Note Investing: A Decade of Lessons Learned w/ Kevin Crowell | Real Estate Notes Show

Episode: Note Investing: A Decade of Lessons Learned w/ Kevin Crowell Dave's Goals and Plans: - Shifted focus to buying non-bank assets and seller finance notes over the last couple years - Working to help note creators understand how to structure notes better so JKP Holdings can work with them more efficiently - Emphasizing that note investing is a finance game, not a real estate game, with different rules to learn - Encouraging face-to-face networking at conferences instead of relying solely on online connections Nathan's Goals and Plans: - Started note investing out of necessity in 2009-2010 with poorly structured seller finance deals on distressed properties - Transitioned from wanting to acquire properties through non-performing notes to preferring to deal with the paper itself due to lower liability and complexity - Highlighting that note creators often don't realize note buyers exist or think about them when structuring deals - Attended first NoteWorthy conference in 2009 and discovered others were doing what he was doing but with much more sophistication Key Recommendations: - Structure seller finance notes with competitive interest rates as a premium specialty product, not at bank rates - Consider creating first and second liens on loans to improve sellability and reduce discount when selling notes - Understand and comply with lending laws and procedures (established 2012-2013) before creating notes to avoid future sale complications - Attend Diversified Mortgage Expo (May 2-3 in Nashville) to connect with multiple note investors and build sustainable long-term relationships - Meet connections in person at conferences rather than relying solely on online networking for more effective relationships Topics Discussed: - Evolution of note investing market from 2008 crash to present day - Non-performing vs performing note inventory and market pricing changes - Proper structuring and pricing of seller finance notes - Legal compliance requirements for note creation - Difference between note investing and real estate investing - Relationship building between note creators and buyers Guest Insights: - Kevin Crowell started in finance during the 2008 crash and attended Robert Kiyosaki financial mastermind before entering note business - Has been in note business for several years with experience spanning from the financial crash era through current market conditions [Music] hey everyone I'm Dave puts from jkp Holdings welcome back for another real estate note show alongside me as always Mr Nathan Turner hello hello what's going on my man how you been trying to stay warm we've been in this cold snap I'm doing I'm going Ultra comfy today going with the hoodie and everything it isga -2 Cel it's it's cold so I'm just trying to stay warm trying to get things done let's see what we can do yeah well I'm glad to see connect for a few minutes and see what's going on and and uh we're 33° so we're chly ourselves um no snow which is really good um but yes cold is anything ah but it's good it's good I it's winter time what do you expect I mean I would rather no offense to anybody in Southern California or Florida or something but you know what I love the snow I like I like uh because the snow comes with cold you just got to stick it out and that's just how it is yeah it's fine but you dress for it you're prepared for it and it's all good yeah absolutely so for those who are curious uh this is we're live right now but we will be recording it'll be on Youtube it'll be on LinkedIn Facebook all that good stuff um and we'll go from there with that said Sydney thank you for reaching out appreciate seeing you in this space of notes we have a lck going on in all the times we're always shifting gear right that's one of the things that we don't realize that we're always shifting gears and figuring out what's new um currently we're really working on what is what are we adjusting to and we've focused in the last couple years truly on focusing on the idea of buying non-bank assets because of a few reasons and those who are on call and may know us in the real estate world who are doing sell Finance notes we're your best partner in that aspect right and I think that most people don't realize that when you're buying baked notes it's easy kind of bread and butter for no buyers and no careers going well just keep doing that it makes sense and we had to shift gears we' talked about this on the show before for those who may not know who we are can you sh a little about the no careers are going who are you guys and why do you guys care about us no career so I mean we both got started early on just after the crash so 2009 2010 11 and at the time nonperforming was the name of the game that's that's what there was there was tons of it and so both you and I bought a ton of that stuff yeah um before that actually I was on the creation side so I was doing the seller finance thing and so I I understand it from that world and then as we progressed on the economy's gotten better uh which is great but that also means that the non performing inventory really shrank so there's there's still some out there obviously there's still people that default on their loans and that's where we're there to help uh but it's far fewer and the pricing on it has gotten much worse uh from our standpoint so both of us kind of looked at that and said and I think independently and then we had to had some kind of paper could do it better could do it in a way that would help us to pay them more and make it easier for us to buy that so we've that's been a big concentration for us these last almost two years now that we've been talking helping people who are creating the paper people that are creating notes how to do it better so that we can work together more efficiently and and make more money together ultimately yep and I think people who are creating notes Don't Know About Us note buyers and don't think about us when they're Crea a note and listen you may never be in position to sell a note nor have to high five yeah that's great buying a note or selling a note may be something you have to do desire to do raise Capital um leverage up higher pay off a hard money guy um it could be a numerous things maybe you find the fact you can grow faster by having our ability to do this so I think most people don't realize it and I'm not saying you have to do in every deal just make sure you're you're thinking about it when you do the first deal right um and make sure you you realize what you're doing when you're doing it how you're doing it um yeah and that's what I really want you guys to focus on and there's there's laws out there like there were laws that you know like them or hate them there were laws that were put into place uh early teens uh 2012 13 where there's a procedure for this and there are things that you're supposed to do as you're creating this note and and again love it or hate it it's there and uh we've talked to several people that think well you know this is what I've always been doing that's fine just realize there are rules if you ever for some reason want to sell that note uh that's going to be an issue that's going to be something that comes up and it could trip you up to where you will have a hard time selling that note or certainly for the amount that you want to sell it for absolutely so what you need to understand as you're a note Creator is that the biggest two factors that come into play of anything is your term and your interest rate I just talked to someone recently who created a not it's six and a half percent and it was a commercial deal and he says well why not I mean the borrower can afford it my question is why isn't the borrower going to a bank then right if that's what the bank is offering yours as a specialty product you should be offering more yes you should be you should be at a premium yep yeah and we always encourage you guys to look at we you know we have couple videos on this stuff about creating first and seconds on your loans because it will help you sell a loan and not take as deep of a discount as you may if you create one loan right so we encourage en everyone out there take a look at it if you have questions reach out to us you're creating notes just give it a feel of saying what could I got to do right um what's possible and then and then on the other side of that if you're out there creating notes and for whatever reason you don't like me or Dave okay that's fine come to a place where you can meet all kinds of note investors so we've got Diversified mortgage Expo it's coming up May 2nd and third in Nashville it's a room full of node investors people who are looking to buy notes so you'll be able to connect with somebody there whether it's me or Dave or somebody else but you'll be able to find somebody that is going to be interested in buying your note so we can make some really great long-term relationships where you can go and create these notes get cashed out go do it again and turn it over and over and over again so that's that's my proposal is that learn how to do it in a way that it can be something sustainable over long term absolutely absolutely so for those who are you know getting in the game and stuff like that note investing is is a difficult task to do as Nathan quietly says on every call we have is it's not real estate it's real estate adjacent and that's a key thing for everyone to really kind of focusing on is that it isn't real estate has to do real estate B in real estate but it's not real estate right this is a finance game it's a different set of rules you have to learn these rules yeah absolutely real estate great and definitely that's involved but it's not the same game y so make sure you understand that absolutely so in the game of Real Estate we have conferences where we get together as note buyers and not creators to just chat meet in person it's a weekend that's unbelievable um I recommend you guys take a look at that and really get focused on an opportunity and see what you can do and what you need to get done and just spend the time to go just visit and talk right face to face makes such a difference and that's that's something I want to kind of push out there this time is you know you've got I don't know how many friends on Facebook or LinkedIn or whatever those are your your connections that you've got online now it's time to connect with your connections like get actually in front of people face to face it makes all the difference I I can't tell you how many times we've had uh where we've done like a zoom call or something and then I meet him in person and and it's either oh man you're much taller than I thought oh you're way shorter than I thought you know just simple things like that but it makes such a difference just to be face Toof face in person you sit down together you have a meal whatever it is y face Toof face chat makes a big difference yeah so um it's great to see everyone come on here and just chat um one thing we want to make sure you clear on is that when we talk about note investing it is extremely difficult to focus on fulltime but there is a lot of questions that go on with it and a lot of mistakes happening along the way it's not a one two three you're in um we struggle with that and we continue to struggle with it be honestly with you we may still make mistakes so um again if this is anything you miss on here the recording will be on there I did see a post but re request an event um I'm doing seeing some internet bouncing around here so we are recording it it will be on our call later if we if you're having trouble getting to it yeah we're going to bring our guest on just a moment but when you first got into Nathan what was your thought of what note investing was I had no idea I didn't know they were called notes I mean I really had no clue this was it was um it was a necessity so I I had a whole bunch of properties that were in really bad shape and I had no operating budget so the logical step was what me and my old partner figured out was we could sell these houses as is on terms whoever is moving into the house they're responsible for the upkeep that was kind of our whole mindset is like we don't have money to fix these up so all right borrower it's your it's your job so instead of rent we charged rent and an interest rate and I I didn't even know how to work a calculator like it it was it was ugly the paper was not well written it was not very good and then I went to my first noteworthy conference in 2009 and I was absolutely Blown Away there's all these people in the room talking about exactly what I was doing but they had years and years of experience and and knew the business much better and then they were talking about buying and selling these notes back and forth I'm like this is a thing this exists no way so that was the intro I and then it was all about non-performing and so again coming from a real estate background so you're telling me I can buy non-performing note and then that's a way that I can get the property well yeah that's one thing you can do but that was that was where I was approaching it in the beginning and then as I kind of continued on I'm like why do I want the house again it's a lot more work liability right that the managing of it it's just not it's not to us rather just deal with the paper it is so much simpler so much cleaner yeah so let's bring our special guest on here I did uh see that we're having some I'm having some internet bounces so again it will be recorded so I appreciate you holding on there for a minute so let's bring in our special guest Mr Kevin crra how are you man hi Dave hi Nathan how you guys doing thank you so much for having me I appreciate it thank you so much for the time yeah absolutely tell us a little about yourself well guys I've been let's see I've been in the note business now for quite a few years um very much like you guys uh started out um not in 2008 2008 I was in the financial game but I was in finance and uh you know had an interesting uh beginning obviously during the crash I was still in finance um I had gone to a financial Mastermind um and again I'm from the Boston area so when I went uh it was believe it or not it was a financial Mastermind run by Robert kosaki and our our current president wow and and yeah um one of those uh cash flow um business Expos yeah and in there they had all kinds of things you know how to you know get money from the government all this kind of stuff um and then there was a lady in there and she talked about notes now at the time I'm just like okay this doesn't exist this this lady's full of it um and I'm like being the bang sure sure this this no no no this does not existed all this lady's and then she starts doing you know it's basically she talking about owner finance and I'm just like this lady's off a rocker no way finally but she had but I was just like you know what but this is the lady that this is one of the only ladies that actually is you know talking about something that really interests me yeah yeah she has a course basically says you know if you buy something in 30 days I'll refund the entire course I said 30 days all I have to do is you know purchase one of these that's it yeah okay that's it sure I'm game yeah so I went I did it I got the course for free and she's like and she literally said yes you got it okay obviously 2 hit 2008 hits lost my job I'm just going about getting you know contracts contract jobs everything I wasn't even thinking no investing I was just thinking about you know how to pay for rent all this kind of thing then but her course is sitting on my bookshelf just sitting and I see her emails popping up and I said you know what I Saidi have these contracts but they're only paying me you know by the hour I'm going to take that out I'm gonna really look at it pick it up read it I buy another one and I want another and I said I said you know what i' like this better than that yeah and I emailed her and I said you know what if you're having another conference I'm in Dallas I said Boston Dallas the weather's better than Dallas i' go to one of your conferences and I did and I really took the and this time I'm surrounded by like Nathan had said mil investors yep you're like oh these people this time you absolutely D I'm like oh okay now I'm actually really concentrating on this stuff instead of just wondering when Robert k is going to come in the building um and I'm like my God you can actually do this and you can actually make money on this now at the time I'm just looking for cash loan per month yeah I'm just looking to you know for a steady stream okay um the time you know I have my you know my wife and I were just looking for a way to make money each month all this kind of stuff but a lot of it is kind of getting out of my own head I'm like I can actually still do this I think that's one of the things that I just had to learn like don't make this so complicated it's not that complicated a plus b equals c okay and I think that would be a lesson for anybody that's listening it's not as complicated as you make it just get out of your own head it's you know it's it's not as complicated as you think it is just don't try to over engineer it sure hope that makes sense yeah um you get you get back and you just keep on doing but you keep on trying to you know trying to make it better then you see a lot more stuff then you see in 2014 then you start seeing non-performing yeah stuff then you see non-performing training coming in and all this kind of stuff and of course you're doing this and then you're like oh do I want to look at this do I want to look at that I did then this started over complicating things you guys have any questions please ask no no because I because I can keep talking Boston so I can I can talk it's all about learning what it what you're what you're doing and figuring it out along your way and and avoiding mistakes right that's the biggest concern we all have is we don't want to make mistake and part of it was learning as you go yes absolutely and I think it was a lot about too much thrown at you at the same time yeah I when I first got started with the non-performing the the good news was I was able to buy them at a low enough like a big enough discount I had room to make mistakes and so I did and I learned and I got better but uh but we were still okay because that pricing was just it was ridiculous like it was so low you know I could spend it was crazy I would buy a $30,000 note for $10,000 and you know we'd still come out ahead we'd still you know we'd make you know it's anywhere between I don't know2 and $10,000 or something like that but uh but still even at a $2,000 profit I didn't lose anything and I sure learned a lot along the way and I learned how to do it better and and what to do and what not to do and all those kinds of things and so that that was a huge help so there's and that was alongside taking different people's classes just to understand even just different points of view different people have different ways of doing it different preferences and things and so that was that was useful as well as to have that additional training I think what also helped me was my financial background the fact that I could you know I mean while I was in it I could use a calculator pretty easily so when yeah I was given a calculator I was just like okay this this is happening but when I was gaining experience I was like okay maybe I should take this number in the account maybe I should take that number and if you know if anyone's listening you know there are a ton of calculators out there uh you guys provide a calculator which people can use um others provide calculators um what helped me was I already knew how to use a calculator and my but my experience help me add this it's like okay I've never seen that I need to add this number this number I've never seen I need to add that number you know um it took a lot of mistakes yeah which I saw um but just as far as the training went when I saw a non- perform yeah that was stuff that I wasn't used to seeing yeah so let's dive into that for a minute right because I think people today are spoiled with performance notes right and you take the flant calculator out you put a bunch of numbers in you get a yield and you think well here's my PV I wanted 10 yield or 12 yield here's my PV I'm going to buy it and for the most part they've been right right for the last couple years performing notes has been what it's been until it's not a performing note anymore well that's the thing and that's what I primarily wanted to take non-performing for because I was basically saying to myself you know what any performing is going to you know I could have as many as I want and it's like oh it's just going to keep pain no it's not going to do that right one of some of these people can just say one day you know what I don't feel like paying you too bad yeah which is why I said to myself okay I need to get accustomed to this I need to but again I think again it's who you learn from too yeah I think probably the other thing that I big lesson that I learned was the aspect of due diligence and it's not just on a note which you know I could we're GNA definitely get into yeah it's due diligence on who you learn from who you buy from you sell to uh the vendors that you use which that's a big thing yeah um the trainers um you know do the trainers by notes do they do they practice what they preach obviously I'm talking to you guys you practice what you preach um you know um but some but some don't yeah you know and and it's too bad because there are people out there learning from these people yeah and they also give money to these people and and you know I get it training has money attached to it and people are really good at presenting and marketing and sales and all stuff out there right and there's some really great Educators out there who are also great marketers I mean gra and Fred great marketers as well as Greek trainers and I agree in the trenches yeah I think that people um don't do enough homework when they first get started on who they want to listen to trust believe in and listen to and I listen I'm not going to give who you should who you shouldn't just ask around yeah and I think the and I think sometimes when people see the aspect of no investing even real estate they're just like I want to make money yeah and they'll go after that first person and it's like guys you don't have to be in such a rush I and that's the same thing as you know getting an investment I know sometimes when I was just getting started especially like you know when you have your first kid you know it's like oh I've I've got to start saving for them yeah look at this tape oh I can get this one because that's what I can afford that looks great oh don't worry about the due diligence I can just get it why not because you can also lose that yeah don't don't just skip through certain things guys you know just because that says it on a tape doesn't make it doesn't mean it's real yeah you know doesn't mean that person's telling you the truth oh you know what you could just go with this servicer you should want to go with that servicer oh just get that from this title company yeah sure you want to get that number from that title company yeah let's dive into some details here right I know people are saying well well well so let's dive into some fun stuff here what would say your first lesson you learned learned you remember when you got in the space what was the first hard lesson you learned that was negative that you said crap I can't make that mistake again um let's see I would say the first or second note that I bought uh again like I was saying I rushed through it uh when I rushed through it um I went to an attorney and I just believed everything that he said mhm and what happened was it turned out I knew more about the note than he did and he basically came back said oh everything you're saying is right what I want you to tell me more than that I'm paying you to look at this file this the collateral file it's like yeah but everything you look at I'm like I'm not paying you for that yeah I'm paying you to look at my collateral file yeah and I think what that told me and what that taught me was that no one is going to know this asset better than me yeah and it's my money at stake so no one's ever going to know the assets that I have better than me so do you say you learned that you can't trust attorneys or don't expect them to analyze a deal like like it's their own the ladder the ladder no you can trust attorneys but it's just like a vendor just like a trainer just like I said no one's going to do the work for you no one's going to do the heavy lifting for you that's what I would say there and with attorneys sometimes it's just they only know what they know yes exactly yeah you know and what are you asking analyze the file or can I foreclose on this if I need to those are exactly key number one guys when you talk to attorney the question is can I foreclose on this file yeah don't tell look over yeah look over the collateral like they'll they'll flip the pages just like you did and I think and that was I think the biggest thing yeah was what did I ask was I specific enough did I say what I needed to say yeah and so then I go back and I say listen this address this file does it have this issue does it have a does it have B does it have C does it have these issues that I need to worry about yeah yes or no no thank you yeah yeah but you end up double paying for it then it's like in the end was it the biggest deal in the world and did it cost me thousands upon thousands of dollars no yeah but was it a good lesson that I learned yes so after that I was really specific I was really cautious on who I used what I needed which was really helpful yeah and was it a big huge loss no luckily I haven't had the biggest losses in the world but those little mental lessons yeah I have had tons of those yeah I think the first mistake big mistake I made was on my first deal I didn't account for the taxes accumulating while I owned the asset for whatever reason I knew that the angle taxes were X and it was an Ohio of course it took 17 months and I didn't either I didn't account for the tax accumulating or didn't expect have to pay the tax sale I can't remember which one and then to change my calculator to say okay I need to know the annual tax amount that if I had to foreclose that's accumulating over time and I'm might have to pay at the auction so every deal I look at my anual tax amount has to be part of my calculator and the first thing I grab off whatever site you want to grab it off of it could be 400 or 4,000 or 40,000 that accumulates over the year and if you're in a longer State like Ohio New Jersey or wherever that could be tens of thousand dollars because you have to wait yeah if you're in Chicago that could be a couple years depends on what county you're in Chicago yeah Cleveland it depends on what county you're in as well yeah yeah yeah so I think that was one thing Nathan what was one of the first lessons you learned that threw you for a loop I think it was the same kind of thing just just not really knowing my numbers or what the numbers should be like not knowing what to expect uh and and timelines as well those are a couple of things I learned pretty quick so yeah Ohio is going to take a whole lot longer than uh Missouri for example or you know and Texas is going to be a lot faster than I don't know somewhere in the Northeast pick one just combine them all they're all the same just just just you know what don't even bother yeah but those can take a very long time and and time like you say taxes add up uh your holding costs are adding up and then typically if it's a longer foreclosure State the attorney is going to cost more too yeah so that you know that's a different factor to put even sometimes in Florida Insurance can add up too yes yeah for place is expensive down there yes it is so due diligence where have you made a mistake Kevin where your due diligence wasn't that you've learned from maybe positive or negative right um well let's see I would say [Music] um as far as due diligence something today you do now because before you didn't realize or didn't think about it or care about it right I would say as far as just going over tapes you know I don't go over let's say a lot of assets at a time now Dave I don't go over you know I have my I have a formula in place as far as like how many assets I go through per week I don't go over like some people always recommend oh you need to go over a certain amount of assets I'm not going to say like hundreds but some people but I don't do that I have I mean I'm pretty busy with my you know my schedule I'm not going to say I'm busier than everybody else that would be wrong for me to say but I have a certain amount of states that I look at I have a certain amount of assets that I look at why I try not to look at quantity I try to look at the quality of the assets which gives me time to look at it when I did that before it would be too much much and I would try to rush things I think people get stuck on well Nathan bought three assets I got to buy three assets yeah yeah that means nothing Dave I'm too old I'm I I feel like I'm you know um my wife likes to refer to me as like it's like listen you're an old man you're an old man now so you know what I don't I don't think of myself in as an old man but you know what I try to think of myself like less is more yeah yeah you know and I'd rather worry about you know trying to say you know what let me look at quality instead of quantity yeah I hear you let me try to say you know what let me worry about good tapes instead of every single tape that's out there you guys have a good tape that you send out yeah you know paper stack has some good assets you know there's some that aren't the greatest but they have some good stuff you know we had a question for Christina on here regarding you know uh interesting to note about the attorney is a vendor would it be appropriate to ask the attorney about what issues I could be facing if I had a foreclose and what the attorney advis would be about tax foreclosure as well I'm currently looking at uh near home here in Texas but I can imagine other states bring more details you'd have to have a turnning look at so I'm presuming you're asking Christina is you know should you ask turning about what issues could you face as well as asking about tax foreclosure um yeah I mean an attorney can give you advice a tax forclosure if you own the taxes as a lean on the property and you bought a County taxes yeah a similar attorney would be foreclosing on it um but if you're asking about what problems I run into I would just simply ask can I foreclosing this file if not what would hold what's holding me yeah yeah what are some of the what are some of the things that would prevent this from for closing and that's a good one I had one where this is oh years ago but it was good lesson learned where um I was buying up non-performing just kind of going through and seeing stuff and that I found one on tape the numbers looked fantastic it was something like a $40,000 value uh I was going to be able to pick it up for something like 8,000 and you got to think back in those days most of the time we were bidding on property value because the unpaid balance was irrelevant it it could be whatever and it didn't really matter so so there was a ton of equity in there so I'm like okay this looks great and I almost went ahead and pulled the trigger without doing one of my steps which was getting a local realtor to go out and look at it and give me their idea of value and I almost skipped it and I was like there's so much equity in here it'll be fine it doesn't even matter even if it comes in lower than what I think it is it doesn't matter it'll be fine and I was like well I'll I'll get it just for the file just so I can stick it in the file say that I've got it whatever it'll be fine so I had the realtor go out there sure enough what house there was no longer a house on that lot so now was just a piece of dirt I'm like holy smokes and the value of it was going to be less than what I was going to pay for the note on a property that no longer was there so I was like okay mental note don't ever ever ever do that have somebody to go and look at it and I mean that's that's the big thing yeah because if you don't you can't go through all those steps you can't yo go ahead I'm sorry go ahead well so one of the things that I kind of learned over time and and then um working like at a trade desk for a little bit sometimes there's the impression that the seller is trying to pull one over on you the reality is 90% of the time the seller doesn't actually know the answer either they're sending out the tape that that vendor had no the seller had no idea that there was no property there that they weren't trying to you know sell me something that wasn't there they just didn't know so to top of that right how many of us have bought an asset that was for listed for sale by the borrower and you thought the seller knew that it was for sale I've gotten deals were like a payoff within a couple weeks yeah seller had no clue the house is for sale doesn't know stuff in general don't don't assume that they're trying to like mess you over they they probably didn't know in a lot of CAS in a lot of cases you guys are right no sometimes they don't um I know I try to do less because I want to make sure all those numbers are right yeah yeah I want to make sure that that just like Nate you said I can get that picture because God forbid there is not a property there yeah yeah or something else you know there there could be some issue with it but like you say Dave like seller doesn't know that that house was currently for sale and they were gonna get paid off and I'm maybe not gonna share that information either no yeah because again we're in the paper business we're not in the property business so some of the tricks we always did was you know find out the borrower lives there right that was to due diligence things positive that I learned yes and some of the old tricks we used to do is call the electric company and tell them you're buying it want to get an average of what the the the monthly your bill is and just make sure it's on yeah I don't want to know any more numbers I'm just to become the buyer of that property and then you realize oh it's been off for three months oh yeah interesting okay thanks I'm not sure why my seller maybe they moved down I didn't know about it you get an idea if they live there or not right if you see a lot of mail piled up right and that allowed us to kind of figure it out what I tell you guys what did what I also learned that was negative is if you do send a door knocker out please or if you want to check on tell them not to interact too much they can go crazy on some stuff and like walk around the property don't do that yeah right yeah and make sure you don't cont to the borrow before you buy the asset yeah don't do that either man I had that was a big issue back in the day uh where people were trying to initiate conversations with borrowers and no no no no no don't do that that's a big well you've got to well you've got to be careful because each state I mean if let's say we're out here let's say you know you have a place in California yep you can't do it by you have to do it at a certain time and you don't necessarily know certain times so there's yeah so what was something positive that you've learned over the years that worked out for your greatness and said oh thank God I got it and it worked out and you've done it from now on is there something that sticks out Nathan do you think of anything yourself that you did it and like oops by accident it work worked out to be actually the best thing that you could have done for me it was right from the get-go my my first my very first note purchase was a package of three from our friend Jack Y and uh and again I was coming from a real estate background so I'm like I want the house that's that's what it's all about and so it was in Columbus Ohio took a friend of mine that was out there he was kind of acting as a property manager and I took him along and knocked on the door and said so I'm here I now own the mortgage here's the papers to show that I own the mortgage I don't want to collect on the mortgage I just want the house if you if you can sign it over I can make this all go away and she started crying she's like are you serious really you do that and like she was so grateful yeah and that where I was like holy smokes I had no inkling that I was going to be helping her solve a problem I was just trying to I was looking out for number one you know like I just wanted the house yeah but it was in that moment I was like holy smokes I'm really helping this person like she's been losing sleep over this and here I am taking her problem away that's awesome and so that huge in the chat in the Box Below guys feel free to put in the chat if you see something we can see the feed if you had a positive negative experience you want to share Kevin you name a positive experience you did maybe by accident that you're like I gota do this more often I think I think the big thing Dave is just the simple fact that you know what I I look at it by just when I talk to people about this business you know a lot of people look at it and they get very complic you know up here when I just talk Noe investing to everybody you know the first thing that people say and I see you guys smiling when I say it they're just like no investing you know the hell is that yeah yeah and but when you take some time to just explain it yeah they'll get there and they'll be like okay tell me more yeah and up here in this area you know while people the one thing that they do is a lot of my friends are all invested in the stock market and all they do is complain about them and I'll just be like that seriously that's all they do and I'll be like guys here's another Avenue you can take it if you want or not but I just explain another way to do it so similar to that you know one of my first times learning and really kind of talking about I went to Aria and I hear all landlords like I was complaining about being a landlord you know what I hear you Dude tell I'll tell you my jersey story this was going on I got this and I accidentally said I got out of the landlord craziness man I got into notes and the ears and faces turned what what do you mean you got tired of landlording you did what yeah I became the bank and they said you're becoming the what and this is back 2011 2012 or so and I started explaining I was buying notes from the bank and doing my and the attention I got I felt almost guilty because the speaker was losing attention and I realized this is a landmine so I found my first JB Partners back in the day by going to R and saying this is what I did I you know I quit my smoking kind of ideas this is how I did it hey I quit BEC a landlord and this is how I did it and this is what I Shi to and I'm able to buy properties you guys are bragging about buying in 2010 2011 buying property 65 I'm over here buying at 40 and they're shocked by this and saying holy goodness and then we bought a note local toia and they wanted a case study and it was one of my best home runs and I I made president that it doesn't know was happening way but the attention just by talking about it so encourage you guys all out there just talk about it you don't got to be the expert I'm going tell you if someone hasn't heard about it you're now the expert in their year yeah I'd say I'd say to everybody listening you know it's it doesn't take you don't have to have millions of connections but if you have one or two I mean I talked to 10 of my friends about it Mo most of them are like well that's really interesting one of them turned when they all left and said listen can I talk to you more about it yeah sure they said and they said how much would it take once they say how much it's like okay yeah all right all we did and now he he mest with me regular yeah and literally I've done a lot of deals with him so calculator is a big thing in our space yes name something you've learned over the years that you've changed or added to your calculator that kind of made you who you are today that was was a positive negative what is was something that you didn't do 10 years ago that you are doing today that your bid calculator is able to do oh God my calculator um now um before I never really had much as far as like if it goes non-performing now I have a lot of okay and most of the stuff I buy is performing it's owned Finance now it has a lot of okay yep what if this does go non-performing you know what kind of return am I going to get if this does go nonperforming you know what's going to happen when can I you know what kind of if I sell this back if I keep this a year what's going to happen with it you know what kind of return can my investor get kind of a return can I get if this is my money yep that's what I have yeah that's good basically if the hits the fan what am I going to do so Nathan what have you had changed over the last 15 plus years that your calculator not the first one we all would cry looking at our first one that now it all does right something you learned along the way so much my goodness and and the the non-performing calculator shifted so many times and just added different things and it's like okay mental n now we got to add this in now we got to add this in now we got to take this out because we don't actually need that and you know all those kinds of things the biggest shift now is um for a long time I was just doing JV Partners so we were whatever the end product was we were just splitting the profits now I'm at uh with the fund where we're paying an an annual return so I know exactly what I'm going to be paying them before the JVS I didn't know I was going to pay them just however it turned out it turned out uh with this now I know what I'm going to be paying I know when I'm going to be paying it so then I back into it and I say okay so if I'm going to be paying my investor 8% a year then that means I need to make at least this to make sure that I can pay that and pay myself at the same time so that has really shifted my mindset on how to look for notes and like what kind of returns I'm looking for and even even the types of notes I we've been talking about this a little bit just recently I've been buying more short-term notes and in the fund structure it makes a ton of sense it makes a lot more sense for that to happen it's less work for me uh I don't have to look down the road and say at what point do I need to sell this loan to get my money back out instead I look at it and say okay 12 months from now I get all my money back out okay great it takes a whole step away so that's that's huge so I mean it's constantly shifting as I learn things and as I you know find out about different kinds of notes or different approaches it's always changing so it's awesome to just keep your ears open and eyes open yeah mind I still adjust in my calculator there like balloons were never in my calculator 10 years ago right we didn't have them right Banks didn't do them um I think the biggest changes and people have seen my calculator and cringe right because it's ridiculously big but I think the big thing is and the big takeaway for you guys out there who are listening is there's three extra strategies I care about three I don't care about if it reies cuz I control that I don't care if it short cells I can control that right I guess yes or no but all I care about is if I have to foreclose what if it sells at auction and I can't get the equity that I wish I had if it doesn't sell to auction I take it back and I have to rehab it and sell it what kind of return I make there they can't control that either or if they reinstate even performing if they reinstate and continue to pay am I okay there in that case if it's a 3% note and they default it for a year and that they rein State and I buy it I got to make sure I get my return if they reinstate CU I can't control them reinstating or not reinstating yeah that's the problem we run into so those three exit I had I don't know beginning 10 different exit strategies that could be possible and I realize over time there's only three to care about because if those three work out all the other ones are controllable a modification no I don't like it yes I like it short sale nope number doesn't work number does work um any of those kind of things work out and I'm going to have a better return even if they pay me off I'm still going to have a better return those are three scenarios outside I make sure you have your state timelines and your state costs um I heard someone the those days told me they have a flat forclosure fee of two grand per state I'm going to tell you right now that's very very rare to have a $2,000 cost you bumped up a little more you don't need to have it as crazy as mine but I would definitely have between five and 10 grand per state if you have a flat timelines like crazy so what's shift to dealing with the borrower what's something you've learned over the years that you've changed working with our borrowers 10 years ago you didn't realized or didn't feel or you came in saying I'm going to save the world and you realize you can't um a couple years ago I was like you know what i' I'd love to deal with the bar now I'm more like you know what I want to leave it to the servicer yeah I know that's an awful way to think but you know what now it's like you know what if I have to get involved I will but you know I'd rather just you know the more I get which it's you know that's relative to everybody but I'd much rather have the serer deal with it unless I have to step in yeah I'm with you the the further I go along maybe the older and lazier I get I I would rather just not have those conversations I and same thing if I need to I'm more than happy to if it would help the the whole process go a lot smoother and more efficiently great I'm more than happy to get on a call and it's interesting going back when I first started I didn't want I wanted to be the one in the driver talking to them because especially with the non-performing it was you know broken telephone where we're passing messages in between the serer and to me I was like that's just so inefficient like they're doing five conversations where I could get it figured out in one and so that was uh that was a big thing but then as things have progressed and now we're looking at performing a there's not that much communication to be had so I'm happy to have the serer do that but if there is a situation where there's issue and you know they need a month to recuperate from this that or the other that's fine but having that conversation with me directly if I can be part of that conversation directly that's uh that's a lot more efficient we all want to help right that our premises to help and sometimes you can't help and I sometimes don't want to be the bad guy right right but I got to be to let my servicer kind of interact with that um what borrowers what I've learned is I want to help I get taken advantage of me too right where borrow say listen I'll pay half this Friday and I'll pay the other half next Friday and I say okay I take it this Friday I take half the money and I don't hear from again yeah and what they what I what what I didn't realize when I first did that was I just pushed the C down the curb that I can't for Clos because I just took some money yeah I just got you know they're 6 months behind now they're three months behind right or they're 3 months behind I paid half now they're a month and a half behind I got to another month and a half start the Foreclosure again yeah so I I learned to treat it like it's somebody else's money I'm just a employee here and what will a boss yell me for right and treat it that way and say this is what it is and now granted the borrower can come up and work with us great but they have time to fix it right they're probably 11th Hour either fail to do anything about BK or they're going to solve the problem but what I realized was don't don't let it get you just go to the process and treat like it's not your money right different right so Kevin working with sellers what have you learned about dealing with sellers sellers um I don't know um they're not as bad as they think um they're out for their bottom line just but I've sold so I'm up for my bottom line too they're just trying to you know I don't know D have you have have a situation where you work with someone thinking they're the buyer the seller and then are they're not um I have um what are those called good old Joker Brokers right yes of course just you know and I think walking in I think I've I've always walked in thinking that everyone was a joker broker but in some CA in but you walk in thinking that but in most cases they're not you know at least that's been my experience let's give a golden nugget here what are some questions you do to rule out that they're the seller or broker what are some ways you can kind of weave that out and determine what are some questions Nathan what would you say to a person just to see if they're a broker or if they're a seller how would you prove Pro that um if you can have a like a phone call and like an actual voice call I find that helps and then I say so are you do you own this note or are you reselling it and and it's not necessarily what they say but how they say it and how long it takes them to say it if there's a hesitation there if they kind of pause and well you know okay then then you're brokery but if they can if write immediately they said no this is mine okay good then that's a totally different story I asked two questions yeah right who servicing the note a broker typically doesn't know that because they just got the note off a tape right and I can tell you that if I said Kevin and I see your list assets where is that one serviced you may say I'm not sure it's either this place or that place I have three service let me look at whole different conversation where Brokers kind of go huh and my other question is where is the collateral held if you don't know where the collateral is held that's scary yeah that's good right hopefully Brokers try not to answer these questions and if they do I can usually weed them out too right you know we I've heard people say oh mine are held by um my trainer my educator well that's not good right yeah um I've had them say they're held the bank which could be possible but most beginners are not doing that they usually H in a cabin in their house yeah yeah right or they're using Richmond Monroe or Casey Wilson or something like that but yeah and I would tell you guys if you are buying collateral and it's not performing just send it right to the attorney Skip all everything else just send it right to them yeah can for close on this old Gabe Cass and just send everything to them yeah yeah so Kevin have you run into a lot of sellers where they may not been so truthful on some stuff and then not recently but most of the time you can tell at least from what I see Dave you know is four years old yeah you know um if I ever see a seller it's pretty much someone who you know guys do you own this no I'm selling it for somebody okay like next yeah you know and like I say with the sellers that I found a lot of the time they knew they know about the information of when they either created or purchased that note however long ago that was they probably don't know what it is today other than you know this is the upb this is the last time they made a payment but talking about the property they probably don't know they probably are relying on that four-year-old BP because that's that's the last time that they did that and the you know typically I mean I don't do this I don't know if anybody else does but I don't run bpos every year on all my assets like why I do that no I know what it was when I bought it I don't know what it is today no so I'm gonna bring up one Nathan that is passes by we have tons of these guys we can go out for hours for this Nathan pulled one over bunch of us in our private group this going back a few years ago we all got a tape of assets and we all says nope we're not we're not pass we're passing this one pass this one and Nathan was able to determine that the next due date was very similar to the data date of the tape yeah I didn't pick up on that and the eight or so in our private group we were talking with didn't pick up on either and he said oh man I made I made offers on that tape really why and once the offers were submitted and things were awarded he says guys did you ever look at the data tape date the date the data was pulled and next due date the whole tape was performing but for us it was 3 months old he he pulled the data three months ago yeah so it was just it was old data it wasn't that it was non-performing all of them were performing they just had old data so you know again should I have said something I don't know so I bought it as if they were non-performers so my my pricing was based on non-performers because that's what they thought they were selling and so I was pricing accordingly but my my hunch was they're all actually performing according to the history everything had been performing up until three months ago yeah wait a second and then uh and sure enough they were performing so I I was I it wasn't that many loans it was four or five loans or something like that but sure they were all performing not non-performing so I got a sweet deal on those guys that was awesome let's dive in another due diligence one that I love talking about what have you found in servicing notes that really made a deal work or made you run servicing notes um and let me ask question are we allowed to ask for servicing notes from our seller absolutely every time you should always do it yes it's like a necessity so tell me something you found yeah go Nathan what do you found in servicing notes that kind of either made a deal good or made you run I I had one where it made me run where in the notes I was reading through and like the last six months of communication between the serer and the borrower was just like back and forth almost bickering where the the borrower was obviously very angry and belligerent and did not look like they wanted to do anything productive and so I thought so that could go either way that could go where I can walk in and now I'm brand new face and now I'm I'm the hero whatever I say I could say the exact same thing that the last guy said but I'm a new face and they'd be like oh I like you I don't like those guys because they did this and they this bad and blah blah blah blah blah so it could work that way or I could walk into it and I'm just another jerk that is trying to collect money from them and you know they don't want anything to do with me either in that case I decided I was gonna be another jerk I I figured that's how I would be seen yeah perceived and so I'm like no I'm out I don't want that one though yeah that's just going to be a headache and I don't want to take it on a headache Kevin have you seen something in service notes that kind of made you run or get excited I think what I've seen Dave is when whenever you see on the tape you see oh it's a performing not but a lot of times on it's like oh is this really performing or is this going to be a non-performing gem when I like to look at the servicing notes what I like to see is borrower hasn't paid in three months borrower hasn't paid in four months and it's like okay is this really a performing or do I really want to deal with this borrower do I want to like borrower pays every other month borrower pays half every other month yeah just like you were saying before it's like is this just going to be can that I continuously kick down the road do I really want this headache yeah the price is low but why is it low oh this bar was not paying consistently um you know sometimes that could be a good thing if uh you know you have the right servicer and you can just try to basically say listen say this you know maybe you can work out you know a payment schedule maybe you can do something a lot of times I just haven't purchased it and just don't my time yeah in service notes I've also seen where um they wanted to made a modification right and they're talking about it and nothing ever came of it or you find out Hey listen I lost my job I just got a new one and I'm G tell you sellers don't looking at servicing notes as clear as we as closely as we are no yeah so sometime the gems looking through it and saying look at the borrower give you could bat up it could be hey they started answering the phone call recently it tells you a lot of what's Happening hey there's a damage to the property hey what's going on here my husband got sick we're just back to the hospital it's coming through can you please hold on for another month and then you look on Facebook or social media and go you can see him at the hospital and you see I'm out or I got my job back yeah one of the things that it might also be able to tell you is borrower is in first um beginning stages of bankruptcy soste performing bankruptcy you know you're it's like okay maybe I do want this because I'm gonna be guaranteed to get payments yeah so that's you know I haven't had that but I've know I know people that have had that yeah that's not a bad case to I've also seen the service notes like oh BP's ordered this property came at 46,000 you're like it's worth 75 like where did they get and and as we all know bpos as far as you can trust them right yeah sure who's bad BPO right yeah and it's like crap this thing is 75,000 all day long I'm GNA buy I get the $446,000 property I'm going to buy for 25 they'll understand or 30 maybe I'll do it a 35 and they'll go oh my God you're paying high on us yeah but I know I can sell for 75 tomorrow yeah holy goodness how many deals you got where the BP's way off and you're like he's smoking some we should die for those kind of assets we're like they think it's one of my biggest home runs again was in Jersey right that one I told before they thought it worth 50 Grand was worth 180 holy goodness right we got lucky I'm not saying so is you know um when it comes to meeting people in the space is there any anything that you realize I'll start here I didn't value conferences know plug the DME but conferences enough when I first got started and I think was I was intimidated at the beginning I was away from my family all those kind of fashions and I didn't realize the impact until I went for my second one going I need to do more of this how networking and talking and sharing and relating you know Nathan and I are part of a biweekly call where there's experts in the room constantly and we're sharing information and that networking may not have a gem today but it may have five gems next week you never know talk a little about that Kevin about networking in the space and the importance of it so to everyone listening um building relationships and networking in this space real estate whatever but notes in particular because that's what we're talking about um is so important space you can literally meet two to three people and literally you can get your tapes from two to three people you can get funding from two or three people but you have to go find they're not just going to come to you and you know there's a great event coming up in Nashville Tennessee um one of the one of the people one of the faces that you're looking at and one of the voices that you're listening to is heading it up um not gonna say Nathan um but seriously guys um that's a start I know when I started I know that it was tough to go um seriously my daughter was you know she had a really tough time with me going yeah um to one of my first events okay and it was tough for me to go and costly it's I went yeah it was costly as well no Dave you're absolutely right but the benefit that I had yeah it was amazing yeah you know it was amazing and the people that I met you know I got funding from it I got notes from it and I said you know what I'm I'm not doing this to escape her I'm doing for her and that's why I'm continuously going you need to pick the events that you go to but it's like who are you going to meet what are you going to do but build them yeah meet the people that you know try to meet people that you don't meet new ones but it's important yeah and like get your face out there and you know you have no idea the connection that you made you know five years ago can all of a sudden become something totally different today because situations have changed whatever you're you're doing something different but you don't know it could be today it could be next year it could be three years from now whatever but I'm blown away at the difference that that makes of just being able to know people and have people know you it's night and day yeah absolutely it has to happen it it does having lunch with them shaking their hand having a face to face right we all love emails we all love them but shaking someone's hand and I go to Kevin and say hey you got any deals for me what you an email he may ignore it you know but just say hey hey deals what are you looking for Dave the interaction the conversation changes that and you become part of that inner circle of conversation people begin to know you and reach out to you directly where you're not having to reach out constantly look Rass things are sent to you because they know who you are yes it's really and I would say when you go to these conferences make sure you you have some goals in mind I know Nathan talks about the beginning of the conference have some set goals make sure you have an agenda you're not there to hang out and party right you're there really for business you could do the partying later night if you choose to or go to sleep but the purpose of that day is really to connect with people right and that and one of the first connections I made these conferences where amazing right I started by going to me Nathan men in person the first time out in Vegas I start from that point on me and Nathan became friends we got talking more on more this 2014 2015 whatever it was I started my own local group my little you know Meetup thing here and this whole thing came out of it if I didn't go to that conference I don't know if a this would been possible right that was 10 years ago and the impact is still hitting me so just focusing on what you're doing and meet people right yeah so Kevin let's finish up with what are some what's the deal you've come through that's made you or break you and you just you learn the most from bad or good I would say the deal that helped me um not May being the best profit or biggest loss but you learned the most from positive or Nega best lesson yeah um let's see um give me a sec guys there's a lot that I've learned and a lot that just um I'd say just you know along the lines of the deals that I told you guys the ones um probably one that I couple of the first ones that I just rushed you know um the first couple that I saw where I got in and I wanted to just oh my God I got in and I was just like look at this this is my price point I need to buy it well you got to do some due diligence on it okay A B C I've just got to get it back because I've got this many days to just here it is here's the offer here's this I've got to keep on making these bids I've got to keep on making these bids then all of a sudden all all of them are accepted so you went to school you went to class and learned yeah yeah yeah and the crazy part about it you may have broke even you may have lost a little money but you would have got some of your money back I say we say this in college you get none of your money back you have education but none of your money in notes you may get a little bit of your money back may lose some money right but you get some of it back that and I would that's my Kevin I was to say the same thing that first deal change my belief of I don't know if I could do this or not or is that seller going to scam me or is this whole thing a scam going wait a minute I just made a dollar on this deal wait a minute it shook you the core so those who are beginners at this thing right just get in I don't care if you buy it for 15,000 you and you lose 5,000 you just paid $5,000 for an education that you couldn't get anywhere El y it's I'd say the most important thing guys is this okay for anyone out there that's new all right learning with implementation is the most important thing that you could do okay it's like it's no different than playing the piano you can read a book about playing the piano but the only way that you're actually going to learn how to play is to sit down in front of the keys and put your fingers on them and actually play yeah some of it's not going to sound great someone's going to complain about how you play but eventually after time it's going to sound great how many people here how many of us have heard someone go to a conference say boy I've seen you around a lot I've seen you at conferences yeah Tak some education and then ask them how many deals have you bought and they say zero and you just feel bad like you spend thousands of dollars and you you just buy an asset and screw up or succeed you may succeed and you can ask people about the asset hey right these numbers make sense what am I missing here right but do something yes and yeah and I tell everybody guys it's okay if you screw up yeah yeah it's okay what if you want to just buy a partial at 6% any one of us can sell partial 6% today mhm yeah and you say well that's not a lot return it is wealth of knowledge experience yeah right loading with a serer boarding it up looking at a serer record saying I'm actually a note investor holy you actually you'd get a better return on a partial at 6% than just going to conferences and buying nothing yeah yeah yeah learning hearing people talk about it so what do you see coming down the road Kevin what's your what's your crystal ball oh you know what I kind of had a feeling that you guys might um so I mean I I'll prepare you for the fact that I'm from Boston guys and all I've been hearing in the news on all I see is Elizabeth Warren talking about the destruction of the cfpb um I I don't know guys I mean I'll be honest with you um I would exercise anyone that's out there caution um there's a lot I mean obviously origination is going through the roof right now um I've talked to some people um some people that are you know higher ups you know people that have been doing note investing for a long time um higher ups as far as the note investing World goes that there are um some hard money lenders that are thinking about um saying you know basically saying that origination we're not going to do origination interesting interesting like one hard money lender in particular um I don't know if that's I don't know if that's a trend yeah but uh I mean I also read something else on LinkedIn uh that they're like what do you guys think uh 32% of foreclosure auctions with 4% Unemployment uh you know is that gonna is that going to be stable or you know couple other stats you know I I don't know are you seeing are you feeling more non performers coming down the pike do you feel that people create notes that are going to go bad H right now I see a couple I see some more non-performing coming but I don't know right now I just I want to see a little bit more I I'd exercise caution do I see a little bit more non-performing out there a little bit but I I don't want to say anything right now there's so much going on I mean and who knows next week there might be more yeah there might be something to battle it yeah I don't I mean right now I can't keep up who knows in two hours that might be something else yeah yeah so I'm not sure that's that's what I see that's what I hear right now um I'd say to anybody just stick with your systems and just pivot when you see something yeah and ask a lot of questions right I still ask questions guys Nathan still ask questions Kevin still ask questions ask question of fellow investors and say it might feel do you feel this Kevin asked before we get on like hey what are you guys seeing Supply wise right we're all seeing the same Supply wise right and I hear people well I see a lot of stuff out there there may be some stuff but is it good stuff bad stuff stuff that you just won't touch right assets below 30,000 no thank you right it depends on what you're looking for so I agree is getting a handle on what's Happening just kind of feel it out ask more questions perfectly said Kevin well Kevin I appreciate you coming on for the afternoon on Friday and enjoying a time with us and making the show possible um Cindy says you don't sound like you're from Boston which I'm surprised Cindy it's all good right um but I think it's you can tell you can tell Sydney that I went to uh I went to college at the University of Vermont and believe it or not everyone would always talk about my Boston accent so it took me a while to get rid of it Sydney so I so so when it was Pac it all of a sudden that became Park so yes however when I get really upset everything comes out really Boston but thank you I appreciate and most people what weirdly enough they're not from our area think that's a Jersey accent until like no that's not Jersey Boston is Boston right yeah oh no it it comes out a certain way but yes again Kevin I thank you for joining us this afternoon hang on for after hours everyone else we will see you soon we have a special thing that we'll be doing in our next show so please make sure you stay tuned um and we'll go from there yeah take care everyone.