We Close Notes: How To Buy Real Estate For 40% Off By Breaking Into The Secret World Of Real Estate Note Investing With Scott Carson From Expert Authority Effect Interviews With Mario Fachini

Sam.

Do you want to invest in real estate? I bet you do. Because you know real estate is not going anywhere. Everyone needs a home to live in. They need commercial buildings. They need this. So if you're thinking about investing, how do you do it? What's the best way to do it? Well, that's why I'm excited to have best selling author, speaker and CEO Scott Carson on the show today because he's going to explain how he helps investors close deals with notes and how you can too. I'm going to bring them up right after we thank our sponsor. Every business needs a book, including yours. Visit freebusinessbookpublishingcourse.com today to learn the seven steps to publish and promote your nonfiction lead and profit generating business book in eight weeks. Once again, that's free businessbook publishingcourse.com here. He's late. Here he is ladies and gentlemen, Scott Carson. Scott, how are you feeling today?

Hey, I'm doing wonderful, Mario. Honored to be here. Excited to be here. I should say it and just, just blessed I'll put it that. How's that sounds a blessed, blessed day. Hope everybody's having a great time out there today.

I will take that. And I know we're going to have fun. We could talk about anything and it's going to go great. But I am wanting to know why should someone get into real estate investing? Did I even, is that a word? Whatever. I said why should anyone get into real estate investing and why should they do it with notes?

So that's a really great question. So right now with so many defaults and people not paying their mortgage, it's a great time to be buying real estate. It's a great time to be buying in distressed assets. And the reason I love note investing and it's been my primary niche of focus for the last decade plus last 12 years, is the fact that in the note investing side, when you buy the note, you're really not buying the property, you're buying the receivables. And so when I buy a note, or in my case a non performing mortgage where somebody hasn't paid their payment in 90 days at least, if not longer, we are buying that receivable from the bank at a big discount. It's like, you know, it's like the clearance rack, I guess you could say we're buying that. No, that shirt still looks good in the clearance rack. It's just that it didn't fit with the right thing with the bank. So we buy that debt, that mortgage at a big discount. We then become the bank and have all the same rights that a bank does. And we make our money by working to keep the borrower actually in their house. And so we love to, when we buy the debt, since we bought it at a discount, it gives us a lot of flexibility to reach out to the homeowner and say, hey, what happened? Tell us your country western song. You know, did you lose your job? Did you get divorced? Did grandma get run over by a reindeer? You know, whatever it might be, okay.

There'S always a dog.

There is the dog. But I love dogs. So, yes, dog ran away with the ex wife. How's that sound? But you buy that debt at a discount, it gives you a lot of flexibility to work to keep the people in the house. And so if you can reperform or modify the loan, that's usually a really good return on investment. And as far as monthly cash flow. And then if you get them performing for a while, for 12 months, then if you bought the note at a big discount, usually 30, 50, 60 cents off, you could then turn around and sell it at 30, 40, 50 cents on the dollar profit after 12 months. So everybody's in the note game. Whether you believe it or not. If you've got a car loan, a student loan, credit card, you owe Bubba Joe down their street 500 bucks or a mortgage, you're in the note game. You're just on the wrong side of the payment stream. And our goal has been to help make America Great again, one defaulted borrower at a time, for the last 12 years.

And how well has it been going for you?

It's been going well. I mean, obviously the country went through a bit of a shakeup in 2008, 9 and 10 with a great recession, but we bought a tremendous amount of notes over the last 12 years, over a billion dollars in distressed debt on single family homes, apartments, commercial property. We buy debt on just about every type of residential commercial asset. And when we buy the debt, we're seeing deals directly from banks, and we usually see them at bigger discounts. And we usually will take these deals down 6 to 12 months before your conventional investors, the people that love to watch Flip this House or Flip or Flop or your landlords, we'll see deals that they'll never end up seeing because we bought the debt, became the bank, and then worked out some sort of win win with the borrower.

So you're saying at a deep discount early on, and I heard you say 30, 40, 50 cents on the dollar. So it sounds like there's A pretty substantial margin in there. What, what are you doing to help the people and what are you doing to help the people get back into it? How do you structure it? Where if they still owe 23 years on a 30 year mortgage, how do you get them to get back on track and then get caught up again? Because I'm sure you and them don't want it to take longer. Do you keep that note for the next 20 years or is there a point where you can sell it back to the bank and you take your profit?

Yeah. So yes, basically we don't hold on to stuff for 20, you know, 30 years for the most part. Usually it's 12 to 24 months. Okay. And our biggest goal is let's give some numbers to it. So I'll actually give you a deal in Detroit, Michigan. I love Michigan. Okay. Bought a lot of real estate up in Michigan, from, you know, Bay City down to Michigan. I buy a lot in Flint, you know, I just don't drink the water, you know, out west to Jackson or Kalamazoo and all over Michigan. I love Michigan. But anyway, we bought a note, a borrower owed 120,000 on $100,000 house. They were upside down, they hadn't paid in a while. Okay. Or the. And then the property value dropped a little bit because there's foreclosures. So they owed 100, they owed 120, $100,000 house.

We bought the house worth like a buck and a half originally or something that.

Well, it was originally worth about 110 back in the day, but it dropped off in value because of foreclosures and things like that.

So in a way they are really not in the right direction.

No. And when you add in they had made mortgage payments in over a year that went into that $120,000 balance too. They'd been laid off or working part time. It was a variety of things. So we bought that debt at 50 grand. So they owed 120 plus some change. We bought it for $50,000 because we usually pay 50% of value house as is value was 100 borrower. We reached out to him immediately and said, hey, what's going on? You know, the beautiful thing is when we buy this debt, we see a lot of the behind the scenes numbers. We get to look at the loan documents, the paperwork, the call history between the borrower and the bank. If they were friendly, if they were not friendly, if the borrower mailed in hardship letters or tried to do a variety of things, we get those to look at and this borrower been trying to do a loan mod for a couple years. And so we knew immediately that they wanted to stay in the house. When we had our realtor drive by the property, take a look at it was in good condition. They had the flag out on a holiday, little kids, toys. They had some emotional equity in the house, but not any equity. They were negative equity. So when we bought the note, we reached out to them immediately. And we use third party servicing companies, I'm not the one calling. And immediately takes third people, third party people to do it. They're licensed to do that. So they reached out the bar, picked up the phone, they said they wanted to stay in the house. And we found out what happened. You know, job loss and their businesses shut down and they like, we'd like to stay. So my servicing company's like, well, could you start making your existing payment? And they was like, yeah, I could do that, but I'm upside down. I'm like, we'll get it. So listen, if you make, if you start making your existing payments, I think it was like 575amonth. Start making your existing payment of 575amonth. After 12 months, we'll recast the loan, we'll remodify the loan. Okay, so what that means is after 12 months of payment, we would forgive, we would reevaluate their property. And so if they say it went up to 110 instead of 100 and they still owed 120, well we would forgive that. 10 grand in debt. So that they were basically. In some cases we've bought loans where they had like a 9% interest rate where we said, okay, pay for 12 months on time and then we'll reduce your interest rate down to 6% or 8%. In one case, the lady who lived in a house for 18 years refinanced out, put some equity out of the property back.