Real Estate Divas Podcast: Profiting from Distressed Debt with Scott Carson

Good afternoon and welcome to Real Estate Divas. I'm Kristen Gerst with my co host Jer Leigh Thompson and we have Scott Got Carson on with us today. It is National Women's Day or International Women's Day. So happy International Women's Day to all of you. We'll be back in just a couple minutes.

Hi there and welcome back. Today's guest is Scott Carson and he's the CEO and founder of weclosenotes.com he's been in the mortgage business since the early 2000, was the president, vice president of JP Mortgage and really specializes in non performing notes. So we're going to dive into that subject today. Say hi, Scott.

Ladies.

Hey.

Happy International Diva Day. I am honored to be your guest on International Women's Day as well. So I'm a little diva. Yes, I am glad to be here.

Well, let's go ahead and dive in it. So you're in Orlando right now. You're doing a bunch of podcasts and doing your thing.

Yeah, we've got PodFest multimedia expos out here for the fifth year and I'm a sponsor and a speaker out here. Been out here with 1100 other different podcasters from across the United States and then I think 20 different countries. So honored, excited to be here. We've got a little podcast with a note closure show is doing well. So I was honored to be asked to come out and speak tomorrow afternoon and wrap up the day well.

And you know, there you go. This was a gift from Scott that he sent over the Note Closers podcast along with a fabulous bottle of Glen Merengia scotch. So single malt, which is of course my favorite. Anyways, his podcast, the no Closer show Goes, just got picked up by 16 radio stations across the country and it's going to be airing what, Tuesday through Thursday starting this week.

Was it the same started Tuesday? Yeah, exactly. So we got picked up from Tampa to Long beach and all over Pittsburgh, Milwaukee, Las Vegas, just a few of the bigger cities that we're in. And we're actually probably in 25, 30 different channels and different radio stations here in the next couple weeks as well too. So things are exploding for the note closure show. It's also exploding at a good time here with our distressed note business as well too.

That is fantastic.

So you are in the note performing space, Scott, can you tell us a little bit of difference? Why do non performing notes as opposed to performing notes?

Yeah, I like naughty notes, as I like to say. I dove in after I was Vice President JPMorgan Chase and left that in 2004 and started a mortgage company with a couple buddies in Austin where we were traveling the country and doing a lot of investor style loans for investors on fix and flips and rehabs. I started seeing the writing on the wall with everything happening back in 2008. So I jumped ship from one side on the origination side and started buying non performing notes. Why do I like non performing notes? A lot of people ask me why would I want to buy or invest in something where the borrower is not paying on time? There's a couple reasons for it. The biggest one is I get this debt at substantial discounts. We buy direct from banks and hedge funds all across the country and been doing it for a long time. The people think is the banks are motivated to get this off their books because the bar has not been paying for either 90 days or longer. You know, average time frame is usually about two years where the borrower has not been paying on a mortgage that I end up picking up. So I'm buying that debt at substantial discounts, usually under 50% of the as is value. And I've also, I buy cheap because the fact is I have a lot of creative strategies to turn that into a performing note. I like to buy occupied assets where there's a borrower in place who's taking care of the property for the most part. It may not be perfect, but the fact that somebody still has emotional equity in a property and the fact that I bought their debt at a substantial discount gives me a lot of flexibility to say, hey, I don't care what your country western song was. You know, whether your grandmother got run over by a reindeer, your wife left you, the dog got killed by, you know, whatever, I don't care what it is. Let's work on a win win solution now for you. So a lot of people.

Yeah, I have a question going right into that. So if you've got somebody who they haven't been paying previously on a loan, but you will keep them in that house just because if I will keep.

Them in the house if they can start paying on time again. Because Most Americans, actually 85% of America is one missed paycheck away from being a default. And actually today in today's world, one of every 10 homeowners is behind already on their mortgage. Wow, one out of 10.

That's shocking to me. That is shocking to me.

That really is.

So there's a lot out there for you. But. All right, so how big of discounts are we talking about? Can you equate that then parlay that into loan to value.

Yeah, totally. Because that's the. I call that the note two step. I'm constantly looking at the value of the property is versus the debt and looking at the discount I'm getting. So it varies on a state by state basis and then also how far along that borrower in default. So they're like 90 days in default, you know, they've missed three payments. I'm the seller. The bank is probably gonna want somewhere around 70 cents on the dollar and that's okay. 70 cents on the dollar of the debt owed as long as the value of property is similar. Now if the mortgage is upside down where they owe a lot more, I'm only going to pay up to like $0.70 of the value of the actual asset. All right, but if it's in states like New York, New Jersey that have long foreclosure timeframes, like a year or more, you're not going to pay that much for. You might pay 20 cents a dollar. I don't buy in New York, New Jersey or New England just because it takes forever to foreclose. But I do buy in a lot of states like Ohio, Michigan, Indiana, Missouri, South Carolina, North Carolina. I love God's waiting room. Florida as like to call it. I've bought in Texas, but everything's so fast in Texas as a, you know, Texas is the fastest in the country as far as highways, executions and foreclosures. All right, so the banks know that. I mean it makes it very desirable for a bank to come in and lend in Texas, but it makes for expensive stuff when you're buying distressed debt. So I don't like to buy a lot in Texas. I go where there's better bang for the buck. So I'm not usually paying over 50 cents on the dollar for a non performing note, often lesser if it's in a longer foreclosure state where the legal has not been started.

And are we talking about 50 cents on the dollar for value?

Okay, so yeah, it could be less if they're over encumbered. So if they owe a hun basic number. So if the house is worth 100 but they owe 120, the most I would pay is 50 grand which is 50% of the house, but that's literally 40 cents on the dollar of the unpaid balance.

That makes sense. Very much so.

So I guess where I was going and I think you just kind of went over, that is I was thinking you said up to a year in default of their Loan for, well, you know, a lot of being here in Texas, I mean up to a year. If you're not doing the short sale process or something like that, then you're probably already getting foreclosed on. So that explains why you don't do a lot here in Texas, but a lot of other states like you just mentioned though, that's not the issue. Like it just takes a lot longer. So you can get those at a discount.

Yes, ma', am, that's correct. And the thing too is it depends on the bank too. They've got a big portfolio of distressed debt. They're going to focus on the higher valued assets. They're not going to waste their time with the sub $100,000 value properties for the most. They'll wait till they get around with that. So that leaves a lot of opportunity for investors like me to come in, say hey, what do you have on your books that we can take a look at? And then they'll send us the full list of assets. And that's, that's one of the beautiful things. The second reason I like non performing notes is when I make contact with a bank or a hedge fund, it's not going after like one property, like a distressed owner. I get hundreds of properties on a regular basis emailed to me so I don't have to do any postcards or foreclosures or door knocking. There's nothing wrong with that. There's plenty of great deals in it. But I like just being further closer to the source where I'm getting stuff sent to me on an automated basis for the most part.

Excellent, excellent. So there's a lot, I mean, and I'm sure you get this question all the time, but I'm constantly asked how do I get started in note investing? Because now you're hearing a lot about it. And what is your advice for getting started in note investing for a brand new and some of the. We got to be honest, some of these investors have never done a deal. They've never even done a wholesale, wholesale real estate deal, let alone a note deal. So what do you say?

So if you want to come to the sexy side of real estate, sexy side of debt investing, or as we like to call the dark side, first and foremost with anything, you got to get educated. That's the first and foremost. It's a different model completely than looking at a property and saying I'm going to go off to after repair value. And no, no, no. When you're in the note game, whether it's performing or Non performing. You have to come to that decision as if you're in this, you know, the shoes of a banker. What is the bank going to do? What are the options? And if you're going to get started, you got to understand, hey. That it's a terminology is different. Like if you're going to be talking to bankers to find deals, not mom, PA, borrower, you know, you've got to have, there's a little lingo that goes along with it. There's also different departments in the bank. You're not going to go down to your local JPMorgan Chase and say, hey, I want to buy some of your naughty notes. I saw some guy in Portalio talking about it the other day. Doesn't work that way. If you get anything out of this, the people inside the banks that handle the asset sales, as far as the non performing assets, they go by either the special asset departments, the secondary marketing managers, these are the people that have the actual marbles in their head and they're looking at the portfolio of the bank and seeing okay, what do we have that's performing which is good? What do we have that's non performing that we've got to get collected? And this is where they're constantly okay, well this is, we gotta go for books. Cause for every dollar of a mortgage that's not performing, it costs them 10 to 15 times that in fees that they're not collecting.

Wow. That's why that's a ton.

It is, it is. That's why your phone starts ringing off the hook if you're seven days late. That's why the mailman starts knocking on your door with a certified letter if you're late. Because the bank is really trying to reach out to you to have you start get back on track. And unfortunately most of the Americans that we talked about are, you know, they don't have extra savings. So if they miss a payment or two or three, most of the banks want them to bring the full amount to the table to reinstate. And most Americans don't have that. And that's what makes it so valuable for us, is we buy that debt at a discount. It's like a do over. I can be their white shiny knight that rides in on a mortgage, you know, horse to say, hey, okay, like I said, let me help you out with something. Let's figure out a payment that works. Let's get you started. If you start paying on time again for six to 12 months, I can forgive you debt, I can forgive the back payments, I can adjust Your interest rate. I can let somebody take over the mortgage from you. Or if you can't afford it, hey, let me let you walk, or I'll give you cash for keys. Or if you need to, hey, let's short sale your house. So there's a lot of exit strategies that are involved with this. The big thing I want people to keep in mind is I'm not looking at these assets like I'm going to rehab the property. My number one goal is to try to rehab the borrower and try to do that.

Interesting. So a totally different strategy than most investors when you're coming from the note side. One thing I did want to ask, because now we hear a lot more about notes, you know, than we did, you know, five years ago or whatever. But even five years ago, I remember hearing that sometimes it was, it was hard to get that asset manager, get that asset manager make that relationship because they were selling to hedge funds, they're selling to people that are buying a larger portfolio. So they don't really want to talk to the individual that's just getting started. And I just need five notes. So what?

Well, total, that was the way over 10 years ago. Definitely. You had to have 5 million to get in the game. Well, when everything happened in 2008-2010, we had 15 million Americans underwater. 15 million Americans. And a lot of the debt buyers went away. So the banks got very motivated to move stuff to smaller, you know, smaller investment funds, smaller investors like me, because they needed to move this stuff off the books. Now you still have the JP Morgan Chases, the Wells Fargo's, the Bank of America's. They don't want to deal with anybody unless they can write a $50 million check. It's just not worth them. Heck, I couldn't even tell you who to talk to in those big banks. They don't even know half the time. But there's still a ton of lending institutions, there's a ton of. Of smaller regional banks that still have stuff on their books. They may not have thousands of assets every month, but they still have stuff on their books that they need to move, and they're looking to get rid of it. So it's all about.

And they're too small, and they're too small to do it as well, is that correct?

Exactly.

They're not going to be unloading their assets in pools of half a billion dollars to get in front of some really big players. And so if they only have a couple hundred thousand dollars in assets a month, yeah, it'd be great. To have a really great relationship and prove yourself as a new investor.

Yeah, exactly, exactly. And the thing you gotta realize, I mean, I've bought from Capital One. I mean when I was buying from Capital One, it took me 30 phone calls. I'm sorry, 30 phone calls in like a one week, but 70 phone calls over three weeks. I can't tell you how many times it was transferred to Pakistan or India. Hello, my name is Steve. No, it's not. Let me get to the right person. But when I finally got to the right person out of New York, they were like, okay, sign this non disclosure agreement. And they emailed me their PDF. It was 33 page PDF in 6 point font of all the assets across the country. And I can't buy this all. They're like, no, buy something, just buy anything, help us out. And that's what we saw for, you know, five, 10, you know, five, six, seven, eight years now. It has gotten a little bit tighter now with the markets rebounding and then moving stuff off their portfolio. But we still see somewhere around 3 to 5 million homeowners are still in default. They still haven't been cleared off the books. You have a lot of people that modified their loans with the home affordability modification program a couple of years ago that were in fixed rate interest rates at like 0, 1 or 2%. Now those mortgages are starting to adjust now and those people are going into default because they can't afford, you know, afford the payments now. So there's, it's, I kind of call it the perfect wave. You have new originations that are in default. You have the older stuff and you have these homes that were modified, those ones that were modified that are not starting to default as well. So you've got a lot of opportunities, but it's a whole different ballgame when it comes to marketing. It's not sending out postcards, it's not sending letters out. You literally almost have to dial for dollars calling these asset managers or put together an email list and do an email blast out once a month. That's, that's kind of what we do. We do an email blast the first week of the month. We follow up with a second email a couple days later. Those that didn't open up and we get lists sent to us, you know, every quarter.

Well, it definitely narrows down your marketing strategy. You know, you're trying to get ahold of those people in charge of large amounts of possibilities, you know, of the notes that you're trying to purchase. So that, that helps with marketing.

Absolutely.

So In a lot of. Add some of that. I didn't interrupt you, but a lot of people, they get into, they're like, oh, I want to deal with notes and reos. And so they call the banks, say, hey, I want to buy. Talk to the person, charge your notes and reos. Well, the person on this, you know the switchboard up, right here's reos and just send you to a mailbox and on that mailbox says, oh, just call the listing agent. Like, oh, I can't buy notes from a bank. Well, no, because you're trying to be too broad. Be specific, be focused. If you see a smaller bank and.

You'Re coming, that's a golden nugget. That's your gold nugget. Yeah.

One thing that I like to do is I'll pull a foreclosure list and if I see a smaller bank that's foreclosing on an asset, I'll track down that Asset Manager on LinkedIn or Lane Guide or something like that and I'll call that asset manager not to buy that note because I know they're probably already gonna foreclose on it anyway. I'm like, okay, you're gonna foreclose on that note. Can I make an offer on it? If you don't sell at the foreclosure auction or what else you got? What else do you have on your books that I can take a look at?

I love it. I love it. So the biggest barrier to entry, I believe is access to money. Because it's not like there are hard money lenders who will lend on note purchases. How did you get started raising capital? I mean, I understand you've got how many pages was it in a PDF at six point font of, you know, all of these things and they're saying just buy something but you still need cash to do it. And you can't be running down to your local hard money lender, your local, you know, Noble mortgage or whatever to do that.

Yeah, plug to Noble there. Hard money lenders. Hard money lenders, I love them. And they're in the origination side, you know, they're creating paper. You would think they understand buying a note because they're creating a note, we're just buying it at a discount. Unfortunately. They like to control the property and be, and be able to have that deedback. It's kind of the same thing. But yeah, you need, you need cash. You either have cash or we like to help investors leverage their self directed IRAs like the Quest Trust Company.

Nice.

You know, you can Buy a note with your self directed IRA, your solo 401k, your ESA, your HSA, actually quest trust, largest percentage of their assets under management is in paper actually. And it's a beautiful thing. I was talking to Nathan Long the other day. He was saying about a third of their 1.2 billion assets under management is money just sitting in 0% accounts waiting to pull the trigger. So we tell people, look, if you got a good deal, you're picking up a property or picking up a note at $0.50 of value or less, it's occupied. You can get the borrower to start paying on time. Their existing payments probably going to be a decent roi just off the payment stream to get them re performing well 6 to 12 months or 18 months later if they've been paying on time. That note is now considered a reperforming asset that you can sell now at 70, 80, 85, 90 cents on the dollar. So if you picked it about 40, got 12 months of cash flow, now you can sell it at 80. That's a sizable chunk of profit without having to do any rehab or any foreclosure along the way. So that's truly a win win. I wish it happened like that all the time. It happens about 40 to 50% of the time for what we do the other 50% of the time we're working on some sort of liquidation strategy, either a cash for keys foreclosure short sale or you know, cash for keys deed. Lou, short sale or foreclosure.

Well, and you know, I had never actually thought that, you know, of the short sale route with doing those. And I mean that's genius because if you're going to buy it at let's say 50% of unpaid principal balance, you can go in there and you can afford to do a short sale on something like that. And you know, because you've got it at a deep discount.

Yeah, I'm the fastest short sale negotiation company in America. Seriously, because that's the thing, you know, we see an asset that we're getting ready to buy from a bank and it was listed as a short sale previously. Or we get the whole servicing documents and the loan file, we can see what's going on, you know, behind the property, you know, the bars filed a hardship letter or tried to do a short sale. We see it's listed on the mls. I get excited about that because like you said, we buy at 40 and I talk to the listing agent that the investor or the borrower has and they say, well I got an offer at 80, 85. I'm like, great. How soon can they close? Let's approve it today. Yeah, yeah. And Lily, spin around, they're like, huh, this has been nine months in the making. I'm like, yeah, it just took me nine minutes.

No, that's fantastic. I mean, I love that we call.

That short papering, not short sale, but short paper.

Short papering.

Yeah. Nice. So whenever you do have to go the other process, you said about 40% of the time, then you're able to rehab the borrower. Correct. And then the rest of the time you're doing these other strategies. Then do you, let's say you foreclose on the property, do you turn around and you sell it to another, another investor that wants to get it, or you go ahead and then at that time you're in charge of that property. You want to rehab it, you or you just get rid of the property at which you can get market value.

So one of the biggest, one of the biggest mistakes I made early on when I got into space is I was trying to foreclose on everything because I came from the fix and flip side. You don't want to be doing fix and flips states away from where you live. The biggest bang for your buck is, hey, if you're going to take that property back, list it so it can a either sell at the foreclosure auction. You know, people are overpaying for assets all the time first Tuesday of the month in Texas or other places. So we listed at 80, 85 cents is what our opening bid. If we sell it there, great. If we don't, we take the property back. Then we'll either list it with an agent if we have to do a little bit of work. We don't like to do heavy rehabs. It's not worth our time. But you know, clean out paint carpet. I'll hire Kristen to come over and sell her dirty carpet on Craigslist Marketplace. You know, let her come do my rehabs that way. And then I like selling it. I'd rather get the cash in so then I can go back and double down. Some people like turning those properties into, you know, rentals for them, which is great. If it's local, awesome. Or they want to turn around and create new paper and owner finances somebody, that's great as well. I just don't like doing that. That's my, I want to be as turnkey in a systems oriented as possible. I don't want to tie up my equity in an asset for that long a period of another 12 or 24 months, I'd rather get it, get it sold, get the capital back, pay back on our investors, and then go back and rinse and repeat and do it all over again.

So did you start out with, did you start out with actual capital buying these or did you first get the deals in and go, okay, who can I talk to? And go, hey, I've got this great opportunity, can you set it up for me? Can you do this? And the reason why I'm asking is because, you know, we, we talk to so many people and I tell them, hey, number one barrier to entry is cash and if you don't have it, you need to raise it. And you need to know what you're talking about because really you're assigning that collateral to them that you're picking up. And you need to explain to investors, potential capital investors for your business, how they are protected and how their money is secure.

So I got into this in 2008, which was a great time to be a real estate investor. Right? If you had capital. I didn't. I had two rehab projects in Austin, Texas where I had to write big checks at the closing table. That's not what you want to do as a rehabber. You want to get checks, you don't want to write checks. Okay, at the closing table.

Good for you for only having two, by the way. I had eight.

I saw the sign. I got rid of them as best I could, but that's, I was getting these deals in from the bank. So when you're dealing an asset directly from a bank, they'll often give you 30, 45, 60 days to close. So I would get an asset list in like say from Capital One. Do my due diligence, realize, oh, hey, this is a seven unit apartment complex in San Diego. Looks like it's fully occupied. The broker price opinion values at 700. Borrower owes 548. I can pick it up at 375. Let me market this. And so I would just go guerrilla marketing, post to Craigslist, to Facebook, LinkedIn. I mean it's part of the thing that has helped me so much in the last decade is I think we just out hustle as far as marketing with anybody else. But then I'm just talking, hey, this is, it's a first lien. Here's the numbers, here's the photos, here's the risks, here's the rewards. You know, we really share the due diligence. And initially I was wholesaling assets. Boom. Property under contract. I'd wholesale it for 35 grand three days later or 100 grand on a 16 unit apartment complex in LA, or six grand for a crappy little property in Tampa. Or I put a condo in Miami beach under contract for five grand and sell it for 20 grand. You know, I wish I had a bunch of those condos of Miami beach again. But anyway, but that's the thing. I started hustling and then built reserves and then people started saying, well, hey, I like what you're doing, tell me more, you know, or hey, I don't want to do the work. I'd rather just write a check and then either a get a flat return on my investment or you know, go on an equity split where you're doing all the work and then I'm funding the deal and we split profits. So that's kind of what's fun.

And that's, that's awesome. So you're basically wholesaling.

I was.

Right. But were you wholesaling the paper or were you picking up the asset for five grand, foreclosing on it, then selling it for 20 and possibly you didn't need to because it was bacon anyways.

Or you still gotta foreclose to wipe out that first lien or do a deed in lieu if you could. But it was, it's a mixture of that, Kristin. It was wholesaling at first to other note investors who understood the deal. They didn't mind the foreclosure process or in some cases it was buying it cheap and then negotiating with a homeowner to sign off and walk away from the property and then selling the asset off. I mean, one deal, I bought a condo in Miami beach and I asked the hedge fund to throw in this really rickety, ugly ass beat up townhome in downtown Baltimore. I said, throw it in for free. And they're like, I can't throw it in for free. I was like, well, give me a price on it. Okay, seven bucks. I'm like, okay, great. I wholesaled it for five grand the next day to somebody on Craigslist.

How is that not free?

Marketplace wasn't around. You know, you just got to get creative now. The thing I like is I focus now more. So where it's just occupied assets where I know hopefully that I can get the bar re performing. And that's the thing is we're only buying occupied assets. That way we're usually not surprised with indoor water features where the copper goblins have showed up or the air conditioner's not gone on a holiday and walked off, they're usually taking care of the property. Okay, first lien. So the only thing that wipes us out is taxes. And then we're also staying out of rough areas. I mean, if it's a two gun alley, we're not buying there. We'd rather buy in assets that are in pretty decent areas. Here's a tip for you. If your rent rate on a property is $500 or less, it's in a rough area. It's in a rough area. 500 is below $500. It's a rough area. Is that nationwide?

Is that nationwide or is that. Oh yeah, just Texas.

No, no, it's like Cleveland. I mean Detroit, Michigan, Flint. You know, early on I was dealing with Banco Popular, you know, big bank. And they were selling all these Michigan assets in Detroit, Michigan. So I was buying like beat up houses for like 500 bucks and selling them for scrap for 1500 dollars the next day. Wow. But that's the thing. Everybody's in the debt game. Whether you got a mortgage, a credit card, student loans, we're all in the debt game. Just unfortunately, most people are making payments versus receiving the payments. And so that's what I like. I mean, I can do this business whether I'm in Orlando here or I'm in Puerto Rico or Spain last summer where we had our vendors message me on Facebook, hey, I got a couple loan mods approved from a couple of your borrowers or hey, way to sell go through for you. This is a, it's a very vendor driven business. I have to really tell people that if you're trying to do everything yourself, you are not going to be happy because there's a lot of moving parts and you can actually get in trouble because you're dealing with consumer debt with the CFPB and Dodd Frank and things like that. You got to be very careful. That's why you ask what they should do. Hey, get educated. There's a ton of videos online. I mean, we've got thousands of videos of different webinars and podcast episodes to really help people dive in to learn the business, the nuts and bolts. But it's different. You're going to learn more by buying your first asset than you ever would from sitting through a workshop or listening to a webinar.

Kind of like any investment opportunity in real estate, you know, where we talk about the deal analysis paralysis thing. If you're sitting there and all you're doing is classes, then, I mean, classes definitely educate yourself, but you got to get out there and actually get your Hands on something.

You know, unfortunately we've got a lot of brain surgeons that are walking around doing nothing. You know, experts, educated idiots that are knowledge, knowledge junkies. But they're not taking any action. And that's the same way across the board, whether it's performing or non performing, fixing, flipping, wholesaling. You really only have 10% of people that want to do something. And I love helping that 10%. I feel the other 90% is what aggravates me. I'm like, come on, just pull the trigger. The fear, false evidence appearing real. If you get out and actually make an offer, send an email blast or pick up the phone and dial for dollars, you're gonna get beyond that fear that so many of us have that paralyzes us, that suffers from over paralysis analysis. Just take action. And what's so great about what you girls are doing? Sorry. You ladies are doing women ladies.

Day.

Yeah, girls.

Actually what's funny is about 45% of our audience is women. And actually women have an easier time being note investors than guys.

Really?

Huh? Yes.

That's what I'm saying.

Here you go. Here you go. Most of the asset managers at the banks are guys and guys who do we call back first? When we get a voicemail or email, we call the ladies.

Is that true?

Yeah, I'm not being sexist. It's just a true, true point. And I've got hundreds and hundreds of case studies.

Well, and they say the same thing about cold calling of any kind if you're in sales. Cold calling of any kind. If they hear a woman's voice, then they're most likely to be more receptive if they actually pick up the phone or if they are going to call somebody back, then a woman's voice just helps ease them into that.

Drops that brick wall. If he sees a guy, they think we're gonna try to sell him something.

Yep. Yep. Well, real quick, we're gonna go ahead and take a break and then we'll be back here with more questions with Scott Carson while he's hanging out in Orlando. And we'll be right back.

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Hey you guys, welcome back. We're here on Real Estate Divas Kristen and myself, Jaylee and Scott Carson is in and visiting with us from Orlando about notes to today. So anyway, we were talking about all your different strategies. Maybe we can get into I know in the beginning we were talking about how you like to reform re. What was the word you used?

Rehab the borrower.

Yeah, Rehab the borrower. Yeah. I love that. So if you can't rehab, then. I know you touched on a couple of the different strategies. What are some of the things that you do? Like specifically some of the deals that you do. What are the things that you offer if they can't be rehabbed?

So I like to compare mortgages to marriages. Okay. If you're in a marriage, it's often like a mortgage, you're into it for 30 years. Right. So if it's a non performing mortgage, I'm sorry, non performing marriage, what happens? You go to counseling, hopefully. Right. So that's what we do. If we can't get the borrower to start performing, we get our attorneys on the phone, our servicers on the phone, and start, you know, trying to get right party contact, try to get them to the table to talk. Let's try to work out a solution that makes sense. And then if that doesn't work, it's going some other way of fashion. Either foreclosure or. I don't like going to foreclosure. I'd rather pay the borrower three to five grand to have them walk because it saves me time. It also saves me a lot of money because now I can take control of that asset in 90 days versus nine months.

I mean, I've done it. Personally, I would say that that's probably the most successful way. Plus, you know, you ask them to clean everything out. So it's not like you show up and there's like this house full of like hoarder junk or something like that. So there, there are so many advantages.

We've had that happen too. Okay, let's not paint the pretty picture here, all right? Yeah, we've had people leave the houses and it's like the worst flea infestation in three counties in Missouri. Or I had one guy who was. The power had not been on the house for four months. The water had not been on too much. It was a bit of a nasty thing because he's still using the facilities. Oh, yeah. Yes. You're glad it wasn't scratch and sniff day. But, you know, those are. Those are rarity. Most people. You have to realize that most people are really good. Most people still want to stay in their house. They can, you know, and we like helping people. I mean, there's been times I bought portfolios of assets and I just forgave the debt because it was 12 grand. And I bought the note for a thousand bucks. It was in a property I didn't want to take back, Cleveland. So I just forgave the debt. There was the. The borrower in South Illinois that had lived in the house for 18 years and took out a mortgage for 35, refinanced at 60. And then her husband got sick, and the mortgage value dropped to 35. The property value dropped to 35. She'd been trying to do a loan mod for four years. Wow. You know, I get this loan file, and the box comes to me. I think it's like, 20 files, and it's one file because it's got her. You know, it's got all her paperwork, her tax returns or hardship letters. I'm like, okay, we're going to buy this asset. And so I bought it, paid the 12 grand for the note when she owed 60 houses worth 35. Get her on the phone, and I'm like, what's going on? I just bought your mortgage. She starts crying. I'm like, whoa, whoa, whoa, wait, wait, wait. I know you've been doing this for four years. Let's solve this. Don't cry at me yet, okay? I said, can you start making your existing payment? She's like, yes. I'm like, okay. Can you bring anything to the table? Skin the game? Cause you always want to have the borrowers bring some skin in the game. If you're gonna modify. Just, like, I can bring 2,500 now, and I can bring another 2,500 over five or ten months. Like, great, let's do that. We're gonna reinstate your loan. You bring 2,500 to the table. Great. We're gonna add another $200 a month for the first 10 months. At that point when you've been paying on time for 10 months, I'm gonna drop your interest rate to zero percent, and then I'm gonna take and forgive 25 grand off your 60 grand, drop the balance of what you owe to 35 grand, so that every dollar you pay towards your mortgage goes 100% to principal, so that now, instead of you taking another 28 years to pay your mortgage off, you'll be paid off in seven.

Well, that's a huge incentive.

That's a huge incentive.

Yeah, it's huge incentive. But I was. I mean, I paid 12 grand for the note. I got five grand from her in the first year as far as extra payments, and then five grand in her on time payments. I made 10 grand on my deal in 12 months. You know, I had a lot of flexibility to really create a win win. And so she's paid on time for two years straight. Every time she's even like a week late, I get an email or my service gets an email. But what was great is she showed up my attorney's office in Illinois about three weeks after we talked, signed the paperwork. Her husband cried at the closing table because he had a heart attack when she went back to work. But the neatest thing is about six months later, I get a letter from them and her eldest daughter, who'd grown up in the house for 18 years, was pregnant and had a baby. And they named the baby Carson.

No, thank you.

Oh, my goodness.

Wow.

You know, that's a great story. Love it. Hey, thanks for keeping me in the house. Thanks for helping me out. I mean, homeownership is the American dream. Unfortunately, it turns into a nightmare for a lot of people from things they can't handle. So I like to make the joke that we're making America great again, one mortgage at a time. I've had people that have poured concrete down the sink. I'm like, okay, whatever. That's gonna cost me two grand. I've had the. We bought a note and we were Facebook stalking our borrowers. And she said on there on her Facebook profile, hmm, to make my mortgage payment or go to Disney World. We're going to Disney World. I'm like, great, we're not modifying that mortgage. There was a professor at the University of Missouri we were checking online, a tenured professor that we found out that he was using his mortgage payment to go through a bit of a transition. He wanted to pay for his girls and he posted that to Facebook. I was like, okay, great. That's not. Is that a cash flowing asset? I don't think so.

I love the fact that you are Facebook doctor.

That's hilarious. But I mean, seriously. So it's not only your employers people. It is. It may be your mortgage lien holder. So.

Yeah.

Well, I mean, for all of us to do, like, inappropriate things like drink scotch on Facebook.

I mean, showing off your Halloween costumes. Yeah, exactly. You know, it's. You see, you learn a lot about people in, like, the person. You know, we use that to identify to. Hey, are they working now? This one lady's working at Dollar General as a cash. I'm like, okay, she's making 18 grand a year. That's not much. Let's figure out what a third of that is a month. Because that's really all she could afford in A modification. Let's, you know, we use it in a win win. Yes. It helps us identify. Oh, no, we're not buying that asset.

That's a great golden nugget. So do you go with the third rule? Because that's what I, I mean, I always did when I was originating. And I have to imagine when you're doing a loan mod that it's about the same when you're, you know, when you're looking in, can this person actually afford to do it? And so I would always go, all right, what if, you know, if they're bringing home $3,000 a month, they can afford 1,000 bucks a month for mortgage or rent. Same deal exactly.

Yeah. It's roughly about 33%. I think 40% is for those that are curious out there. Kristen's referring to front end and back end debt, to income ratios, front end numbers and back end number. So most people, when they look, when you're getting a mortgage, the mortgage company's gonna look at all your debts and all your stuff and say, okay, your housing costs can't be more than 40% usually, and back in with all the other expenses, your credit cards. This can't be more than like 50 or 55% today. It's worse than that because subprime is now back. They got really creative. They just call it non prime these days.

No, no, no, I have not heard that. Non prime.

Oh my gosh. Show Ryan.

Prime.

Non prime. They got really creative. Not subprime, but non prime. And there are over, there are hundreds of mortgage companies, not banks, but mortgage companies that are originating loans. People at 75, 80, 90, 100% financing with 520 FICOs.

Wow.

You know, it's, it's so the big short, if you ever watched that movie, it's going to happen again.

Everybody goes, so what do you do? And I go, just watch the big short. But I'm like a good version of that.

I don't know. I'm the Christian Bale, but with two good eyes. I'm the khaki shorts and T shirt rocking out in my office looking at mortgages and stuff like that on a pre regular basis. But the thing everybody, you don't need 5 million to get started. We have a lot of investors that get started like 25, 50 grand because they're buying one or two mortgages at a discount from a bank or hedge fund and they'll work those through. But the best thing I can tell anybody on here, if you're going to get in any type of Real estate investing, whether it's note investing, performing or non performing, or fix and flip or wholesaling, get educated, learn it, and then learn how to market. And I'm talking marketing in the 21st century. So if you're a Star Trek fan, Scotty is here to beam you up into the 21st century. I'm giving her all she's got, Captain. She's coming apart. The big thing, learn how to market, learn how to use Facebook and LinkedIn and use how to video to talk to asset managers.

So social media is what you're talking about.

Social media. But thing is, everybody's used to sending like one thing and giving up on marketing. Like one email blast or one letter or one door knocker. 80% of sales are made after the fifth contact. So that's what I'm always telling our students, like, listen, get in the habit of sending emails and they expect it'll take five months for you to really start seeing all that stuff in. If you're doing it once a week, if you're doing it twice a month, it's gonna take you three months to really start seeing a lot of stuff coming in. But it's out there and banks are selling it. I mean, we get phone calls every day. I got a portfolio, I'm trying to move. I got a portfolio, I'm trying to move. I had a bank call me the other day, say, hey, I got a grow house and a dispensary that we're trying to move. I'm like, oh, that's a different type of green.

Jay Lee's. Like, Jay Lee is like, wait, wait, I can buy Jaylee's.

Like, I can totally buy this. You know, how do I.

Out of your underwriting.

Is it in Colorado? Is it in Colorado?

It's in Los Angeles, actually.

Wow.

Yeah. Surprise.

Are they allowed to have dispensaries downtown?

It's a smaller California bank that is able to do that. So that's. That's why it fell under the thing. But you see all sorts of weird stuff. I mean, I bought a note on an Aplex apartment complex in Charlotte that turned out to be a working brothel.

Wow.

Yeah. I bought mobile homes, I bought apartment complexes. Mixed use, you know, everybody. There's so much distressed debt out there. It's just not on the residential side. The commercial space, it's got so much distressed debt as well too. If you like the commercial side of business.

Well, and within. I see she has a point. Yeah. With distressed debt. Because, you know, and Scott knows this, I'm not in the distress. You know, I'm not in the distressed debt arena. I'm in performing notes, which is completely different. Why are there so many people in distress and what is the sexiest thing you see about distress? Because it is. I mean I hear these stories and I hear you talking about literally turning 10, $20,000 worth of profit in very few days.

That's on the wholesale side. Our typical what I tell people when you're buying a non performing note, it's not going to usually be a 10 day event. It's not a get rich quick scheme by any means. The imagination, because it takes a while. You buy a note, it can take 30 days just for the servicing to be transferred from the seller's servicer to your servicer. And then it can take a couple weeks for the hello letters that go, I say, hi, thanks for not paying ABC bank, but now you gotta pay Scott Carson, you know, and then there's the right party contact. So it really takes about 60 days from the time that you purchase to really get a good foothold on where that borrower is and where you're kind of going with it. And then it's all about, hey, let's get them on the phone, let's get them started on something. A lot of investors screw up because they don't start that foreclosure process. They don't like the fire under the feet of the borrowers soon enough. I mean, you can always stop or delay the foreclosure if they come to the table and want to modify. But people will, you know, a lot of people are like, I want to talk to the borrowers myself. I'm like, no you don't. You have too big a heart. You know, they're going to sing you that country western song and you're going to fall right into it. Okay, I'll give you another chance. I'll give you another chance. I'll give you another chance. You seem like a night person. I'm going to go and let you stay in that house for another year. I don't need that money. But that's why there's vendors, that's why there's servicers that help out with that stuff because they're, you know, I only talk to borrower unless I, if I have to. You know, usually most of the time I'm getting emails or spreadsheets from our attorneys or our servicing companies and they're showing, okay, here's where it is with this. I'm like, and what do you want to do? Go this, do this, do that and go from there. But it's, it's a, I always tell our investors, hey, it's probably gonna be like a 12 to 18 month process. You know, you want to under promise and then over deliver if you know and if it happens before 12 months is up, great, let's do it again. If it doesn't, hey, let's, let's work on getting this asset sold off. The borrower is not going to re perform. Let's get it foreclosed and move that asset as best as we can, as fast as we can. Because it's all about the velocity of capital. How often can you turn that money? Every 12 or 18 or 24 months.

So you talked about how you rehab the borrower. Whenever you're talking single family now when you're talking commercial, because I've heard several of your podcasts where you're talking commercial is like it's a whole another ball game. So when you're getting something that is a non performing and it's a commercial property, what is it that you, what are your strategies there? Because now we're talking about a whole lot of other things that you may or may not be able to control or you got to be more hands on.

That's a great, great, great question. Unfortunately, you don't always get the rent rates when you buy a commercial asset because that's really what commercial is all about is the cash flow, the they underlying the cap rates. And a lot of times you gotta play Sherlock Holmes when you're buying a commercial note, trying to recreate those numbers and figure out what's going on from online marketing or LoopNet or other comparable assets. So it's the same thing if you buy non performing note, we still always try to get it re performing. The beautiful thing about commercial notes though is that the bank has the right to take over rents in a commercial note immediately. So a lot of the borrowers are using commercial properties as their own personal atmosphere. But the minute we step in and take over the rents, that takes away a lot of the motivation to not work with the bank at that point. And so we always try to take over the property and the right collect rents. Once we do that, then we can see hey, what's going on with the tenants. You know, is it a apartment complex? Do we need to set up and you know, re gentrify the property or renew rents or increase rent rates for those that have been sitting around for a while? A lot of times we take the property back, we'll offer Cash for keys. And then we have an REO and we then can either hold on to it, sell it off. In some cases we've done master leases to people, you know, they wanted to come and operate the property and we didn't want to do the work, said, okay, we'll give you a master lease for, you know, 12 to 24 months, let you kind of go in and fix the property up, and then it'll give you 24 months to refinance this out and, or buy the property. So a lot of the same strategies, but the big kicker is that commercial debt, especially on investment loans, is also a clause or a waiver in there. The minute the bar goes late, commercial deal, the bank has the right to go in and collect the rents. And that is a very, very valuable nugget in the commercial space.

That is, that's huge.

That's huge. I mean, because so it is that as soon as they're in default, I mean, understand that basically 90 days, I mean, 90 days. So they, they missed three payments. They missed three payments. And you can go in there and start collecting their rents. And that's on commercial space. What about, I mean, are we talking about anything bigger? Larger than a one to four multi family?

Yeah, five plex or greater.

Same, same deal. So we can go in and just show up and go, hey, this guy isn't, this guy is not performing on his loan. You are now paying me. How much throwback do you get in something like that?

So it's really funny that's. You gotta wait and make sure you're in that day. But the minute you go start posting letters on tenants doors, you know, oh boy, does the phone start ringing. Either the tenants or the borrower. Like, hey, where do I got to show up to make a payment? Or they get up something like, listen, it's in the, it's in the mortgage, it's written in. You either need to do it or we're going to start changing locks on it. And so it's a beautiful clause to have. It's a, hey, let's, you know, let's either take some action or get off the pot. Either you got to do something with me or you're going to move on, brother.

So nice. And so that's not only with multifamily. That's like you were talking storage.

Every commercial, every commercial loan.

Wow, I gotta say, I love that. I do too.

I mean, that's pretty. I mean, if you could start after 90 days, really, that you've, you're going after that and you can start collecting on actual income.

It's already in the paperwork. It's not like you got a file like you, you know, depending on the state. Because that's nationwide. Correct. Like it's in the.

You still want to make sure. And have your check with legal counsel. I'm not an attorney or an accountant. I'm not giving legal accounting advice. But check with your attorney on that. You know, that's a really important. Now if they're in bankruptcy, you can't go do that. You got to reach out to the attorney. But that's a bonus. We like bankruptcies because that gives. If somebody's filed bankruptcy, whether it's residential, commercial, that now gives us an attorney to talk to. And they've gone and filed a bankruptcy. Well, they've got to record a bankruptcy report, a short report. Basically, it's nine pages or greater on pacer.gov, which is an open government website. And it tells everything. It's like stripping down the kimono, tell you what they have for access.

And that website is pacer.gov.gov and what can you find on that website?

Oh, my gosh. It's the cheap. It's like 37 bucks full due diligence on the bar. What they have is debts. What they believe the property's worth, who else they owe. What do they have, you know, for cars, any other thing of value. It's literally them opening up the kimono. And you can read everything that's on that patient report. If it's a bankruptcy, chapter 13, it's usually going to turn into a loan modification for five years. You can see what they propose, if it makes sense. Or you can say, no, we don't approve this. We need to do something else. If it's a chapter seven, it's a liquidation of the assets. So you're going to be taking that property back. It's a good thing. I mean, there are. I've got a buddy who runs a 100 million plus fund in Wall street that all they do is chase bankruptcy chapter 13 loans because they know it's cash flow. Wow. And it's a fun game. Every day is different with what we do. But I'm not going picking out paint and carpet. No offense to those that love to do that, but I hate that. I don't want to do that. I'd rather just pick out. Okay, where we going?

On vacation this year, isn't it? I know. People always ask me, they're like, so you love notes? And I go, yeah, I love Notes. Nobody ever wants to hear about the note business. And I'm like, that's what makes money. If you look at the scoreboard, notes are way better than those Airbnbs. But all anybody cares about is the Airbnb's because it's like an HGTV reveal. And, you know, people. People are like, oh, that's sexy. And I'm like, okay, money's sexy. Being able to travel and live and eat is sexy.

Yeah.

So in Texas, we all have a saying. Bless her heart or bless his heart. Les Herhart, my ex wife, when that was her hgtv, flipped this house, and that's when we got into real estate investing. I grew up in a small southwest Texas town called Ingleside down by Corpus Christi. Dad owned the local hardware store, so I was digging ditches, running pipe, fixing whatever I could in the house, and I was like, oh, yeah, I want to be a landlord. I want to be a fix and flipper. Because that tv, those shows dramatize it. And literally, it should say fiction, because none of this stuff happens.

It's 100% fiction. It's 100% fiction.

Exactly. Unless Kristen shows up to sell your dirty carpet for 20 bucks.

That's different.

I only said because it was.

By the way, that was $40. I sold that dirty $40. That was the one presentation that was the first time you got to see me on stage.

Yeah.

One bottle of scotch for that carpet, please, with no barter. But that's what you got to realize is you said nobody likes the notes stuff. They want the. Get their fingernails dirty, picks that stuff out. They want to go out and touch it and feel it and hump it. Me, I don't like that. I have not been drinking, I promise you.

He's trying to make it sexy.

That's right.

The hump it thing at the end helps.

Think about it. People like to go touch it. I want to hug a tree. Okay. No, I want to look at numbers. I want to look at cash flows. I'll look at values. I look at spreadsheets. I'll send realtors out to put their eyes on ears. Have driven some of my assets before, and, you know, it's great, but it's all about numbers. It's all about, hey, is it occupied? What do we think the bar could do? If they can't come to the table with this, they can't really start performing. Hey, they're just not meant to own a house at this point. Doesn't mean we have to be ugly. Yeah, we can still be friends. We'll let you give you money to walk. I mean we've done cash for keys or bars, anywhere from 500 bucks to 10,000 bucks before. You know, it's just we try to create a win win. But in some in today's society, with America being so financially illiterate out there, some people are just not destined to own a home at this time and you just have to have those hard discussions.

Gotcha. Yeah, I mean we see that all the time. They don't like the hard discussions. Well, we're gonna take another quick break and we will be back with Scott Carson and some more golden nuggets here in a second.

Propelio.com. what does Propelio offer? Lead generating websites, access to true MLS comps, off market lead lists and deal alerts. Get them all today@propelio.com.

Hey there.

Hello.

Welcome back. We're here with real estate divas and Scott Carson and we've been talking about notes and how sexy they are. You got to check them out, get educated and check out some of this great info and all these golden nuggets Scott's been dropping on us today. Well, we're getting towards the end of our show and I know you have, you're doing the podcast convention thing down there in Orlando. So you're going to.

He's actually speaking.

Yeah, yeah, yeah.

He's speaking and presenting at the podcast because he has a fabulous podcast. So. Yeah, which I actually listen to.

And you've been a very good guest on it before.

I've been a guest on it, yes.

Subtle plug there. Episode something. I don't know.

Anyway, no closure show, right?

Yeah, we're on any iTunes channel you can find. We're also. You check out videos on YouTube, Vimeo.

Just got picked up across the country.

We're pretty excited. Yeah, we got 16am FM Radius Daniels.

Yeah. And it's airing anywhere from Tuesday to Thursday. I mean it's pretty impressive. Yeah, 16 stations, so that's pretty good.

We're impressed, Scott.

I have a lot of leather bound.

Books, by the way, and my office smells of rich mahogany. That's right.

That's right. No, I've got a candle for that. But anyway, no, yeah, you can find us all. Just type in Scott Carson, the note guy. Or go to weclothesnotes.com to find all our resources for everybody out there. We're glad to help out. Anything we can do. Whether you're looking to buy, looking to invest, or just looking to get educated, we're honored to have you? I will tell you this. I was very lucky early on. I had somebody that really mentored me for four years on the note space. And so I have a big heart for helping people overcome their obstacles and pull the trigger and get started doing things well.

And I find that the mentoring is key. You know, I mean, people say it over and over again, and I wish somebody. I mean, I hear it all the time now. I didn't hear it so much whenever I first got into this business. So I wish somebody had told me that and I had gotten a mentor. But I feel like it's that whole, if I had known what I know now, what I'd do differently on that question, real quick, I did want to ask you, if you knew what you knew now, what would you do differently? Ten years ago, I would made more offers.

I would have bought a whole lot more stuff. I mean, that's the thing. I look at stuff that I got back 10 years ago, I'm like, oh, my gosh, pennies on the dollar. But I will tell you this, history repeats itself. So the things that I learned in the last 10 years, I'm much more prepared for the future. It's not saying I've never made mistakes. I mean, I've got some great deals and I've got some deals I've gone south. It's just, it's. You're in real estate long enough. I think I saw Ryan's Instagram post the other day about that. It's so true. The beautiful thing about notes is our risk is leveraged across a lot of different assets. If we do have something goes south, we can make it up with another deal. And that's the important thing. If you're just so focused on one deal and the one deal only, if deal itis, you're going to be in a lot more trouble later on because you're not going to be diverse in that if your risk spread about different assets. So going back, I would bought a lot more assets, made a lot more offers, and bought a lot more stuff.

Well, and we are about ready to come back into the cycle from where? From 08. And I was, I was traumatized back in 08 and I'm still.

You recovered well.

I recovered well.

That's why she started drinking scotch.

I didn't do too badly. But you learned some hard lessons. And I think back to those lessons of 2008. And I still have nightmares going on back there. But going into this, I love hearing from Scott that people are bringing back the subprime loan or the non prime loan and it just shows you that yes, we're 11 years out and people, history is repeating itself. And so all of these great deals which people are so afraid and the sky is falling and every time I say people be ready for it. Not to make you afraid but to say there are going to be so many buying opportunities. Just be prepared, just be prepared, you know and get, you know, get your financial house in order and be ready to snap up these deals because they're coming. He's doing the dance.

I'm bringing sexy back. Yeah. I'm bringing sexy back. Yeah.

So Mr. Harper, do we have any questions?

Yeah, Matt Smith, he was asking earlier on in the episode but he was asking how do I get the list emailed to me.

So the best way to get lists emailed to you is to reach out to the special asset managers or the secondary marketing professionals. If you go on LinkedIn and type in those names, you'll find hundreds and hundreds of people that have that their job title and what I'd like to do. This is easy for you to do at night or at 7pm to 2am during your side hustle to start connecting with people. Hey, what do you have on your books? I'd love to talk about buying or get down your investors list. So that's an easy thing. Somebody else asked where do you find asset managers you can go to like scotsmanguide.com for commercial notes. Scottsmanguide Scott with one T. It's a free resource, residential, commercial and even on the residential side you'll see all the niche non prime lenders on there. You'll see a lot of the commercial lenders on there available. I see Brady Durr posted a link to laneguide.com that's a great resource to find other asset managers or secondary marketing professionals at most of the major banks. Lane Guide's been around for 40 years and tracks what bank bought what bank and who's in charge. And it's a great resource that we use every day.

And I also don't, I don't know if you still have the availability but if you're already in the notes space and you've done maybe one or two notes. Scott's got a book coming out, correct? I don't know if you do you still have spots on that?

I still got a couple shafters available. I have a book called how to buy real estate at 40% off. It's on Amazon. You know a couple thousand sales of that. Use that if you want to email me at Scott at we close notes, I'll give you a free copy of that book. Or yes, we have a book coming out called Loan Tales where we've got 50 chapters of 50 different note investors who have bought any type of note originated, first, second, non performing, hard money, whatever. It's basically 50 different case studies of investors that are buying notes. So yeah, we've got a couple chapters left. It's a 599 first, but we've got a huge marketing plan rolled out where we'll be sending that book and to all our asset manager contacts and banks and things like that too, so.

Correct.

And so yeah, let's say that you want to get in front of asset managers. That right there with Scott Carson's new book coming out would be a great way because they are going to be sending that out to nationwide asset managers everywhere.

That's brilliant too. I just have to say, like that is.

I'm gonna make sure and pass the money there when I'm back in Dallas for you.

Yeah. That is, we've collected.

We've collected with all my swag and my scotch.

Yeah, well, but that's the thing is most of these asset managers, a lot of them can't keep lists because they work for a bank. They're very limited on what kind of list they can't have. So one of my plays that you'll like is if I know an asset manager that I finally get in front of, I will ship him or her a bottle of scotch or bourbon or whiskey. Because a banker can accept one time a year a gift from me up to $100.

Really?

Wow.

Yes. That's a little nugget there for you.

I just let my bakers take me out for dinner. They always have to dinner.

That's the difference.

Yeah, you're a blue eyed blind. That doesn't work for me. Okay, I'm taking them out to dinner. International Women's Day.

So a couple more. Speaking of it, one of my favorites, Casey Deli. How do you get it to re performing status? What kind of borrower management is involved? It's a good question.

Good question. You need to have a servicing company. We use Madison Management out of New Jersey. They're licensed in a variety of states. You got to make sure and have them because they're the ones that are doing the outreach, they're the ones that need the statements out, making sure you're compliant and not doing anything stupid. So bar outreach. The bar is not going to respond to your emails or phone calls or letters. We'll send A door knocker out to knock, knock, knock. And if they won't answer, then we file with a foreclosure attorney and they'll either answer that attorney letter or we're going to the chapel and we're going for clothes. Going to the chapel.

Ryan Harper, if you had to start in 2019, what guerrilla marketing would you attack today?

And by guerrilla, I'm assuming he's making. He's meaning maybe short sales.

Well, like short sales.

Social media.

Social media, yeah. Well, like you said, bring it to date.

I'm helping you out, Mr. Harper.

That's right. That's right. Keep drinking the scotch. All right, so what I would do is I would do video. I think video is the number one thing. And you look at what Facebook and Instagram, Twitter is doing, YouTube, Hulu, you know, everything. We're all in the media business. So the more you can do video, the better it's going to be for you. The better you get used to being on camera or sharing case studies. That's a really valuable thing. LinkedIn, this is announcement event that I went to last week. LinkedIn in 2020 is going to have live video.

Wow, nice.

Facebook Live has. They're not going to do it for like personal pages, going to be for business pages. So. But they're doing live video. So anything you do live video or sharing it there, that's, I mean, well, a goldfish, hang on, you're gonna love this. A goldfish has a nine second attention span. We have an eight second attention span.

All right, that's just sad.

That is, that's a sad.

What'd you say?

Well, she's got, she's got a question. But then I've got a question.

I'm sorry, I lost my attention.

You said LinkedIn can only, will only be on business pages for video. That's what they're talking about doing to a personal page.

I don't know, I don't work for LinkedIn yet. Five videos coming.

Well, the one thing that I was going to mention is that you've mentioned LinkedIn several, several times now. All of us are on the Facebook Live. We're getting into the, you know, Propelio's getting into the YouTube and we've been trying to up our profiles in both of those medias and Twitter and Instagram and that sort of thing. But I think one that has been untapped and Brian even mentioned over a year ago is the LinkedIn. LinkedIn. LinkedIn. LinkedIn is like really kind of an untapped market that really not everybody is saturating right now.

It's my goal. It's my goal. And you know what? I get on there this morning and Scott's there. Scott's, you know, Scott's already posted. Hey, you know I'm going to be on Real Estate Divas today.

Yep.

So, yeah, no, very cool.

Yeah, I don't sleep. I was in the middle of the night here. Couldn't sleep. Orlando.

Real quick on the LinkedIn stuff. If anybody's on the live stream and wanting to know about LinkedIn video, somebody commenting earlier, Roger Wakefield, he's actually one of the beta testers for the LinkedIn live. So he's got an in that none of us have. I'm trying, but I ain't got it yet. But Roger Wakefield, if you reach out.

To him, hook a lady up on International Women's Day. Come on.

Hi, Roger. If you're still watching.

Hey, Roger.

But the Association, American association of Marketing did a study on all the marketing platforms. People that have money that are too busy to work but not enough time to invest, they spend their time on LinkedIn and Twitter, not Facebook and Instagram. So I've got. That's why we spend a lot of time on LinkedIn, because there's people, it's a business profile. They're not looking at my bikini pictures, they're looking at my higher return photos.

The hardest thing though, and I mean, you're talking to a bunch of real estate investors, is that real estate really is all encompassing real estate investment. And so, yeah, most of us know we do need to be on LinkedIn. I mean, I have to. And I've been on LinkedIn for a while, but you know, you go and compare what I'm doing on either or. And I know, you know, I'm stronger on Facebook than I am on LinkedIn and that's got to change. And YouTube, because YouTube, I mean, let's be honest, is the number two.

What?

It's number two search engine after Google.

That's correct, Mr. Harper. Yes, yes. I'm not Harper, but that's right. It's totally right. So one of the things you look at is especially ideal podcasting. Podcasting is great, but it's not even itunes, is not even a top 100 website. So you have Google number one. That's why I still post a Google or YouTube. Okay. Facebook is like number four. LinkedIn is number 10. Twitter is in the top like 20 as well. So one of the most things about marketing, Ryan said, is trying to hit multiple platforms, just try to spread Your web across the web. And so while you're laughing about me being on LinkedIn, we've taken one piece of content and shared that same piece of content across Facebook, Instagram, Twitter, LinkedIn, Pinterest, active rain, our email all across platform because you never know where somebody's gonna see you. And we're all competing for eyes and ears these days.

For your eight seconds. For our eight seconds.

I'm sorry, what was that again?

I lost my attention.

Well, you want to take one more question and then. Sure.

Jason Bible, which I got a shout out to Jason Bible because he actually sent me a deal last month and.

He'S got a new show here on Propelio.

Does he? Yeah, Wanda's going to come into the studio and just totally sock him. Loving my drug dealers in one of my multis. They are so much fun.

Not really a question.

Not really a question, but it's funny. And then Bill Mays, I love Bill Mays as well. What is the best source for distressed commercial and let's be specific there. Is it the same asset managers or.

No, same thing. But most banks have different residential asset managers versus commercial asset managers. So I would use same thing. Scotsman guide or Lane guide we talked about. But look for commercial lenders. Both of those have filters for commercial banks or commercial lending institutions. And when you're calling the main switchboard, say hey, I'd like to talk to somebody in charge of your commercial distressed debt. So oftentimes they'll have the banks will have one or two people on the residential side but they'll often have multiple people in the commercial side because it's higher valued assets. And the biggest play, the biggest opportunity I see on commercial debt these days is targeting assets that are worth a million dollars or less or have a mortgage of a million dollars or less because the banks want those off the books. Now the side thing is if a mortgage is on those non performing notes of a million or more, oftentimes the bank will play ball with you if you're going to take over that asset. They'll often either switch that non performing note and underwrite it to you and basically carry the paper for you.

So what you just said, and let me just clarify that and make sure I understood it correctly, you want us to or you're suggesting that the banks and the asset managers are willing to really play ball for anything that's a million dollars or less commercially commercial speaking. So if you can go after those assets that are under a million dollars on their books, they want them off of There for commercial.

And the ones that are million or more, they want to keep them. So if you're to go after them, oftentimes they'll sometimes carry the financing and just move that note from the non performing side of their books to the performance side. If you've got experience, or even if you don't have experience, you have a good team that's got some experience in.

Your field, you're suggesting that's a good way for people to actually source property.

Yes, exactly.

I mean, so if you're a multifamily investor out there and you find something more.

Hang on a second. There's a big caveat there. Multifamily is the most overpriced priced asset right now. So I don't waste my time. I'm gonna wait two years or three years and then buy multifamily at a lot cheaper than at the peak of the market right now.

What about other commercial space?

Other commercial.

Yes, other commercial space. So strip malls, mixed use, big box.

Medical office, you know, executive suites, self storage. We see that stuff, you know all that stuff. Yeah, got it.

Okay, well, very cool. Well, thanks everybody for joining us today. And the questions, keep them coming. Everybody will, Scott will answer or Kristen.

And I. Scott's really good about getting in, answering those. And Scott, do you want to tell us how you can get a hold of us? I know you have your little. I mean he basically has this like mafia of like students. I mean he does the note mafia. I mean you've got some students.

Yeah.

So it's pretty impressive.

You know, I'm very blessed that we have a lot of students have pulled the trigger. That's the biggest thing. I'm very honored. We've got a very good loyal following who do a great job because they go out and take action. And I get so excited. I get more excited when I hear somebody, my students closing a deal than I do when I close my own.

Well, that says a lot for you as well.

I want people to close deals. That's why we call the company. We close notes. Not we talk notes, we close notes. Okay? And I don't care who you are, I may ruffle some feathers here, but there are people out there that tell you you can't buy notes from banks. That's bull. You can buy notes direct from banks. You just gotta know how to do it. And they will talk to you. You don't need 5 million, you don't need a million. Go out and start making phone calls, start dropping emails. You know, people help you out with. But the best way to get ahold of me, just like I said, go weclosenotes.com you can opt into a variety of different things or just drop me an email@scottclothesnotes.com and you know, myself or one of my staff will get back to you and be glad to help you out any way we can.

That's awesome. Thanks, Scott for taking time out of your busy week week schedule there in Orlando.

You know he's presenting and you know he's got another. He's got, got a podcast interview coming up here.

Well, thanks for bumping some people for national Women's day for us.

Exactly.

Always, always honored. You know, I'm a big fan of win women in notes. So always to get an edge on anything I can. If you had told me I didn't show up in a tutu and a wig, it'd been hard to find. But hey, you know, we would have done it. Yeah. Hey, let's have fun. Everybody go out, take some and if you're listening to this on the podcast of prop, do yourself a favor, go on over and hit subscribe and leave a five star review on the Propelia podcast as well along with the divas here. Leave a review, share it with your friends and come on people, go out and take some action.

Hey, we didn't even have to do it. I know. Yeah, that's awesome. Yeah. So share like go to the YouTube video share and like for Propelio. Thank you Propelio for letting us do this. And we're pretty excited about our new show here every Friday at 11am Kristen and I will be here for real estate divas and Kristin, how does everybody get a hold of you?

You can find me at the easiest way. Send me an email@infoapricornmortgage.com make sure you.

Get a deal attached to it.

Yeah, that really does help if you want to be answered really quickly. If you send me a note to buy, I'll be a lot faster there.

She likes scotch and red wine too.

Yeah, yeah. The way to our hearts right here. And then you can reach me at Texale Real estate. Facebook's easy Jaylee Real estate broker. Yeah. Or through Propelio or this feed. Drop your name, drop your questions and we'll get back to you. Thanks for watching you guys.

Propelio TV is brought to you by Noble Mortgage and Investments.

Hey everybody, I'm Ryan with Propelio.

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