The Ten Commandments for Note Investors

Foreign.

This is the no Closer show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property. For panties on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now here's your host CEO of We Close Nodes, Scott Carson.

Hey real estate investors.

If you have ever wanted to dive into the sexy side of real estate and become a note investor and not just somebody that owner finances properties or buys and sells on terms, but somebody who's actually buying debt from lenders, mortgage bankers, hedge funds on distressed real estate on both residential and commercial properties. Now is the perfect time. And guess what? We have our upcoming three day workshop here in just a few days on July 25th, 26th and 27th. That's right, that's a Friday. Saturday, Sunday. You can join me live on Zoom and our Note Buying for Dummies workshop. We'll go through the Fs of how to find fund and flip non performing notes at huge discounts without having to use your own money. And we'll show you all the different ways you can make money being a note investor. Day one's all about how we find these deals from banks, hedge funds and how you can automate the process of connecting with these people and get tapes and listen to you over and over again. Day two is all about raising capital and marketing. We'll show you how to tap into thousands of IRA investors who are looking for deals to fund and how to communicate and how to contact them and get them to fund your deals. And day three is all about the flip the exit strategies putting deals together. We'll mix in due diligence. We'll mix in the marketing side along with the structure side. So much stuff in three days live on Zoom with yours truly, the note guy, Scott Carson. Make sure you get signed up by going to Note buying for dummies.com or click on the three day workshop tab on our workshop. Get signed up today as we're still running discounts and you too can soon become a no buyer.

Foreign Good morning, good afternoon, good evening everybody. Welcome this episode of the Note Closed Show. As always, Scott Carson, excited to be here today. Today's episode is all about the ten Commandments when it comes to note investing. Now. Yes. Am I talking a little bit kind of in throwback to the Ten Commandments movie, Charlton Heston back when I was a young wee lad, you know, three hour four hour biopic about Moses and the ten Commandments that God gave them. But today I want to share kind of a different Ten Commandments. Now this doesn't have anything to do with due diligence or raising capital or evaluating up. These are 10 things you really got to keep in mind as a note investor to find success in the long run to help you end up going to that note, investing heaven in the sky, okay? And I see, I see investors making these mistakes or making these sins all the time when it comes to their own personal investment or portfolio, what they're doing. And the first one kind of spun off of. Somebody called me up and asked me a question about a note they were getting ready to buy. And I was like, as I'm pulling it up and looking at the numbers look good. But when we actually look at the asset, I'm like, oh, this doesn't look good at all. So the number one, we'll start with the first commandment, okay? Number one is never buy a note on a property that you don't want to end up owning the asset. If somebody's living in a property and you're buying it at a good decent price, you have to realize if you end up owning that asset, guess what, you're going to probably have to rehab it, repair it, and then do a lot of work to it. So I'm not a fan of buying ugly properties. I'll buy sometimes notes in smaller cities than what most people would do. But I don't mind owning that ass because it's a decent looking asset in a community that I know can move. But if it's a pos, like I'll give you a great example. I was getting ready to buy two performing notes from a fund a month or two ago down in South Texas, down in the Valley. Performing. They weren't the biggest of assets. I mean, they were kind of smaller valued assets, smaller payments in the most part. But I was like, oh, at least we get some higher. Then I started looking at them as I sent my property inspector by to take a picture of the property. I'm like, yeah, no, grass is tall. I swam. You live in it. But it's probably never been outdated or updated. Needle a whole lot of work. And then the work putting into it would be a whole lot more work. So number one, never buy a property to end up owning or taking an asset back. Important thing to stay awake from the woke states. Okay? You're seeing a mass exodus of people leaving California crime, going up in Portland, Oregon City, Chicago, dealing with issues. Walmart's moving out and stuff like that. I hate to say this, I'm not, you know, I'm not usually I'm pretty anti political in a lot of cases. That's the whole bar tender, you know, two stubborn, don't talk about religion, don't talk about politics. But you can't but help but talk about politics these days with the way the world is. So one of the big things stay awake from those woke cities where the borrowers or tenants or do something. I mean you've seen some very disastrous policies in cities where they're starting to pay criminals who are paying people to leave houses instead of evicting. Takes forever to evict somebody or anything under a thousand dollar crime. They're not even processes or time to rest. Just seriously, anytime you see cities like that, you're gonna see investors mass migrating to get the hell out of Dodge. So that's why I don't buy in Chicago anymore. That's why I don't buy in like Portland and some other states like that out there. Just better bang for your buck than working with investor friendly cities. Okay, another thing, never buy for just one exit strategy. This is three. This is the number three. When it comes to number three commitment, never buy an asset that you're just going to profit from. Performing, performing or foreclosing or Dean Lu. If you only have one exit strategy, you've got a lot more opportunities for things to go wrong. Not necessarily in a bad way, but if your exit strategy is to oh I'm just going to foreclose in the proper well then suddenly the borrower brings money to the table and now it's only a now it's a performing note because you have to give the borrower right to get caught back up and it's a low ROI that's on you. Or if your one strategy was to get it reperforming and you're paying at a higher price, but then the borrower defaults, you got to foreclose and now you're sitting in above, you got to rehab the property, do some other things and you're upside down in water. Yeah, that's the thing. So always make sure that your assets you're buying have one, two, preferably three exit strategies that's gonna make money to either re performs cash for keys or three, if you foreclose, you'll still make money on it. Okay, number four, the number four commandment is follow up, follow up, follow up, follow up with people that you make offers from. I'm amazed. This is the one of the biggest things that investors don't do. They don't have any type of follow up system, any CRM, any calendar to follow up with people in a timely fashion. Because the more time an asset sits on a listing website or on a bank's books that's non performing usually the more motivation that seller has to move the move it off their books is they're paying for servicing especially it's non performing, they're paying monthly for servicing costs. Taxes are getting more expensive that they, they, they got to take care of and it becomes more of a detriment to their portfolio. So you know, we make an offer, we follow up 30 days which is not accepted. We follow up 60 days and not accepted, follow up 90 days. Some of the best deals are stuff that we've negotiated 90 to 120 days out from when it first came across our books. And we just followed up because the bank, the seller, the asset manager wasn't that smart at marketing nothing. Not that saying they're stupid, they just didn't have the tools for CRM, didn't have a big database to reach out to people. So you never know what the motivation is. But usually increased time on a platform, increased time for sale means a bigger discount and maybe that note will be on clearance at some point. Okay. Especially as soon as we get to the end of the year is right now a lot of banks are really kind of uneasy and looking to probably start taking some discounts off their stuff. Okay. Number five commandment. This should go without saying, but know your buy box, know exactly what you're looking for, know what parameters you're looking at. The 50k to 500k in most markets. Some people I just want to buy in hardest hit fund states. Well that's not a good buy box. As hard as IT fund states don't exist or hardest hit funds don't exist anymore. So know your buy box since stick to don't be buying, we're one off assets unless you've got something special lined up for that. Okay. I don't like to do empty properties for the most part. I like to do vacant properties for the most part. Unless it's in a couple states that I'm okay with if I have to rehab because I've got the team of people there. So know your buy box. It's very important. If you say I buy everything, sellers know that you don't buy anything. Okay. So don't be one of those people. I buy everything. No, you don't really. What are you looking for? I mean what your Buy box is your steak and potato, your vanilla. What, what's your traditional buy box? You can still do the outside things that's uncrossed. But your major buy box is what you want people to know what you're looking for. Okay, Number six commandment, and this is a big thing is that the servicers work for you, your vendors work for you, you don't work for your vendors. Okay. There are some servicing companies out there that don't have that mindset like, oh, we don't work for you. Yeah, you do. You need to get off your ass and put your people to work there. I've seen some servicing companies service literally just fall off a cliff because the owner, the operator, the head honcho over there really isn't that motivated in providing service to their clients. Because that's what a servicing company is supposed to do. Be providing you with service in the bar outreach. And you're supposed to dictate to them what you want them to do. Now they've got their specific things that the follow with a fair debt collection practices. But if you're not getting service by your servicer, you need to find somebody else. Okay. And that's just not your service. It's your insurance company, it's your due diligence companies, it's, it's realtors, vendors, that kind of stuff. You work, your vendors work for you, you don't work for your vendors. Okay, Number seven is a mistake. I see a lot of people is nickel and diming their business and that's is that they step over dollars to save a nickel. Okay. And anything you can do to speed up the velocity of capital. And by the velocity capital you can get to an exit strategy faster. Offering it cash for keys, sending out a, a trial payment plan with a certified letter. So something really to sign off or sending out a mobile notary to meet the bar, to sign off on a property sign of assignment or anything you can do to speed that up is going to speed up your velocity capital. Because instead of it taking two, three months for somebody to come to the table, it's done in 30 days. I know an investor who runs a fund. I can't believe he's still in business. But he was literally send out a snail mail. He wouldn't go pay for FedEx to send out documents, he'd send it via snail mail. So there was no tracking. And then you're waiting to see when it was received. There's no tracking from where you see the borrower signed on it. That just, that's Such as drives me bonkers. Send out a mobile notaries, pay the extra125,250 bucks. Pay FedEx overnight. Send in a self addressed stamped envelope or sending a return envelope from FedEx so that you know it's signed and then it's dropped off and sent in. These are things that speed things up. It's a cost of doing business. But if you can get your money in faster, you end up making things. If you can get a borrower to sign the property over to you in 30 days versus six months, you just really quadrupled your ROI than what it would have been before. Okay, number eight, this is something dollar. I call it the dollar cost averaging your portfolio. Now some people, and I've made this mistake before, that's why I threw in a commitment. Here we get so bogged down with oh, I gotta buy a specific dollar amount or a specific percentage. I'm not gonna go above that. That's good. That will keep you in parameters safe. But sometimes the deal may make more sense for you to go a little bit higher because you're maybe getting a deal another deal cheaper. All right, I've had students in the past who were got all upset because one deal went really south for them. I'm like, whoa, aren't you buying more deals like yes. Don't you have a bunch of other notes? He was like, yes. Well just make up the profits or the losses on this one deal with your profits off. These others your investors are no, things are going to go wrong at some point. They just want to have some sort of action plan. I am going to pay you out of this other asset or I'm going to transfer your, your, my interest in this asset to you to make up for what it is. But dollar cost average of portfolio. Not every deal is going to be the perfect cookie cutter price point. Some you're going to get cheaper, some are going to hire, some you're going to pay more in foreclosure servicing costs. Others and others you realize keep track of what's going on in dollar cost average portfolio highs and lows. You know, not everything's be perfect. Not everything's be a home run. You have a lot of singles and doubles along the way and then the casual home run and sometimes you'll hit a grand slam as well too. Okay, that's number eight. Number nine commandment, let's make multiple offers. Quit trying to find the perfect deal where it's everything is perfect. I had a student one time like oh, he turned down like 10 different deals. I'm like, why are you turning down these deals? These are great deals. I need the perfect deal. I'm like, these are perfect deals. You want something that's foolproof, and if that's the case, you keep looking for the perfect deal, then you don't need to be investor. You literally turn down and I literally kick them out of my coaching program, refunded his money back. I was like, you're impossible. I can't deal with you. These are great deals. These are deals that I would do. And if you're not going to do them and you're not coachable, so there's no perfect, perfect deal out there. But the great thing is people oftentimes overlook great deals because they're only focused about what one deal, the best deal possible. If you're buying the best asset or the highest roi, guess what? Other people are going to be on that one too. So make multiple offers. I got to give a big shout out to one of my students, Taylor. She made offers on 20 assets recently. Well, out of the 20, 17 were declined, but three were accepted. And I'm like, that's. She's all excited about this, but if she just made offers on like one asset, it probably wouldn't have been accepted and the others wouldn't have been. She said nothing. So now at least she has three offers that are accepted. She's working through those to get those going through the due diligence process and starting that whole thing. But she's so much more excited versus making just one offer and being scared. But make multiple offers. Not everything's gonna be accepted. Even if it is all accepted, guess what? You're probably gonna kill a lot through due diligence and working everything down and fading your bid and other things will pop up. Okay, that's number nine. Number 10 is probably one of the number one. You gotta get educated. You can't be an idiot. Yes, it's great to Learn everything through YouTube, university and podcasts is why we have it. Frame. And you got to get somebody on there to educate you, because my experience, somebody else's experience is going to save you so much grief and speed up the learning curve from six months to six weeks or 60 days is the thing. But you're going to learn more by doing. You're going to learn more about buying notes than by pulling the trigger in your first deal, by taking action, by making things happen. But that's the thing. You can learn, learn and learn all you want, but if you never take action, you're never going to find success. And you're gonna Like I said, you're gonna learn more about that first deal first. 34 notes you do and you'll feel a lot more prepared for different things. Things are gonna happen. New things happen all the time. Always keep learning, but pull the trigger. Make offers. Get things done so quick recap of the ten note commandments 1. Never buy a note on a property 1. End up owning. 2. Stay away from woke states and cities. 3. Never buy just with one exit strategy that's working. 4. Follow up follow up follow up 5. Know your buy box. 6. You direct your servicers. Your vendors work for you, you don't work for them. 7. Speed up your velocity capital by expediting things. 8. Dollar cost average of portfolio not every deal is going to be perfect cookie cutter. Some are better than others and it's an average. Okay. 9. Make multiple offers. Quit trying to find the Perfect deal number. 10. 8. Education is key, but you learn more about pulling the trigger. So hopefully this episode was valuable to you guys. Go out, take some action. Check out our classes@weclose notes.com if you always want to. You know, you're more than welcome to pick up the phone or schedule a call with me by going to talkwithscottcarson.com but I'm here to help you guys. Go out, take some action buddy, and we'll see you all at the top. Bye.