Finding and Marketing Owner/Seller Financed Notes | Real Estate Notes Show

Episode: Note Investing Finding and Marketing Owner/Seller Financed Notes Dave's Goals and Plans: - Been in institutional notes for over 10 years, new to seller financed notes space - Planning to learn alongside panelists and audience during this webinar - Will keep chat open and moderate while letting panelists share expertise - Expecting to close 2300 individual transactions this year (stated by Jeff, not Dave - correction needed) Key Recommendations: - Focus marketing efforts on seller finance note holders - less than 6% of residential transactions involve seller financing, so targeting is critical - Five primary marketing channels: direct mail, reverse ad marketing, referral/networking, brand building, and internet pay-per-click ads - Prioritize first position performing notes over non-performing and junior liens when starting out - Establish relationships with real estate professionals (attorneys, brokers, insurance agents) who contact seller finance note holders - Expect 2% response rate on direct mail marketing with approximately 10% conversion rate from those responses (0.2% overall) Topics Discussed: - Finding and sourcing seller financed notes - Marketing strategies for note acquisition - First position vs.

non-performing vs. junior lien notes - Direct mail, reverse marketing, and networking as acquisition methods - Market size: $100 billion in seller finance notes created in last five years - Data mining and list purchasing from county records Guest Insights: - Tracy: 35+ years in seller finance notes (since 1988), works with self-directed IRAs and referrals - Jeff: 30 years in first position performing seller finance notes, does extensive personal marketing, focuses on building relationships - Gabe: Direct marketing through county records data mining, 2% response rate on 19,000 pieces mailed over 3 years with 0.2% close rate - Abby: Emphasizes importance of marketing background and strategy - notes business requires targeting right audience, not shotgun approach resources out there that that list you know i don't know 70 or 100 i don't know how many are in that that book but um there's lots of ways that you can get a deal and you've got to figure out for yourself which of all those ways is going to work for you just because jeff is you know does great at direct mail doesn't mean you're going to just because tracy does great with with the internet doesn't mean you're going to just because gabe does does good at what he does does not mean that it's going to work for you too so all this stuff has to be tested out by each and every one of you to figure out what works for you and it's got to be very targeted uh to our specific first position seller finance note performing uh as well and just a side note i've dabbled in the non-performing definitely not for me i'd only do it in my state um and uh re-performing and stuff performing we will look at some of that stuff as well but the majority of it you know 85 90 of what we're closing every year is those first position seller finance notes that we go after and target so uh that's kind of what i do so we're a lot about buying lists and stuff like that i'm curious if anyone ever targeted like attorneys or insurance companies or you know maybe a local hard money lender kind of world um abby what has been your typical technique or strategy um well yeah all of this information i'm just kind of digesting uh the numbers that jeff's just kind of throwing out there as far as the mailers because i the one area it's you know the one area that i do not operate in are the mailers everything else is where i operate our focus is digital so we uh try to uh you know our our footing is organic google search or other search engines pay-per-click social media um we're really starting to incorporate ai all right everybody dave putz here from jkp holdings tonight we're talking about cell refinance notes buying them finding them the issues the problems successes and that angle of buying notes um we've been in institutional notes for over 10 years now and this space is new to me so i'm going to learn alongside everyone else here so i'm glad to be joined with a bunch of awesome people um some great pre freak webinar talk was going on here and i think it's gonna be a really fun uh sunny night uh i please apologize with the football going on and we were pretty talk about before um and we'll do our best to kind of keep to the the point that we're looking for but the education here please do your best just tune in ask questions i'll keep the chat open i'll kind of moderate but i'm gonna let these guys talk about what they know best so i'm gonna start with tracy go to gabe jeff and then go to abby tracy can you share who you are what you've been doing and all the good stuff about yourself absolutely well welcome everybody right now i'm crying a little bit because we're big packer fans so ouch anyways but yeah so fred and i were laughing because when i met my husband he he's also in the note business and uh he was a packer fan so it's kind of like you got to be a packer family if you're in this family so you know we've been married now 23 years and we only had two quarterbacks the whole time it's crazy right so it's enough football talk so as faithful as i have been to the packers i have also been faithful to the note business so i've been a seller finance note buyer since 1988 so a few years and the first 10 years i purchased notes for what we called an institutional investor so they would buy seller financed paper and they'd hold a lot of it and then they ended up actually securitizing some of it turning it into mortgage-backed securities and then about 1997 after i learned so much from them i decided that i wanted to make some of that money for myself and not for another company and it went out on my own and i've been buying and selling notes since then we'd like to buy them in our self-directed retirement account and we still refer some notes so we'll sometimes make the income as well so just each note kind of has its own home whether it's a immediate profit or a long term profit and seller finance notes are are different definitely uh we tend to focus on first position performing uh we leave the non-performing in the seconds to other people i've dabbled in them over the years but every time i do i think i should get back in my lane uh so i like the seller finance note paper i'm excited to be here and i've got some other great panelists that you know i know love the solar finance notes as well thank you tracy gabe can you share it about yourself hi my name is gabe cass i'm the portfolio manager at surf city investors based in huntington beach california and for the past five and a half years we've specialized in acquiring and managing non-performing nodes primarily junior liens and for the last three or so years we've specialized in acquiring and managing non-performing junior liens that are seller financed or private money loans here in california interesting jeff can you share about your background and uh what you're involved in with self seller finance notes is sure so my background i worked for over a decade in institutional investment management primarily fixed income as an analyst so one and then i worked for a bank for a few years and then i discovered notes and i eventually transitioned into a full-time note investor five and a half years ago congratulations amazing thank you gabe appreciate it jeff how about yourself hey uh hi guys uh thanks for spending your sunday night here uh hopefully this will be done at seven i got a dinner date but uh uh it's six o'clock here in arizona i'm in the calves u city arizona i've been in uh seller finance notes first position performing seller finance notes since may of 1991 may of this year will be my 30th year doing just that and uh tracy and i met uh in that probably in that year 91 so yeah with that institutional investor and and uh it's been a long road a lot of people come and go in this business and and uh you know i knock on wood i'm so grateful i found it when i did uh but i've been doing this now 30 years i've been in real estate for 37 years and and uh there's nothing like notes i i don't do anything else besides notes uh after 30 years now uh i still do a ton of marketing for notes by myself and uh i think this year we're going to hit closed 2300 individual transactions um brokered most of them by probably one out of five by by about 20 for myself my self-directed ira my daughter's self-directed iras and and a few investors that i have but uh it's uh it's a great business it's just uh you got to figure it out and the way to figure it out is marketing what we're talking about tonight so um yeah this should be a fun discussion great is that enough good job you guys know i do keep going abby can you share with everyone who you are and what you've done with selfless notes absolutely my name is abby shemesh and i um own a company called the marinode exchange we are a uh a first position we are a note buyer and we uh purchase i uh our main operations occur within the seller finance space of the discounted loan industry so we typically focus on as the rest of the panel had mentioned first position performing is uh definitely our our primary focus uh we do dabble in all types of performance levels of uh assets including uh subperforming non-performing re-performing um we will also deal in uh seconds although those usually do get wholesaled or traded off um and it really as tracy and jeff and gabe have pointed out it really boils down to uh strategy for us so you know what comes and what goes but just to clarify i was uh started my career in loan acquisition excuse me loan originations in uh with a company called ibg financial and outside of the philadelphia area uh which led to my many um incarnations through the origination realm and then in 2006 got into the loan acquisition side or the secondary mortgage market um and and really uh as jeff had mentioned and what we're going to talk about tonight uh exploited a lot of the um the the areas that weren't being exploited in that industry at that time so uh you know that's how we really roared into it um coming from a marketing background uh as well dabbling in internet and affiliate marketing uh between originations and loan acquisition so we kind of brought all of our assets to bear if you would uh once we got to the secondary seller finance note market so that's been our uh our journey and here we are hopefully to answer some questions and and all learn something together tonight i'm amazed guys this is awesome i'm looking forward to learning stuff it's something i'm not used to so um for a lot of the cars on here i would be asking questions hopefully that you're thinking about the same time being in the institutional world having paper that's originated by a mom and pop shop is just strange to us right it's scary at times it's someone similar to those pers people getting into notes in general it's a different world it's like the wild west so let's just jump right in here and you know tracy when you're going to find assets are you buying lists are you marketing are you where are you typically going we thought about some some ideas of like local finance guy and attorneys and insurance and brokers where do you typically find the the assets or what do you do for marketing to find those assets well there are five in my mind primary places that you can find notes you can use direct mail where you are buying a list of seller finance note holders and remember it's about less than six percent of all residential real estate transactions involve some sort of seller financing so you really gotta hone in your marketing or you you're just gonna do shotgun and not target and really waste a lot of time and money so i think that's the first place i like to come from when you start talking about marketing um and so the direct mail is one we do some reverse ad marketing where we talk to people that are advertising that they sell properties with owner financing our favorite is referral and networking because you can establish relationships with professionals in real estate that come in contact with seller financing and then there's you know building your brand and there's you know there's ads it used to be old school ads some of that works a little bit but more now it's ads on the internet right pay-per-click so i kind of look at those as the main marketing areas we've used them all over the years we tend to do more networking referrals now just because we've been at it a while and you know we don't have to re do the grind of direct mail i know jeff still does a ton of direct mail and so i'll i'll definitely let him weigh on in on that but that's what we see is the five main avenues of finding notes and so we'll all talk to it i'm sure more here i do want to say that think about it that just to set the framework is about we track these numbers every year on our nodeinvestor.com site about 23.9 billion with the b was the number of seller finance notes picked up on county recording so there's others out there that aren't recorded like unrecorded land contracts and that's like first position over 30 000 so there's more that if you count seconds and there's more if you count smaller notes but if you look at the like we're talking the marketable notes so we're talking about 100 billion with the b created in the last five years so it's not as huge as some of the other market but it's definitely a sizable market it's just targeting your marketing to find that market so are you talking about you're buying notes or cfds or both we do both okay gabe can you share a little bit of what your techniques have been are you buying lists are you going to a broker sure so we've been direct marketing primarily for three years here in california for junior liens that are originated by private parties so we spend extensive time data mining and scrubbing the recorders records and buying lists trying to find and contact these private note holders and we spend most of the time on marketing and following up and that's how we've acquired most of the private notes over the last three years um it's a very you know sometimes painful and time-consuming process and i have an assistant who helps me with this process 30 hours a week also so it's both of us working on it i primarily handle the calls and she helps scrub the data but it's a lot of following up but the success stories sometimes are really great and they keep you going until you have the next one so it's pretty difficult we're gonna get into that whole idea of you know that the energy that you need to do once you get a loan that possibly you can buy because just getting the marketing started and then just getting the note seller to say i'll mention it is just the beginning we're gonna get into that in a few minutes because that's a new world on average how what would you say your response rate is on your marketing on i don't know how many you're saying at a year or so but what's your response rate um well i've sent out about 19 000 pieces of mail over the last three years and we've had about two percent call okay and then and then we've closed maybe 10 of those two percent so 0.2 so that that's been about the number and we're targeting uh junior lien holders so it's a little different than than what the other guys are doing so you're buying marketing is somewhat similar we're just using different criteria when we're figuring out who to mail to yeah so you're buying lists jeff what's your strategy of finding the deal oh boy abby gabe and tracy y'all know i can go for days and days on this um both tracy and gabe mentioned a couple things and and uh one thing tracy said where that is that it's a needle and a haystack that we're looking for seller finance note holders that are purchasable and and it's more than that it's a needle in a needle stack uh there's a lot of them out there there's a hundred billion dollars worth of these notes out there you know um a little guy like me can only do i don't know seven to ten million a year you know so so there's plenty of stuff out there but we gotta find them now we gotta get them to respond um gabe mentioned something about follow-up okay marketing aside for just a half a second if you're not following up with these people after they contact you the first time just because they don't say yes right away doesn't mean you're not going to get a deal in the future and too many people think you send out a letter and you get a deal that's not the way it works marketing works and tracy said this already as well with a targeted marketing plan a program something that you go out there and you're persistent for at least a year if not more to get your business started and to grow and survive your business you got to keep doing it and keep doing it and keep following up uh targeted marketing uh you know it there has to be three to five lines in the water this is how i teach it that's how i talk about you got to be doing more than one thing right you can't just rely on direct mail you can't just rely on classified ads you can't just rely on internet you've got to have several lines in the water to catch those fish because some months will be better with one marketing method than others right direct mail for me is huge uh i mean i giggled a little bit no offense gave but gabe said he's mailed out 19 000.

i probably mailed out close to a million pieces of mail in in the last 10 years and and but that's now in the beginning it was 500 a month right way back in 91 when i started with with this but direct mail still is only about 45 50 of the deals i close every year so direct mail is huge for me yes we buy lists um but the lists have to be you have to target it to the right correct thing as well you can't just buy a list and they're going to get a deal it doesn't it doesn't work like that it's a very targeted list so direct mail number one uh for me now just like tracy after doing this for 30 years we got a decent referral network out there and we get uh you know a good percentage our closed transactions every year from building up that referral network for so many years uh i still place classified ads in in papers uh printed ads in certain targeted places to get people to respond um i do play with the internet stuff i am not the greatest at the internet i have someone do it for me and we get a we get enough out of the internet leads uh for to cover our expenses for the year make a little profit okay so that that is not my forte um we do a lot of direct contact when we can these days it's it's going to be these zoom meetings from now on until we can have actual live events and things but that direct contact has been huge in building up that referral base over the years you know i i've got into the process artificial intelligence and chat bot uh so when we can you know free up the human to do stuff that makes money as opposed to uh directing traffic online because that becomes uh you know uh an issue if you start these leads start pouring in you don't know what to do with them and and again to the point of the panelists here uh follow-up is everything it's everything i still have deals that i'm following up from 2015 2015.

so that's five years i'll i'll kick it out six months eight months uh we just did a a fee a wholesale fee it was one of the largest wholesale fees we've ever encountered from a follow i shouldn't say just but uh within the past six months you know from a follow-up so i can't stress enough how follow-up is extremely important and i it correct me if i'm wrong uh to anyone out there but if i'm not mistaken when you send a mailer you know five to eight times they need to see that mailer before they really start thawing out and figure you know depending on the type of mailer and so forth um it could very well be that way for a person who fills out a short form or a long form on your website they have the intent of wanting to sell a note that you confirm that they own and they still need five to ten follow-up calls just to get a copy of the note so it's it's a lot of hand-holding it's a lot of uh you know relationship and nurturing and uh the other speaking of nurturing email email lists so for all of our opt-ins uh we do email lists we also monetize you know for the for the folks that are not necessarily in the note business but kind of on the periphery we will try to monetize the leads that we have coming in to make that some sort of cash flow whether that monetization occurs through a product or another service uh that we can uh take an affiliate fee on or something to that effect uh we've had a little bit of success there and we're kind of building that out now but um all of these uh methods as jeff had mentioned are not a one size fits all and you know that was the area in which we operated prior to coming into the note space so i was very comfortable there um and it is like a 180 degree difference from what it was in 2007 uh online in the note space and i i can i know all the panelists here i see heads nodding and i you know one of our institutional investors uh had mentioned to me in passing over the past i don't know nine months that you know when they had folks in our space you know wholesaling notes to them they maybe had seven 12 people in their system as of november of 2020 it was 107 people in their system so if that gives you any representation of how crowded the space is right now you're not going my recommendation is to go in through the back door you want to take an asymmetrical approach to marketing you're not going to throw a fist at a giant and and think that you're going to win sometimes but asymmetrical uh motivation is is the way to go here i think that's an excellent point to add to that we tell people normally start out in your local market get to be your local expert and then branch out from there so that's you know to your point yeah are you reaching out are you reaching out to any kind of like you know hard money lenders locally are you reaching out to insurance companies at all are you doing any kind of those kind of relationships tracy are you reaching out to well hard many lenders aren't going to have hard money lenders aren't going to have seller finance notes correct but they answered these people hard money lenders took money out of their pocket and gave it to someone and they're not going to sell their note for a discount that'd be a waste of time yeah we buy at a discount and i've found hard money lenders don't want to sell at a discount yeah so i i'd like to chime in on that we actually just recently yeah that's absolutely just a double down on what's being said they don't sell at a discount but i i don't know if anyone else has saw this but immediately after covid uh uh april 2020 the phones and the the submission forms were lighting up with hard money lenders and uh non-qm lenders i don't know if anyone else was seeing this but it was yeah it was just you know watching you know the the the non-qm market collapse exactly it was uh something so we actually wanted to filter real quick close uh just for everyone who's online that's a non-qualified mortgage i beg your pardon just make it short yes non-qualified mortgages which is another way of saying subprime really um which is non-conforming or something that most banks wouldn't touch for whatever reason or another but i will say that we had to fill we're getting so many leads with these hard money letters even now today that we actually just found a third party a referral if you would that would take these uh assets at par which is highly unusual but he's very specific to a certain area so um yeah yeah i heard someone mentioned insurance companies and you know these hard money lenders of contacting them through whoever is local to the market who's maybe selling stuff but i was just curious if anyone's reached out to attorneys as well who has their clients i see abby and said jeff have you worked with anyone or even gabe where maybe a attorney is a great resource to find assets absolutely and you really got to clarify it's not just any attorney it's real estate attorneys right real estate attorneys are the ones that that can refer a lot of business to us if we make their clients happy uh it's really tough to just call up a real estate attorney and say hey i buy notes can you refer some to me i mean that's that's not really how it happens uh the advantage to doing business for a long time is that we've closed so many transactions we have worked with real estate attorneys across the country and yes now they then refer clients to us um so that is a good contact real estate attorneys you mentioned hazard insurance don't get a lot of referrals from hazard insurance agents um but they are a contact they are someone that would know of someone that's holding a note because on the lost payee form on the on hazard insurance declaration uh the mortgagee will be listed and if the mortgage is an individual's name that's going to be a seller finance note um so that that is an avenue to try to get some business as well uh but very small percentage gabe have you what have you been have you worked with any kind of odd person to buy a note from um you know we really focus on buying from individuals because we we're buying the non-performing loans and we find the biggest discounts we can get are from individuals that have been holding non-performing loans for long periods of time when we talk to brokers or attorneys the pricing is just too high for what we're looking for so we specialize in finding those note holders that no one has contacted in years and they've they've had this note in their office drawer and they've received no interest payments for the last eight years those are the people that we specialize in finding and we get the best the largest discounts buying directly from these individuals so ours is you know it's very research intensive to find these people and contact them but then the follow-up part is also very intensive some of our best notes we've ever bought took you know 15 to 20 touches from one lead before we finally closed with them but in the end it works out when you get an amazing note i think that's a really important point it's kind of like dating you know you're just gonna ask them to marry you on the first date it's according bro no no work that way yeah that's uh um a lot of uh both abby and gabe mentioned a lot of touches and um uh direct mail even in my direct mail program in two years they they get four pieces of direct mail but if they have an email address they'll probably get 24 emails you know an email a month right and they'll get a call every three to six months even if they don't want to sell yet they might in the future so those those 15 to 20 touches just to get them to say yes or just to just to get them to say yes i'm ready to sell um is an actual number is is true uh there is work involved here it's not you get a call and you and you cash a check anymore um not that it ever really was but um gabe are you just doing that in california just curious um right now we're still working on our california leads because we have you know tens of thousands that we've dug up but when we eventually run out we will understand you won't so in question most time when you buy lists and i see where you can find your list at by catherine and i'll sorry i'll get to your question in a second you're not getting email addresses on most of these lists you actually have to do some kind of skip tracing or some kind of tool to obtain their email address you're really just getting the property information would that be no uh when you get a list there's a few list companies out there that that are are recommended and that's the first question people think if i if i know who that list company is i'm going to get you a list i'm going to get me some deals and then you got to before you even get the list there's some work to do there's some groundwork delay before you get these lists i see the question here where can you get the list you know it's like she's ready to go buy a list right now but but it's just a name and an address right and maybe some information about what they have but not enough to really do anything other than send a letter um skip tracing can be done you can you can do things to try to find emails we found that maybe you can find 25 of them that might have an email maybe um maybe some of you guys have some other experience with that but uh the way that i get my email addresses is when they call me i ask them to have an email address and you put them on a list you know and then you start with that that process of contacting so somebody asked about the insurance company make sure you get that can you ask yeah i i don't know the answer so can you ask can the insurance company sell that information to us no they they really can't but if if one of their clients that's holding a note then they're friendly with their client and their client says hey do you know anybody i can sell this note to oh yeah here here's jeff armstrong yeah right yeah wow okay you learned something new everything yeah that's that's my whole free time we're talking abby [Laughter] i assume it goes that way because we've done that with servicers right services say listen this guy's looking to sell a note can you or even sellers are like listen i got this note on mine can you throw it my way it's kind of a broker hand washing thing if i may say if there was a time where you could and jeff and tracy and gabe correct me if i'm wrong but uh where you could reach out to servicers and say hey all the mail or all your bills that you send out can you put my card in there or one of my marketing material i don't think they do that anymore i don't know but um i i always thought that was the same thing i don't know you gotta have an end but it still happens yeah yeah that's awesome and i i don't i know tracy you uh or jeff i i don't want to uh forgive me if i'm missing something but i personally know uh and i have saw because i own a copy of jeff's book every marketing how to do every marketing technique in the notebook every single marketing god i don't i can't remember right now everybody has every single remote marketing in the world and it has almost it has everything there is a plethora it doesn't have internet well yeah right i mean just some of the uh some great stuff in there and i still have that uh book that i bought in you know 2009 or something wow and i know one of the struggles that i i look into this stuff right is you know when you get a list and it has a trust in it you know from an ira it's almost impossible to get a hold of that trustee that the individual behind the trust from my knowledge you can forget that i think i mean i i i've had no luck i mean i don't i'm not the be all end all but it's very difficult someone else may have some insight but i've never had any luck with that trustee the whole point of that trustee is for protection um but may i just want to jump back to the attorney and the question of solicitation of services to receive leads i had a tremendous amount a week cast as tracy had mentioned a wide net so there's different types of digital nets that we put out there we'll put a wide general net we'll do a sniper targeted you know not shooting at a dart board with a blindfold on kind of thing but really targeted stuff and in some of our wide net uh digital marketing we receive a tremendous amount of executors of estates liquidating estates um not only we're not we don't advertise that we buy distressed properties but we buy distressed properties as well and we we picked up some really interesting finds of through these very long lengthy and sometimes torturous process because you end up being in some of these cases a family therapist uh trying to divvy up you know for the feuding siblings i see jeff and tracy and you know it's amazing but that's a good it's a good fleet source if you can figure out a way to market to that effectively second only to divorce liens true amazing it's just such a long list i mean you know games in a mix between institutional world and seller finance like we're you know we're looking to go towards but you know this whole thing of where you can get loans i'm going to hedge funds buying them for 10 plus years this is like the wild west you mean the grandma the grandpa we're gonna get into that issue of destruction of you know siblings buying it you know having a part and fighting over and so like that um did you have any you know angles where you got something from you know somebody that was just a weird scenario where it's just something just odd with it and you're able to make it out of nothing to something uh yes so we're willing to buy some of the hairier notes which which means uh maybe the paperwork is not great or the pay history is not great if the risk reward if the risk return potential is there and we're paying a low price in exchange for how much risk we're taking from that note for example a couple of years ago we bought a non-performing third deed of trust with terrible paperwork but because because we were confident in the amount of equity covering the note and the price we're paying was so extremely low we're willing to take on that type of risk of having to even having to write off the note completely so we bought a note we bought a non-performing third here in california for five cents on the dollar and then with bad paperwork by the way and we we eventually got a hold of the borrower and then and then modified their loan and just the down payment on the mod was four or five times the amount we have paid for the note itself and they're still paying today you got to clean up your paperwork i bet it's some of the paperwork we see is really really unbelievable and many of the leads that we get the the people that call us cannot find the note for the life of them so we ask for other documentation such as the hud one you know the closing documents and a lot of the time they can't find any documentation so now in our mark now in our letters and postcards that we send out it says please have your note handy and then call this number it still doesn't work it doesn't work it wouldn't work i can't imagine that would i mean they just wanted that money i call i call these people back over and over to never find the note yeah i hope you're not in florida so you know it's interesting all these different angles of marketing these people um you know and you know we talked about the fact that you can run postcards and you know and jeff's strategies of all kinds of stuff phone calls and emails and and like obvious tech person i'm more into the tech world of collecting things automatically and grandma doesn't like tech you know we've dealt with a lot of grandma things are difficult right and feel free to post questions in the chat box uh rob and i see your thing about saying to the letter to equity trust and basically got nowhere working with these ira companies is really difficult um because they're not allowed to disclose the information um to anyone it's it's protected so i don't know who you would mail it to or whatever but it would never get back to that person we look for the individual whose name is in that header ira trust so bob smith shows up right smith and then i'll look for john smith and sometimes i can locate them yeah and contact them directly but we would never contact the trustee yeah it's pointless they're not going to even bother um you definitely if it's a strange or unique name you can definitely find that we use a website advancedbackgroundchecks.com it's free you can check it out and it's a kind of a free skipped race thing um not the nlp all but it's the kind of way to get into it so we're going to dive now into um tracy the obstacles the struggles right we finally get to go through the process we got a hold of the seller we targeted them we mailed them we got a hold of them they're on the phone call or email whatever and then you get an envelope full of a bunch of numbers and dates and you want to take this loan in and this seller doesn't understand why you're buying it for a discount can you share a little about the misorganization the poorest rations the uh educating the seller of it you know them self-servicing it and collateral problems well the first thing you hear is i'm not going to take a discount that's the first thing just everybody's going to say that right but they're just going to say that so it's really about establishing rapport educating them on how the syst process works and you have to come down at the end of the day they're going to have to have a need to sell they're either moving towards something that they want something better maybe an investment or they're doing something exciting but a lot of times they have a problem and they need a solution to the problem and so they need money for that so you really have to listen to what it is they need we always like to do a full and at least one partial offer so that they have a choice they don't have to sell it all we have options for them to sell it without taking discounts by selling some now and some later but a lot of people don't want to do that but some will so i mean they can everyone here can talk to this there's definitely a process of explaining uh a discount and it's you know as much as i love my hp 12c it's not about educating them on the time value of money figuring out what their need is and solving the problem i like it that's the answer i hope you gave because most people want to solve the problem by hey how can we make this deal work it's really understanding the person right you're you're selling the person the opportunity to solve their problem not buy something off of them um someone's sick someone injured someone going to school right you're really selling them gabe we you mentioned before about some issues of a collateral and things like that and i just posted the link to that background check that i've used before i like one of the posts you had was like you got an envelope full of data and you're trying to give it to a servicer my thought my brain thought goes if this goes to bankruptcy court holy god like how can you prove any of this stuff so i'm curious you know how did you handle a service looking at an envelope and getting through that process oh no i don't i i clean it all up before any servicer or attorney gets to view the file sometimes i will take all the miscellaneous envelopes with the handwritten collection dates and amounts and i'll type it all into a neat spreadsheet calculate the exact payoff amount the exact reinstatement amount before i even attempt to transfer servicing or start a foreclosure um i feel that that's just one of the services i'm offering when i'm buying this notice how nice of you and i want to know what i bought also i want to know how much is owed exactly yeah even even on uh not just the non-performing and the stuff that you do gay but even on standard what we call standard first position you know seller finance notes performing um we're part of our our duty our job is to clean it up and make it presentable so that an investor will buy it or that so that we'll buy it and we could give it to a servicer and and such like that so we're not just handing over a bunch of information and letting someone else try to try to do it um but yeah i hope i didn't interrupt you there gabe well sometimes we literally get no information it's just it's just i went i lent this guy a hundred thousand dollars eight years ago i've never received the payment this is all i have well that's an easy payment history to verify what's on pay balance i don't know i can't finally know i get it that's that's it people call us i ask them so how much is owed and they say i don't know because they've never kept records and i say is this is the payment interest only i don't know can you just send me a photocopy of anything you have please thank you if that makes sense out of it so you know um i know that abby you jumped on uh one of the comments here's you know you could perform gestapo to verify the history can you share a little bit about that well definitely jump in next sure sure um so we buy one of our primary buying strategies um no surprise i would imagine but you know some of our institutional and high net worth individual investors that only require a five six seven eight percent yield which you know depending on the asset uh or or return on investment they're only looking to make that that percentage um you know credit score sensitivity comes into play and when credit score sensitivity comes into play and the credit scores aren't good enough for these investors those you know the cost of capital goes up because the investor pool changes that the offers go down so forth and so on we buy those we pounce on those uh poor credit borrowers with good payment history now it's v it's not verified good payment history so what we do in a situation like that is we will have the seller perform uh you know execute a payment history affidavit you know based on what they say that they received and sign it and then we will then take a uh have a conversation with the borrower uh and let the borrower know we're sending them what we call a loan confirmation loan balance confirmation otherwise known as an estoppel basically saying that i the borrower on this note you know do by swear that this is the balance blah blah blah blah blah and they sign that and now we have from the borrower and the seller so if it ever goes into a legal situation we now did everything we could to cover ourselves shy of having any copies of checks uh deposit slips servicing records anything like that that's the i i from our my experience that's the best thing that we could do i could be mistaken there could be others uh maneuvers that you can perform but that's pretty uh um straightforward on how we prove you know how we get over that my favorite payment history is um you know photos and xerox copies of cash [Laughter] i want to just jump in i had a business oh yeah we had a business note and the guy it was like a barbecue and i was like i need a copy of the down payment check and he sent me a picture of cash on a table i was like and a lawn mower there was a lawnmower in trade as well and i couldn't that's like i was doing reverse images just to make sure he didn't pull it off of google you know oh yeah my i i crack up because i'll have somebody to send me a copy of a note and they'll put it on their bed and take a picture of it with their phone yeah yeah you see all kinds of original but it's like i don't care what color your bedspread is you know but we do the same thing abby does i think it's pretty common you start out asking for this skin this is one of the things that scare people the most i think because you buy these notes that aren't service that aren't used to sell or financed and it's like how do you confirm the payment history so you start you know you start with your wish list well so i wish for a copy of canceled checks wouldn't that be nice okay i wish for a copy of your deposit statement showing the deposits going into your account i don't and uh not lumped in with everything else like actually just the amount of the payment that's what i wish for right so i have this this list of wishes and you know sometimes you get down to you know you're just recreating the uh affidavit the payment history affidavit that abby mentioned and then verifying it with the payor and it all has to do with how much equity is there and how good is that borrower's credit score and uh you know just what's the likelihood so you kind of you know you start out with your wish list and depending on the quality of the transaction you might back off that depending on where you are but definitely an affidavit and an estoppel are two good ways to handle that at least do that jeff how would you typically handle it and you know my thought were you know we administration where bankruptcy court wanted proof of you know payment history and a picture of money and a you know letters on an envelope that grandma kept don't really work well in bankruptcy quarter yeah uh there's so much going through my mind right now i what was the original question um uh the seller affidavit that they'll always sign it but we'll also send out a a uh an estoppo for the payor for the borrower for the person making the payments to to sign and agree to they have no reason to cooperate they may we they never see that again right we may not get confirmation from the borrower that that is and we have to just kind of take it on faith that okay we're trusting you that these payments were made um i would say probably 70 of the time we get the wish list you know that tracy's talking about we get the copies of the checks coming in if someone presents us with hit you know i get cash every month hey you know what we're not going to close this toe until the next payment goes by when they pay next time make them get you a money order because they can't send me cash so then they get a money order and and then we get a copy okay they paid that payment they must be paying the other payments uh i have uh um sometimes i'll even ask for a copy of the envelope that the check was sent in to make sure that they didn't write it themselves the seller so you know there there is there are sneaky things sellers try to do but but the the wish list that tracy mentioned and the things that we look for in the seller finance note um are there for a reason they're not there to piss off the brokers they're not there to upset the sellers they're there so that when we're buying a first position performing seller finance note we want it to keep performing that's why we're buying it you know and we want to check off all those boxes and make sure that that we can be as comfortable as we can with it um and whether we're gonna buy it or whether we're gonna wholesale it or broker it off uh like abby was mentioning too um but uh uh they they try all kinds of tricks and and we have to do the best we can to protect ourselves uh and if it came to a situation i mean knock on wood i've only had two foreclosures in 30 years that's a whole other story um i've never been knock on wood i mean this might be the year but i've never had anyone uh go to bankruptcy that that was a payer on one of the loans that i bought i've never had um uh those kind of things happen now have we had to modify notes when they when they stopped making payments sure you know did we give some people relief because of kovid last year yeah we did um and that was pretty funny because uh three months later two of them paid off i gave them three months and then you get a payoff check you're like i thought you're making no money how did that happen that happened too jeff it was the weirdest thing i mean like thank you but what's up with that yeah you're just like you buy you buy them right you know you're in the thick of it right so here you go and you you buy them right we've had n i'm not bragging because i you know knock on wood not one issue with our entire in-house portfolio not one not one issue with our investors in house portfolio um we've had i didn't even have a a call maybe one call on this whole kobe thing um and a payoff you know it's you know so um when you're in the thick of it you're buying them right you have you're touching everything you're seeing everything you're buying them right abby that that is that is so true um you know i i get calls and emails all the time from from people that have bought notes wrong and if you buy them wrong wrong bad things can happen you know things can happen um but if you and that's i try to stress that to everybody that that i talk to about notes is that if you buy them properly you will never ever lose your money and that's the truth if you buy them properly uh gabe buys him at five cents on the dollar for a second position non-performing note that hasn't been paid on in ten years that might be a little too high i don't know gabe knows gabe knows right but but it might be worth one cent on the dollar you know uh but when you buy them properly uh you should never ever lose your money you will never ever lose your money yeah it's when i got it started we're buying around 35 cents on a dollar you know first institutional and i didn't know what i was doing and i look back now i know exactly what i was doing but i had no clue people i was working before like how can you buy this stuff what is all about and i could have been i could have been 50 wrong on the value of the property and when you buy it right it don't matter right you're in a situation where we're saying we're never going to pay over 40 cents we'll never do that and you bought it in a situation where it no matter how bad it went you're still making money and i think most people miss on that where they buy it with one strategy in mind that this is going to happen and i'm going to do this and this is what the borrower's going to do and they forget these are human beings that have a life that's gone on um and if you don't plan for the worst you you're really in a bad situation where you bought a performing note and you think it's always gonna be a good situation it doesn't have to be the way and a lot of borrowers may make a payment every other month may their real estate you know brokers and they're buying and selling assets or you know work for companies i think people you're right i think people most time take courses go out and buy an asset and they say i'm gonna buy a performer and i'm gonna get it a great return and they don't claim any other issues or problems with it um and then they get to a servicer and all hell breaks loose right yeah so you know i hear a lot about educating the seller what is something you had to teach i'm going to start back with abby go back the other way what is something you had to teach a seller of a note that was just kind of brain dumb or whatever you know what are you going to say that you just you're surprised yeah yeah so you so just to clarify the question you're asking what are you know bringing the seller into the light so to speak and letting them see how they this is how i mean basically it doesn't always work because sometimes i get a little bit too technical i as tracy had mentioned you do not mention time value of money i know that all of the courses over the past 30 years have said well tell them about the time a cup of coffee today is that work to say no no no no you don't you're gonna lose them um you know as again how's tracy tracy mentioned they they they're not taking a discount well after the third or fourth call in a lot of the cases we'll we'll get them on the phone or the communication back and forth we get them on the phone and we explain them what they have mr note seller mrs note seller you know you have this good payment history the interest rate at five percent not so great you have you know 301 payments remaining you know uh 25 years and one month remaining it's a hell of a long time for return on investment and you've got to understand that if someone were to come in and buy this note at 100 cents on the dollar they would only be making a 5 return there's a ton more deals out there you're not going to sell it because other people are selling it for 10 12 13 return and your guy or gal that was making the payments don't have good credit that comes into play so you got we have there's a cost of capital you can exit an investment two ways you have an institutional exit or you have a private exit the institutional exit you're gonna see higher offers but they want you to jump through those credit hoops those payment hoops you gotta paint a real pretty picture on paper and if you don't have those records which we know you don't because we established it here here and here the return on investment the going rate of capital out there is 12 so there's a gaping hole between your five and the 12 that needs to be made in order for this thing to sell and that usually if they're listening that usually will get them to go oh i see what you're saying some will say but i'm still not taking a discount and others will say okay let's let's what's you know i break the the i the uh ice barrier what do they call like um iceberg yeah basically just going through and they go okay well i don't like the full what's the other options now you at least have them talking and moving in the right direction and that's half the battle jeff what would you say is the most common education you have to get to these sellers it's right on that first phone call it's right on the first phone call and and abby hit it right on the head hey what interest rates you have on that note two percent whoa what are you a bank what are you competing with banks here i mean why did you give them such a low interest rate and you really harp on the negatives yeah and you make them understand that this note is not worth what you think it is my underwriters aren't gonna like that two percent no way you know you should have gone to seven eight nine or something yeah but that's too high no it's not you're a seller you're not a bank why are you giving up two percent you know go ahead what's up they said they could have went to a bank for a loan that low why you know oh no they couldn't that's the whole point they couldn't they couldn't go why did you give it to him right yep yep so it's right on that first phone call when we're going through the worksheet we're building rapport we're on the phone for 25 30 minutes with them or sometimes longer sometimes shorter and really finding out about what they have you're hitting those points and why'd you take zero down payment oh my gosh who does that is this i mean you might as well have rented it right two percent oh my gosh you're not a bank and oh you only got two payments and the first one didn't come for 15 days after that i mean this is not sounding good dude right i mean this is what you're telling them on the phone right now on those negatives so that that they they get the sense that they're not gonna get you know 100 cents on the dollar and we may not even buy it at all we really make them afraid that when we go to the underwriters and get the prices that we can come back at least with something please hopefully i can get something for you yeah and i think most people it's i love the fact you talk about the whole yield thing i've had this conversation with students of gurus who don't get this whole idea they're buying it based on upb and they forget all about you know the yield number where they say well i'm going to buy it 70 no matter what it is and i try explaining them that if you're dealing with a three percent coupon or nine percent coupon that returns completely different because the coupon rate your payment rate's completely different and that 65 across the board doesn't work right so from if you're a buyer go through courses and you've heard by 65 by 70 please learn the math part of it we did a whole video on it because the yield doesn't work a three percent coupon if you buy a hundred percent as jeff just said you're getting a three percent return to maturity right unless you go to partial which tracy mentioned before if you bought that same numbers at an eight percent coupon rate your yield is significantly higher you bought that 100 you're gonna get an eight percent return so understand that buying your profit buying a yield not being buy based on percentage of upv or percentage of bpo we haven't mentioned at all we're buying it based on a yield or partial xr kind of formula so gabe what kind of education have you done with borrowers to cut our sellers to help them understand the the shift well i want to make it a little more basic to start with as far as the education way before we even talk about the terms some of the questions i get from the people that call me from the letters and postcards say you know how did you get my address why did you send me a letter i explained oh we're looking to add more loans to our portfolio and i found you in the public records i said oh wow i didn't know i didn't know that was possible and then the next question is what do you mean you can buy my note people can buy a note you know so you explain oh yeah we can buy it and they transfer the lien to us and then another question is how do i know i'm going to get my money if i send you the paperwork so i assure them that we close through an attorney you know to make them feel more comfortable those are those are even before we talked about the terms right and then i started asking them questions do you have the note third of the time no i don't have the note it's recorded in the county records and i say no i see so tracy find the no or even the copy of it or something and a lot of languages just end there they can't find anything and i'll email them a month later oh it's in a storage box uh 100 miles from here that i haven't been to in a year and then six months later i call them again did you find the note no i'm never finding the note i said well thank you i know we talked about the terms yeah i like what trees liquid gabe is saying is that this before we talk about terms and numbers and explaining why you're doing what you're doing and that basic one phone call they don't know about selling a note right they don't know about respite laws and all that kind of good stuff um servicers who the hell are them right what is that how do you go about it is as soft as it is it you know or are you buying you know is there assignments on some of these loans what is your strategy of teaching that seller who is not used to selling this note who definitely has a need to sell baby steps you know you just take them along the journey as you can you know yeah actually people say i just wish they call and they have the original note and they know their payment amount and they have all this lined up and that's somebody who's been shopping they've been around the block so i don't get too upset at the ones who don't know because they haven't been exposed very much so that means they're not shopping quite as hard and i have an opportunity to form a relationship and figure out the problem that they need to solve and so you know i think with them you you just have to take it in steps you can't uh you know make them drink from a fire hose of everything you've just got to get them along the way but definitely figuring out where that original note is i mean we could all tell horror stories i've been doing it for 30 over 30 years yeah i got the note oh yeah i got the no and then they don't have the note you're down to closing it's the last thing you need so it it's definitely a process i mean and we've tried to figure out how to make it just seamless but i just think it's seller financing if you don't have an appetite for not always knowing exactly what's going to happen it's not the right business [Laughter] people are going to be people right and i think that that's a good segue into the fact that knowing you're getting into a space to buy sell france notes buying the note is the easiest part of it it's the transfer of a mom and pop grandma grandpa to transferring a piece of paper that they think is worth x and they have attached them to the property typically tracy when you bought these kind of assets who are the typical sellers are they uh heirs of properties are they real estate investors what's a typical seller's situation with that property we see at all across the board so i mean we've bought notes where the seller has filed bankruptcy not the payer but the seller and this is an asset of theirs we've bought them definitely out of the states that has been mentioned we've bought them because um somebody was going into retirement facility and this is an asset that they had to liquidate before they could get coverage through social security or medicare medicaid so i mean there's all sorts of reasons we do like working with repeat sellers because we can show them how to document a transaction so they can get 90 95 cents on the dollar instead of 50 cents on the dollar so that is a goal to work with somebody more than once and and sometimes yes they have to document it differently and follow the mlo and the respa and that sort of thing but that that's not so hard to show them how to do that uh but a lot of times it's just a mom-and-pop seller you've got to realize there's a lot of seller financing rural areas so those individual note sellers uh a lot of it's in the rural areas and sometimes those are good notes sometimes they're not sometimes they're mobile home and land sometimes they're just land sometimes they're non-conforming properties that have an outhouse outback i mean there's you just never know what you're gonna get but it's all out there it's all part of the seller finance world i'm just looking back at some questions here what's the process of an lna if the original note is missing there is none well i actually we have some solutions to that i mean lna would be lost note affidavit but in the seller finance world if the note is really lost your best course of action if you can again it's my wish list you would go to the payor and have them sign a replacement note or take if there's a copy of the note sign it and say um i recognize the sellers lost it i'm saying this is it and i will honor this as the original note and then you have the seller sign an affidavit like that as well and so basically you've replaced the lost note that is more usually preferred by most investors i it's not as common in the seller finance word to just have the seller the holder of the note sign a lost note affidavit that's not as common i know it's very common in the institutional paper world but in the world of seller financing it's not as common because it's uh it's it's tricky it's tricky to show that you own it i beg your partner i may have misunderstood i thought the question was if there is no copy of the note how do you perform like if you like right now i have a deal a second in pennsylvania where the seller went into bankrupt went into bankruptcy and now they're selling off the asset and the the fiduciary whoever custodian doesn't have the even a copy of the note let alone the original so we're stuck we don't know what to do at this point that's what i thought the question was is if anyone has any insight i'm all ears that's an interesting one and also understand that most some states don't allow copy right even no affidavit you know doesn't allow that inside there you know pennsylvania is another state where a lost affidavit doesn't work right so you have to be careful where you get these things i would think typically what i would do i mean come from this world is i would just try to do a modification where i can just come somehow some way get someone to sign a doctor and go hey a new mod came up and give them little better terms to convince them hey here's my upb oh okay great that's how i would think about doing it from my perspective we did quite a few lost note affidavits um here on the non-performing loans in california and we're good with it if there is a copy of the note uh a legitimate looking copy of the note um but if there is no copy of the note we cannot start a foreclosure here and that's our primary collections technique on the non-performing loans so we can't buy it unless there's a at minimum of a copy of the node minimum right yeah so uh gabe as i as tracy what typical person is this person who's selling a no is it the mom and pop is it a heir you know the kids of a deceased person is it um a real estate investor most of the time it is someone that sold their house to someone else and carried a second because the person didn't have enough at closing or did not have a down payment and this was pretty common in the late 2000s here in california where people were just selling houses and buying them with nothing down and we're still buying those seller finance seconds because those things stopped paying as soon as the market declined in 2000 there's still a lot of that paper that we're buying you know chef yourself uh yeah the uh the typical note seller well i mean it's all across the board as tracy mentioned i mean from from rehabbers and fix and flippers we used to buy notes from in the 90s just consistently repeat sellers uh back then in the 90s and early 2000s uh to i i'm going to say most of my uh note holders and this is not just on single family homes this is on single family it's on commercial it's on land i are uh are older are 55 and older um have owned one property or two properties in their entire lifetime it's the only asset they've ever had they sell it and they carry back a note which is now the only asset they ever have and now we want to buy it at a discount but the typical i don't there really isn't a typical i the only typical i can get out of out of all the the people that have ever talked to um all the thousands and thousands of calls and and and notes um are that they're they're older they've they've owned a property for years and years and years they they had it most of the time free and clear they sold and they carried back their note um so i'm going to say 55 and up uh but uh it's really all across the board now you know we've got we've got um kids selling their their note their parents had in their inheritance we've got um estate planners trying to clean up someone's financials and and they got trying to get him to sell the note you got bankruptcy attorneys trying to sell its notes uh to get the people out of bankruptcy we've got i mean it's just it just the list goes on and on and on um and uh to kind of piggyback the answer on a previous question uh is these people are not going to just sell at a discount they've got to have a need right there's got to be some underlying need of why they picked up that phone and called you why they filled out your online worksheet they've got to be thinking about something in their head and that's our job to get through to them say hey trust me enough to tell me what you're looking for and i'll let you know if we can help you you know write me a book i'm not sure if everybody that never split the difference book never split the difference with a great mark it was a negotiating book fbi guy and it was talked about that it's not why is what about situation is motivating you how would it feel like what would you do if i gave you this money today what would it what would you do with it and you find well then i would go and pay my medical bills off you immediately have a situation where your what is what is the what does the past me purchasing do and i think that's a key thing right now um so i know that that it's uh yes so yeah it never splits the difference is the book uh that i if you can't haven't read it before it's an awesome book i've read it twice so far because there's so many insights about how to work with individuals he's a high level fbi guy you know abby i know you you dwindle into the summer finance worlds like that what has been your experience with these different sellers has been their biggest why what what has been their motivating factor you've seen that is something you can if someone goes i don't know you could throw out a suggestion for them to think about so just to clarify their what what's their biggest why and that the most common biggest why out there is from what i see in my you know what uh 14 years in this uh space which is you know half of the time less than half the time some of the other panelists um is they are between a rock and a hard place that's the best way i can explain it there there's a whole you know rainbow of hues that come across in that that that basket but there's the re you know i get um they are between a rock and a hard place it is usually it comes in waves and it comes it's not seasonal it's almost cyclical like for instance uh we'll see a ton of rehab flippers for yeah again these are the digital wide nets and the sniper nets that were you not necessarily i'm talking about the wide net the wide net can't i mean we pull everything in from asset managers at pnc to mr and mrs smith in mississippi that have to go to the library to use the internet i mean we have all different types of uh of folks coming across but the the traditional seller finance mom and pop seller is they're looking to sell because they want to uh downsize they're looking and you know they you know i'm 77 years old and i'm not going to live for another 30 years i want to give this money to my kid you know or i want to do something with this money we hear that a lot we hear investment opportunity a lot um especially with kovid that's all we've been hearing is investment opportunity and you know we get into uh you know i want cash on the sidelines so when the whole world goes on sale i can you know jump in without having to wait for an underwriting process to refine my house and you know so it's a tremendous amount of different reasons uh but the the long and the short of it is is that they've tried all 95 of them have tried all avenues and then have landed in our lap for one reason or another because their back is against the wall or they think their back is against the wall wow abby yeah you're a poet dude man it's true i tell you what i i mean that's it and and that rock and a hard place is the need yeah you know and and it is such there's a lot of them out there that that don't need um but uh when this covid thing hit last year business has been out of control out of control yeah yeah i'm so busy it's um uh people need money to pay their freaking bills right now i mean if that's what it comes down to and government's not giving it to them and they don't know if they're getting their jobs back they don't know if they can go back to work and if they do they have to do all these other things and and who has the money to get those things so they can't go back to work and and it's just people are people are wanting money um and we're seeing uh we're seeing quite a few calls on commercial notes from five years ago and six years ago and ten years ago saying hey uh they haven't been paying their payments now i'm like oh okay well let's let's see what we can do for you um but no one's really even talked about that is is the commercial space we talk a lot about residential but in the commercial space there's a lot of seller not maybe not as much as seller as residential um but we see quite a bit of rural area commercial stuff coming across our desk and they're like they had to close their restaurant they can't pay their mortgage i'm like and you want me to buy it let's talk about it where is it at uh uh where was this one uh this little tiny town in montana uh pillars pillars something montana and i was like oh my god it's a town of 200 people you know and you're just like and you want me to buy a 100 000 note on a on a restaurant that's not even an operation that's vacant right now you know and i'm like i i got permission to talk to the borrower and they're like yeah when we can start back up we'll start paying again i'm like okay so i gave the guy an offer of 10 cents on the dollar you know just in case i want to go to montana and foreclose on some commercial property and try to sell it to 199 people [Laughter] so i mean uh but but we're you know getting off track but but what abby was saying they're rocking a hard place and it might only be one out of ten people that are in a rock and a hard place yeah you know uh still a big numbers game that needle in a needle stack yep and they're it's the perceived rock in a hard place because when they start they start talking you're like well it's not really that bad you know i i'm i am not the type of person that's going to give this person every excuse in the book you know once we get past that hard conversation the two percent interest rate and oh by the way did you finance this to a relative or a friend how come you didn't charge him a down payment or two percent interest rate you know or yeah so once we get beyond that i i always uh represent to the seller that i am not the type of person in this company that you're dealing with it's not the type of company that's going to give you every excuse in the book a reason not to do our job we're gonna really try to go over and above um you know our ability to leave a good taste in your mouth when you walk away because we know you're selling at a discount but this is why this makes sense at least what we're seeing based on what you're telling us but there is just for everyone out there looking to get into this and i i spoke about this quite a bit there is a tsunami of assets that are going to hit the market in the commercial space in 21.

um it's going to be it's already i'm driving through here and as i mentioned i'm in palm springs we've been for the most part out in the wilderness so to speak in the middle of nowhere for the past 10 weeks and i really come through cathedral city here outside of palm springs and i'm not going to lie it looks a little bit like soviet russia in the 80s with a lot of the commercial shutdown it's a little bit unnerving um because it's sad it really is sad but these assets are either going to be transformed into seller carry notes for whatever reason or there's going to be a ton of seller carry notes hitting the commercial space which are going to be purchased and repurposed and innovated uh for a new economy in the future so we're looking forward to that but there's an opportunity right there it didn't you guys say that because in my years of doing this we never saw a lot of commercial i mean we even the asset tapes we got from different funds and commercial even multi-use buildings just nothing we ever came across i'll get from a broker here and there but i guarantee you guys there's gonna be a huge pile that's because of what's happened um i'm gonna just jump into some of the questions here and i see jeff doing his good job of uh answering them um and i think you know i asked this earlier what percentage of these assets you're buying are cfds versus notes um tracy what is what do you think your breakdown is whether it's a concert for d versus the seller finance note that depends on the state where you're marketing because some states don't use them at all um and some states do so if you're in michigan you're going to see a lot more than if you're in texas right so that that really is a product of what of what the state is but it's a smaller percentage i mean if you had to pick a number i'd say less than 10 percent i don't know what do you think jeff abby that's right that's right 10 yep i'm a big cfd fan i just don't like that i don't like the that instrument of just because it just it's not clean for me right um i'm seeing another question was and i think jeff you answered it like you know if you can give one sample of of marketing what would it be and i think you guys only answer that question of there isn't one right there you have to hit from different angles and one is not phone calls emails postcards mailers you know door knocks sometimes all are different ways you can get a hold people um and i'm just going down some lists um what i'm gonna do some people ask also is if you can put your contact information whatever the best one is for you into the chat box um just whatever public way you wanna share who people can reach out to you i'm getting some awesome feedback that they really enjoyed the conversation we're having tonight um even though sunday evening for everyone else i'm going to wrap it up just a few minutes i think for everyone learning this is that those who are in notes like myself and we want to get into this world because we find there's an angle here that we're not seeing or haven't seen a lot of but what we're hearing now is that it's as different as it is it's not the clean cut um it's similar to those people who are calling banks up to find product from bank asset managers and going oh that's a great way of doing it because gurus are all talking about it and the angle is that you're not going to get supply be if you do get any supply it's going to be crazy stuff i heard churches and schools and stuff like that where it's just not clean residential so you're really going to lose out with this wild west what would you say obviously returns are pretty good what are you typically buying a performer asset wise right are you buying it and it you know and it it eight percent are we buying at higher returns because the institutional loans are ranging in between eight and twelve i'm seeing from our purchasing abilities trace what would you say you're where would you say a round about the most common question we get you're buying these performing loans at any yield it depends on the attributes of the note it depends on the equity and the credit and the interest rate and the term and so you bring me a zero percent note and uh 30 years i'm going to be you know under 50 cents on the dollar you bring me a note with a 680 credit score and 20 percent down payment and uh over a hundred thousand dollar balance i'm can get 95 to 97 from an institutional buyer so it is so all over the board i mean we we test everything against um investment to value limits uh yield and then a certain amount of discount that we want to make yeah and i think what most people don't realize is if there's 10 payments left versus 10 years of payments left that changes the price dramatically right buying a loan with a year of payments left there's nothing to be making on it so you're gonna have to buy it i like the ones with interest only uh payments and it's gonna balloon two years and they didn't put any money down those are my money you gotta build that in 20 cents on the dollar mr no-tiller get yourself a deal gabe will be buying those uh in a couple of years where's your email game okay good email now send it to him so you know i think one of the things that tracy mentioned too and it's awesome situation is buying the partials guys if you're going to get into this business understand what partials is i'm not going to go into finding it but it's a way to make a deal happen for a borrower where the numbers don't work to buy the entire loan you can buy a partial you found their why they need five grand to buy a property they live in their bulk the backyard to buy rental property hey listen send me buying the entire thing i'll give you five thousand dollars now for this x-map payments and they can get some of the money out of this note um that's an angle that most people don't even explore even in our institutional world so abigail there's i was gonna oh god i was gonna say jeff is the um the the professional on this one no no no he yeah i was gonna say he knows so just to clarify partials are a very good way you know you want to make sure that you let them know that they not only can they sell the entire note but they can sell a portion of the note and uh you know that that's a a very powerful thing if you're not pushing is just pushing the partial then you're not doing your job and i'll i'll let you take it from there good sir go ahead jeff what was your comment about it no i'm laughing at abby uh with his link to his uh his uh article oh yeah so yeah guys there's what there's like tracy 29 ways to buy a note yeah and i know of 29 ways uh for sure and too many people focus on the full purchase uh seven out of ten deals i close are partials they called me and they'd need money because they lost their job because of covid i'm buying two years of payments or something just to give them some money now yeah it's better for them too it's a better deal for them it really is bite-sized portions and you can also if you're wholesaling or brokering um or or you know referring you can do that you can you can basically you know there could be more so if they take you know a shot at a partial and then they you know we've had multiple uh income streams or multiple wholesale fees over many many different years from the same note because they would come back and sell more payments and sell more payments and sell more payments you can you know make you know uh bite-sized portions of wholesale fee as well as you know provide them with bite-sized portions of cash which could really turn around quickly as you know you know the underwriting process occurs the first time around the second time they come back for cash they can have it in their account in 72 hours um you know from requesting as long as we get a bpo on the uh uh you know bpo done on the uh place make sure it's still yeah we won't get into this but i you know i'm always curious how people write their parcels up of you know if it if it defaults during that period of time um just those who are watching listening reach out to these guys about how they do it everyone does that a little differently um that if it's not performing what do you do how do you handle buy it back and typically people give three options or so what they would do in a scenario like that but i'm not going to go into it tonight this has been a killer nightmare uh one of my favorites i think it you guys for you guys i couldn't have picked a better crew of people to spend my night with um i know some people were distracted by football i appreciate you guys tuning in um i i really enjoy you guys i appreciate you guys coming on um awesome time with you guys uh if you have any parting words or anything you want to you know pitch what you got going on tracy i'll let you go start first if anything you want to pitch or share with everyone about what you're doing or uh how they can reach out to you or anything going on with you feel free to go ahead about your expo as well yeah thanks so we do have my husband and i put on cash flow expo once a year so that's cashflowexpo.com and it's uh three days and 30 speakers and it's free to watch live and then we have very affordable recordings if you want those as well so it looks at all the different aspects of the note business and uh various aspects of just generating cash flow not everybody's in the note business although a big portion of them are i think that i in closing i just like to say that there is a lot of opportunity coming to help people that's really how i look at it and i've had some time to come to terms with like you're making money off of people in need and that sometimes you're like how do i feel good about that and i'll tell you the how you do it is that you are helping them solve a problem you didn't cause that problem for them but you are helping them find a solution when they sometimes don't think they have one so i really think coming forward in 2021 and 2022 there's going to be an opportunity to help people that are in need and they're helping to solve their problem and always keep that in mind too that's why we always are fair and any kind of fee structure we take we're not out to take advantage of them but but make a fair profit and and help them solve their problem and i think that there's going to be a lot of opportunity for that in the in the coming years that's awesome gabe are you speaking anywhere what's going on yourself how can people reach out to you uh the best way to reach me is email gabe surfcityinvestors.com if you ever have any questions about non-performing loans i'll be happy to help out or even buy them for people thinking about getting into the buying of seller finance notes just remember that you really need to market consistently and spend a lot of time following up with the leads and don't underestimate how much time it's going to take the follow-up part but some of the best investments we've ever had were from following up over and over and over and over so it can be quite painful but it can be quite rewarding at the same time and yourself jeff uh yeah i piggyback on both gabe and tracy's comments um i uh i used to go speaking once a month at various places and that's not happening anymore i'm i'm barely getting used to this zoom thing and and to tell you truth i'm so busy buying notes right now i'm kind of glad i'm not traveling because uh it's it's been very busy and i i see it's going to get busier i really think that's going to uh it's going to be a banner year i had my best year last year uh in the last eight years so um it's it's gonna be phenomenal it is phenomenal if you know what you're doing um for those of you that are still listening here don't get all confused and and go right to the partial stuff i mean there's so much more just get your marketing down i've got a one-page marketing form that that i help people with just go to my website armstrongcapital.com click on note brokers there's a a wealth of information free information there for you i do have some resources there is my free weekly email newsletter that you can sign up for uh that goes out every wednesday morning and uh when you have specific questions you know free feel free to email me and i'll get back to you as soon as you can you can ask any of them gabe abby tracy i mean we respond we'll respond if you email us and and that's the name of the game it's such a small community of people here um it's really nice to see you tracy i mean kind of live and abby yes david it's yeah thanks for having us on uh uh that's next time let's not do a sunday night all right yes yes my kids are like what are you doing dad oh no we're working i wrote two articles today and stuff and things like that but but you know we're not working working [Laughter] you guys got going on right now abby anything coming up and i'll share what we have as well at the end here do you have anything you're pitching or selling uh we're not sad the only thing i'm selling is money i can i can buy notes i can buy us so you know jeff and uh tracy and my company myself abby and amara note we provide a lot of the same services uh gabe has a very specific uh niche where he's operating within i i want to just be very clear we we you know the the folks on this panel have been uh you know pillars of the note buying seller finance note buying community as they have mentioned for decades um we are you know we operate in the same space we all provide that same service and i'm sure the same level of of customer service and experience where where marinode exchange comes in does things a little bit differently is we will touch the harrier you know we also we dabble in institutional so we we're not just seller financed uh we dabble in institutional you know non-performing seconds uh notes that past statue limitations you know we can do a business notes um you know so we can do a plethora of different types of assets um so if there's something that uh is comes across your desk like a church note or something weird uh that that others won't touch you know by all means please feel free to reach out to us because we can really dig in and provide some solution there for you awesome and for us we have a beginner's course we have going on right now i have a bid calculator out there um we have a couple products where we can automate due diligence click data point for stuff but i think what everyone's really come down is getting involved in networking with everyone in the space and taking a little bit about from everyone everyone's experience and knowledge came from their own experience and what they've heard of so i have tools i have software i have resources directories some are free some aren't you're going to pay for some of the information you're going to get and some information is going to be free right just understand that the bigger picture here is networking and reaching out to other people and communication so guys with that said i am excusing you for the night enjoy your evening enjoy your time your family guys and abby enjoy your travel man i appreciate you coming on no and i look great man so yes thank you i really thank you for having us thank you yes all right guys i appreciate you guys have a great day everyone enjoy football the rest of the night thanks guys bye all right everybody dave putz here from jkp holdings tonight we're talking about cell refinance notes buying them finding them the issues the problems successes and that angle of buying notes um we've been in institutional notes for over 10 years now and this space is new to me so i'm going to learn alongside everyone else here so i'm glad to be joined with a bunch of awesome people um some great pre freak webinar talk was going on here and i think it's gonna be a really fun uh sunny night uh i please apologize with the football going on and we were pretty talk about before um and we'll do our best to kind of keep to the the point that we're looking for but the education here please do your best just tune in ask questions i'll keep the chat open i'll kind of moderate but i'm gonna let these guys talk about what they know best so i'm gonna start with tracy go to gabe jeff and then go to abby tracy can you share who you are what you've been doing and all the good stuff about yourself absolutely well welcome everybody right now i'm crying a little bit because we're big packer fans so ouch anyways but yeah so fred and i were laughing because when i met my husband he he's also in the note business and uh he was a packer fan so it's kind of like you got to be a packer family if you're in this family so you know we've been married now 23 years and we only had two quarterbacks the whole time it's crazy right so it's enough football talk so as faithful as i have been to the packers i have also been faithful to the note business so i've been a seller finance note buyer since 1988 so a few years and the first 10 years i purchased notes for what we called an institutional investor so they would buy seller financed paper and they'd hold a lot of it and then they ended up actually securitizing some of it turning it into mortgage-backed securities and then about 1997 after i learned so much from them i decided that i wanted to make some of that money for myself and not for another company and it went out on my own and i've been buying and selling notes since then we'd like to buy them in our self-directed retirement account and we still refer some notes so we'll sometimes make the income as well so just each note kind of has its own home whether it's a immediate profit or a long term profit and seller finance notes are are different definitely uh we tend to focus on first position performing uh we leave the non-performing in the seconds to other people i've dabbled in them over the years but every time i do i think i should get back in my lane uh so i like the seller finance note paper i'm excited to be here and i've got some other great panelists that you know i know love the solar finance notes as well thank you tracy gabe can you share it about yourself hi my name is gabe cass i'm the portfolio manager at surf city investors based in huntington beach california and for the past five and a half years we've specialized in acquiring and managing non-performing nodes primarily junior liens and for the last three or so years we've specialized in acquiring and managing non-performing junior liens that are seller financed or private money loans here in california interesting jeff can you share about your background and uh what you're involved in with self seller finance notes is sure so my background i worked for over a decade in institutional investment management primarily fixed income as an analyst so one and then i worked for a bank for a few years and then i discovered notes and i eventually transitioned into a full-time note investor five and a half years ago congratulations amazing thank you gabe appreciate it jeff how about yourself hey uh hi guys uh thanks for spending your sunday night here uh hopefully this will be done at seven i got a dinner date but uh uh it's six o'clock here in arizona i'm in the calves u city arizona i've been in uh seller finance notes first position performing seller finance notes since may of 1991 may of this year will be my 30th year doing just that and uh tracy and i met uh in that probably in that year 91 so yeah with that institutional investor and and uh it's been a long road a lot of people come and go in this business and and uh you know i knock on wood i'm so grateful i found it when i did uh but i've been doing this now 30 years i've been in real estate for 37 years and and uh there's nothing like notes i i don't do anything else besides notes uh after 30 years now uh i still do a ton of marketing for notes by myself and uh i think this year we're going to hit closed 2300 individual transactions um brokered most of them by probably one out of five by by about 20 for myself my self-directed ira my daughter's self-directed iras and and a few investors that i have but uh it's uh it's a great business it's just uh you got to figure it out and the way to figure it out is marketing what we're talking about tonight so um yeah this should be a fun discussion great is that enough good job you guys know i do keep going abby can you share with everyone who you are and what you've done with selfless notes absolutely my name is abby shemesh and i um own a company called the marinode exchange we are a uh a first position we are a note buyer and we uh purchase i uh our main operations occur within the seller finance space of the discounted loan industry so we typically focus on as the rest of the panel had mentioned first position performing is uh definitely our our primary focus uh we do dabble in all types of performance levels of uh assets including uh subperforming non-performing re-performing um we will also deal in uh seconds although those usually do get wholesaled or traded off um and it really as tracy and jeff and gabe have pointed out it really boils down to uh strategy for us so you know what comes and what goes but just to clarify i was uh started my career in loan acquisition excuse me loan originations in uh with a company called ibg financial and outside of the philadelphia area uh which led to my many um incarnations through the origination realm and then in 2006 got into the loan acquisition side or the secondary mortgage market um and and really uh as jeff had mentioned and what we're going to talk about tonight uh exploited a lot of the um the the areas that weren't being exploited in that industry at that time so uh you know that's how we really roared into it um coming from a marketing background uh as well dabbling in internet and affiliate marketing uh between originations and loan acquisition so we kind of brought all of our assets to bear if you would uh once we got to the secondary seller finance note market so that's been our uh our journey and here we are hopefully to answer some questions and and all learn something together tonight i'm amazed guys this is awesome i'm looking forward to learning stuff it's something i'm not used to so um for a lot of the cars on here i would be asking questions hopefully that you're thinking about the same time being in the institutional world having paper that's originated by a mom and pop shop is just strange to us right it's scary at times it's someone similar to those pers people getting into notes in general it's a different world it's like the wild west so let's just jump right in here and you know tracy when you're going to find assets are you buying lists are you marketing are you where are you typically going we thought about some some ideas of like local finance guy and attorneys and insurance and brokers where do you typically find the the assets or what do you do for marketing to find those assets well there are five in my mind primary places that you can find notes you can use direct mail where you are buying a list of seller finance note holders and remember it's about less than six percent of all residential real estate transactions involve some sort of seller financing so you really gotta hone in your marketing or you you're just gonna do shotgun and not target and really waste a lot of time and money so i think that's the first place i like to come from when you start talking about marketing um and so the direct mail is one we do some reverse ad marketing where we talk to people that are advertising that they sell properties with owner financing our favorite is referral and networking because you can establish relationships with professionals in real estate that come in contact with seller financing and then there's you know building your brand and there's you know there's ads it used to be old school ads some of that works a little bit but more now it's ads on the internet right pay-per-click so i kind of look at those as the main marketing areas we've used them all over the years we tend to do more networking referrals now just because we've been at it a while and you know we don't have to re do the grind of direct mail i know jeff still does a ton of direct mail and so i'll i'll definitely let him weigh on in on that but that's what we see is the five main avenues of finding notes and so we'll all talk to it i'm sure more here i do want to say that think about it that just to set the framework is about we track these numbers every year on our nodeinvestor.com site about 23.9 billion with the b was the number of seller finance notes picked up on county recording so there's others out there that aren't recorded like unrecorded land contracts and that's like first position over 30 000 so there's more that if you count seconds and there's more if you count smaller notes but if you look at the like we're talking the marketable notes so we're talking about 100 billion with the b created in the last five years so it's not as huge as some of the other market but it's definitely a sizable market it's just targeting your marketing to find that market so are you talking about you're buying notes or cfds or both we do both okay gabe can you share a little bit of what your techniques have been are you buying lists are you going to a broker sure so we've been direct marketing primarily for three years here in california for junior liens that are originated by private parties so we spend extensive time data mining and scrubbing the recorders records and buying lists trying to find and contact these private note holders and we spend most of the time on marketing and following up and that's how we've acquired most of the private notes over the last three years um it's a very you know sometimes painful and time-consuming process and i have an assistant who helps me with this process 30 hours a week also so it's both of us working on it i primarily handle the calls and she helps scrub the data but it's a lot of following up but the success stories sometimes are really great and they keep you going until you have the next one so it's pretty difficult we're gonna get into that whole idea of you know that the energy that you need to do once you get a loan that possibly you can buy because just getting the marketing started and then just getting the note seller to say i'll mention it is just the beginning we're gonna get into that in a few minutes because that's a new world on average how what would you say your response rate is on your marketing on i don't know how many you're saying at a year or so but what's your response rate um well i've sent out about 19 000 pieces of mail over the last three years and we've had about two percent call okay and then and then we've closed maybe 10 of those two percent so 0.2 so that that's been about the number and we're targeting uh junior lien holders so it's a little different than than what the other guys are doing so you're buying marketing is somewhat similar we're just using different criteria when we're figuring out who to mail to yeah so you're buying lists jeff what's your strategy of finding the deal oh boy abby gabe and tracy y'all know i can go for days and days on this um both tracy and gabe mentioned a couple things and and uh one thing tracy said where that is that it's a needle and a haystack that we're looking for seller finance note holders that are purchasable and and it's more than that it's a needle in a needle stack uh there's a lot of them out there there's a hundred billion dollars worth of these notes out there you know um a little guy like me can only do i don't know seven to ten million a year you know so so there's plenty of stuff out there but we gotta find them now we gotta get them to respond um gabe mentioned something about follow-up okay marketing aside for just a half a second if you're not following up with these people after they contact you the first time just because they don't say yes right away doesn't mean you're not going to get a deal in the future and too many people think you send out a letter and you get a deal that's not the way it works marketing works and tracy said this already as well with a targeted marketing plan a program something that you go out there and you're persistent for at least a year if not more to get your business started and to grow and survive your business you got to keep doing it and keep doing it and keep following up uh targeted marketing uh you know it there has to be three to five lines in the water this is how i teach it that's how i talk about you got to be doing more than one thing right you can't just rely on direct mail you can't just rely on classified ads you can't just rely on internet you've got to have several lines in the water to catch those fish because some months will be better with one marketing method than others right direct mail for me is huge uh i mean i giggled a little bit no offense gave but gabe said he's mailed out 19 000.

i probably mailed out close to a million pieces of mail in in the last 10 years and and but that's now in the beginning it was 500 a month right way back in 91 when i started with with this but direct mail still is only about 45 50 of the deals i close every year so direct mail is huge for me yes we buy lists um but the lists have to be you have to target it to the right correct thing as well you can't just buy a list and they're going to get a deal it doesn't it doesn't work like that it's a very targeted list so direct mail number one uh for me now just like tracy after doing this for 30 years we got a decent referral network out there and we get uh you know a good percentage our closed transactions every year from building up that referral network for so many years uh i still place classified ads in in papers uh printed ads in certain targeted places to get people to respond um i do play with the internet stuff i am not the greatest at the internet i have someone do it for me and we get a we get enough out of the internet leads uh for to cover our expenses for the year make a little profit okay so that that is not my forte um we do a lot of direct contact when we can these days it's it's going to be these zoom meetings from now on until we can have actual live events and things but that direct contact has been huge in building up that referral base over the years you know i i've got resources out there that that list you know i don't know 70 or 100 i don't know how many are in that that book but um there's lots of ways that you can get a deal and you've got to figure out for yourself which of all those ways is going to work for you just because jeff is you know does great at direct mail doesn't mean you're going to just because tracy does great with with the internet doesn't mean you're going to just because gabe does does good at what he does does not mean that it's going to work for you too so all this stuff has to be tested out by each and every one of you to figure out what works for you and it's got to be very targeted uh to our specific first position seller finance note performing uh as well and just a side note i've dabbled in the non-performing definitely not for me i'd only do it in my state um and uh re-performing and stuff performing we will look at some of that stuff as well but the majority of it you know 85 90 of what we're closing every year is those first position seller finance notes that we go after and target so uh that's kind of what i do so we're a lot about buying lists and stuff like that i'm curious if anyone ever targeted like attorneys or insurance companies or you know maybe a local hard money lender kind of world um abby what has been your typical technique or strategy um well yeah all of this information i'm just kind of digesting uh the numbers that jeff's just kind of throwing out there as far as the mailers because i the one area it's you know the one area that i do not operate in are the mailers everything else is where i operate our focus is digital so we uh try to uh you know our our footing is organic google search or other search engines pay-per-click social media um we're really starting to incorporate ai into the process artificial intelligence and chat bot uh so when we can you know free up the human to do stuff that makes money as opposed to uh directing traffic online because that becomes uh you know uh an issue if you start these leads start pouring in you don't know what to do with them and and again to the point of the panelists here uh follow-up is everything it's everything i still have deals that i'm following up from 2015 2015.

so that's five years i'll i'll kick it out six months eight months uh we just did a a fee a wholesale fee it was one of the largest wholesale fees we've ever encountered from a follow i shouldn't say just but uh within the past six months you know from a follow-up so i can't stress enough how follow-up is extremely important and i it correct me if i'm wrong uh to anyone out there but if i'm not mistaken when you send a mailer you know five to eight times they need to see that mailer before they really start thawing out and figure you know depending on the type of mailer and so forth um it could very well be that way for a person who fills out a short form or a long form on your website they have the intent of wanting to sell a note that you confirm that they own and they still need five to ten follow-up calls just to get a copy of the note so it's it's a lot of hand-holding it's a lot of uh you know relationship and nurturing and uh the other speaking of nurturing email email lists so for all of our opt-ins uh we do email lists we also monetize you know for the for the folks that are not necessarily in the note business but kind of on the periphery we will try to monetize the leads that we have coming in to make that some sort of cash flow whether that monetization occurs through a product or another service uh that we can uh take an affiliate fee on or something to that effect uh we've had a little bit of success there and we're kind of building that out now but um all of these uh methods as jeff had mentioned are not a one size fits all and you know that was the area in which we operated prior to coming into the note space so i was very comfortable there um and it is like a 180 degree difference from what it was in 2007 uh online in the note space and i i can i know all the panelists here i see heads nodding and i you know one of our institutional investors uh had mentioned to me in passing over the past i don't know nine months that you know when they had folks in our space you know wholesaling notes to them they maybe had seven 12 people in their system as of november of 2020 it was 107 people in their system so if that gives you any representation of how crowded the space is right now you're not going my recommendation is to go in through the back door you want to take an asymmetrical approach to marketing you're not going to throw a fist at a giant and and think that you're going to win sometimes but asymmetrical uh motivation is is the way to go here i think that's an excellent point to add to that we tell people normally start out in your local market get to be your local expert and then branch out from there so that's you know to your point yeah are you reaching out are you reaching out to any kind of like you know hard money lenders locally are you reaching out to insurance companies at all are you doing any kind of those kind of relationships tracy are you reaching out to well hard many lenders aren't going to have hard money lenders aren't going to have seller finance notes correct but they answered these people hard money lenders took money out of their pocket and gave it to someone and they're not going to sell their note for a discount that'd be a waste of time yeah we buy at a discount and i've found hard money lenders don't want to sell at a discount yeah so i i'd like to chime in on that we actually just recently yeah that's absolutely just a double down on what's being said they don't sell at a discount but i i don't know if anyone else has saw this but immediately after covid uh uh april 2020 the phones and the the submission forms were lighting up with hard money lenders and uh non-qm lenders i don't know if anyone else was seeing this but it was yeah it was just you know watching you know the the the non-qm market collapse exactly it was uh something so we actually wanted to filter real quick close uh just for everyone who's online that's a non-qualified mortgage i beg your pardon just make it short yes non-qualified mortgages which is another way of saying subprime really um which is non-conforming or something that most banks wouldn't touch for whatever reason or another but i will say that we had to fill we're getting so many leads with these hard money letters even now today that we actually just found a third party a referral if you would that would take these uh assets at par which is highly unusual but he's very specific to a certain area so um yeah yeah i heard someone mentioned insurance companies and you know these hard money lenders of contacting them through whoever is local to the market who's maybe selling stuff but i was just curious if anyone's reached out to attorneys as well who has their clients i see abby and said jeff have you worked with anyone or even gabe where maybe a attorney is a great resource to find assets absolutely and you really got to clarify it's not just any attorney it's real estate attorneys right real estate attorneys are the ones that that can refer a lot of business to us if we make their clients happy uh it's really tough to just call up a real estate attorney and say hey i buy notes can you refer some to me i mean that's that's not really how it happens uh the advantage to doing business for a long time is that we've closed so many transactions we have worked with real estate attorneys across the country and yes now they then refer clients to us um so that is a good contact real estate attorneys you mentioned hazard insurance don't get a lot of referrals from hazard insurance agents um but they are a contact they are someone that would know of someone that's holding a note because on the lost payee form on the on hazard insurance declaration uh the mortgagee will be listed and if the mortgage is an individual's name that's going to be a seller finance note um so that that is an avenue to try to get some business as well uh but very small percentage gabe have you what have you been have you worked with any kind of odd person to buy a note from um you know we really focus on buying from individuals because we we're buying the non-performing loans and we find the biggest discounts we can get are from individuals that have been holding non-performing loans for long periods of time when we talk to brokers or attorneys the pricing is just too high for what we're looking for so we specialize in finding those note holders that no one has contacted in years and they've they've had this note in their office drawer and they've received no interest payments for the last eight years those are the people that we specialize in finding and we get the best the largest discounts buying directly from these individuals so ours is you know it's very research intensive to find these people and contact them but then the follow-up part is also very intensive some of our best notes we've ever bought took you know 15 to 20 touches from one lead before we finally closed with them but in the end it works out when you get an amazing note i think that's a really important point it's kind of like dating you know you're just gonna ask them to marry you on the first date it's according bro no no work that way yeah that's uh um a lot of uh both abby and gabe mentioned a lot of touches and um uh direct mail even in my direct mail program in two years they they get four pieces of direct mail but if they have an email address they'll probably get 24 emails you know an email a month right and they'll get a call every three to six months even if they don't want to sell yet they might in the future so those those 15 to 20 touches just to get them to say yes or just to just to get them to say yes i'm ready to sell um is an actual number is is true uh there is work involved here it's not you get a call and you and you cash a check anymore um not that it ever really was but um gabe are you just doing that in california just curious um right now we're still working on our california leads because we have you know tens of thousands that we've dug up but when we eventually run out we will understand you won't so in question most time when you buy lists and i see where you can find your list at by catherine and i'll sorry i'll get to your question in a second you're not getting email addresses on most of these lists you actually have to do some kind of skip tracing or some kind of tool to obtain their email address you're really just getting the property information would that be no uh when you get a list there's a few list companies out there that that are are recommended and that's the first question people think if i if i know who that list company is i'm going to get you a list i'm going to get me some deals and then you got to before you even get the list there's some work to do there's some groundwork delay before you get these lists i see the question here where can you get the list you know it's like she's ready to go buy a list right now but but it's just a name and an address right and maybe some information about what they have but not enough to really do anything other than send a letter um skip tracing can be done you can you can do things to try to find emails we found that maybe you can find 25 of them that might have an email maybe um maybe some of you guys have some other experience with that but uh the way that i get my email addresses is when they call me i ask them to have an email address and you put them on a list you know and then you start with that that process of contacting so somebody asked about the insurance company make sure you get that can you ask yeah i i don't know the answer so can you ask can the insurance company sell that information to us no they they really can't but if if one of their clients that's holding a note then they're friendly with their client and their client says hey do you know anybody i can sell this note to oh yeah here here's jeff armstrong yeah right yeah wow okay you learned something new everything yeah that's that's my whole free time we're talking abby [Laughter] i assume it goes that way because we've done that with servicers right services say listen this guy's looking to sell a note can you or even sellers are like listen i got this note on mine [ __ ] can you throw it my way it's kind of a broker hand washing thing if i may say if there was a time where you could and jeff and tracy and gabe correct me if i'm wrong but uh where you could reach out to servicers and say hey all the mail or all your bills that you send out can you put my card in there or one of my marketing material i don't think they do that anymore i don't know but um i i always thought that was the same thing i don't know you gotta have an end but it still happens yeah yeah that's awesome and i i don't i know tracy you uh or jeff i i don't want to uh forgive me if i'm missing something but i personally know uh and i have saw because i own a copy of jeff's book every marketing how to do every marketing technique in the notebook every single marketing god i don't i can't remember right now everybody has every single remote marketing in the world and it has almost it has everything there is a plethora it doesn't have internet well yeah right i mean just some of the uh some great stuff in there and i still have that uh book that i bought in you know 2009 or something wow and i know one of the struggles that i i look into this stuff right is you know when you get a list and it has a trust in it you know from an ira it's almost impossible to get a hold of that trustee that the individual behind the trust from my knowledge you can forget that i think i mean i i i've had no luck i mean i don't i'm not the be all end all but it's very difficult someone else may have some insight but i've never had any luck with that trustee the whole point of that trustee is for protection um but may i just want to jump back to the attorney and the question of solicitation of services to receive leads i had a tremendous amount a week cast as tracy had mentioned a wide net so there's different types of digital nets that we put out there we'll put a wide general net we'll do a sniper targeted you know not shooting at a dart board with a blindfold on kind of thing but really targeted stuff and in some of our wide net uh digital marketing we receive a tremendous amount of executors of estates liquidating estates um not only we're not we don't advertise that we buy distressed properties but we buy distressed properties as well and we we picked up some really interesting finds of through these very long lengthy and sometimes torturous process because you end up being in some of these cases a family therapist uh trying to divvy up you know for the feuding siblings i see jeff and tracy and you know it's amazing but that's a good it's a good fleet source if you can figure out a way to market to that effectively second only to divorce liens true amazing it's just such a long list i mean you know games in a mix between institutional world and seller finance like we're you know we're looking to go towards but you know this whole thing of where you can get loans i'm going to hedge funds buying them for 10 plus years this is like the wild west you mean the grandma the grandpa we're gonna get into that issue of destruction of you know siblings buying it you know having a part and fighting over and so like that um did you have any you know angles where you got something from you know somebody that was just a weird scenario where it's just something just odd with it and you're able to make it out of nothing to something uh yes so we're willing to buy some of the hairier notes which which means uh maybe the paperwork is not great or the pay history is not great if the risk reward if the risk return potential is there and we're paying a low price in exchange for how much risk we're taking from that note for example a couple of years ago we bought a non-performing third deed of trust with terrible paperwork but because because we were confident in the amount of equity covering the note and the price we're paying was so extremely low we're willing to take on that type of risk of having to even having to write off the note completely so we bought a note we bought a non-performing third here in california for five cents on the dollar and then with bad paperwork by the way and we we eventually got a hold of the borrower and then and then modified their loan and just the down payment on the mod was four or five times the amount we have paid for the note itself and they're still paying today you got to clean up your paperwork i bet it's some of the paperwork we see is really really unbelievable and many of the leads that we get the the people that call us cannot find the note for the life of them so we ask for other documentation such as the hud one you know the closing documents and a lot of the time they can't find any documentation so now in our mark now in our letters and postcards that we send out it says please have your note handy and then call this number it still doesn't work it doesn't work it wouldn't work i can't imagine that would i mean they just wanted that money i call i call these people back over and over to never find the note yeah i hope you're not in florida so you know it's interesting all these different angles of marketing these people um you know and you know we talked about the fact that you can run postcards and you know and jeff's strategies of all kinds of stuff phone calls and emails and and like obvious tech person i'm more into the tech world of collecting things automatically and grandma doesn't like tech you know we've dealt with a lot of grandma things are difficult right and feel free to post questions in the chat box uh rob and i see your thing about saying to the letter to equity trust and basically got nowhere working with these ira companies is really difficult um because they're not allowed to disclose the information um to anyone it's it's protected so i don't know who you would mail it to or whatever but it would never get back to that person we look for the individual whose name is in that header ira trust so bob smith shows up right smith and then i'll look for john smith and sometimes i can locate them yeah and contact them directly but we would never contact the trustee yeah it's pointless they're not going to even bother um you definitely if it's a strange or unique name you can definitely find that we use a website advancedbackgroundchecks.com it's free you can check it out and it's a kind of a free skipped race thing um not the nlp all but it's the kind of way to get into it so we're going to dive now into um tracy the obstacles the struggles right we finally get to go through the process we got a hold of the seller we targeted them we mailed them we got a hold of them they're on the phone call or email whatever and then you get an envelope full of a bunch of numbers and dates and you want to take this loan in and this seller doesn't understand why you're buying it for a discount can you share a little about the misorganization the poorest rations the uh educating the seller of it you know them self-servicing it and collateral problems well the first thing you hear is i'm not going to take a discount that's the first thing just everybody's going to say that right but they're just going to say that so it's really about establishing rapport educating them on how the syst process works and you have to come down at the end of the day they're going to have to have a need to sell they're either moving towards something that they want something better maybe an investment or they're doing something exciting but a lot of times they have a problem and they need a solution to the problem and so they need money for that so you really have to listen to what it is they need we always like to do a full and at least one partial offer so that they have a choice they don't have to sell it all we have options for them to sell it without taking discounts by selling some now and some later but a lot of people don't want to do that but some will so i mean they can everyone here can talk to this there's definitely a process of explaining uh a discount and it's you know as much as i love my hp 12c it's not about educating them on the time value of money figuring out what their need is and solving the problem i like it that's the answer i hope you gave because most people want to solve the problem by hey how can we make this deal work it's really understanding the person right you're you're selling the person the opportunity to solve their problem not buy something off of them um someone's sick someone injured someone going to school right you're really selling them gabe we you mentioned before about some issues of a collateral and things like that and i just posted the link to that background check that i've used before i like one of the posts you had was like you got an envelope full of data and you're trying to give it to a servicer my thought my brain thought goes if this goes to bankruptcy court holy god like how can you prove any of this stuff so i'm curious you know how did you handle a service looking at an envelope and getting through that process oh no i don't i i clean it all up before any servicer or attorney gets to view the file sometimes i will take all the miscellaneous envelopes with the handwritten collection dates and amounts and i'll type it all into a neat spreadsheet calculate the exact payoff amount the exact reinstatement amount before i even attempt to transfer servicing or start a foreclosure um i feel that that's just one of the services i'm offering when i'm buying this notice how nice of you and i want to know what i bought also i want to know how much is owed exactly yeah even even on uh not just the non-performing and the stuff that you do gay but even on standard what we call standard first position you know seller finance notes performing um we're part of our our duty our job is to clean it up and make it presentable so that an investor will buy it or that so that we'll buy it and we could give it to a servicer and and such like that so we're not just handing over a bunch of information and letting someone else try to try to do it um but yeah i hope i didn't interrupt you there gabe well sometimes we literally get no information it's just it's just i went i lent this guy a hundred thousand dollars eight years ago i've never received the payment this is all i have well that's an easy payment history to verify what's on pay balance i don't know i can't finally know i get it that's that's it people call us i ask them so how much is owed and they say i don't know because they've never kept records and i say is this is the payment interest only i don't know can you just send me a photocopy of anything you have please thank you if that makes sense out of it so you know um i know that abby you jumped on uh one of the comments here's you know you could perform gestapo to verify the history can you share a little bit about that well definitely jump in next sure sure um so we buy one of our primary buying strategies um no surprise i would imagine but you know some of our institutional and high net worth individual investors that only require a five six seven eight percent yield which you know depending on the asset uh or or return on investment they're only looking to make that that percentage um you know credit score sensitivity comes into play and when credit score sensitivity comes into play and the credit scores aren't good enough for these investors those you know the cost of capital goes up because the investor pool changes that the offers go down so forth and so on we buy those we pounce on those uh poor credit borrowers with good payment history now it's v it's not verified good payment history so what we do in a situation like that is we will have the seller perform uh you know execute a payment history affidavit you know based on what they say that they received and sign it and then we will then take a uh have a conversation with the borrower uh and let the borrower know we're sending them what we call a loan confirmation loan balance confirmation otherwise known as an estoppel basically saying that i the borrower on this note you know do by swear that this is the balance blah blah blah blah blah and they sign that and now we have from the borrower and the seller so if it ever goes into a legal situation we now did everything we could to cover ourselves shy of having any copies of checks uh deposit slips servicing records anything like that that's the i i from our my experience that's the best thing that we could do i could be mistaken there could be others uh maneuvers that you can perform but that's pretty uh um straightforward on how we prove you know how we get over that my favorite payment history is um you know photos and xerox copies of cash [Laughter] i want to just jump in i had a business oh yeah we had a business note and the guy it was like a barbecue and i was like i need a copy of the down payment check and he sent me a picture of cash on a table i was like and a lawn mower there was a lawnmower in trade as well and i couldn't that's like i was doing reverse images just to make sure he didn't pull it off of google you know oh yeah my i i crack up because i'll have somebody to send me a copy of a note and they'll put it on their bed and take a picture of it with their phone yeah yeah you see all kinds of original but it's like i don't care what color your bedspread is you know but we do the same thing abby does i think it's pretty common you start out asking for this skin this is one of the things that scare people the most i think because you buy these notes that aren't service that aren't used to sell or financed and it's like how do you confirm the payment history so you start you know you start with your wish list well so i wish for a copy of canceled checks wouldn't that be nice okay i wish for a copy of your deposit statement showing the deposits going into your account i don't and uh not lumped in with everything else like actually just the amount of the payment that's what i wish for right so i have this this list of wishes and you know sometimes you get down to you know you're just recreating the uh affidavit the payment history affidavit that abby mentioned and then verifying it with the payor and it all has to do with how much equity is there and how good is that borrower's credit score and uh you know just what's the likelihood so you kind of you know you start out with your wish list and depending on the quality of the transaction you might back off that depending on where you are but definitely an affidavit and an estoppel are two good ways to handle that at least do that jeff how would you typically handle it and you know my thought were you know we administration where bankruptcy court wanted proof of you know payment history and a picture of money and a you know letters on an envelope that grandma kept don't really work well in bankruptcy quarter yeah uh there's so much going through my mind right now i what was the original question um uh the seller affidavit that they'll always sign it but we'll also send out a a uh an estoppo for the payor for the borrower for the person making the payments to to sign and agree to they have no reason to cooperate they may we they never see that again right we may not get confirmation from the borrower that that is and we have to just kind of take it on faith that okay we're trusting you that these payments were made um i would say probably 70 of the time we get the wish list you know that tracy's talking about we get the copies of the checks coming in if someone presents us with hit you know i get cash every month hey you know what we're not going to close this toe until the next payment goes by when they pay next time make them get you a money order because they can't send me cash so then they get a money order and and then we get a copy okay they paid that payment they must be paying the other payments uh i have uh um sometimes i'll even ask for a copy of the envelope that the check was sent in to make sure that they didn't write it themselves the seller so you know there there is there are sneaky things sellers try to do but but the the wish list that tracy mentioned and the things that we look for in the seller finance note um are there for a reason they're not there to piss off the brokers they're not there to upset the sellers they're there so that when we're buying a first position performing seller finance note we want it to keep performing that's why we're buying it you know and we want to check off all those boxes and make sure that that we can be as comfortable as we can with it um and whether we're gonna buy it or whether we're gonna wholesale it or broker it off uh like abby was mentioning too um but uh uh they they try all kinds of tricks and and we have to do the best we can to protect ourselves uh and if it came to a situation i mean knock on wood i've only had two foreclosures in 30 years that's a whole other story um i've never been knock on wood i mean this might be the year but i've never had anyone uh go to bankruptcy that that was a payer on one of the loans that i bought i've never had um uh those kind of things happen now have we had to modify notes when they when they stopped making payments sure you know did we give some people relief because of kovid last year yeah we did um and that was pretty funny because uh three months later two of them paid off i gave them three months and then you get a payoff check you're like i thought you're making no money how did that happen that happened too jeff it was the weirdest thing i mean like thank you but what's up with that yeah you're just like you buy you buy them right you know you're in the thick of it right so here you go and you you buy them right we've had n i'm not bragging because i you know knock on wood not one issue with our entire in-house portfolio not one not one issue with our investors in house portfolio um we've had i didn't even have a a call maybe one call on this whole kobe thing um and a payoff you know it's you know so um when you're in the thick of it you're buying them right you have you're touching everything you're seeing everything you're buying them right abby that that is that is so true um you know i i get calls and emails all the time from from people that have bought notes wrong and if you buy them wrong wrong bad things can happen you know things can happen um but if you and that's i try to stress that to everybody that that i talk to about notes is that if you buy them properly you will never ever lose your money and that's the truth if you buy them properly uh gabe buys him at five cents on the dollar for a second position non-performing note that hasn't been paid on in ten years that might be a little too high i don't know gabe knows gabe knows right but but it might be worth one cent on the dollar you know uh but when you buy them properly uh you should never ever lose your money you will never ever lose your money yeah it's when i got it started we're buying around 35 cents on a dollar you know first institutional and i didn't know what i was doing and i look back now i know exactly what i was doing but i had no clue people i was working before like how can you buy this stuff what is all about and i could have been i could have been 50 wrong on the value of the property and when you buy it right it don't matter right you're in a situation where we're saying we're never going to pay over 40 cents we'll never do that and you bought it in a situation where it no matter how bad it went you're still making money and i think most people miss on that where they buy it with one strategy in mind that this is going to happen and i'm going to do this and this is what the borrower's going to do and they forget these are human beings that have a life that's gone on um and if you don't plan for the worst you you're really in a bad situation where you bought a performing note and you think it's always gonna be a good situation it doesn't have to be the way and a lot of borrowers may make a payment every other month may their real estate you know brokers and they're buying and selling assets or you know work for companies i think people you're right i think people most time take courses go out and buy an asset and they say i'm gonna buy a performer and i'm gonna get it a great return and they don't claim any other issues or problems with it um and then they get to a servicer and all hell breaks loose right yeah so you know i hear a lot about educating the seller what is something you had to teach i'm going to start back with abby go back the other way what is something you had to teach a seller of a note that was just kind of brain dumb or whatever you know what are you going to say that you just you're surprised yeah yeah so you so just to clarify the question you're asking what are you know bringing the seller into the light so to speak and letting them see how they this is how i mean basically it doesn't always work because sometimes i get a little bit too technical i as tracy had mentioned you do not mention time value of money i know that all of the courses over the past 30 years have said well tell them about the time a cup of coffee today is that work to say no no no no you don't you're gonna lose them um you know as again how's tracy tracy mentioned they they they're not taking a discount well after the third or fourth call in a lot of the cases we'll we'll get them on the phone or the communication back and forth we get them on the phone and we explain them what they have mr note seller mrs note seller you know you have this good payment history the interest rate at five percent not so great you have you know 301 payments remaining you know uh 25 years and one month remaining it's a hell of a long time for return on investment and you've got to understand that if someone were to come in and buy this note at 100 cents on the dollar they would only be making a 5 return there's a ton more deals out there you're not going to sell it because other people are selling it for 10 12 13 return and your guy or gal that was making the payments don't have good credit that comes into play so you got we have there's a cost of capital you can exit an investment two ways you have an institutional exit or you have a private exit the institutional exit you're gonna see higher offers but they want you to jump through those credit hoops those payment hoops you gotta paint a real pretty picture on paper and if you don't have those records which we know you don't because we established it here here and here the return on investment the going rate of capital out there is 12 so there's a gaping hole between your five and the 12 that needs to be made in order for this thing to sell and that usually if they're listening that usually will get them to go oh i see what you're saying some will say but i'm still not taking a discount and others will say okay let's let's what's you know i break the the i the uh ice barrier what do they call like um iceberg yeah basically just going through and they go okay well i don't like the full what's the other options now you at least have them talking and moving in the right direction and that's half the battle jeff what would you say is the most common education you have to get to these sellers it's right on that first phone call it's right on the first phone call and and abby hit it right on the head hey what interest rates you have on that note two percent whoa what are you a bank what are you competing with banks here i mean why did you give them such a low interest rate and you really harp on the negatives yeah and you make them understand that this note is not worth what you think it is my underwriters aren't gonna like that two percent no way you know you should have gone to seven eight nine or something yeah but that's too high no it's not you're a seller you're not a bank why are you giving up two percent you know go ahead what's up they said they could have went to a bank for a loan that low why you know oh no they couldn't that's the whole point they couldn't they couldn't go why did you give it to him right yep yep so it's right on that first phone call when we're going through the worksheet we're building rapport we're on the phone for 25 30 minutes with them or sometimes longer sometimes shorter and really finding out about what they have you're hitting those points and why'd you take zero down payment oh my gosh who does that is this i mean you might as well have rented it right two percent oh my gosh you're not a bank and oh you only got two payments and the first one didn't come for 15 days after that i mean this is not sounding good dude right i mean this is what you're telling them on the phone right now on those negatives so that that they they get the sense that they're not gonna get you know 100 cents on the dollar and we may not even buy it at all we really make them afraid that when we go to the underwriters and get the prices that we can come back at least with something please hopefully i can get something for you yeah and i think most people it's i love the fact you talk about the whole yield thing i've had this conversation with students of gurus who don't get this whole idea they're buying it based on upb and they forget all about you know the yield number where they say well i'm going to buy it 70 no matter what it is and i try explaining them that if you're dealing with a three percent coupon or nine percent coupon that returns completely different because the coupon rate your payment rate's completely different and that 65 across the board doesn't work right so from if you're a buyer go through courses and you've heard by 65 by 70 please learn the math part of it we did a whole video on it because the yield doesn't work a three percent coupon if you buy a hundred percent as jeff just said you're getting a three percent return to maturity right unless you go to partial which tracy mentioned before if you bought that same numbers at an eight percent coupon rate your yield is significantly higher you bought that 100 you're gonna get an eight percent return so understand that buying your profit buying a yield not being buy based on percentage of upv or percentage of bpo we haven't mentioned at all we're buying it based on a yield or partial xr kind of formula so gabe what kind of education have you done with borrowers to cut our sellers to help them understand the the shift well i want to make it a little more basic to start with as far as the education way before we even talk about the terms some of the questions i get from the people that call me from the letters and postcards say you know how did you get my address why did you send me a letter i explained oh we're looking to add more loans to our portfolio and i found you in the public records i said oh wow i didn't know i didn't know that was possible and then the next question is what do you mean you can buy my note people can buy a note you know so you explain oh yeah we can buy it and they transfer the lien to us and then another question is how do i know i'm going to get my money if i send you the paperwork so i assure them that we close through an attorney you know to make them feel more comfortable those are those are even before we talked about the terms right and then i started asking them questions do you have the note third of the time no i don't have the note it's recorded in the county records and i say no i see so tracy find the no or even the copy of it or something and a lot of languages just end there they can't find anything and i'll email them a month later oh it's in a storage box uh 100 miles from here that i haven't been to in a year and then six months later i call them again did you find the note no i'm never finding the note i said well thank you i know we talked about the terms yeah i like what trees liquid gabe is saying is that this before we talk about terms and numbers and explaining why you're doing what you're doing and that basic one phone call they don't know about selling a note right they don't know about respite laws and all that kind of good stuff um servicers who the hell are them right what is that how do you go about it is as soft as it is it you know or are you buying you know is there assignments on some of these loans what is your strategy of teaching that seller who is not used to selling this note who definitely has a need to sell baby steps you know you just take them along the journey as you can you know yeah actually people say i just wish they call and they have the original note and they know their payment amount and they have all this lined up and that's somebody who's been shopping they've been around the block so i don't get too upset at the ones who don't know because they haven't been exposed very much so that means they're not shopping quite as hard and i have an opportunity to form a relationship and figure out the problem that they need to solve and so you know i think with them you you just have to take it in steps you can't uh you know make them drink from a fire hose of everything you've just got to get them along the way but definitely figuring out where that original note is i mean we could all tell horror stories i've been doing it for 30 over 30 years yeah i got the note oh yeah i got the no and then they don't have the note you're down to closing it's the last thing you need so it it's definitely a process i mean and we've tried to figure out how to make it just seamless but i just think it's seller financing if you don't have an appetite for not always knowing exactly what's going to happen it's not the right business [Laughter] people are going to be people right and i think that that's a good segue into the fact that knowing you're getting into a space to buy sell france notes buying the note is the easiest part of it it's the transfer of a mom and pop grandma grandpa to transferring a piece of paper that they think is worth x and they have attached them to the property typically tracy when you bought these kind of assets who are the typical sellers are they uh heirs of properties are they real estate investors what's a typical seller's situation with that property we see at all across the board so i mean we've bought notes where the seller has filed bankruptcy not the payer but the seller and this is an asset of theirs we've bought them definitely out of the states that has been mentioned we've bought them because um somebody was going into retirement facility and this is an asset that they had to liquidate before they could get coverage through social security or medicare medicaid so i mean there's all sorts of reasons we do like working with repeat sellers because we can show them how to document a transaction so they can get 90 95 cents on the dollar instead of 50 cents on the dollar so that is a goal to work with somebody more than once and and sometimes yes they have to document it differently and follow the mlo and the respa and that sort of thing but that that's not so hard to show them how to do that uh but a lot of times it's just a mom-and-pop seller you've got to realize there's a lot of seller financing rural areas so those individual note sellers uh a lot of it's in the rural areas and sometimes those are good notes sometimes they're not sometimes they're mobile home and land sometimes they're just land sometimes they're non-conforming properties that have an outhouse outback i mean there's you just never know what you're gonna get but it's all out there it's all part of the seller finance world i'm just looking back at some questions here what's the process of an lna if the original note is missing there is none well i actually we have some solutions to that i mean lna would be lost note affidavit but in the seller finance world if the note is really lost your best course of action if you can again it's my wish list you would go to the payor and have them sign a replacement note or take if there's a copy of the note sign it and say um i recognize the sellers lost it i'm saying this is it and i will honor this as the original note and then you have the seller sign an affidavit like that as well and so basically you've replaced the lost note that is more usually preferred by most investors i it's not as common in the seller finance word to just have the seller the holder of the note sign a lost note affidavit that's not as common i know it's very common in the institutional paper world but in the world of seller financing it's not as common because it's uh it's it's tricky it's tricky to show that you own it i beg your partner i may have misunderstood i thought the question was if there is no copy of the note how do you perform like if you like right now i have a deal a second in pennsylvania where the seller went into bankrupt went into bankruptcy and now they're selling off the asset and the the fiduciary whoever custodian doesn't have the even a copy of the note let alone the original so we're stuck we don't know what to do at this point that's what i thought the question was is if anyone has any insight i'm all ears that's an interesting one and also understand that most some states don't allow copy right even no affidavit you know doesn't allow that inside there you know pennsylvania is another state where a lost affidavit doesn't work right so you have to be careful where you get these things i would think typically what i would do i mean come from this world is i would just try to do a modification where i can just come somehow some way get someone to sign a doctor and go hey a new mod came up and give them little better terms to convince them hey here's my upb oh okay great that's how i would think about doing it from my perspective we did quite a few lost note affidavits um here on the non-performing loans in california and we're good with it if there is a copy of the note uh a legitimate looking copy of the note um but if there is no copy of the note we cannot start a foreclosure here and that's our primary collections technique on the non-performing loans so we can't buy it unless there's a at minimum of a copy of the node minimum right yeah so uh gabe as i as tracy what typical person is this person who's selling a no is it the mom and pop is it a heir you know the kids of a deceased person is it um a real estate investor most of the time it is someone that sold their house to someone else and carried a second because the person didn't have enough at closing or did not have a down payment and this was pretty common in the late 2000s here in california where people were just selling houses and buying them with nothing down and we're still buying those seller finance seconds because those things stopped paying as soon as the market declined in 2000 there's still a lot of that paper that we're buying you know chef yourself uh yeah the uh the typical note seller well i mean it's all across the board as tracy mentioned i mean from from rehabbers and fix and flippers we used to buy notes from in the 90s just consistently repeat sellers uh back then in the 90s and early 2000s uh to i i'm going to say most of my uh note holders and this is not just on single family homes this is on single family it's on commercial it's on land i are uh are older are 55 and older um have owned one property or two properties in their entire lifetime it's the only asset they've ever had they sell it and they carry back a note which is now the only asset they ever have and now we want to buy it at a discount but the typical i don't there really isn't a typical i the only typical i can get out of out of all the the people that have ever talked to um all the thousands and thousands of calls and and and notes um are that they're they're older they've they've owned a property for years and years and years they they had it most of the time free and clear they sold and they carried back their note um so i'm going to say 55 and up uh but uh it's really all across the board now you know we've got we've got um kids selling their their note their parents had in their inheritance we've got um estate planners trying to clean up someone's financials and and they got trying to get him to sell the note you got bankruptcy attorneys trying to sell its notes uh to get the people out of bankruptcy we've got i mean it's just it just the list goes on and on and on um and uh to kind of piggyback the answer on a previous question uh is these people are not going to just sell at a discount they've got to have a need right there's got to be some underlying need of why they picked up that phone and called you why they filled out your online worksheet they've got to be thinking about something in their head and that's our job to get through to them say hey trust me enough to tell me what you're looking for and i'll let you know if we can help you you know write me a book i'm not sure if everybody that never split the difference book never split the difference with a great mark it was a negotiating book fbi guy and it was talked about that it's not why is what about situation is motivating you how would it feel like what would you do if i gave you this money today what would it what would you do with it and you find well then i would go and pay my medical bills off you immediately have a situation where your what is what is the what does the past me purchasing do and i think that's a key thing right now um so i know that that it's uh yes so yeah it never splits the difference is the book uh that i if you can't haven't read it before it's an awesome book i've read it twice so far because there's so many insights about how to work with individuals he's a high level fbi guy you know abby i know you you dwindle into the summer finance worlds like that what has been your experience with these different sellers has been their biggest why what what has been their motivating factor you've seen that is something you can if someone goes i don't know you could throw out a suggestion for them to think about so just to clarify their what what's their biggest why and that the most common biggest why out there is from what i see in my you know what uh 14 years in this uh space which is you know half of the time less than half the time some of the other panelists um is they are between a rock and a hard place that's the best way i can explain it there there's a whole you know rainbow of hues that come across in that that that basket but there's the re you know i get um they are between a rock and a hard place it is usually it comes in waves and it comes it's not seasonal it's almost cyclical like for instance uh we'll see a ton of rehab flippers for yeah again these are the digital wide nets and the sniper nets that were you not necessarily i'm talking about the wide net the wide net can't i mean we pull everything in from asset managers at pnc to mr and mrs smith in mississippi that have to go to the library to use the internet i mean we have all different types of uh of folks coming across but the the traditional seller finance mom and pop seller is they're looking to sell because they want to uh downsize they're looking and you know they you know i'm 77 years old and i'm not going to live for another 30 years i want to give this money to my kid you know or i want to do something with this money we hear that a lot we hear investment opportunity a lot um especially with kovid that's all we've been hearing is investment opportunity and you know we get into uh you know i want cash on the sidelines so when the whole world goes on sale i can you know jump in without having to wait for an underwriting process to refine my house and you know so it's a tremendous amount of different reasons uh but the the long and the short of it is is that they've tried all 95 of them have tried all avenues and then have landed in our lap for one reason or another because their back is against the wall or they think their back is against the wall wow abby yeah you're a poet dude man it's true i tell you what i i mean that's it and and that rock and a hard place is the need yeah you know and and it is such there's a lot of them out there that that don't need um but uh when this covid thing hit last year business has been out of control out of control yeah yeah i'm so busy it's um uh people need money to pay their freaking bills right now i mean if that's what it comes down to and government's not giving it to them and they don't know if they're getting their jobs back they don't know if they can go back to work and if they do they have to do all these other things and and who has the money to get those things so they can't go back to work and and it's just people are people are wanting money um and we're seeing uh we're seeing quite a few calls on commercial notes from five years ago and six years ago and ten years ago saying hey uh they haven't been paying their payments now i'm like oh okay well let's let's see what we can do for you um but no one's really even talked about that is is the commercial space we talk a lot about residential but in the commercial space there's a lot of seller not maybe not as much as seller as residential um but we see quite a bit of rural area commercial stuff coming across our desk and they're like they had to close their restaurant they can't pay their mortgage i'm like and you want me to buy it let's talk about it where is it at uh uh where was this one uh this little tiny town in montana uh pillars pillars something montana and i was like oh my god it's a town of 200 people you know and you're just like and you want me to buy a 100 000 note on a on a restaurant that's not even an operation that's vacant right now you know and i'm like i i got permission to talk to the borrower and they're like yeah when we can start back up we'll start paying again i'm like okay so i gave the guy an offer of 10 cents on the dollar you know just in case i want to go to montana and foreclose on some commercial property and try to sell it to 199 people [Laughter] so i mean uh but but we're you know getting off track but but what abby was saying they're rocking a hard place and it might only be one out of ten people that are in a rock and a hard place yeah you know uh still a big numbers game that needle in a needle stack yep and they're it's the perceived rock in a hard place because when they start they start talking you're like well it's not really that bad you know i i'm i am not the type of person that's going to give this person every excuse in the book you know once we get past that hard conversation the two percent interest rate and oh by the way did you finance this to a relative or a friend how come you didn't charge him a down payment or two percent interest rate you know or yeah so once we get beyond that i i always uh represent to the seller that i am not the type of person in this company that you're dealing with it's not the type of company that's going to give you every excuse in the book a reason not to do our job we're gonna really try to go over and above um you know our ability to leave a good taste in your mouth when you walk away because we know you're selling at a discount but this is why this makes sense at least what we're seeing based on what you're telling us but there is just for everyone out there looking to get into this and i i spoke about this quite a bit there is a tsunami of assets that are going to hit the market in the commercial space in 21.

um it's going to be it's already i'm driving through here and as i mentioned i'm in palm springs we've been for the most part out in the wilderness so to speak in the middle of nowhere for the past 10 weeks and i really come through cathedral city here outside of palm springs and i'm not going to lie it looks a little bit like soviet russia in the 80s with a lot of the commercial shutdown it's a little bit unnerving um because it's sad it really is sad but these assets are either going to be transformed into seller carry notes for whatever reason or there's going to be a ton of seller carry notes hitting the commercial space which are going to be purchased and repurposed and innovated uh for a new economy in the future so we're looking forward to that but there's an opportunity right there it didn't you guys say that because in my years of doing this we never saw a lot of commercial i mean we even the asset tapes we got from different funds and commercial even multi-use buildings just nothing we ever came across i'll get from a broker here and there but i guarantee you guys there's gonna be a huge pile that's because of what's happened um i'm gonna just jump into some of the questions here and i see jeff doing his good job of uh answering them um and i think you know i asked this earlier what percentage of these assets you're buying are cfds versus notes um tracy what is what do you think your breakdown is whether it's a concert for d versus the seller finance note that depends on the state where you're marketing because some states don't use them at all um and some states do so if you're in michigan you're going to see a lot more than if you're in texas right so that that really is a product of what of what the state is but it's a smaller percentage i mean if you had to pick a number i'd say less than 10 percent i don't know what do you think jeff abby that's right that's right 10 yep i'm a big cfd fan i just don't like that i don't like the that instrument of just because it just it's not clean for me right um i'm seeing another question was and i think jeff you answered it like you know if you can give one sample of of marketing what would it be and i think you guys only answer that question of there isn't one right there you have to hit from different angles and one is not phone calls emails postcards mailers you know door knocks sometimes all are different ways you can get a hold people um and i'm just going down some lists um what i'm gonna do some people ask also is if you can put your contact information whatever the best one is for you into the chat box um just whatever public way you wanna share who people can reach out to you i'm getting some awesome feedback that they really enjoyed the conversation we're having tonight um even though sunday evening for everyone else i'm going to wrap it up just a few minutes i think for everyone learning this is that those who are in notes like myself and we want to get into this world because we find there's an angle here that we're not seeing or haven't seen a lot of but what we're hearing now is that it's as different as it is it's not the clean cut um it's similar to those people who are calling banks up to find product from bank asset managers and going oh that's a great way of doing it because gurus are all talking about it and the angle is that you're not going to get supply be if you do get any supply it's going to be crazy stuff i heard churches and schools and stuff like that where it's just not clean residential so you're really going to lose out with this wild west what would you say obviously returns are pretty good what are you typically buying a performer asset wise right are you buying it and it you know and it it eight percent are we buying at higher returns because the institutional loans are ranging in between eight and twelve i'm seeing from our purchasing abilities trace what would you say you're where would you say a round about the most common question we get you're buying these performing loans at any yield it depends on the attributes of the note it depends on the equity and the credit and the interest rate and the term and so you bring me a zero percent note and uh 30 years i'm going to be you know under 50 cents on the dollar you bring me a note with a 680 credit score and 20 percent down payment and uh over a hundred thousand dollar balance i'm can get 95 to 97 from an institutional buyer so it is so all over the board i mean we we test everything against um investment to value limits uh yield and then a certain amount of discount that we want to make yeah and i think what most people don't realize is if there's 10 payments left versus 10 years of payments left that changes the price dramatically right buying a loan with a year of payments left there's nothing to be making on it so you're gonna have to buy it i like the ones with interest only uh payments and it's gonna balloon two years and they didn't put any money down those are my money you gotta build that in 20 cents on the dollar mr no-tiller get yourself a deal gabe will be buying those uh in a couple of years where's your email game okay good email now send it to him so you know i think one of the things that tracy mentioned too and it's awesome situation is buying the partials guys if you're going to get into this business understand what partials is i'm not going to go into finding it but it's a way to make a deal happen for a borrower where the numbers don't work to buy the entire loan you can buy a partial you found their why they need five grand to buy a property they live in their bulk the backyard to buy rental property hey listen send me buying the entire thing i'll give you five thousand dollars now for this x-map payments and they can get some of the money out of this note um that's an angle that most people don't even explore even in our institutional world so abigail there's i was gonna oh god i was gonna say jeff is the um the the professional on this one no no no he yeah i was gonna say he knows so just to clarify partials are a very good way you know you want to make sure that you let them know that they not only can they sell the entire note but they can sell a portion of the note and uh you know that that's a a very powerful thing if you're not pushing is just pushing the partial then you're not doing your job and i'll i'll let you take it from there good sir go ahead jeff what was your comment about it no i'm laughing at abby uh with his link to his uh his uh article oh yeah so yeah guys there's what there's like tracy 29 ways to buy a note yeah and i know of 29 ways uh for sure and too many people focus on the full purchase uh seven out of ten deals i close are partials they called me and they'd need money because they lost their job because of covid i'm buying two years of payments or something just to give them some money now yeah it's better for them too it's a better deal for them it really is bite-sized portions and you can also if you're wholesaling or brokering um or or you know referring you can do that you can you can basically you know there could be more so if they take you know a shot at a partial and then they you know we've had multiple uh income streams or multiple wholesale fees over many many different years from the same note because they would come back and sell more payments and sell more payments and sell more payments you can you know make you know uh bite-sized portions of wholesale fee as well as you know provide them with bite-sized portions of cash which could really turn around quickly as you know you know the underwriting process occurs the first time around the second time they come back for cash they can have it in their account in 72 hours um you know from requesting as long as we get a bpo on the uh uh you know bpo done on the uh place make sure it's still yeah we won't get into this but i you know i'm always curious how people write their parcels up of you know if it if it defaults during that period of time um just those who are watching listening reach out to these guys about how they do it everyone does that a little differently um that if it's not performing what do you do how do you handle buy it back and typically people give three options or so what they would do in a scenario like that but i'm not going to go into it tonight this has been a killer nightmare uh one of my favorites i think it you guys for you guys i couldn't have picked a better crew of people to spend my night with um i know some people were distracted by football i appreciate you guys tuning in um i i really enjoy you guys i appreciate you guys coming on um awesome time with you guys uh if you have any parting words or anything you want to you know pitch what you got going on tracy i'll let you go start first if anything you want to pitch or share with everyone about what you're doing or uh how they can reach out to you or anything going on with you feel free to go ahead about your expo as well yeah thanks so we do have my husband and i put on cash flow expo once a year so that's cashflowexpo.com and it's uh three days and 30 speakers and it's free to watch live and then we have very affordable recordings if you want those as well so it looks at all the different aspects of the note business and uh various aspects of just generating cash flow not everybody's in the note business although a big portion of them are i think that i in closing i just like to say that there is a lot of opportunity coming to help people that's really how i look at it and i've had some time to come to terms with like you're making money off of people in need and that sometimes you're like how do i feel good about that and i'll tell you the how you do it is that you are helping them solve a problem you didn't cause that problem for them but you are helping them find a solution when they sometimes don't think they have one so i really think coming forward in 2021 and 2022 there's going to be an opportunity to help people that are in need and they're helping to solve their problem and always keep that in mind too that's why we always are fair and any kind of fee structure we take we're not out to take advantage of them but but make a fair profit and and help them solve their problem and i think that there's going to be a lot of opportunity for that in the in the coming years that's awesome gabe are you speaking anywhere what's going on yourself how can people reach out to you uh the best way to reach me is email gabe surfcityinvestors.com if you ever have any questions about non-performing loans i'll be happy to help out or even buy them for people thinking about getting into the buying of seller finance notes just remember that you really need to market consistently and spend a lot of time following up with the leads and don't underestimate how much time it's going to take the follow-up part but some of the best investments we've ever had were from following up over and over and over and over so it can be quite painful but it can be quite rewarding at the same time and yourself jeff uh yeah i piggyback on both gabe and tracy's comments um i uh i used to go speaking once a month at various places and that's not happening anymore i'm i'm barely getting used to this zoom thing and and to tell you truth i'm so busy buying notes right now i'm kind of glad i'm not traveling because uh it's it's been very busy and i i see it's going to get busier i really think that's going to uh it's going to be a banner year i had my best year last year uh in the last eight years so um it's it's gonna be phenomenal it is phenomenal if you know what you're doing um for those of you that are still listening here don't get all confused and and go right to the partial stuff i mean there's so much more just get your marketing down i've got a one-page marketing form that that i help people with just go to my website armstrongcapital.com click on note brokers there's a a wealth of information free information there for you i do have some resources there is my free weekly email newsletter that you can sign up for uh that goes out every wednesday morning and uh when you have specific questions you know free feel free to email me and i'll get back to you as soon as you can you can ask any of them gabe abby tracy i mean we respond we'll respond if you email us and and that's the name of the game it's such a small community of people here um it's really nice to see you tracy i mean kind of live and abby yes david it's yeah thanks for having us on uh uh that's next time let's not do a sunday night all right yes yes my kids are like what are you doing dad oh no we're working i wrote two articles today and stuff and things like that but but you know we're not working working [Laughter] you guys got going on right now abby anything coming up and i'll share what we have as well at the end here do you have anything you're pitching or selling uh we're not sad the only thing i'm selling is money i can i can buy notes i can buy us so you know jeff and uh tracy and my company myself abby and amara note we provide a lot of the same services uh gabe has a very specific uh niche where he's operating within i i want to just be very clear we we you know the the folks on this panel have been uh you know pillars of the note buying seller finance note buying community as they have mentioned for decades um we are you know we operate in the same space we all provide that same service and i'm sure the same level of of customer service and experience where where marinode exchange comes in does things a little bit differently is we will touch the harrier you know we also we dabble in institutional so we we're not just seller financed uh we dabble in institutional you know non-performing seconds uh notes that past statue limitations you know we can do a business notes um you know so we can do a plethora of different types of assets um so if there's something that uh is comes across your desk like a church note or something weird uh that that others won't touch you know by all means please feel free to reach out to us because we can really dig in and provide some solution there for you awesome and for us we have a beginner's course we have going on right now i have a bid calculator out there um we have a couple products where we can automate due diligence click data point for stuff but i think what everyone's really come down is getting involved in networking with everyone in the space and taking a little bit about from everyone everyone's experience and knowledge came from their own experience and what they've heard of so i have tools i have software i have resources directories some are free some aren't you're going to pay for some of the information you're going to get and some information is going to be free right just understand that the bigger picture here is networking and reaching out to other people and communication so guys with that said i am excusing you for the night enjoy your evening enjoy your time your family guys and abby enjoy your travel man i appreciate you coming on no and i look great man so yes thank you i really thank you for having us thank you yes all right guys i appreciate you guys have a great day everyone enjoy football the rest of the night thanks guys bye all right everybody dave putz here from jkp holdings tonight we're talking about cell refinance notes buying them finding them the issues the problems successes and that angle of buying notes um we've been in institutional notes for over 10 years now and this space is new to me so i'm going to learn alongside everyone else here so i'm glad to be joined with a bunch of awesome people um some great pre freak webinar talk was going on here and i think it's gonna be a really fun uh sunny night uh i please apologize with the football going on and we were pretty talk about before um and we'll do our best to kind of keep to the the point that we're looking for but the education here please do your best just tune in ask questions i'll keep the chat open i'll kind of moderate but i'm gonna let these guys talk about what they know best so i'm gonna start with tracy go to gabe jeff and then go to abby tracy can you share who you are what you've been doing and all the good stuff about yourself absolutely well welcome everybody right now i'm crying a little bit because we're big packer fans so ouch anyways but yeah so fred and i were laughing because when i met my husband he he's also in the note business and uh he was a packer fan so it's kind of like you got to be a packer family if you're in this family so you know we've been married now 23 years and we only had two quarterbacks the whole time it's crazy right so it's enough football talk so as faithful as i have been to the packers i have also been faithful to the note business so i've been a seller finance note buyer since 1988 so a few years and the first 10 years i purchased notes for what we called an institutional investor so they would buy seller financed paper and they'd hold a lot of it and then they ended up actually securitizing some of it turning it into mortgage-backed securities and then about 1997 after i learned so much from them i decided that i wanted to make some of that money for myself and not for another company and it went out on my own and i've been buying and selling notes since then we'd like to buy them in our self-directed retirement account and we still refer some notes so we'll sometimes make the income as well so just each note kind of has its own home whether it's a immediate profit or a long term profit and seller finance notes are are different definitely uh we tend to focus on first position performing uh we leave the non-performing in the seconds to other people i've dabbled in them over the years but every time i do i think i should get back in my lane uh so i like the seller finance note paper i'm excited to be here and i've got some other great panelists that you know i know love the solar finance notes as well thank you tracy gabe can you share it about yourself hi my name is gabe cass i'm the portfolio manager at surf city investors based in huntington beach california and for the past five and a half years we've specialized in acquiring and managing non-performing nodes primarily junior liens and for the last three or so years we've specialized in acquiring and managing non-performing junior liens that are seller financed or private money loans here in california interesting jeff can you share about your background and uh what you're involved in with self seller finance notes is sure so my background i worked for over a decade in institutional investment management primarily fixed income as an analyst so one and then i worked for a bank for a few years and then i discovered notes and i eventually transitioned into a full-time note investor five and a half years ago congratulations amazing thank you gabe appreciate it jeff how about yourself hey uh hi guys uh thanks for spending your sunday night here uh hopefully this will be done at seven i got a dinner date but uh uh it's six o'clock here in arizona i'm in the calves u city arizona i've been in uh seller finance notes first position performing seller finance notes since may of 1991 may of this year will be my 30th year doing just that and uh tracy and i met uh in that probably in that year 91 so yeah with that institutional investor and and uh it's been a long road a lot of people come and go in this business and and uh you know i knock on wood i'm so grateful i found it when i did uh but i've been doing this now 30 years i've been in real estate for 37 years and and uh there's nothing like notes i i don't do anything else besides notes uh after 30 years now uh i still do a ton of marketing for notes by myself and uh i think this year we're going to hit closed 2300 individual transactions um brokered most of them by probably one out of five by by about 20 for myself my self-directed ira my daughter's self-directed iras and and a few investors that i have but uh it's uh it's a great business it's just uh you got to figure it out and the way to figure it out is marketing what we're talking about tonight so um yeah this should be a fun discussion great is that enough good job you guys know i do keep going abby can you share with everyone who you are and what you've done with selfless notes absolutely my name is abby shemesh and i um own a company called the marinode exchange we are a uh a first position we are a note buyer and we uh purchase i uh our main operations occur within the seller finance space of the discounted loan industry so we typically focus on as the rest of the panel had mentioned first position performing is uh definitely our our primary focus uh we do dabble in all types of performance levels of uh assets including uh subperforming non-performing re-performing um we will also deal in uh seconds although those usually do get wholesaled or traded off um and it really as tracy and jeff and gabe have pointed out it really boils down to uh strategy for us so you know what comes and what goes but just to clarify i was uh started my career in loan acquisition excuse me loan originations in uh with a company called ibg financial and outside of the philadelphia area uh which led to my many um incarnations through the origination realm and then in 2006 got into the loan acquisition side or the secondary mortgage market um and and really uh as jeff had mentioned and what we're going to talk about tonight uh exploited a lot of the um the the areas that weren't being exploited in that industry at that time so uh you know that's how we really roared into it um coming from a marketing background uh as well dabbling in internet and affiliate marketing uh between originations and loan acquisition so we kind of brought all of our assets to bear if you would uh once we got to the secondary seller finance note market so that's been our uh our journey and here we are hopefully to answer some questions and and all learn something together tonight i'm amazed guys this is awesome i'm looking forward to learning stuff it's something i'm not used to so um for a lot of the cars on here i would be asking questions hopefully that you're thinking about the same time being in the institutional world having paper that's originated by a mom and pop shop is just strange to us right it's scary at times it's someone similar to those pers people getting into notes in general it's a different world it's like the wild west so let's just jump right in here and you know tracy when you're going to find assets are you buying lists are you marketing are you where are you typically going we thought about some some ideas of like local finance guy and attorneys and insurance and brokers where do you typically find the the assets or what do you do for marketing to find those assets well there are five in my mind primary places that you can find notes you can use direct mail where you are buying a list of seller finance note holders and remember it's about less than six percent of all residential real estate transactions involve some sort of seller financing so you really gotta hone in your marketing or you you're just gonna do shotgun and not target and really waste a lot of time and money so i think that's the first place i like to come from when you start talking about marketing um and so the direct mail is one we do some reverse ad marketing where we talk to people that are advertising that they sell properties with owner financing our favorite is referral and networking because you can establish relationships with professionals in real estate that come in contact with seller financing and then there's you know building your brand and there's you know there's ads it used to be old school ads some of that works a little bit but more now it's ads on the internet right pay-per-click so i kind of look at those as the main marketing areas we've used them all over the years we tend to do more networking referrals now just because we've been at it a while and you know we don't have to re do the grind of direct mail i know jeff still does a ton of direct mail and so i'll i'll definitely let him weigh on in on that but that's what we see is the five main avenues of finding notes and so we'll all talk to it i'm sure more here i do want to say that think about it that just to set the framework is about we track these numbers every year on our nodeinvestor.com site about 23.9 billion with the b was the number of seller finance notes picked up on county recording so there's others out there that aren't recorded like unrecorded land contracts and that's like first position over 30 000 so there's more that if you count seconds and there's more if you count smaller notes but if you look at the like we're talking the marketable notes so we're talking about 100 billion with the b created in the last five years so it's not as huge as some of the other market but it's definitely a sizable market it's just targeting your marketing to find that market so are you talking about you're buying notes or cfds or both we do both okay gabe can you share a little bit of what your techniques have been are you buying lists are you going to a broker sure so we've been direct marketing primarily for three years here in california for junior liens that are originated by private parties so we spend extensive time data mining and scrubbing the recorders records and buying lists trying to find and contact these private note holders and we spend most of the time on marketing and following up and that's how we've acquired most of the private notes over the last three years um it's a very you know sometimes painful and time-consuming process and i have an assistant who helps me with this process 30 hours a week also so it's both of us working on it i primarily handle the calls and she helps scrub the data but it's a lot of following up but the success stories sometimes are really great and they keep you going until you have the next one so it's pretty difficult we're gonna get into that whole idea of you know that the energy that you need to do once you get a loan that possibly you can buy because just getting the marketing started and then just getting the note seller to say i'll mention it is just the beginning we're gonna get into that in a few minutes because that's a new world on average how what would you say your response rate is on your marketing on i don't know how many you're saying at a year or so but what's your response rate um well i've sent out about 19 000 pieces of mail over the last three years and we've had about two percent call okay and then and then we've closed maybe 10 of those two percent so 0.2 so that that's been about the number and we're targeting uh junior lien holders so it's a little different than than what the other guys are doing so you're buying marketing is somewhat similar we're just using different criteria when we're figuring out who to mail to yeah so you're buying lists jeff what's your strategy of finding the deal oh boy abby gabe and tracy y'all know i can go for days and days on this um both tracy and gabe mentioned a couple things and and uh one thing tracy said where that is that it's a needle and a haystack that we're looking for seller finance note holders that are purchasable and and it's more than that it's a needle in a needle stack uh there's a lot of them out there there's a hundred billion dollars worth of these notes out there you know um a little guy like me can only do i don't know seven to ten million a year you know so so there's plenty of stuff out there but we gotta find them now we gotta get them to respond um gabe mentioned something about follow-up okay marketing aside for just a half a second if you're not following up with these people after they contact you the first time just because they don't say yes right away doesn't mean you're not going to get a deal in the future and too many people think you send out a letter and you get a deal that's not the way it works marketing works and tracy said this already as well with a targeted marketing plan a program something that you go out there and you're persistent for at least a year if not more to get your business started and to grow and survive your business you got to keep doing it and keep doing it and keep following up uh targeted marketing uh you know it there has to be three to five lines in the water this is how i teach it that's how i talk about you got to be doing more than one thing right you can't just rely on direct mail you can't just rely on classified ads you can't just rely on internet you've got to have several lines in the water to catch those fish because some months will be better with one marketing method than others right direct mail for me is huge uh i mean i giggled a little bit no offense gave but gabe said he's mailed out 19 000.

i probably mailed out close to a million pieces of mail in in the last 10 years and and but that's now in the beginning it was 500 a month right way back in 91 when i started with with this but direct mail still is only about 45 50 of the deals i close every year so direct mail is huge for me yes we buy lists um but the lists have to be you have to target it to the right correct thing as well you can't just buy a list and they're going to get a deal it doesn't it doesn't work like that it's a very targeted list so direct mail number one uh for me now just like tracy after doing this for 30 years we got a decent referral network out there and we get uh you know a good percentage our closed transactions every year from building up that referral network for so many years uh i still place classified ads in in papers uh printed ads in certain targeted places to get people to respond um i do play with the internet stuff i am not the greatest at the internet i have someone do it for me and we get a we get enough out of the internet leads uh for to cover our expenses for the year make a little profit okay so that that is not my forte um we do a lot of direct contact when we can these days it's it's going to be these zoom meetings from now on until we can have actual live events and things but that direct contact has been huge in building up that referral base over the years you know i i've got resources out there that that list you know i don't know 70 or 100 i don't know how many are in that that book but um there's lots of ways that you can get a deal and you've got to figure out for yourself which of all those ways is going to work for you just because jeff is you know does great at direct mail doesn't mean you're going to just because tracy does great with with the internet doesn't mean you're going to just because gabe does does good at what he does does not mean that it's going to work for you too so all this stuff has to be tested out by each and every one of you to figure out what works for you and it's got to be very targeted uh to our specific first position seller finance note performing uh as well and just a side note i've dabbled in the non-performing definitely not for me i'd only do it in my state um and uh re-performing and stuff performing we will look at some of that stuff as well but the majority of it you know 85 90 of what we're closing every year is those first position seller finance notes that we go after and target so uh that's kind of what i do so we're a lot about buying lists and stuff like that i'm curious if anyone ever targeted like attorneys or insurance companies or you know maybe a local hard money lender kind of world um abby what has been your typical technique or strategy um well yeah all of this information i'm just kind of digesting uh the numbers that jeff's just kind of throwing out there as far as the mailers because i the one area it's you know the one area that i do not operate in are the mailers everything else is where i operate our focus is digital so we uh try to uh you know our our footing is organic google search or other search engines pay-per-click social media um we're really starting to incorporate ai into the process artificial intelligence and chat bot uh so when we can you know free up the human to do stuff that makes money as opposed to uh directing traffic online because that becomes uh you know uh an issue if you start these leads start pouring in you don't know what to do with them and and again to the point of the panelists here uh follow-up is everything it's everything i still have deals that i'm following up from 2015 2015.

so that's five years i'll i'll kick it out six months eight months uh we just did a a fee a wholesale fee it was one of the largest wholesale fees we've ever encountered from a follow i shouldn't say just but uh within the past six months you know from a follow-up so i can't stress enough how follow-up is extremely important and i it correct me if i'm wrong uh to anyone out there but if i'm not mistaken when you send a mailer you know five to eight times they need to see that mailer before they really start thawing out and figure you know depending on the type of mailer and so forth um it could very well be that way for a person who fills out a short form or a long form on your website they have the intent of wanting to sell a note that you confirm that they own and they still need five to ten follow-up calls just to get a copy of the note so it's it's a lot of hand-holding it's a lot of uh you know relationship and nurturing and uh the other speaking of nurturing email email lists so for all of our opt-ins uh we do email lists we also monetize you know for the for the folks that are not necessarily in the note business but kind of on the periphery we will try to monetize the leads that we have coming in to make that some sort of cash flow whether that monetization occurs through a product or another service uh that we can uh take an affiliate fee on or something to that effect uh we've had a little bit of success there and we're kind of building that out now but um all of these uh methods as jeff had mentioned are not a one size fits all and you know that was the area in which we operated prior to coming into the note space so i was very comfortable there um and it is like a 180 degree difference from what it was in 2007 uh online in the note space and i i can i know all the panelists here i see heads nodding and i you know one of our institutional investors uh had mentioned to me in passing over the past i don't know nine months that you know when they had folks in our space you know wholesaling notes to them they maybe had seven 12 people in their system as of november of 2020 it was 107 people in their system so if that gives you any representation of how crowded the space is right now you're not going my recommendation is to go in through the back door you want to take an asymmetrical approach to marketing you're not going to throw a fist at a giant and and think that you're going to win sometimes but asymmetrical uh motivation is is the way to go here i think that's an excellent point to add to that we tell people normally start out in your local market get to be your local expert and then branch out from there so that's you know to your point yeah are you reaching out are you reaching out to any kind of like you know hard money lenders locally are you reaching out to insurance companies at all are you doing any kind of those kind of relationships tracy are you reaching out to well hard many lenders aren't going to have hard money lenders aren't going to have seller finance notes correct but they answered these people hard money lenders took money out of their pocket and gave it to someone and they're not going to sell their note for a discount that'd be a waste of time yeah we buy at a discount and i've found hard money lenders don't want to sell at a discount yeah so i i'd like to chime in on that we actually just recently yeah that's absolutely just a double down on what's being said they don't sell at a discount but i i don't know if anyone else has saw this but immediately after covid uh uh april 2020 the phones and the the submission forms were lighting up with hard money lenders and uh non-qm lenders i don't know if anyone else was seeing this but it was yeah it was just you know watching you know the the the non-qm market collapse exactly it was uh something so we actually wanted to filter real quick close uh just for everyone who's online that's a non-qualified mortgage i beg your pardon just make it short yes non-qualified mortgages which is another way of saying subprime really um which is non-conforming or something that most banks wouldn't touch for whatever reason or another but i will say that we had to fill we're getting so many leads with these hard money letters even now today that we actually just found a third party a referral if you would that would take these uh assets at par which is highly unusual but he's very specific to a certain area so um yeah yeah i heard someone mentioned insurance companies and you know these hard money lenders of contacting them through whoever is local to the market who's maybe selling stuff but i was just curious if anyone's reached out to attorneys as well who has their clients i see abby and said jeff have you worked with anyone or even gabe where maybe a attorney is a great resource to find assets absolutely and you really got to clarify it's not just any attorney it's real estate attorneys right real estate attorneys are the ones that that can refer a lot of business to us if we make their clients happy uh it's really tough to just call up a real estate attorney and say hey i buy notes can you refer some to me i mean that's that's not really how it happens uh the advantage to doing business for a long time is that we've closed so many transactions we have worked with real estate attorneys across the country and yes now they then refer clients to us um so that is a good contact real estate attorneys you mentioned hazard insurance don't get a lot of referrals from hazard insurance agents um but they are a contact they are someone that would know of someone that's holding a note because on the lost payee form on the on hazard insurance declaration uh the mortgagee will be listed and if the mortgage is an individual's name that's going to be a seller finance note um so that that is an avenue to try to get some business as well uh but very small percentage gabe have you what have you been have you worked with any kind of odd person to buy a note from um you know we really focus on buying from individuals because we we're buying the non-performing loans and we find the biggest discounts we can get are from individuals that have been holding non-performing loans for long periods of time when we talk to brokers or attorneys the pricing is just too high for what we're looking for so we specialize in finding those note holders that no one has contacted in years and they've they've had this note in their office drawer and they've received no interest payments for the last eight years those are the people that we specialize in finding and we get the best the largest discounts buying directly from these individuals so ours is you know it's very research intensive to find these people and contact them but then the follow-up part is also very intensive some of our best notes we've ever bought took you know 15 to 20 touches from one lead before we finally closed with them but in the end it works out when you get an amazing note i think that's a really important point it's kind of like dating you know you're just gonna ask them to marry you on the first date it's according bro no no work that way yeah that's uh um a lot of uh both abby and gabe mentioned a lot of touches and um uh direct mail even in my direct mail program in two years they they get four pieces of direct mail but if they have an email address they'll probably get 24 emails you know an email a month right and they'll get a call every three to six months even if they don't want to sell yet they might in the future so those those 15 to 20 touches just to get them to say yes or just to just to get them to say yes i'm ready to sell um is an actual number is is true uh there is work involved here it's not you get a call and you and you cash a check anymore um not that it ever really was but um gabe are you just doing that in california just curious um right now we're still working on our california leads because we have you know tens of thousands that we've dug up but when we eventually run out we will understand you won't so in question most time when you buy lists and i see where you can find your list at by catherine and i'll sorry i'll get to your question in a second you're not getting email addresses on most of these lists you actually have to do some kind of skip tracing or some kind of tool to obtain their email address you're really just getting the property information would that be no uh when you get a list there's a few list companies out there that that are are recommended and that's the first question people think if i if i know who that list company is i'm going to get you a list i'm going to get me some deals and then you got to before you even get the list there's some work to do there's some groundwork delay before you get these lists i see the question here where can you get the list you know it's like she's ready to go buy a list right now but but it's just a name and an address right and maybe some information about what they have but not enough to really do anything other than send a letter um skip tracing can be done you can you can do things to try to find emails we found that maybe you can find 25 of them that might have an email maybe um maybe some of you guys have some other experience with that but uh the way that i get my email addresses is when they call me i ask them to have an email address and you put them on a list you know and then you start with that that process of contacting so somebody asked about the insurance company make sure you get that can you ask yeah i i don't know the answer so can you ask can the insurance company sell that information to us no they they really can't but if if one of their clients that's holding a note then they're friendly with their client and their client says hey do you know anybody i can sell this note to oh yeah here here's jeff armstrong yeah right yeah wow okay you learned something new everything yeah that's that's my whole free time we're talking abby [Laughter] i assume it goes that way because we've done that with servicers right services say listen this guy's looking to sell a note can you or even sellers are like listen i got this note on mine [ __ ] can you throw it my way it's kind of a broker hand washing thing if i may say if there was a time where you could and jeff and tracy and gabe correct me if i'm wrong but uh where you could reach out to servicers and say hey all the mail or all your bills that you send out can you put my card in there or one of my marketing material i don't think they do that anymore i don't know but um i i always thought that was the same thing i don't know you gotta have an end but it still happens yeah yeah that's awesome and i i don't i know tracy you uh or jeff i i don't want to uh forgive me if i'm missing something but i personally know uh and i have saw because i own a copy of jeff's book every marketing how to do every marketing technique in the notebook every single marketing god i don't i can't remember right now everybody has every single remote marketing in the world and it has almost it has everything there is a plethora it doesn't have internet well yeah right i mean just some of the uh some great stuff in there and i still have that uh book that i bought in you know 2009 or something wow and i know one of the struggles that i i look into this stuff right is you know when you get a list and it has a trust in it you know from an ira it's almost impossible to get a hold of that trustee that the individual behind the trust from my knowledge you can forget that i think i mean i i i've had no luck i mean i don't i'm not the be all end all but it's very difficult someone else may have some insight but i've never had any luck with that trustee the whole point of that trustee is for protection um but may i just want....