people because you can do business but you can't ask for it. No, you're not handed. It's not networking, not handing out business cards. And, and it's really, you know, people are so generous with their time, whatever. And you know, and I had that experience and I remember there were a couple of situations with lawyers who came in, right. Do what, do what I do in the New York area, you know, which is where I was. I mean now I spend more time in my place in California. But we were, you know, we have clients all over the country always. But as New York based lawyer, you know, comes in and whatever and what somebody, you know, he's, and he's actually, you know, trying to grow his firm and he's trying to figure some stuff out and a couple of people say, why don't you talk to Corey? And they're like, why would Corey talk to me? He's like, you know, he's, he's a bigger player than me, but he does what I do, I work. And you know, of course he reached out to me after people encouraged him and I just gave him all kinds of, I don't even know, I don't know. Of course I just helped him out, right, Whatever. And he said to me, I was honestly a little afraid to call. And I said, listen, I said, I get it. A lot of people come from a scarcity mentality, you know, and, and, and that's where they live. And in, in, in, in the context of scarcity, it would be crazy for me to, to help you out. But I come from an abundance mentality. There's more enough. There's more enough for all of us, right? You, you, you doing well is not going to make me do not, not as well. In fact, I believe whether it's energy, karma, building relationships, however you want to look at it, it's actually probably going to help me in the long run. It's not the reason I'm doing it. It's not a quid pro quo. I'm doing it out of, you know, a place of service. So I love the way, you know, you're coming from it there and then, yes, obviously it's natural you're going to end up partnering with some of those folks. And you know, and I can tell in your voice like it's just the satisfaction factor. Right. When you gave those examples, the stories of your students who made $7,000 or six figures, whatever, it's just, you know, it's just, it's just, it's a great day when you, when you, when you've helped somebody and you see that they've applied it.

Amen to that. And that's what I get so excited about because when you, I've always found that people are more successful, they're the more giving of time because they don't want people make the same mistakes that.

They made along 100%.

Yeah, it's not always that way, but it is for a lot of folks. And it's funny, in this industry that I'm in, we've got some peers have been around for a while, you know, they're, they come from a different mentality. They're like, no, well Scott, your generation is all about the give, give, give ours. We don't want to give it away. I'm like, well, you can either change your mentality or somebody's going to use a tool called Google to get to hell it and find the same information online somewhere. You know what I mean? So you might as well be a resource for people. And otherwise if you're trying to nickel and dime to death, they can smell that after a while and they're going to go somewhere else. And you don't want that. I'm a, I'm a believer in every relationship has to be a win win out there for it to be really fruitful. If only one side's winning, it's not going to be a long term relationship. And I'm a big believer in long term relationships that those breed values and not be just profits and sales and stuff like that, but much longer term rewards out there. And that's what we really need to take place in this world today.

Absolutely. So what are, what are maybe the top two or three mistakes people make in the, in the note business?

Well, I'll say just as an investing side is a lot of people make the mistakes that they don't embrace marketing right off the bat. And for us to find note deals, you've got a market to banks, you've got a market to hedge funds. We leverage LinkedIn a lot. We're dropping drip marketing campaigns, emails out to these asset managers on a monthly basis. And so a lot of people don't have the patience to follow up with that. You know, 80% of sales comes after the fifth contact. So I tell people, you gotta be marketing, you know, and then they also don't market to raise capital. A lot of people will only look at what's in their bank account and they're like, well, I only got like 50 grand in my retirement. I can't buy enough. Well, you can buy one or two there, but guess what? There's millions of people out there that have money sitting on the sidelines that's depreciating right now, that is making nothing, that would gladly partner with you for a 6 or 8% return on their money for 12 or 24 months. You know, you just gotta share the deals and get to where some marketing, you know, for more deals and marketing for capital. Biggest thing. And then the next biggest thing I would say is, is people, like I said before, they come and approach it like a fix and flip, where they're looking at the property. They're not coming from the banker's mindset, which is a little bit different.

Yeah, yeah, yeah. And I love, and I love that my people, my listeners and viewers know that I, at least every other show I bring up, the concept of the mindset comes up because I'm a, I'm a huge believer in. Listen, you mentioned the stat. And it's true. It's true not only in your industry, it's true in other industry. Every personal growth guru. And I've taken. I'm a, I'm a lifelong learner, right? I've taken business growth, personal growth, spiritual growth, like, you name it, right? I do it, but I do it. Go apply it in my life, right? And then, like, I'm not. Some, some people are seminar junkies, right? And you're like, where's. You know, you're still poor, you're unhappy, you're not in a relationship, you're out of shape, you're like, what? Like, what are you, what are you doing? Right? So you got to go apply. But my point is that every person I know who is a successful trainer will tell you that 95% of the people are going to do pretty much nothing with what they're learning in that room. And maybe 3 or 3 or 4% will apply it, you know, at a reasonable level. And then you'll have your 1 or 2% of people who really, like, really take it and run. And so for me, the game is not played. I mean, obviously skills training, all that stuff is super important, the tools. But for me, the game is played initially on the mindset level because I don't care what you learn if you're not going to apply it, which is a mindset thing, what's stopping you when you walk out of that seminar and you don't. You have all these notes or whatever you do, and then you don't do anything with it? That's a mindset conversation. And it's why I tout he passed away recently. But people like Bob Proctor's work, who took paradigms like I'm, I'm a huge proctor guy, you know, and, and, and many, many others. So talk, you know, a little bit about the mindset difference of the people who are successful and who aren't in this business.

So here's the thing I want to bring up. You brought Bob, and I got a chance to share the stage a couple times with Bob and spent some time in San Diego with a few years back. And I didn't know that Bob made most of his money to begin with in the janitorial services aspect.

That's right. He was a janitor.

He was a janitor. You know what I mean? So if he can clean up his shit, you all can clean up your shit too.

That's right.

But the mindset is so key because like, we did an episode recently on podcast talking about imposter syndrome. A lot of folks come from the corporate 9 to 5 where they're used to being told what to do. And they told them, well, that's not your job, don't do it. If they do anything extra, they get penalized, which I don't understand that in the corporate world, but that's just me. But you look at the most successful people are the ones that get up the fastest from mistakes. They make the most amount of mistakes, but they learn from them. But they're also the most coachable. They listen, they soak up things like a sponge. And that's what you have to really do. I mean, we struggle. Everybody struggles with negative talk in our head. Everybody does on him every day. It's a matter of how soon you can tune that out or, you know, get that rebound figure getting knocked down seven times, get up eight times, and realize there's always a silver line to some things. I mean, I think someone that comes from faith in that God doesn't. For me, I'm A big believer that God doesn't give me anything more than I can't handle.

Yep.

You know what I mean? And sometimes when you want to find success, you got to grow mentally into that space first. If you want to go from making a hundred grand a year to making seven figures, you first got to get your mind right into that seven figure business model because it's a whole lot of different decisions and things that you're doing at that upper level basis. So that's. I love what you said about that. Because it is the most successful people you look at, sales wise or whatever it is, it's. They got the game right, they got the mindset right. They are. They realize overnight success is like an eight year process. You know, Damon John, I heard him say that one time, he's like, yeah, I'm an overnight success. It took eight years of waiting tables at Red Lobster and going home at night, working on, sleeping on the floor. And that's what you. That's one thing that I think especially our younger generation, and I've talked to a few colleges and stuff like that, and they have this. Everything is so instant gratification. Give it to me now, delivered on demand, you know, all this stuff. And when it comes to real world, it takes time, it takes patience, and it takes follow up and it takes gumption just to realize that no, because you're going to be told no a lot. But no doesn't mean really no. It means not now. And you realize the more you follow up, the less, the more nos you get, the sooner you'll get to a. When I was gone making my first batch of calls back in 2007 to banks, I was sitting in my office and the phone wasn't ringing in the mortgage department anymore. I was calling banks and I called 53 banks and I got 53 notes. I'm like, this is the birds. I'm not gonna do this. Why make us. I'm giving one more phone call. Before they made one more phone call, lo and behold, I talked to this lady Kim on the other line. She and the president of this lending company were the last employees. As soon as she sold this portfolio and 5 million loans and Houston, she was laid off. So she was not having a good day, right? But that call, trying to a $50,000 profit for me, I was able to flip that portfolio, make five points and split with a couple people. I was like, aha. Every no I got was worth a thousand bucks to me there, okay? And so you have to realize that, that every, you know, I've seen some people that take playing cards and they shuffle them up and they, you know, 1, 2, 3, they start like, you know, rolling them out one order. And when you hit like a three and a three of ace or three space shows up, oh, you have a hit. It's kind of that process in the sales aspect. You got to go through so many of those to get a yes. And once you figure out that right ratio, then you can gamify your marketing, gamify your strategy calls, whatever it might be to realize, Okay, I need 20 no's to get a yes. And every yes is worth 25 grand or 50 grand to me. So that law of numbers is so important these days, but so many folks, they just like, oh, I, I'm only going to call 10 banks and give up. Or am I going to get my first no? Or I'm going to send my email out and I get my one ugly email and I'm going to give up because this is not for me. Or it can't be done.

And that's.

You can't do that. You want to be successful at anything in life.

No, no, no question about it. Amen. All right, so you mentioned the podcast. Tell people a little bit more about what, you know, what it is. I'm sure they can find it on all the players. But give a little bit about the podcast.

Yeah, the no Closer show podcast is our megawatt blowtorch. 725 episodes over five or six years. We were cranking them out an episode each day. Like through the first three years, it's kind of slowed down a little bit, but we've recraited it about. We're recranking out a new episode every day. Wow. Over. We just surpassed the 1.2 million download mark. Pretty excited about that. But it's half the time it's me interviewing people, vendors, folks in our industry that can help them in the mindset, the business, the marketing side, or the other half is me teaching a lesson of some sort. So, yeah, I'd love for you guys to listen to it, but here's the most important thing. You're listening right now. Corey is kicking ass and taking it. So you all know that here on the Deal Quest podcast. So while you're listening to this, click on Over, Hit the subscribe button. If you're not subscribed, but also scroll down a little bit, hit that. Leave a 5 star review for Corey. He's kicking ass and taking his wheeze. Podcaster, this is your opportunity to tell Corey how much you love him. So we as podcasters love to see this stuff. So make sure you leave a review and hit that subscribe button. Corey as well.

See now, now, now he sees not only got to tell you, but he's got to give an example of how you market and how you right and how nobody's a competitor and it's all big up everybody else. I love, I love that you just did that. Thank you. I appreciate it. Appreciate it.

No frag.

So. All right, cool. So, so in terms of your other stuff, whether it's your courses or, you know, investing in the business, whatever it is, websites, other contact information, what do you want to give?

So if they go to weclosedesk.com you find about everything there. That's we close us dot com. But if you're interested in a little bit more information, I've got a special gift for you. If you go to noteweekend. Com. I teach a one day class every third Saturday of the month and it's normally 99 bucks. I'll give it to you guys for free. If you go to noteweekend. Com, hit the sign up button of the green button there. Sign up, leave your information and then on checkout page, just type in dealquest no space, all caps, deal quest, no space, and you'll get the class for free. If you can't make it live, don't worry, I'll send you the replays. You can watch and learn anyway.

So appreciate that offer to our audience. That's so generous of you. All right, my final question on the podcast is always about my highest value in life, which is freedom. And for me, that means everything from freedom in the world, from for all people, from oppression to the reason why I haven't had a boss in decades. What does freedom mean to you and how does it impact your life and business?

So freedom is being able to do what you want when you want is the best way to look at. Everybody has a different number. Some people say, oh, you got 4 million, the bank. No, no, no. If you got, if your bills are $3,500 a month, you got $3,500 a month in cash flow coming in that you ain't going to work for. That's freedom.

Right?

That's my definition of doing what you want when you want without having somebody determining what your worth is. Because what's so great about this country, especially we're at right now, you can determine what your worth is. If you're. Yeah. If you're working for a job that's fine. But you have the opportunity with side hustles and the Internet and starting a podcast or whatever you might want to do on the side do, do a hustle flipping stuff from ebay or you know, Habitat for, you know, whatever you might see freedom is doing what you.

Want, when you want.

And if you're not liking your job or liking your career, where you're where you're at, that's all on you. You have the decision and you're where you're at today. We're all at, we're at today because the decisions we have made on a day in, day out basis. So you still have a decision to change your direction, change your path and go find freedom in one, one form or another and reach out to folks like Corey, myself, hey, we're always glad to help give you a counsel and what to take. Don't get advice because you can get advice from anyone, your grandma, your uncle Jimmy, Bob, Joe down at the bar. But advice is like assholes. Everybody has one. Doesn't mean it's a good one. So seek counsel from people that are in a position or where you want to be and I guarantee most of the time they're going to be glad to give up a few minutes at a time to help you on that path.

Well, Scott Carson, from the moment we were on our pre call, we said this is going to be fun. And it's been fun. Scott, thanks so much for being a great guest on the DealQuest podcast.

Honor to be Man. Thanks so much for having me. It's been a pleasure.

Thank you for joining me on this episode of DealQuest where we help you understand how Deal Driven Growth can be your ticket to freedom. I want to invite you to a unique way to tap into the wisdom and experience of the DealQuest community. Join the DealQuest DealDen Zoom calls a free monthly 90 minute mastermind. In the Mastermind, we address all the challenges you may be facing and help support you with the opportunities that may arise in terms of Deal Driven Growth. You will get input not only from me, but all the members on the call will collaborate and serve each other in a Mastermind format. To sign up for the free Mastermind, go to www.coreycupfer.com dealden that's coreycupfer.com dealden I'll see you there. I'm Corey Kupfer until next week. Wishing you the freedom and financial prosperity that I know your Deal Quest will bring.