REAL ESTATE NOTE INVESTING WITH SCOTT CARSON

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Estate investment expert, Scott Bauer. Welcome, welcome, welcome everybody to a special episode of the Investors podcast. Why is it special? Well, we're a week away from Christmas and we're almost done with 2018, so I wanted to take this time to thank you for tuning in with us each and every week. I hope you have enjoyed the podcast and taken a lot of the information that we've been able to provide and implement it into your business and into your life to keep you moving forward. And I also want to wish you a very merry Christmas and a happy New Year. I hope you're as excited for 2019 as I am. We have a lot of exciting guests that are going to be on the show. A lot of exciting things that are happening in business in 2019 that I can't wait to share with you. I also wanted to go ahead and thank everybody involved with creating this podcast. Natalie has done a phenomenal job at creating this and making sure that we provide this to you each and every week. And so I want to thank her for doing everything that she's done for us and also want to thank you, the listeners, for tuning in because we of course wouldn't have this without you. So going into 2019, I hope you're very excited. I hope you're ready to, to really change the world, ready to really move your business and your life or your life forward. And I'm excited to give as much content for you as possible. So Merry Christmas, happy New Year, and we will talk to you in 2019. Thank you. Bye bye. And welcome, welcome, welcome Everybody to the 45th episode of the Investors podcast. I am your host, Scott Bauer and today very blessed to have Scott Carson with us. Scott, how are you?

I am doing great, man. It's a tale of two Scotts this morning, huh?

That's right. That's right. Scott has been an active real estate investor since 2002 and for the last decade has focused on the niche of note investing primarily in the area of non performing notes. So far he's purchased over 500 million in distressed assets and made a name for himself in the industry. He also hosts very Popular podcast, the Note Closer show podcast. So make sure you get over and listen to that. With that being said, Scott, Scott, why don't you go ahead and give the listeners a little bit more about your background and kind of what you're focused on now.

Yeah. So I was like many real estate entrepreneurs. I went to some workshops back in 2002, watched HGTV. Me and the ex wife at the time, or wife at the time, ex wife, now got into real estate investing. Thought we'd be the next, you know, the landlords, you know, here in Austin, Texas. Bought a couple investment properties. I was making good money out of college as a financial advisor, and we bought two investment properties and then the market went south. You know, we have a little company here called Dell Computers, rhymes with hell for a reason. They laid off a bunch of their employees as they're moving stuff around our land. Our tenants obviously weren't paying, were deadbeat. I got laid off because my company closed their offices here. So we went from being landlords to being deadbeat borrowers relatively quickly. Okay.

Isn't it crazy how fast that can happen?

It can happen. The only people that made money on those deals was the Realtor. All right, so fast forward a couple years. I worked some different odd jobs, did whatever I could to get my assets out of a sling, got back into banking and finance and was doing great doing that here in Austin, Texas, for A big company, JPMorgan Chase. Had one of my buddies start a mortgage company up with a couple real estate entrepreneurs that were teaching owner financing, creative finance and wraparound mortgages, you know, fix and flips and stuff like that. And came to me because he needed help. And I saw the opportunity to try to give my real estate entrepreneur dreams a second chance. And I remember it by the day. I put my two weeks notice in basically July 5, 2004. And for the next four years, I was doing mortgages for investors, traveling the country, all these seminars. I was really blessed that the people that I was working with really were mentoring me. So I got to take home manuals and training things every weekend and really started implementing that in my own real estate business in the fix and flip and wholesaling and options aspect of the business here in Austin, Texas. And Austin is a great, great city. You and I were just talking about that a few minutes ago before we got started, Scott. But in the last few years, it is just crazy, crazy appreciation. Not a lot of great real estate deals. If you're an entrepreneur in real estate who looking for something that makes sense you can buy real estate here doesn't mean it's a good investment. You know what I mean?

Yep.

And so everything's going well. 2008, the music stopped in the mortgage market with all the meltdowns and things like that. So I gave my part of the mortgage company to my buddy and then started just focusing on fix and flipping, short sales and a little bit of note investing here in Austin. But that went on for about two years. 2010, I said, let me just stop doing everything else. I sold everything that I owned except my dog and my truck. Had gotten divorced and was just focused on the note game of calling banks and asset managers. It was literally like a scene out of the pursuit of happiness. Just down for dollars three days, four days a week. Really built a name for myself with these banks and asset managers because I was getting in stuff and buying stuff. And like I said, From 2010 to 2013, it was just me and the dog literally driving across the country, going into banks, talking with asset managers, speaking at real estate investment clubs. And my business just ballooned overnight. I mean, it was just crazy how much I was walking into banks after banks in Florida, and they'd have just files all the way to the ceiling that we could cherry pick from. It was just absolutely pennies on the dollar at the time as well. And so bought a lot of assets. I mean, we've closed on over a half a billion dollars in the last decade. Actually, it's over a billion now, but people like half a billion dollars is a little easier number to swallow for most people, but started teaching people how to do it in 2010 with workshops and built a name for myself. And now they call me the note guy across the country. But, yeah, that's what built a name company called. We close notes, you check it out online. But we focus. That's what we focus on is buying assets, mortgages on residential commercial properties where the borrower is not paying for some sort of reason. Our goal is then to, once we buy that note, try to work out with a borrower, try to keep them in the property if we can, or if not, work on some exit or liquidation strategy to take the property back and sell it.

Definitely, definitely. So a lot of questions. I mean, let's just start at the very beginning. I mean, you go through the whole cycle. You go up to.08, the market falls out from underneath you. You're just like a lot of people. You're sitting there with bag like, wow, what am I going to do now? And, you know, got you to where you kind of push the reset button. It Sounds like in 2010 you decided that, you know, it was your dog and your truck, which you're in Texas, so that only makes sense.

Well, if you read the Millionaire Next Door, it was a 6 year old white Ford F150 down to the exact.

That's hilarious. But anyway, so you get in there and you start building these relationships with banks. But my question is, in this time of turmoil where nobody had any money, you're going to these banks, you're finding these distressed assets. How are you funding them? Where are we getting the capital to do that?

That's a really great question, Scott. So I didn't have the capital myself. I had a couple higher end properties that I bought that I had to write big checks at the closing table. And, you know, that's not the way you should do it as an investor getting a check, not writing a check. So I leveraged social media, I leveraged LinkedIn, I leveraged Facebook, I leveraged videos talking about specific deals. I would just share that out to my audience and then they would share it out there. So I found people that had money. I found investors that had made money during the RTC days of the 80s, which was a whole basically, you know, pre 2008, 9 and 10. And they came to me. You know, I was, first of all, when I didn't have a lot of capital, I was wholesaling assets to other investors that knew what they were doing. So I'd make 1500 bucks or 3 grand or 35,000 on a 6 unit apartment complex I wholesaled in San Diego, made 100 grand on a 16 unit in LA back in the day. So that gives you a little bit of cushion when you've got some nice checks there that you just keep hustling. So I built up my own stuff. And then as people started seeing what I was doing and they started people coming to me, hey, I got money sitting in IRA making zero. Can I put that with you? Can I partner with you? Can I learn what you're doing and earn while I learn, you know?

Yep, yep. And so really that gives you a lot of good leads. Not only are you helping somebody else to achieve what they wanted to do, but they're in turn bringing you what you need to achieve as well. Because you're, excuse me, taking a cut or taking a piece of what they're doing as well.

Exactly.

It really makes a lot of sense. So, you know, you kind of, you got in. It's such a niche thing to do. And a lot of people do not understand. Why would you want to buy a note that's not performing? They're not paying. Why would you want to do that? So why don't you walk us and the listeners down that path? How do you make money, you know, or how do you go negotiate with these, with these borrowers that are not paying? And do you charge interest on that? Do you get interest on the note that you're buying? Or explain that a little bit for the listeners out there.

So these are all great questions, very common questions we get. So you have to realize I'm buying the mortgage on an asset, on a house or a commercial building or commercial property, that borrower usually owes more than what the property is worth. So let's just use basic numbers. Say they owe 120,000 on $100,000 house. And the fact that they haven't paid that mortgage for three months or six months or a year or two years depreciates the value of that receivable. So I can buy that debt for a fraction of what's owed, whether it's 30, 40, or let's just say 50 cents of value right now. Okay, $100,000 house, guy owes 120 on it. I buy it for 50 grand.

Okay.

I usually buy below 50%, but we'll just use the numbers because it's easy. So a normal mortgage payment on $120,000 mortgage would be roughly around 800 bucks a month.

Right, Right.

Say that. So the fact, if I can get them, if I can then reach out to the homeowners and say, okay, I'm now the bank. Thank you for not paying abc, but you've got to now pay to stay. You know, pay you. No, stay. They still owe 120. Okay. And I don't care what their country western song is. I'm like, listen, I'm giving you an opportunity here. Let's figure this out. Because it's gonna depend on pricing. In states where it's a longer foreclosure timeframe, like Florida or God's waiting Room, like I like to call it, where it can take a year to foreclose. Okay, it takes a year to foreclose. But here in Texas or Georgia or Missouri, where it's like 90 days or less, that works in my favor. So I'll pay a little bit more for those.

But Phoenix.

Yeah, Phoenix, exactly. Phoenix is fast, man. I was buying a lot down in Phoenix back in 2010. Anyway, so they, their monthly mortgage payments say $800 a month. Well, if I come to listen, Mr. Borrower, you're over a year behind. If you can start making your $800 a month payment to me, I don't care if you're out of work, if you can start making that payment, we'll worry about what you're behind on later on. So $800 a month times 12 is 9,600, right. 9,600 divided by a $50,000 investment is almost a 20% return right there, right? Boom.

Yeah, Right.

Now if I get them to pay a couple hundred bucks extra a month to whittle off the rearages, or I can have them bring two grand or five grand to the table, you see how my return, my ROI goes up substantially.

Substantially, Right.

And that's my goal. I want to get them to start paying because then it's cash flow. Then I'm not paying attorney fees to foreclose. I don't have to pay fix up fees to go and get the property or rent ready or to sell it on the MLS. It's a re performing asset after they make six to 12 months of payments. And then at that point, a year later, they've been paying on time. I can sell that Note now for 80, 85% of value.

Because now it's a performing note. Say what now it's a performing note at that point, right?

That's correct, Scott. So let's, if you go through the numbers, 9,600 in payments, let's say I got them to put two grand down just to reinstate, which is what I usually like to ask for as a minimum. So that's 11, six. Now I bought it at 50, I sell, I'm selling it at 85 grand, that's another 35,000. Plus the 11,000, that's $46,000 in profit on a $50,000 investment.

Yeah, that's a very, very, very good return. My next question is how often, I mean, if these people were behind to begin with, right, and they're not making their payments and you step up to the plate and you say, hey, new owner, but you need to start paying me. How often do they just say, go pound sandman. I wasn't paying before, I'm not gonna pay you.

That's a really great question too, Scott. And for the most percentages, you buy 10 notes, 10 distressed mortgages, about half of them are going to get reinstated, provided that they're working, you know, they're living in the house. If somebody's already moved out of the house, you're not gonna get re Performing, you're gonna work on a deed malino or cash or keys or a foreclosure at that point. But there's basically three strategies. Either get it re performing one sort of fashion. Either they reinstate it or they start up again. Or you modify the loan with like a trial payment plan, things like that. Second thing is like cash for keys deed lose. Hey, just, we'll give you money to walk away. If you can't make payments, I'll give you a couple grand to walk away. Or they'll just sign the property over because we won't come after them. And then of course, foreclosure happens a good chunk of the time. You know, 40 to 50%. We're pretty blessed on what we do because we do such an extensive due diligence check on the front end. You know, we're checking taxes if those are paid up to date. If they've made a payment of any sort in the last 12 months. Is power utilities on? Because an occupied asset has a lot more strategies for reinstatement versus vacant. So we run about a 64% reinstatement rate on the assets we buy. And then the other 35% is a mixture of foreclosure and cash for keys.

So, and then if. So once, let's say they get out of the house, whatever they decided not to make payments. Or you do a cash for keys, you give them a couple grand, they get out of the house. Now all of a sudden you have an asset that you either turn around, fix and flip, you wholesale it, you do, you know, or you turn around if it's in good shape, put on the retail market. Is this the case?

That's exactly right. So usually if it needs a, you know, we have paint, carpet, just about everything. But a lot of times we'll sell it as is. You know, we'll be able to move it. Or if we do have to take it to foreclosure, we'll sell it at the foreclosure auction. Not to do any work on and just get a check.

Right.

You know, some people we have, some of our students are taking properties back and then owner financing them or turn them into rentals to add to their portfolio. I'm not a. I don't like toilets, tenants and trash out, so I like to double down. So if I take an asset back to foreclosure, I want to sell it as fast as possible. So I'll list it at 85, 90 cents on the dollar to get multiple bids to bid it up. So I'm not giving in concessions a lot.

Yep.

And then take that money back and then look to double down. Okay, so I bought one, let's buy two or three now.

All right.

Yep. And those three turn into six or nine and it just kind of, you know, cascade it down from there.

So I'm sure that a lot of listeners out there, myself included, how, what is it and how do you get into this market? How do you get into it? You know, where do you go to find these notes? Or do you have to have a lot? You have to be cash heavy in order to buy these notes at the very beginning. You have to build relationships with the bank. Obviously all this stuff takes time and takes resourcefulness. So explain that a little bit.

Well, you've got to be a super grand wizard with a Masonic lodge to get in. I'm joking. Used to be back years ago, a decade ago, prior to 2008, you needed really to have a good chunk of change, roughly $5 million to get in the game. Otherwise you were. Banks wouldn't really talk to you. And then when everything happened with the meltdown we had in 2010, we had a peak of 15 million homeowners underwater.

Wow.

15 million underwater that were in default or owed more on their house is still, it's still average of 1 out of 10Americans are upside down or behind on their mortgage right now. Okay. So it hasn't gone away. So the beautiful thing is all the bigger buyers of debt got scared and walked away. So it left for this huge void or vacuum for investors like me to come in and start reaching out to banks and hedge funds because they didn't have their normal, you know, exit strategies to bigger funds. So they went from requiring you to have like 5 million to buy anything. You know, buy something from us. I've had. Yeah. Get it off the books. Capital One sends me a spreadsheet. I'm sorry, a PDF is 33 page PDF in 6 point font full of notes on everything on their commercial sub million dollar loan amount across the country. And they're like, just buy anything. All right? Buy anything. And so that's the thing, it's different. You're not going to go down to your local bank and talk to the vice president if anybody gets anything out of it. Most of the notes are handled by an internal department in these banks and lending institutions called the secondary marketing department or they're also known as the special asset department. Those individuals are the ones that look at the portfolio, look at what's going on in the market, and they're the ones looking to sell the bad debt off of their books. And so it's just a matter of reaching out to them, their internal departments. A lot of times you got to call the, the main switchboard at the corporate office and get transferred there. Although you can jump on like LinkedIn and type in special asset managers and I'll pull up a list like half a million people that have that in a portfolio. Because there's a lot of lending institutions out there that aren't banks that have this stuff on their books too.

Right.

That's one of the easiest way go to go to LinkedIn. You can jump on like another website like Lane Guide. You can go to the fdic.gov website, pull up the quarterly reports, it's from a bank to tell you what kind of stuff they have in bad accrual loans or bad loans and then just start dialing for dollars for the most part. Or doing an email blasted out is what I do on a regular basis. And then it's just a. The beautiful thing is banks aren't looking for proof of funds for the most part. They're not requiring earnest money. They'll send you a list like I got a list coming in here. In about an hour I'll have 500 different assets from across the country that I can cherry pick from when I'm buying one or 50 of them. If I buy in bulk, I get a bigger discount, but I'll have 30 days of due diligence or longer once we get the list in and get bids accepted. So that gives me the opportunity to go out and raise private capital because that's where we fund most of these deals is with other people's money. And most of it comes from people's self directed IRA accounts, their cash accounts, their solo 401ks. I mean there's 7 trillion in money sitting on the sidelines, not making anything. I'll give you an example. We do a lot with Quest IRA out of Houston and they have $1.3 billion under management and 34% of that is sitting in 0% earning accounts.

Wow.

So that's what we do a lot with marketing out to our databases, out to LinkedIn, out to social media, talking about the deals that we've closed, the deals that we're working on. And then I speak a lot on the subject, obviously every month I'm speaking somewhere and that helps us raise a lot of capital for our deals as well.

Definitely. So let me, let me go, let's go to the dark side of this for a Second, where does things go bad? How do you get screwed? How do you lose all your money? How do you know? How do you. How do you lose out of this game?

That's such a great question. So glad you brought that up. Because we see, I do see people coming into the note game that have no experience. They don't understand it's a different game than real estate. Okay. Because I'm a bank basically, and I act as a bank. I have all the same rights. When I buy a note, I step directly in the bank's shoes. So I have things that I have to do and things that I can't do because I'm fair. Debt collection practices and servicing laws and things like that. So where people lose money is they, A, don't check taxes and they get wiped out in a tax sale. B, they take somebody's opinion, like a bpo, an online valuation, and trust that as the value versus actually putting eyes on the property. You always get to have a Realtor or somebody drive by, take photos, make sure it's still there, make sure it's not a slab or, you know, it's got a lean on it versus being upright. You know what I mean?

Right.

And so that's, that's the big thing. Not checking taxes, not getting a proper value with Realtors, not going off of Zillow or Truly. I mean, you can do that on the front end to get a rough idea, but always before you close, make sure your value. Trust but verify. Yeah, exactly. And then the third thing besides taxes and value is title. We are buying notes that have clouded titles because there's liens and other things on it. So what I mean by title is checking to see what's behind your first lien. And that's a big thing. I only buy first liens. I don't go buy junior lien, second liens or third liens. There are some people that buy that. And that's fine. It's just not my cup of tea. I want to control the property by being the first lien position so that the only thing that can really wipe me out is taxes if I don't pay, you know, and I'm always checking that, but checking the paperwork, making sure that the mortgage is enforceable, making sure that all the assignments of mortgages, all the lounges that transfer ownership from one seller to another, making sure those are in the file, checking the servicing records, you can see what the borrower has said. If they told the previous bank to go pound sand or they've tried to do a Loan mod for three years. Those are the things to check onto it and then taking action. Don't sit around. If you buy a note, your servicers sending letters out and the bar tells you pound sand. Don't just sit on it. I know one fund out of California, San Francisco, they're big in the reo phase. They dropped 5 million bucks on a portfolio of first liens they bought at a great price, and they didn't touch the files for five years.

Oh, wow.

So they finally get around it, messing around with it. Well, 70% of it's trashed or it's gone to tax foreclosure. The files have never been filed or checked properly. So those are in disarray. So they literally basically wrote a $5 million cashier's check and then with a match to it.

Wow, that's crazy. That's crazy. I mean, I think that it is a whole nother game. I mean, it's not your typical real estate transaction, although real estate is the vessel. This is a whole different niche that you know. And let me ask you flat out, how profitable is it? Is it, you know, you got to hold these things for at least a year?

No, no, no, no. I mean, I like holding it because I get cash flow. So that's why I have. My goal is to have, you know, 400 performing nuts that are sending me in $500 a month.

Right? That's good.

That's. That's the goal. But we have a lot of people that are buying 10 or 20 assets in a year, and they're making six figures because some of them get worked out relatively quickly. You know, every. Every note is its own kind of country western song. You don't know which way it's going to go. It's like a choose your own adventure book.

Okay.

Some. The borrowers are really easy to work with, and they're so thankful. And they, you know, with one letter, one phone call, they're paying on time again because they take the opportunity. Others, they just try to stretch things out. So it's important to know, like, if you're buying an estate, what that foreclosure time frame is. If it's a year or two years or three years or, you know, two months. That's important, you know, knowing the days on market. So when you do take the property back, you don't want to buy rural areas. You want to kind of stay in either the primary or secondary markets. So you've got plenty of realtors, plenty of vendors, plenty of people to buy that house. If you need to. And so that's the biggest thing. What's really great too, Scott, is this is a vendor driven business. I'm not the guy making phone calls. I'm not the guy knocking on the doors. I compare myself to be like my own general manager of a franchise, you could say, or I would say Jerry Jones of the Dallas Cowboys. But they got beat last night by the Titans, so I can't really say that too much.

But they got crushed.

They got crushed is a good way to put it. I'm sad, but you don't see Jerry Jones selling hot dogs in the sands. You don't see Jerry Jones out there trying to protect Dak. All right? What he's doing is he's putting people in charge. And so that's what we do. I put my servicing company in charge. They're the ones that are doing most of the borrower reach out. And then when we buy assets, I get my attorneys involved very quickly to send door knockers out. Or if the borrower responds, hey, let's come to a solution in 30 days so that we can then either start the foreclosure process or get you paying back on time and take that nightmare that you fell into, whether it's getting laid off or going through a divorce or going sick, kind of putting that to bed and helping you re establish the dream of homeownership.

Yeah, yeah, that makes a lot of sense. Now. Do what you're good at. Outsource the rest. I've always been a very big proponent of that because you can't do everything. And course it sounds like buying notes is a team sport. You need to have different members of the team doing their part to make sure you get to the goal line, right?

That's correct.

Now, what is the biggest obstacle you've faced up to now?

So biggest obstacle is depending on where you're at, and this is something everybody goes through as entrepreneurs, is we get so used to doing a lot of things ourselves, being the, the jack of all trades, you know, in fix and flipping or wholesaling or marketing. And as you start growing your note business, like anything else, you have to delegate things off. So a lot of people will hit that solopreneur ceiling of like at 20 deals, they can still manage everything. There's paperwork. You gotta learn to hire somebody. Hiring your assistant, a good first assistant, will make you six figures because they're gonna do the things that you don't want to be doing the paperwork or the phone calls or the running to the bank or running to get the mail or you're dry clean, whatever. Most entrepreneurs, including real estate professionals, don't value their hour wisely. They're doing minimum wage jobs when they should be making 100, $250 an hour. Okay. That's one of the hardest things. People don't value their time right off the bat. They're doing little things that they shouldn't be doing. The other thing is if they hit a wall, what's so great about the note industry is it's such a very friendly, small community. Hey, I need a realtor in Alabama. Reach out to somebody. I need an attorney to help me foreclose or who's a servicer I should be using or you know, who's, I've got some deals, who's looking for funding, you know, who's looking to fund a deal, who's opening somebody to work or vice versa. So it's a, it's a small niche, probably around, you know, less than 5,000 true distressed note investors. I'm talking individuals, not like funds right out there. But it's, you know, we share so many deals that we see six to 12 months before the traditional investor does that. I don't get worried about competition. I know there's plenty of deals to go around. And then I have that mentality of if I can make other people successful, it's gonna make me successful as the cream rise at the top. I have a very big servant leadership aspect of what I do to teaching people because it's a different, different animal. You're not gonna see an HGTV flip this house TV show, all right? But the beautiful thing is there is a lot of education online. You got to get trained because there's a lot of little things that can trip you up if you don't know what you're doing.

That abundance mentality really makes all the difference in the world. There is plenty to go around. And especially in this distressed note buying business, nobody understands that. I mean, most people don't understand that, right? So I wouldn't be worried about competition. Now, what is the biggest deal you've done? You mentioned you made 100 grand on one deal in California. I mean, what should a person expect out of an average deal? And maybe what's the biggest deal you've done?

So I'll start. We buy a lot of mini bulks, you know, where our normal trading amount is about a quarter million. Okay. So we buy a lot of, you know, it might be 10 assets here and there, six assets here, you know, for the last four years we've averaged on an annual basis of at least closing on at least one, on average of at least one deal per day.

Okay.

You know, we did 500 two years ago, 435 last year. We'll be right around 400 when we wrap up the year this year. But the thing is, biggest deal, we did 225 notes in one pool. You know, that was a nice chunk of change. I'm working on a deal right now, 227 notes that we're looking to backend with investor. We got guys that come in, they'll probably pay us somewhere, I don't know, three to five points on it just for forwarding the deal to them. Okay. Or we're not taking it down ourselves. But a lot of investors get started. You know, I always say, look, if you're gonna buy an asset, buy something's around 50 grand. You can usually pick it up for like 25. That may be like a doghouse in Phoenix or LA, but it's a nice house in Ohio, a really great house in Michigan or Indiana. So that's where we see most of the deals is in the, and I'm a football fan, so the Big Ten, the Big 12, you know, the ACC part of the countries, they're basically from the Mississippi east is where we see most of the assets and those are what makes the most amount of sense. So you know, 25, 50 grand on a deal that you maybe take back and foreclose on a start side or, you know, $300 to $400 a month in cash flow. It's not a, I'll tell you this, it is not a get rich quick overnight type of investing for the most part.

Most, most stuff isn't, you know, it really isn't. And you know, the people out there that say that there is a get rich quick are lying, they're lying to you. And that's what it always is every single time. My next question was, you know, what type of time should somebody try to commit to if they want to be a note buyer? You know, obviously it's a full time job. Right?

It can be, it can be a very full time thing if you want to do that. But we have a lot of investors that are doing this from their 7 to 2. It's their side hustle, they work a normal job and then from 7pm to like 2am or on the weekends or like 10 to 20 hours a week part time, they're buying, they're getting their feet wet, you know, and one of the Things that I really love. The fact is like we love to give people kind of a game plan for success. How do you get to from zero to six figures in your first 12 months? And that just takes time of making offers. You got to know that if you make 10 offers, you'll probably get one accepted right at the board. So you keep those numbers in mind. If you need to do 30 deals in your first year, means gonna make 300 offers. That means you've got to make 25 offers a month or roughly six offers a week to get to where you want to go. So it's all about knowing your KPIs and building a game plan to get to it. I would not recommend somebody who's looking for that needs cash right now to try to do this because there's a bit of a build up. You know, it may be 60 days before you buy your first asset from getting everything set in place and marketing asset managers and getting stuff close. So you have to keep that in mind. Now wholesalers, you can wholesale notes like you can or traditional piece of property, which is nice. But if you're wholesaling, I think you're making the least amount of money on a transaction when most of the time if you had the investors coming in that would have bought that as a wholesale deal, they often will partner a joint venture with you where you can make a sizable amount of capital.

Yeah, definitely. You know what, I think that's across the board, you know, fix and flipping. You're probably going to make more per deal than if you just wholesale it. And it comes down to the time, right? The more time you put into something, the longer it takes to get something done. Ideally the more profitable it should be because otherwise why would anybody put that time? But Scott, I think we could probably talk for the entire day today about buying notes, the strategies, the way to get into it, problems you've had, etc. But I really appreciate you sharing so far your timeline and how you got to this point and now you're buying these niche or you're in this niche opportunity that is being profitable for you. And I'm sure that the listeners are very eager to learn more about it. But I think this is a really good segue into our lightning round.

Are you ready for the lightning round? Bring it on baby.

Alright, what is your investest tip to keep our listeners moving forward?

Oh, that's such a great thing.

Take action.

Boom. Here's the biggest thing I can tell you. Quit going to workshop after workshop. Quit getting on webinar after webinar. It does you no good if you never take action. So figure something out. Whether it's fixing, flipping or wholesaling or options or note investing, whatever that may be. Focus on something and focus your time on that. You'll be five times more successful than trying to be a jack of all trades and doing things. Don't water down your message. You've heard that 80% of your profits come from 20% of your activities will make your make your turn your 20% of activities into 100% of your activities and you'll make five times the amount of money.

That's huge man. Appreciate you sharing that. It's a good tip. Do you have a favorite book you've ever read that's had a massive impact on your life and business?

Oh my gosh. We've all read Think and Grow Rich by Napoleon Hill, everybody.

Yep. My favorite book.

There's a book that Napoleon wrote in 1938 that did not get published. It's called Outwitting the Devil.

Yep.

Right. It is one of the best books I read, I've ever read. I read it once a year at least. Sometimes I give away 100 copies a year to different people on it. It's a phenomenal book. The reason it didn't get published in 38 is Mrs. Hill was too worried about the fact that in the book Napoleon is having a conversation with the devil about why the devil is so successful at getting people to not find success. And he says in the book, well, those that are focused are the ones that have the most amount of impact in society. Those are the ones that I try my best to get them to drift, to get them to chase the squirrels, to go after shiny object syndromes. Those that can avoid drifting are the ones going to find the most amount of success and have the most positive impact in this world. So what was great is a few years back Don Green, the CEO of Napoleon Hill foundation, found the manuscript, gave it to Sharon Lechter, who is the co author of Rich Dad, Poor dad and is a good friend of mine as well. And literally she rewrote the book, left it pretty much the same, but added segments in each chapter of what she thought or how she thought Napoleon would approach the subject and the conversation in today. And so it's Outwitting the Devil by Napoleon Hill. Phenomenal book. It will be a game changer to anybody that's read it.

Thank you for sharing that. That's actually one of the books I have not read. I know about it. It's in my Amazon, just click to buy. I just haven't bought it. So now is my time to go buy it. Thanks for sharing that great book, man.

You will not be disappointed, buddy. Quit drifting, go buy it.

Who has given you some really good advice? Of course I'm sure you mentioned about being mentored and coached. What's the best advice you've ever been given and what has that impact been, man?

My buddy Greg Reed, who many people know is thinking grow is straight from gold. He's a co author of that one. I'm very fortunate to call Greg a mentor and a buddy of mine. Greg gave me some great advice years ago because I think as entrepreneurs, especially when we start marketing and we get out there, we leave our jobs and start doing our side hustle more so we get so concerned about others opinions of us. Greg told me just to worry about the 33 rule. If you take a look at your tribe, your circle of influence, 33% or a third of your audience is going to love you because they know who you are. They love you. They're there to support you, love on you, help you, support whatever you need.

Okay.

There's 33% of your group though that are just ugly people. They hate you. They're not going to like you no matter what you do, who you are. They don't care what your sex, your race, color, whatever ethnicity, they don't care. They just have a dark soul in their heart. Okay. Oftentimes though, when it's us as marketers or entrepreneurs, we don't worry about what the 33% that's good side. We worry about that one or two person in the dark side that says something bad about us.

Yep.

Best advice Greg ever told me since quit worrying about the 33% that hate you. They're not gonna pay your bills. So f them worry about the 33% that love you. And then that middle part, middle chunk that's on the fence that doesn't know you go out and wow them and eventually that's 66, 67% of the audience out there. Eventually you keep doing a good thing, being who you are, not somebody else. Eventually that 33% of the outliers will start coming over to the good side and be like, oh, I knew Scott or I knew Steve back when he was just getting going. He'd be like, yeah, whatever, asshole.

Hey, man, no, that's huge. I think it's really important for everybody to think about that because it's human nature, I think, to really be focused on people that don't agree with your opinion or don't agree with what you're trying to say. So that's huge. Thank you for sharing that. We're blessed, very blessed. Right? How do you like to give back?

Man? We've done it in a couple ways. First and foremost, we are big fans of our past and present military and first responders. So we have workshops that we teach all the time. We comp our military into those. Any first responders as well, we compliment. Second thing, with it being the holidays, we're big about kids, alright? So we give a lot, we do a lot of dollar matching, dollar for dollar to like toys for tots or other charities. For that too, we've donated, golly, half a million dollars the last few years to a very special program out in San Diego that helps do volunteer surgeries for kids that have facial deformities or birthmarks or things like that. Then we're also very active with Make a Wish foundation as well too.

Man, that's huge. Those are two major things that are very impactful, not only in the military, but also kids and our youth that are growing up to give them the right direction. So thank you for that. Where can the listeners find you? I guarantee you that they're wondering about what? How do I get into buying notes or they just want to know more about you. Where can they find you?

Really easy if they go to weclosenotes.com and they can go there and we've got all sorts of information if they want to. If they pull out their phone that they're listening to this on or watching this on and text the word notes N O T s to the phone number 72000 and send it. It'll send them back a text message, opt in and get free over 80 hours of free video. Not trying to sell them anything. It's free hours, 80 plus hours of different webinars and coaching calls that we do for people. Every Monday night on the note business we tackle a different topic and it's my gift to them to help them kind of get their feet wet and learn some of the ins and outs of note investing.

Man. Scott, thank you so much for being here today, man. You've given so much value to all the listeners, myself included. This niche is something that I would even look into on a part time basis because it's another tool and tool belt to go out and do more deals and ultimately, you know, be successful. So thank you for sharing that. Thanks again for being here and we'll talk to you real soon, man.

Thanks for having me. It's an honor.

All right, Talk to you soon. Thanks. Bye.

Bye. For more ways to connect to your.

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