Pitfalls, Costs and Time of Note Investing | Real Estate Notes Show

Episode: Pitfalls, Costs and Time of Note investing Dave's Goals and Plans: - Moderating East Coast note investing group on Facebook to ensure appropriate content - Maintaining Facebook business page for posting events - Managing YouTube channel for recording podcast episodes - Distributing asset list (scruff list) via Google Doc with NDA and daily notification system - Organizing panel of experienced investors and professionals to discuss note investing pitfalls Key Recommendations: - Conduct thorough due diligence before purchasing notes, especially regarding property location and flood risk - Know when to stop pursuing a deal and accept losses rather than spending excessive attorney fees - Be cautious about social media exposure when discussing note deals as ammunition for opposing attorneys - Avoid aggressive legal strategies that may result in unwanted property acquisitions with unclear profitability - Don't rely on optimistic foreclosure timelines (6-9+ months minimum, often over a year with contested borrowers) - Be wary of joint venture partnerships, especially passive investor deals promoted on social media Topics Discussed: - Common pitfalls in buying notes - Due diligence failures and property risk assessment - Horror stories from actual note investments - Distressed second mortgages exit strategies - Litigation risks and costs in note investing - Foreclosure and forfeiture timeline expectations - Joint venture structures and passive investor risks - Social media exposure and legal implications - Loan servicing and boarding procedures Guest Insights: - Bill (distressed seconds investor): 50% of deals result in bankruptcy/REO; litigation costs $15-50K per file; need 600+ file experience to navigate properly - Karen (non-performing firsts): Operating exclusively in notes for 4 years; transitioning from 12-year rental portfolio - Franco (attorney/default legal work): Hamilton County Ohio litigation delays due to aggressive local attorneys; certain counties prone to prolonged litigation regardless of case merit - Shantae (loan servicing): Handles loan boarding setup and investor inquiries - Recurring theme: New investors underestimate complexity and timeline; experienced investors emphasize risk management over promotional marketing Episode: Pitfalls, Costs and Time of Note investing Guest: N/A Summary: This episode discusses critical pitfalls, costs, and operational challenges in note investing through perspectives from experienced investors, attorneys, and loan servicers.

Main Topics: Common pitfalls in note investing, Due diligence failures when purchasing notes, Distressed second mortgage investing strategies, Non-performing first mortgage investing, Legal and bankruptcy considerations in note investing, Property evaluation and flood risk assessment, When to exit or write off a bad deal Key Takeaways: Insufficient due diligence is a major pitfall when buying notes, particularly regarding property location and flood risks | Distressed second mortgages have high failure rates with approximately 50% success rate and require knowing when to stop pursuing a deal | Legal costs and attorney fees can quickly become prohibitive if aggressive foreclosure strategies result in unwanted property acquisition | A diversified panel of experts including attorneys, loan servicers, and experienced investors is essential for navigating note investing challenges | Proper loan boarding, servicing setup, and understanding state-specific legal environments are critical components of successful note operations Keywords: note investing, due diligence, distressed seconds, non-performing mortgages, foreclosure, bankruptcy, loan servicing, property collateral, default legal work, real estate investing loans people and pick our brains for any kind of question you have so thank you again guys enjoy appreciate your time and we'll talk soon everyone Shante franco thank you thank you thanks all right welcome all we're gonna be talking about pitfalls cost and time of the note investing world you do a little housekeeping we always do I'm gonna just there's some stuff we got that I have going on as everyone probably does the group we have an East Coast no vesting group on Facebook that we posts different topics and whatnot on discussions and I I'm honor it pretty closely to make sure nothing's on there that's shouldn't be second of all we have a I have my facebook business page which we post events so feel free to log in and connect to that next we have a youtube channel which this recording will be posted on so if you want to catch it later definitely take a look at this it's also in the emails and lastly we we started putting out some assets that we're going out to other people some of these are mine some are friends of ours that are direct there is no broker near this is just I'll connect you right to them throughout the states this is the scruff list and it's a Google Doc so you'll if you click on the once you get the NDA signed and sent back to us there is a button through tools that you actually can do notification and when any changes are made and you get a digest daily not right away try doing daily so we ever you see a change in the asset status or asses are adder taken away you'd be notified so just some assets with strike prices which is purchase price so what housekeeping we get started here so what are we talking about tonight well what I found in the industry is a lot of people are getting into this space with either a miss no--nor or some concerns of this space is awesome it is fun it's exciting there are some good returns but there are some pitfalls that you should be aware of tonight I got some people on the other that's been in a space for as long as I have sometimes longer some people had done more less deals I have a tourney on board here we have a service run board really to answer a lot of the questions that go on so the first thing I want to get into his pitfalls everyone sees how someone bought her know what we find often is people are buying these notes and getting excited at peel buying notes but everyone in this room has bought a note and bought it wrong and that's the pitfall buying you know does not the challenge here is buying a note that's worthwhile the challenge so it's gonna be difficult let me just take this personal huh one seconds it's gonna be difficult and challenging to to really grasp everything tonight and I'm going to do it best to kind of color everything in a journal sense with that said the first thing I want to talk about is you bought a ton of notes what do you do do they buy correctly we all have horror stories I like for Bill Aaron you kind of give me the shortest way praise what has been a horror story you've seen in buying a note what kind of horror story guile posture with Karen what has been a horror story note that you bought that you would never did I'd say when I bought a pool of them there was I mean the biggest one that I wish I never did was when I bought a pool of them and it was a one house I didn't do enough due diligence on you know and after I bought it I checked on it but that's one of those it was like on the first pool I ever bought you know so the rest of them looking good what was that with the property that you didn't do enough too diligent on well I like to have something that I'm not afraid to end up with later this was one that was in an area that you could tell it clem close to flooding and I've just had all kinds of problems with it you know the but that was the main one you know it was stuck on in a pool and that's the first one that comes to my mind there's others but bill can you give me a horror story yeah I mean a horror story just everybody's aware I fully invest in distressed second mortgages that's my true skill that is my full-time investment strategy and when you invest in distressed seconds probably 80 to 90 percent of my exits are through the homeowner not the property and since it's such a numbers game in the seconds it's it's real common to have a horror story so it's not like I have one specific horror story because if you're playing in the second space hard enough you're going to strike out my numbers are basically one out of two will give me a payday and the other one becomes a bankruptcy and REO I'm a situation that's not great and with more experience and more playing the game you learn how to deal with those that don't pay you or file bankruptcy or you particularly end up what's very difficult to figure out in the second space is when to say it's a bad deal and just stop with it it's an easy space to spend a lot of money with attorneys within bankruptcy and that's basically what I would say is more of a horror story is knowing when to say when with a deal and accepting the fact that the deal just didn't work out my calling shut downs I'm very aggressive with legal in my space and when you're aggressive with legal sometimes you end up with a property and you don't really want that property and the numbers don't make sense or there's not much to do and I'm always a firm believer in if I end up with a property and it's gonna cost me 10 or 15 grand to get situated and really know what's gonna happen because there's a first mortgage on that property you're better off on another second and just let neck go and take it as a write-off that's true you know and thank you Bill Karen can you give you a little background your history of who you are a fraud you some intro that Paula dies guys how far back you want to go Jarrell what you who are you what you do and Karen Peterson Katie investors is my company i I do non-performing firsts so and I've done non-performing first for three or four years I had rentals in Dallas before that for I don't know for probably the last 12 years so but notes exclusively for the last four I mean I still have my rentals I'm selling I'm getting rid of all those but Franco can you give explain who you are what you do sure Franco Borelli part of Sicilian Burley with my partner Tony he's also within this share group tonight to answer any BK questions but we're a law firm we do a lot of default work default legal work and out of court a lot especially on the foreclosure and forfeiture side I mean also do quite a bit of a reviewer we're in Ohio Michigan Kentucky in Indiana we do have more states on the bankruptcy tonight as well that Tony could speak with as well and Shonte who are you what do you do I'm Shantae Duffy and I am with Madison management services your loan servicing company I'm the office manager there I deal with all setup loan boarding and any odds-and-ends questions you guys may have they usually come to me before that's me awesome so we're talking horror stories Franco I'm sure you have a time as well can you pinpoint wanting you dealt with that just you wish the person never brought you or I never bought you can bet well there's there's you know I don't want to say their weekly but I mean they're there's quite a bit of files and sometimes it's not the fault of the investor it's not the fault of any type of title or collateral review or pre punches there are a lot of attorneys out there that are looking to sue so specific seller especially county in Ohio Hamilton currently that there's a specific seller that sometimes gets all the lawsuits not for any fault in their own it's like we've somebody got municipalities give me one second oh sure there you go you're back I don't know how you muted okay Hamilton County been a problematic issue yeah it hasn't problematic only because you know there's there's certain attorneys in that area that pinpoint certain sellers and they're they're just looking for a fight and we have a couple cases that there's really no merit to it you know if you get a legal aid attorney or if you just have it just a standard attorney you know representing the borrower and trying to ruffle feathers there's a few counties in Ohio where that can work and they can kind of prolong the case we do the best we can with you know serving discovery and making sure that the case moves forward on our end however there are litigation scheduled dates that you can't avoid so you know which are artists involved in the case very quickly and try to get the attorney at least at the table saying hey look you either give up a property or reinstate the loan so trying to be as diligence we can but that's usually we get so sounds of me is what as some people get into space they look at the foreclosure timeframe and say I'm gonna be out in 8 months 10 months we're in Texas have you had in three months that's not always true is it no I mean if you're looking at a foreclosure you know timelines that are probably six to nine months sometimes a little over if you get a little just borrower you're looking over a year if you've got a land contract that's a little different you can go down water out but even going through the forfeiture route we've seen some problems again not only the investor not by the seller just you get an attorney involved and all of a sudden it slows down so we want to hit on tonight you know and I think everyone on the webinar definitely understands this point we're seeing a lot of joint venture partner people coming into space and doing a lot of joint venture sanity emails asking for capital to be a passive investor I know bill and I fought I cared as well I'll hate Franco yeah last to say because he'll be the legal side of it but give me your impression of someone that's new in a space JV with people maybe find the money through JV emails getting that money and investing in a note what are the pitfalls of raising money passively investing in space passively you an investor at promising things bill can you share what your thoughts on that is absolutely I personally don't do joint ventures I have two companies I'm an asset manager I offer a service for investors that want me to manage their second mortgages and I also do it in my own portfolio so I've stayed clear of joint ventures I don't really want to get into a relationship or a partnership with people within my own portfolio I do have some private money I might do some collateral assignments I do sell some partials to kind of refuel and keep things moving but you know my recommendation is and we just talked about this last week Dave is I see a lot of people out on social media treating this business like it's the house business like we buy houses sharing all their stories out on Facebook and you know Franco can talk on this if I want to talk about some horror stories it's actually deals that we did nothing wrong and if you get pulled into litigation I mean litigation can go anywhere from 15 to 50 K on one file and you did nothing wrong so any ammunition that you can give an opposing attorney or a borrower that's why you don't see me out on social Media talking shop and exactly what I do just to put in perspective for people I've worked over 600 files in this space over the last 10 years so I get it and I understand what goes on but what scares me a lot is these new investors going around Tooting their JV deals out on Facebook and social media it's not even so much the partnership that's going to get them in trouble you just got to be very careful it takes one opposing attorney to come after you and and it's only one or two crazy litigations that could crush you in this space good point real good point can from your understanding about these emails and the social media what's your impression of JV people going out there raising capital and having a passive investor a deal well you know I've heard people I've heard from attorneys say that they've gone after people for what they've posted on there and I'm the same as Bill of I do post ones of showing here's what I'm bidding on but I don't put all the details in there and I'm looking for a JV partner and it's more like just picture of a house here's what I'm bidding on today here's what I'm bidding on today but I'd say you know I'm about like Bill I mean I do have JV partners but I don't have many and it's usually other people who are in the note space who see something I've gotten and called me and they went in on it or you know I invest my own money and my parents money and my husband's money and that's the majority of it I don't so and it's not as easy as people like to think it is you know I've only had a couple that I've had to deal with and luckily they've been you know not demanding people but you know I told him way in the beginning this isn't you know this isn't as simple this isn't the simplest thing no matter what anybody says and you got to know and I you know it's just like the pitfalls I've told them you've got to know all the downfalls and we're going under the worst case scenario and a lot of these people I think when they go post them they they give the best case scenario you know you got to go with the worst case scenario the worst numbers the worst outcome the worst whatever and a lot of people don't do that so breaking from a from a litigation point of view you know as bill and Karen say about posting on Facebook is over that I would raising capital for a passive investor is that legal for you in venture with somebody else where the only thing that person does is provide funds well I mean the big thing is is gonna be putting everything in writing I mean when it when it comes to JV agreement it's it's usually short term that's an exit strategy you know you're putting money in forth the specific venture um you end up becoming a bank or a lender at that point just got to be careful but I if you're looking at JV you got to look at it chickabee agreement put everything in writing and make sure everybody knows what it means and you know how long it's gonna take gotcha you know I have a hard time believing it you can pass Lee mangi investor and possibly invest and not have that partner doing any of the work is that a problem where someone does absolutely nothing as per the GE agreement yeah to where they just on the deal well I mean if you base them writing off of that you probably could pitfalls in that too on both sides not just the the person taking the money but the person putting the money in but again whenever you come to JV agreement obviously somebody's probably bringing in more money than and trying to fund a little more of it than than the other what happens if somebody is only doing the microphone and not really working deal well I mean it explained the work so once you know me I guess managing the properties or what you know trying to get the deals they just literally just putting money to the deal just putting money in I gotta take a look at that I mean usually I don't see that I mean you got both sides doing something I think I've lost your so the problem is when people are doing deals and they are putting in money and just funding a deal for a partner if you gave me money and a JD just says you give you money when you split 50-50 and you do absolutely no work I'm on my under saying as that cannot happen that JV partner has to work in a deal or that scene is raising capital yeah me that that's that's how I've normally seen JV agreements is both sides are doing something I mean I haven't seen one where somebody's just putting money in and kind of walking away really haven't seen it okay so we want to get into also the dealings with buying a note and you know I'm a touch upon quickly of brokering when you finally deal through a broker what is the typical situation and how do you tell if that broker is is truly a broker Kent I'm sure you've seen deals and circles when you have a person come at you so oh I have direct access to an asset what's your first thought and how do you know if they're true or not well a lot of times if it's ones you've seen already or even the way they've word it you know the direct access usually tells you that's just one of the ones that like if somebody's really selling it to you if somebody's coming after you would be the first one if somebody's sending them to you you know every hedge fund doesn't come and hunt me down I mean I have to send them an email and say send me what you got so if they're coming to me in the first place that's the first one that there trying to wholesale a list and let them say listen I'm direct to the seller well yeah direct to the seller doesn't make them the seller so and Bill what's your experience when you see we call him Joe car brokers I hate if anyone's been brokering deals you've seen deals come at you and go Bob direct to the XYZ or I'm the seller rep which is the more formalized word of it what's your first thought how do you know if they're true people or not just like Karen said I just use all my experience and all my network and relationships in this business if I'm looking for something or my clients need something you know we're going direct to a hedge fund or to a note seller and we're requesting and seeing what they have I rarely deal with any brokers you know I know a lot of bigger people deal with some big brokers and they know the real brokers but if somebody's called me and I don't really know them I'm kind of just pushing them off and not even gonna really you know I'll respect them but I'm not gonna do any business or really really deal with them to waste my time not sure I really want to play any daisy-chain game in the second space at all you know no no you don't want to play anywhere this isn't a wholesaling you know yo letter kind of thing and MA I've given this out to a few people my two first questions if someone eyes assets which I rarely believe is first off the S word any kind of eye any kind of Li or a that I ignore him immediately I've never given out any kind of letter of intent any time in this space ever I asked who the servicer of the assets are and asked who the Clairol Cloud Storage Manager is it can be them it could be Franco it could be whoever but the seller or director cell would know bolt those questions you don't know this is or collateral there's problems I'm just trying to help out some new people who are going on LinkedIn and Facebook and hearing about these great page direct ask them the service areas ask who the cloud manager is Thanks after know that not many brokers in space there's not many sellers in the space or curry leaks either selling something at gold or thought that it passed around by six people oh I want to get you I'm gonna get to the BK thing in a minute and I want to touch upon debt licenses as well and worry about them but I wanted to get into the cost of getting an LLC together buying notes a private name and things like that or all you guys buying notes the LLC bill and LC correct yes yeah LLC or the IRA and why are you doing that what's the advantage of doing that person by person what could happen you know you know basic own coverage is the protection blanket that you have is doing notes I think that most people are gaining the space and being told it's easy and just just jump in and that's where so my concern comes at bill when I talked about insurance and getting sued having a protection it's you're gonna get sued in the space which is kind of scary I want to move on to the time it takes to find a deal turn you get a tape of assets even 20 let's say what the time period it takes you get you a 20 from start to finish I mean you're looking at 20 minutes 23 minutes long the fund deal you want how difficult how time-consuming is it space to find a single 3-4 deals or even a tape of deals that you really want to bid on well several different directions there you know right now I think it's harder to find tapes and it was you know months ago or last year it's a lot harder to find the tapes but you know going through them once you get used to it I don't think takes that much time you knock them out pretty fast you know you know what you want you know whether it's knocking them out by States or putting formulas in or you know I still I think the hardest thing right now is finding tapes that you haven't seen over and over and over yeah so wouldn't you find that asset you like do due diligence it gets involved in that to make sure that the asset is a solid asset built you share a little bit of what your what do you need to do to make sure that's nice that you want it once again you know most of our exits are through the bar or so if I get a spreadsheet I'm pretty good at a determinant you know what I like and what I would pay for it that's the reality in the second space a lot of it is purchase price than what you would pay for it if I have if I have my computer the spreadsheet the credit report and access to face or i can determine pretty much in fifteen or twenty minutes what i would pay for that asset and if I want that asset um could take you know a new person an hour or two once again I take a lot of chances in the face just because I know what a lot of the outcomes end up being and clearly not through the property so you know I'm not picture-perfect but I don't do a lot of you know having somebody on the ground look at the property you know when you buy a lot of seconds and that first is caring you know you're taking a lot of assumptions that the taxes are being paid and that the homeowners in there taking care of them because there's a first mortgage caring and being paid on now if that first is not caring or that first is unknown you know it may take a little longer to dive into it you may have to pull title if you're really interested in an asset and you're not real sure but I can usually determine in 15 20 minutes what I would like to pay for that asset okay when you get that as you like and you started to do diligence process how deep are you going in that borrower the asset self county records well with the first it's you totally different than what bill does of course I would say when I get the you know the first tape before I do a first bid I do enough due diligence to know the you know the biggest one is to make sure about the taxes whether the taxes are paid or not because if you bid on that and then that's the thing you come back with you're out of luck because they're not knocking those taxes off but if you bid on it and then find out the roof is caved in you know after you've bid on it even if they've accepted it they're a lot better off about you know if you're like the properties are destroyed you can still renegotiate but you can't come back and say oops I forgot to check the taxes so that's my biggest one ever is making sure you know because you can come up with a thousand dollars or ten thousand dollars there it's crazy sometimes what's not paid on a yeah and then what some people don't know in like Texas you have to know a lot about it you have to know enough to know what you need to ask even when you call you can't just call and say are they paid because they might say yes ask who they're paid for by you know and if it's ABC tax service whatever then somebody's got a lien on that property but you have to know that much too so yeah what I'd like to know from some of the newer people here what are some of the things that you look for in your due diligence period and Franco - in collateral as well as the property what are some of the things that you've learned over the years that you know now that if you can go back to year one of doing notes you would not do again I'm actually like Shanti it's just one because from a service point of view she's running into a lot of investors who are new or coming in in able he just didn't know they didn't know I'm Shanti what would you say something new investor you're seen now coming through server-side are going crap I wish I knew that I the number one thing that I see and I get the most phone calls on just because they you know company it's an assistant I'm there to help as much as they can is that they are running into issues at their collateral they aren't sure what they're looking at I don't feel as if a lot of people are experienced obviously enough to when you are doing your due diligence going through collateral knowing what you're looking for and only what an assigned a mortgage is knowing that you should have a matching launch to go with that some people I even had they had no idea to deed of trust was to begin with so I think everybody should kind of take a step back and as much research as I can because I see files akin men all the time they're missing assignments the assign chain is all out of whack Saturday I had an investor who bought a note and had a chance to Madison for servicing but they had the their assignments were transferred to Madison as well Madison doesn't own that no there's an adult of his liver drafted it kind of made the mix-up but it's things like that that you've got to keep an eye out for and be looking for you know understand that you know that is your your investment that it's your note you want to make sure that that stuff is clean and clear where you go and purchase and a lot of the other the stuff before assignments transferred to you you can see and then of course you want to double-check whatever is being drafted transferring to you but I feel like that number one downfall on just a new investor that the knowledge isn't there yet and not comfortably and they don't know what to look for and you're relying everybody else to kind of do your due diligence and you never know how well everybody else is and how verse they are to do that great point great segue to Franco Franco how can you resolve that and some tasks a private question regarding again what states you working to answer as well what are some of these you can assist with for them privately as well as relationship wise that could avoid that that heartache in it understanding and a lack of knowledge right and I think Shantae is right on point you know I think it's I called the real estate language it's a completely different way of looking at things assignments deeds and mortgages and some are you know due to trust there's so many different ways of looking at now what we do in house we do practice in it's in Ohio Michigan Kentucky and Indiana so we've got a pretty good swath here and it West we perform a title and collateral review what we would like to see is a copy the collateral file along with a copy of the title report that's what normally Lester you get yo any report for if people are familiar with that right and what we would do is that I take a look at the Oni report I take a look at the collateral and kind of merged into and provide you with an analysis of one page analysis of kind of the the highlights of the file that you're buying and there are times where I do put in there you know I really don't recommend you purchasing it there's the assignment chain is so bad you know the prior deeds are bad a lot of that can be fixed if you if you buy a note mortgage and there's a title policy there's a lender's policy involved you can always go back if there's a lien that shows up as has priority you can make a title claim which you can't make a title claim on is a clean chain of title that is something really all investors should know when you're looking at a title report if you don't use us and you're looking at it by yourself you could have a nut you could have seven assignments they look busy but something's wrong maybe one is order and it's it's a missing something yeah you have to go back in the chain fix it that way and we've helped them in in that sense but you know you want to get that pre-purchase so you can at least go back to your seller and say what can you do for me and I'm sure the first question was yes is what's the cost and a pre-purchase review for with you guys well we're on the cheap side only because we we hope you guys give us a default work if it gets the fault it will you charge $100 to do it it takes between 24-48 hours to get it back once we receive it so we do turn around pretty quickly I've done some on Saturday and Sunday just for some hot deals but that's fine you know we we like the work we enjoy it and we do you know provide that pretty quickly at a cheap rate so to clarify what he's saying is he'll take all your electronic collateral that you'd opt-in your seller which he should have received and said to him he'll review it as well as your Oni and compare and see what's missing what's not missing I also whenever I'm buying alone I'm also asking for servicing notes I'm asking for if they have a collateral custodian report from their previous time when they got a review done I'm also asking for property preservation pictures or any kind of worked at done with that and who the FBI company is if it's being if there's insurance on it a lot of funds out there that not putting insurance on their bill the second space what things are you looking for in that in a due diligence period on an asset file that new investors you wish you knew you're one of your two absolutely and I should have mentioned this earlier when I said I can determine in fifteen or twenty minutes on what I would pay on a file been very blessed and very thankful for this space and one thing that I've learned is to do business with real people so when I'm buying something like I know the collateral is legitimate and if there is something wrong with it even after purchase we can run up the chain and get stuff fixed all the time any legitimate good note seller if you buy something and some happens they're usually pretty good at fixing stuff or helping you resolve it I do it all the time you know managing that many files one thing that I'm good at is I actually want to touch the file when I'm first hired I also do with my files I want to look at it make sure everything's good even when I work files in the second space within the first 30 days I'm sending it over to an attorney not only to send out a demand letter but I'm also going to get the attorneys eyes on all the clever right away most important thing in this space is the collateral on people by non-performing loans and they're chasing the borrower right away I don't do that I'm making sure to collateral is legitimate and I'm having an attorney send out a demand letter and once I know those two things are set I call it I'm parked and I'm good to go so it's a huge deal and a big deal in this space but at the same time a lot of stuff can get fixed on there's document company that I utilized like a Ryan and Richmond and micro to handle stuff when I can't fix it you know there's always something going on even I'm like a Georgia you'll buy a file there's a chain of assignments and as soon as you send it to a Georgia attorney they're going to tell you you got to reduce the assignment and it's not that anybody did anything wrong some counties have a specific languages they want something in there and they'll make you redo them and it makes it so much easier easier when you know who you purchased it from and you know the up chaining it just makes everything a lot easier awesome lots of the first-year buyers who get quick courses and some of that don't have a clue about and it's it's no no I don't want to scare people but I want to make them aware and I did one also touch my Karen but all this work we're paying frankly to do reviews so that there's a there's a cost of not getting a deal accepted you do all the work on it time on it value it order BPO maybe and for whatever reason deals didn't work out I'm we're get Frank right now that I've got everything ready we're just trying to find a way this just blown working out that I can buy it money energy how often is that happen in the space well to go back to that one two I would say if I was thinking while they were saying it but yes there wouldn't be any reason not to have Franco do something like that for a hundred dollars I mean I get Owen ease I get but if you can have an attorney do it right off the bat you know that that changes everything and to me it's I mean I read through them but they bore the heck out of me you know which I have a friend who loves them and I don't you know so if I can pay somebody a hundred dollars to do it for me now that's well worth it besides doing it in six different states you know you can't keep up realistically what every state's gonna want yeah but there there's always going to be ones that I mean but I'd rather them fall through in the beginning and fall through later you know so get your own e and send it to an attorney and you know you can find out pretty fast if everything's gonna work out the way you know you read it to work out so a lot of people new space have no clue about this stuff you know they had they sought asset they bid it at 55% of value and they're like rock and rollin they may matter order would need a they would do you know what it looks like don't know how to read it and they're throwing out JV offers it kind of scares me um Ryan did push a question um right on wall do is all just that I don't need that be that detail situation they talk about phantom income on taxes that were forgiven in a loan situation wall do is also get with Franco how bad directly as that's a very specific situation you know in this space it's it's funny you know besides managing the deal I got to manage our attorneys be a manager servicer we got a manager JV partner if you have one pain stamp D and rules there's debt licenses we have to worry about changing in times and court records and seeing us out for attorneys to make sure they know what's going on how often are you guys bill and Karen working with the servicer and staying on top of them that painting a file to shontayne don't okay let us know when it's done how often you dealing with your servicer to make sure things stay on top of it build a little differently but you know he's also working files how much time you spend working on these files okay I would say it's kind of a constant thing I mean your constant like you said you're you've got to manage you've still got it you don't get to just hand it to them and say tell me when it's done you've still got to constantly see what the attorneys doing or where it needs to go or why it's getting rejected by the county or I mean that's there's a lot to it there's a lot more to it than your time to it you know I mean people literally I mean you we go to the things all over the country and everybody's saying oh it's great it's easy it's you know and nobody wants to stand up there and like this and tell you there's a lot to manage in it you know and it's funny when you get in the first and you hang on one or two of the koalas a little bit it's not bad to get to three or four five well this is getting harder you need to expand and do things differently and it's one or two is easy to handle bill do you want anything federal you know you you handed your files a little differently you don't know anyone else you personally handle it how much time are you managing your files I've managed right around eighty right now for clients you know since from like 2011 to 2017 and I was in between that 100 and 150 mark it's very time-consuming you got to have your systems and processes down I call laser focused daily activity you know I'm on top of myself daily you know I build out my systems and processes you know I utilize attorneys and servicers and document companies you know my accountant and my QuickBooks people are probably the two most important people on my team I don't do any QuickBooks data entry my track all my money in and out and I have all my folders and systems where I put everything but you know they're keeping track of all that I'm just concentrating on what makes me money and I oh it's absolutely you know to get a deal across the finish line in the second space and actually get paid from it there's so much that needs to happen from the homeowner sending the stuff into it getting to the servicer to process and for my client to do everything that needs to get done for me to actually get paid so it's it's real hands-on you know constantly managing stuff constantly no going out of my way to get stuff done for people you know it's all about your reputation it's all about the back office yeah I'm at my desk probably you know 25 hours a week you know I manage a lot through the phone and also but you know I need to be at my desk probably 25 hours if not more especially dealing with a lot of that collateral this it's very time-consuming there's so many little fine details I'm very detail-oriented and there's just a lot of stuff that goes on from assignments to a lodges the documents so I mean it's a full-time job I mean this is what I do full-time it's not as easy as just put a deal out there bid on it and let things happen there's a lot even go on and I wanted to touch upon this because it's come up a few times and groups of saw it you know bankruptcy situation how offer you guys getting involved and see how much of pain can it be and how much can be beneficial and I'm going to go into Franco in a minute about how BK can can sometimes help and hurt you okay you want to explain how BK like mine can be easy cuz I've never had any I've never bought any that were in bankruptcy and I've never had I've never had so far yeah any that I had to uh that I've had to deal with them so also I mean I know people buy it specifically and it sounds fun but it's kind of like you say you gotta concentrate on one thing so I usually it's a lot there's a lot to it so I have an infant loan goes from non-performing to BK because it's the last day and your wonderful clothes on it well the majority of the ones I have anyway are have always been empty or contract for deeds okay so that's why I've never had to deal with it lucky bill BK's deal with BK all the time I'm actually you know in the second space a lot of the second set you buy our chapter 7 bankruptcy discharges you know what a chapter 7 bankruptcy is is down a motor went through bankruptcy a few months later they got discharged of all their debts personally they're not liable for it anymore but in the second space it's just understanding that the the lien still exists on the property and if anybody wants to stay in the house they have to you know deal with the lien on the property that's chapter 7 chapter 13s a whole new ballgame you know I basically in my myspace I I forced three exits basically with legal when I'm working alone a homeowner is going to pay me they're going to make me get the keys or they're going to file bankruptcy and when they file bankruptcy majority at the time its chapter 13 and in this space a lot of the bar it will file chapter 13 to try to strip your lien because a lot of second sometimes there's no equity or a little bit equity if there's plenty of equity and they file 13 you're going to be included in the plan and it's actually awesome but a lot of the times the things that I deal with is a homeowner will file chapter 13 and they're going to try to strip your lien with in bankruptcy and if the court approves it you're at the mercy of their BK plan if they completed your lien stripped so I deal with a lot of BK I'm in pacer a lot actually just got hired to work not work but go through about 50 loans for a note seller right now of chapter 13 and just kind of see what's going on with them and give them a little bit of an update to something I do on the side some other services like that but uh I've gotten really good at understanding bankruptcy and you know one thing that I take a lot of pride in is you know there's a lot of attorneys that are definitely experts in bankruptcy but they're not a second mortgage investor with our pockets and who that's good one we have to make decisions on what's best for our portfolio so a lot of times you're just accepting what just happened with the chapter 13 they filed a motion to strip you're not going to fight it because there's no equity and you're just sitting back and waiting for it one thing I found out very early on is you're not really going to pierce a judge and you know sometimes you can you know change the plan a little bit but a lot of the contestant you're just going to waste money the equity is not there there's no reason to fight it you know the equity there go ahead and fight it you may have a chance of winning but a lot of times you spend a lot of money to find out that there's no equity you can't fight the confirmation of the plan and you just have to kind of sit back and go work on other deals at least with the stuff I work I work a lot of no equity not a lot of equity deals you know it's a completely different ballgame if there's a lot of equity in this space and you're not being addressed you definitely want to fight it and get addressed so where you get to BK real quick with Franco and then we're against oral a calculator stuff Franco you know PK can be a blessing to us but payment stream coming in but also going to be curse we estimations where we've seen multiple fire over BK and I wanted to briefly talk about I know a part of yours can talk more about it offline is there resolution to if someone files a BK repeatedly to prolong foreclosure yeah you know to be honest at that side of it that's that's a pretty specialized field and my partner Tony does handle the bankruptcy side I don't know if he's in here today or not or can't address it but you know he's he's got all analogies of a fantastic partner minded if he's available yeah I mean I'm you Tony Tony are you there I sure am can you hear me can you talk in a quick kind of context can you explain if something if a filed bankruptcy filer repeatedly filed bankruptcy what resolution can a lender have to resolve a repeat filer well pretty pretty simply debtor if debtors involved in a bankruptcy there was involved in one bankruptcy within the last year before his current bankruptcy his automatic stays only in effect for 30 days what that means is is he's got a reprieve from his creditors only for 30 days see that a lot that went to no effect in 2005 if the debtor has been involved in two or more bankruptcies within the last year prior to his current bankruptcy an automatic stays not in effect at all and you can continue to collect on that bar or contact that borrower but it's a looking at the picture of it to me you know you can see whether it looks like somebody wants to stay or they've already left or so to me every one of them is kind of different because are you gonna have remodel costs because it looks like they're already gone does it look like they've already torn something up but are you just not going to remodel it so you're just going to turn around and sell it for as low as possible to a to a rehab person so that's why to me it's every one of them's individualize you know do you want these people to stay by the way their numbers look by the way they keep the house or are you gonna go for assuming that you're going to you know foreclose on it so are you gonna have reap cab cast costs or are you gonna have foreclosure costs or are you gonna assume that you're just gonna refi and you're not going to have any of those costs what can expenses you know and I can go lists that I put together that maybe help you guys brainstorm a little bit I'll run through a real quick I in my calculator I'd make sure I have FBI or the women arrived insurance in that property i factor in if there's a bankruptcy situation going on right now what it cost me to file bankruptcy relief from stay servicing costs I'm expecting the first month more likely not to get much done which we know the RESPA and processing not only the current taxes of what is annually but your back taxes in what the future taxes are going to be so while you're foreclosing you make sure you're attacking to impede so if you're projecting out a year you baby ready to pay next year's taxes we got into also rehab you have to budget that if it's gonna foreclose worst-case scenario you may have to put in pain carpet you may bit tricky because some courts are actually it's a bit tricky because I have that debtor can file a motion to implement the automatic stay and what that basically means is hey I've made some mistakes here's why I think this case will work but until that motion to implement the automatic stay is filed there is no stay on that case and you can continue to collect you can the foreclosure sales the next day you can still have the foreclosure sale so it's a pretty powerful tool what we see a lot that a lot of our clients want us to do is uh if we get to that point if we get to that point where it is the third filing in the last year and there is no stay that we would want to go to the court and seek what we kind of call a comfort order we're seeking an order from the court that says yes there is no stay in effect you can proceed so there's no punishment necessarily for that borrower there may be a very good reason why they've been in several bankruptcies before the current one but but that's kind of what you're looking at how about the in rem relief context of what that does and how that can help us as lenders will explain wait explain what you mean by in rem relief where my understanding relief is when a repeat filer does multiple files in they don't do anything with it you can file what they call an in rem relief which basically puts that one back stay on it for a heartier days oh so you're looking you're looking for a bar to refiling so you're looking for are to that debt re filing bankruptcy I have filed those I've been successful on some I've been unsuccessful on others any many instances what I do because that that's gonna typically cost somebody a lot of money so somebody who doesn't have a lot of money in a property they're not gonna want to pay an attorney 1015 hours to to prosecute a filer like that and get a 180 day bar you may be more interested in sitting back and letting the trustee do that work a lot of times you'll see very proactive trustees filing motions to dismiss a case for that purpose motions to dismiss and putting 180 day multiple year bars on filing you know it to the to the more savvy note buyer out there maybe if that happens to them contact the trustee themselves and say you know hey madam trustee mister trustee mister bankruptcy trustee missus bankruptcy trustee you know you've got a debtor here who's filed three four or five times in the last year you know this is bankruptcy abuse you know is there anything that can happen with that yeah um but but but it's a you know you get to a point where you you want to make sure not spending good money after bad yeah yeah absolutely the probably worth thirty grand some done is not worth it awesome yeah I mean why would you why would you pay me I mean I'm a practical kind of guy I mean I'm a business a businessman you know you're not gonna pay me $3,000 to maybe get a hundred and eighty day bar on a file that's it's ridiculous I'm gonna tell you don't do that yeah awesome well Tony I will definitely link up your information on that so anyone any Z asked additional question that can reach out to you please do thanks guys but I the last time we want to get into is in what we gain two ROI calculators what we're seeing a lot of bail and one of the bigger reasons we did his webinar he's a lot of people are missing a lot of the expenses that go into making a bit happen people are bidding stair-step percentage of lot of different things I think people are missing out on the legal fees servicing fees insurance fees they're missing on a lot of stuff I think what people don't realize is there's expenses in a space that they're not aware of simply because they just 30 months you know there's a big cost in this space our servicers and legal you know the ROI you know on these performing notes to go into a deal saying this is the ROI I want it's just and it's not the right space for you the returns are ridiculous when they work out you know I can tell you horror stories and I can give you some ridiculous stories on great returns you know I just because I was able to purchase this thing in a very good price and I got very lucky with just a demand letter on a file that I had in Ohio you know when I punch my numbers into my 10 B I I it's telling me I'm a little over a five hundred ROI I don't talk to numbers with people because they're like number one they might not believe you and you know I can tell you stuff that I've been wiped also so it's like it's everywhere in between in the second space now when I'm buying a pre performing second mortgage you know absolutely I'm looking for a specific rate of return but the like really plug in a true I want this return on this deal in the second space is just tough because it's it's a lot about the portfolio it's a numbers game and it's more about playing a few times and kind of building that portfolio to get those real good returns is there any cost of that in the second space since I don't do a lot of seconds that I missed in my list I mean we don't pull you know we don't pull any kind of federal clear reports in the first place I've been told by Rasika not you should pull it for you know it's better for you guys we don't pull those kind of fees those kind of reports so it's not a fee that I add in there there's anything like that that you pinpoint that those costs of should be in the calculator I mean you just banged it out I'm you just uh you know you don't know can you guarantee names some of the things that you include you would like a younger Karen and know that the first auric are exactly that you put together like myself probably changed you'd probably scared your first one a lot of you wanna know what your ROI calculator is and there's a good reason we don't give it out not because I don't want to share it it's you all understand it and you should understand what's into it can you give me some of the things that you look for in the first place that are expenses that you wish that other people knew did we have the exact same conversation in Dallas cuz the way you just said it sounded like it came straight from me because I have people that ask me and I say yeah it's you I can't give it to you you're not gonna understand it and even if I explain it to you you're you know you're what you need isn't gonna be the same as what I need you know so I I i start out a bit off of a stair-step but I still have a whole excel file that I plug things into and I have to redo it you know if it's if I don't just plug them in and then I accept it on every one of them I mean I really individually when it comes down to the whatever 15 or 20 or whatever that I want to bid on I go look at each one of them individually and see whether those numbers really apply to that one what are some of the expenses that go into this calculator that you can name off your head that thing that may not everyone knows is there was servicing cost hopefully do well they're servicing theirs taxes there's but like I said sometimes it depends on whether the house looks whether whether you know the house is empty or whether you're assuming it's empty I mean you're gonna check that later or whether it's a contract for deed or whether it looks like you know they're not gonna I mean there's a lot of stuff that you can tell by looking at a house you know even if you're just not be all sell it as is attorney fees not only just filing fees where a lot of people are looking at just the cost of from of legal but there's court costs as well so it's not just one side of the legal side so the Fannie Mae allowables you cost euro Andy your cost your BPO the liens involved the judgments IRS liens which we briefly talked online that it was an IRS lien and it was filed after your mortgage they have up the horror twenties after the foreclosure to actually redeem the property state for super liens the HOA problems Redemption which is a huge thing that people like Alabama in states like Michigan people are seeing three months foreclosure periods and going my calculator projects three months I'm good rock'n'roll and then they found out there's a six-month Redemption period on and you can't sell it during that time period those kind of costs go into it boarding alone we've been getting a payoff letter from Madison the cost of deed lose closet forbearance agreements recording fees the man letter fees timeframes that this things take place the borrowers send in financials how long do they have all these time frames not only the costs but actual time frames for it to happen exceed so every month you do it is it cost to you a course on taxes also insurance costs on servicing you know bill in your calculator when you're buying a loan what are some of the things in the second space that you guys have to price in your deals that you know fifty five percent of value just better across the board doesn't work sometimes yeah toughest thing I think in the second space is to actually purchase a deal based off what your ROI is gonna be you know like I said you know I forced a lot of exits and a lot of the ROI is will be determined on what the bar can actually afford sometimes bars can come up with a crazy pay and you don't see that anywhere in your due diligence but the major cost in a second space are your servicing cost and your legal cost you really need to be familiar with your non-judicial on your judicial states you know it's real common in the second mortgage space for a judicial state for a good deal to take 18 to 30 months before you actually get a deal done you know I managed a lot of files for different people and some of the times it may be a newer investor and they start getting nervous in that 18 to 24 months range like nothing things happen in there spending money what's going on and to me I'm looking my chops because that's where it's getting good out that that deep range you know you need to be familiar with you know a non-judicial state you know could take three to eight months and it may cost you you know a thousand to the three thousand dollars to foreclose a judicial state could cost you three grand all the way up to 10 grand and they're just on an uncontested foreclosure yes space you're getting you know one out of three foreclosures are getting contested by an opposing attorney and that just starts jacking up your cost I mean it's real it's real easy to spend you know eight to 12 grand in in New York on a on a second mortgage that you're foreclosing on you know in Florida you know an uncontested foreclosure like fifty five hundred could all of a sudden be eight nine grand because it's getting contested you know if you're going into a deal thinking it's just gonna be serviced as a non-performing note for six months and now you're out the 24 or mentioned a lot of the things that an attorney will pay for with the man letters judgments complaints all that stuff you know you mention a lot of things that a service or may be able to help you out with with pay offs different documents you know I do I don't pull it myself but I do have my avenue to pull credit reports you know they're not real expensive you know $5 $10 $15 mom and pacer a lot and once again it's not real expensive but it's ten cents a page and pacer you know I could easily go and pacer and pull 500 pages one day a familiar Pacers the government version they can look in a bankruptcy file and see the details of the bankruptcy filing on any borrower that's file bankruptcy it's a you know we do pool title usually as your foreclose and you know an attorney will pull title for you and I kind of lump that all into that cost well you know just like anybody don't due diligence maybe I pull a total report for a hundred bucks or 90 bucks just to kind of see what's going on if there's a something I'm not real sure about you know a lot with the second space there's divorces there's people needing the property over to a family member a lot of crazy stuff goes on you know you might just not be able to you know put pieces together doing your due diligence so you know you really like a specific deal so maybe you will spend a little bit of money up front with a you know like I said a total report um I rarely ever do Oh Andes for anything in my space Franco three expenses that you wish that besides the her dollars to you of course that investors should be looking at or not calculating who we're seeing a lot of investors out there bidding on assets doing the Facebook advertising that they bought this asset and I've seen exact same file and I've been at ten thousand dollars less because of XYZ reasons and when they're not conservative they're getting deals and within a year they're out of space which sucks great for competitive but it sucks cuz eight see someone fail varying expenses that you would say that we should have in our calculator you're providing an asset in your states you represent yeah you know to go on with Bill you know you gotta budget it out and you budget it out through your attorney the minute it goes to litigation with a demand letter you'll know from our office exactly what that budgets gonna be so we budget out you know non-contested and we budget out contestants so between those two rates you know we'll provide anybody with our our fee schedule we want to use us but definitely you got to be able to budget that in even before you purchase it and without any type of budget you know and you guys are all talking about non-judicial in judicial states you know Ohio is judicial Michigan's non judicial so we're worn both playgrounds and it's correct you know you you get your property back technically in Michigan within forty-five to sixty days but you're sitting there at a six month Redemption period in Ohio it's going to take you six to nine months even longer to get your house back once once you get the property back you're you're you're set at that point but the cost standpoint you know really take out the attorneys fees because what we do is we bill based on a flat fee rate what you're have in front of you the cost that you're gonna see complaint filing fee you know especially in Ohio there's so many different counties that charge different rates some charge five some charge nine hundred you don't know unless you're in that County there's a requirement for a preliminary judicial report that gets filed with the complaints those are could be very costly because there's the price for the actual report and then there's a premium on top of it based on the value of the property of what the county auditor has and then you have to do a final judicial report when you get towards judgment and then there's other legal descriptions than to be approved then once you get the sale is a lot of sale costs so we do give you those budgets but it's like you said they're they're not in hundreds they're definitely in a thousands because they're labor intensive so bidding and acid at 45 55 or 60 percent of UPB or BPO stair-step doesn't work Shaunie's anything that you've seen from investors that they didn't budget in as well that we can learn as well the number one thing that I see and I see it on almost like in every other day basis and it sometimes becomes frustrating it's the taxes people are you know purchasing notes and they're excited and they're kind of told is performing but they've no clue what the tax situation is and when it comes to our office unfortunately we're the bearer of bad news that trusts explain to a lender hey you know your borrower doesn't have enough escrow funds to pay this you know we give the lender is an option to advance so as fun as the borrower's can't afford it and I've watched way too many people let those taxes just skate by become delinquent you're here and then you know they kind of get sick and tired of it people have told you know my asset manager is like wow but in this industry for to be paying other people's taxes there's just different reasons I feel like that's the number one problem that we hear and then once a property as they say they don't want to pay it and then another year goes by and something's going up for tax sale and then somehow that falls back on us when we ask you the year before you know it's in your best interest to stay on top of those taxes to make sure they stay current and don't go to talk so whether you're you know especially in a first lien position because they taxol kind of do super senior for your senior but yeah I hear it all the time and you know me wanting to be an investor like that so you guys appear it's one thing I always keep in the back of my mind to always look into so one of the private question I had was what is the stair step and what I mean by that when I first got into space 10 11 stair steps were very common we paid based on it was that was worth 50 grand would be fifty percent forty thousand forty percent there you know and it was a model follow it was over a hundred thousand we'd be 55 and that was it I should lower than that but I won't scare you guys we're buying at 30s back then the lobby all were doing is taking you PP or BPO depending on what's lower and doing a 45 or 50 percent of the number and that's my bid number they're not including in expenses because they don't know the expenses where I've been 75% of a value or 75% of UPB because my calculator told me I'll be okay stair-step often just as a general because they don't know any better and that's what scares me a lot of people out there are bidding higher than I would and they've bid 55 percent of value and they have no clue that there's a $7,000 tax lien and no person's gonna be destroyed as well as a JV investor if they have money behind them they're walking to Franco and said what do I do you turn in Shantae and ask what to do and that's what we're trying to wake you guys up if you are investing my highly recommendation is hook up a bill work a file with them hook over Franco and just talking about things talk to shantae talk to Kay and just maybe even JV with them it's listen I want to be apprentice to you I want to just look over file and help you and learn because there's so many things in this business that bill it'll I all of us can learn every month I'm learning some new into space which is scary you don't know you don't know and jumping in a deal because it looked like it's fun deal to get into and the returns of gray where you saw person by three for loans awesome you don't know that you just bid $10,000 above all of us because you didn't know the numbers on the deal and then within a year you're out of this business which is what we don't want to see a lot of the teachers out there aren't talking about the guts of this business that can destroy you legal filing situation borrower problems lengthen foreclosures not having insurance on a property and the property going to hell all these things that you just don't know and you know what do you do you really team up with people you trust and try working with them shaving on your first deal to me scares me Karen you've seen a lot of this where a brand new investor comes out and they haven't done five deals and their JV got stopped so what's your experience with those kind of people and what they come to you and talk to you about those stations I don't think I mean first of all like you said they don't last very long I mean they don't they can't a lot of them I really don't know what's happened to a lot of them because they're no longer in the note this you know and and and like I said on another nobody ever tells you all the details so when they come asking questions you don't necessarily know what they've already done but you know like you were just saying with the stair-step I mean if there's no reason you ought to be bidding on something if somebody's telling you in a bit of stair-step and you're just flat doing it I mean like I said I I look at every property individually there's there's no way possible you can just say I'll give you fifty five percent for those you know so I just don't think they're gonna be in it for long what would you recommend to somebody that wants to be in the space and is new and they're being told just raise some capital find a JV partner do you mean any of them I ever talk to I mean I'm very clear on the and the chante saying she runs into that every day with the taxes sounds crazy to me cuz that's my biggest one of just like I said in the beginning you can't just call and see if the taxes are paid you know you got a call call that County up and ask ask a person who paid those taxes and you know they're they're usually very helpful when you call you know and you say I'm looking at buying this property and you don't have to explain anything to them they don't really care you know they find the note I mean they don't but they're usually as long as you say I'm looking at this property to buy and I need to know about the taxes they're 95% of the time they're very helpful and they'll go in and say oh well it was paid by them or it was paid through another party and it's got a lien on it or so it's a very simple fix to not so I it blows my mind that she says she runs into that every other day that's that's what I mean the space there's hundreds of people a year to come into space and unfortunately a lot of we won't see next year well even something like that if they know enough to go to Madison management why do they not know enough to call on the taxes you know that's be done with for them that's what I've noticed a lot it's kind of like I wasn't told that that kind of falls on your due diligence and not to like point fingers at anybody aren't in the space of all these investors that are attending right now because I don't have any notes yet and I know what it's like to be in the servicing side I've watched other investors and their pitfalls but I don't know from a personal experience where what I need to do on that like they're just so much and so many things that I have learned yes within these perhaps you know six seven months from people taking under her wing Dave being one of them and just kind of showing me some things that I understand but just what I've never even thought twice though just because I've never done it and as I'm learning and then watching everybody else and I'm like why would you do that it seems outrageous to me and Karen oh right there with you but it's real and it's frightening and I hate I hate when people I go I can't be in the no industry anymore this is not what I expected it's just because the knowledge isn't there yet like the for how long you do Madison chantek ah this past February made five years so in five years you've learned everything which servicing have to do with it you step in any investor side and you feel lost I am completely lost that's why you don't have a note yet I don't you know I'm nervous I'm definitely cautious and I feel like everybody should understand what you're getting you're it's money you're spending you know that's either money or someone else's money you know don't just think but there's definitely a lot that I've continued to learn thinking that I thought I knew everything and I don't and they've said every month you were learning something new it's almost weekly from me that I'm walking to something new and there's I know our team uses Franco in some states as a preferred attorney and there's stuff that he's letting my accent managers know that they have they've never seen never walked into and you know blue I'll share that information in-house so you know people definitely need to keep their eyes open years open and put themselves out there to get some knowledge you know don't assume because assumptions are always wrong it's amazing you know take someone who's been in space for five years and they know a lot about one area of it and lost another go with you one of the questions we received was brokering notes to start off getting in loan going through like distressed pro and fine Wandy to deal from a bank and brokering that deal what's your thoughts of people trying to broker deals to get in the space to build cash flow or building up a point or two on the unsaleable it's tough to do I mean it's tough to just broker a deal in the second business you know a lot of us will buy multiple loans and you know you have to be active when you're investing and you know sometimes if it deals not turning maybe you sell one of your non-performers just because you need something to turn not that it's a bad deal you know an active investor is always kind of moving so you know there are definitely plenty of people that have bought loans and then went and sold them you know it's real common in the second space for you know a loan to be sold from one fund to another and it's circled around three or four times and it doesn't mean it's a bad deal it just got caught up in a pool of deals and it got sold on it definitely can be done but you're better off just buying it and working it and trying to figure it out that way and learning you know education is real it happens all the time in this space you know I'm learning every day it's the best thing about the note space you know that's how you're gonna do it you know you're gonna you're gonna learn some pitfalls and you're gonna learn some good things but you know you can't just sit there and watch forever I mean eventually you got to dive in and play the game I mean you know I actually just wrapped up my taxes yesterday I could have used a couple right off so yeah it's amazing of the things that are being encouraged out there to do and get in the space and the fun and just hi your attorney a higher your servicer and rock and roll it's funny because the space is so small and there's a reason for that and we love new people to talk to about it encouraging begins a space but you can tell the people in the space of been here for a while because we all know each other we taught each other if you you meet somebody on the street and he said in the space you see if any was known networking this space is huge I bring up on my every webinar because it space is so small just be smart with it there's a lot of tools peeper or forthcoming with information people talk about anything and share anything you want now you know one of the question came up with what's our wise threshold an accepted deal Tibbie look at it 30% of our why is that realistic you know building a little different space for four seconds but I think you know Karen what's your thoughts on you know it's hard to answer for me should you peg your thing a 30% return to make a deal survey enough is that enough of an information give an answer well I think it goes back to I start with that number that's the return on ROI is even even if I calculate in what the stair step is I look at it versus the ROI and if it's less than 30% I don't even look at them but to me you still have to put it in your other spreadsheet with the best and worst scenario and see if that's the best or the worst scenario you know if like if if you're gonna be able to evict them because it's a CFD is totally different than if you're gonna have to foreclose because it's a you know other or if you're expecting them to say you know if you're expecting them to stay and that's gonna be the 30% ROI but you end up having to foreclose that totally changes the numbers so you really need to put be able to know whether that's your best-case scenario or worst and to go back to either before what Frank goes up you need know your expenses to make that 30% if you have no expenses there besides by the note taxes in the return that that's 30% you miss a whole lot of expenses that'll eat up to 30% like that and we're seeing a lot of people make those bids saying I bid at 30% of my projected 30% you didn't factor in the cost of the taxes for this year ongoing may be the contacts are current by the borrower but they may not pay while they're in foreclosure in Ohio for a year you didn't have that in there you didn't have the insurance quantity the part of them insurance you didn't even hear you know all kind of things like that that we met before the factor of the demson period I was three months well are you factor three percent returns in in you know in 90 days in Michigan and didn't factor another six months of redemption period insurance period servicing period so ROI to me is very dangerous to project without knowing what expenses go into that Joe Kennedy thank you for that question it is realistic have I've gotten it absolutely I find lot of people armpit thank Allah give a situation where a lender came to you with a file and like blew their mind with it the cost of the legal side of this yeah you know it's it's happening a lot you know there again I don't see a lot of them uh some of them think it's it's in the costs are in the hundreds when they should be in the thousands and and you know another thing that you have to worry about are the different states you really have to know where you're investing so you talked about Michigan Redemption rights Ohio one of the big things in Ohio is you bought a land contract so you're thinking okay great land contract forfeiture fees and costs are manageable well that land contract is not five years old you're forced to foreclose but oh how the cost blew up so it's not knowing some of those things and I think that's where it helps you know to have an attorney on your side to go through some of those things and that's what we pick out on that pre-purchase review okay you know you got a five year old land contract here budget in a foreclosure and and that does help but yeah you do see a lot of investors you who are just kind of blown away with the couple with the costs and some of them do go away some you know they'll take it in lot of our assets I'm sure Bill Gates knew it you you some ties your cost of your asset will kill a deal amazingly kill a deal I stay away from a lot of the 30,000 or properties because of you know as Franco say four quarter cost isn't based on the percentage of the value of the deal bill what you know what are some of the things that will kill a 30% ROI that people who just bid 30% and say hey I bid that number should work out like I said it's you know at least in the second space is such a numbers game and there's so many things that happen it's about building a portfolio it's about building those returns not just buying a deal to get that return you know I'll just use an example you know we foreclosed on a house in Nevada last year you know quick numbers and we're like 13 K and and we got a 55k payoff third-party bid on the wrong property at the Sal right so you know homerun deal slam-dunk well that third party wanted their money back so they filed a complaint on us and you know I got pulled in my trusty got pulled in and a lot of people got pulled in and this thing went pretty deep and it ate up all the profit Wow so it's like they're the things that you just we did nothing wrong but you have to deal with it and you know it just came in and you know if you're not prepared or you're not ready for something like that I mean it could crush you I mean it was it wasn't pretty and it's not fun we're still not out of it right now but we did settle it it didn't go to trial but you know if somebody wants to sue you they can sue you it doesn't matter if you do anything right or wrong that's the nature of this space so it's it's so tough and just say you know I want a 30 or 40 or 20 percent return on something and the novel for me second space you know it's a numbers game the more you play the more successful you'll be and it's about building that portfolio but you know crazy stuff like that happens you get pulled into litigation you just can't control it and I also want to make sure people know when they buy not performer I've seen it few times recently where a person born on performer and it performed in a now or in a situation where they bought it without looking at the yield on it if they reinstate the loan and you're getting a 5% return your stock that you have to make sure in your art out there that if it performs you'll be ok with the performing thing because just because it default it doesn't mean you get to foreclose on it they can reinstate get the loan back performing and that return may not be good it may be it's only defaults in six months you bought it projecting that you can foreclose take the powder back and get a killing and they paid three four thousand hours reinstate it and to two percent loan coupon those are kind of things that people aren't clear table later and not factoring in and there's nothing you could do about that so please feel free to ask me more questions because this is a topic that think people are attracted to because Bill's Cather's didn't for my if I look at bills I be lost look Carol I be lost if they look at mine they be lost you build it over years and experiences I you seen mine last week I added something to it I was trying to figure out reinstatement monies to make sure yields work out and with that just if it's an equity deal versus an on equity deal in the first place a lot of lenders don't want you to want you to pay the percentage of the actual you know unpaid balance where if it goes to auction in sells at auction you only get back the legal balance on it you don't get to sell the whole property a lot of people are bidding equity deals poorly one of the questions I other speakers to target or ROI name for Karaca 30% what I guess the question is what are other people target ROI for bill do you have a target number for your ROI calculator of what you're targeting to buy it at I mean I base all my stuff off purchase price of the UPP when I buy something you know I'm just like everybody I got twenty eight twenty five thirty it all does the factors in the second space or equity and the currency of the first and the state so those are the three factors you know right now you can buy stuff in the second space at twenty to sixty sixty percent of you PB you know we first started doing this back in Oh 809 2010 when it started happening and you could buy stuff from ten to fifteen cents on the on the UPP you know prices have definitely went up you know I'm all I'm an investor I mean I want the biggest return and I want the most bang for my buck so you know the second space it really comes down to when you force the hand and that homeowner comes out you know what are your systems and processes you know I go through a whole financial process with these homeowners I give them ideas um you know a homeowner might not have a lot but maybe they got a friend or family member that can come up with a lot of money um it's it's it's what you can do as you know how creative can you be can you give them ideas and I just can't express enough it's about building that ROI on a few deals you know I go through this a lot with very successful people in real estate that are very deal specific on what's the ROI for this deal you should know all your our lives for this deal and you know it's about my portfolio and what makes sense at the time you know maybe I take a discounted payoff that isn't the best ROI but I need a pop to fuel the legal for a couple other deals that are looking real good so it's really based off my portfolio just like everybody I want a nice solid return when I'm buying reap performers in the second space you know right now you're buying them between 10 and 15 percent of our a lot we you know five six years ago you're buying them between 20 and 25 percent ROI absolutely you know some of my best assets pay me in the 30 and 40 ROI range I mean shared with you that one deal I got done in Ohio yeah you know I was $800 in that deal I got all my money out already and they owe me a hundred and seventy eight payments sOooo it's you know they only owe me 203 eleven but all my money is out of that deal and you know they owe me 178 payments and that's what's weird like I have to get paid there's so many things that could happen between me getting all those payments maybe they refinance and it's you know time value of money in this space and you know I've always said this about real estate you know there's a lot of people that are in real estate but it doesn't mean they're an investor you know it's about snowball and the money and and managing it and and working with Beale and moving forward you know can you save money you know not everybody is an investor you know there's a lot of people in the real estate business who are you a true investor and one of the questions came up here is you know the percentage you know my target mile go 25 to 30 based on the value of the property but a whole lot primers go into there so we mentioned it 24 are are a lot of my stuff based on time value of money and a calculator is this thing not yield meaning payment times 12 divided by purchase price that means absolutely nothing to me value okay let me say this I've I've closed over 300 deals in the second space and this is the most I've ever talked about ROI is on this call ever everybody so stuck on them it's not about you yeah it's about the homeowner or the property and getting a deal done it everybody's so worried about themselves and their ROI like I've never talked as much about ROI and this is like this for a living I mean it's changed my life I make lots of money on it but everybody's so fixated on that ROI did it it's very important don't get me wrong and if I was in the first pace or running a big hedge fund it would probably be different I'm confident enough in my space in my business that I know it's going to produce and sometimes it's a really great return sometimes it's okay and when the deal comes to the table and it's fully laid out that's when I determine hey this is a great one for me to keep this may be a good one for me to sell a partial off of maybe I sell this one you know I've got stuff in my portfolio everywhere from a zero percent interest rate up to like an eight percent interest rate and it all depended on the UPP what the homeowner can afford and what made sense for that deal yeah well but like I said I don't I don't start base I mean that's just where I start I don't say oh it's a thirty percent ROI I'm gonna buy it I say you know like I said a minute ago I then you look at that and say is that the best or worst case scenario you know is if if somebody's gonna stay in the house and they're gonna pay and that's the worst case scenario then you're good but if if you have to go with foreclosure and that's the you know what I'm saying it just depends on whether that's the best or worst case but it's just there's a lot of numbers to look at like you said it's a numbers game so you can't just say I'm gonna buy one on a stair-step or I'm gonna buy one because it shows it has a 30 percent ROI there's a lot more factors into it you can buy based the fact that Ohio is a eight 12-month foreclosure timeframe and took you three years foreclose you know there's a hora why he gets factoring a lot of things in space and when you're dealing with someone else's money OPM it becomes mmm disgustingly more difficult because how do you explain to an investor after 24 months they get sort of trying to work a file that you expected to 8 to 12 because you didn't know anything else and you promised him a 30 percent ROI based on a calculator that had missing factors maybe not your own fault but just to borrow it for you into so you know we've we've hit a lot of stuff with that in the second space you're all about the borrower in getting through the borrower first-base know about the property looking at what the house to house near yourself for these are markets do people want to move there he's a crime area is a rental area sell area what market are you buying in as well I mean do you have a team of people you take their property back you have to rehab it you have nothing in there you're more station so I'm gonna just open up if anyone has any additional questions we've been on for about an hour and a half now I'm just wrapping it up I know we talked I are briefly and we won't get into too much about our are I look more time value money I look at returns based on my expenses and to be dead point on your return is very rare I just just so many things that come factored in so I'll be if the latest question let me answer it I'll leave it with asking everyone here if there's something you can tell a brand new investor out there briefly what to do the next 30 days what would you tell them I do so Franco what would you suggest a new investor come out and do to learn from a legal point of view maybe understand it do you trust is what should an investor do to be a better investor more successful yeah you know start to learn the term of art you know know know what a note is know one of mortgages know what a beat is know what assignment is no chain of assignment is you know we can help out if people want to call us and then get them that process but really just start to learn the term of arts that's that's gonna be key because if you can't get past that or you are asking those questions especially taxes if you got questions on taxes you know I guess that's a bigger issue but you know definitely the term art get get those under your belt and and then start down the process of due diligence okay that's kind of a hard question I mean things you know like he said the first place to go is someone like Franco or I mean I don't know where everybody's learning you know and it's hard to know where they started you know they're learning stuff talk to like you said talk to other investors we do like to be very helpful and that kind of goes to something I was thinking about a minute ago that you and I were talking about the other minute the other day Dave about all the different things that can happen with notes when you come up and you call one of your friends who does a ton of notes and go you're never gonna believe this that you called somebody and they were like they've never had to deal with this and you've dealt with it but it's crazy the stuff that can so the biggest thing I would think is to get out and talk to the note investors first and hear the horror stories not just go to all the classes where they're teaching you how to do it go I think you're right don't just talk to one because that's the person you relationship finding investors I've been doing here for a while doing it and talk to every one of them and just the brain because stories are different their experience different but knowledge is different the way they present themselves a different and how they mark himself different I don't ever try and mark myself as a guru or anything like that I'm just looking to share your network and protected maybe you like ken because you will get messed up in a space bill do you have anything in the next 30 days someone can do they can really be more successful in the space what everybody's saying you know it's about education it's about network and it's pretty simple I mean fine people that are actually making money in this business or in any business and see what they're doing and figure out how you can add value to people there's too many people that will come into this space or any part of real estate and they want they want they want but you know what type of value you bring in you know that could be a story for another day but you know it really is about getting out to real estate events you know finding out where some of these note conventions are throughout the country you know there's some pretty good Facebook groups out there Dave you run yours well get on ask questions there's a few good books out there right now I'm fine to people that are actually doing it BiggerPockets is really good you know there's a lot of good stuff out there you got it you got to take action and you got to go find it yeah so I'd say before you go into your new you have a lot to share with new investors I want to mine everyone please feel free to jump on the Facebook groups if it's not mine any of them out there we're all kind of browsing around there stay tuned for additional videos will be doing more I erase stuff next month we did put a list of assets we are selling I did post before if you didn't get here didn't see it there are strike price that is or are you know you know dollar amounts where you could buy for today you can shoot me over an email there's for sale there's details on there you get to sign NDA to get them and we'll getting right over to you so Shante you next 30 days you said you learned a lot less six of months what would you say someone does the next 30 days to make them more successful I agree with Franco Caron and Bill it's helped me tremendously learn and gain knowledge by almost like partnering up with somebody and like you said they've not just one learning different people I've built some pretty great relationships pretty great rapport with different investors I just happened to meet at conferences David they could tell you and I kind of actually click what was last year so I wouldn't build like you said don't you have to bring something else to the table you can't always just want want wine you have to show that okay well I want to learn this and I want to understand this and I need help here but in your return I can listen this for you I feel like those types of relationships work a little bit better but like everyone else said it's networking that's going to get you the knowledge that you need people have been in this industry for years you know I've been on the service inside for five years but don't know much about being investor and actually having to purchase a note and using our calculators but I can tell you all about collateral files and foreclosure processes and things like that so definitely just kind of get out there reach out to whoever you know build that connection build that relationship ship keep in touch with people make yourself known I learned that I've done a lot more of that was in the past year as a whole than I have in the past five years of being this industry and for any reason and I feel like I'm coming out on top by learning more and more and having people that I can access any questions whether I think they are the dumbest questions and almost embarrassed to ask or makes fun of you everybody's you know that I came across is pretty nice and you know but help you they understand because at one point you guys all started there too yeah if you guys are able to go in the chat box just put your information for everyone to get it out to you best contact information if that's an email they'll get you I know you have the distribution in your camera but um if there's you can definitely add stuff to people give them information best email address website whatever you need to give to people so they all have it and they're put in the chat box rating when it's in there I hope we've answered enough questions I know a lot you'll whine no more but are like out there and what expenses involved it's difficult to give that information to answer I hope we explained that well tonight if there's more questions on any of us willing to answer them and just reach out to all of us or any of us I'll get bill get your you motorist here Franco if you put your contact information here the chat box and the bottom is pop it open and it's in there okay you okay and go from there thank you very much so you guys time I'm sure we helped out people I'm sure there's more questions get ready to bus and no--nor or some concerns of this space is awesome it is fun it's exciting there are some good returns but there are some pitfalls that you should be aware of tonight I got some people on the other that's been in a space for as long as I have sometimes longer some people had done more less deals I have a tourney on board here we have a service run board really to answer a lot of the questions that go on so the first thing I want to get into his pitfalls everyone sees how someone bought her know what we find often is people are buying these notes and getting excited at peel buying notes but everyone in this room has bought a note and bought it wrong and that's the pitfall buying you know does not the challenge here is buying a note that's worthwhile the challenge so it's gonna be difficult let me just take this personal huh one seconds it's gonna be difficult and challenging to to really grasp everything tonight and I'm going to do it best to kind of color everything in a journal sense with that said the first thing I want to talk about is you bought a ton of notes what do you do do they buy correctly we all have horror stories I like for Bill Aaron you kind of give me the shortest way praise what has been a horror story you've seen in buying a note what kind of horror story guile posture with Karen what has been a horror story note that you bought that you would never did I'd say when I bought a pool of them there was I mean the biggest one that I wish I never did was when I bought a pool of them and it was a one house I didn't do enough due diligence on you know and after I bought it I checked on it but that's one of those it was like on the first pool I ever bought you know so the rest of them looking good what was that with the property that you didn't do enough too diligent on well I like to have something that I'm not afraid to end up with later this was one that was in an area that you could tell it clem close to flooding and I've just had all kinds of problems with it you know the but that was the main one you know it was stuck on in a pool and that's the first one that comes to my mind there's others but bill can you give me a horror story yeah I mean a horror story just everybody's aware I fully invest in distressed second mortgages that's my true skill that is my full-time investment strategy and when you invest in distressed seconds probably 80 to 90 percent of my exits are through the homeowner not the property and since it's such a numbers game in the seconds it's it's real common to have a horror story so it's not like I have one specific horror story because if you're playing in the second space hard enough you're going to strike out my numbers are basically one out of two will give me a payday and the other one becomes a bankruptcy and REO I'm a situation that's not great and with more experience and more playing the game you learn how to deal with those that don't pay you or file bankruptcy or you particularly end up what's very difficult to figure out in the second space is when to say it's a bad deal and just stop with it it's an easy space to spend a lot of money with attorneys within bankruptcy and that's basically what I would say is more of a horror story is knowing when to say when with a deal and accepting the fact that the deal just didn't work out my calling shut downs I'm very aggressive with legal in my space and when you're aggressive with legal sometimes you end up with a property and you don't really want that property and the numbers don't make sense or there's not much to do and I'm always a firm believer in if I end up with a property and it's gonna cost me 10 or 15 grand to get situated and really know what's gonna happen because there's a first mortgage on that property you're better off on another second and just let neck go and take it as a write-off that's true you know and thank you Bill Karen can you give you a little background your history of who you are a fraud you some intro that Paula dies guys how far back you want to go Jarrell what you who are you what you do and Karen Peterson Katie investors is my company i I do non-performing firsts so and I've done non-performing first for three or four years I had rentals in Dallas before that for I don't know for probably the last 12 years so but notes exclusively for the last four I mean I still have my rentals I'm selling I'm getting rid of all those but Franco can you give explain who you are what you do sure Franco Borelli part of Sicilian Burley with my partner Tony he's also within this share group tonight to answer any BK questions but we're a law firm we do a lot of default work default legal work and out of court a lot especially on the foreclosure and forfeiture side I mean also do quite a bit of a reviewer we're in Ohio Michigan Kentucky in Indiana we do have more states on the bankruptcy tonight as well that Tony could speak with as well and Shonte who are you what do you do I'm Shantae Duffy and I am with Madison management services your loan servicing company I'm the office manager there I deal with all setup loan boarding and any odds-and-ends questions you guys may have they usually come to me before that's me awesome so we're talking horror stories Franco I'm sure you have a time as well can you pinpoint wanting you dealt with that just you wish the person never brought you or I never bought you can bet well there's there's you know I don't want to say their weekly but I mean they're there's quite a bit of files and sometimes it's not the fault of the investor it's not the fault of any type of title or collateral review or pre punches there are a lot of attorneys out there that are looking to sue so specific seller especially county in Ohio Hamilton currently that there's a specific seller that sometimes gets all the lawsuits not for any fault in their own it's like we've somebody got municipalities give me one second oh sure there you go you're back I don't know how you muted okay Hamilton County been a problematic issue yeah it hasn't problematic only because you know there's there's certain attorneys in that area that pinpoint certain sellers and they're they're just looking for a fight and we have a couple cases that there's really no merit to it you know if you get a legal aid attorney or if you just have it just a standard attorney you know representing the borrower and trying to ruffle feathers there's a few counties in Ohio where that can work and they can kind of prolong the case we do the best we can with you know serving discovery and making sure that the case moves forward on our end however there are litigation scheduled dates that you can't avoid so you know which are artists involved in the case very quickly and try to get the attorney at least at the table saying hey look you either give up a property or reinstate the loan so trying to be as diligence we can but that's usually we get so sounds of me is what as some people get into space they look at the foreclosure timeframe and say I'm gonna be out in 8 months 10 months we're in Texas have you had in three months that's not always true is it no I mean if you're looking at a foreclosure you know timelines that are probably six to nine months sometimes a little over if you get a little just borrower you're looking over a year if you've got a land contract that's a little different you can go down water out but even going through the forfeiture route we've seen some problems again not only the investor not by the seller just you get an attorney involved and all of a sudden it slows down so we want to hit on tonight you know and I think everyone on the webinar definitely understands this point we're seeing a lot of joint venture partner people coming into space and doing a lot of joint venture sanity emails asking for capital to be a passive investor I know bill and I fought I cared as well I'll hate Franco yeah last to say because he'll be the legal side of it but give me your impression of someone that's new in a space JV with people maybe find the money through JV emails getting that money and investing in a note what are the pitfalls of raising money passively investing in space passively you an investor at promising things bill can you share what your thoughts on that is absolutely I personally don't do joint ventures I have two companies I'm an asset manager I offer a service for investors that want me to manage their second mortgages and I also do it in my own portfolio so I've stayed clear of joint ventures I don't really want to get into a relationship or a partnership with people within my own portfolio I do have some private money I might do some collateral assignments I do sell some partials to kind of refuel and keep things moving but you know my recommendation is and we just talked about this last week Dave is I see a lot of people out on social media treating this business like it's the house business like we buy houses sharing all their stories out on Facebook and you know Franco can talk on this if I want to talk about some horror stories it's actually deals that we did nothing wrong and if you get pulled into litigation I mean litigation can go anywhere from 15 to 50 K on one file and you did nothing wrong so any ammunition that you can give an opposing attorney or a borrower that's why you don't see me out on social Media talking shop and exactly what I do just to put in perspective for people I've worked over 600 files in this space over the last 10 years so I get it and I understand what goes on but what scares me a lot is these new investors going around Tooting their JV deals out on Facebook and social media it's not even so much the partnership that's going to get them in trouble you just got to be very careful it takes one opposing attorney to come after you and and it's only one or two crazy litigations that could crush you in this space good point real good point can from your understanding about these emails and the social media what's your impression of JV people going out there raising capital and having a passive investor a deal well you know I've heard people I've heard from attorneys say that they've gone after people for what they've posted on there and I'm the same as Bill of I do post ones of showing here's what I'm bidding on but I don't put all the details in there and I'm looking for a JV partner and it's more like just picture of a house here's what I'm bidding on today here's what I'm bidding on today but I'd say you know I'm about like Bill I mean I do have JV partners but I don't have many and it's usually other people who are in the note space who see something I've gotten and called me and they went in on it or you know I invest my own money and my parents money and my husband's money and that's the majority of it I don't so and it's not as easy as people like to think it is you know I've only had a couple that I've had to deal with and luckily they've been you know not demanding people but you know I told him way in the beginning this isn't you know this isn't as simple this isn't the simplest thing no matter what anybody says and you got to know and I you know it's just like the pitfalls I've told them you've got to know all the downfalls and we're going under the worst case scenario and a lot of these people I think when they go post them they they give the best case scenario you know you got to go with the worst case scenario the worst numbers the worst outcome the worst whatever and a lot of people don't do that so breaking from a from a litigation point of view you know as bill and Karen say about posting on Facebook is over that I would raising capital for a passive investor is that legal for you in venture with somebody else where the only thing that person does is provide funds well I mean the big thing is is gonna be putting everything in writing I mean when it when it comes to JV agreement it's it's usually short term that's an exit strategy you know you're putting money in forth the specific venture um you end up becoming a bank or a lender at that point just got to be careful but I if you're looking at JV you got to look at it chickabee agreement put everything in writing and make sure everybody knows what it means and you know how long it's gonna take gotcha you know I have a hard time believing it you can pass Lee mangi investor and possibly invest and not have that partner doing any of the work is that a problem where someone does absolutely nothing as per the GE agreement yeah to where they just on the deal well I mean if you base them writing off of that you probably could pitfalls in that too on both sides not just the the person taking the money but the person putting the money in but again whenever you come to JV agreement obviously somebody's probably bringing in more money than and trying to fund a little more of it than than the other what happens if somebody is only doing the microphone and not really working deal well I mean it explained the work so once you know me I guess managing the properties or what you know trying to get the deals they just literally just putting money to the deal just putting money in I gotta take a look at that I mean usually I don't see that I mean you got both sides doing something I think I've lost your so the problem is when people are doing deals and they are putting in money and just funding a deal for a partner if you gave me money and a JD just says you give you money when you split 50-50 and you do absolutely no work I'm on my under saying as that cannot happen that JV partner has to work in a deal or that scene is raising capital yeah me that that's that's how I've normally seen JV agreements is both sides are doing something I mean I haven't seen one where somebody's just putting money in and kind of walking away really haven't seen it okay so we want to get into also the dealings with buying a note and you know I'm a touch upon quickly of brokering when you finally deal through a broker what is the typical situation and how do you tell if that broker is is truly a broker Kent I'm sure you've seen deals and circles when you have a person come at you so oh I have direct access to an asset what's your first thought and how do you know if they're true or not well a lot of times if it's ones you've seen already or even the way they've word it you know the direct access usually tells you that's just one of the ones that like if somebody's really selling it to you if somebody's coming after you would be the first one if somebody's sending them to you you know every hedge fund doesn't come and hunt me down I mean I have to send them an email and say send me what you got so if they're coming to me in the first place that's the first one that there trying to wholesale a list and let them say listen I'm direct to the seller well yeah direct to the seller doesn't make them the seller so and Bill what's your experience when you see we call him Joe car brokers I hate if anyone's been brokering deals you've seen deals come at you and go Bob direct to the XYZ or I'm the seller rep which is the more formalized word of it what's your first thought how do you know if they're true people or not just like Karen said I just use all my experience and all my network and relationships in this business if I'm looking for something or my clients need something you know we're going direct to a hedge fund or to a note seller and we're requesting and seeing what they have I rarely deal with any brokers you know I know a lot of bigger people deal with some big brokers and they know the real brokers but if somebody's called me and I don't really know them I'm kind of just pushing them off and not even gonna really you know I'll respect them but I'm not gonna do any business or really really deal with them to waste my time not sure I really want to play any daisy-chain game in the second space at all you know no no you don't want to play anywhere this isn't a wholesaling you know yo letter kind of thing and MA I've given this out to a few people my two first questions if someone eyes assets which I rarely believe is first off the S word any kind of eye any kind of Li or a that I ignore him immediately I've never given out any kind of letter of intent any time in this space ever I asked who the servicer of the assets are and asked who the Clairol Cloud Storage Manager is it can be them it could be Franco it could be whoever but the seller or director cell would know bolt those questions you don't know this is or collateral there's problems I'm just trying to help out some new people who are going on LinkedIn and Facebook and hearing about these great page direct ask them the service areas ask who the cloud manager is Thanks after know that not many brokers in space there's not many sellers in the space or curry leaks either selling something at gold or thought that it passed around by six people oh I want to get you I'm gonna get to the BK thing in a minute and I want to touch upon debt licenses as well and worry about them but I wanted to get into the cost of getting an LLC together buying notes a private name and things like that or all you guys buying notes the LLC bill and LC correct yes yeah LLC or the IRA and why are you doing that what's the advantage of doing that person by person what could happen you know you know basic own coverage is the protection blanket that you have is doing notes I think that most people are gaining the space and being told it's easy and just just jump in and that's where so my concern comes at bill when I talked about insurance and getting sued having a protection it's you're gonna get sued in the space which is kind of scary I want to move on to the time it takes to find a deal turn you get a tape of assets even 20 let's say what the time period it takes you get you a 20 from start to finish I mean you're looking at 20 minutes 23 minutes long the fund deal you want how difficult how time-consuming is it space to find a single 3-4 deals or even a tape of deals that you really want to bid on well several different directions there you know right now I think it's harder to find tapes and it was you know months ago or last year it's a lot harder to find the tapes but you know going through them once you get used to it I don't think takes that much time you knock them out pretty fast you know you know what you want you know whether it's knocking them out by States or putting formulas in or you know I still I think the hardest thing right now is finding tapes that you haven't seen over and over and over yeah so wouldn't you find that asset you like do due diligence it gets involved in that to make sure that the asset is a solid asset built you share a little bit of what your what do you need to do to make sure that's nice that you want it once again you know most of our exits are through the bar or so if I get a spreadsheet I'm pretty good at a determinant you know what I like and what I would pay for it that's the reality in the second space a lot of it is purchase price than what you would pay for it if I have if I have my computer the spreadsheet the credit report and access to face or i can determine pretty much in fifteen or twenty minutes what i would pay for that asset and if I want that asset um could take you know a new person an hour or two once again I take a lot of chances in the face just because I know what a lot of the outcomes end up being and clearly not through the property so you know I'm not picture-perfect but I don't do a lot of you know having somebody on the ground look at the property you know when you buy a lot of seconds and that first is caring you know you're taking a lot of assumptions that the taxes are being paid and that the homeowners in there taking care of them because there's a first mortgage caring and being paid on now if that first is not caring or that first is unknown you know it may take a little longer to dive into it you may have to pull title if you're really interested in an asset and you're not real sure but I can usually determine in 15 20 minutes what I would like to pay for that asset okay when you get that as you like and you started to do diligence process how deep are you going in that borrower the asset self county records well with the first it's you totally different than what bill does of course I would say when I get the you know the first tape before I do a first bid I do enough due diligence to know the you know the biggest one is to make sure about the taxes whether the taxes are paid or not because if you bid on that and then that's the thing you come back with you're out of luck because they're not knocking those taxes off but if you bid on it and then find out the roof is caved in you know after you've bid on it even if they've accepted it they're a lot better off about you know if you're like the properties are destroyed you can still renegotiate but you can't come back and say oops I forgot to check the taxes so that's my biggest one ever is making sure you know because you can come up with a thousand dollars or ten thousand dollars there it's crazy sometimes what's not paid on a yeah and then what some people don't know in like Texas you have to know a lot about it you have to know enough to know what you need to ask even when you call you can't just call and say are they paid because they might say yes ask who they're paid for by you know and if it's ABC tax service whatever then somebody's got a lien on that property but you have to know that much too so yeah what I'd like to know from some of the newer people here what are some of the things that you look for in your due diligence period and Franco - in collateral as well as the property what are some of the things that you've learned over the years that you know now that if you can go back to year one of doing notes you would not do again I'm actually like Shanti it's just one because from a service point of view she's running into a lot of investors who are new or coming in in able he just didn't know they didn't know I'm Shanti what would you say something new investor you're seen now coming through server-side are going crap I wish I knew that I the number one thing that I see and I get the most phone calls on just because they you know company it's an assistant I'm there to help as much as they can is that they are running into issues at their collateral they aren't sure what they're looking at I don't feel as if a lot of people are experienced obviously enough to when you are doing your due diligence going through collateral knowing what you're looking for and only what an assigned a mortgage is knowing that you should have a matching launch to go with that some people I even had they had no idea to deed of trust was to begin with so I think everybody should kind of take a step back and as much research as I can because I see files akin men all the time they're missing assignments the assign chain is all out of whack Saturday I had an investor who bought a note and had a chance to Madison for servicing but they had the their assignments were transferred to Madison as well Madison doesn't own that no there's an adult of his liver drafted it kind of made the mix-up but it's things like that that you've got to keep an eye out for and be looking for you know understand that you know that is your your investment that it's your note you want to make sure that that stuff is clean and clear where you go and purchase and a lot of the other the stuff before assignments transferred to you you can see and then of course you want to double-check whatever is being drafted transferring to you but I feel like that number one downfall on just a new investor that the knowledge isn't there yet and not comfortably and they don't know what to look for and you're relying everybody else to kind of do your due diligence and you never know how well everybody else is and how verse they are to do that great point great segue to Franco Franco how can you resolve that and some tasks a private question regarding again what states you working to answer as well what are some of these you can assist with for them privately as well as relationship wise that could avoid that that heartache in it understanding and a lack of knowledge right and I think Shantae is right on point you know I think it's I called the real estate language it's a completely different way of looking at things assignments deeds and mortgages and some are you know due to trust there's so many different ways of looking at now what we do in house we do practice in it's in Ohio Michigan Kentucky and Indiana so we've got a pretty good swath here and it West we perform a title and collateral review what we would like to see is a copy the collateral file along with a copy of the title report that's what normally Lester you get yo any report for if people are familiar with that right and what we would do is that I take a look at the Oni report I take a look at the collateral and kind of merged into and provide you with an analysis of one page analysis of kind of the the highlights of the file that you're buying and there are times where I do put in there you know I really don't recommend you purchasing it there's the assignment chain is so bad you know the prior deeds are bad a lot of that can be fixed if you if you buy a note mortgage and there's a title policy there's a lender's policy involved you can always go back if there's a lien that shows up as has priority you can make a title claim which you can't make a title claim on is a clean chain of title that is something really all investors should know when you're looking at a title report if you don't use us and you're looking at it by yourself you could have a nut you could have seven assignments they look busy but something's wrong maybe one is order and it's it's a missing something yeah you have to go back in the chain fix it that way and we've helped them in in that sense but you know you want to get that pre-purchase so you can at least go back to your seller and say what can you do for me and I'm sure the first question was yes is what's the cost and a pre-purchase review for with you guys well we're on the cheap side only because we we hope you guys give us a default work if it gets the fault it will you charge $100 to do it it takes between 24-48 hours to get it back once we receive it so we do turn around pretty quickly I've done some on Saturday and Sunday just for some hot deals but that's fine you know we we like the work we enjoy it and we do you know provide that pretty quickly at a cheap rate so to clarify what he's saying is he'll take all your electronic collateral that you'd opt-in your seller which he should have received and said to him he'll review it as well as your Oni and compare and see what's missing what's not missing I also whenever I'm buying alone I'm also asking for servicing notes I'm asking for if they have a collateral custodian report from their previous time when they got a review done I'm also asking for property preservation pictures or any kind of worked at done with that and who the FBI company is if it's being if there's insurance on it a lot of funds out there that not putting insurance on their bill the second space what things are you looking for in that in a due diligence period on an asset file that new investors you wish you knew you're one of your two absolutely and I should have mentioned this earlier when I said I can determine in fifteen or twenty minutes on what I would pay on a file been very blessed and very thankful for this space and one thing that I've learned is to do business with real people so when I'm buying something like I know the collateral is legitimate and if there is something wrong with it even after purchase we can run up the chain and get stuff fixed all the time any legitimate good note seller if you buy something and some happens they're usually pretty good at fixing stuff or helping you resolve it I do it all the time you know managing that many files one thing that I'm good at is I actually want to touch the file when I'm first hired I also do with my files I want to look at it make sure everything's good even when I work files in the second space within the first 30 days I'm sending it over to an attorney not only to send out a demand letter but I'm also going to get the attorneys eyes on all the clever right away most important thing in this space is the collateral on people by non-performing loans and they're chasing the borrower right away I don't do that I'm making sure to collateral is legitimate and I'm having an attorney send out a demand letter and once I know those two things are set I call it I'm parked and I'm good to go so it's a huge deal and a big deal in this space but at the same time a lot of stuff can get fixed on there's document company that I utilized like a Ryan and Richmond and micro to handle stuff when I can't fix it you know there's always something going on even I'm like a Georgia you'll buy a file there's a chain of assignments and as soon as you send it to a Georgia attorney they're going to tell you you got to reduce the assignment and it's not that anybody did anything wrong some counties have a specific languages they want something in there and they'll make you redo them and it makes it so much easier easier when you know who you purchased it from and you know the up chaining it just makes everything a lot easier awesome lots of the first-year buyers who get quick courses and some of that don't have a clue about and it's it's no no I don't want to scare people but I want to make them aware and I did one also touch my Karen but all this work we're paying frankly to do reviews so that there's a there's a cost of not getting a deal accepted you do all the work on it time on it value it order BPO maybe and for whatever reason deals didn't work out I'm we're get Frank right now that I've got everything ready we're just trying to find a way this just blown working out that I can buy it money energy how often is that happen in the space well to go back to that one two I would say if I was thinking while they were saying it but yes there wouldn't be any reason not to have Franco do something like that for a hundred dollars I mean I get Owen ease I get but if you can have an attorney do it right off the bat you know that that changes everything and to me it's I mean I read through them but they bore the heck out of me you know which I have a friend who loves them and I don't you know so if I can pay somebody a hundred dollars to do it for me now that's well worth it besides doing it in six different states you know you can't keep up realistically what every state's gonna want yeah but there there's always going to be ones that I mean but I'd rather them fall through in the beginning and fall through later you know so get your own e and send it to an attorney and you know you can find out pretty fast if everything's gonna work out the way you know you read it to work out so a lot of people new space have no clue about this stuff you know they had they sought asset they bid it at 55% of value and they're like rock and rollin they may matter order would need a they would do you know what it looks like don't know how to read it and they're throwing out JV offers it kind of scares me um Ryan did push a question um right on wall do is all just that I don't need that be that detail situation they talk about phantom income on taxes that were forgiven in a loan situation wall do is also get with Franco how bad directly as that's a very specific situation you know in this space it's it's funny you know besides managing the deal I got to manage our attorneys be a manager servicer we got a manager JV partner if you have one pain stamp D and rules there's debt licenses we have to worry about changing in times and court records and seeing us out for attorneys to make sure they know what's going on how often are you guys bill and Karen working with the servicer and staying on top of them that painting a file to shontayne don't okay let us know when it's done how often you dealing with your servicer to make sure things stay on top of it build a little differently but you know he's also working files how much time you spend working on these files okay I would say it's kind of a constant thing I mean your constant like you said you're you've got to manage you've still got it you don't get to just hand it to them and say tell me when it's done you've still got to constantly see what the attorneys doing or where it needs to go or why it's getting rejected by the county or I mean that's there's a lot to it there's a lot more to it than your time to it you know I mean people literally I mean you we go to the things all over the country and everybody's saying oh it's great it's easy it's you know and nobody wants to stand up there and like this and tell you there's a lot to manage in it you know and it's funny when you get in the first and you hang on one or two of the koalas a little bit it's not bad to get to three or four five well this is getting harder you need to expand and do things differently and it's one or two is easy to handle bill do you want anything federal you know you you handed your files a little differently you don't know anyone else you personally handle it how much time are you managing your files I've managed right around eighty right now for clients you know since from like 2011 to 2017 and I was in between that 100 and 150 mark it's very time-consuming you got to have your systems and processes down I call laser focused daily activity you know I'm on top of myself daily you know I build out my systems and processes you know I utilize attorneys and servicers and document companies you know my accountant and my QuickBooks people are probably the two most important people on my team I don't do any QuickBooks data entry my track all my money in and out and I have all my folders and systems where I put everything but you know they're keeping track of all that I'm just concentrating on what makes me money and I oh it's absolutely you know to get a deal across the finish line in the second space and actually get paid from it there's so much that needs to happen from the homeowner sending the stuff into it getting to the servicer to process and for my client to do everything that needs to get done for me to actually get paid so it's it's real hands-on you know constantly managing stuff constantly no going out of my way to get stuff done for people you know it's all about your reputation it's all about the back office yeah I'm at my desk probably you know 25 hours a week you know I manage a lot through the phone and also but you know I need to be at my desk probably 25 hours if not more especially dealing with a lot of that collateral this it's very time-consuming there's so many little fine details I'm very detail-oriented and there's just a lot of stuff that goes on from assignments to a lodges the documents so I mean it's a full-time job I mean this is what I do full-time it's not as easy as just put a deal out there bid on it and let things happen there's a lot even go on and I wanted to touch upon this because it's come up a few times and groups of saw it you know bankruptcy situation how offer you guys getting involved and see how much of pain can it be and how much can be beneficial and I'm going to go into Franco in a minute about how BK can can sometimes help and hurt you okay you want to explain how BK like mine can be easy cuz I've never had any I've never bought any that were in bankruptcy and I've never had I've never had so far yeah any that I had to uh that I've had to deal with them so also I mean I know people buy it specifically and it sounds fun but it's kind of like you say you gotta concentrate on one thing so I usually it's a lot there's a lot to it so I have an infant loan goes from non-performing to BK because it's the last day and your wonderful clothes on it well the majority of the ones I have anyway are have always been empty or contract for deeds okay so that's why I've never had to deal with it lucky bill BK's deal with BK all the time I'm actually you know in the second space a lot of the second set you buy our chapter 7 bankruptcy discharges you know what a chapter 7 bankruptcy is is down a motor went through bankruptcy a few months later they got discharged of all their debts personally they're not liable for it anymore but in the second space it's just understanding that the the lien still exists on the property and if anybody wants to stay in the house they have to you know deal with the lien on the property that's chapter 7 chapter 13s a whole new ballgame you know I basically in my myspace I I forced three exits basically with legal when I'm working alone a homeowner is going to pay me they're going to make me get the keys or they're going to file bankruptcy and when they file bankruptcy majority at the time its chapter 13 and in this space a lot of the bar it will file chapter 13 to try to strip your lien because a lot of second sometimes there's no equity or a little bit equity if there's plenty of equity and they file 13 you're going to be included in the plan and it's actually awesome but a lot of the times the things that I deal with is a homeowner will file chapter 13 and they're going to try to strip your lien with in bankruptcy and if the court approves it you're at the mercy of their BK plan if they completed your lien stripped so I deal with a lot of BK I'm in pacer a lot actually just got hired to work not work but go through about 50 loans for a note seller right now of chapter 13 and just kind of see what's going on with them and give them a little bit of an update to something I do on the side some other services like that but uh I've gotten really good at understanding bankruptcy and you know one thing that I take a lot of pride in is you know there's a lot of attorneys that are definitely experts in bankruptcy but they're not a second mortgage investor with our pockets and who that's good one we have to make decisions on what's best for our portfolio so a lot of times you're just accepting what just happened with the chapter 13 they filed a motion to strip you're not going to fight it because there's no equity and you're just sitting back and waiting for it one thing I found out very early on is you're not really going to pierce a judge and you know sometimes you can you know change the plan a little bit but a lot of the contestant you're just going to waste money the equity is not there there's no reason to fight it you know the equity there go ahead and fight it you may have a chance of winning but a lot of times you spend a lot of money to find out that there's no equity you can't fight the confirmation of the plan and you just have to kind of sit back and go work on other deals at least with the stuff I work I work a lot of no equity not a lot of equity deals you know it's a completely different ballgame if there's a lot of equity in this space and you're not being addressed you definitely want to fight it and get addressed so where you get to BK real quick with Franco and then we're against oral a calculator stuff Franco you know PK can be a blessing to us but payment stream coming in but also going to be curse we estimations where we've seen multiple fire over BK and I wanted to briefly talk about I know a part of yours can talk more about it offline is there resolution to if someone files a BK repeatedly to prolong foreclosure yeah you know to be honest at that side of it that's that's a pretty specialized field and my partner Tony does handle the bankruptcy side I don't know if he's in here today or not or can't address it but you know he's he's got all analogies of a fantastic partner minded if he's available yeah I mean I'm you Tony Tony are you there I sure am can you hear me can you talk in a quick kind of context can you explain if something if a filed bankruptcy filer repeatedly filed bankruptcy what resolution can a lender have to resolve a repeat filer well pretty pretty simply debtor if debtors involved in a bankruptcy there was involved in one bankruptcy within the last year before his current bankruptcy his automatic stays only in effect for 30 days what that means is is he's got a reprieve from his creditors only for 30 days see that a lot that went to no effect in 2005 if the debtor has been involved in two or more bankruptcies within the last year prior to his current bankruptcy an automatic stays not in effect at all and you can continue to collect on that bar or contact that borrower but it's a bit tricky because some courts are actually it's a bit tricky because I have that debtor can file a motion to implement the automatic stay and what that basically means is hey I've made some mistakes here's why I think this case will work but until that motion to implement the automatic stay is filed there is no stay on that case and you can continue to collect you can the foreclosure sales the next day you can still have the foreclosure sale so it's a pretty powerful tool what we see a lot that a lot of our clients want us to do is uh if we get to that point if we get to that point where it is the third filing in the last year and there is no stay that we would want to go to the court and seek what we kind of call a comfort order we're seeking an order from the court that says yes there is no stay in effect you can proceed so there's no punishment necessarily for that borrower there may be a very good reason why they've been in several bankruptcies before the current one but but that's kind of what you're looking at how about the in rem relief context of what that does and how that can help us as lenders will explain wait explain what you mean by in rem relief where my understanding relief is when a repeat filer does multiple files in they don't do anything with it you can file what they call an in rem relief which basically puts that one back stay on it for a heartier days oh so you're looking you're looking for a bar to refiling so you're looking for are to that debt re filing bankruptcy I have filed those I've been successful on some I've been unsuccessful on others any many instances what I do because that that's gonna typically cost somebody a lot of money so somebody who doesn't have a lot of money in a property they're not gonna want to pay an attorney 1015 hours to to prosecute a filer like that and get a 180 day bar you may be more interested in sitting back and letting the trustee do that work a lot of times you'll see very proactive trustees filing motions to dismiss a case for that purpose motions to dismiss and putting 180 day multiple year bars on filing you know it to the to the more savvy note buyer out there maybe if that happens to them contact the trustee themselves and say you know hey madam trustee mister trustee mister bankruptcy trustee missus bankruptcy trustee you know you've got a debtor here who's filed three four or five times in the last year you know this is bankruptcy abuse you know is there anything that can happen with that yeah um but but but it's a you know you get to a point where you you want to make sure not spending good money after bad yeah yeah absolutely the probably worth thirty grand some done is not worth it awesome yeah I mean why would you why would you pay me I mean I'm a practical kind of guy I mean I'm a business a businessman you know you're not gonna pay me $3,000 to maybe get a hundred and eighty day bar on a file that's it's ridiculous I'm gonna tell you don't do that yeah awesome well Tony I will definitely link up your information on that so anyone any Z asked additional question that can reach out to you please do thanks guys but I the last time we want to get into is in what we gain two ROI calculators what we're seeing a lot of bail and one of the bigger reasons we did his webinar he's a lot of people are missing a lot of the expenses that go into making a bit happen people are bidding stair-step percentage of lot of different things I think people are missing out on the legal fees servicing fees insurance fees they're missing on a lot of stuff I think what people don't realize is there's expenses in a space that they're not aware of simply because they just don't know can you guarantee names some of the things that you include you would like a younger Karen and know that the first auric are exactly that you put together like myself probably changed you'd probably scared your first one a lot of you wanna know what your ROI calculator is and there's a good reason we don't give it out not because I don't want to share it it's you all understand it and you should understand what's into it can you give me some of the things that you look for in the first place that are expenses that you wish that other people knew did we have the exact same conversation in Dallas cuz the way you just said it sounded like it came straight from me because I have people that ask me and I say yeah it's you I can't give it to you you're not gonna understand it and even if I explain it to you you're you know you're what you need isn't gonna be the same as what I need you know so I I i start out a bit off of a stair-step but I still have a whole excel file that I plug things into and I have to redo it you know if it's if I don't just plug them in and then I accept it on every one of them I mean I really individually when it comes down to the whatever 15 or 20 or whatever that I want to bid on I go look at each one of them individually and see whether those numbers really apply to that one what are some of the expenses that go into this calculator that you can name off your head that thing that may not everyone knows is there was servicing cost hopefully do well they're servicing theirs taxes there's but like I said sometimes it depends on whether the house looks whether whether you know the house is empty or whether you're assuming it's empty I mean you're gonna check that later or whether it's a contract for deed or whether it looks like you know they're not gonna I mean there's a lot of stuff that you can tell by looking at a house you know even if you're just looking at the picture of it to me you know you can see whether it looks like somebody wants to stay or they've already left or so to me every one of them is kind of different because are you gonna have remodel costs because it looks like they're already gone does it look like they've already torn something up but are you just not going to remodel it so you're just going to turn around and sell it for as low as possible to a to a rehab person so that's why to me it's every one of them's individualize you know do you want these people to stay by the way their numbers look by the way they keep the house or are you gonna go for assuming that you're going to you know foreclose on it so are you gonna have reap cab cast costs or are you gonna have foreclosure costs or are you gonna assume that you're just gonna refi and you're not going to have any of those costs what can expenses you know and I can go lists that I put together that maybe help you guys brainstorm a little bit I'll run through a real quick I in my calculator I'd make sure I have FBI or the women arrived insurance in that property i factor in if there's a bankruptcy situation going on right now what it cost me to file bankruptcy relief from stay servicing costs I'm expecting the first month more likely not to get much done which we know the RESPA and processing not only the current taxes of what is annually but your back taxes in what the future taxes are going to be so while you're foreclosing you make sure you're attacking to impede so if you're projecting out a year you baby ready to pay next year's taxes we got into also rehab you have to budget that if it's gonna foreclose worst-case scenario you may have to put in pain carpet you may not be all sell it as is attorney fees not only just filing fees where a lot of people are looking at just the cost of from of legal but there's court costs as well so it's not just one side of the legal side so the Fannie Mae allowables you cost euro Andy your cost your BPO the liens involved the judgments IRS liens which we briefly talked online that it was an IRS lien and it was filed after your mortgage they have up the horror twenties after the foreclosure to actually redeem the property state for super liens the HOA problems Redemption which is a huge thing that people like Alabama in states like Michigan people are seeing three months foreclosure periods and going my calculator projects three months I'm good rock'n'roll and then they found out there's a six-month Redemption period on and you can't sell it during that time period those kind of costs go into it boarding alone we've been getting a payoff letter from Madison the cost of deed lose closet forbearance agreements recording fees the man letter fees timeframes that this things take place the borrowers send in financials how long do they have all these time frames not only the costs but actual time frames for it to happen exceed so every month you do it is it cost to you a course on taxes also insurance costs on servicing you know bill in your calculator when you're buying a loan what are some of the things in the second space that you guys have to price in your deals that you know fifty five percent of value just better across the board doesn't work sometimes yeah toughest thing I think in the second space is to actually purchase a deal based off what your ROI is gonna be you know like I said you know I forced a lot of exits and a lot of the ROI is will be determined on what the bar can actually afford sometimes bars can come up with a crazy pay and you don't see that anywhere in your due diligence but the major cost in a second space are your servicing cost and your legal cost you really need to be familiar with your non-judicial on your judicial states you know it's real common in the second mortgage space for a judicial state for a good deal to take 18 to 30 months before you actually get a deal done you know I managed a lot of files for different people and some of the times it may be a newer investor and they start getting nervous in that 18 to 24 months range like nothing things happen in there spending money what's going on and to me I'm looking my chops because that's where it's getting good out that that deep range you know you need to be familiar with you know a non-judicial state you know could take three to eight months and it may cost you you know a thousand to the three thousand dollars to foreclose a judicial state could cost you three grand all the way up to 10 grand and they're just on an uncontested foreclosure yes space you're getting you know one out of three foreclosures are getting contested by an opposing attorney and that just starts jacking up your cost I mean it's real it's real easy to spend you know eight to 12 grand in in New York on a on a second mortgage that you're foreclosing on you know in Florida you know an uncontested foreclosure like fifty five hundred could all of a sudden be eight nine grand because it's getting contested you know if you're going into a deal thinking it's just gonna be serviced as a non-performing note for six months and now you're out the 24 or 30 months you know there's a big cost in this space our servicers and legal you know the ROI you know on these performing notes to go into a deal saying this is the ROI I want it's just and it's not the right space for you the returns are ridiculous when they work out you know I can tell you horror stories and I can give you some ridiculous stories on great returns you know I just because I was able to purchase this thing in a very good price and I got very lucky with just a demand letter on a file that I had in Ohio you know when I punch my numbers into my 10 B I I it's telling me I'm a little over a five hundred ROI I don't talk to numbers with people because they're like number one they might not believe you and you know I can tell you stuff that I've been wiped also so it's like it's everywhere in between in the second space now when I'm buying a pre performing second mortgage you know absolutely I'm looking for a specific rate of return but the like really plug in a true I want this return on this deal in the second space is just tough because it's it's a lot about the portfolio it's a numbers game and it's more about playing a few times and kind of building that portfolio to get those real good returns is there any cost of that in the second space since I don't do a lot of seconds that I missed in my list I mean we don't pull you know we don't pull any kind of federal clear reports in the first place I've been told by Rasika not you should pull it for you know it's better for you guys we don't pull those kind of fees those kind of reports so it's not a fee that I add in there there's anything like that that you pinpoint that those costs of should be in the calculator I mean you just banged it out I'm you just uh you know you mentioned a lot of the things that an attorney will pay for with the man letters judgments complaints all that stuff you know you mention a lot of things that a service or may be able to help you out with with pay offs different documents you know I do I don't pull it myself but I do have my avenue to pull credit reports you know they're not real expensive you know $5 $10 $15 mom and pacer a lot and once again it's not real expensive but it's ten cents a page and pacer you know I could easily go and pacer and pull 500 pages one day a familiar Pacers the government version they can look in a bankruptcy file and see the details of the bankruptcy filing on any borrower that's file bankruptcy it's a you know we do pool title usually as your foreclose and you know an attorney will pull title for you and I kind of lump that all into that cost well you know just like anybody don't due diligence maybe I pull a total report for a hundred bucks or 90 bucks just to kind of see what's going on if there's a something I'm not real sure about you know a lot with the second space there's divorces there's people needing the property over to a family member a lot of crazy stuff goes on you know you might just not be able to you know put pieces together doing your due diligence so you know you really like a specific deal so maybe you will spend a little bit of money up front with a you know like I said a total report um I rarely ever do Oh Andes for anything in my space Franco three expenses that you wish that besides the her dollars to you of course that investors should be looking at or not calculating who we're seeing a lot of investors out there bidding on assets doing the Facebook advertising that they bought this asset and I've seen exact same file and I've been at ten thousand dollars less because of XYZ reasons and when they're not conservative they're getting deals and within a year they're out of space which sucks great for competitive but it sucks cuz eight see someone fail varying expenses that you would say that we should have in our calculator you're providing an asset in your states you represent yeah you know to go on with Bill you know you gotta budget it out and you budget it out through your attorney the minute it goes to litigation with a demand letter you'll know from our office exactly what that budgets gonna be so we budget out you know non-contested and we budget out contestants so between those two rates you know we'll provide anybody with our our fee schedule we want to use us but definitely you got to be able to budget that in even before you purchase it and without any type of budget you know and you guys are all talking about non-judicial in judicial states you know Ohio is judicial Michigan's non judicial so we're worn both playgrounds and it's correct you know you you get your property back technically in Michigan within forty-five to sixty days but you're sitting there at a six month Redemption period in Ohio it's going to take you six to nine months even longer to get your house back once once you get the property back you're you're you're set at that point but the cost standpoint you know really take out the attorneys fees because what we do is we bill based on a flat fee rate what you're have in front of you the cost that you're gonna see complaint filing fee you know especially in Ohio there's so many different counties that charge different rates some charge five some charge nine hundred you don't know unless you're in that County there's a requirement for a preliminary judicial report that gets filed with the complaints those are could be very costly because there's the price for the actual report and then there's a premium on top of it based on the value of the property of what the county auditor has and then you have to do a final judicial report when you get towards judgment and then there's other legal descriptions than to be approved then once you get the sale is a lot of sale costs so we do give you those budgets but it's like you said they're they're not in hundreds they're definitely in a thousands because they're labor intensive so bidding and acid at 45 55 or 60 percent of UPB or BPO stair-step doesn't work Shaunie's anything that you've seen from investors that they didn't budget in as well that we can learn as well the number one thing that I see and I see it on almost like in every other day basis and it sometimes becomes frustrating it's the taxes people are you know purchasing notes and they're excited and they're kind of told is performing but they've no clue what the tax situation is and when it comes to our office unfortunately we're the bearer of bad news that trusts explain to a lender hey you know your borrower doesn't have enough escrow funds to pay this you know we give the lender is an option to advance so as fun as the borrower's can't afford it and I've watched way too many people let those taxes just skate by become delinquent you're here and then you know they kind of get sick and tired of it people have told you know my asset manager is like wow but in this industry for to be paying other people's taxes there's just different reasons I feel like that's the number one problem that we hear and then once a property as they say they don't want to pay it and then another year goes by and something's going up for tax sale and then somehow that falls back on us when we ask you the year before you know it's in your best interest to stay on top of those taxes to make sure they stay current and don't go to talk so whether you're you know especially in a first lien position because they taxol kind of do super senior for your senior but yeah I hear it all the time and you know me wanting to be an investor like that so you guys appear it's one thing I always keep in the back of my mind to always look into so one of the private question I had was what is the stair step and what I mean by that when I first got into space 10 11 stair steps were very common we paid based on it was that was worth 50 grand would be fifty percent forty thousand forty percent there you know and it was a model follow it was over a hundred thousand we'd be 55 and that was it I should lower than that but I won't scare you guys we're buying at 30s back then the lobby all were doing is taking you PP or BPO depending on what's lower and doing a 45 or 50 percent of the number and that's my bid number they're not including in expenses because they don't know the expenses where I've been 75% of a value or 75% of UPB because my calculator told me I'll be okay stair-step often just as a general because they don't know any better and that's what scares me a lot of people out there are bidding higher than I would and they've bid 55 percent of value and they have no clue that there's a $7,000 tax lien and no person's gonna be destroyed as well as a JV investor if they have money behind them they're walking to Franco and said what do I do you turn in Shantae and ask what to do and that's what we're trying to wake you guys up if you are investing my highly recommendation is hook up a bill work a file with them hook over Franco and just talking about things talk to shantae talk to Kay and just maybe even JV with them it's listen I want to be apprentice to you I want to just look over file and help you and learn because there's so many things in this business that bill it'll I all of us can learn every month I'm learning some new into space which is scary you don't know you don't know and jumping in a deal because it looked like it's fun deal to get into and the returns of gray where you saw person by three for loans awesome you don't know that you just bid $10,000 above all of us because you didn't know the numbers on the deal and then within a year you're out of this business which is what we don't want to see a lot of the teachers out there aren't talking about the guts of this business that can destroy you legal filing situation borrower problems lengthen foreclosures not having insurance on a property and the property going to hell all these things that you just don't know and you know what do you do you really team up with people you trust and try working with them shaving on your first deal to me scares me Karen you've seen a lot of this where a brand new investor comes out and they haven't done five deals and their JV got stopped so what's your experience with those kind of people and what they come to you and talk to you about those stations I don't think I mean first of all like you said they don't last very long I mean they don't they can't a lot of them I really don't know what's happened to a lot of them because they're no longer in the note this you know and and and like I said on another nobody ever tells you all the details so when they come asking questions you don't necessarily know what they've already done but you know like you were just saying with the stair-step I mean if there's no reason you ought to be bidding on something if somebody's telling you in a bit of stair-step and you're just flat doing it I mean like I said I I look at every property individually there's there's no way possible you can just say I'll give you fifty five percent for those you know so I just don't think they're gonna be in it for long what would you recommend to somebody that wants to be in the space and is new and they're being told just raise some capital find a JV partner do you mean any of them I ever talk to I mean I'm very clear on the and the chante saying she runs into that every day with the taxes sounds crazy to me cuz that's my biggest one of just like I said in the beginning you can't just call and see if the taxes are paid you know you got a call call that County up and ask ask a person who paid those taxes and you know they're they're usually very helpful when you call you know and you say I'm looking at buying this property and you don't have to explain anything to them they don't really care you know they find the note I mean they don't but they're usually as long as you say I'm looking at this property to buy and I need to know about the taxes they're 95% of the time they're very helpful and they'll go in and say oh well it was paid by them or it was paid through another party and it's got a lien on it or so it's a very simple fix to not so I it blows my mind that she says she runs into that every other day that's that's what I mean the space there's hundreds of people a year to come into space and unfortunately a lot of we won't see next year well even something like that if they know enough to go to Madison management why do they not know enough to call on the taxes you know that's be done with for them that's what I've noticed a lot it's kind of like I wasn't told that that kind of falls on your due diligence and not to like point fingers at anybody aren't in the space of all these investors that are attending right now because I don't have any notes yet and I know what it's like to be in the servicing side I've watched other investors and their pitfalls but I don't know from a personal experience where what I need to do on that like they're just so much and so many things that I have learned yes within these perhaps you know six seven months from people taking under her wing Dave being one of them and just kind of showing me some things that I understand but just what I've never even thought twice though just because I've never done it and as I'm learning and then watching everybody else and I'm like why would you do that it seems outrageous to me and Karen oh right there with you but it's real and it's frightening and I hate I hate when people I go I can't be in the no industry anymore this is not what I expected it's just because the knowledge isn't there yet like the for how long you do Madison chantek ah this past February made five years so in five years you've learned everything which servicing have to do with it you step in any investor side and you feel lost I am completely lost that's why you don't have a note yet I don't you know I'm nervous I'm definitely cautious and I feel like everybody should understand what you're getting you're it's money you're spending you know that's either money or someone else's money you know don't just think but there's definitely a lot that I've continued to learn thinking that I thought I knew everything and I don't and they've said every month you were learning something new it's almost weekly from me that I'm walking to something new and there's I know our team uses Franco in some states as a preferred attorney and there's stuff that he's letting my accent managers know that they have they've never seen never walked into and you know blue I'll share that information in-house so you know people definitely need to keep their eyes open years open and put themselves out there to get some knowledge you know don't assume because assumptions are always wrong it's amazing you know take someone who's been in space for five years and they know a lot about one area of it and lost another go with you one of the questions we received was brokering notes to start off getting in loan going through like distressed pro and fine Wandy to deal from a bank and brokering that deal what's your thoughts of people trying to broker deals to get in the space to build cash flow or building up a point or two on the unsaleable it's tough to do I mean it's tough to just broker a deal in the second business you know a lot of us will buy multiple loans and you know you have to be active when you're investing and you know sometimes if it deals not turning maybe you sell one of your non-performers just because you need something to turn not that it's a bad deal you know an active investor is always kind of moving so you know there are definitely plenty of people that have bought loans and then went and sold them you know it's real common in the second space for you know a loan to be sold from one fund to another and it's circled around three or four times and it doesn't mean it's a bad deal it just got caught up in a pool of deals and it got sold on it definitely can be done but you're better off just buying it and working it and trying to figure it out that way and learning you know education is real it happens all the time in this space you know I'm learning every day it's the best thing about the note space you know that's how you're gonna do it you know you're gonna you're gonna learn some pitfalls and you're gonna learn some good things but you know you can't just sit there and watch forever I mean eventually you got to dive in and play the game I mean you know I actually just wrapped up my taxes yesterday I could have used a couple right off so yeah it's amazing of the things that are being encouraged out there to do and get in the space and the fun and just hi your attorney a higher your servicer and rock and roll it's funny because the space is so small and there's a reason for that and we love new people to talk to about it encouraging begins a space but you can tell the people in the space of been here for a while because we all know each other we taught each other if you you meet somebody on the street and he said in the space you see if any was known networking this space is huge I bring up on my every webinar because it space is so small just be smart with it there's a lot of tools peeper or forthcoming with information people talk about anything and share anything you want now you know one of the question came up with what's our wise threshold an accepted deal Tibbie look at it 30% of our why is that realistic you know building a little different space for four seconds but I think you know Karen what's your thoughts on you know it's hard to answer for me should you peg your thing a 30% return to make a deal survey enough is that enough of an information give an answer well I think it goes back to I start with that number that's the return on ROI is even even if I calculate in what the stair step is I look at it versus the ROI and if it's less than 30% I don't even look at them but to me you still have to put it in your other spreadsheet with the best and worst scenario and see if that's the best or the worst scenario you know if like if if you're gonna be able to evict them because it's a CFD is totally different than if you're gonna have to foreclose because it's a you know other or if you're expecting them to say you know if you're expecting them to stay and that's gonna be the 30% ROI but you end up having to foreclose that totally changes the numbers so you really need to put be able to know whether that's your best-case scenario or worst and to go back to either before what Frank goes up you need know your expenses to make that 30% if you have no expenses there besides by the note taxes in the return that that's 30% you miss a whole lot of expenses that'll eat up to 30% like that and we're seeing a lot of people make those bids saying I bid at 30% of my projected 30% you didn't factor in the cost of the taxes for this year ongoing may be the contacts are current by the borrower but they may not pay while they're in foreclosure in Ohio for a year you didn't have that in there you didn't have the insurance quantity the part of them insurance you didn't even hear you know all kind of things like that that we met before the factor of the demson period I was three months well are you factor three percent returns in in you know in 90 days in Michigan and didn't factor another six months of redemption period insurance period servicing period so ROI to me is very dangerous to project without knowing what expenses go into that Joe Kennedy thank you for that question it is realistic have I've gotten it absolutely I find lot of people armpit thank Allah give a situation where a lender came to you with a file and like blew their mind with it the cost of the legal side of this yeah you know it's it's happening a lot you know there again I don't see a lot of them uh some of them think it's it's in the costs are in the hundreds when they should be in the thousands and and you know another thing that you have to worry about are the different states you really have to know where you're investing so you talked about Michigan Redemption rights Ohio one of the big things in Ohio is you bought a land contract so you're thinking okay great land contract forfeiture fees and costs are manageable well that land contract is not five years old you're forced to foreclose but oh how the cost blew up so it's not knowing some of those things and I think that's where it helps you know to have an attorney on your side to go through some of those things and that's what we pick out on that pre-purchase review okay you know you got a five year old land contract here budget in a foreclosure and and that does help but yeah you do see a lot of investors you who are just kind of blown away with the couple with the costs and some of them do go away some you know they'll take it in lot of our assets I'm sure Bill Gates knew it you you some ties your cost of your asset will kill a deal amazingly kill a deal I stay away from a lot of the 30,000 or properties because of you know as Franco say four quarter cost isn't based on the percentage of the value of the deal bill what you know what are some of the things that will kill a 30% ROI that people who just bid 30% and say hey I bid that number should work out like I said it's you know at least in the second space is such a numbers game and there's so many things that happen it's about building a portfolio it's about building those returns not just buying a deal to get that return you know I'll just use an example you know we foreclosed on a house in Nevada last year you know quick numbers and we're like 13 K and and we got a 55k payoff third-party bid on the wrong property at the Sal right so you know homerun deal slam-dunk well that third party wanted their money back so they filed a complaint on us and you know I got pulled in my trusty got pulled in and a lot of people got pulled in and this thing went pretty deep and it ate up all the profit Wow so it's like they're the things that you just we did nothing wrong but you have to deal with it and you know it just came in and you know if you're not prepared or you're not ready for something like that I mean it could crush you I mean it was it wasn't pretty and it's not fun we're still not out of it right now but we did settle it it didn't go to trial but you know if somebody wants to sue you they can sue you it doesn't matter if you do anything right or wrong that's the nature of this space so it's it's so tough and just say you know I want a 30 or 40 or 20 percent return on something and the novel for me second space you know it's a numbers game the more you play the more successful you'll be and it's about building that portfolio but you know crazy stuff like that happens you get pulled into litigation you just can't control it and I also want to make sure people know when they buy not performer I've seen it few times recently where a person born on performer and it performed in a now or in a situation where they bought it without looking at the yield on it if they reinstate the loan and you're getting a 5% return your stock that you have to make sure in your art out there that if it performs you'll be ok with the performing thing because just because it default it doesn't mean you get to foreclose on it they can reinstate get the loan back performing and that return may not be good it may be it's only defaults in six months you bought it projecting that you can foreclose take the powder back and get a killing and they paid three four thousand hours reinstate it and to two percent loan coupon those are kind of things that people aren't clear table later and not factoring in and there's nothing you could do about that so please feel free to ask me more questions because this is a topic that think people are attracted to because Bill's Cather's didn't for my if I look at bills I be lost look Carol I be lost if they look at mine they be lost you build it over years and experiences I you seen mine last week I added something to it I was trying to figure out reinstatement monies to make sure yields work out and with that just if it's an equity deal versus an on equity deal in the first place a lot of lenders don't want you to want you to pay the percentage of the actual you know unpaid balance where if it goes to auction in sells at auction you only get back the legal balance on it you don't get to sell the whole property a lot of people are bidding equity deals poorly one of the questions I other speakers to target or ROI name for Karaca 30% what I guess the question is what are other people target ROI for bill do you have a target number for your ROI calculator of what you're targeting to buy it at I mean I base all my stuff off purchase price of the UPP when I buy something you know I'm just like everybody I got twenty eight twenty five thirty it all does the factors in the second space or equity and the currency of the first and the state so those are the three factors you know right now you can buy stuff in the second space at twenty to sixty sixty percent of you PB you know we first started doing this back in Oh 809 2010 when it started happening and you could buy stuff from ten to fifteen cents on the on the UPP you know prices have definitely went up you know I'm all I'm an investor I mean I want the biggest return and I want the most bang for my buck so you know the second space it really comes down to when you force the hand and that homeowner comes out you know what are your systems and processes you know I go through a whole financial process with these homeowners I give them ideas um you know a homeowner might not have a lot but maybe they got a friend or family member that can come up with a lot of money um it's it's it's what you can do as you know how creative can you be can you give them ideas and I just can't express enough it's about building that ROI on a few deals you know I go through this a lot with very successful people in real estate that are very deal specific on what's the ROI for this deal you should know all your our lives for this deal and you know it's about my portfolio and what makes sense at the time you know maybe I take a discounted payoff that isn't the best ROI but I need a pop to fuel the legal for a couple other deals that are looking real good so it's really based off my portfolio just like everybody I want a nice solid return when I'm buying reap performers in the second space you know right now you're buying them between 10 and 15 percent of our a lot we you know five six years ago you're buying them between 20 and 25 percent ROI absolutely you know some of my best assets pay me in the 30 and 40 ROI range I mean shared with you that one deal I got done in Ohio yeah you know I was $800 in that deal I got all my money out already and they owe me a hundred and seventy eight payments sOooo it's you know they only owe me 203 eleven but all my money is out of that deal and you know they owe me 178 payments and that's what's weird like I have to get paid there's so many things that could happen between me getting all those payments maybe they refinance and it's you know time value of money in this space and you know I've always said this about real estate you know there's a lot of people that are in real estate but it doesn't mean they're an investor you know it's about snowball and the money and and managing it and and working with Beale and moving forward you know can you save money you know not everybody is an investor you know there's a lot of people in the real estate business who are you a true investor and one of the questions came up here is you know the percentage you know my target mile go 25 to 30 based on the value of the property but a whole lot primers go into there so we mentioned it 24 are are a lot of my stuff based on time value of money and a calculator is this thing not yield meaning payment times 12 divided by purchase price that means absolutely nothing to me value okay let me say this I've I've closed over 300 deals in the second space and this is the most I've ever talked about ROI is on this call ever everybody so stuck on them it's not about you yeah it's about the homeowner or the property and getting a deal done it everybody's so worried about themselves and their ROI like I've never talked as much about ROI and this is like this for a living I mean it's changed my life I make lots of money on it but everybody's so fixated on that ROI did it it's very important don't get me wrong and if I was in the first pace or running a big hedge fund it would probably be different I'm confident enough in my space in my business that I know it's going to produce and sometimes it's a really great return sometimes it's okay and when the deal comes to the table and it's fully laid out that's when I determine hey this is a great one for me to keep this may be a good one for me to sell a partial off of maybe I sell this one you know I've got stuff in my portfolio everywhere from a zero percent interest rate up to like an eight percent interest rate and it all depended on the UPP what the homeowner can afford and what made sense for that deal yeah well but like I said I don't I don't start base I mean that's just where I start I don't say oh it's a thirty percent ROI I'm gonna buy it I say you know like I said a minute ago I then you look at that and say is that the best or worst case scenario you know is if if somebody's gonna stay in the house and they're gonna pay and that's the worst case scenario then you're good but if if you have to go with foreclosure and that's the you know what I'm saying it just depends on whether that's the best or worst case but it's just there's a lot of numbers to look at like you said it's a numbers game so you can't just say I'm gonna buy one on a stair-step or I'm gonna buy one because it shows it has a 30 percent ROI there's a lot more factors into it you can buy based the fact that Ohio is a eight 12-month foreclosure timeframe and took you three years foreclose you know there's a hora why he gets factoring a lot of things in space and when you're dealing with someone else's money OPM it becomes mmm disgustingly more difficult because how do you explain to an investor after 24 months they get sort of trying to work a file that you expected to 8 to 12 because you didn't know anything else and you promised him a 30 percent ROI based on a calculator that had missing factors maybe not your own fault but just to borrow it for you into so you know we've we've hit a lot of stuff with that in the second space you're all about the borrower in getting through the borrower first-base know about the property looking at what the house to house near yourself for these are markets do people want to move there he's a crime area is a rental area sell area what market are you buying in as well I mean do you have a team of people you take their property back you have to rehab it you have nothing in there you're more station so I'm gonna just open up if anyone has any additional questions we've been on for about an hour and a half now I'm just wrapping it up I know we talked I are briefly and we won't get into too much about our are I look more time value money I look at returns based on my expenses and to be dead point on your return is very rare I just just so many things that come factored in so I'll be if the latest question let me answer it I'll leave it with asking everyone here if there's something you can tell a brand new investor out there briefly what to do the next 30 days what would you tell them I do so Franco what would you suggest a new investor come out and do to learn from a legal point of view maybe understand it do you trust is what should an investor do to be a better investor more successful yeah you know start to learn the term of art you know know know what a note is know one of mortgages know what a beat is know what assignment is no chain of assignment is you know we can help out if people want to call us and then get them that process but really just start to learn the term of arts that's that's gonna be key because if you can't get past that or you are asking those questions especially taxes if you got questions on taxes you know I guess that's a bigger issue but you know definitely the term art get get those under your belt and and then start down the process of due diligence okay that's kind of a hard question I mean things you know like he said the first place to go is someone like Franco or I mean I don't know where everybody's learning you know and it's hard to know where they started you know they're learning stuff talk to like you said talk to other investors we do like to be very helpful and that kind of goes to something I was thinking about a minute ago that you and I were talking about the other minute the other day Dave about all the different things that can happen with notes when you come up and you call one of your friends who does a ton of notes and go you're never gonna believe this that you called somebody and they were like they've never had to deal with this and you've dealt with it but it's crazy the stuff that can so the biggest thing I would think is to get out and talk to the note investors first and hear the horror stories not just go to all the classes where they're teaching you how to do it go I think you're right don't just talk to one because that's the person you relationship finding investors I've been doing here for a while doing it and talk to every one of them and just the brain because stories are different their experience different but knowledge is different the way they present themselves a different and how they mark himself different I don't ever try and mark myself as a guru or anything like that I'm just looking to share your network and protected maybe you like ken because you will get messed up in a space bill do you have anything in the next 30 days someone can do they can really be more successful in the space what everybody's saying you know it's about education it's about network and it's pretty simple I mean fine people that are actually making money in this business or in any business and see what they're doing and figure out how you can add value to people there's too many people that will come into this space or any part of real estate and they want they want they want but you know what type of value you bring in you know that could be a story for another day but you know it really is about getting out to real estate events you know finding out where some of these note conventions are throughout the country you know there's some pretty good Facebook groups out there Dave you run yours well get on ask questions there's a few good books out there right now I'm fine to people that are actually doing it BiggerPockets is really good you know there's a lot of good stuff out there you got it you got to take action and you got to go find it yeah so I'd say before you go into your new you have a lot to share with new investors I want to mine everyone please feel free to jump on the Facebook groups if it's not mine any of them out there we're all kind of browsing around there stay tuned for additional videos will be doing more I erase stuff next month we did put a list of assets we are selling I did post before if you didn't get here didn't see it there are strike price that is or are you know you know dollar amounts where you could buy for today you can shoot me over an email there's for sale there's details on there you get to sign NDA to get them and we'll getting right over to you so Shante you next 30 days you said you learned a lot less six of months what would you say someone does the next 30 days to make them more successful I agree with Franco Caron and Bill it's helped me tremendously learn and gain knowledge by almost like partnering up with somebody and like you said they've not just one learning different people I've built some pretty great relationships pretty great rapport with different investors I just happened to meet at conferences David they could tell you and I kind of actually click what was last year so I wouldn't build like you said don't you have to bring something else to the table you can't always just want want wine you have to show that okay well I want to learn this and I want to understand this and I need help here but in your return I can listen this for you I feel like those types of relationships work a little bit better but like everyone else said it's networking that's going to get you the knowledge that you need people have been in this industry for years you know I've been on the service inside for five years but don't know much about being investor and actually having to purchase a note and using our calculators but I can tell you all about collateral files and foreclosure processes and things like that so definitely just kind of get out there reach out to whoever you know build that connection build that relationship ship keep in touch with people make yourself known I learned that I've done a lot more of that was in the past year as a whole than I have in the past five years of being this industry and for any reason and I feel like I'm coming out on top by learning more and more and having people that I can access any questions whether I think they are the dumbest questions and almost embarrassed to ask or makes fun of you everybody's you know that I came across is pretty nice and you know but help you they understand because at one point you guys all started there too yeah if you guys are able to go in the chat box just put your information for everyone to get it out to you best contact information if that's an email they'll get you I know you have the distribution in your camera but um if there's you can definitely add stuff to people give them information best email address website whatever you need to give to people so they all have it and they're put in the chat box rating when it's in there I hope we've answered enough questions I know a lot you'll whine no more but are like out there and what expenses involved it's difficult to give that information to answer I hope we explained that well tonight if there's more questions on any of us willing to answer them and just reach out to all of us or any of us I'll get bill get your you motorist here Franco if you put your contact information here the chat box and the bottom is pop it open and it's in there okay you okay and go from there thank you very much so you guys time I'm sure we helped out people I'm sure there's more questions get ready to bus and loans people and pick our brains for any kind of question you have so thank you again guys enjoy appreciate your time and we'll talk soon everyone Shante franco thank you thank you thanks all right welcome all we're gonna be talking about pitfalls cost and time of the note investing world you do a little housekeeping we always do I'm gonna just there's some stuff we got that I have going on as everyone probably does the group we have an East Coast no vesting group on Facebook that we posts different topics and whatnot on discussions and I I'm honor it pretty closely to make sure nothing's on there that's shouldn't be second of all we have a I have my facebook business page which we post events so feel free to log in and connect to that next we have a youtube channel which this recording will be posted on so if you want to catch it later definitely take a look at this it's also in the emails and lastly we we started putting out some assets that we're going out to other people some of these are mine some are friends of ours that are direct there is no broker near this is just I'll connect you right to them throughout the states this is the scruff list and it's a Google Doc so you'll if you click on the once you get the NDA signed and sent back to us there is a button through tools that you actually can do notification and when any changes are made and you get a digest daily not right away try doing daily so we ever you see a change in the asset status or asses are adder taken away you'd be notified so just some assets with strike prices which is purchase price so what housekeeping we get started here so what are we talking about tonight well what I found in the industry is a lot of people are getting into this space with either a miss no--nor or some concerns of this space is awesome it is fun it's exciting there are some good returns but there are some pitfalls that you should be aware of tonight I got some people on the other that's been in a space for as long as I have sometimes longer some people had done more less deals I have a tourney on board here we have a service run board really to answer a lot of the questions that go on so the first thing I want to get into his pitfalls everyone sees how someone bought her know what we find often is people are buying these notes and getting excited at peel buying notes but everyone in this room has bought a note and bought it wrong and that's the pitfall buying you know does not the challenge here is buying a note that's worthwhile the challenge so it's gonna be difficult let me just take this personal huh one seconds it's gonna be difficult and challenging to to really grasp everything tonight and I'm going to do it best to kind of color everything in a journal sense with that said the first thing I want to talk about is you bought a ton of notes what do you do do they buy correctly we all have horror stories I like for Bill Aaron you kind of give me the shortest way praise what has been a horror story you've seen in buying a note what kind of horror story guile posture with Karen what has been a horror story note that you bought that you would never did I'd say when I bought a pool of them there was I mean the biggest one that I wish I never did was when I bought a pool of them and it was a one house I didn't do enough due diligence on you know and after I bought it I checked on it but that's one of those it was like on the first pool I ever bought you know so the rest of them looking good what was that with the property that you didn't do enough too diligent on well I like to have something that I'm not afraid to end up with later this was one that was in an area that you could tell it clem close to flooding and I've just had all kinds of problems with it you know the but that was the main one you know it was stuck on in a pool and that's the first one that comes to my mind there's others but bill can you give me a horror story yeah I mean a horror story just everybody's aware I fully invest in distressed second mortgages that's my true skill that is my full-time investment strategy and when you invest in distressed seconds probably 80 to 90 percent of my exits are through the homeowner not the property and since it's such a numbers game in the seconds it's it's real common to have a horror story so it's not like I have one specific horror story because if you're playing in the second space hard enough you're going to strike out my numbers are basically one out of two will give me a payday and the other one becomes a bankruptcy and REO I'm a situation that's not great and with more experience and more playing the game you learn how to deal with those that don't pay you or file bankruptcy or you particularly end up what's very difficult to figure out in the second space is when to say it's a bad deal and just stop with it it's an easy space to spend a lot of money with attorneys within bankruptcy and that's basically what I would say is more of a horror story is knowing when to say when with a deal and accepting the fact that the deal just didn't work out my calling shut downs I'm very aggressive with legal in my space and when you're aggressive with legal sometimes you end up with a property and you don't really want that property and the numbers don't make sense or there's not much to do and I'm always a firm believer in if I end up with a property and it's gonna cost me 10 or 15 grand to get situated and really know what's gonna happen because there's a first mortgage on that property you're better off on another second and just let neck go and take it as a write-off that's true you know and thank you Bill Karen can you give you a little background your history of who you are a fraud you some intro that Paula dies guys how far back you want to go Jarrell what you who are you what you do and Karen Peterson Katie investors is my company i I do non-performing firsts so and I've done non-performing first for three or four years I had rentals in Dallas before that for I don't know for probably the last 12 years so but notes exclusively for the last four I mean I still have my rentals I'm selling I'm getting rid of all those but Franco can you give explain who you are what you do sure Franco Borelli part of Sicilian Burley with my partner Tony he's also within this share group tonight to answer any BK questions but we're a law firm we do a lot of default work default legal work and out of court a lot especially on the foreclosure and forfeiture side I mean also do quite a bit of a reviewer we're in Ohio Michigan Kentucky in Indiana we do have more states on the bankruptcy tonight as well that Tony could speak with as well and Shonte who are you what do you do I'm Shantae Duffy and I am with Madison management services your loan servicing company I'm the office manager there I deal with all setup loan boarding and any odds-and-ends questions you guys may have they usually come to me before that's me awesome so we're talking horror stories Franco I'm sure you have a time as well can you pinpoint wanting you dealt with that just you wish the person never brought you or I never bought you can bet well there's there's you know I don't want to say their weekly but I mean they're there's quite a bit of files and sometimes it's not the fault of the investor it's not the fault of any type of title or collateral review or pre punches there are a lot of attorneys out there that are looking to sue so specific seller especially county in Ohio Hamilton currently that there's a specific seller that sometimes gets all the lawsuits not for any fault in their own it's like we've somebody got municipalities give me one second oh sure there you go you're back I don't know how you muted okay Hamilton County been a problematic issue yeah it hasn't problematic only because you know there's there's certain attorneys in that area that pinpoint certain sellers and they're they're just looking for a fight and we have a couple cases that there's really no merit to it you know if you get a legal aid attorney or if you just have it just a standard attorney you know representing the borrower and trying to ruffle feathers there's a few counties in Ohio where that can work and they can kind of prolong the case we do the best we can with you know serving discovery and making sure that the case moves forward on our end however there are litigation scheduled dates that you can't avoid so you know which are artists involved in the case very quickly and try to get the attorney at least at the table saying hey look you either give up a property or reinstate the loan so trying to be as diligence we can but that's usually we get so sounds of me is what as some people get into space they look at the foreclosure timeframe and say I'm gonna be out in 8 months 10 months we're in Texas have you had in three months that's not always true is it no I mean if you're looking at a foreclosure you know timelines that are probably six to nine months sometimes a little over if you get a little just borrower you're looking over a year if you've got a land contract that's a little different you can go down water out but even going through the forfeiture route we've seen some problems again not only the investor not by the seller just you get an attorney involved and all of a sudden it slows down so we want to hit on tonight you know and I think everyone on the webinar definitely understands this point we're seeing a lot of joint venture partner people coming into space and doing a lot of joint venture sanity emails asking for capital to be a passive investor I know bill and I fought I cared as well I'll hate Franco yeah last to say because he'll be the legal side of it but give me your impression of someone that's new in a space JV with people maybe find the money through JV emails getting that money and investing in a note what are the pitfalls of raising money passively investing in space passively you an investor at promising things bill can you share what your thoughts on that is absolutely I personally don't do joint ventures I have two companies I'm an asset manager I offer a service for investors that want me to manage their second mortgages and I also do it in my own portfolio so I've stayed clear of joint ventures I don't really want to get into a relationship or a partnership with people within my own portfolio I do have some private money I might do some collateral assignments I do sell some partials to kind of refuel and keep things moving but you know my recommendation is and we just talked about this last week Dave is I see a lot of people out on social media treating this business like it's the house business like we buy houses sharing all their stories out on Facebook and you know Franco can talk on this if I want to talk about some horror stories it's actually deals that we did nothing wrong and if you get pulled into litigation I mean litigation can go anywhere from 15 to 50 K on one file and you did nothing wrong so any ammunition that you can give an opposing attorney or a borrower that's why you don't see me out on social Media talking shop and exactly what I do just to put in perspective for people I've worked over 600 files in this space over the last 10 years so I get it and I understand what goes on but what scares me a lot is these new investors going around Tooting their JV deals out on Facebook and social media it's not even so much the partnership that's going to get them in trouble you just got to be very careful it takes one opposing attorney to come after you and and it's only one or two crazy litigations that could crush you in this space good point real good point can from your understanding about these emails and the social media what's your impression of JV people going out there raising capital and having a passive investor a deal well you know I've heard people I've heard from attorneys say that they've gone after people for what they've posted on there and I'm the same as Bill of I do post ones of showing here's what I'm bidding on but I don't put all the details in there and I'm looking for a JV partner and it's more like just picture of a house here's what I'm bidding on today here's what I'm bidding on today but I'd say you know I'm about like Bill I mean I do have JV partners but I don't have many and it's usually other people who are in the note space who see something I've gotten and called me and they went in on it or you know I invest my own money and my parents money and my husband's money and that's the majority of it I don't so and it's not as easy as people like to think it is you know I've only had a couple that I've had to deal with and luckily they've been you know not demanding people but you know I told him way in the beginning this isn't you know this isn't as simple this isn't the simplest thing no matter what anybody says and you got to know and I you know it's just like the pitfalls I've told them you've got to know all the downfalls and we're going under the worst case scenario and a lot of these people I think when they go post them they they give the best case scenario you know you got to go with the worst case scenario the worst numbers the worst outcome the worst whatever and a lot of people don't do that so breaking from a from a litigation point of view you know as bill and Karen say about posting on Facebook is over that I would raising capital for a passive investor is that legal for you in venture with somebody else where the only thing that person does is provide funds well I mean the big thing is is gonna be putting everything in writing I mean when it when it comes to JV agreement it's it's usually short term that's an exit strategy you know you're putting money in forth the specific venture um you end up becoming a bank or a lender at that point just got to be careful but I if you're looking at JV you got to look at it chickabee agreement put everything in writing and make sure everybody knows what it means and you know how long it's gonna take gotcha you know I have a hard time believing it you can pass Lee mangi investor and possibly invest and not have that partner doing any of the work is that a problem where someone does absolutely nothing as per the GE agreement yeah to where they just on the deal well I mean if you base them writing off of that you probably could pitfalls in that too on both sides not just the the person taking the money but the person putting the money in but again whenever you come to JV agreement obviously somebody's probably bringing in more money than and trying to fund a little more of it than than the other what happens if somebody is only doing the microphone and not really working deal well I mean it explained the work so once you know me I guess managing the properties or what you know trying to get the deals they just literally just putting money to the deal just putting money in I gotta take a look at that I mean usually I don't see that I mean you got both sides doing something I think I've lost your so the problem is when people are doing deals and they are putting in money and just funding a deal for a partner if you gave me money and a JD just says you give you money when you split 50-50 and you do absolutely no work I'm on my under saying as that cannot happen that JV partner has to work in a deal or that scene is raising capital yeah me that that's that's how I've normally seen JV agreements is both sides are doing something I mean I haven't seen one where somebody's just putting money in and kind of walking away really haven't seen it okay so we want to get into also the dealings with buying a note and you know I'm a touch upon quickly of brokering when you finally deal through a broker what is the typical situation and how do you tell if that broker is is truly a broker Kent I'm sure you've seen deals and circles when you have a person come at you so oh I have direct access to an asset what's your first thought and how do you know if they're true or not well a lot of times if it's ones you've seen already or even the way they've word it you know the direct access usually tells you that's just one of the ones that like if somebody's really selling it to you if somebody's coming after you would be the first one if somebody's sending them to you you know every hedge fund doesn't come and hunt me down I mean I have to send them an email and say send me what you got so if they're coming to me in the first place that's the first one that there trying to wholesale a list and let them say listen I'm direct to the seller well yeah direct to the seller doesn't make them the seller so and Bill what's your experience when you see we call him Joe car brokers I hate if anyone's been brokering deals you've seen deals come at you and go Bob direct to the XYZ or I'm the seller rep which is the more formalized word of it what's your first thought how do you know if they're true people or not just like Karen said I just use all my experience and all my network and relationships in this business if I'm looking for something or my clients need something you know we're going direct to a hedge fund or to a note seller and we're requesting and seeing what they have I rarely deal with any brokers you know I know a lot of bigger people deal with some big brokers and they know the real brokers but if somebody's called me and I don't really know them I'm kind of just pushing them off and not even gonna really you know I'll respect them but I'm not gonna do any business or really really deal with them to waste my time not sure I really want to play any daisy-chain game in the second space at all you know no no you don't want to play anywhere this isn't a wholesaling you know yo letter kind of thing and MA I've given this out to a few people my two first questions if someone eyes assets which I rarely believe is first off the S word any kind of eye any kind of Li or a that I ignore him immediately I've never given out any kind of letter of intent any time in this space ever I asked who the servicer of the assets are and asked who the Clairol Cloud Storage Manager is it can be them it could be Franco it could be whoever but the seller or director cell would know bolt those questions you don't know this is or collateral there's problems I'm just trying to help out some new people who are going on LinkedIn and Facebook and hearing about these great page direct ask them the service areas ask who the cloud manager is Thanks after know that not many brokers in space there's not many sellers in the space or curry leaks either selling something at gold or thought that it passed around by six people oh I want to get you I'm gonna get to the BK thing in a minute and I want to touch upon debt licenses as well and worry about them but I wanted to get into the cost of getting an LLC together buying notes a private name and things like that or all you guys buying notes the LLC bill and LC correct yes yeah LLC or the IRA and why are you doing that what's the advantage of doing that person by person what could happen you know you know basic own coverage is the protection blanket that you have is doing notes I think that most people are gaining the space and being told it's easy and just just jump in and that's where so my concern comes at bill when I talked about insurance and getting sued having a protection it's you're gonna get sued in the space which is kind of scary I want to move on to the time it takes to find a deal turn you get a tape of assets even 20 let's say what the time period it takes you get you a 20 from start to finish I mean you're looking at 20 minutes 23 minutes long the fund deal you want how difficult how time-consuming is it space to find a single 3-4 deals or even a tape of deals that you really want to bid on well several different directions there you know right now I think it's harder to find tapes and it was you know months ago or last year it's a lot harder to find the tapes but you know going through them once you get used to it I don't think takes that much time you knock them out pretty fast you know you know what you want you know whether it's knocking them out by States or putting formulas in or you know I still I think the hardest thing right now is finding tapes that you haven't seen over and over and over yeah so wouldn't you find that asset you like do due diligence it gets involved in that to make sure that the asset is a solid asset built you share a little bit of what your what do you need to do to make sure that's nice that you want it once again you know most of our exits are through the bar or so if I get a spreadsheet I'm pretty good at a determinant you know what I like and what I would pay for it that's the reality in the second space a lot of it is purchase price than what you would pay for it if I have if I have my computer the spreadsheet the credit report and access to face or i can determine pretty much in fifteen or twenty minutes what i would pay for that asset and if I want that asset um could take you know a new person an hour or two once again I take a lot of chances in the face just because I know what a lot of the outcomes end up being and clearly not through the property so you know I'm not picture-perfect but I don't do a lot of you know having somebody on the ground look at the property you know when you buy a lot of seconds and that first is caring you know you're taking a lot of assumptions that the taxes are being paid and that the homeowners in there taking care of them because there's a first mortgage caring and being paid on now if that first is not caring or that first is unknown you know it may take a little longer to dive into it you may have to pull title if you're really interested in an asset and you're not real sure but I can usually determine in 15 20 minutes what I would like to pay for that asset okay when you get that as you like and you started to do diligence process how deep are you going in that borrower the asset self county records well with the first it's you totally different than what bill does of course I would say when I get the you know the first tape before I do a first bid I do enough due diligence to know the you know the biggest one is to make sure about the taxes whether the taxes are paid or not because if you bid on that and then that's the thing you come back with you're out of luck because they're not knocking those taxes off but if you bid on it and then find out the roof is caved in you know after you've bid on it even if they've accepted it they're a lot better off about you know if you're like the properties are destroyed you can still renegotiate but you can't come back and say oops I forgot to check the taxes so that's my biggest one ever is making sure you know because you can come up with a thousand dollars or ten thousand dollars there it's crazy sometimes what's not paid on a yeah and then what some people don't know in like Texas you have to know a lot about it you have to know enough to know what you need to ask even when you call you can't just call and say are they paid because they might say yes ask who they're paid for by you know and if it's ABC tax service whatever then somebody's got a lien on that property but you have to know that much too so yeah what I'd like to know from some of the newer people here what are some of the things that you look for in your due diligence period and Franco - in collateral as well as the property what are some of the things that you've learned over the years that you know now that if you can go back to year one of doing notes you would not do again I'm actually like Shanti it's just one because from a service point of view she's running into a lot of investors who are new or coming in in able he just didn't know they didn't know I'm Shanti what would you say something new investor you're seen now coming through server-side are going crap I wish I knew that I the number one thing that I see and I get the most phone calls on just because they you know company it's an assistant I'm there to help as much as they can is that they are running into issues at their collateral they aren't sure what they're looking at I don't feel as if a lot of people are experienced obviously enough to when you are doing your due diligence going through collateral knowing what you're looking for and only what an assigned a mortgage is knowing that you should have a matching launch to go with that some people I even had they had no idea to deed of trust was to begin with so I think everybody should kind of take a step back and as much research as I can because I see files akin men all the time they're missing assignments the assign chain is all out of whack Saturday I had an investor who bought a note and had a chance to Madison for servicing but they had the their assignments were transferred to Madison as well Madison doesn't own that no there's an adult of his liver drafted it kind of made the mix-up but it's things like that that you've got to keep an eye out for and be looking for you know understand that you know that is your your investment that it's your note you want to make sure that that stuff is clean and clear where you go and purchase and a lot of the other the stuff before assignments transferred to you you can see and then of course you want to double-check whatever is being drafted transferring to you but I feel like that number one downfall on just a new investor that the knowledge isn't there yet and not comfortably and they don't know what to look for and you're relying everybody else to kind of do your due diligence and you never know how well everybody else is and how verse they are to do that great point great segue to Franco Franco how can you resolve that and some tasks a private question regarding again what states you working to answer as well what are some of these you can assist with for them privately as well as relationship wise that could avoid that that heartache in it understanding and a lack of knowledge right and I think Shantae is right on point you know I think it's I called the real estate language it's a completely different way of looking at things assignments deeds and mortgages and some are you know due to trust there's so many different ways of looking at now what we do in house we do practice in it's in Ohio Michigan Kentucky and Indiana so we've got a pretty good swath here and it West we perform a title and collateral review what we would like to see is a copy the collateral file along with a copy of the title report that's what normally Lester you get yo any report for if people are familiar with that right and what we would do is that I take a look at the Oni report I take a look at the collateral and kind of merged into and provide you with an analysis of one page analysis of kind of the the highlights of the file that you're buying and there are times where I do put in there you know I really don't recommend you purchasing it there's the assignment chain is so bad you know the prior deeds are bad a lot of that can be fixed if you if you buy a note mortgage and there's a title policy there's a lender's policy involved you can always go back if there's a lien that shows up as has priority you can make a title claim which you can't make a title claim on is a clean chain of title that is something really all investors should know when you're looking at a title report if you don't use us and you're looking at it by yourself you could have a nut you could have seven assignments they look busy but something's wrong maybe one is order and it's it's a missing something yeah you have to go back in the chain fix it that way and we've helped them in in that sense but you know you want to get that pre-purchase so you can at least go back to your seller and say what can you do for me and I'm sure the first question was yes is what's the cost and a pre-purchase review for with you guys well we're on the cheap side only because we we hope you guys give us a default work if it gets the fault it will you charge $100 to do it it takes between 24-48 hours to get it back once we receive it so we do turn around pretty quickly I've done some on Saturday and Sunday just for some hot deals but that's fine you know we we like the work we enjoy it and we do you know provide that pretty quickly at a cheap rate so to clarify what he's saying is he'll take all your electronic collateral that you'd opt-in your seller which he should have received and said to him he'll review it as well as your Oni and compare and see what's missing what's not missing I also whenever I'm buying alone I'm also asking for servicing notes I'm asking for if they have a collateral custodian report from their previous time when they got a review done I'm also asking for property preservation pictures or any kind of worked at done with that and who the FBI company is if it's being if there's insurance on it a lot of funds out there that not putting insurance on their bill the second space what things are you looking for in that in a due diligence period on an asset file that new investors you wish you knew you're one of your two absolutely and I should have mentioned this earlier when I said I can determine in fifteen or twenty minutes on what I would pay on a file been very blessed and v....