How a Beginner Note Investor Navigated First Purchases and Hidden Costs | Real Estate Notes Show

Episode: Interview with beginner Note Investor - Peggy Mitchell Dave's Goals and Plans: - Conducting interview with Peggy to discuss buying a loan for the first time and struggles faced - Wanting to help others understand the note investing process through Peggy's experience Key Recommendations: - Obtain formal training before buying any note - do not jump in without education regardless of risk tolerance - Develop strong understanding of real estate, money, and finance fundamentals before entering note investing - Build detailed spreadsheets accounting for all ancillary costs beyond purchase price to accurately forecast expenses - Thoroughly conduct due diligence using multiple valuation methods: Google Maps/Street View, drive-by inspections, BPOs, Zillow, and appraisals - Never raise investor money until you have successfully managed your own capital and proven the strategy works Topics Discussed: - Importance of education and training programs before note investing - Trust and transparency issues in the small note investing niche - Hidden and ancillary costs associated with note investments - Due diligence processes for evaluating loans - Managing investor capital and JV agreements - Real-world loss case study: duplex with structural damage Guest Insights: - Peggy emphasized that training programs oversimplify note investing - actual costs are far more complex than presented - Experienced trust issues early on with service provider connections and kickback structures in the industry - Ancillary expenses are the most critical factor missing from training and the primary cause of investment failures - Demonstrated integrity by absorbing losses on investor capital rather than defaulting on JV agreement terms - Recommends only accepting investor money after successfully proving profitability with personal capital first everyone Dave puts from jkp Holdings here with Peggy from arrow Emeril Tom buy investments so we're doing as an interview with Peggy today to discuss buying a loan for the first time in some of the struggles and issues that Peggy had with going through that entire process she's not a big investor but she's one of the new investors that bought just a few loans and she could touch about things that she struggled with as a single investor buying loans so Peggy thank you for joining us and I appreciate you coming on today and we have a few questions for you hopefully you don't mind but we want to make sure that you're willing to help others do this process thanks for having me Jeanne I'm I'm happy to share my experience if it helps somebody else that's absolutely great awesome thanks Peggy so can give you a little bit background of how you go into Nuits and what took place I'm sorry can you repeat the question yes sure my unities so can you share a little bit how you dhanji notes and what your background was gosh you know that's an interesting question so um I'm not even sure how I got into I was I was listening to something and you know somebody somebody mentioned you know got Carson and I think he was doing a it was a workshop that was free to you know people a military past military military spouses kind of thing and so I took that workshop and that was kind of the beginning of my my notes journey if you will and from there you know we we did the note camp 101 which led to you know the fast track several mastermind events after that I took some local horses from our local RIA on on notes they had far less of an offering you know but they absolutely did have some workshops and there were a lot of similarities there were some differences and it was a little hard to discern which was the right path to travel because of the differences but it was all still you know it's at that point I think you're just you want to be exposed to as much information as possible in that space so you want to try and be as educated as you can be know there's um you know I have heard people say you know just jump in you know and and while that's all good fine and well for people who have a much higher risk tolerance I believe in being educated and having an understanding of what you're getting into and how you're going to manage it before you do that that's awesome um just for where do you live currently where is these RBI's there you go over to I'm sorry I'm in Delaware okay I'm in Kent County we only have three counties where small state so but our REI has you know they do service all three counties so they have a group for Newcastle Kent and Sussex County I time mostly in Newcastle because I live in Newark which is in Newcastle County wonderful so you said you had some formal trainings right how'd you feel without my best mate rays out there they're all good so how did you feel that that prepared you for buying alone um so I like to think that a lot of the information was really hugely beneficial right but then I will say early on like especially after I purchased my first note there was a specific structure that you were supposed to go through to get to things that you need it like if you needed Polaris you know to take on you know borrower negotiations to try and get that note back up and running or paying or you know negotiate a payoff or whatever the case would be you had to go through another person like there was a connection and so very early on I became really leery of this what I would call kickback structure that had been put in place and I actually received a phone call kind of reaming me out because I didn't go through that instruction I jumped over that connection and and it wasn't it actually wasn't the case at all I didn't jump over the the connection I reached out to the connection who never returned my calls or emails and then I jumped over you know and made the direct call to the to the service provider and so I became leery pretty pretty early on and that did create some genuine trust issues for me because it is hard to know who you can trust and who's just taking advantage of an opportunity to make money essentially at your expense and you probably know this space is very small right we're a very small niche of real estate investments so wouldn't you get done with these trainings did you feel comfortable buying your first loan I think I think for the most part I did and I understood very clearly that you know there is potential for loss and I'm sorry I was I was okay with that you know like I was in a place where I felt confident that you know if I needed to take a loss that I could do so without it being you know devastating to me personally or financially you have raised money for this or we're using my behaviors not okay and and I will say that I think for me you know I have a I have a very high level of in respect for someone else's money right and I would choose and I would treat their money like I would treat my own money so if I'm going to jeopardize anything it's going to be mine first and then once I feel like I'm in a place where I have real we kind of gotten it down and you know and I can make it work and be lucrative then I would be willing to take on someone else's money now there was a time I'm not with my first asset that was strictly on my money my second asset I did have investors and we we took a loss by I totally owned it and and I took the loss on my end and you know in the beginning our agreement right I can't remember what you call it like a JV agreement it was like a JV agreement so the agreement had some language in there which was a little contrary to everything that I have been taught right that people just give you their money and there's you know there's no tie there's no promissory to them there's no personal liability to them they understand that there's you know some level of risk that they could lose their money so you don't take money from people who obviously don't have it to lose I don't necessarily agree with that philosophy but you know so in this in this JV agreement there was some language that said that there was a minimum interest rate that I was agreeing to pay back to the JV investors and then it said in addition to that there was there was a percentage split so and that was that was very unusual you know and all of the education I had been exposed to it was it was just you know hey you know I'm not guaranteeing you anything there's potential that you could make this kind of money on this kind of a return on the investment but you know if it doesn't work out it doesn't work out or you just do a split you know that whatever it is less cost you know we split it 50/50 or what have you so in the beginning I was very nervous about that because I kind of felt like you know it is someone trying to put me in a position that's not healthy for me to be in but then after everything we went through the whole process we had meetings every week and we talked about where we were in the process and what was going on and I felt like I did a really great job of mana the asset from beginning 10 we did take a loss because ultimately the borrower had it was it was a duplex we owned both units in the duplex but the borrower had literally cut through the adjoining wall in the duplex so that he didn't have to walk out the front door go over the other door to get in the other side so it just cuts through the adjoining wall and the other side had been completely stripped down down to this stud ma so there was like no value in the other side at all and I didn't know until we got till the end of it you know after we came back that the fact that he had cut that hole in the adjoining wall meant that everything then had to be brought up to code and to do that I mean we had gotten some estimates from some vendors and did you that was going to be well over a hundred thousand dollars and there was just there was yeah I didn't have that money you know to do that um we did take the loss but I I respected our Jamie agreement and I was thankful that that minimum percentage rate was in the agreement and that you know and I could absorb that that that I was comfortable with it so they did get their ten percent in proceeds for lending their their funds to the you know to the UM to do yeah to the deal um and I do believe that you know if you're gonna be in the space you have to be that kind of person you have to have that kind of integrity about you so with that said I know that you did a few different training programs out there and you found helpful would you bought a deal without three programs or would you recommend even doing it I would never buy a deal without having had some kind of training or been exposed to it on some level no as a matter of fact I mean I think through the training I was even subjected to other types of investing options like something to investing but which I have done and I have been much more successful with what stars what we were talking before camera what were some of things you feel that are missing what trainings out there that investors should learn before getting into the space it's maybe not taught or expressed thanks gratefully as it should be right so I mean obviously there is a lot to learn and to know and I I don't can't say that I think any one training program captures everything it's not the intent of the training program to literally take you by the hand and educate you on absolutely everything that you could possibly need to know in this space but you should have some general sense and knowledge of real estate of money and Finance just in general you know to to take you on this this kind of journey really recording that one of things that you wish you learn better with a calculator absolutely so there are so many components to note investing right I mean when you go to the training it kind of it kind of makes it looks a little simplistic in the sense that you know here's your purchase price you know here's fifteen hundred dollars for foreclosure cost you know here's a thousand dollars for you know third party negotiator or something like that that's not what they called it but you know and and this is your net and here's your own wine it's just not that simple there are so much more involved and and you need to know what those things are so that you can prepare for them and put something in your spreadsheet to give you a baseline for what you can anticipate you're all right to be given all of those ancillary costs there's a lot of expense associated with notes would you say that's probably the key item that you need to know as an investor that may be missing some courses but that's the key item um I would say that that that by far is the most important thing to know and understand because that's where everything goes awry once you've secured your asset and major purchase then all of the expenses start kicking in and if you don't know that to expect them and to account for them they they can have dramatic you know effects on your bottom line so if you bid 55 hours from a UPB because that sounds good right it's a traumatic good strategy I agree right even sometimes digging 80% of you could be could be a terrible thing right I know about that how to really do diligence like how did you go about looking at the loan or the loans would you do you hire someone did you look at Zillow what you did we do so I certainly did all of the things that I as an investor could do right you know go to Google Maps and Street View the property and have somebody do a drive-by the property get a BPO and the property to kind of get you know some estimated value for what's going on in the market you know for a property that has that many numbers of bedrooms and bathrooms and square footage and all the happy stuff but I also say that you know I mean you do three estimates right your Zillow your you know appraisal and on all of those things against a BPO but I will say that there's it in in this space there's especially in the lower level assets right there's there's just a lot to say for those BPOs and and those online appraisal values they're just not they're not enough you know they're not they're just they don't contribute the reality that you need to know and understand about what you're going to be dealing with if you make that purchase so you know obviously look at other things you know like how many how many payments are left Gino versus you know what you can what you'll get back you know if those payments are all made why you should also I think factored in some kind of loss on those payments because most borrowers don't know so you mentioned you know part of valuing the property how about reviewing the collateral and understanding the state timelines so I I have been personally subjected to a bit of legal background so I did understand a lot of that the the one component that I never really appreciated was the value of an ax launch right so the assignment you know that's pretty understandable but the allonge was like I'm not I'm really understand you know what the value of that is and and I actually caught into some trouble because I didn't understand that you know the seller of an asset you know said oh well that that you know these documents aren't aren't needed anymore so we don't need to provide them to you when you purchase this file and in fact according to the legal system they are still very much required so in my most recent note purchase which I still have I had to go back and pay somebody years later to to go back and try and get signatures for launches and assignments that we're missing from the file but we absolutely used you know as part of our due diligence we used all of the providers of service providers they're out there the Polaris's the richmond monroe for you know file storage collateral review chain review you can review your own collateral you hired outside yeah I paid somebody to do all that yeah because I felt like you know and you should feel like if that's the business that they're in you know that you can be pretty confident that you're getting you know you're getting good good advice backs better then you would review it yourself that's not always true you know people make mistakes people are human and as a result of that even the best-laid plans you know are subject to go right so the next step is a fun servicer how'd you pick a servicer for me it was I really tried to focus on you know the less change the better right so I wanted to stay with the current servicer if that was possible and sometimes it wasn't until after I mean even if you ask you know will the service or take the file and you know if you get yes and then you make the purchase and then you find out after the fact oh well yeah servicer has changed they're in a protocol and they don't do single files anymore so now I have to go find somebody else and that created some delays and the transfer time which also then created delays and receiving the payments like there were payments I didn't get because the file didn't get transferred so the seller kept those payments which then affected my ROI yeah and I bought like the dickens to get them back and there I was not getting them back so that would be found to do in the person sale agreement on what the cutoff date should be if you're aware that there's a cut-off fee but there was no cutoff date in the agreement it's a lesson learned right we all learn the first item from the minute all right you know who she'll get your counselor set up getting the numbers in there and make sure you have a due date a cutoff date on your first sell agreement you looked at up under the loans I'm sure ready if not more how'd you choose the ones you did I'm so I mean I like this so I kind of like going internet investing I kind of had predetermined in my own mind right well how much financial exposure I wanted to put out into the world in this journey and so that is essentially the foundation for the choices that I made along with you know anticipated value for the asset along with the projected ROI again not having you know clearly identified all of those ancillary expenses that we're going to come along and and the the one thing I will say I found to be the weakest is that is the expenses you know like in all of the training the expenses our I think reduced right like they they're small numbers but they really add up to big numbers once you get your asset and you start working through that process you know legal fees can you know I mean attorneys are not cheap I I tell people all the time nobody works for free right no oh they add up quickly your storage fees add up you know and every time you need to touch a document or look at a document or have them send you a document it's 100 bucks 100 bucks 100 bucks you know and I mean after a while you're in you know a grander better so there's fees add up really really fast and they do affect your bottom line did you per have a did you pick a no based on state it'll or location or based on numbers I'm not sure that I understand the question did you pick a note did you the notes you train do you think I'm gonna buy in Florida or was the location of big factor then the price location so location was more important to me right you hear all of these other investors out there you know they're traveling to Georgia and traveling to Chicago and travel and all these places to check on their investment that's another huge expense right and I didn't want to have to incur that so for me it was more important to focus on assets that were closer to home number one because they're if they're in my state I know I know the laws in my state so I kind of feel like I have you know a leg up if you will or I actually purchased one in Pennsylvania the other one that I have is in Michigan so they weren't all in Delaware but I started with two that were very close in proximity to where I live so that I could reasonably travel there in a day's time by car you know to assess it myself to deal with property preservation after it had been you know taken back you know and and things of that nature so when you pick the Michigan and PA what were the factors well get into detailed why choose that loan over other loans you looked at was it numbers was it value property what about those loons attracted you so I think for the most part they were the closest to me right and all of the things would not have reviewed it was more about proximity so there aren't a lot of Delaware assets that you can you can buy in the market and so that was that was probably the most attractive thing for me was that this particular house it was very close to me I managed to get one how about that Michigan one of you mentioned oh so that's after I you know I yeah supposed to be a Mary that was supposed to be like the the easiest know purchase of my life but why choose that one versus the other one would be what about that one was attractive for you because it had that one was was a note that already had an established history of payments gotcha oh it was just supposed to be an investment for a return and nothing more you know was supposed to be involved in that it's not worked out that does not always repeat itself yes it does so it well worth something I know we thought about the calculator being a huge factor what other issues were you not prepared for the sudden you mentioned cost fees that you weren't expecting um was a part of the process I mean you were not expected so we'll call it red tape for lack of a better answer right it was it was increasingly frustrating every it just seemed like at every turn there was a hurdle that had to be overcome and you know you make the phone calls you have the conversations then there's you know like you have to call one of the things that you need to do is you need to understand whether or not there are any signs on the property are there any judgments on the property so you know working through calling like the local you know holidays that the home is located in to find those things out and not being the person with you know who owns the document right that owns the property creates a conflict because they don't want to just give out information to the general public so that was that was a hardship in a finding a way to overcome that was was a challenge and then of course you know even like working working with the borrower in other words this like I think um as it does CFPB says you're not supposed to have direct contact with the borrower but a lot of people were doing it um and and I did it too right you know [Laughter] you know after once once Polaris had kind of established contact and you know we had some initial agreements in place that they were going to make some initial payments which I thought we're going to put me on the positive end of my oh I ended up killing me because what I didn't know like I said you know trying to call the local authorities to get information this guy had fifteen hundred dollars in back utility costs and sewer bills that that had to be paid and it ruined they've ruined the whole deal um you know Oh an eighth word before you bought it do you pull it honey for me we did but those things don't show up on there they do not show up on there so you have to you have to think outside of the box and make those phone calls and get that information so I think like one of the things that maybe I would do today right that I didn't know or do then wise potentially have my attorney's office use their title company to get that information instead of trying to get it yourself and encountering all that frustration and stress of not being able to get the information you need to move the file in a forward direction when we first bar when we talked before I Hammond hall I lost some deals just cuz I've got a nervous how many deals would you like that you missed due to being nervous I mean no one's you miss out on you feel um in a tape you could probably say a lot right because there are a lot of deals on the tape and you're supposed to have a strategy for you know for streamlining the ones that you want to focus on you know so obviously the ones that are proposed to have greater or wise are the ones that you focus on first and then you kind of work your way down from there um so in theory I missed out on a lot by given my already predetermined budget you know for this journey my comfort level with how far away the asset could be from where I was personally located two main managed cost was the second so I really had already identified you know where the focus had to be right from the beginning so I don't feel like guy I felt really excited when I won the assets right you know when I was awarded the assets that I bid on that was very exciting because it was everything that I had expected you know it was close by it was gonna be manageable it had an estimated good ROI on it you know so I I would say that I didn't I didn't feel like I lost any deal everything could have been in there was one property that I bid on that they just absolutely refused me I've been on it over and over and over again like you you know and they just kept coming back and saying no no no no but there was no no way to see the house like the bit the front of the house it wasn't on Google Maps you couldn't get it anywhere and I just said you know what I'm not doing that I'm not going to invest any more money in a property I can't physically even see a picture though so I I don't think I'd really lost out on any considering those things any deals you have nervousness over like you passed on because you just were nervous and not sure and you just nerves carrier all I mean that was for sure right that property the one I could not get so there were two there was that one that I could not get a photo of the house and then there was a second one which was in Danville Virginia looked really super great online Google Images we actually called a relative who lives nearby and sent the relative on a drive bike and the relative was like yeah no that's awesome so as you work it something to me that notes weren't nervousness for you you didn't have a nerve where you're like your hemming hard you know now says my paralysis didn't affect you which is great for those who have that announced the paralysis would you recommend anything for them or suggest anything for them to help them get through that so I I think that that really goes back to understanding an ROI calculator I'm having one prepared understanding all of the elements that will come into play or could potentially come into play and their estimated cost factors because I mean the numbers of the numbers are the numbers right now they like to say numbers don't lie and they don't if you account for them I think most people get into trouble because they don't account for those expenses and and then that's where things really start to fall apart we've seen a lot of us who still as well I don't use a calculator I cringe here that I would - yeah I'm sure there are certain things I can calculate in my head but I'd rather not especially deal with money and deals do you want you know with any deals what were the property values of the deals you did buy will give me the first two you bought what was the value of the property worth gosh I'm trying to think I know the first one that I bought I purchased it for just over $20,000 it was anticipated to have I think a 30-plus thousand dollar value and then there were some inside there were some in festers who also knew the area like oh yeah that's gonna go for $100,000 in blah blah blah you know and of course that turned out not to be after I took it back it's in it it's in a neighborhood that is or literally it's located right next to a very hot zone in the city so that was a deterrent right it was it was fine for investors who do like Section eight investments in the city and keep those properties for rentals I did end up selling it but I took I took like a ten thousand dollar loss on it when I sold it because it was you know because of all the cost not because of the purchase price the purchase price was fine I sold it for $29,000 but like I had so much money you know invested in the expense of taking it back and those liens and utility charges that were not known on the front end I'm just really ate it all up amazing amazing information it's always good to hear different stories from different perspective you not I had fun you're not a private equity fund your investor got involved and of interest and in this field is confusing it's hard to get into because the diffusion trains do give you some help but I do agree you have trust numbers and trust your due diligence that's scary stuff so yeah I was going with us I'm sorry I appreciate you sharing this too absolutely I think that one other thing that I think has the most value aside from the ROI understanding in the calculator and the expenses and and proposed things that could come into play an effective financial that's like by far the most important but second important is just know yourself right know your tolerance for the different types of situations that you're going to have to deal with you know re are you are you able to deal with you know complicated people complicated borrowers because you are going to find yourself and you know very rigid you know relations with them and in dealing working through that whole process so do you have the heart for that do you have the stomach for that for taking back a property you know from from someone and and and for dealing with the state of that property once you have it because it could be anything I mean I kind of feel like my experiences were a little on the lighter end of the conditions that you know have been experienced in this space with the lower-level assets then others that have shared that I'm aware of I mean everything from human waste to you know just being gutted and you know not needing to be completely rehabbed and brought up to code which would be a very expensive thing to do so if you can get somebody inside that property before you purchase it that's that's huge that's absolutely huge most many people people probably cannot you know because it requires someone who's willing to go in there and say hey I work for the insurance company and we're here to evaluate your home you know for the new buyer even if they don't work for the insurance company it's done it's a legal side of it yeah well Peggy I really appreciate coming on me sharing some of your insights sharing your experience from a different perspective than we are used to I'm glad you jumped into this opportunity with us and we look for key gonna get with you and appreciate it thank you I appreciate the ability to share I hope it's helpful to someone in some way and thank you for having me wonderful thank you everyone Dave puts from jkp Holdings here with Peggy from arrow Emeril Tom buy investments so we're doing as an interview with Peggy today to discuss buying a loan for the first time in some of the struggles and issues that Peggy had with going through that entire process she's not a big investor but she's one of the new investors that bought just a few loans and she could touch about things that she struggled with as a single investor buying loans so Peggy thank you for joining us and I appreciate you coming on today and we have a few questions for you hopefully you don't mind but we want to make sure that you're willing to help others do this process thanks for having me Jeanne I'm I'm happy to share my experience if it helps somebody else that's absolutely great awesome thanks Peggy so can give you a little bit background of how you go into Nuits and what took place I'm sorry can you repeat the question yes sure my unities so can you share a little bit how you dhanji notes and what your background was gosh you know that's an interesting question so um I'm not even sure how I got into I was I was listening to something and you know somebody somebody mentioned you know got Carson and I think he was doing a it was a workshop that was free to you know people a military past military military spouses kind of thing and so I took that workshop and that was kind of the beginning of my my notes journey if you will and from there you know we we did the note camp 101 which led to you know the fast track several mastermind events after that I took some local horses from our local RIA on on notes they had far less of an offering you know but they absolutely did have some workshops and there were a lot of similarities there were some differences and it was a little hard to discern which was the right path to travel because of the differences but it was all still you know it's at that point I think you're just you want to be exposed to as much information as possible in that space so you want to try and be as educated as you can be know there's um you know I have heard people say you know just jump in you know and and while that's all good fine and well for people who have a much higher risk tolerance I believe in being educated and having an understanding of what you're getting into and how you're going to manage it before you do that that's awesome um just for where do you live currently where is these RBI's there you go over to I'm sorry I'm in Delaware okay I'm in Kent County we only have three counties where small state so but our REI has you know they do service all three counties so they have a group for Newcastle Kent and Sussex County I time mostly in Newcastle because I live in Newark which is in Newcastle County wonderful so you said you had some formal trainings right how'd you feel without my best mate rays out there they're all good so how did you feel that that prepared you for buying alone um so I like to think that a lot of the information was really hugely beneficial right but then I will say early on like especially after I purchased my first note there was a specific structure that you were supposed to go through to get to things that you need it like if you needed Polaris you know to take on you know borrower negotiations to try and get that note back up and running or paying or you know negotiate a payoff or whatever the case would be you had to go through another person like there was a connection and so very early on I became really leery of this what I would call kickback structure that had been put in place and I actually received a phone call kind of reaming me out because I didn't go through that instruction I jumped over that connection and and it wasn't it actually wasn't the case at all I didn't jump over the the connection I reached out to the connection who never returned my calls or emails and then I jumped over you know and made the direct call to the to the service provider and so I became leery pretty pretty early on and that did create some genuine trust issues for me because it is hard to know who you can trust and who's just taking advantage of an opportunity to make money essentially at your expense and you probably know this space is very small right we're a very small niche of real estate investments so wouldn't you get done with these trainings did you feel comfortable buying your first loan I think I think for the most part I did and I understood very clearly that you know there is potential for loss and I'm sorry I was I was okay with that you know like I was in a place where I felt confident that you know if I needed to take a loss that I could do so without it being you know devastating to me personally or financially you have raised money for this or we're using my behaviors not okay and and I will say that I think for me you know I have a I have a very high level of in respect for someone else's money right and I would choose and I would treat their money like I would treat my own money so if I'm going to jeopardize anything it's going to be mine first and then once I feel like I'm in a place where I have real we kind of gotten it down and you know and I can make it work and be lucrative then I would be willing to take on someone else's money now there was a time I'm not with my first asset that was strictly on my money my second asset I did have investors and we we took a loss by I totally owned it and and I took the loss on my end and you know in the beginning our agreement right I can't remember what you call it like a JV agreement it was like a JV agreement so the agreement had some language in there which was a little contrary to everything that I have been taught right that people just give you their money and there's you know there's no tie there's no promissory to them there's no personal liability to them they understand that there's you know some level of risk that they could lose their money so you don't take money from people who obviously don't have it to lose I don't necessarily agree with that philosophy but you know so in this in this JV agreement there was some language that said that there was a minimum interest rate that I was agreeing to pay back to the JV investors and then it said in addition to that there was there was a percentage split so and that was that was very unusual you know and all of the education I had been exposed to it was it was just you know hey you know I'm not guaranteeing you anything there's potential that you could make this kind of money on this kind of a return on the investment but you know if it doesn't work out it doesn't work out or you just do a split you know that whatever it is less cost you know we split it 50/50 or what have you so in the beginning I was very nervous about that because I kind of felt like you know it is someone trying to put me in a position that's not healthy for me to be in but then after everything we went through the whole process we had meetings every week and we talked about where we were in the process and what was going on and I felt like I did a really great job of mana the asset from beginning 10 we did take a loss because ultimately the borrower had it was it was a duplex we owned both units in the duplex but the borrower had literally cut through the adjoining wall in the duplex so that he didn't have to walk out the front door go over the other door to get in the other side so it just cuts through the adjoining wall and the other side had been completely stripped down down to this stud ma so there was like no value in the other side at all and I didn't know until we got till the end of it you know after we came back that the fact that he had cut that hole in the adjoining wall meant that everything then had to be brought up to code and to do that I mean we had gotten some estimates from some vendors and did you that was going to be well over a hundred thousand dollars and there was just there was yeah I didn't have that money you know to do that um we did take the loss but I I respected our Jamie agreement and I was thankful that that minimum percentage rate was in the agreement and that you know and I could absorb that that that I was comfortable with it so they did get their ten percent in proceeds for lending their their funds to the you know to the UM to do yeah to the deal um and I do believe that you know if you're gonna be in the space you have to be that kind of person you have to have that kind of integrity about you so with that said I know that you did a few different training programs out there and you found helpful would you bought a deal without three programs or would you recommend even doing it I would never buy a deal without having had some kind of training or been exposed to it on some level no as a matter of fact I mean I think through the training I was even subjected to other types of investing options like something to investing but which I have done and I have been much more successful with what stars what we were talking before camera what were some of things you feel that are missing what trainings out there that investors should learn before getting into the space it's maybe not taught or expressed thanks gratefully as it should be right so I mean obviously there is a lot to learn and to know and I I don't can't say that I think any one training program captures everything it's not the intent of the training program to literally take you by the hand and educate you on absolutely everything that you could possibly need to know in this space but you should have some general sense and knowledge of real estate of money and Finance just in general you know to to take you on this this kind of journey really recording that one of things that you wish you learn better with a calculator absolutely so there are so many components to note investing right I mean when you go to the training it kind of it kind of makes it looks a little simplistic in the sense that you know here's your purchase price you know here's fifteen hundred dollars for foreclosure cost you know here's a thousand dollars for you know third party negotiator or something like that that's not what they called it but you know and and this is your net and here's your own wine it's just not that simple there are so much more involved and and you need to know what those things are so that you can prepare for them and put something in your spreadsheet to give you a baseline for what you can anticipate you're all right to be given all of those ancillary costs there's a lot of expense associated with notes would you say that's probably the key item that you need to know as an investor that may be missing some courses but that's the key item um I would say that that that by far is the most important thing to know and understand because that's where everything goes awry once you've secured your asset and major purchase then all of the expenses start kicking in and if you don't know that to expect them and to account for them they they can have dramatic you know effects on your bottom line so if you bid 55 hours from a UPB because that sounds good right it's a traumatic good strategy I agree right even sometimes digging 80% of you could be could be a terrible thing right I know about that how to really do diligence like how did you go about looking at the loan or the loans would you do you hire someone did you look at Zillow what you did we do so I certainly did all of the things that I as an investor could do right you know go to Google Maps and Street View the property and have somebody do a drive-by the property get a BPO and the property to kind of get you know some estimated value for what's going on in the market you know for a property that has that many numbers of bedrooms and bathrooms and square footage and all the happy stuff but I also say that you know I mean you do three estimates right your Zillow your you know appraisal and on all of those things against a BPO but I will say that there's it in in this space there's especially in the lower level assets right there's there's just a lot to say for those BPOs and and those online appraisal values they're just not they're not enough you know they're not they're just they don't contribute the reality that you need to know and understand about what you're going to be dealing with if you make that purchase so you know obviously look at other things you know like how many how many payments are left Gino versus you know what you can what you'll get back you know if those payments are all made why you should also I think factored in some kind of loss on those payments because most borrowers don't know so you mentioned you know part of valuing the property how about reviewing the collateral and understanding the state timelines so I I have been personally subjected to a bit of legal background so I did understand a lot of that the the one component that I never really appreciated was the value of an ax launch right so the assignment you know that's pretty understandable but the allonge was like I'm not I'm really understand you know what the value of that is and and I actually caught into some trouble because I didn't understand that you know the seller of an asset you know said oh well that that you know these documents aren't aren't needed anymore so we don't need to provide them to you when you purchase this file and in fact according to the legal system they are still very much required so in my most recent note purchase which I still have I had to go back and pay somebody years later to to go back and try and get signatures for launches and assignments that we're missing from the file but we absolutely used you know as part of our due diligence we used all of the providers of service providers they're out there the Polaris's the richmond monroe for you know file storage collateral review chain review you can review your own collateral you hired outside yeah I paid somebody to do all that yeah because I felt like you know and you should feel like if that's the business that they're in you know that you can be pretty confident that you're getting you know you're getting good good advice backs better then you would review it yourself that's not always true you know people make mistakes people are human and as a result of that even the best-laid plans you know are subject to go right so the next step is a fun servicer how'd you pick a servicer for me it was I really tried to focus on you know the less change the better right so I wanted to stay with the current servicer if that was possible and sometimes it wasn't until after I mean even if you ask you know will the service or take the file and you know if you get yes and then you make the purchase and then you find out after the fact oh well yeah servicer has changed they're in a protocol and they don't do single files anymore so now I have to go find somebody else and that created some delays and the transfer time which also then created delays and receiving the payments like there were payments I didn't get because the file didn't get transferred so the seller kept those payments which then affected my ROI yeah and I bought like the dickens to get them back and there I was not getting them back so that would be found to do in the person sale agreement on what the cutoff date should be if you're aware that there's a cut-off fee but there was no cutoff date in the agreement it's a lesson learned right we all learn the first item from the minute all right you know who she'll get your counselor set up getting the numbers in there and make sure you have a due date a cutoff date on your first sell agreement you looked at up under the loans I'm sure ready if not more how'd you choose the ones you did I'm so I mean I like this so I kind of like going internet investing I kind of had predetermined in my own mind right well how much financial exposure I wanted to put out into the world in this journey and so that is essentially the foundation for the choices that I made along with you know anticipated value for the asset along with the projected ROI again not having you know clearly identified all of those ancillary expenses that we're going to come along and and the the one thing I will say I found to be the weakest is that is the expenses you know like in all of the training the expenses our I think reduced right like they they're small numbers but they really add up to big numbers once you get your asset and you start working through that process you know legal fees can you know I mean attorneys are not cheap I I tell people all the time nobody works for free right no oh they add up quickly your storage fees add up you know and every time you need to touch a document or look at a document or have them send you a document it's 100 bucks 100 bucks 100 bucks you know and I mean after a while you're in you know a grander better so there's fees add up really really fast and they do affect your bottom line did you per have a did you pick a no based on state it'll or location or based on numbers I'm not sure that I understand the question did you pick a note did you the notes you train do you think I'm gonna buy in Florida or was the location of big factor then the price location so location was more important to me right you hear all of these other investors out there you know they're traveling to Georgia and traveling to Chicago and travel and all these places to check on their investment that's another huge expense right and I didn't want to have to incur that so for me it was more important to focus on assets that were closer to home number one because they're if they're in my state I know I know the laws in my state so I kind of feel like I have you know a leg up if you will or I actually purchased one in Pennsylvania the other one that I have is in Michigan so they weren't all in Delaware but I started with two that were very close in proximity to where I live so that I could reasonably travel there in a day's time by car you know to assess it myself to deal with property preservation after it had been you know taken back you know and and things of that nature so when you pick the Michigan and PA what were the factors well get into detailed why choose that loan over other loans you looked at was it numbers was it value property what about those loons attracted you so I think for the most part they were the closest to me right and all of the things would not have reviewed it was more about proximity so there aren't a lot of Delaware assets that you can you can buy in the market and so that was that was probably the most attractive thing for me was that this particular house it was very close to me I managed to get one how about that Michigan one of you mentioned oh so that's after I you know I yeah supposed to be a Mary that was supposed to be like the the easiest know purchase of my life but why choose that one versus the other one would be what about that one was attractive for you because it had that one was was a note that already had an established history of payments gotcha oh it was just supposed to be an investment for a return and nothing more you know was supposed to be involved in that it's not worked out that does not always repeat itself yes it does so it well worth something I know we thought about the calculator being a huge factor what other issues were you not prepared for the sudden you mentioned cost fees that you weren't expecting um was a part of the process I mean you were not expected so we'll call it red tape for lack of a better answer right it was it was increasingly frustrating every it just seemed like at every turn there was a hurdle that had to be overcome and you know you make the phone calls you have the conversations then there's you know like you have to call one of the things that you need to do is you need to understand whether or not there are any signs on the property are there any judgments on the property so you know working through calling like the local you know holidays that the home is located in to find those things out and not being the person with you know who owns the document right that owns the property creates a conflict because they don't want to just give out information to the general public so that was that was a hardship in a finding a way to overcome that was was a challenge and then of course you know even like working working with the borrower in other words this like I think um as it does CFPB says you're not supposed to have direct contact with the borrower but a lot of people were doing it um and and I did it too right you know [Laughter] you know after once once Polaris had kind of established contact and you know we had some initial agreements in place that they were going to make some initial payments which I thought we're going to put me on the positive end of my oh I ended up killing me because what I didn't know like I said you know trying to call the local authorities to get information this guy had fifteen hundred dollars in back utility costs and sewer bills that that had to be paid and it ruined they've ruined the whole deal um you know Oh an eighth word before you bought it do you pull it honey for me we did but those things don't show up on there they do not show up on there so you have to you have to think outside of the box and make those phone calls and get that information so I think like one of the things that maybe I would do today right that I didn't know or do then wise potentially have my attorney's office use their title company to get that information instead of trying to get it yourself and encountering all that frustration and stress of not being able to get the information you need to move the file in a forward direction when we first bar when we talked before I Hammond hall I lost some deals just cuz I've got a nervous how many deals would you like that you missed due to being nervous I mean no one's you miss out on you feel um in a tape you could probably say a lot right because there are a lot of deals on the tape and you're supposed to have a strategy for you know for streamlining the ones that you want to focus on you know so obviously the ones that are proposed to have greater or wise are the ones that you focus on first and then you kind of work your way down from there um so in theory I missed out on a lot by given my already predetermined budget you know for this journey my comfort level with how far away the asset could be from where I was personally located two main managed cost was the second so I really had already identified you know where the focus had to be right from the beginning so I don't feel like guy I felt really excited when I won the assets right you know when I was awarded the assets that I bid on that was very exciting because it was everything that I had expected you know it was close by it was gonna be manageable it had an estimated good ROI on it you know so I I would say that I didn't I didn't feel like I lost any deal everything could have been in there was one property that I bid on that they just absolutely refused me I've been on it over and over and over again like you you know and they just kept coming back and saying no no no no but there was no no way to see the house like the bit the front of the house it wasn't on Google Maps you couldn't get it anywhere and I just said you know what I'm not doing that I'm not going to invest any more money in a property I can't physically even see a picture though so I I don't think I'd really lost out on any considering those things any deals you have nervousness over like you passed on because you just were nervous and not sure and you just nerves carrier all I mean that was for sure right that property the one I could not get so there were two there was that one that I could not get a photo of the house and then there was a second one which was in Danville Virginia looked really super great online Google Images we actually called a relative who lives nearby and sent the relative on a drive bike and the relative was like yeah no that's awesome so as you work it something to me that notes weren't nervousness for you you didn't have a nerve where you're like your hemming hard you know now says my paralysis didn't affect you which is great for those who have that announced the paralysis would you recommend anything for them or suggest anything for them to help them get through that so I I think that that really goes back to understanding an ROI calculator I'm having one prepared understanding all of the elements that will come into play or could potentially come into play and their estimated cost factors because I mean the numbers of the numbers are the numbers right now they like to say numbers don't lie and they don't if you account for them I think most people get into trouble because they don't account for those expenses and and then that's where things really start to fall apart we've seen a lot of us who still as well I don't use a calculator I cringe here that I would - yeah I'm sure there are certain things I can calculate in my head but I'd rather not especially deal with money and deals do you want you know with any deals what were the property values of the deals you did buy will give me the first two you bought what was the value of the property worth gosh I'm trying to think I know the first one that I bought I purchased it for just over $20,000 it was anticipated to have I think a 30-plus thousand dollar value and then there were some inside there were some in festers who also knew the area like oh yeah that's gonna go for $100,000 in blah blah blah you know and of course that turned out not to be after I took it back it's in it it's in a neighborhood that is or literally it's located right next to a very hot zone in the city so that was a deterrent right it was it was fine for investors who do like Section eight investments in the city and keep those properties for rentals I did end up selling it but I took I took like a ten thousand dollar loss on it when I sold it because it was you know because of all the cost not because of the purchase price the purchase price was fine I sold it for $29,000 but like I had so much money you know invested in the expense of taking it back and those liens and utility charges that were not known on the front end I'm just really ate it all up amazing amazing information it's always good to hear different stories from different perspective you not I had fun you're not a private equity fund your investor got involved and of interest and in this field is confusing it's hard to get into because the diffusion trains do give you some help but I do agree you have trust numbers and trust your due diligence that's scary stuff so yeah I was going with us I'm sorry I appreciate you sharing this too absolutely I think that one other thing that I think has the most value aside from the ROI understanding in the calculator and the expenses and and proposed things that could come into play an effective financial that's like by far the most important but second important is just know yourself right know your tolerance for the different types of situations that you're going to have to deal with you know re are you are you able to deal with you know complicated people complicated borrowers because you are going to find yourself and you know very rigid you know relations with them and in dealing working through that whole process so do you have the heart for that do you have the stomach for that for taking back a property you know from from someone and and and for dealing with the state of that property once you have it because it could be anything I mean I kind of feel like my experiences were a little on the lighter end of the conditions that you know have been experienced in this space with the lower-level assets then others that have shared that I'm aware of I mean everything from human waste to you know just being gutted and you know not needing to be completely rehabbed and brought up to code which would be a very expensive thing to do so if you can get somebody inside that property before you purchase it that's that's huge that's absolutely huge most many people people probably cannot you know because it requires someone who's willing to go in there and say hey I work for the insurance company and we're here to evaluate your home you know for the new buyer even if they don't work for the insurance company it's done it's a legal side of it yeah well Peggy I really appreciate coming on me sharing some of your insights sharing your experience from a different perspective than we are used to I'm glad you jumped into this opportunity with us and we look for key gonna get with you and appreciate it thank you I appreciate the ability to share I hope it's helpful to someone in some way and thank you for having me wonderful thank you.