Note Investing Strategies from 5 Active Investors | Real Estate Notes Show

Episode: Note investing: Q&A 5 Active Note investors Nathan's Goals and Plans: - Started buying non-performing notes in 2010 - Buys first lien mortgages and contract for deeds all over the country from Canada - Has been doing notes seriously in the last two years - Lives just outside Montreal in Canada Key Recommendations: - Work with larger hedge funds for note sourcing rather than cold calling banks - Spend unlimited time analyzing tapes to find diamonds in the rough - Research borrowers online and use county recorder information to find deals sellers may not know about - Focus on relationship building and networking within note investor masterminds - Notes provide better cash flow than traditional rental properties without tenant management issues Topics Discussed: - Transition from brick-and-mortar real estate to note investing - Note sourcing methods and finding sellers - Individual investor strengths in note analysis, capital raising, and deal evaluation - Benefits of note investing over traditional property management - Due diligence and underwriting processes - Working with hedge funds and banks for note acquisitions Guest Insights: - Notes function as bonds, making them suitable for investors with finance backgrounds - Non-performing notes can generate REO properties through foreclosure - Storytelling and communication skills are critical for raising capital in note investing - Technology systems and data analysis capabilities provide competitive advantage in tape review Episode: Note investing: Q&A 5 Active Note investors Guest: N/A Summary: Five active note investors discuss their backgrounds, transition into note investing from traditional real estate, and share their individual strengths in the note investing space.

Main Topics: Note investing strategies and types (first liens, second mortgages, contracts for deed), Transition from traditional real estate to note investing, Individual investor backgrounds and motivations, Investor strengths and competitive advantages, Non-performing note acquisition and portfolio management Key Takeaways: Note investing offers passive income without tenant/property management responsibilities | Multiple investors transitioned from single-family rentals and apartment investing due to hot markets and operational challenges | Key strengths in note investing include capital raising, data analysis, valuation skills, and investor communication | Technology and systems are critical for scaling note operations efficiently | Persistence and problem-solving are essential traits for successful note investors Keywords: non-performing notes, contract for deeds, first lien mortgages, portfolio management, foreclosure, note investing, passive income, capital raising, property valuation end and then I'm coming up a little bit but to answer your question why I like the lower value is because I can get a bigger discount and that's that's changing somewhat now or the prices are going up there being driven up and that's getting a little bit tighter overall now my average property value on the low end is forty thousand upwards of eighty and that's usually where I play and I think we've had discussion and someone a Wayne situation where even out of $40,000 that mortgage payment is always giving less than a rent payment locally yeah sounds right I like to German well i buy low end stuff too but I don't like to buy one off lowest they go I get pools and then I try and get investor to buy the pool too so they might be three or four low in assets in one deal that way if one of them tanks I still got two or more to bring the deal back up so yeah what did you have a purchase price that you guys are buying it now what's your purchase place you're buying your assets if you can give an average which is I know difficult well if it were minus one a GV and want to get into the business what are some of your asses that you're buying that they can join up with you guys well for us we specialize kind of a middle middle of the price range average knows maybe fifty thousand and say fifty to sixty thousand dollars on average for a first yeah I would say about the same I mean we do see for some of our joint ventures we can go we find some as low as 40s but most of them are in the sixty to seventy-five thousand range I would say minor about the same but everyone swell and like I mentioned before those there yeah you should go ahead and kiss yourselves that Adam you can start off I'm Adam Adams in name twice live down in Dallas and buy notes just not quite a year yet but I've been in real estate for five or six years I guess I started apartments and at a couple of single families and I feel like the apartment market is too hot so I've moved over the notes and I'm happy ever since okay give me one second using your feet everyone speaks for luck we're back I like that so I got that's okay I grew up in a real estate investor family bought my first rental property right outside of college spend a lot of time as a landlord and get tired of that and felt note sounded like the best way to not be called at 3 o'clock in the morning when the toilet explodes I buy first and second and contract for deeds all over the country and I've been doing this lucidly since 2013 when the next Nathan pressure I'm Nathan Turner I actually live just outside a Montreal in Canada I actually started buying non-performing notes in 2010 of my first purchase and then really seriously in the last two years I buy of the questions online what are everyone's favorite states I well my favorite state is Georgia has been for about a year and a half and there's just a lot of nicer houses that were really distressed so there was a lot of distressed debt on nicer houses and the foreclosure is lightning fast there so Georgia has been my favorite state but I do like to look at almost every state whether or not we'll buy there is different but I've made a lot of money in New Jersey - so you just have to look at you have to look at it loan by loan sometimes yeah I was gonna say I don't know this is one state I mean there's a lot of people that hate Florida I do really well for it okay so with that mind Georgia is a state that I avoid for some of the laws that we've seen and we've heard about you know we will buy any state that has a good price again back to the house back to the dealer in um we have a couple of people here from Jersey as well what what attracts you said Jersey deal where Jersey could be a six month two year record you're saying what right side deal Jersey the couple I'm gonna New Jersey have just been the story I bought it about these notes because of the story like the first woman I had recent photos of the house the loan was only eight months delinquent the realtor said this is a pretty good area and I bought the loan and the prices are pretty good on New Jersey notes and the realtor went over to the borrower's house for me and today you know your your lender wants to give you a short sale you want that or do you want a foreclosure and they just said short sale that was it it doesn't get much better than that in any state and then recently about six months ago I bought another one in New Jersey because the previous lender had been in foreclosure for a year and a half so it was reaching the very end so I knew it was reaching the end so I bought it and now I own this at home you know after only six month because of the story so you so you shouldn't be you know you shouldn't worry about oh just because it's in New Jersey but as long as you have the whole process in mind how you're going to exit it's worth looking at because you get good deals in New Jersey one thing that came up in the last hop until I got a lot of questions about what about um self servicing are you at all dealing with loans servicing biking your own stuff and dealing your own borrow outreach which sometimes you 2% i see i'm Jigga's i got out and go off no no I have better things to do I hire someone else to do it I mean my servicer does it or I get to Blair's to do it don't cost that much and they're probably better result than normal anyway and I'll say the wrong thing and I'll get sued so I'll just keep my mouth shut yeah you can get yourself in a lot of trouble saying the wrong thing to a borrower to a borrower is awesome especially a borrow that's looking to delay the system any way you can and has read up on how to fight your lender and a foreclosure and all that so self servicing is really not a great I guess yeah mr.

Wayne you let air deepen so on a chat so I I think servicing is essential or your deal here but also with the partnering you that you don't have to worry about and this business can get very busy what you're doing let the servicer be a person could depend on and do some work for you so and that's what I was going to say I can go to your my first purchase and then really seriously in the last two years I buy first lien mortgages and contract for deed and all over the country from Canada thank you all right this is Wayne Snell hi guys I'm also in Dallas or a suburb dowse actually Frisco Texas I got into real estate about ten years ago I'm my trade was as a software marketing industry for 30-plus years most recently as the global VP of Marketing for a company here in Dallas so got involved in single-family rentals just about 2008 and start what my first no 2 doesn't and really as a hobby as I like to say got serious about notes when I had a fairly large embezzlement and realized I had to kind of find a way to start increasing my capital quickly and that was I got involved in sort of called real notes if you will firstly in position CFDs in 2013 and I was able to leave my full-time job last year so I've been doing it full-time for about a year awesome return game alright hi my name is Gabe I'm the portfolio manager here at Surf City investors and were based in Huntington Beach California I'm managing a portfolio of both in second mortgages primarily not performing some performing and a handful of Oreos that I've created recently by foreclosing on those notes I started investing in hard money loans in 2010 and I participated in 30 plus loans of that nature and then a few years ago I started investing in non-performing loans and I eventually built that full-time business out of it a couple of years ago so I just manage the notes and the portfolio full-time now my background is in portfolio analysis I work for large bond managers for over a decade so it was a pretty natural transition into notes since they are bonds basically so that's only work on over here awesome so I wanted you guys touch about already why you got involved in the business why do I take this over doing brick-and-mortar well um yeah well this is Gabe I was you know I mentioned I was an analyst on bond before this so you know just it was a natural transition to analyzing and find my own bonds so there wasn't you know there wasn't a thought of buying a bunch of properties from me personally but now I acquire the properties and ran them out via foreclosing on the non-performing loans wing well I actually got involved in notes more seriously because I wanted more brick and mortar so I I was a single family rental guy here in Dallas the market recovered really well faster than we ever imagined and so it was really hard to buy new single-family rentals that were distressed because they either weren't distressed or the wholesalers were snapping off pests and I could buy so I started buying notes with the intent that I was going to go foreclose on people and get ahead of the wholesalers and get the properties however along the way I learned that you don't have to do any of that you want to deal with tenants and trash and toilets and you still get the cash flow that I was actually looking for at the time so that's why I've kind of changed my business model over the years I'm kind of a mix between Wayne and Kimberly where at first it was to get the property and then the further I went along the more I realized I don't want on the property okay it's much better if I can it rather than a renter if I can have a borrower that's that's far superior in my opinion great Kimberly although I kind of said in my intro I got tired of creating calls that there was something wrong with the rental property so I had a kid at one time that she had somehow had a sixth sense any time we left the state of Texas she ya know fails not a lie so I was done I was uh I was actually looking for physical brick and mortar I mean you know being in the apartments now I was looking at large riffles you know but I got hot and now we got out and tried to wholesaling thinking that kids maybe makes money at that but that was pretty hot too it was every house has been twenty thirty postcards I met a guy tell me but notes and then I moved on the sky Carson and he gonna show me the way and yeah I like it a lot more I thought gonna be more complicated it's compared to brick and mortar it's more abstract and I'm trying to get money from investors and try to explain on that you know I'm not actually getting the property it's hard to get by or it gets through to some people but what they see it they enjoy it too it's a lot less risk with yessiree when we go back then Adam what do you think your biggest strength is in this space I'm King you up for a good one here I mean typically is technology we some people are good at raising money some people are good at valuations some people good at speaking what's your strength you feel that you bring to the network we have is a know community on that people can turn to you for advice raising money was easy for me I'd already had a network from the apartment world convincing them to buy notes was my fear but I was able to raise money before notes and as soon as I explained but notes whether that's for much my money came from this apartment investors and now I'm getting money outside of that group but it was sort of a problem for me to raise money so my other strengths is technology I was an IT for a long time business intelligence developer we're going to data and massaging it and so I have my systems I think it allows me to do a lot more things and most people see RMS real ones and I use a five drive but some other ones out there but five thousand one I use right now and I think I not easy to give its full potential because of my background alright those are my strengths I'm I'm pretty good to do in the analyzing figuring out property values in particular I can go through a tape and get you know narrowed down at 300 long tape down to my top 10 in maybe an hour hour and a half two hours tops and and get to it I think I'm a pretty good speaker more than anything else though I think I'm just turbine and stubborn so alright I'll go after and if it's if there's a way to get it done I'll figure it out and if there's a way not to get it done I'll figure it out just keep pushing until I can figure something out there really okay I'll go next um whenever the fulfills our very strong I'm in nad a in finance so I have been running crunching numbers and doing spreadsheets for forever but I think one of my bigger skills is being able to talk to people and really explain things I don't have much trouble talking to investors to get them to understand what notes are and once I have JV partners and they start to have questions and how does this work and what's going on I'm really able to cover not only the question that they asked but I can figure out the route of where their mind is going why they asked this I did that works really well so I think it's showing of analysts here on the panel pretty exciting I know you know I'm always hope my strength is also analysis I think my specialty is really finding the diamonds in the rough i I I spent a lot of time on the last several notes left on the tape that I haven't eliminated and sometimes I can really find some interesting stories about the borrowers to help me determine whether I want to buy their loans or not you know I researched them online and see are these people really interested in working keeping their houses you know what kind of decorations do they have on their houses does it look like they want to stay there for a long time and also finding information about the loans that the sellers don't necessarily have sometimes they're trying to sell 100 loans at one time and I can spend unlimited time analyzing their loans so sometimes I can find things on the County Recorder's office or on tidal reports that the seller may not know about and that sometimes leads to really large rewards because you can get a good deal on it especially in a second on the ones where the seller doesn't have all the information so I like spending a lot of time on that type of analysis I kind of lived in a hybrid world for a long time I was actually I started my career as a programmer for computers but I ended my career as a VP of Marketing oh so I can do the analytics I actually can I spent a lot of time like everyone else analyzing the deals I actually taught a one of my my business partners the due diligence and actually now I'm not even as good at it as she is but I'm a storyteller and I'd have to be as a marketing guy and so that's actually how I raise a lot of capital it's also how I I can market our deals and our even convincing sometimes when I used to do it I don't do anymore talking to borrowers why they might want to consider saying in their home and paying us so I think that's been pretty helpful for me ah yeah alone how do you guys find a seller you sort of need to list you keep what you're always being finally they work what do you think with spotting me differently throwing that that red and green these are all yeah you kind of broke up with a less pistes um so what are we fighting what reapply to heal that ah well hold up for you what we haven't - a gases are you a lot of people are searching bang some people come into the way that might be laughing what are you doing well I used to do that a long time ago I mean to be completely honest I don't have the time to call banks anymore and I don't think that's a good use of my time to pay someone to do that either although I have had people volunteer to do that what I do now is I work with some of the larger heads funds and we try to take down us a mini tapes you know in the 15 to 20 assets for a month range and so what we you know that allows me to and a lot of I think everybody that's giving on this call say we all kind of work with the same folks give or take but you know if we can find one or two that are new great I also impart of a note mastermind I think most of the folks on here are so we do see some tapes that way I will try and end some of the larger events we were just talking about you know in paper source which I can't go to this year you find companies hedge funds particularly who are selling or larger banks and so we try and participate in their sales you got your meal here now I'm on top like that that's right yeah yeah okay I'm you are you guys starting your historic moment before we find lying as it why buy most of my assets through hedge funds or sometimes I'll pick up one or two from another node investor I agree with Lane I mean I think you can called the right bank and you know really worked hard on the relationship you can get some great stuff from them but it does take a lot of time so it's a trader I find just networking I same as the other guys were I think we're all buying from the same hedge funds and then networking like crazy and just seeing maybe just maybe somebody's got some kind of connection I in fact is actually just last week I ended up buying five notes at direct former Bank which is first time for me and I'm hoping to make that a much more common thing at least with them I don't I agree with the other two guys there I don't know that it's worth my time to actually make that calling list maybe it is but it's not something I do now anyway well mark wanna go through that your same thing is a lot of new investors a wonderful way to finalize them yeah where there's not working what they already isn't so this quantity of I'm going to jump with that question but let me add into it what kind of what are you buying I don't know we jump in on the editorial cell where you find yourself and what are you focused on like first second something multi more they work on for deeds what do you buy out of that ah I'll buy anything that would be like to be useful for me to resume not everybody I like when contracts for deed as legal names land contracts they're also called the agreements for deed spinning on States but um basically it's for in town yeah I go to rent town center you get a TV and you quit bein on it Brenda said oh come pick it up and land contracts pretty much the same thing as the lender I hold on to that deed until that final payment is made which puts me in a stronger position if I needed a legal but in it depends on the states to some states treat the land contract like a mortgage so there's no advantage and those but stateside Dubai in the give me pretty quick and fast and they're usually cheaper but you can find some gyms in my contracts for many times like one of the most common thing is you can get a homeowner's turns to be turn into a ticket and you can owe proposal it's called forfeiture and it can be depending on the state can be pretty quick or it takes some time like Michigan if the borrower's know the system it's going to be at least four months they get a 30 days to reinstate and then you go to court and you get your judgment and then they get three months of Redemption and I get to stay in the house well thank that that pretty much is going on so there's four months right there other you know I'll is faster but you know if it's over five years old then it's a foreclosure instead so now you're looking at six months again Indiana there's a reinstatement period but then it turns into an Ohio thing thank you pretty fast so unless it's five years old Iowa it's just forfeiture that's pretty quick and simple as long as there is a clause in the contract that says as a forfeiture and if there's not it's a foreclosure so we really got to know the intricacies by date because they're all different and if you don't under write it right you know a forfeiture custody 800 bucks in a Lyle bond foreclosure cost me 48 books okay make the would be working on now no don't come to me you've done some burst what what have you what are you working on right now I still both contracts your deed and first lien mortgages I taped I just got on contracts for deed I don't know if the rest of guys looked at it but nothing super impressive so I'm probably going to buy first lien mortgages this month why do you like comedy with mortgages I'm kind of going off of what Adam was saying is one of the other advantages because it's a four picture for example in Ohio foreclosure takes a real long time and like Joe says is expensive um so for me personally I don't buy firstly mortgages in Ohio but I do buy like land contracts all the time just because they're a lot easier to turn around even when I need to it's not my my first goal to take back the property but it's my protection so I want to make sure that I can emanate too quickly well I buy first and seconds and contracts for d1 comment I'd like to add about the contractor deeds they're also lower value properties so yes it's great that you can take them back clicker but you got to remember you're not taking back a palace right now everyone that I've had to take back I have needed to do some serious renovation on bring it back so you just have to be careful with that and I really enjoy doing first and second because I think the training on both of them just improves improved my analytical skills on Gabe you may think the same thing since you do go to them but it each one has a different model how you research your note and I find that my due diligence process just sort of blends both of them and I can find out cool little things that I don't know that everybody was shot as unless they had training on both sides waiter waiter Gabe Gabe yeah I would say you know I buy both first and second I primarily put the seconds in my IRA accounts using my money and lately I've been foreclosing on quite a few pretty nice houses from second and taking them and renting them out and keeping them in my my joint venture partners are more comfortable at first so by analyzing purchase first mortgage it since then and it's usually our kind of middle to your property so we don't buying a contract for needs because of these houses are worth a little more than your contract for deed house and for first I prefer faster foreclosure states if the borrower story is really what I'm looking for I look for a sign that they want to pay that's really what I'm looking for because it makes it a lot easier to manage these investments when the borrower you know talking and wants to pay so generally violence where there's a pretty good chance they're going to pay or if they don't they're in a fast foreclosure state and we move very quickly on that yeah recently we did buy a couple performing seller finance notes with high equity and we've got a yield of over 20% on each one so I'll try to buy those as much as market when I see them headway will you uh what do you focus on a while we mix between first of all we only really purchase first lien mortgages and contract for Deeds I kind of pendulum swing back between the two everybody talked about the disadvantages / advantages of CFDs I will say for me we bought about 70 of them last year and of the 70 we got 48 to read perform within two months and that's to be the advantage of contract for deeds they do reaper form and one of the reasons is because as kimberly mentioned they're lower value properties with lower payments and quite frankly their alternative as a borrower is you either pay me or you're going to have to pay a lot more money somewhere else to live and when you kind of spell it out like that they get it hopefully not everybody unfortunately wants to play ball and then it becomes a real disaster almost we contract for deed when you take back possess repossess the property it is a major rehab in order to get a productive again we then usually will we won't major rehab it but we will put some rehab in it and try and sell it as a in order to finance contractor D if possible but for the first we have a very specific demographic that we look for we only want occupied properties like you mentioned we kind of look for indications that the borrower is more willing to pay it doesn't always work but we get a lot of them reaper forming and the reason is we target a certain demographics like elderly or veterans who are underserved and they usually um you know maybe they've had a spouse pass away or sick and they've just had an unfortunate life circumstances that make it more difficult for them to stay current with their loans so we capitalize on that and help them out and so I'm really big on the pay forward kind of thing if we should help them stay in the house will actually take less profit and that actually in itself gets a little bit of a what would you call it you know they're more indebted to you and then we're willing to stay working with you because you helped them okay so that's a way what would you say short stories what is your destination and the worst stories you've had regarding oh by I'm not a lot of really good ones by winds but let me tell you one that was a horrible situation that turned into lemonade so we we purchased a loan and actually I just presented that to some of the folks in my mastermind last weekend we bought alone in Dayton Ohio it was a mid 2015 we hadn't spent a lot of money on it we spent about 69 hundred bucks for the for the first busy physician lien and the reason was they had a lot of back taxes and there was a lot of maintenance deferred on the property so we were able to get the borrower to talk to our loss mitigation team and the pretty to summarize that the guy said pounce and I'm never paying you you can't take my house I'm gonna die here kind of thing and I got really interesting a feedback around that we did unfortunately prove him wrong and we were able to take his house the sheriff had to forcibly remove them from the property and as a parting gift to us he poured cement down the toilets um now that sounds bad I mean when you think about it yes you're gonna have to rehab a house but we had to rehab the house anyway because it was a huge hole in the ceiling in the master bedroom and you can see starlight when you lay down on the bed so these folks you know the house was a complete gut rehab so we we pretty much were in the house between the note and the eviction and the foreclosure and the attorney fees and the rehab we're in it for $45,000 we were able to turn it around by putting a tenant in the house and rented it for almost a year and then we just recently sold it as a turnkey investment property to a investor in California and we're able to get some money down and created a note so now we're getting a cash flow on that property so there's the lemonade out of the lemon a few up oh so um I also wanna remind everyone and there's a chat window if you wanted to chat Bucky has questions I need to get participant to go against questions we're going to get to a lot of questions a minute i'ma label to share quickly again here here I guess someone's here your horror story what was the built in with bad I went through fleabag - you just got killed on will ever the stories was a bad go ahead mr.

deed I won't say a few years ago I rolled the dice on the lower end non-performing first in Indiana and the house worked okay from the outside and I called the realtor said hey you know just in general what do you think it's worth he said uh probably worth 40 plus how they bought the note and it's sent someone over there and apparently the whole side of the house I fell in and I'm just going to see it from the street that was a thing and then I tried selling it on Craigslist it was almost people whatever eventually the city sent me a letter says we're going to demolish the house and I found someone who who actually bought it who wanted to buy it for I think was nine thousand dollars cash and even right after they bought it the city sent me more letters and said we're really serious we're going to knock down the house oh that was a bad one you want to hear it good luck yeah give me picked in that last year I bought a second Oscar here in Los Angeles County for I think it was $7,500 and as soon as we got the loan set up and borne it we sent the borrower a letter so hey you know where your lender now and then me and then he called us they said hey so penny gets lender would never talk to me I was trying to settle the debt they said we picked $40,000 that hold a loan all right just going to by answering the phone and talking to the borrower which is the previous lender would not do go ahead Kimberly was your worst and I guess good one okay um my worst was a second in Reno we started foreclosing on him because we could not get him to respond to us and somehow there is a nice attorney in Reno that likes to find disabled vets who are being taken advantage of by their lender um so he sued they sued me not just my LLC but they sued me personally and it was the first that's probably too optimistic to say the last time I had ever been sued so I was very paranoid about the whole thing but I paid 10 grand for the note and I ended up getting a settlement of $1,100 that was fun uh why don't do reno anymore or so and then my best one was very cool i was buying some notes um with a partner we bought a small pool and they accidentally sent an assignment for a mortgage we had never been up um so when we got it we looked it up see what it was it turns out was for closing in two weeks so we just hey you know since you threw it in here could you just sell it to us so we bought it like the beginning of december and three weeks later it sold and we made it eighty percent beautiful they had no intention of selling that long but you know since we already had the assignment oh yeah miss Mayton i worse is the closest I've come to losing money so far hey we broke even thank goodness but is that it was a property on a piece of land out in Maryland and the house was worthless it was really just land value and from what we could tell land in the in the neighborhood was selling for about seventy five thousand so I'm like great she bought it for thirty and thought this is going to be great we'll turn around the land land was selling selling for good prices great and it wasn't until I got it deed in lieu even so it was nice and easy quick and dirty and as people were starting to go look at the property they came back with their own due diligence saying hey I think you're going to have problem selling this I'm like what do you mean and the the bylaws have changed over the last hundred years since that house had been built so building on that lot what impossible but it is going to be very difficult for anybody to just to place the house in the great way so that you can actually build anything and the house that he was existing was a teardown so you're kind of stuck so we ended up selling the piece of land to the next-door neighbor for 30,000 so broke even on it were walked away fine thank goodness but that was a close one so lesson learned I don't do land yeah okay 30 on your numbers are good about that yeah I don't know enough about land to be able to figure that one out so that's okay best I was thinking about this earlier um there's what there's profitable and then there's easier and a bunch of good stories which is the good news but probably the easiest I'll tell you that one I took it over and had to complete a had to complete a an eviction it had already actually time I bought it was a land contract by the time I got it the contract had been cleared and I just had to finish the eviction so finished off the eviction I put a buck back up for sale and the whole from purchase to sale with four months and that was about a forty percent return so not the hugest return but it was really fast and easy mr.

Adam my pain in Paynesville oh so it's a contract the DVD was duplex and it looked good now I'm and if it didn't look shiny but it look like a decent property outside looked okay and bought the contract paid cash for keys I got lucky I save money on that because the cops arrested her so she could move out in time so but uh then we got in the house and it was a dump they had been tearing down walls oh and one of the reasons I bought it is because they had a rehab permit and so I thought they were renovating but they were just doing the knock down of the walls the or defecating in the house and yeah it's a mother of three - as well it was pretty sad but the cops won't even go in this building because it's infested with rodents please and don't mine and nobody wanted I actually tried to donate it to Holmes fry eros and they took a look and said oh whatever good give that give him another good one real quick bought it right before Christmas duplex and Grand Rapids got the collaterals the longest part technically posted collateral got the deed reported which simply fall so I got that done 20 minutes then got boarded up and got the borrowed us on a release a contract for five hundred bucks and lifted it and tomorrow is closing so it was just going to ask once I'll make 15 grand nice so I paid 19 for it now I'll make 15 profit so one of the first question line we'll go to is you Gail when you mention it you target demographics you address ever you know you are happy to so one of the things that we do well first of all Gail I do have Natalie as my due diligence queen who figures out ways to find stuff that's crazy Adams really going to do diligence soon so Adam you can chime in after I do but what we do do is we look at the tax sites and you can get a lot of information from the tax sites so for example um if it's an elderly or a veteran it's pretty apparent just looking at what they're paying in taxes however being assessed you can tell if they're elderly because they get the 65 plus exemptions if they are veterans they pay no taxes if they're disabled or they have is that there's also a veteran of discount to put on many places in the country not all but so we look at that we also look at just factors around the the neighborhood and the house if they're if they're house is as Gabe mentioned pretty good-looking outside then we think they're going to want to stay this doesn't always work that way but we do use that to our advantage if around the holidays if everybody's got Christmas lights up were menorahs or things like that there's a pretty good chance that they have pride of ownership so that helps us target that loan versus say another one where it's vacant and I don't buy anything vacant it's just not our business model because we are trying to get rid performers well the next question was regarding I guess Kimmel you're asking who do you train the second thing is your restroom 40 marks the start of the Gordon loss and then I was in Travis tall strop and Aaron Halderman mastermind group which was just fantastic Supriya Allen was there from time to time to train us it was great but unfortunately they have dissolved their mastermind so I can't encourage anybody to go join that but if either one of them offers any training or Gordon or Sabrina here that's a real obligation we'll do your what Big East guys really talk loss mitigation with litigation come here man who do you loss mitigation well I have the law office of Daniel singer you know Daniel and Devin they are working on some of my files some of them they just go right to foreclosure so it fits a high equity loan I'm just putting it right in foreclosure the borrower needs to figure out their own loss mitigation because they're the one that could lose I've done it on some of the files I'm not a big talker and I don't like the borrower's calling generally so I don't use that strategy too often and on a few files I've used the servicer because I feel that they're very simple on this icon and if the servicer can't do it then it's not going to happen because I give the easy one to the servicer sometimes so it's kind of a combination depending on the circumstances of each roll your finger here I think one of the questions I had was when you're doing due diligence what are you looking for your baby to snitch for what are some acres looking for on your under utilities what you're looking for on an open to buying it or is the file or are you looking for me buying it well the first thing is to make sure it meets all of your criteria what do you mean after you've already cooked placed a bit so he's looking at tape of notes what are you using to notify this the acid layer or some things you you're putting out on your finding yeah well I'm filtering it down by state and the market value of the houses and how long since the borrower has paid and if they're underwater or if they have equity and how much their monthly payment was and if if they fail the very low monthly payment that the most likely is not going to work as a mod those first lien mortgages and contract for deed and all over the country from Canada thank you all right this is Wayne Snell hi guys I'm also in Dallas or a suburb dowse actually Frisco Texas I got into real estate about ten years ago I'm my trade was as a software marketing industry for 30-plus years most recently as the global VP of Marketing for a company here in Dallas so got involved in single-family rentals just about 2008 and start what my first no 2 doesn't and really as a hobby as I like to say got serious about notes when I had a fairly large embezzlement and realized I had to kind of find a way to start increasing my capital quickly and that was I got involved in sort of called real notes if you will firstly in position CFDs in 2013 and I was able to leave my full-time job last year so I've been doing it full-time for about a year awesome return game alright hi my name is Gabe I'm the portfolio manager here at Surf City investors and were based in Huntington Beach California I'm managing a portfolio of both in second mortgages primarily not performing some performing and a handful of Oreos that I've created recently by foreclosing on those notes I started investing in hard money loans in 2010 and I participated in 30 plus loans of that nature and then a few years ago I started investing in non-performing loans and I eventually built that full-time business out of it a couple of years ago so I just manage the notes and the portfolio full-time now my background is in portfolio analysis I work for large bond managers for over a decade so it was a pretty natural transition into notes since they are bonds basically so that's only work on over here awesome so I wanted you guys touch about already why you got involved in the business why do I take this over doing brick-and-mortar well um yeah well this is Gabe I was you know I mentioned I was an analyst on bond before this so you know just it was a natural transition to analyzing and find my own bonds so there wasn't you know there wasn't a thought of buying a bunch of properties from me personally but now I acquire the properties and ran them out via foreclosing on the non-performing loans wing well I actually got involved in notes more seriously because I wanted more brick and mortar so I I was a single family rental guy here in Dallas the market recovered really well faster than we ever imagined and so it was really hard to buy new single-family rentals that were distressed because they either weren't distressed or the wholesalers were snapping off pests and I could buy so I started buying notes with the intent that I was going to go foreclose on people and get ahead of the wholesalers and get the properties however along the way I learned that you don't have to do any of that you want to deal with tenants and trash and toilets and you still get the cash flow that I was actually looking for at the time so that's why I've kind of changed my business model over the years I'm kind of a mix between Wayne and Kimberly where at first it was to get the property and then the further I went along the more I realized I don't want on the property okay it's much better if I can it rather than a renter if I can have a borrower that's that's far superior in my opinion great Kimberly although I kind of said in my intro I got tired of creating calls that there was something wrong with the rental property so I had a kid at one time that she had somehow had a sixth sense any time we left the state of Texas she ya know fails not a lie so I was done I was uh I was actually looking for physical brick and mortar I mean you know being in the apartments now I was looking at large riffles you know but I got hot and now we got out and tried to wholesaling thinking that kids maybe makes money at that but that was pretty hot too it was every house has been twenty thirty postcards I met a guy tell me but notes and then I moved on the sky Carson and he gonna show me the way and yeah I like it a lot more I thought gonna be more complicated it's compared to brick and mortar it's more abstract and I'm trying to get money from investors and try to explain on that you know I'm not actually getting the property it's hard to get by or it gets through to some people but what they see it they enjoy it too it's a lot less risk with yessiree when we go back then Adam what do you think your biggest strength is in this space I'm King you up for a good one here I mean typically is technology we some people are good at raising money some people are good at valuations some people good at speaking what's your strength you feel that you bring to the network we have is a know community on that people can turn to you for advice raising money was easy for me I'd already had a network from the apartment world convincing them to buy notes was my fear but I was able to raise money before notes and as soon as I explained but notes whether that's for much my money came from this apartment investors and now I'm getting money outside of that group but it was sort of a problem for me to raise money so my other strengths is technology I was an IT for a long time business intelligence developer we're going to data and massaging it and so I have my systems I think it allows me to do a lot more things and most people see RMS real ones and I use a five drive but some other ones out there but five thousand one I use right now and I think I not easy to give its full potential because of my background alright those are my strengths I'm I'm pretty good to do in the analyzing figuring out property values in particular I can go through a tape and get you know narrowed down at 300 long tape down to my top 10 in maybe an hour hour and a half two hours tops and and get to it I think I'm a pretty good speaker more than anything else though I think I'm just turbine and stubborn so alright I'll go after and if it's if there's a way to get it done I'll figure it out and if there's a way not to get it done I'll figure it out just keep pushing until I can figure something out there really okay I'll go next um whenever the fulfills our very strong I'm in nad a in finance so I have been running crunching numbers and doing spreadsheets for forever but I think one of my bigger skills is being able to talk to people and really explain things I don't have much trouble talking to investors to get them to understand what notes are and once I have JV partners and they start to have questions and how does this work and what's going on I'm really able to cover not only the question that they asked but I can figure out the route of where their mind is going why they asked this I did that works really well so I think it's showing of analysts here on the panel pretty exciting I know you know I'm always hope my strength is also analysis I think my specialty is really finding the diamonds in the rough i I I spent a lot of time on the last several notes left on the tape that I haven't eliminated and sometimes I can really find some interesting stories about the borrowers to help me determine whether I want to buy their loans or not you know I researched them online and see are these people really interested in working keeping their houses you know what kind of decorations do they have on their houses does it look like they want to stay there for a long time and also finding information about the loans that the sellers don't necessarily have sometimes they're trying to sell 100 loans at one time and I can spend unlimited time analyzing their loans so sometimes I can find things on the County Recorder's office or on tidal reports that the seller may not know about and that sometimes leads to really large rewards because you can get a good deal on it especially in a second on the ones where the seller doesn't have all the information so I like spending a lot of time on that type of analysis I kind of lived in a hybrid world for a long time I was actually I started my career as a programmer for computers but I ended my career as a VP of Marketing oh so I can do the analytics I actually can I spent a lot of time like everyone else analyzing the deals I actually taught a one of my my business partners the due diligence and actually now I'm not even as good at it as she is but I'm a storyteller and I'd have to be as a marketing guy and so that's actually how I raise a lot of capital it's also how I I can market our deals and our even convincing sometimes when I used to do it I don't do anymore talking to borrowers why they might want to consider saying in their home and paying us so I think that's been pretty helpful for me ah yeah alone how do you guys find a seller you sort of need to list you keep what you're always being finally they work what do you think with spotting me differently throwing that that red and green these are all types of things you really have to know your investment criteria but then you can get through the tape screen right agree yep same like for me one of the additional things I look at is whether it's owner occupied or vacant there are certain cities across the country that have a really good team and I'm fine with a vacant one I know I'll be able to sell it it'll work other places if I don't have the greatest team there then I only want to know they're occupied and hope to get them tomorrow so anyone else want to chime in at all I always look at rinse my worst case scenario is I got there into a rental so I need to make money off the rents that's a good point Adam we do the same we also let's look at the yields if it does read perform for the year we're looking at but one of things I always look at is how to link with the taxes are it's important and and and probably more importantly what kind of city liens they have because those things usually don't go away not not to taxes go away either but if there's any sort of sewage liens let's stay with the house not to borrower so even if you foreclose you're still stuck with those liens and they can be fairly expensive fairly quickly and I've actually started modifying my cash for keys because of that some of these counties they'd bill quarterly I'll give my cash for keys and borrow moves on and then I get the bill three months later and get stuck was another thousand bucks I got a dish out so yeah I'm modifying my cash for keys to have a contingency for those water bills they're pretty bad so one thing a lot to that as well as one thing that I've just just started doing is using Black Knight to get tax reports and ID it's a separate report than the than the Oney and I do that because it it shows not only what the current taxes are and the delinquent taxes but it also shows if any delinquent taxes have been sold as lien and what the amount is and there's there's a great nugget guys I'm not ready before so Nathan is that you at the paint that service that free how the work its pain but it's $12 a report so it's not a big deal well yeah so everyone understand what that means is that when we're pulling taxes you know Annie that's a big thing for us to know exactly what what our current is we're angle is and what's been sold off often too much we see it taxing are delinquent in tax records and actually that's not what's linked with is additional lien that was sold off a year six months two weeks ago and sometimes it'll show paid on the Oni but what that actually means is somebody bought the lien and you can get hung with that so it's for 12 bucks that's worth running the report just to see I learned something today thank you mm-hmm I didn't want that one down hey guys what's the different I didn't hear that no these are a vision David's muted you need to dig gate it is Oh David still talking still no sound hello no unmute Dave you what do you find it what do you guys thought a bit between your due diligence between first and second mm I think second you have to do a lot more diligence on the borrower's uh paying of the first mortgage you have to really know if they're paying the first consistently because if they're not they're not going to pay you so you have to do the same to building for the first like you know know how much the house is worth look at it idle report but you have to figure out what if hours and tensions are by looking at how they're paying first also and in addition yes if they're not paying that person up paying you but also the first could foreclose and wipe you out you have to have a lock on what's going on with the first when you're buying a second sometimes you have to research bankruptcies a lot and read foreclosure actions it's a judicial state you'll see what's going on well see that guys know hopefully hopefully work here none I'm familiar with the seller financing in bricks and mortar what seller financing on a note I think it was Gabe that said he had bought one yeah sometimes it did if someone sells a house the borrower can't get financing so the seller will carry the note for the new buyer so what I said with a note that one correct he bought the note keeper closed now he's your the property it creates a new notes for planting right arm how do you guys handle bankruptcy well research how do we handle it well you have to become pretty comfortable with pacer to be able to read the report this is a skill that seconds investors have a lot of experience with just real quick what's pacer what is pacer get for generator pacer is a government it's a bankruptcy case search engine and all the bankruptcy documents are posted there because it's public record so you can look up your borrowers bankruptcy petition and their plan and see what their finances are and what their their intentions are they have to share everything on them if this is the first and they file chapter 13 you know their intention is to pay and the bankruptcy trustee usually sends the money to your loan servicer but if you're a second investor you need to read the filing to see if you're trying to strip your second which is a big deal so I may announce that put a question for Ron if the loan has multiple bankruptcies will you avoid the loan I won't avoid it but I'll tell you what you know damn well they're going to continue to try and to follow they're probably going to default again so you want to figure out a bankruptcy thirteen we want to read through the docs and find out what they're proposing their settlement is and quite frankly I just petition to have it removed if they've had multiple bankruptcies and then we foreclose right it happens all the time and that is more likely to be willing to pull the house out of the BK if they keep filing so be also that point where if someone files too many times you can get the judge to bear or whatever all right I've got one like that right now where they they can't claim again after July so great so we also get into some head my out per day work well I try to outsource everything possible and that system current because I go to the beach every day so that's only work now the thing I was going to say though with the servicer I actually got to the point where I hired a VA down in El Salvador his only job is to follow up with the servicer once a week we've got a meeting he tells me what has been going on and I tell him ok do this next and that's his job and then he just follow-up all off all up that's it which brings up a good copic here how many of you guys are using VA s high using every day obviously yes I am NOT I went ahead and I went ahead and hired a yeah so I do also use the VA for different things well and I think it's a beneficial part of any real estate business to have someone helping you ah I know Wayne not only been a great team and maybe successful because he had each other where the tools are using to become successful in this business that can be shared with other people I got one just about a month ago I started using a company called JM a um and I don't know if anybody else is using them but I highly recommend them their doorknockers so they'll go out and deliver whatever letter I get them wanted to deliver they'll do the so far nobody's taking them up on it but they'll do a warm handoff so they'll build while the agent is standing there with the borrower they'll call me and hand the phone to the borrower so far nobody has actually taking them up on that offer so I haven't actually spoken to about at that point but I've all of the sudden in last month I've got a lot more phone calls coming in from borrowers I've got half a dozen new mods that I just put together within the last two weeks all because these guys are going out and actually knocking on the door what do you guys worry about them versus other door knockers could we from a I use odd to a knockers all time what do you find different from them in traditional door knockers and I think for me the traditional door knockers was supposed to have been done through the servicer and I was finding they just weren't doing it so I went ahead and hired him myself to get it done accommodations hey what weather um at this time a lot of people gain space what are you saying most people are struggling with are not getting in this space said you may have gotten your help or other means that they're just not getting we're not doing to become successful they're not getting reasonably priced assets you have their pain along say thank you very much yeah they paying too much yeah but and I think just to add to that because they're willing you know because they're excited and they want to buy stuff and they're paying too much it hurts everybody yeah yeah don't hurt your pocket yeah so can if you hear me I'm sure this business is all about relationships and the more that you're working with uh specific hedge fund the better the deals are that you're going to get you find I mean I mean I'm hoping you're confirming what my thought is you find you get better assets the more you're buying from a specific hedge fund or do you find that you're getting different ones I mean you're all buying from the same places are you getting different lists or all you can are you all competing against each other don't you yeah how do you say both yeah I didn't you know we all share the same width so sure I think from my perspective I don't know for a fact that I'm getting different assets because there's only one hitch love his hair uh-huh but I know I get better prices sometime right so I get better pricing by buying more than one at a time I find true yeah thank you so Lucy thank you you have only bought singles twice everything else I thought does going to pull whether it's cheap assets or mid-range assets so yeah it's helped me out with my pricing when the company I see is people when they buy loans they don't use an ROI calculator to determine any kind of value and they base it on fifty five percent that's the work right there's always work did you talk with a very low yielding performing loan and you'll have no exit and I don't see fifty five percent it's they're paying 65 70 percent lately yeah it's amazing how sometimes things aren't presented as well as we hope it be in this pace and sometimes a 67 percent deal is better than 63 and our account there will project that because there's different situations especially performing um one of the struggles that I we've talked about privately is equity deals last meetup we thought that equity deals and are we buying them are we not buying you know how we buy and what's our game plan to deal with equity loans because there seem to be more of them now oh I love all because especially in a fat foreclosure state because I'm going to get paid out in full at the trustee sale and and you don't mean to negotiate with the borrower because it's in their hands they can refinance the house or sell the house or I might take a house and get a big discount on it which I did last week I've got two houses on I exit II homes so I bought these houses at a big discount so I like them a lot you have less flexibility than you would with an underwater loan but I think it's a little more direct outcome anyone else what do you expect an equity deal I think I see yeah the price weekend I was going to actually I'm going through a issue on my phone probably my best one bought the note and you know the payoff was another 80 grand on it and so we inherited the foreclosure we get substituted we find out the foreclosure did not include that payoff amount it was just an older amount so we had to make an amendment to the foreclosure and we're starting that up but we got notified today that the judge wants to proceed so now I have to dismiss and start over and so one of the complications this yeah this is the only one I've experienced but I don't have that mean equity deals here I don't even know how to do diligence that you know the sellers going to give you a payoff you can check the payoff amounts but is it part of the foreclosure already or not it's a little bit more complicated one of the questions I got this week from a private person was what do you do once you've settled on a price what's additional due diligence that you do my strategy typically is get that file to a custodian tomorrow or where we're using attorney to review to make sure tiles clean we also do a drive-by to make sure that out there what additional due diligence do you guys do once you get a firm price to make sure you're buying what you're buying so I'm calling code enforcement I'm calling a tax department of whatever County some states you have to call the city to there's two levels of Taxation now pulling the oni I actually try and pull the status of the company I'm buying from if I haven't Buffalo before some I know Cuyahoga County if you're recording a deed they require these status of all parties involved and I got burned on that one so I'm checking now but there's a tons of things I check when I get this thing in the contract I see a common conversation going on the chat right now for anyone have thought on it definitely jump on it about pricing why notice notes are getting so highly priced why are we buying them versus audios their price here is a question you got yeah yeah it's funny how we all argue that but REO pricing has almost come retail now why we're still getting a discount and that's why most people still focus on that even at fifty five cents we're getting a discount where are we as our 90 plus yeah and for me I mean I so I want occupy properties too I really want to try and reform borrower anyway versus an REO where I know I can treat the former boardwalk and then I got it since we sell it or rent it yeah these are suspense will work on a nicer property but I would not pay fifty on a lower in property so sixty cents of something we won't touch on lower price I know Nathan you focus on a lot of roll and price homes where I choose not to what do you find attractive that those assets where some of the investors on the calls all in the room may not have a ton of money or want to spread their money diversify why do you buy it after four three four five ten grand where you know similar small trading below twenty five thousand off purchase price yeah I I did focus more on lower certain markets then I have a really great team I'll buy higher in one hundred one time something like that I just pulled up my stats actually I've got my average market value right now for property is 46,000 and my average purchase price is just below 16 so I'm actually and it fluctuates obviously but currently my my current investment to value is about 34 percent with that said what are you using what are you looking at right now for those who may not have the systems you have what program you're using Excel goes back some people try to be too fancy sometimes and sometimes the fanciest works out um yeah penis made a lot of programs out there what can help us but sometimes they're more difficult to learn yeah I most everything of God is Excel I actually just bought a new software to kind of track my loans it's called Centurion loan servicing so it's actually set up for servicing and I'm doing some of that myself but it's nice it you know keeps track of everything it's good yep all right so is it safe to say that most of the values of the properties are less than 250,000 that you guys are all buying yes okay so who's buying the $500,000 properties the 500 the 1.5 million cuz they're in default - right and are there better prices on them no no here's the thing about those tight price those type properties first of all most of the banks and the hedge funds are going to hold them from their cells because it costs them the same amount of money to foreclose on something like that as it does to foreclose on these small ends which is why they small is so awful small so that's part A Part B is we're talking about a highly sophisticated borrower who might be using strategic default as a way to get out of their situation and so these type of 500,000 to million-plus homes those generally dragged on for years so you got the New York's of the world to take three years to foreclose but a $1,000,000 house in Florida might take three years to foreclose on to because they're going to file multiple bankruptcies they're going to be looking for stays it's just for at least for me I can't talk my capital up for that one for somebody you know Ken great but it's just not a market for us and that reason yeah same here it's too much money to taya but we do buy a lot of seconds on high-end houses I mean we have some seconds on $800,000 houses is a different ballgame every once in a while though there is a gem I'm actually working on one now hopefully we'll come through it's in Hawaii more places and I think I'm good right off yeah but it's the beauty it's going to foreclosure foreclosure finishes next month and I can get it for a screaming good deal so I think that's something you're willing to JV with somebody online if someone didn't shoot him that I kick it Hawaii deal yeah yeah for sure my brother-in-law is the one who said he's interested but it'll if you he hasn't called me back yet so so his intrepid check yet Heatherette in a jacket so it's not done all right going back to Chad's additional questions on there is any of us seen anything on the chat that stood out to be a good question that maybe some of the other people haven't seen that may not have the chat open maybe in the car and there's some of the questions regarding we're you know displayed between AMA forming a forming loan where they sell for ah can you briefly for some of people that may not know what is the performing moaning why the treated why is it ready we have why do people play why so often performing loan I think well people get the non performers to Reaper form and then they can sell them off for you know 60 to 80 cents on the dollar so that's their exit from the non-performing loan and most of people are with IRAs 401 K to rolled out where they just want to have a great continent rolling in money in every month if I'm the IRA but that I brought a few performing loans and surf cities that have 25% needles to hold them for the cash flow so sometimes you do find ones like that uh one of the questionnaires we got this week was why am I not afraid to go outside my local area and trust people I've never met before you have to or else you won't have enough loans you know I wasn't a common question you also get is you know my neighbor's house is naked how do I get to buy it yeah for those who may not understand that think quickly what you know out of what why would the house next door that's vacant why can't we just go ahead and buy the note you'll never find the right person to talk about yeah yeah so um I'm away from my computer here they had questions there you want to bring up to the group anything on there that you feel is some we should speak about before we tail into the end of this this webinar well there's a question about first verse of second success rate I think this success rate so in first it's a little more consistent the results right I mean you don't exactly know what's going to happen but in general you're going to make between I don't know 10 to 40% it just depends on how much you're paying but in a second it's the outcome is much more variable it can you can be stripped and lose 100% or you could have a Grand Slam and make seven hundred percent so there's just a lot more variability in the second which is why you need to diversify across several of them so the first is a little less risky I would say but you have a lot more money invested at the same time true-crime mean I think it also depends on the type of second that you pick I really are four different types of seconds depending on the status of the first and how much equities in the deal so I focus mostly on second that have them performing first and then have some equity so that's kind of like really were the first so I think I have if you compare my out my successful outcomes to some second investor that does all four types I think I've minor a little more successful not to say that if someone focused on just that type of second thing wouldn't be as successful as I am that just cuts down my variability of it so yeah the pricing is so much more variable I would say last year on us on seconds we paid between seven cents and fifty cents so you wouldn't have that kind of variability in pricing on on first but in seconds you would and that would explain on the variability in that he's missing it Cristiano chat asked about are we getting inventory list directly from originators and our price is coming up we talked over before about pricing where we're getting rabbit or a problem that a lot of new investors focus on finding new inventory versus working with the inventory now how many you guys we met before you know are we work with hundreds of different sellers or very few and focus on what we're getting I work with about 12 consistently I'm always willing to look at something so somebody comes along and they're not just Joker brokering and they are playing that real quick with yoga poseurs order because we get along yeah that's a good point so Joker brokers are usually daisy chains where somebody picks up a tape from you and then represent it as their first person to have it and then they mark it up a little bit and then they share it with somebody who then does the same thing by the time I see it you can see the same assets this tapes been out for six months and but the pricing is like triple the price or you know um it's just crazy I'm willing to pay people a fair price for the finding big deals that I can't find or I want the time to find but I'm not going to just take somebody who does nothing more than marks up somebody else's tape and and represent it as their own doctor the Joker broker is I actually pay about I don't know three or four of the 15 to 20 we buy a month we do pay a broker fee for and I'm okay with that I mean it's you know I'm not going to pay $20,000 on a $40,000 note but like I've actually seen some people try to pull off but you know if it's a if it's a fair you know three percent or fifty five hundred bucks or whatever it is I'm having perfectly happy to to give people the credit they deserve for finding something I can't had time to find and if you build that fee into your ROI calculator it's fine right you're buying a deal that you don't have enough room to pay the guy that found the deal five hundred or a thousand you probably buying that deal you know we often see a lot of tape to come around that is a sporting scene or tricks the tray we know that came from somebody or something where those are new in the space of maybe on the call how small as the circle people were involved with and quickly know who or what is truly a seller it's a small group um I fear could put a number on it like actual consistent buyers not counting the people that have just bought one because if you're getting started which is everybody's got started somewhere but that's mine but the people that are consistently buying every month kind of thing a couple of dozen maybe it's it's not a huge group we're talking nationwide as well not Stace international but Adam you know you're by lankan for deeds how many and first work how many people in the space you're seeing how much competition you have versus the whole state of investors of real estate every hundreds of real estate investors I mean that it is okay for competitors on you know they that's a good point I mean so if you look at just the note investor world in general let's say North America so we include maybe there might be let's let's give it a let's say there's a thousand note investors in the United States consistently right how many wholesalers are there in the United States a hundred thousand I think that's probably being to Dallas low just yeah I was going to say so you know yes there's competition but it's not nearly as bad and as it is with just every other part of the real estate mists and I think go ahead I'm sorry I'm just going to say I think we find it's actually kind of a friendly competition yeah it's I wouldn't say it's cut through most of the time we you know we talk and we find out who bid on what and it's like oh you got that one ah that's what I was looking at and you know how much is it yeah right and then it's kind of an X Games feel or we were rude each other on while competing at the same time we ought to say why did you buy that and I didn't you know that many different angles everything you know we have a narrowly behind this as well so and we didn't see um every one of you guys I'm here are looking for JV investors what type of investor attract you versus one what are you looking for it in JV partner one with a checkbook I'll go cash I I like someone I can really manage their expectations I don't want to hear from my JV partners once a day it just no so we have that conversation going in that I'll email them once a month and if something major happens then I'll call them and if they go well we'll pick it up now we're not going to figure this out that's the way it works or we're just not going to be a great partnership so they have to understand that they're the passive partner in the relationship you know I give updates to all my investors every time something significant happens but they know that they're there the passive side of the joint venture so as long as they understand what our strategy is and that they're not in control of it then it's okay I've fired joint venture partners before because they have been too needy quite frankly I'm too busy trying to run a business that includes their deal but but they're one of many joint venture partners and if I have to spend a lot of time with them and they're not being passive and there are some who just physically cannot be passively want to but they can so you know unfortunately you get you have to do that sometimes Adam you're going to see something yeah one of the things that I think a lot of people at our time understand is that when we buy these notes we don't know what's going to happen there's so many variables on this business and we might you know do the research and kind of get a feel for the bar or something I might get an idea what might happen but any and we don't know you might be going two months down the road and economic tension is going to be about a forbearance or reinstatement and then making out is starting foreclosure or something and if you get the property after foreclosure okay now is it rehab or or can we sell it as is so yeah all kinds of outcomes and you just don't know what you buy one quick question we have two questions here what is the average JV partner invest with you dollar about for me that I've had between 5000 and I have had over under do I have best through what they average ly invest with you guys when I'm my smallest was 13,500 I was burned down and we got 20 grand so I still made money but uh the highest one I think she's on the Colliers 82 grand eighty sixth grade somewhat that for a duplex in Cincinnati and then but a lot of mine I'm doing pools you know 50 to 80 grand on the pools so speaking of competition that was supposed to be my duplex in Cincinnati is a different one that guy is basically paying against it here that's what you say now give me a real description of your criteria for a note going into the self-directed account it depends what your goal is with your account if you want it to be more passive or more active I have some highly active notes in my self-directed IRA and then I have some really passive notes or dependents how involved you want to get I guess I have a lot of JV partners that use their IRA self-directed IRA funds to fund our deals together and you know we we have a conversation in the beginning of what they trying to do or they trying to grow their money or they looking for cash flow is it just they have something they don't know what to do with their money so they it's something to do you know we'll try and find an opportunity that meets their specific criteria it doesn't always work because like Adam so you don't really know how this is going to end you kind of have an idea where it's gonna add the big one yeah so you know somebody tells me I only want cash flow so only get me a performing note then I'm actually I don't invest in performance so I won't actually partner with them instead I might say hey you know what we're going to do we're going to have Reaper forming notes available for sale later so when the yields are what you're interested in I will I'll come to you and see if you're interested in buying them but you don't want to joint venture with me because right now I can't I can't tell you what we're going to go with this particularly did one other question we also add was what the longest deal you sat on and go with period of time I'm saying I myself at the Padgett second in New York City that I bought in 2014 and we still have not finished the foreclosure yeah I'm in Cleveland other ones like to New York City would I have a floral one going on two years now so basically these are all for stairway down no I got to take is I was the JV partner on some other note investors deal so I funded it and we are beyond two years but we have both agreed that at this point we're going to win this first episode it's a principle of it yeah 16 months as long as I had and I was I blame it all on peak oh yeah takes a servicer for those who don't know basically stop servicing our loans with that said who's your servicers I know we've used multiple services ourselves who are you using the servicer loan right now and are using outside block the negation to help you through things lacking on I'm using Madison some of them have a full service program I used sometimes if you want to know more that Madison we have a webinar on the YouTube channel with Shantae that we did a couple months ago so I had them bad that's right usually before I get the collateral I'll and Steve over Polaris these loss mitigation see if we get the story once I get the deeds and getting recorded done my contracts land contracts then I turn it over to Madison and and my lawyer take care of it Nate who's doing yours SN currently I'm actually taking some of the servicing back myself not fully but some of that loss mitigation was the main reason they just weren't quick enough so I'm doing some of that myself and then I use Greenstein and lip liner as attorneys that they handle foreclosures wherever they happen to read information Kimberly who are using and I use Madison predominantly I have a couple of New York loans that I've had at FCI because medicine doesn't have a license to do New York and I find that Madison does an okay job on my lost mitt I'll leave it with them for like a month and see how it goes but I'm using Gentle singer as well for my other Walkman i use i like f CI for the performing louis i like to park them there they're cheap and the website is good for non-performing I usually Park them at Lancome you can pretty cheap to just park in there and one out Punk became I believe it I know Leto two hours a month play no money it's two hours a month demo let a home first again the charge me well I don't know I I'm ahead of any minimum your family charge $20 for a non-performing second or 30 for a non performance service and then I have lost mitt either at Daniel singers law firm or I use the color Alerus before is good or I will fit or Alexis flow so to everyone we until the presentation while go the garden is it services with dogs in Europe it without get missing be set aside wait what do you typically use um like Nathan I use SN servicing Pradhan primarily as in servicing although I also use land home and as Nathan mentioned one of the challenges I have with s n is they are very stringent in their loss mitigation which slows it down tremendously and sometimes the the additional delays that they're implementing or causing just it's it just costs almost money so so we're making decisions based upon individual loans now whether we park them in land home or keep them with SN SN for particularly seriously litigious borrowers if I see that their bankruptcy and we'll fight a few times or Owen I'm going to leave it in SN because I paying for an additional layer of protection and you are paying more money somebody asked about the $200 minimum for land home you get three loans in there and that's human you very hit the minimum anyway so I don't even know how many we have there now but but I used for loss mitigation SN servicing for the seriously litigious loans but we also use Polaris for our contract for deeds and we use the law office of Daniel singer to help us out as well so and and we've done some last-minute with others I've actually used now this will be my eighth servicer over the years so I can I should write a book and whatnot service or should not do but the somebody pulling it out peak we actually lost quite a bit of money because of the cutting down thankfully it's trying to go away all right there's a question I'm here and you can let me know you agree with it could you explain how you break up your JD fields as you tighten up in the chat window okay so um if if the deal was done you know we're getting go an auction or short sale whatever I pay out it's 50/50 split and first thing that gets paid off is any unpaid expenses so if we have to pay for closing costs and things like that that comes out first next thing I do is I paid back the JV capital and then third thing I do is pay back any money I put into it and then finally what's left overs should be the profit and just put that 5050 if it's a cash flow deal then you know take the profits or take the cash flow most expenses and put that 50/50 yeah it sounds like we all do that I think pretty pretty similar guys what I do admire that we have four months reserves cookies Duke in its recent work rental or whatever we have four months reserves in there just keep getting add-ins what I won't cash out I won't give any kind of fun down so we have four months reserves so um and I pay out on a quarterly basis go um that's something that I just changed up this year actually so now anytime somebody jayvees with me it's for a two year commitment and then I pay out on a quarterly basis with the same kind of structure that Adam explained what do you how do you do this with four gating orders it's pretty much the same as everyone else if we end up in a situation where we have a Reaper forming loan sometimes we'll make a deal with the JV partner to just have them buy by our part out so they can just hold it in its entirety because otherwise we're splitting the cash flows for the next 20 years sort of whatever it is I might give them a good deal and just have them find me out from my part and when you're doing a field are you put any schooling your penalty game are you joining your assignment a title do older names how you typically working that knowing as a favor to our investors we don't put their name on the assignment because then every single time we have some kind of legal action they need to go to notary and then their name is out there in the public as one of the foreclosing parties so generally they prefer not to have it on the assignment but you spell this all out on the JB agreement how you're going to title that has been really fun and the JB agreement is just as binding as any recorded assignment it's juror or private document so JV partner shouldn't be concerned by that in addition you not just having all you know getting copied about what if for some reason you get sued on a deal your JV partner shielded no one knows exists so they can't and need to hire an attorney all of that so it does offer protection also I think it's question when you're talking about in the chat here about pooling access it's fully money together multiple investors are on a full deals I hope let me let me clarify that if I may so so the question was do I pull assets together or how would you handle it if you have multiple JV partners for me we only have one JV partner on one deal I do not take multiple JV partners for any specific note deal ultimately I may have multiple notes per JV partner but so when we do a JV the Jo join venture partner fur for at least four platinum ventures we create a private cloud that they have access to all their all of their specific information including the JV partner any due diligence the expenses that alumns talk about we document everything so it's all available for them so that they have access to a trigger counting purposes we pay very similar how Nathan said quarterly especially on cash flow but we do have one operating bank account that we manage all of our expenses from we don't have multiple bank accounts we don't have multiple JV partners I'm sorry multiple LLC's or anything like that and so without Mobile Bay temps we're doing everything with folks and breaking me up without having to give somebody a thanks David it's correct yeah so we have a bookkeeper actually we kind of really nice little keeper from Adam Debbie on yeah also on when you just so no one can choose when you buy a pool of assets I don't need to have just one JV partner funding your pool that's right if I pull the ten and JV partner a gets two and JV partner gets three and JV partner three gets the other five that's not pooling money even though it's called a pool Kapaun good point advice for new before we get to find a question what do you advise for people are getting into space what's your advice to that I know yeah oh thank you much don't think much um yeah I think you learn more from actually buying the note and working through the process than you ever will at seminars and classes and all that I call those College reduce your school you're doing education mm-hmm and if you're interested in the business but you just figure you know what I it sounds really cool but I'm too busy great JV with somebody and you'll still get all the benefits without having to do the work that's how I started is a I was JV on about six notes that's how I get involved huh yeah if you're too busy to run the deal you can be a JV now and then when you're less busy' you'll be a little more familiar with it you can run your own view yep or you can buy a reaper forming note and kind of you know learn a little bit about the due diligence process to how to work with vendors Bob I want to thank everyone for joining us tonight I do want to ask you last on how we reach out to you we hold you and why don't work Adam how do we reach you putting my email and chat okay good thinking nice I'll put mine there - dear - now we're all still when I was with you all right of items ready there we go if you send me an email I will spam you know you won't you'll send valuable information ah well the guys I preached yep we're awful one second this chat I couldn't even turn that everyone this recording will be on my Facebook page as well as my youtube channel or anyone didn't see it if you do want the sound recording for Drive let me know I'll send it to you as well um thank you very much for joining me and joining us and answering questions I pre-show your time and again happy shopping I'll see you guys in short by tomorrow will be our chatting off and stuff again thanks for putting this together yeah you're welcome guys are pretty take your time and we'll go from there okay everyone thanks guys bye.